In the matter of Tarsem Lal v Directorate of Enforcement, Jalandhar Zonal Office, the Hon’ble Supreme Court of India (SC) delineated Enforcement Directorate’s (ED) scope of powers to arrest under Prevention of Money Laundering Act, 2002 (PMLA), ruling that (i) the Enforcement Directorate and its officers cannot exercise powers under section 19 of the PMLA to arrest an accused person once the Special Court takes cognizance of a complaint; and (ii) furnishing of bonds under section 88 of the Code of Criminal Procedure, 1973 (CrPC) is merely an undertaking that does not amount to grant of bail; hence, section 45 of the PMLA remains inapplicable.
The case originated from a complaint filed by the ED against Tarsem Lal and others, alleging offenses under the PMLA and predicate offenses under the Indian Penal Code, 1860 (IPC) and the Prevention of Corruption Act, 1988. The accused, revenue officials, were accused of misusing their positions for personal gain through illegal land sales. Despite being summoned by the Special Court, Tarsem Lal failed to appear, leading to the issuance of a warrant. Seeking anticipatory bail under section 438 of the CrPC, Lal’s request was initially granted by the Punjab & Haryana High Court but later dismissed for failing to meet the twin conditions of bail under section 45 of the PMLA.
The Bench, led by Justice Abhay Oka and Justice Ujjal Bhuyan, addressed two critical issues, which were that, (i) whether the ED would have the power to arrest under section 19 of PMLA once a Special Court takes cognizance of a complaint under section 44(1)(b) of the PMLA, and (ii) the applicability of the twin conditions of bail under section 45 of the PMLA when the accused has furnished a bond under section 88 of the CrPC.
The SC held that once the Special Court takes cognizance of a complaint under the PMLA, the ED loses its authority to arrest under section 19. The Court clarified that issuing a warrant at the first instance is typically unnecessary unless the accused has been uncooperative. The SC determined that bonds furnished under section 88 of the CrPC do not amount to bail under section 45 of the PMLA. Such bonds merely ensure the accused’s appearance in court. Consequently, the stringent twin conditions of bail under section 45 are not applicable in this context.
The decision underscores the balance of judicial powers and aims to prevent potential abuses by the ED while promoting the due process of law. The SC has effectively curtailed the ED’s discretion to arrest and detain the accused without sufficient grounds and judicial oversight.