“ED Cannot Arrest Post-Cognizance If No Prior Arrest Was Made”: Patna HC Applies SC Ruling, Limits PMLA Powers Under Section 19
Sanchayita Lahkar
The High Court of Judicature at Patna Single Bench of Justice Satyavrat Verma disposed of an anticipatory bail application in terms of the directions issued by the Hon’ble Supreme Court in Tarsem Lal v. Directorate of Enforcement. The Court held that where the Enforcement Directorate (ED) did not arrest the accused during the course of investigation and later filed a complaint under Section 44(1)(b) of the Prevention of Money Laundering Act, 2002 (PMLA), it could no longer exercise powers of arrest under Section 19 of the PMLA without the permission of the Special Court. The Trial Court was accordingly directed to act in strict accordance with the precedent laid down by the Supreme Court.
The petitioner, a resident of Patna, filed an anticipatory bail application in connection with ECIR No. PTZO/07/2016 dated 27 December 2016 registered for offences punishable under Sections 3 and 4 of the PMLA. The petitioner apprehended arrest after cognizance was taken by the Special Court based on a complaint filed by the ED under Section 44(1)(b) of the Act.
It was submitted on behalf of the petitioner that a predicate offence FIR had been registered in the year 2013, pursuant to which the ED initiated investigation and registered the ECIR in 2016. During the course of investigation, the petitioner was summoned and interrogated by the ED and allegedly cooperated fully from 2016 until 2022, the year in which the ED filed its complaint.
The petitioner’s counsel argued that the ED never arrested the petitioner during the entire span of investigation and, as such, it would not be appropriate for the authorities to seek custody post cognizance based solely on the complaint. It was submitted that the law declared by the Supreme Court in Tarsem Lal v. Directorate of Enforcement, Criminal Appeal No. 2608 of 2024, was directly applicable to the facts of the present case.
Annexure-8 of the anticipatory bail application was referred to, where the decision of the Supreme Court in Tarsem Lal was placed on record. It was submitted that the ratio of the Supreme Court judgment held that after cognizance is taken by the Special Court under Section 44(1)(b) of the PMLA, the ED loses the authority to arrest the accused under Section 19 of the Act unless permission is first obtained from the Special Court.
The petitioner’s counsel further argued that given the petitioner’s prior cooperation and absence of custodial interrogation throughout the lengthy investigation, any sudden change in stance post-cognizance would not align with the procedural safeguards recognized by the apex court.
The ED, represented by counsel, did not contest the factual submissions made by the petitioner regarding the absence of arrest during the investigation phase. The agency did not provide any contrary evidence to suggest that it had previously invoked its arrest powers or that circumstances had changed post-cognizance.
Given these submissions, the petitioner sought disposal of the anticipatory bail application solely in terms of the decision in Tarsem Lal.
Justice Satyavrat Verma noted that the petitioner was not arrested at any stage of the investigation, despite the ECIR being registered as early as 2016 and the ED having conducted a full investigation culminating in a complaint filed in 2022. The Court recorded:
“The ED during the course of investigation never felt the need of arresting the petitioner.”
Further, the Court acknowledged that the Special Court had taken cognizance of the offence punishable under Section 4 of the PMLA solely based on the complaint filed under Section 44(1)(b). The petitioner, having cooperated with the ED throughout, had now approached the Court apprehending arrest after the stage of cognizance.
With regard to the applicability of the precedent cited by the petitioner, the Court referred to the decision of the Hon’ble Supreme Court in Tarsem Lal v. Directorate of Enforcement. It recorded:
“The learned counsel appearing on behalf of the Enforcement Directorate is not in a position to rebut the submission… that ED during the course of investigation never felt the need of arresting the petitioner and after cognizance is taken… the ED and its officers are powerless to exercise power under Section 19 of the PMLA to arrest a person shown as an accused in the complaint.”
The Court also noted that the submissions made on behalf of the petitioner had not been contradicted or challenged by the ED in any material form.
The judicial reasoning ultimately relied entirely on the applicability of the Supreme Court’s binding precedent and did not involve any factual disputes warranting further inquiry.
The Patna High Court concluded the matter by issuing the following directives:
“In view of the submissions made by the learned counsel appearing on behalf of the petitioner, the instant anticipatory bail application is disposed of in terms of order dated 16.05.2024 passed by the Hon’ble Supreme Court in Criminal Appeal No.2608 of 2024.”
The Bench further directed procedural compliance by the lower court in line with the Supreme Court’s mandate:
“The learned Trial Court is directed to strictly adhere to the directions contained in the order dated 16.05.2024 passed by the Hon’ble Supreme Court in Criminal Appeal No.2608 of 2024 (Tarsem Lal v. Directorate of Enforcement, Jalandhar Zonal Office).”
Advocates Representing the Parties
For the Petitioners: Mr. Anurag Saurav, Mr. Abhinav Alok, Ms. Prity Kumari, Mr. Anjaneya Singh
For the Respondents: Mr. Dr. K.N. Rai (Additional Deputy Solicitor General), Mr. Tuhin Shankar (for Enforcement Directorate), Mr. Manoj Kumar Singh, Mr. Ankit Kumar Singh, Mr. Shivaditya Dhari Sinha
Case Title: Ganesh Prasad Singh v. Union of India & Others
Case Number: Criminal Miscellaneous No. 68054 of 2024
Bench: Justice Satyavrat Verma
[Read/Download order]
