Powers of Summons Resting on Enforcement Directorate: A Chronological Analysis

This article traces the historical development of ED’s summons powers, key court rulings shaping their use, recent directives (including Technical Circular 03/2025 of 20.06.2025 addressing attorney-client privilege under the Bharatiya Sakshya Adhiniyam, 2023), and compares how similar agencies abroad exercise such powers. The analysis is geared to tax practitioners, advocates, chartered accountants, and finance professionals, offering a comprehensive, chronological perspective.

Historical Evolution of ED’s Summons Powers

Origins — FERA (1956-1970s): The ED originated on May 1, 1956 as an “Enforcement Unit” under the Department of Economic Affairs, tasked with enforcing the Foreign Exchange Regulation Act, 1947 (FERA). In 1957 it was renamed the Enforcement Directorate and placed under the Department of Revenue. For the first few decades, ED’s mandate was narrow - focused on foreign exchange violations - but amendments in 1973 greatly enhanced its enforcement powers.

Under the revamped FERA 1973, ED officers could arrest without warrant and conduct searches on mere suspicion of violations. These broad powers effectively allowed ED to summon and interrogate suspects similar to police, albeit limited to forex offenses. The 1970s thus saw ED wielding formidable authority, even drawing allegations of coercive interrogation tactics. Still, its domain remained largely corporate and financial circles.

Transition — FEMA (1990s): India’s 1990s economic liberalization led to FERA being deemed draconian and obsolete. In 1999, FERA was repealed and replaced by the Foreign Exchange Management Act, 1999 (FEMA), effective June 2000. FEMA reclassified forex violations as civil offenses, eliminating criminal arrests. This defanged the ED - it could no longer arrest or detain individuals under FEMA, and its summons served more for administrative inquiries than criminal investigations. During this interim, ED’s profile was lower, handling forex contraventions largely via notice and adjudication rather than coercive summons.

Currency — PMLA Era (2005-present): A paradigm shift came with the enactment of the Prevention of Money Laundering Act, 2002 (PMLA). PMLA came into force on July 1, 2005, and ED was entrusted with its enforcement. This vastly expanded ED’s remit to target “proceeds of crime” from a wide range of predicate offenses (fraud, corruption, drug trafficking, tax evasion, etc.). Crucially, PMLA re-empowered ED with investigative powers akin to those under FERA, including the authority to issue summons compelling attendance and testimony. Section 50 of PMLA grants ED officers powers of a civil court to summon any person to give evidence or produce documents, with such proceedings deemed “judicial” under the Indian Penal Code (for purposes of perjury).

Persons summoned are legally obligated to comply on pain of penalty - Section 63 of PMLA makes failure to appear or giving false information a punishable offense. In effect, ED can record statements under oath, and these statements are admissible evidence. Notably, unlike in ordinary criminal investigations, those summoned by ED do not enjoy an automatic right to silence or to counsel during questioning, reflecting the law’s intent to treat money laundering inquiries as “civil inquiries” even though they carry criminal consequences.

Enhancements — Post-2018: The ED’s powers further grew with new laws like the Fugitive Economic Offenders Act, 2018 (FEOA), which the ED began enforcing from April 2018. Over the last decade, particularly after 2014, the ED has dramatically increased the number of high-profile investigations under PMLA, thereby frequently employing its summons powers in politically sensitive cases.

This uptick in activity brought the summons issued by ED under greater public scrutiny and judicial review, as discussed below.

Constitutional and Judicial Scrutiny of ED’s Summons

The ED’s use of summons under PMLA has been tested against constitutional guarantees, especially the right against self-incrimination (Article 20(3)) and the right to life and personal liberty (Article 21). A landmark moment was the Supreme Court’s judgment in Vijay Madanlal Choudhary & Ors. v. Union of India (July 2022), wherein a three-judge bench upheld the core provisions of PMLA. The Court ruled that ED’s procedures - including arrest, search, seizure, and summons to record statements - were constitutionally valid, viewing PMLA as a special law for a regulatory inquiry rather than a typical criminal investigation.

Also Read: PMLA: Supreme Court upholds 'Twin Conditions' forGranting Bail

It held that statements recorded by ED under Section 50 do not violate Article 20(3) because the person summoned is not an “accused” at that stage. The Court also accepted PMLA’s stringent bail conditions and the non-supply of the Enforcement Case Information Report (ECIR) to the accused.

