Be transparent and fair in your functioning, don’t be vindictive: SC tells ED

ByAbraham Thomas
Oct 03, 2023 01:35 PM IST

The bench was hearing a petition filed by the arrested directors of real estate group M3M in an alleged money laundering case.

The Supreme Court on Tuesday directed the Enforcement Directorate (ED) to maintain stringent standards of probity, fairness and not be vindictive in its functioning.

Supreme Court of India (HT file photo)
Supreme Court of India (HT file photo)

Hearing a petition filed by the arrested directors of real estate group M3M in an alleged money laundering case, a bench of justices AS Bopanna and Sanjay Kumar noted that the two directors Pankaj and Basant Bansal were summoned on June 14 for questioning in an alleged money laundering case and the duo were arrested in another case registered by the ED on the same day.

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The Bansals challenged their arrest under Section 19 of the Prevention of Money Laundering Act (PMLA) to be illegal and questioned the order of the Punjab and Haryana high court which refused to set aside their arrest.

Also Read: Enforcement Directorate arrests M3M India director in PMLA case

Directing their immediate release, the top court said the facts of the case make for an interesting reading as it took serious exception to the ED officer orally reading out the grounds of arrest to the accused without supplying them with a written copy of the grounds for their arrest.

The bench said, “It speaks volumes about the ED and reflects poorly on their style of functioning, especially since the agency is charged with preserving the financial security of the country.”

Stating what is expected from an agency entrusted with such high powers and functions, the bench said, “The ED has to be transparent, above board and conform to pristine standards of fairness and probity and not be vindictive in its stand.”

The Court further noted the lack of any consistent or uniform practice followed by ED for supply of grounds of arrest to accused.

Laying down norms for the entire country, the bench held, “We hold that it will be necessary for a copy of grounds of arrest to be furnished to the accused at the time of arrest.”

The Court held that such a right is a constitutional right under Article 22(1) as it enables the accused to take legal counsel based on written grounds of arrest.

Besides, the bench said that in the absence of written grounds of arrest, it will boil down to the word of ED against that of the accused as it happened in the present case.

The Court set aside the arrest of the Bansals and said, “ED’s investigating officer merely read out the grounds of arrest. This does not fulfil the mandate of Article 22(1) of Constitution and Section 19(1) of the PMLA. The clandestine conduct of ED in proceeding against the accused does not commend of satisfaction as it reeks of arbitrariness.”

The Bansals are also accused of bribing a trial court judge (since suspended) to secure favourable orders.

The ED had accused them of diverting an amount to the tune of over 400 crore through several shell companies.

Further investigations revealed that the M3M along with another realty firm Ireo Group tried to manipulate the trial court proceedings in ED cases against them by “indirectly” bribing special judge Sudhir Parmar.

Parmar was suspended from service on April 27.

The ED had defended its action by claiming that the charges were serious, and the accused were not cooperating with the probe.

The petition filed by Bansals pointed out that the FIR (first information report) did not name Pankaj or Basant as it was against Roop Bansal, another director with the firm.

In July, when the matter was last heard, the petitioners argued that vast powers given to ED under the money laundering law is leading to arbitrary arrests and unless ED is reined in, it will result in drastic consequences to citizens.

Their argument was noted by the top court in its judgment which noted that section 167 of Code of Criminal procedure (CrPC) which lats down procedure for seeking custody following arrest has to be complied with once an arrest is made under Section 19 of PMLA.

The first ED case against the M3M group directors was lodged in 2021 in which Roop Bansal was arrested in June 2023 while the remaining two directors – Pankaj and Basant obtained anticipatory bail.

The present arrest was made in a subsequent ED case registered earlier this year in which the duo were arrested even though they were not named in the ED complaint.

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