Do officers of the ED under PMLA have the power to seek remand ?

Pavan Narang

Recently, the Delhi High Court, in its judgment titled Rajbhushan Omprakash Dixit v. UOI, referred to a larger Bench certain important questions of law that need to be settled.

One of the questions referred is “Do the provisions of Chapter XII Cr.P.C. apply to Prevention of Money Laundering Act (PMLA) insofar as offences under PMLA are concerned and if so, to what extent?”

Although it has been held in a spate of judgments that courts have powers to remand the accused arrested by officers of the Enforcement Directorate (ED) under PMLA, they have failed to address the more fundamental issue of whether or not the officers of the ED are Police Officers in the strict sense.

The Hon’ble Supreme Court in Directorate of Enforcement v. Deepak Mahajan [(1994) 3 SCC 440] stated that none of the Acts – including the Police Act, 1861-define the expression “Police Officer”.

However, the Court probably overlooked Section 1 of the Police Act, 1861, which contains the interpretation clause, wherein the word “police” has been defined as “all persons who shall be enrolled under this Act”.

Further, Section 8 of the Act, titled Certificates to Police Officers, states that every police officer shall receive a certificate on his appointment, and the person holding such certificate shall be vested with the powers, functions and privileges of a Police Officer. Further, the Police Act, 1888, provides that only the Central government can constitute a police force for special purposes.

Thus, a conjoint reading of the above provisions shows that either a Police Officer enrolled under the Police Act, 1861 or officers of a police force specially constituted by the Central government for a special purpose under The Police Act, 1888 can be considered as “Police Officers” as referred to in the CrPC. No other officers from the various investigating agencies specially created by the State or Central Governments can be automatically deemed to be “police officers”, in the absence of a specific provision to that effect in the statute itself.

The Central and State governments have enacted special statutes like the Delhi Special Police Establishment Act, NDPS Act. CRPF Act, The Bengal Excise Act, 1909, Bihar & Orissa Excise Act etc. wherein officers appointed under those statutes have been explicitly vested with the powers of police officers.

Although PMLA is a special statute and is being considered as a code in itself, it is, in all fairness, an enabling statute. This is because the commission of a predicate offence under the provisions specified in the Schedule of the Act is the sine qua non for triggering an investigation under the PMLA.

This Act is different from the likes of Income Tax Act, Customs Act, NDPS, FEMA etc., which provide for fiscal as well as penal action for commission of offences under those Acts. On the other hand, under the PMLA, “proceeds of crime” are derived from the commission of any of the offences specified in the Schedule under the Act.

Further, as per the Act, authorized officers have been given powers to register a case, initiate investigation, conduct surveys and searches, collect evidence, record statements, arrest a person, and file a complaint to prosecute a person for commission of an offence under the Act.

However, nowhere have these officers been either designated as, or given powers vested in a “Police Officer” under the Police Act, 1861 to invoke provisions of the CrPC. All the powers available to officers of the ED under the PMLA are similar to powers of officers under the Customs Act, Central Excise Act, the now repealed FERA, 1973, among others.

In light of the above, it has to be seen whether a designated officer under the PMLA, who, under Section 19 read with Section 65, has the power to arrest, can seek remand of an accused. Another question is whether courts have the powers to hand over custody of a person accused of an offence to such an officer.

It is settled law that any person, whether a police officer or not, has the power to take a person into custody and ensure his production before a judicial magistrate within 24 hours of arrest. But such persons have no further powers.

This has been settled by the Hon’ble Supreme Court, firstly in State of Punjab v. Barkat Ram [AIR 1962 SC 276] decided by a 3-judges Bench. This was later affirmed by two Constitution Benches of the Court.

However, a two-judge bench of the Hon’ble Supreme Court in the Deepak Mahajan case distinguished all the above judgments and adopted the broader meaning of word Police Officer by relying upon a Division Bench judgment of Gujarat High Court in NH Dave v. Mohmed Akhtar.

In Deepak Mahajan, the Court went on to hold that officers of the ED under the PMLA have the power to seek remand of an accused in their custody during investigation. This interpretation has been followed by another two-judge bench in Ashok Munilal Jain v. Assistant Directorate, ED. With due respect, these judgments should be considered per incuriam.

A perusal of Section 167 CrPC reveals that once a person is arrested by the police for commission of an offence, the Magistrate can authorize his detention in the custody of the police for a period of 15 days if there exist valid grounds for doing so. However, except for remanding the accused in judicial custody, Section 167 CrPC nowhere permits any person other than a police officer to take the accused into custody.

By applying the provisions of the Police Act, 1861 and the Police Act, 1888, the Central government has constituted police forces and authorized certain sets of officers with Police Powers, e.g. DSPE Act (CBI), NDPS, NIA to name a few. However, no such powers has been vested in the officers under PMLA.

Further, our Courts have held that officers under Customs Act, Central Excise Act, now repealed FERA etc. are not Police Officers and do not enjoy the powers of the same.

Officers of the ED who have been designated with powers under the PMLA are a creation of the statute and have to perform their duties and execute their powers within the confines of the Act.

Our courts have not looked into the above aspects, and by invoking principles of gravity of offences, have started handing over the custody of accused to officers under PMLA, assuming that they have authority to receive the custody of a person, under the garb of completing investigation.

What has been overlooked is that once an officer is granted custody of an accused person under remand, any statement recorded under a Special Act under oath by an officer would become inadmissible, as per Section 25 of the Evidence Act, thus rendering the entire investigation null and void.

The few judgments that have recently been pronounced wherein such custody has been upheld, are, with due respect, based more on moral conviction than legal premises. This would lead to legal anomalies rendering the trial if not illegal, irregular in nature, thus impacting the objects and reasons of bringing in this statute to control money laundering.

Thus, investigating officers, in their zeal to show that they are vigilant and committed towards curbing money laundering, are committing acts which one day can be declared illegal or irregular, and thereby do more harm than service to the cause of justice.

The author is a Delhi-based lawyer.

Disclaimer: The views expressed in this article are of the author and Bar & Bench does not necessarily hold the same views. Bar & Bench does not take responsibility for the same.