The government extended the tenure of Enforcement Directorate chief Sanjay Kumar Mishra by a year till November 18, 2022, days after the Centre brought ordinances to allow ED and CBI directors to occupy the office for up to five years.

The already extended tenure of Mishra, a 1984-batch Indian Revenue Service (IRS) officer of the Income Tax Department cadre, was to end on November 18.

The case in SC and promulgation of ordinance

• Mishra, 61, was first appointed the ED director for a period of two years by an order on November 19, 2018. Later, by an order of November 13, 2020, the appointment letter was modified retrospectively by the central government and his term of two years was replaced by three years.

• This order of 2020 was challenged before the Supreme Court which allowed the government’s move but the apex court said that no further extension in service can be given to Mishra.

• A bench headed by Justice L. Nageswara Rao made it clear that extension of tenure of officers who have attained the age of superannuation should be done in rare and exceptional cases.

• The court had also made it clear that no further extension can be given to Mishra.

• The top court said that a reasonable period of extension can be granted to facilitate the completion of cases of ongoing investigations only after recording the reasons by the committee constituted under Section 25 of the Central Vigilance Commission Act.

• The judgment, that came on September 8, was issued on a plea filed by NGO, Common Cause, which had challenged retrospective change in the 2018 appointment order of Mishra as director of the ED.

• On November 14, the government brought out two ordinances that said that the tenure of the directors of the ED and the Central Bureau of Investigation (CBI) can now be extended by up to three years after the mandated term of two years. 

• The Central Vigilance Commission (Amendment) Ordinance and Delhi Special Police Establishment (Amendment) Ordinance, 2021 have come into effect.

• In both cases, an extension of a year each for three years can be given to the directors after clearance by the committees constituted for their appointments, the ordinances said. 

Enforcement Directorate

• The ED functions under the Union finance ministry and it enforces the criminal provisions of the Prevention of Money Laundering Act (PMLA), the Fugitive Economic Offenders Act that was brought by the Modi government in 2018, and the civil sections of the Foreign Exchange Management Act (FEMA).

• The ED was first established in 1956 as ‘Enforcement Unit’ under department of economic affairs  for dealing cases of violations on exchange control laws under Foreign Exchange Regulation Act, 1947 (FERA).

• In 1957, this unit was renamed as ‘Enforcement Directorate’. The administrative control of ED was transferred from department of economic affairs to department of revenue in 1960.

• The ED is headed by the director, who is not below the rank of additional secretary to the government of India.

• There are five regional offices located at Chandigarh (Northern Region), Chennai (Southern Region), Delhi (Central Region), Kolkata (Eastern Region) and Mumbai (Western Region), each headed by a special director. In addition, there is a Headquarters Investigation Unit (HIU) headed by a special director. There are zonal offices and sub-zonal offices.

Functioning of the ED and Acts

Prevention of Money Laundering Act

• The primary function of the Enforcement Directorate is administration and enforcement of the Prevention of Money Laundering Act, 2002 (PMLA) including investigation into the offence of money laundering, filing of prosecution complaint before the special court against the accused, attachment and confiscation of property involved in money laundering and carrying out international cooperation with competent authorities in foreign jurisdictions. 

• The ED has the sole jurisdiction to investigate the money laundering cases and the law enforcement agencies having the responsibility to investigate a “predicate offence”, including the state police authorities, are required to make a reference to the ED to examine the money laundering aspect of the criminal activity. 

• In certain cases, the fact that a predicate offence has taken place is also obtained from publicly available sources or on receipt of information from the Financial Intelligence Unit (FIU). 

• On receipt of the reference or information and after making certain preliminary verification, the ED registers a case and initiates investigation (Enforcement Case Information Report or the ECIR) following a risk based approach taking into consideration factors such as materiality of the offence, transnational nature of the crime, complexity of the case, the larger public interest and the availability of resources.

Foreign Exchange Management Act

• The ED is  entrusted with the implementation of the Foreign Exchange Management Act (FEMA) whose object is to consolidate and amend the law relating to foreign exchange for facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange resources. 

• The ED initiates investigations and issues Show Cause Notices (SCN) in cases where the allegations of contravention of provisions under FEMA are noticed. These SCNs upon adjudication result in imposition of penalty as well as confiscation of currency/property involved.

Fugitive Economic Offenders Act

• The Enforcement Directorate has also recently been entrusted with the implementation of the Fugitive Economic Offenders Act, 2018 (FEOA). 

• The FEOA provides for the measures to deter the fugitive economic offenders from evading the process of law in India by staying outside the jurisdiction of Indian courts and to preserve the sanctity of the rule of law in India. 

• Action under the said Act can be initiated against economic offenders who have left India so as to avoid criminal prosecution or who, being abroad, refuse to return to India to face criminal prosecution and the total amount involved in the economic offence is more than Rs 100 crore.

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