Mumbai: In the last week of July, the Supreme Court upheld the constitutionality of the Prevention of Money Laundering Act (PMLA), 2002, relating to the overarching powers of the Enforcement Directorate (ED).
In doing so, it dismissed more than 200 petitions challenging the constitutionality of sections of the PMLA and the ED’s power to investigate crimes under the legislation.
The judgment came at a time when the Narendra Modi government was being accused of misusing the ED and the PMLA against critics and political opponents.
The ED has indeed been in the news lately for a number of high-profile cases – almost all involving opposition leaders, including the Gandhis of the Congress. The agency’s turn in the spotlight comes as the Central Bureau of Investigation (CBI), once the country’s premier investigative agency, retreats into the background.
Analysis by The Free Press Journal has revealed that in the past eight years, action by the ED has jumped by a factor of six and the agency has now overtaken the CBI in registration and prosecution of big cases.
Between 2004 and 2014, when the Congress-led United Progressive Alliance was in government, the ED carried out just 112 raids. But between 2014 and 2022, under the BJP-led National Democratic Alliance, there have been more than 3,000 raids.
In the past decade, the ED has registered 24,893 cases under the Foreign Exchange Management Act (FEMA) and 3,985 cases of m oney laundering.
In 2014-15 it registered 915 cases under FEMA. In 2018-19, 2,659 cases were filed; the figure rose to 5,313 in 2021-22.
There were 178 cases registered under the PMLA in 2014-15, which increased to 1,180 in 2021-22.
Overall, where 1,093 cases were registered in 2014-15, the number went up to 5,493 in 2021-22.
In comparison, the CBI has lodged over 2,300 cases against more than 3,000 civil servants in the past five years. The agency registered 632 cases in 2017, 460 in 2018, 396 in 2019, 425 in 2020, and 457 cases in 2021.
The most prominent case that the agency has prosecuted in recent years is last week’s raids on Delhi’s Deputy Chief Minister Manish Sisodia and the state’s civil servants in connection with an alleged excise scam.
The ED’s origins go back to May 1, 1956, when an Enforcement Unit was formed to handle violations of exchange control laws under the Foreign Exchange Regulation Act, 1947.
In 1957, this unit was renamed Enforcement Directorate. In 2002, the NDA government enacted the PMLA, and the Act was amended by the UPA government in 2005, 2009 and 2012.
The 2012 amendment expanded the list of offences to include concealment of money, acquisition and criminal use of money. The Prevention of Corruption Act, included in Part A of the Schedule to the Act, empowered the ED to take action against political scams.
Withdrawal of general consent
The CBI is governed by the Delhi Special Police Establishment (DSPE) Act, 1946, and must obtain the consent of the state government concerned before investigating a crime in that state.
Section 6 of the DSPE Act (‘Consent of State Government to exercise of powers and jurisdiction’) says: “Nothing contained in section 5 (titled ‘Extension of powers and jurisdiction of special police establishment to other areas’) shall be deemed to enable any member of the Delhi Special Police Establishment to exercise powers and jurisdiction in any area in a State, not being a Union territory or railway area, without the consent of the Government of that State."
Traditionally, almost all states have given the CBI general consent. However, from 2015 on, nine states have withdrawn consent: Maharashtra, Punjab, Rajasthan, West Bengal, Jharkhand, Chhattisgarh, Kerala, Meghalaya and Mizoram.
All but the last two were ruled by opposition parties at the time of withdrawal of consent. In Maharashtra, the new government led by rebel Shiv Sena leader Eknath Shinde has restored the CBI’s permission. The ban on CBI entry in opposition-ruled states forced the Centre to rely more on the ED.
In the last three years, the directorate’s size and scope have increased. It has more officers and bigger budgets. The newly built Pravartan Bhawan on APJ Abdul Kalam Road in New Delhi has many more domain experts sitting and decoding data and files.
The directorate is led by Sanjay Kumar Mishra, an Indian Revenue Service officer who is a well-known authority on international finance and taxation. The opening of local offices has led to a substantial increase in local inputs.