Legally Speaking | From arrests to trials to judgments: A look at the track record of the Enforcement Directorate

The Supreme Court has raised concerns over the ED's low conviction rate. The court's remarks come amid criticism of the agency's targeting of opposition leaders

The Supreme Court (SC), on August 7, 2024, commented on the low number of convictions secured by the Enforcement Directorate (ED), despite registering 5,000 odd cases. The Court noted, “You need to concentrate on the quality of prosecution and evidence. In all the cases where you are satisfied that a prima facie case is made out, you need to establish those cases in the court…”

The ED is a statutory body created by the Prevention of Money Laundering Act, 2002 (PMLA). (HT Photo)

The ED has been in the news for the arrests of politicians from the Opposition. The arrest of Delhi chief minister Arvind Kejriwal during election season raised several questions about the fairness of the investigative body. Critics have raised concerns about the ED being used to stifle dissent. Hence, the SC’s observations raise several questions regarding the functioning of the ED.

Enforcement Directorate: Origins and legal tangles

The ED is a statutory body created by the Prevention of Money Laundering Act, 2002 (PMLA). The Act came into force on July 1, 2005. Initially, PMLA was intended to target the generation of black money only from serious crimes identified in Schedule A of the Act, with minor crimes notified in Schedule B. The narrow approach was also adopted to justify the stringent arrest and bail conditions of the Act.

The 26/11 terror attacks and pressures of the Financial Action Task Force led to the 2012 amendment of the Act. The amendment diluted the serious crime approach by removing the monetary threshold and effectively merging Schedule A and B offences. Thus, irrespective of the gravity of the crime, the stringent bail provisions were made applicable.

The amendment was challenged before the apex court in Nikesh Tarachand Shah v. Union of India in 2017, and the omnibus application of the stringent bail conditions, irrespective of the gravity of the offence, was held unconstitutional. However, the government effectively overruled the SC verdict by introducing another amendment in 2019, wherein it argued that money laundering by itself was a grave offence and did not need a gradation of severity. Interestingly, a three-judge bench of the SC upheld this amendment in 2022 in Vijay Madanlal Choudhary v. Union of India.

On August 6, 2024, the Union ministry of home affairs informed Parliament that, from 2014-2024, a total of 5,297 cases were registered under the PMLA and conviction was secured in 40 cases and acquittals in three. It is pertinent to note that since its inception in 2005 to July 31, 2024, a total of 7,083 Enforcement Case Information Reports (ECIR) have been registered. Implying that from 2005 to 2014 only 1,786 cases were registered and there was almost a threefold increase in the cases registered after 2014.

A year-wise break-up of cases registered showed a sharp increase after the 2019 amendment from 188 cases in 2019 to 708 cases in 2020. The highest number of cases were registered in 2021 i.e. 1,166. The official website of the ED provides statistics till January 31, 2023. As per this data, a total of 5,906 ECIRs had been registered till January 2023. Thus, from February 2023 to July 2024 (18 months) a total of 1,177 cases were registered.

In July 2022, in an answer to a question in the Rajya Sabha, the Union finance ministry stated that prior to 2014 a total of 112 searches had been carried out which resulted in the filing of 104 prosecution complaints. There were no convictions in this period. From 2014 to 2022, 3,010 searches were conducted, and 23 accused persons were convicted.

Who are the people arrested?

As per the ED website data, a total of 513 people have been arrested by it since its inception. The home ministry data reveals that from 2016 to July 31, 2024, a total of 375 people have been arrested, of which 90 were arrested from Delhi. Interestingly, the maximum number of persons were arrested in the 6 months of 2024 i.e. 140 than any of the previous years. In fact, the 2024 arrests till July 24 account for almost 40% of the arrests from 2016.

An investigative report of the Indian Express published in 2022 concluded that there was a fourfold jump in the cases registered against politicians i.e. 26 during the UPA regime to 121 in the NDA-led government starting from 2014. Of 121 political leaders, nearly 95% (115) were from opposition parties. The ED has refuted this allegation by stating that politicians accounted for only 2.98% of the total cases registered. As per the ED website from 2005 to 2023, 176 ECIRs had been recorded against existing and ex MPs, MLAs and MLCs.

In March 2023, 15 political parties approached the SC calling into question the alleged selective targeting of the opposition leaders by the ED. However, the petitions were subsequently withdrawn. Presently, the number of ECIRs against politicians must be much higher as this data does not include the several arrests made in January 2023, including Kejriwal, Manish Sisodia and Hemant Soren. Apart from politicians, the ED has also raided organisations like Amnesty International and NewsClick.

What happens to these cases?

The ED, on its website, claims to have a conviction rate of 96%. However, a closer look reveals that the same is not an accurate representation of the prosecution under the ED.

Till January 2023, of the 5,906 ECIRs recorded, the ED had filed only 1,142 prosecution complaints i.e. in less than 20% of the cases. Prosecution complaints are like chargesheets in other cases and usually denote the completion of the investigation.

Of these 1,142 complaints only 25 trials were completed, just about 2%. In these 25 trials, the agency was able to secure 24 convictions, based on which they are claiming a 96% conviction rate. The reality is that of the 5,906 cases registered between 2005-2023, the agency was successful in completing the trial in less than 0.5% of the total cases registered.

According to the figures furnished in Parliament on August 6, from 2014 to 2024, a total of 43 trials were completed. Of which there were 40 convictions and 3 acquittals. Thus, the trial completion rate improved from 0.4% to 0.8 %. This low conversion rate prompted the Supreme Court to advise the ED to improve the quality of prosecution and evidence.

The low trial completion rate is reflective of the prolonged pendency in all these cases. Pendency is a common feature of the criminal justice system in India, however, pendency in PMLA cases often implies prolonged pre-trial incarceration due to the stringent bail provisions.

On August 9, 2024, while granting bail to Manish Sisodia, the Supreme Court observed, “In the present case, in the ED matter as well as the CBI matter, 493 witnesses have been named. The case involves thousands of pages of documents and over a lakh pages of digitized documents. It is thus clear that there is not even the remotest possibility of the trial being concluded in the near future. In our view, keeping the appellant behind bars for an unlimited period of time in the hope of speedy completion of a trial would deprive his fundamental right to liberty under Article 21 of the Constitution.”

For the Enforcement Directorate to fulfil its objective of preventing money laundering, it is functioning should not only be fair but appear to be fair and just. Presently, the high pendency, vague allegations, and targeted attack on opposition leaders coupled with the sudden stalling in the investigation when the accused changed parties among others have tainted the ED’s investigations.

Parijata Bharadwaj, a lawyer and researcher based in New Delhi, co-founded the Jagdalpur Legal Aid Group that offered legal services to adivasis in Chhattisgarh. The views expressed are personal.