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Kinds of Cases handled by the ED

Shambhavi Suyesha

| Updated: Apr 20, 2022 | Category: FEMA, PMLA

Kinds of Cases handled by the ED

The Enforcement Directorate (ED) was established in the year 1956, with its headquarters in New Delhi. It works under Foreign Exchange Management Act (FEMA), 1999 and under some of the provisions of the Prevention of Money Laundering Act. It investigates and prosecutes the cases under the Prevention of Money Laundering Act. There are different kinds of cases handled by the ED.

The Department of Revenue has administrative control over the Enforcement Directorate for the operational purpose, whereas its legislation and amendments are under the control of the Department of Economic Affairs. 

The head of ED is a director and headquarter in New Delhi, and it has five regional offices, Mumbai, Chennai, Chandigarh, Kolkata and Delhi, which are headed by Special directors of Enforcement. In Ahmedabad, Bangalore, Chennai, Chandigarh, Mumbai, Kochi, Delhi, Panaji, Guwahati, Patna, Hyderabad, Jaipur, Jalandhar, Lucknow and Srinagar, it has a zonal office with Joint Director as head and sub-zonal offices with deputy director as head at Bhubaneswar, Indore, Nagpur, Madurai, Kozhikode, Ranchi, Dehradun, Allahabad, Raipur, Surat, Shimla, Jammu and Vishakhapatnam. 

The Enforcement Directorate has extensive powers given under the Prevention of Money Laundering Act[1] and Foreign Exchange Management Act, as different kinds of cases handled by the ED.

Powers of the Enforcement Directorate

The main powers of the ED defined under FEMA and PMLA are:

Inspection or raid

It can conduct an inspection/raid at any place in India with the search memo issued by investigating officer as per the provisions of the Criminal Procedure Code, and even if such an investigation or raid continues till tine, no one will question it. However, if the place inspected or raided has a woman, then it cannot be carried out till night, and it should be conducted during the day only, but it can continue till night if the investigating team has a woman officer. The investigation agency, along with the local police, should support the ED during the raid or search. The presence of two dignified individuals at the time of the raid and the presence of an independent witness (as per section 100 of CrPC) is mandatory, but even if the search is conducted without an independent witness, then also it will not be questioned. 

The house owner should sign the search memo for the raid, and if he does not do that, the ED can forcefully start the raid. ED can arrest any person during inspection or raid under Section 19 of the Prevention of Money Laundering Act, and it can also seize or attach the property under section 17 or section 8 of the same Act. And to release such property, one has to take the order of the court.

Summons 

According to section 50 of the Prevention of Money Laundering Act, any person who receives a summon from ED has to appear at the place mentioned, and if he fails to do so, the ED has the power to take action against or can arrest him.

Kinds of cases handled by the ED

There are different kinds of cases handled by the ED, including cases that fall under the above mentioned two Acts. These cases can be:

  • any violation of provisions of the Foreign Exchange Management Act, 
  • offences under the Prevention of Money Laundering Act, 
  • cases under Fugitive Economic Offenders Act, 
  • Preventive detention case of Conversion of Foreign Exchange and Prevention of Smuggling activities, concerning the contravention of FEMA. 

Most of the cases are related to money laundering. 

Foreign Exchange Management Act

FEMA is applicable to the whole of India and also applicable to entities located outside India; FEMA is mainly applicable to:

  • Foreign Exchange
  • Foreign Security
  • Export of any goods and services
  • Import of any goods and Services
  • Securities
  • Banking or any Financial Services
  • Insurance Services
  • Transfer of any kind
  • Citizen of India
  • A non-Resident of India, and
  • Any company owned by an NRI.

The prohibitions given under FEMA are:

  • Remittance out of winning lottery 
  • Remittance from riding or racing
  • Remittance of buying lottery tickets, football pools, banned magazines, etc
  • The commission payment on exports 
  • Remittance of dividend 
  • Payment regarding call back services of telephones
  • Travel to Bhutan or Nepal
  • A transaction with a resident of Bhutan or Nepal
  • Remittance of interest income on funds in non-resident special rupees scheme account

These can also be considered as kinds of cases handled by the ED.

