Supreme Court on Tenure Extensions of Enforcement Directorate Chief

• 13 Jul 2023

For Prelims: Foreign Exchange Management Act,1999 (FEMA), Prevention of Money Laundering Act, 2002 (PMLA), Supreme Court, Enforcement Directorate, Central Vigilance Commission Act, 2003, Delhi Special Police Establishment Act, 1946, Mandamus, Money laundering.

For Mains: Structure and Function of Enforcement Directorate (ED)

Source: IE

Why in News?

The Supreme Court of India has declared the two tenure extensions granted to the Director of the Enforcement Directorate (ED), beyond the fixed cut-off date as "not valid in law."

• While the court allowed the director to continue on the post until July 31, it cut short his overall tenure.

What is the Background and Current Status of the Issue?

• The current director was appointed in November 2018, for a period of two years. In November 2020, his tenure was extended to three years, which was subsequently challenged through petition.
  • On September 8, 2021, the Supreme Court dismissed the petition but issued a specific mandamus prohibiting further extensions.
• The government later amended the Central Vigilance Commission Act, 2003, and the Delhi Special Police Establishment Act, 1946, to grant itself powers for three tenure extensions.
  • The amendments were challenged, arguing that they contradicted a previous directive from the Supreme Court that advocated for fixed tenures for top officials like the CBI chief (Vineet Narayan Case).
• The court ruled that the amendments themselves were constitutional but declared the specific extensions given to the director of ED as invalid, as they violated the earlier mandamus.

Note: The ED Director is appointed under Section 25 of the CVC Act, 2003. The Central Government appoints a Director of ED on the recommendation of a selection committee. The committee consists of the CVC Chairperson, Vigilance Commissioners, Secretaries to the Ministry of Home Affairs, the Ministry of Personnel and the Ministry of Finance in the Central Government.

What is Mandamus?

• Mandamus refers to a writ or order issued by a court to a public body, tribunal, corporation or lower court, directing them to perform a specific legal duty that they are obligated to carry out.
  • It is derived from the Latin word meaning “we command”.
• In India, it is used to enforce the fundamental rights of citizens when they are violated by the state or its agencies. It is also used to prevent the abuse of power or discretion by the authorities.
  • It is only issued by the Supreme Court or the High Courts in India under Article 32 and Article 226 of the Constitution respectively

What is Enforcement Directorate (ED)?

• About:
  • ED is a multi-disciplinary organization mandated with investigation of offences of money laundering and violations of foreign exchange laws.
  • It operates under the jurisdiction of the Department of Revenue, Ministry of Finance, Government of India.
• Establishment:
  • In 1956, an ‘Enforcement Unit’ was formed, in the Department of Economic Affairs, for handling Exchange Control Laws violations under,
  • In 1957, this Unit was renamed as ‘Enforcement Directorate’.
  • In 1960, the administrative control of the Directorate was transferred from the Department of Economic Affairs to the Department of Revenue, Ministry of Finance, Government of India.
• Enforcement:
  • ED enforces the following laws:
    • Foreign Exchange Management Act,1999 (FEMA)
    • Prevention of Money Laundering Act, 2002 (PMLA)
    • The Fugitive Economic Offenders Act, 2018 (FEOA): This law was enacted to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts.
• Structure:
  • The Directorate of Enforcement, with its headquarters at New Delhi, is headed by the Director of Enforcement.
  • There are five regional offices at Mumbai, Chennai, Chandigarh, Kolkata and Delhi headed by Special Directors of Enforcement.