However, this sweeping validation prompted criticism that due process protections were diluted; several review petitions and fresh challenges were filed thereafter. By 2023, the Supreme Court agreed to reconsider certain aspects: a review bench (Justices Surya Kant, Ujjal Bhuyan, and N. Kotiswar Singh) was hearing arguments on whether Vijay Madanlal was decided per incuriam, particularly on the issue of compelled self-incrimination and lack of transparency.

As of mid-2025, this review is pending, and the apex court has issued notice to the Government on pleas specifically challenging the validity of Section 50 (ED’s summoning power) and Section 63 (penalty for non-compliance). The petitioners argue that summoning even persons not formally accused, on pain of prosecution, coerces self-incrimination and violates fundamental rights.

Apart from the Supreme Court, High Courts have also shaped the discourse on ED summons. A notable example is the Karnataka High Court’s March 2025 decision concerning ED summons in an alleged land scam (MUDA allotments case). The ED had summoned Karnataka Chief Minister Siddaramaiah’s wife and a state minister for inquiry under PMLA, even though they were only indirectly linked to the matter. The High Court quashed those summons, observing there was no prima facie case of money laundering against the individuals.

The court held that issuing summons without evidence of involvement is an abuse of process and infringes personal liberty under Article 21. In the minister’s case, since he took office after the events in question, the court noted that dragging a stranger to the alleged crime into an ED investigation “is undoubtedly violative of the petitioner’s right to life”.

It was ruled that ED’s summons must not become a “roving inquiry” or fishing expedition - there should be a clear nexus to the crime being probed, and persons with no role cannot be compelled for mere information gathering. High Courts in other instances have generally upheld ED’s powers but have cautioned against harassment. Courts have emphasized that while ED can summon even witnesses and third parties, such powers are subject to judicial review if exercised arbitrarily or in a malafide manner.

The evolving jurisprudence thus attempts to strike a balance: preserving ED’s ability to investigate complex financial crimes, while curbing excessive or unjustified use of summons that could impinge on individual rights and the rule of law.

Professional Privilege and Section 132 of Bharatiya Sakshya Adhiniyam, 2023

One particular flashpoint in the ED’s use of summons has been the summoning of legal professionals and the potential breach of attorney-client privilege. Indian law has long protected confidential communications between lawyers and clients - a principle now codified in Section 132 of the Bharatiya Sakshya Adhiniyam, 2023 (BSA 2023), which replaced the old Indian Evidence Act, 1872. Section 132 of BSA 2023 explicitly provides that no advocate shall be compelled to disclose any communication made to him by or on behalf of a client for the purpose of his professional employment, except with the client’s express consent.

This essentially enshrines the attorney-client privilege in statute. The only exceptions are communications made in furtherance of an illegal purpose or facts that come to the lawyer’s knowledge showing a crime or fraud since the engagement - in such cases, the privilege does not apply. Apart from these narrow exceptions, the privilege is inviolable: the lawyer cannot divulge, and investigators cannot force disclosure of protected client confidences.

Tensions arose in mid-2025 when the ED issued summons to two senior lawyers - including a respected Senior Advocate - in connection with a money laundering probe into a company’s transactions. The lawyers had given legal opinions on certain transactions (employee stock options in an insurance firm) that later came under ED’s scanner. The ED’s move was met with uproar from the legal community. Bar associations decried it as an “impermissible transgression into the sanctity of lawyer-client privilege”, warning that conflating legal advice with criminal complicity undermines the constitutional right to counsel.

The Supreme Court Advocates-on-Record Association (SCAORA) wrote to the Chief Justice of India in June 2025, calling the summons to advocates for professional advice a grave threat to the independence of the Bar. They urged the Court to lay down guidelines to prevent investigative overreach and even mooted amendments to the Evidence Act (and BSA 2023) to bolster professional privilege.

Technical Circular 03/2025: New Guidelines on Summoning Advocates

Responding to these concerns, the ED took internal corrective action. On 20 June 2025, the agency issued Technical Circular No. 03/2025 addressed to all its field offices, mandating restraint in issuing summons to lawyers. The circular expressly references Section 132 of BSA 2023, reproducing its provisions, and directs that “no summons shall be issued to any advocate in violation of Section 132”. In other words, ED officers cannot ask a lawyer to disclose information or documents that are protected by client privilege. The circular further instructs that if an exceptional situation arises (i.e. the communication falls within the legal exceptions to privilege such as furtherance of a crime), any such summons to an advocate must be issued only with prior approval of the Director, Enforcement Directorate.

