SC Says ED is Violating Country's Federal Structure But the Same Court Had Once Emboldened the Agency

New Delhi: “The ED is crossing all limits…you are totally violating the federal structure of the country.”

In the past week (May 23), these utterances of the Supreme Court bench led by Chief Justice of India B.R. Gavai as he rapped the Enforcement Directorate (ED) in the TASMAC (Tamil Nadu State Marketing Corporation) ‘liquor scam’ case, had hit the headlines across a cross-section of media.

The words were used by the country’s apex court to question the premier central investigating agency’s actions in an Opposition-ruled state. An occasion to note as the top court had put a stay on the probe by the ED at a time when it is being seen widely as a tool increasingly used by the Narendra Modi government to tame Opposition parties and their leaders.

Much as these words indicate the sorry state of affairs at the premier investigating agency that functions under the department of revenue in the Ministry of Finance, the occasion must also be to reflect on a near past – when the apex court had itself endorsed the agency’s reach and grip on cases under a law ED draws its powers from, the Prevention of Money laundering Act (PMLA).

SC upholding the constitutional validity of PMLA, then agreeing to review its judgment

On July 27, 2022, a judgement pronounced by a bench of Justices A.M. Khanwilkar, Dinesh Maheshwari and C.T. Ravikumar did uphold the extensive powers given by the statute to the ED. The genie was allowed to be out of the bottle in full force?

A bunch of as many as 241 petitions had then sought a judicial view on not only various aspects of PMLA, including the reverse burden cast on accused to prove innocence, but had also questioned the wide powers given to ED under the amended law for search, seizure and attachment  of properties and allowing statements made to the ED as evidence in court.

In the 545 page judgement upholding the constitutional validity of the Act, the SC, among other things, had also said that its section 19 which deals with the power to arrest, doesn’t suffer from the “vice of arbitrariness”.

Importantly, the court had also said that supplying a copy of the Enforcement Case Information Report (ECIR) in every case to the person concerned is not mandatory. Though ED’s ECIR is the equivalent of an FIR by police against a person which as a legal right must be made available to the accused, the SC had said it need not give a copy of ECIR to the accused under PMLA, and it is enough to disclose the grounds on which the person was arrested at the time of the arrest.

However, on August 24, 2022, the court agreed to hear a review petition on its own judgement.

On October 19, 2023, when a special Supreme Court bench headed by Justice Sanjay Kishan Kaul had said it would examine whether its 2022 judgement upholding ED’s powers to arrest and attach property involved in money laundering under PMLA required any reconsideration, solicitor general Tushar Mehta, representing the central government, had vociferously countered, saying, an “academic exercise should not be carried out without there being substance because someone approaches the court and wants the issue decided by a three-judge bench to be revisited. It should not be an occasion to revisit.” Clearly, the Modi government wanted the status quo on ED to continue.

In due course though, a three-judge bench comprising Justices Surya Kant, Ujjal Bhuyan and C.T. Ravikumar was constituted to take a relook at ED’s extensive powers to arrest, raid and seize property.

This May 4, 2025, the court had reconstituted the bench including Justice N. Koteshwar Singh as Justice Ravikumar had retired this January. Sitting for the first time this May 7, the bench had directed both the petitioners and the Solicitor General to redraft the issues to be decided in the review petitions.

Court had flagged the ED’s “pattern” of making allegations without any material evidence

Significantly, just two days before it, on May 5, 2025, hearing another case, a two-judge bench of the top court had flagged the ED’s “pattern” of making allegations without any material evidence to support them. The bench comprising Justices Abhay S. Oka and Ujjal Bhuyan was hearing another ‘liquor scam’ case from Chhattisgarh, when it was ruled by the Opposition Congress.

That remark was in tandem with another rap on ED on August 7, 2024 by another three-judge bench of the SC hearing a bail plea of a Chhattisgarh-based businessman accused of money-laundering.

“You need to concentrate on the quality of prosecution and evidence. All the cases where you are satisfied that a prima facie case is made out, you need to establish those cases in the court,” the bench had told additional solicitor general S. V. Raju appearing for the ED.

This, when the central government had told the Parliament just a day before (on August 6, 2024) that a total of 5,297 cases had been registered under PMLA between 2014 and 2024 (during Modi’s terms as prime minister). The data had showed though, only 40 of those cases had seen convictions and three acquitted.

In November 2024, the SC had also expressed concern at a 73-year-old former minister from West Bengal belonging to an Opposition party (Partha Chatterjee of Trinamool Congress) being kept in custody for two and a half years without trial in a money laundering case and had flagged the low conviction rate in cases chased by the ED.

'Keep quiet, or ED may arrive at your home'

Barely a year before the data on ED was submitted to Parliament by minister of home (state) Nityanand Rai, the Bharatiya Janata Party (BJP)’s senior leader Meenakshi Lekhi had famously warned the Lok Opposition members in Lok Sabha saying, “Keep quiet, or ED may arrive at your home.”

Lekhi’s open warning to Opposition members inside the temple of democracy sits in league with another set of data collated by the Indian Express back in September 2022. Hinged on court records, ED’s statements and reports of politicians booked, arrested, raided or questioned by the agency, the report had held up that since 2014 when Modi first came to power, “there had been a four-fold jump in ED cases against politicians in comparison to the UPA regime earlier.”

Looking at this trajectory since 2014, and the Supreme Court’s own critical remarks on the ED from time to time in the recent years, perhaps it was coming to a point when in the court, the CJI had to say, “The ED is crossing all limits”?

The next date of hearing of the three-judge bench taking a re-look at the ED’s powers under PMLA is set for August 7.

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