This article is written by Palash Bhatkoti, pursuing Certificate Course in Advanced Criminal Litigation & Trial Advocacy from LawSikho.com.

The first official document recorded by the Enforcement Directorate (ED) before beginning its investigation is the Enforcement Case Information Report which is popularly known as the ECIR. 

Just like the police registers a First Information Report (FIR) before starting investigation in a cognizable offence, similarly the ED registers an ECIR upon receiving information of the commission of the offence of money laundering. 

However, there are some controversies surrounding the validity, nature and character of an ECIR. This article will discuss all these controversies and try to offer a possible solution.

Whether registration of an ECIR is necessary to initiate investigation under PMLA?

Strictly speaking, there is no legal prerequisite of registering an ECIR before beginning investigation under the Prevention of Money Laundering Act (PMLA). This view was endorsed by the honorable Delhi High Court in Virbhadra Singh v. Enforcement directorate and ors, 2017 (3) RCR Criminal 576. 

Unlike the Criminal Procedure Code, 1973 (CrPC), where an FIR is registered by the police under section 154 before initiating investigation into a cognizable offence, there is no legal compulsion under the PMLA to do the same, for the simple reason that, there is no provision under the PMLA which mandates the registration of an ECIR before starting an investigation into the offence of money laundering.

An authorized officer under the PMLA, upon receiving information or having any material in his possession if has “reasons to believe” that an offence under section 3 of the act has been committed may take action in all or any of the following ways:

• Attach a property suspected to be ‘proceeds of crime’ involved in money laundering under section 5
• Conduct a survey under section 16
• Conduct search or seizure under section 17
• Conduct search of persons under section 18
• Arrest a person believed to be involved in money laundering under section 19
• Summon persons for recording evidence under section 50

Thus, it is a matter of established practice within the ED to record an ECIR before initiating investigation into a matter. As per the ED, an ECIR is an internal document which is created just for the purpose of keeping a record of the cases.

Since we have already discussed that there is no legal sanction behind recording an ECIR, therefore, does merely mentioning a person’s name in the ECIR will make him an accused and deprive him of his right against self incrimination? The following para is aimed at dealing with this question.       

Whether a person named in the ECIR is an accused or not?

The High Court of judicature at Hyderabad in Dalmia Cement(Bharat) Limited and ors V. Assistant Director of Enforcement, MANU/AP/0055/2016 cements case held that, an ECIR is not similar to an FIR for the simple reason that, firstly, there is no provision in the law requiring the recording of an ECIR and secondly unlike the FIR, the ECIR is not forwarded to the magistrate under section 157 CrPC. The court further held that, since there is no formal accusation under the PMLA even after the registration of an ECIR, hence the protection of testimonial compulsion would not be available at the stage of answering summons issued under section 50(2) of PMLA. Thus, merely recording a person’s name in the ECIR would not make him an accused unless a formal accusation has been made in the prosecution complaint filed under section 45 PMLA. 

This aforesaid judgment of the honorable high court has ignored the loopholes created by the practice of recording an ECIR. For someone who has even once studied an ECIR would know that it involves all the ingredients of an FIR like recording of preliminary information along with the names of the potential accused. 

To put it simply, the practice of recording an ECIR causes more harm than good, at least as far the accused is concerned. Firstly, the whole idea of recording an ECIR is still a big mystery, as even the ED recognizes it as a mere piece of paper used for recording preliminary information. Further, as a matter of practice, a copy of the ECIR is always supplied with the Relied Upon Documents (RUDs), but the purpose of doing so is of no consequence as such, neither the law recognizes it nor the ED for any material purposes.

Thus, in totality, it is nothing but a process to circumvent the protection against testimonial compulsion. A person served with summons under section 50(2) is bound to adhere to them and on the other hand, he cannot seek refuge in article 20(3) even if his name finds a mention in the ECIR.

The judgment in Dalmia’s case (ibid), adds insult to injury. Not only does it refuse to recognize the legal validity of an ECIR, but goes one step ahead and even deprives the person named in the ECIR of the right against self incrimination.