This high-level vetting is meant to ensure that summoning a lawyer is truly unavoidable and legally justified. Essentially, ED has exempted advocates from routine summons - field investigators can no longer call in lawyers for questioning about their clients without clearance from the top.

The impact of this policy change was immediate. The contentious summons to Senior Advocate Pratap Venugopal (who, apart from being a lawyer, was an independent director in the company under investigation) was promptly withdrawn in light of the new guidelines. ED communicated that any information needed from him in his capacity as a company director would be sought in writing rather than through personal deposition.

Likewise, a summons to Senior Counsel Arvind Datar (who had given a legal opinion in the same matter) was rescinded following the backlash. These moves have been seen as ED’s acknowledgement of the serious constitutional and professional issues raised by the legal fraternity. The new ED circular aligns the agency’s practices with the law’s protection of professional communications, effectively instructing its officers to tread carefully when an advocate is involved.

This development has been welcomed as it reinforces the attorney-client privilege and the rule of law, ensuring that investigative zeal does not compromise fundamental rights of representation. For practitioners, the circular provides reassurance that legal advice given in good faith should not ordinarily land them in the hot seat of an ED inquiry, barring clear evidence of illegality.

Political and Media Discourse on ED’s Summons Powers

In tandem with legal debates, the ED’s summons powers have been a subject of intense political and media scrutiny, especially in high-profile and sensitive cases. The agency’s actions often make headlines, and critics allege that ED investigations (and the summons that come with them) are sometimes used as political leverage. Data points in recent years lend credence to claims of differential targeting.

According to an investigation by The Indian Express, since 2014 there has been a four-fold jump in ED cases against politicians, and remarkably about 95% of those politicians belong to opposition parties. Overall, in the 18 years from 2004-2022, around 147 prominent politicians came under ED probe, and over 85% were from the Opposition. This pattern mirrors that of the Central Bureau of Investigation (CBI), leading to a quip that “ED is the new CBI” in terms of allegedly being used against political opponents.

Government officials have rebutted these allegations, insisting the ED only acts on credible evidence and not affiliations. In March 2025, the Finance Ministry revealed in Parliament that the ED had registered 193 cases against politicians in the last decade, resulting in only two convictions so far. While the low conviction rate (≈1%) has been seized upon by detractors as proof that many cases are launched for effect rather than outcome, the agency argues that no acquittals have occurred either - most cases are pending in court, and lengthy trials for financial crimes are not unusual.

Media reports have also highlighted the surge in ED’s overall activity: for instance, the number of raids conducted by ED increased by an astonishing 86 times in the decade after 2014 compared to the previous decade. Each high-profile summon or raid triggers a predictable political storm - the ruling establishment defends it as a crackdown on corruption, while the affected party decries it as vendetta.

Examples abound: ED’s questioning of Congress leaders Rahul Gandhi and Sonia Gandhi in the National Herald case sparked nationwide protests by Congress workers in 2022; multiple ED summons and actions in Maharashtra were cited as catalysts for political realignments in 2022; and opposition-ruled states frequently claim they face disproportionately aggressive enforcement.

This discourse has, in a way, itself influenced ED’s operational approach - aware of the spotlight, the agency in recent directives (like the advocate-summons circular) has stressed adherence to law and proper process, perhaps to counter perceptions of overreach. For professionals observing these trends, the key takeaway is the importance of due process: regardless of politics, when ED summons a client or any individual, ensuring that all procedural rights (like disclosure of reasons, adherence to privilege, fair opportunity to be heard) are respected becomes paramount to withstand legal and public scrutiny.

In summary, while the ED’s powers of summons under PMLA are quite sweeping (with non-cooperation criminalized and no general right to silence), this is not entirely unique globally. The UK and Australia have demonstrated that compelling witnesses or suspects to provide information can be balanced with safeguards like use immunity and respect for privileges. The United States takes a different route by heavily involving the judiciary (grand juries) and allowing refusal to testify unless immunity is granted, thereby leaning more on constitutional rights upfront.

India’s current approach, as affirmed by the Supreme Court in 2022, treats ED inquiries as sui generis - neither fully civil nor criminal - to justify a limited suspension of certain rights during the investigative stage.

However, the recent Bharatiya Sakshya Adhiniyam, 2023 and internal ED directives show an increasing recognition in India of the need to align enforcement practices with fundamental legal privileges and fairness. Going forward, one can expect continued judicial oversight - perhaps even new guidelines or legislation, to ensure that the ED’s undoubted powers are exercised in a manner that upholds both effective enforcement and the rights of those summoned.

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