ED can’t act like ‘crook’, must work within four corners of law: Top Court

New Delhi: The Supreme Court on Thursday raised serious concerns over the Enforcement Directorate’s (ED) approach to investigations under the Prevention of Money Laundering Act (PMLA), cautioning the agency to act within legal boundaries. The court also highlighted the central agency’s low conviction rate, drawing attention to the broader implications on personal liberty and judicial accountability.

“You can’t act like a crook, you have to act within the four corners of the law,” Justice Ujjal Bhuyan told the ED’s counsel, referring to one of his earlier judgements. “I observed that ED has registered around 5,000 ECIRs in the past five years but the conviction rate is less than 10 per cent,” he said, citing figures that were also reportedly acknowledged in Parliament.

A three-judge bench comprising Justices Surya Kant, Ujjal Bhuyan, and N Kotiswar Singh is currently hearing a series of petitions seeking review of the Supreme Court’s 2022 judgment that upheld the ED’s broad powers of arrest, attachment, and seizure under the PMLA.

“We are also concerned for the image of the Enforcement Directorate,” Justice Singh said, as the bench questioned the effectiveness of the agency’s investigative processes.

During the proceedings, Additional Solicitor General S V Raju, representing the ED and the Union government, argued that low conviction rates were not reflective of weak investigations but rather the result of legal stalling tactics by influential individuals.

“Influential crooks have a lot of wherewithal. They employ a battery of lawyers to file application after application at different stages to delay the proceedings,” Raju said. “The investigating officer ends up spending more time in court responding to petitions than actually conducting the investigation.”

Justice Surya Kant proposed the creation of dedicated PMLA courts to ensure expedited hearings, akin to earlier TADA and POTA courts. “Dedicated courts could conduct day-to-day trials. Yes, influential accused will still file numerous applications, but they will know their pleas will be decided immediately. Time has come to hit them hard,” he remarked. “We can’t have sympathy for them.”

The court also expressed concern over the ED’s handling of long pre-trial detentions. “At the end of 5-6 years of judicial custody, if people are acquitted, who will pay for this?” Justice Bhuyan asked, pointing to the impact of delayed trials on personal liberty.

Raju highlighted additional challenges faced by the agency, including accused persons fleeing abroad and using complex digital assets. “They escape to countries like the Cayman Islands and deal in crypto-currencies, making investigations tougher,” he said.

This prompted Justice Kant to raise the need for tighter regulatory mechanisms around digital assets. “The government needs to seriously think of regulating crypto. People are using various apps and crypto stock exchanges,” he observed. He also referred to a recent comment by Justice Joymalya Bagchi, who warned that a day may come when bribes would be accepted in crypto, complicating enforcement.

Raju pushed back against the admissibility of the review petitions, describing them as “appeals in disguise.” According to him, the petitioners failed to show any clear error in the 2022 judgment, which had upheld the ED’s authority. “If these reviews are admitted, it would amount to rewriting the 2022 judgment,” he told the court.

He also invoked the 2019 Roger Mathew case, where a Constitution bench upheld the statute’s validity, stating that the legal position remained in the government’s favour.

The court inquired into the ED’s arrest procedures, specifically whether accused individuals were informed of the reasons and grounds of arrest. Raju acknowledged that while the law does not mandate supplying a copy of the Enforcement Case Information Report (ECIR), courts have ruled that the grounds for arrest must be communicated.

The hearing is expected to continue next week.

The petitions stem from the Supreme Court’s July 2022 ruling in Vijay Madanlal Choudhary vs. Union of India, which had upheld the ED’s authority to arrest and investigate under the PMLA without the immediate disclosure of the ECIR — a move that has since drawn scrutiny over its implications for due process.