Undermining Autonomy: On Judicial Endorsement of a Tenure Extension System

July 13, 2023

GS Paper II Indian Polity and Governance

Context:

Recently, the Supreme Court has asked the Enforcement Directorate (ED) Director to resign four months before his third extension ends in November.

Image Source: Hindustan Times

Background:

2018: Mr. SK Mishra is appointed as the Enforcement Directorate (ED) Director for a two-year term.
2020: The original appointment of the ED Director is retrospectively amended to extend the tenure to three years.
2021: The Supreme Court (SC) directs the government to stop granting extensions to the ED Director.
2021: Amendments are enacted to the Central Vigilance Commission Act and the Delhi Special Police Establishment Act.
- These amendments allow a maximum of three annual extensions (totaling a term of five years) to the Directors of the Central Bureau of Investigation (CBI) and ED, based on the recommendation of High-Level Committees.
- Previously: CBI and ED chiefs had fixed tenures of two years.

The High-Level Committees for Extensions of Service:

For the ED Director: The panel consisted of a five-member committee comprising the Central Vigilance Commissioner and Vigilance Commissioners.
- They were responsible for recommending whether an ED Director should receive an extension in service.
- The committees were required to provide written reasons supporting their recommendations.
For the CBI Director: The High-Level Committee for the CBI Director included the Prime Minister, Opposition Leader, and the Chief Justice of India.
- This committee was responsible for recommending whether a CBI Director should be granted an extension in service.
- Like the ED Director committee, this committee also had to provide written reasons to support their recommendations.

Recent Supreme Court Ruling:

On Tenure Extension: The Supreme Court declared the consecutive service extensions granted to ED Director in 2021 and 2022 as illegal.
- As a result, the court ordered the present ED Chief to resign by July 31, facilitating a smooth transition to a new chief.
On 2021 Amendments: Regarding the amendments made to the Central Vigilance Commission Act, 2003, and the Delhi Special Police Establishment Act, 1946, the Supreme Court upheld their constitutionality.

Conclusion:

At a time when there is a cloud of suspicion over the misuse of government agencies against political opponents, the Court’s endorsement of a tenure extension system designed to undermine their independence is not conducive to the rule of law.

About ED:

The Directorate of Enforcement is a multi-disciplinary organization mandated with investigation of offence of money laundering and violations of foreign exchange laws.

Evolution of ED:

1956: The Enforcement Unit was founded within the Department of Economic Affairs of the Ministry of Finance.
1957: The Enforcement Unit was renamed as the Enforcement Directorate.
1960: The administrative control of the Enforcement Directorate was transferred to the Department of Revenue.
Post-Liberalization Era: The nature of the Enforcement Directorate changed as India underwent economic liberalization.
- FERA 1973 was repealed, and the Foreign Exchange Management Act, 1999 (FEMA), came into operation on June 1, 2000.

The Present Mandate of ED: Presently, the ED deals with four laws

The Prevention of Money Laundering Act, 2002 (PMLA)
The Foreign Exchange Management Act, 1999 (FEMA)
The Fugitive Economic Offenders Act, 2018 (FEOA)
Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA)

Powers of ED:

Admissibility of Statements:
- Statements recorded before an ED investigation officer (IO) are admissible as evidence in court under the Prevention of Money Laundering Act (PMLA).
Non-Bailable Offences:
- All offences under the PMLA, which the ED deals with, are classified as non-bailable.
Custody Procedures: Individuals in ED custody are sent to the nearest police station’s lock-up, irrespective of its status.
Challenges in Property Attachment:
- Once the ED attaches properties belonging to an accused, it can be a lengthy and challenging process to retrieve those assets.
Burden of Proof on the Accused:
- Unlike regular criminal law, under the PMLA, the burden of proof lies with the accused rather than the prosecutor.
- Accused individuals are required to furnish proof in their defense, making it harder to deal with the ED’s investigations.