Assuming that the person named in the ECIR is not an accused. In such an event, can he seek a copy of the ECIR if there is any apprehension of arrest? Let’s find this out through the following question.          

Can an accused/person avail the copy of an ECIR?

Since, there is no legal requirement of registering an ECIR therefore there is no corresponding liability upon the ED to provide the copy of an ECIR to the accused at the threshold stage.

The first time when the accused gets a copy of the ECIR, is at the stage of attachment proceeding before the Adjudicating Authority. The ED supplies all the Relied Upon Documents (RUD) to the accused in which the ECIR is also a part. 

This kind of a situation becomes very cumbersome for the accused, especially at the stage of bail. When an accused is either arrested on an accusation of an offence under PMLA or when an accused is apprehending arrest for the offence of money laundering, formulating grounds of bails and stating prosecution’s allegations against him become very difficult as he is oblivious of the exact allegations leveled against him.

Even, in contemporary criminal law practice, the accused gets the copy of an FIR at the stage of supply of documents. But in  the judgment of Youth Bar association V. Union India, 2016 SC 4136, the Apex court directed that  accused is entitled to get a copy of the FIR at the threshold stage itself and the prosecution need to wait the till the stage of section 207 CrPc to supply the copy of the FIR to the accused. 

Under the PMLA, there is no settled position of law till date, which entitles the accused to obtain a copy of ECIR at the threshold stage. However, as a matter of practice, an accused can obtain a copy of the ECIR at the threshold stage by writing an email or through any other official correspondence to the investigating officer or even with the aid of the court by filing a writ petition. The order passed by the Delhi high court in the case Virbhadra Singh V. Enforcement Directorate and ors, 2016 W.P. (CRL) 3107/2015 is an example of how a person can invoke remedy under article 226 of the constitution to obtain the copy of ECIR. 

The final and the most important issue which is pending determination before the Apex court is the applicability of chapter XII CrPC on PMLA investigations. It is anticipated that, upon final adjudication of this issue, a majority of questions relating to ECIR would be answered. 

Nevertheless, till the aforesaid question is pending in the court, let us attempt to find out its answer.     

Is an ECIR  similar to an FIR?

This is one of the most contentious issues in the PMLA which seeks urgent determination by the Apex court. The ED refuses to supply any document to the accused before the stage of attachment proceedings. As a rule of practice, when the authorized officer passes a provisional attachment order under section 5, it submits a copy of the complaint along with all the RUDs to the Adjudicating Authority as well the accused. In regular circumstances, it is this stage when the accused gets a copy of the ECIR for the first time as it forms the part of RUDs.

Nevertheless, the Delhi High court in the judgment of Virbhadra Singh V. Enforcement Directorate and Ors, 2017 (3) RCR (Criminal) 576, observed that, though there is no legal requirement to register an ECIR before setting the process of investigation in motion, under PMLA even then it is routinely registered and hence it is akin to an FIR. 

Unlike an FIR, which is registered under section 154 CrPC and then forwarded to the magistrate under section 157, there is no procedural requirement to forward an ECIR to the magistrate. In short, there is no monitoring of investigation by the magistrate under the PMLA.

Basically, the main issue entailing this whole controversy is whether, the procedure under chapter XII (sections 154-176) of the CrPC, is applicable to the PMLA or not.

In Ashok Munilal Jain V. Assistant Director, Directorate of Enforcement, (2018) 16 SCC 158, the question of applicability of section 167(2) CrPC in PMLA cases came before the Supreme Court. The Honorable court answered the reference in widest possible sense and held that not only section 167 but the entire chapter XII of CrPc would apply in cases of PMLA investigations.      

However, these are serious contradiction within the PMLA, as the act itself seeks to make the offences cognizable through section 45. The question of applicability of the chapter XII of CrPC upon PMLA is a question which is yet not settled by the judicial pronouncements and is currently pending adjudication before the Apex court in Rajbhushan Omprakash Dixit v. Union of India, (2018) 361 ELT 1007 (Del.).

Wherever the PMLA is silent, it seeks to rely upon the CrPC. Section 65 of the PMLA states that provisions of the CrPC will apply mutatis-mutandis to PMLA proceedings as well. However, if there is any inconsistency between the both of them, then the procedure under PMLA shall prevail.   

