Do the ED's Powers Under PMLA Overreach Legal Boundaries?

Chennai, June 17 (NationPress) The Madras High Court delivered a robust oral remark on Tuesday, challenging the authority wielded by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA), 2002. The court highlighted that while the legislation is developing, "it is actually the ED officials who are evolving daily by broadening their powers."

Justice M.S. Ramesh, leading a division bench alongside Justice V. Lakshminarayanan, made this observation during the hearing of several writ petitions filed by film producer Akash Baskaran and his associate Vikram Ravindran, who are contesting ED actions in relation to a money laundering probe tied to alleged irregularities within the Tamil Nadu State Marketing Corporation (TASMAC).

The judges particularly criticized the ED’s attempt to "seal"—or effectively limit access to—two locations, including a commercial office in Semmenchery and a rented apartment in Poes Garden, without sufficient legal justification.

Ravindran reported that both sites were locked when ED officials sought to conduct a search on May 16, and in his absence, they affixed notices on the doors, allegedly barring entry until further directives from the agency.

Representing the ED, Special Public Prosecutor (SPP) N. Ramesh disputed the claim that the locations were sealed, clarifying that the officers had merely placed notices requesting the petitioners' cooperation.

However, the court pointed out that the wording in the notices effectively prohibited entry without the ED's consent.

Justice Lakshminarayanan questioned the legal validity of such notices, asserting: "Even if the terms in the notice do not equate to sealing, what gives you the authority to stop an individual from entering their home or office?"

He remarked that no rational person would risk disregarding such a notice out of concern for possible penalties.

The ED’s advocate contended that Section 17 of the PMLA grants the agency the right to conduct search and seizure operations and even force entry if required. "However, we chose not to take the extreme measure of breaking locks, hence the notices were placed," the SPP noted, adding that the notices could be rescinded immediately if permitted by the court.

Nonetheless, the bench observed that the ED's actions lacked clarity regarding their legal foundation and remarked on the psychological impact such notices could inflict on individuals who are not formally accused.

The court was also made aware that neither of the petitioners had been designated as accused in the TASMAC-associated money laundering case thus far. The ED had only received credible information indicating that potentially incriminating evidence might be in their possession.

Ramesh reiterated that the petitioners should assist with the investigation and that the agency was acting solely based on intelligence information.

In response, the bench granted the ED until Wednesday to present pertinent documents supporting its actions.

The hearing will resume on Wednesday, as the court deliberates whether the agency has exceeded its statutory boundaries under the PMLA.