Pointing to the misuse and abuse of the anti-money laundering law, the Supreme Court on Thursday was told that an accused under the Prevention of Money Laundering Act upon being produced before a magistrate can’t be mandatory remanded to custody of the Enforcement Directorate (ED) upto 15 days and can only be sent to judicial custody.

Stating that on being produced before a magistrate court by the Enforcement Directorate, accused can’t be remanded to its (ED) custody, senior advocate Kapil Sibal told a bench of Justice A.S. Bopanna and Justice M.M. Sundresh that there has been, “Enough use and abuse of this (PMLA).”

“Enough this law has been used and abused” and the government have been toppled in the name of …”

Solicitor General Tushar Mehta appearing for the ED asked Sibal to “confine to the facts and not attribute motives and politicise it.”

Getting back, Sibal said that the government have been toppled and asked the Solicitor General to name the people who have been arrested under the Prevention of Money Laundering Act thereby suggesting that it was only the leaders of the opposition parties being targeted under the anti-money laundering law.

Sibal said this in the course of the hearing of two petitions by Tamil Nadu Minister V. Senthil Balaji and other by his wife Megala challenging the Madras High Court order upholding his arrest in ‘cash for job’ scam and asking the two-judge bench to determine the date on which the ED could take custody of Senthil Balaji, who had undergone coronary bypass surgery, and to shift him from the hospital.

Appearing for both Senthil and his wife Megala, Sibal underlined that the ED officers were not police officers incharge of a police station and thus they were not vested with the powers that are available to police officer incharge of a police station under the code of criminal Procedure.

In posers from the bench whether custody of a person accused of allegedly being involved in money laundering cannot be given to ED for further investigation, Sibal said that an accused under the penal offences is first attested followed by investigation, under the PMLA a suspect is first investigated and on the satisfaction that he is involved in money laundering, he is arrested.

Sibal said that after being arrested, when a person accused of offences under the PMLA is produced before a magistrate, he can only be sent to judicial custody and not remanded to the custody of the ED.

To buttress his point, Sibal in support of his contentions cited a number of earlier top court judgments including one pronounced by a three-judge bench on July 27, 2022, that had upheld the amended stringent provisions of Prevention of Money Laundering Act – relating to denial of ECIR by the Directorate of Enforcement while arresting an accused and presumption of innocence of an accused till convicted.

He took the court through the provisions of the Foreign Exchange Regulation Act, (now replaced by Foreign Exchange Management Act), the Customs Act 1962, the Prevention of Money Laundering Act and the powers of police under the Code of Criminal Procedure to drive home the point that ED officers are not police officer incharge of a police station and were not vested with the power, even under the provisions of PMLA, to get the custody of an accused for 15 days, as they are seeking in the case of Senthil Balaji.

The top court is hearing a challenge to the Madras High Cout decision upholding the arrest of Senthil Balaji and subsequently magistrate court remanding him to judicial custody.

The High Court order upholding the arrest of the minister, and also holding valid his subsequent remand in judicial custody came following the decision of a third judge, Justice C.V. Karthikeyan holding that the accused had no right to frustrate the investigation.

The matter travelled to Justice C.K. Karthikeyan – the third judge – following a split verdict on July 4, by a division bench of Madras High Court comprising Justice Nisha Banu and Justice D. Bharatha.

Justice Nisha Banu held that the Habeas Corpus plea filed (by Balaji’s wife Megala) for Senthil Balaji’s release is maintainable and should be allowed. Justice Banu further said ED is not entitled to get the custody of Senthil Balaji.

However, Justice D. Bharatha Chakravarthy said the habeas corpus plea was not maintainable after the remand order had been passed. He said that no case was made out to show that Balaji’s remand was illegal. Justice Chakaravarthy has also said that that period of Balaji’s stay at the hospital, should be excluded from the ED’s custody period.

Senthil Balaji was arrested by the Directorate of Enforcement on June 14 in an alleged ‘cash for job’ scam that took place when he was the transport minister (2011-2015) in the government of late Chief Minister J. Jayalalithaa.

The ED has arrested Senthil Balaji in connection with a money laundering case rooted in alleged ‘cash for job’ scam that took place when Senthil Balaji was Transport minister in AIADMK government who later crossed over to ruling DMK in 2018.

The High court had permitted Senthil Balaji to be shifted to a private hospital for a heart surgery and restricted his interrogation in the hospital. Senthil Balaji was operated for the blockages of three coronary arteries at a local private hospital in Chennai.

Sibal will continue his arguments on next Tuesday (August 1).