Be transparent and fair in your operations; avoid being vindictive: SC informs ED
The bench was hearing a petition filed in an alleged money laundering case by the arrested directors of real estate group M3M.
The Supreme Court directed the Enforcement Directorate (ED) on Tuesday to uphold strict standards of probity and fairness in its operations and to avoid being vindictive.
Hearing a petition filed by the arrested directors of real estate group M3M in an alleged money laundering case, a bench of justices AS Bopanna and Sanjay Kumar noted that the two directors Pankaj and Basant Bansal were summoned for questioning in an alleged money laundering case on June 14, and the duo were arrested in another case registered by the ED on the same day.
The Bansals claimed that their arrest under Section 19 of the Prevention of Money Laundering Act (PMLA) was illegal and challenged the order of the Punjab and Haryana high court, which refused to vacate their detention.
The top court ordered their immediate release, saying the facts of the case make for interesting reading because the ED officer orally read out the grounds of arrest to the accused without providing them with a written copy of the grounds for their arrest.
The court stated, “It speaks volumes about the ED and reflects poorly on their style of functioning, especially since the agency is charged with preserving the financial security of the country.”
The bench stated, “The ED has to be transparent, above board, conform to pristine standards of fairness and probity, and not be vindictive in its stand.”
The Court also noted the absence of any consistent or uniform practice by the ED in providing accused with grounds for arrest.
The bench stated, “We hold that it will be necessary for a copy of the grounds of arrest to be furnished to the accused at the time of arrest.”
According to the Court, such a right is a constitutional right under Article 22(1) because it allows the accused to seek legal counsel based on written grounds for arrest.
Furthermore, the bench stated that in the absence of written grounds for arrest, it will come down to the ED’s word against the accused’s, as it did in the current case.
The arrest of the Bansals was overturned by the Court, which stated that “ED’s investigating officer merely read out the grounds of arrest.” This violates Article 22(1) of the Constitution and Section 19(1) of the PMLA. The ED’s covert conduct in prosecuting the accused does not inspire satisfaction because it reeks of arbitrariness.”
The Bansals are also accused of bribing a trial court judge (who has since been suspended) in order to obtain favorable orders.
The ED had accused them of diverting more than 400 crore through several shell companies.
Further investigation revealed that the M3M and another real estate firm, Ireo Group, attempted to sway trial court proceedings in ED cases against them by “indirectly” bribing special judge Sudhir Parmar.
Parmar’s service was terminated on April 27.
The ED had justified its action by claiming that the charges were serious and that the accused were refusing to cooperate with the investigation.
Bansals’ petition stated that the FIR (first information report) did not name Pankaj or Basant because it was filed against Roop Bansal, another director at the firm.
When the case was last heard in July, the petitioners argued that the vast powers granted to ED under the money laundering law are leading to arbitrary arrests, and that unless ED is reined in, citizens will face severe consequences.
Their argument was taken into account by the Supreme Court in its decision, which stated that Section 167 of the Code of Criminal Procedure (CrPC), which lays out the procedure for seeking custody following arrest, must be followed once an arrest is made under Section 19 of the PMLA.
The first ED case against the directors of the M3M group was filed in 2021, and Roop Bansal was arrested in June 2023, while the remaining two directors, Pankaj and Basant, were granted anticipatory bail.
The current arrest was made in a subsequent ED case filed earlier this year, in which the duo was arrested despite not being named in the ED complaint.