In a landmark ruling today, the Supreme Court declared that the Enforcement Directorate (ED) and its officials are prohibited from arresting an accused individual under Section 19 of the Prevention of Money Laundering Act (PMLA) once the Special Court has acknowledged the complaint regarding money laundering.

If the ED wants custody of such an accused, then they will have to apply to the Special Court.

"After cognizance is taken of the offence punishable under Section 4 of the PMLA based on a complaint under Section 44, the ED and its officers are powerless to exercise powers under Section 19 to arrest the person shown as accused in the complaint. If the ED wants custody of the accused who appears after service of summons for conducting further investigation of the same offence, ED will have to seek custody of the accused by applying to the Special Court. ''

''After hearing the accussed, the Special Court must pass an order on the application after recording brief reasons. While hearing the application, the Court may permit custody only if it is satisfied that custodial interrogation is required even though the accused was never arrested under Section 19" 

The matter was heard before the division bench of Justices Abhay S Oka and Ujjal Bhuyan.

Additionally, the bench emphasized that if the ED intends to pursue further investigation regarding the same offense, it retains the authority to arrest individuals who haven't been named as accused in the previously filed complaint, provided that they meet the criteria outlined in Section 19.

In cases where the accused hasn't been arrested by the ED until the complaint is filed, the Special Court, in the normal course of action, should issue a summons to the accused rather than a warrant when taking cognizance of the complaint. This remains true even if the accused is already out on bail.

When the accused appears before the Special Court in response to a summons, it cannot be considered that they are in custody. Consequently, it is not obligatory for the accused to seek bail. However, the Special Court has the discretion to require the accused to provide bonds in accordance with Section 88 of the Code of Criminal Procedure.

A bond provided under Section 88 of the Criminal Procedure Code (CrPC) constitutes only an undertaking. Consequently, the court's decision to accept the bond under Section 88 does not equate to granting bail. As a result, the dual conditions outlined in Section 45 of the Prevention of Money Laundering Act (PMLA) are not applicable to this situation.

If the accused fails to appear, the Special Court has the authority to issue a warrant under Section 70 of the Criminal Procedure Code (CrPC). Initially, the court must issue a bailable warrant. If serving a bailable warrant proves unsuccessful, the Special Court may then resort to issuing non-bailable warrants.

At the heart of the matter before the Supreme Court lies the question of whether an accused's execution of a bond to ensure their appearance before the court under Section 88 of the Criminal Procedure Code (CrPC) constitutes an application for bail, thereby making the twin conditions of bail under Section 45 of the Prevention of Money Laundering Act, 2002 applicable.

During the proceedings, the petitioner/accused contended that upon their appearance before the court in adherence to the summons and the submission of a bond under Section 88 of the Criminal Procedure Code (CrPC) to ensure their presence in court, said bond should not be regarded as bail, thereby exempting it from triggering the twin conditions outlined in Section 45 of the Prevention of Money Laundering Act (PMLA).

Contrarily, the Directorate of Enforcement (ED) contended that whenever the court exercises its powers under Section 88 of the Criminal Procedure Code (CrPC) to secure a bond for the accused's appearance, it inherently constitutes granting bail. Therefore, according to the ED, the provisions of Section 45 of the Prevention of Money Laundering Act (PMLA) would be applicable, meaning bail would only be granted if the twin conditions are fulfilled.

After hearing both the parties as length the Court reserved the Judgment on April 30, 2024.