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Madras High Court holds that ED has the right to take Tamil Nadu minister Senthil Balaji into custody in PMLA case, says accused has to abide by the law

Justice Karthikeyan noted that Section 19 of the PMLA authorised ED officials to arrest a person if there are reasons to believe that is guilty of any offence punishable under the Act.

On Friday, July 14, the Madras High Court held that the Enforcement Directorate (ED) has the right to take Dravida Munnetra Kazhagam (DMK) minister V Senthil Balaji into custody. This is a day after Solicitor General Tushar Mehta said to the HC that the ED had the right to do so under the Prevention of money laundering act (PMLA).

Following a disagreement on the division bench, the case was referred to Justice CV Karthikeyan, who agreed with Justice D. Bharatha Chakravarthy’s position that ED is entitled to custody. “I hold that ED has right to take Senthil Balaji into custody”, the judge ruled. Earlier, Justice Nisha Banu had held that the ED does not have the right to seek custody under PMLA.

Saying that the ED does have right of custody, Chief Justice Karthikeyan said, “The fact that respondents(ED) can take custody for further investigation cannot be denied. The respondent, in this case, had a right to get custody. I would align my opinion with the reason given by Justice Bharatha Chakravarthy in this aspect”.

During the hearing, Senior Counsel Kapil Sibal, appearing for Senthil Balaji’s wife Megala, said that PMLA was unconstitutional and that it empowered ED only to summon bank officials and collect evidence which is used to file a complaint. “You search, seize, get statement. You call banks/financial institutions and confront him. You take a statement. Then based on material you arrest him. I don’t say so, SC says so. PMLA empowers only inquiry and not an investigation,” he said.

Sibal also claimed that only the police official had right to go to the magistrate for the custodial interrogation of the accused and not the ED. “S.167 reads “officer in charge of police station” or “officer not below the rank of sub-inspector”. ED is neither. Then how can S.167 apply. The constitutional provisions will apply. The Act does not give him that power. Then how can any court give him that power,” Sibal said.

Justice Karthikeyan accepted the argument made by Sibal that ED officials are not police officers. However, he stated that since Balaji was remanded to judicial custody by the Sessions Court under Section 167 of CrPC, his status changed from “detenu” to “accused”. The judge added that Section 167(2) CrPC enables the remand of the accused to “such custody as such Magistrate thinks fit” during the first fifteen days and does not specify whether it has to be “police custody” or “judicial custody”.

The court further stated that the statement recorded during the custody would be admissible for further investigation. “ED should have taken him to custody after obtaining the order. They should have come to the HC for a variation of the order or should have challenged it. But they did neither,” Sibal meanwhile pressed.

The court also rejected the argument that the grounds of arrest were not informed and said that there was no way the Minister could claim innocence. “Money laundering is not a standalone offence that does not have any background. The respondents were at his doors since June 13. He should have known why. He can’t claim innocence,” the court said.

Finally, Justice Karthikeyan noted that Section 19 of the PMLA authorised ED officials to arrest a person if there are reasons to believe that is guilty of any offence punishable under the Act. Emphasising on the word “punishable”, he said that  once the word punishment is used, then the provisions of CrPC will apply. The person so arrested will have to subjugate himself to the laws of trial and such trial must be under the process of CrPC.

The court decided that officers like Director, Deputy Director or Assistant Director or any other authorised officer, who are empowered to arrest a person under Section 19, can take advantage of the provisions of the CrPC even though they are not “police officers”, as the PMLA says that CrPC will apply to proceedings under it.

“It had been held in Vijay Madanlal that ED are not police officials, but nowhere it was said that they cannot take custody. If investigation requires custody, then custody can be sought as a matter of right”, the Court ruled.

The court further added, “Detenu has to abide by law. Every accused has a right to prove innocence during trial but no accused has a right to frustrate an inquiry or investigation”.

On Thursday, July 13, Solicitor General Tushar Mehta made the arguments on behalf of the ED before Justice CV Karthikeyan, who had been appointed as the third judge to oversee the ongoing hearing of the habeas corpus petition (HCP) submitted by the minister’s wife S Megala. Following a split decision by a division bench of the Madras high court last week on the plea, the Supreme Court ordered the high court to appoint a new bench to hear the matter.

Mehta contended that the reason why legislature did not confer the powers of a police officer on ED officials was because, PMLA deals with only one offence of money laundering, unlike other special enactments, which are non-bailable and therefore, only a court can grant bail.

Notably, on July 11, the Income Tax department officials conducted raids on properties linked to Tamil Nadu minister V Senthil Balaji in Karur. Around ten locations linked to the minister throughout the city were raided by the IT officials.

Senthil Balaji, who served as a minister in the DMK government, was detained on June 14 by the Enforcement Directorate (ED) in connection with a cash-for-jobs scheme. Since then, he has been a patient at Kauvery Hospital, where he underwent coronary bypass surgery.

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