Under FEMA, the assistant director of ED has been given the power to investigate any offence that occurred under it. They have been given the power to investigate, similar to Income-tax authorities under Income Tax Act. The ED has the power to issue a summons for investigation purposes under section 37 of FEMA, and no one can question such summon.

When the Centra Government believes that an act has been done in contravention of the FEMA, the government can seize the value equal to that Act, under 37A of the Act. Contravention of any provision of FEMA would attract a penalty of thrice of the sum involved in the contravention, and if the amount cannot be calculated, then Rs. 1 lakh. In case of continuation of such contravention, the penalty will extend to Rs. 5,000/- each day since the day of one of continuity of contravention. The time period given to make payment of the penalty is 90 days, and if such penalty is not paid within such time period, then the ED will be authorized to recover such penalty and arrears of it.  

Prevention of Money Laundering Act

PMLA deals with the offences of money laundering and is applicable to whoever is directly or indirectly involved or attempts or is part of any activity or process in connection to money laundering. It defines the obligation of banking institutions, financial institutions, and intermediaries to identify their clients and all the transactions and to furnish information on such transactions to the Financial Intelligence Unit of India. It empowers the ED to conduct an investigation in cases of money laundering. It also has an appellate body to deal with appeals against the authority. 

PMLA makes any court a special court to deal with cases under this and asks the central government to sign an agreement with another country’s government to comply with the provisions of PMLA and to investigate or share information related to the offences under PMLA. 

Fugitive Economic Offenders Act

This Act was made under the Prevention of Money Laundering Act. It allows the special courts set under PMLA to confiscate or seize the property of any offender of economic offences who has been charged over 100 crores and trig to avoid judicial proceedings. After confiscation, the property will go into the hands of the central government. This Act prohibits such offenders from filing or defending any case.  

The offences listed under this Act are:

  • Counterfeiting government stamps
  • Counterfeiting coins
  • Cheque dishonour
  • Money laundering
  • Transaction defrauding creditors.

Conversion of Foreign Exchange and Prevention of Smuggling Activities Act

The COFEPSA Act gives power to executives to any person involved in smuggling activities; such detention can be done on apprehensions also. It provides detention in cases like Conversion and augmentation of foreign exchange and Smuggling activities. 

Famous Cases dealt by Enforcement Directorate

There are so many different kinds of cases handled by the ED which have attracted the become famous globally and demanded a large media attraction. Some of them are:

  • INOX Media Case
  • Augusta Westland Chopper deal case (case of Ratul Puri, nephew of CM of MP, Kamal Nath)
  • The case against former CM of Jharkhand, Madhu Koda
  • 2G Scam case
  • Coal Scam
  • Manesar Land Scam
  • Sterling Biotech loan fraud 
  • Sand mining scam
  • Narada Sting case
  • Punjab National Bank Scam
  • Kingfisher Airlines case
  • Saradha chit fund case
  • Rose Valley chit fund case
  • Aircel-Maxis case
  • Aviation scam
  • ICICI Bank-Videocon loan scam case

Conclusion

The Enforcement Directorate (ED) has been working mainly under the FEMA and PMLA. It has been given of investigation similar to the investigating power given to an Income Tax authority as well as the power on investigation provided under the CrPC. There are different kinds of cases handled by the ED, but mostly they are related to money laundering. The ED is empowered to search and seize the property of any offender, and no one can question such investigation, even if it can continue its inspection during the night also, except in the case in which a woman is involved. The summons issued by the ED can also not be questioned by any person. Under the Fugitive Economic Offenders Act, it can confiscate the property of any economic offender. Such property will be vested in Central Government. 

Read Our Article: A Detailed Review of Foreign Exchange Management Act 1999

Shambhavi Suyesha

Shambhavi holds a strong legal background, having completed her BA LLB and LLM. She is particularly interested in legal research and writing, and wishes to utilise her knowledge to create informative legal content. She is an analytical researcher and keeps herself updated about the current legal affairs. She also holds prior experience in publishing articles on assorted legal areas.

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