The corresponding section 4(2) of the CrPC extends its applicability to the special statutes unless its operation is expressly barred under the special law. 

Further, the sections 45, 46 and 47 of the PMLA specifically make room for the applicability of CrPC.

Also, in Lalita Kumari V. State of UP and Ors, AIR 2014 SC 187, the Apex Court has held that, if the offence is cognizable offence, then the procedure of recording substance of information under section 154, forwarding report under section 157 to the magistrate, procedure of arrest under section 167, maintaining case diary under section 172 CrPC has to be followed and if the offence is non-cognizable then compliance of sections 155, 167(1) and 172 CrPC is must.

The similar view was earlier taken in State of Haryana and Ors V. Bhajan Lal, (1992), AIR 604 and Som Prakash Rekhi V. Union Of India and Anr (1981) SCR (2) 111. 

The Delhi high court in Gurucharan Singh v. Union of India, W.P. (CRL) 307/2016, without answering whether the offence under PMLA is cognizable or non-cognizable, held that if the offence under PMLA is to be treated as non-cognizable, then the procedure under sections 155, 167(1) and 172 of the CrPC is to be followed and in case if the offence is to be treated as cognizable, then procedure under section 154 and 157 CrPC has to be followed.       

The 2019 amendment, seeks to disintegrate the offence of money laundering from the predicate/scheduled offence and aims at providing independent status to the offence, irrespective of the fact, whether the predicate offence is proved or not. The following important changes brought in the act vide 2019 amendment relevant to the present issue are as under:

• Explanation added to section 2(1)(u), where it is stated that proceeds of crime includes property not only derived or obtained out of a scheduled offence but also any property which may be directly or indirectly be derived or obtained as a result of any criminal activity “relatable” to a scheduled offence.
• Proviso to section 17(1) and 18 (1) has been omitted. Now there is no requirement of forwarding a report or a complaint to the magistrate in relation to a scheduled offence before conducting search and seizure under PMLA.
• Explanation(i) added to section 44 clarifies that, the jurisdiction of the special court while dealing with the offences under PMLA shall not be dependent upon any orders passed in respect of the scheduled/predicate offence. 

Thus, in the event where the legislature has strived to reduce the dependency of the offence of PMLA upon the scheduled offence, it become highly incumbent upon the executive and the legislature to devise a formal mechanism for recording case sensitive information by the ED.

Therefore, the plea that an ECIR is an internal document and thus cannot be shared with the accused at threshold stage is bereft of the established principles of law and doesn’t reflect well on the celebrated and a competent agency like the Enforcement Directorate.

Since we have already discussed that there is no legal sanction behind recording an ECIR, therefore, does merely mentioning a person’s name in the ECIR will make him an accused and deprive him of his right against self incrimination? The following para is aimed at dealing with this question.       

Conclusion and way forward

Time and again, the courts have been bombarded with the issue of deciding on the status of ECIR. The judiciary has dealt with this issue on a case specific basis, but we need a concrete ruling to settle the controversies arising due to the non-validated nature of the ECIR. 

Till now, the courts have worked out only to make shift arrangements like the one with respect to obtaining the copy of the ECIR, at threshold stage but such efforts are not enough when the life and liberty of persons is at stake. Also, until finality is reached upon this issue, we will continue to see rise in unnecessary litigation which will augment delay in justice delivery systems.

For a country where pendency of cases is a major concern, the last thing anybody would want is more litigation. Unless the executive and the legislature extend an olive branch to the judiciary a common ground cannot be reached. 

As far as the executive and the legislature are concerned the gamut of issues relating to the legal validity of an ECIR can be addressed by them through three simple steps:

1. Insertion of fresh rules in the PMLA, laying down procedure and manner for registration of an ECIR.
2. The parliament needs to draft a separate manual for laying down rules and procedures to be followed by the ED in the matters of investigation under the PMLA. Like we have the CBI manual, there can be an “ED manual”.
3. A separate clause should be added, in both the PMLA rules dealing with the registration of an ECIR and the ED manual for harmoniously constructing the provisions of both these instruments. 

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