Arrest of Senthil Balaji and the Constitutional question

The arrest of Senthil Balaji, Minister for Electricity, Prohibition and Excise, in the MK Stalin government, by the Enforcement Directorate (ED) has raised several basic legal and political issues. The arrest was preceded by a day-long search at the official chambers of the minister in the state secretariat without any prior notice. Chief Minister Stalin termed it as an “assault on the federal principles of the Indian Constitution”.

Can ED enter the official premises of the state secretariat without any authorisation from the competent state authorities without prior notice or permission? Searches were also conducted at the official residences of the minister, both in Chennai and Karur. Till late in the day, there was no clear indication about the nature of action initiated by the ED. There was allegedly almost an 18-hour interrogation by the ED and, by evening, it culminated in his arrest.

Watch | Tamil Nadu: Senthil Balaji’s arrest amid high drama and action

It is still not clear under what law the arrest has been made by the ED. The existing law states that the ED is entitled not to disclose these basic legal information in the immediate context. The usual legal framework adopted by the ED in all its operations and raids in recent times is based on the Prevention of Money Laundering Act, 2002 (PMLA, 2002).

Unbridled power to ED

This 2002 enactment which came into force in 2005 has been amended several times, starting from 2009 and subsequently in 2012 and 2019. The latest 2019 amendments to PMLA are regarded as too one-sided, providing the ED with unbridled power to take recourse to procedural legal tools that appear to violate the basic Constitutional norms as enshrined in Part III of our Constitution, especially its Articles 14 and 21 that seek to provide basic protection to all in the form of “equality before law and the protection of life and personal liberty”. In other words, all civil and criminal procedural requirements in any investigation should meet the Constitutional standards set in Article 14 and 21. PMLA, obviously, is no exception to this norm.

The increasing application and usage of PMLA by the ED in recent times have raised several questions. Some of the political parties, especially opposition parties, have strongly felt that the ED has been using the PMLA and related legislations in a partisan manner. There were almost 240 petitions challenging the constitutional and procedural validity of the ED actions in various High Courts and before the Supreme Court.

Also read: TN withdraws general consent given to CBI; ‘Stalin scared he’s next,’ taunts Annamalai

The legality of the ED actions and the constitutional validity of its procedural norms were finally and fairly comprehensively considered by the Supreme Court of India in Vijay Madanlal Choudhary and Others v. Union of India and Others (decided on 27 July 2022).

The arrest of the Minister Senthil Balaji must be seen in the context of above Supreme Court verdict. This verdict validated some of the basic procedural tenets of PMLA, thereby allowing the ED to act the way it did in this case. A cursory look at the PMLA, particularly its preamble, provides the basis for this act. As is clear and also, as noted by the Supreme Court in the Vijay Madanlal Choudhary case, this enactment was brought in to meet the emerging global crime on “money laundering”.

Also read: The job-for-cash scam case that brought ED to Senthil Balaji’s door

What is “money laundering”?

The definition of “money laundering” as a criminal activity is susceptible to myriad interpretations. Foremost among them is the introduction of unaccounted money into our economy. It could also include the provisions of Prevention of Corruption Act. Such monetary transactions and trials will follow global criminal networks. These could menacingly include terrorist networks. Therefore, the United Nations in the decade of 1990s started evolving basic norms and principles to ensure cooperation between countries to combat the crime of “money laundering”.

The Indian initiative began with a bill introduced in our Parliament in 1999. The Preamble to the PMLA sufficiently indicates the international nature of the whole issue. Subsequent adoption of a Convention by the United Nations on this topic required India to pass a formal law on the subject as well. All this legal history of the PMLA Act has been noted by the Supreme Court in its decision while examining its constitutional validity in the Vijay Madanlal Choudhary case. Majority of the countries around the world recognized this crime `money laundering’ and introduced their own legislative frameworks. India is also one of them.

More than the substantive legal framework, the biggest worry in the PMLA is that it provides unfettered procedural autonomy to the agencies, such as ED in our country, that seek to investigate and prosecute these crimes. Should these agencies not apply and respect the basic Criminal Procedure Code norms? These simply include such norms as (a) filing of First Information Reports (FIRs); (b) Investigation Procedures; (c) Bail requirements; and (d) onus of proof or the burden of proof. Now the burden of proof lies on the accused not on the prosecutor.  The 2019 amendments modified some of these procedural requirements that now could have far-reaching consequences on the prosecution methods of ED and related agencies.

Also read: What ED custody petition says about case against Senthil Balaji

These changes were validated by the Indian Supreme Court in the above-mentioned Vijay Madanlal Choudhary case as necessary for the proper investigation and prosecution of the case by the ED. There appears to be a mismatch between the application of the basic legal requirements such as the principles of natural justice for a fair hearing, particularly when the agency is arresting a person. Arresting a person shall inevitably result in limiting one’s personal liberty which is a fundamental constitutional right. There is a plethora of cases decided by the Supreme Court in this regard seeking to uphold the personal liberty of every person. The decision of the Supreme Court in the above-mentioned case appears to tilt more towards state action rather than balancing such a right under the PMLA with personal liberty. Of course, this could change in the future.

Working of federal structure

This arrest has also raised the issue of effective working of the federal structure of the Indian Constitution. None other than the Chief Minister Stalin has raised this issue. He also took a decision by late evening to revoke the general consent given to Central Bureau of Investigation (CBI) to operate within Tamil Nadu. This decision by him appears to have arisen as a natural corollary to the unfolding of political events within Tamil Nadu. Beyond Constitutional and legal arguments, there appears to be an apprehension about the working of the central agencies.

For example, the Supreme Court, in the Vijay Madanlal Choudhary case, while considering the publication of the working methods of the ED as enshrined in its Manual (known as ED Manul), merely suggested that the ED should “explore” the possibility of placing it on its website. While other central agencies such as CBI, Income Tax, and others appear to have complied with this suggestion, ED has not done it so far. Considering this, such questions of alleged arbitrary usage and function of agencies in certain political context will eventually give rise to such questions as raised by the Tamil Nadu chief minister.

At some point of time the Supreme Court will have to revisit some of these issues. The definition of economic crimes such as “money laundering” is amenable to multifarious legal interpretations. The instant publicity and noise these events have created will eventually subside. The trial and the subsequent conviction will only decide the efficacy of the work accomplished by the agencies. However, that does not seem to be the goal as of now.

(The writer is a professor at the Centre for International Legal Studies, School of International Studies, Jawaharlal Nehru University, New Delhi)   

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