Supreme Court Grants Interim Bail to Delhi CM Arvind Kejriwal , Refers Key Questions on PMLA Arrests to Larger Bench

Raising the Bar for Enforcement Directorate's Arrest Powers

In a significant ruling, the Supreme Court on Friday granted interim bail to Delhi Chief Minister Arvind Kejriwal in a money laundering case linked to the alleged Delhi Liquor Policy scam. However, the court has referred some crucial questions regarding the Enforcement Directorate's (ED) power to arrest under the Prevention of Money Laundering Act (PMLA) to a larger bench for consideration.

Scrutinizing the ED's Arrest Powers

The two-judge bench of Justices Sanjiv Khanna and Dipankar Datta expressed doubts over the ED's wide interpretation of the provisions in Section 19 of the PMLA, which deals with arrests. The court underlined that the "power to arrest under Section 19(1) is not for the purpose of investigation" and that the power can be exercised only when the material with the designated officer enables them to form an opinion, by recording reasons in writing, that the arrestee is guilty.

"Arrest, after all, cannot be made arbitrarily and on the whims and fancies of the authorities. It is to be made on the basis of the valid 'reasons to believe', meeting the parameters prescribed by the law," the Supreme Court said.

The court emphasized that the exercise of the power to arrest is not exempt from the scrutiny of courts, and the "satisfaction of the conditions must and should be put to judicial scrutiny and examination, if the arrestee specifically challenges their arrest."

Subjective Opinion and Admissible Evidence

The Supreme Court also expressed concerns over the ED's reliance on "material in possession" rather than "admissible evidence" to form the opinion for arrest. The court stated that "guilt can only be established on admissible evidence to be laid before the Court, and cannot be based on inadmissible evidence."

The bench clarified that the "subjectivity of the opinion is not a carte blanche to ignore relevant absolving material without an explanation." It held that in such situations, the officer commits an error in law, which goes to the root of the decision-making process and amounts to "legal malice."

Balancing Arrest Powers and Bail Conditions

The Supreme Court emphasized that since the bar for bail is high under the PMLA, the power to arrest must be "rigid and restrictive." The court underlined that "framing of the charge and putting the accused on trial cannot be equated with the power to arrest" and that "a person may face the charge and trial even when he is on bail."

While granting interim bail to Kejriwal , the court clarified that the larger bench could modify the question of interim bail. The court also noted that Kejriwal has suffered incarceration for more than 90 days and that he is an elected leader, leaving it up to him whether he wants to continue in the role or not.

Implications and the Way Forward

This ruling, even as it leaves the key question on the necessity of arrest to be considered by a larger bench, raises several questions on how the ED has been using its vast powers under the PMLA. The Supreme Court's emphasis on the need for judicial scrutiny of the ED's arrest powers and the requirement of admissible evidence could have far-reaching implications for the agency's future actions.

As the larger bench takes up the crucial questions on the PMLA arrests, the legal community and the public at large will be closely watching the outcome, which could potentially reshape the landscape of white-collar crime investigations and prosecutions in India.