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In Tarsem Lal v. Directorate of Enforcement, Criminal Appeal No. 2608 of 2024 (2024 INSC 434), the Supreme Court of India delivered a significant ruling clarifying the procedural position under the Prevention of Money Laundering Act, 2002 (PMLA) in relation to custody, arrest powers and the applicability of the stringent bail conditions under Section 45.
The case arose out of complaints filed by the Directorate of Enforcement (ED) under Section 44(1)(b) of the PMLA. The appellants were not arrested during investigation. After cognizance was taken of the offence punishable under Section 4 of the PMLA, the Special Court issued summons under Section 204 of the Code of Criminal Procedure, 1973 (CrPC). When the appellants did not appear before the Special Court as directed, warrants were issued for procuring their presence. Applications for anticipatory bail were rejected by both the Special Court and the High Court, leading to the appeals before the Supreme Court.
The controversy was whether, upon appearance pursuant to such summons, the accused could be treated as being in custody and therefore required to seek bail subject to the twin conditions under Section 45 of the PMLA.
The Supreme Court categorically held that when an accused is not arrested during investigation and appears before the Special Court in pursuance of summons issued after cognizance, such appearance does not amount to custody. The Court observed in clear terms that when an accused appears pursuant to summons, it is not necessary for him to seek bail, and he cannot be treated as being in deemed custody of the Court. As a natural corollary, the rigorous twin conditions under Section 45 of the PMLA are not attracted in such a situation. The judgment thus draws a vital distinction between arrest and voluntary appearance, holding that the bail regime under Section 45 is triggered in cases of arrest and not where the accused submits to the jurisdiction of the Court on summons.
The Court further clarified the limits of the Enforcement Directorate's powers after cognizance has been taken. It held that once cognizance of the offence under Section 4 of the PMLA is taken on a complaint filed under Section 44(1)(b), the ED and its officers are powerless to exercise power under Section 19 to arrest a person shown as an accused in the complaint.
If the ED seeks custodial interrogation of an accused who has appeared pursuant to summons for conducting further investigation in the same offence, it must apply to the Special Court for custody. The power of arrest cannot be exercised unilaterally at that stage.
The Supreme Court also explained that when an accused appears pursuant to summons and is not in custody, the Special Court may require the accused to furnish bonds under Section 88 of the CrPC to secure attendance. Such a direction to furnish bond cannot be equated with a requirement to apply for bail.
The ruling is a significant pronouncement on personal liberty in PMLA proceedings. It harmonises the provisions of the PMLA with the CrPC and makes it clear that the stringent bail conditions cannot be invoked mechanically in the absence of arrest. The decision reinforces that custody is a matter of substance and not a legal fiction, and that compliance with summons cannot automatically trigger the rigours of Section 45.
By
Rajat Jain, Advocate
Vaish Associates Advocates
Email id:rajatjain@vaishlaw.com
Mobile No. 9953887311
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