ED Arrests CM Kejriwal; How ED Arrest Differs from Arrest by Police

In dealing with the complexities of Enforcement Directorate (ED) matters, it's essential to understand the legal framework and remedies available to an accused, and how these differ from the conventional police arrest procedures. The Enforcement Directorate is a specialized financial investigation agency in India, which enforces economic laws and fights economic crimes, primarily under the Prevention of Money Laundering Act (PMLA), 2002, and the Foreign Exchange Management Act (FEMA), 1999.

Shedding light on arrest of Mr Arvind Kejriwal in Liquor scam under PMLA, Advocate Varun Bajaj, Founding Managing Partner & Head - Litigation Practice, RSD Bajaj Global Law Firm states, “Having handled PMLA matters, we are of the legal view that Enforcement Directorate (ED) has clear power to arrest Mr. Kejriwal under Section 19 of the  PMLA (Prevention of Money Laundering Act 2002) , unless or until there is specific court order providing protection to Mr. Kejriwal of no coercive action by ED, also called as the "Non-Coercive Order". In case of Mr Kejriwal, as Hon'ble Delhi High Court, after hearing the matter on  21.03.2022 has not granted any Non-Coercive Order, therefore, ED by virtue of Section 19 of PMLA has powers to arrest CM Kejriwal.”

What to Expect Next?

CM Kejriwal’s legal team has moved to Hon’ble Supreme Court to seek the above "Non-Coercive Order" against ED in this matter. However, as the matter has not been listed in causelist of Hon'ble Supreme Court, the only legal option with CM Kejriwal is to get the matter mentioned before start Supreme Court for urgent hearing, and it would be discretion of the Court to hear this matter today. It has been observed that in PMLA matters, Hon’ble Supreme Court generally does not give "Non-Coercive Order" against ED. Also, with the arrest of CM Kejriwal having been effected, listing the urgent petition before the Supreme Court has become infructuous now leaving Shri Kejriwal with option to apply bail at Magistrate Court.

Additionally, as provided by section 19(3) of the PMLA, all persons arrested must be presented before a judicial magistrate within 24 hours, excluding the time necessary for the journey from the place of arrest to the Special Court or Judicial Magistrate or a Metropolitan Magistrate, as per jurisdiction. 

How ED Arrest Differs from Arrest by Police

In a significant differentiation from standard police protocols, arrests made by the Enforcement Directorate (ED) focus narrowly on economic offenses, notably those involving money laundering, with stringent conditions for bail. Legal experts highlight the distinct legal landscape shaped by the Vijay Madanlal Choudhary judgment, which clarifies that the ED does not have the status of Police. ED is also not strictly governed by the criminal procedure code. While an accused has a right against self-incrimination before the Police, the same is unavailable while making statement to ED officials. 

Under the specific mandates of Section 19 of the Prevention of Money Laundering Act (PMLA), the ED possesses the authority to arrest individuals based on ‘reason to believe’ that the individual is guilty of an offence punishable under the Act. The authority may inform the accused of the grounds for such arrest. It is not a mandatory provision as is the case with an FIR, where an accused is entitled to a copy of the FIR to know grounds for arrest. 

Adding to the rigorous nature of ED's legal proceedings, bail conditions under PMLA underscore a critical departure from conventional criminal law practices. For instance, under PMLA, the burden is on the accused to prove they are not guilty to be eligible for bail, which is a reversal of the traditional burden of proof.

Remedies Available to an Accused in ED Matters

Despite the stringent conditions, the possibility of bail remains, contingent on court’s satisfaction that there are reasonable grounds to believe the accused is not guilty and will not commit any offence while on bail. 

The accused has the right to consult and be represented by a legal practitioner of their choice. Decisions made by the Adjudicating Authority under PMLA can be appealed to the Appellate Tribunal. Further, decisions of the Appellate Tribunal can be challenged in the High Court and subsequently in the Supreme Court of India. 

(Additional expert insights are awaited. The story will be updated.)