Established in the year 1956 with its headquarters at New Delhi, the Directorate of Enforcement (ED) is considered to be one of the premier investigating agencies in the country, tasked with the enforcement of the Foreign Exchange Management Act, 1999 (FEMA) and more recently, with certain provisions under the Prevention of Money Laundering Act (PMLA), 2002.
As the number of cases under the PMLA have gone on increasing, their investigation and prosecution have come to occupy centre stage for ED, and with a major chunk of the cases dealing with high profile personalities or related companies, ED has naturally been pushed to occupy the spotlight in the country.
For instance, a status report filed by the centre before the Supreme Court on the specific question of number of cases pending against Members of Parliament (MPs) and Members of Legislative Assembly (MLAs) under the PMLA shows that while atleast 51 cases arising out of PMLA are pending against Members of Parliament, 71 are pending against Members of Legislative Assembly alone.
Further, according to a report by the ED itself, while as on Mar 31, 2012, 1437 cases were pending disposal with the ED, in a period of 3 years, until Mar 31, 2015, this number was reduced to 1326 only. The number of new cases registered during this 3 year period were about 608, whereas those disposed were 111. In relation to these cases, between Jul 1, 2005 till Mar 31, 2015, the ED arrested 52 persons, according to the report.
Drawing the court's attention to ED'S report amongst others filed by the Central Bureau of Investigation (CBI) and the National Investigation Agency (NIA) reports on the matter filed before the Supreme Court (SC), Sr. Adv. Vinay Hansaria, Amicus Curae in the case remarked, "I want to mention that the reports are shocking."
Considering the figures on pendency of cases, in general, and with respect to those pending against MPs and MLAs, in particular, the ED has been pulled up by the Supreme Court to give explanation on the latter.
We attempt a 360-degree view on the situation on ground with respect to the general pendency of ED cases, to understand two things:
1. Where does this buck stop?
2. Who all are engaged in its to and fro, back and forth?
Situation with Agencies Same as Courts – Short Staffed, Overworked
Taking into account the report filed by the different premier national investigation agencies, alongwith the ED before the Supreme Court on pendency of cases against MPs and MLAs, a full bench of Chief Justice NV Ramana, Justice DY Chandrachud and Justice Surya Kant observed, "We dont want to say anything against these agencies because this will demoralise them, we are aware of the situation, same lies with the courts."
"Like us, investigating agencies are also suffering on infrastructure, manpower, staff issues, etc. Mr. Mehta you look into the suggestions," Justice Ramana had added.
In this regard, figures from the ED website reveal that while the Enforcement Directorate's sanctioned staff strength was 2064, its working strength as on Mar 31, 2015 was 682 only.
“Short of judges, short on staff also – initially there weren’t as many cases too, but over the years the number of cases has just gone on increasing. I’m sure the government must be looking into it,” says Central Govt Standing Counsel Amit Mahajan.
Mahajan adds, “What is to be done then? I’ve worked with these officers, some of them work day in and day out. They are complicated cases."
“Only Attaching Properties Cannot Do”
It is a basic principle of natural law that one cannot be allowed to reap benefits of their own wrong - by extension of this principle to cases handled by the ED where assets worth thousands of crores are at stake (for instance in the recent Sterling Biotech Ltd case, the ED attached assets worth nearly Rs. 14,000 crores), one would naturally arrive at the conclusion that those in possession of such assets not be allowed to reap their benefits.
Concurring, Mahajan opined, “Attaching properties is one of the major aspects, the accused cannot be allowed to enjoy the property."
However, the judiciary as the protector of civil liberties, showed its anguish over the reports and said it was sorry to observe that, "...that the report is very inconclusive, there are matters of 100s of crores, chargesheet has not been filed for 10s of years, only attaching property cannot do."
One of the major causes of delay in investigation and subsequently the prosecution process is said to be the involvement of parties, locations and transactions abroad. As opposed to an investigation for offences under the Indian Penal Code, Mahajan shared that a major variable in PMLA investigations is the presence of the foreign element.
Each jurisdiction has its own laws and procedures even for something as basic as providing information sought by the ED.
Mahajan shares, "PMLA investigations are inherently very tedious because the agency is tracing those money trails in which a lot of money has gone abroad. It’s not dependent just on our courts and the investigation agency – there has to be international coordination. I don’t know what our position is so far as international coordination is concerned, how seriously are we taken? They take their own time. Of course, they too have their own procedures to follow."
Solicitor General Tushar Mehta contended the same before the Supreme Court, saying, "In ED, what happens is that the letter goes to other countries, several countries do not respond and some who reply, they reply late... we are not justifying delay..."
Covid-19 Related Delays
Mahajan also shared that Covid-19 has hampered physical functioning of courts to a large extent, due to which the conduct of trials in the last 1.5 years has suffered.
He said, “Last 1.5 years due to Covid-19 not much work has happened, trial has to happen for conviction to follow, and I don’t think trials have proceeded. So if there is pendency from the last 7-8 years you can easily take out the last 1.5-2 years. Nobody knows how much longer this will continue, and trials have to happen in physical court, cant be done virtually. Priority is health, no one is going to risk their lives for trials.”
Complicated Nature of Offence
Highlighting the often complicated nature of transactions involved in PMLA offences where money is not just passing several hands but multiple layers of company-entities, Mahajan said, “It’s not so simple, not like an IPC investigation – we’re dealing with money related offences. People have become very smart too. Even in India, for laundering, people resorting to multiple layering of companies. Jurisdictional issues also come up in such cases, where the company may not be in India at all.”
Another source shared that with ED being a "central" agency, sometimes it has been difficult to get cooperation of the local police and authorities - there are certain states in the country where ED doesn’t get required coordination, so delay is inevitable.
Highlighting how sometimes the same case gets listed at different courts, and has different legislations involved in it, a litigious chain is formed which slows down the adjudicatory process further, Adv. Raghav Sethi, Associate at Luthra & Luthra (in his personal capacity) states, “Various courts have jurisdiction & litigious chain keeps building, with the accused often exercising their rights as well.”
Does the buck stop at ED?
Perhaps, ultimately yes, however, the criminal justice system is more about the process than the result – which is why it is said that in the Indian criminal justice system the process itself becomes the punishment. Resultantly, the buck reaching ED to investigate on information collected is only one part of it, but the victory in the next part of the lap depends on the courts as well. Further, multiple players seem to be involved in the entire process at different stages - some of whom the agency may have little to no control over.
Successful prosecution in ED cases therefore can only be a result of coordinated effort at various levels, similarly, failure of the prosecution is not and cannot be seen as a failure of ED, rather a systemic failure.
Mahajan says in this regard, “Finding a loophole in the process is not difficult, so everything is challenged. On 20 trials, there will be 200 petitions pending before the High Court. Courts should realize, it’s not a one-way street – not just one agency because of whom delay is happening. This is not a fault, I would say, because it is their right to challenge such issues. Then, everything ultimately comes down to the strength of judges. In High Courts even petitions with minor issues take atleast a year to decide, and if you consider the CrPC, if one accused files 40 petitions in the High Court challenging procedural aspects, that itself will take 10 years. Even the High Court can’t be blamed. If they have 100 cases, they can’t give priority to one over the other."