Enforcement Directorate

What is an Enforcement Directorate (ED)?

• Enforcement Directorate (ED) is a specialized financial investigation agency under the Department of Revenue, Ministry of Finance.
• On 1st May 1956, an ‘Enforcement Unit was formed in the Department of Economic Affairs for handling Exchange Control Laws violations under Foreign Exchange Regulation Act, 1947. In 1957, it was renamed as ‘Enforcement Directorate.
• ED enforces the following laws:

1. Foreign Exchange Management Act (FEMA), 1999.
2. Prevention of Money Laundering Act (PMLA), 2002.

• The Headquarters of Enforcement Directorate (ED) is situated in New Delhi and is headed by the Director of Enforcement.
• The director is appointed by the Appointments Committee of the Cabinet headed by the Prime Minister.

Why in news?

• The Supreme Court did not intervene with the government’s decision to “retrospectively extend” the tenure of Sanjay Kumar Mishra as the Director of the Enforcement Directorate (ED), saying his tenure is anyway drawing to a close in November 2021.
• In a judgment pronounced, a Bench led by Justice L. Nageswara Rao, however, said Mr. Mishra should not be given any further extension at the top of the specialized Central agency which investigates sensitive cases under the Prevention of Money Laundering Act.
• The court, however, upheld the power of the government to extend his tenure beyond two years.
• “As the tenure of appointment of Director of Enforcement is not a maximum period of two years, a person can be appointed as Director of Enforcement for a period of more than two years... The decision to extend the tenure of the respondent [Mishra] is pursuant to the recommendation made by the high-powered committee,”
• However, the court said the power to grant extensions for a “reasonable period” to the ED Director should be done rarely and only after recording the reasons.

The Collegium System

The Collegium System was introduced in response to executive interference in judicial appointments. However, this system has failed to protect judicial appointments from executive interference. It is due to the reasons like Post-retirement appointments of judges.

At present, the collegium comprises of CJI (Chief Justice of India) and 4 senior-most judges of the Supreme Court. Despite various criticisms and attempts to reform the appointments and transfers process, the collegium system still persists.

Current Scenario

• The appointments of the judges are formally made by the President of India on the recommendation of the collegium. These proposals are processed through the Ministry of Law and Justice.
• The system was recently in the news as two judges of collegium expressed caution to CJI against the proposed elevation of 22 lawyers as High Court judges in Bombay. They felt that the proposed people were lacking in integrity and shouldn’t be appointed.

About Collegium System of Supreme Court

• It is the system by which the judges are appointed and transferred only by the judges.
• This system is not formed by an Act of Parliament or by a Constitutional provision. Instead, it is the system evolved by the judgments of the Supreme Court.
• The SC collegium is headed by the CJI and comprises four other senior-most judges of the court.
• An HC collegium is led by its Chief Justice of the High Court and four other senior-most judges of that court.
• The names recommended for appointment by a High Court collegium reach the government only after approval by the CJI and the Supreme Court collegium.
• The government can return the recommended Judge for reconsideration by Collegium.
• If the collegium reiterates its recommendation then the government is mandated to appoint a person.
• The system was introduced for strengthening and improving the appointment process.

Evolution of Collegium System

1. Article 124(2) of the Indian Constitution provides that the Judges of the Supreme Court are appointed by the President. He/she should consult such a number of the Judges of the Supreme Court and of the High Courts in the States as he/she may deem necessary for the purpose.
2. Article 217 of the Indian Constitution states that the Judge of a High Court shall be appointed by the President in consultation with the Chief Justice of India and the Governor of the State. Further, the Chief Justice of the High Court should also be consulted except in case of his/her own appointment.
3. In First Judges Case (1981) – The court said consultation under Article 124 doesn’t mean concurrence (unanimity). Based on this judgement, the President is not bound by CJI’s advice.
4. In Second Judges Case (1993) – The court overruled its previous decision and said CJI’s advice is binding. Further CJI is required to formulate its advice based on a collegium of judges consisting of CJI and two senior-most SC judges.
5. In Third Judges Case (1998) – The court expanded the collegium to a five-member body to include the CJI and the four senior-most judges of the court after the CJI.
6. In the Fourth Judges Case (2015)– The SC upheld the primacy of the collegium. Further, the court struck down the NJAC (National Judicial Appointments Commission) Act as unconstitutional. The Court held that the Act gave the government significant powers to appoint Judges. The Court held the Act encroached upon the judiciary’s independence and undermined the basic structure.
   • The NJAC has comprised 3 judges of SC, a central law minister, and 2 civil society experts.
   • A person would not be recommended by NJAC if any 2 of its members did not accept such a recommendation, making the appointment process more broad-based.

Need for Collegium System

1. It separates the judiciary from the influence of the executive and legislative. This ensures impartial and independent functioning. So, the collegium system strengthens the principle of separation of powers (no organ of State should intervene in the functioning of another).
2. The State is the main litigant in Indian Courts. About 46% of total cases pending in India pertains to the government. If the power to transfer the judges is given to the executive, then the fear of transfer would impede justice delivery.
3. The executive organ is not a specialist or does not have the knowledge regarding the requirements of the Judge. Therefore, it is better if the collegium system appoints Judges.
4. The political vulnerability in India- The government handling the transfers and appointments is prone to nepotism. For example, there are ample amount of evidence that the civil servants were transferred for political gains. This cannot be feasible with the present collegium system. Further, the collegium system provides stability to the judges.

Criticisms of the Collegium System

1. It gives enormous power to judges that can be easily misused. The collegium system has made India, the only country where judges appoint judges.
2. The selection of judges by collegium is undemocratic. Since judges are not accountable to the people or representative of peoples i.e. executive or legislative.
3. There is no official procedure for selection or any written manual for functioning. This creates an ambiguity in the collegium’s functioning.
4. Sons and nephews of previous judges or senior lawyers tend to be popular choices for judicial roles. Thus, it encourages mediocrity in the judiciary by excluding talented ones and breeds nepotism.
5. The delays over the appointment are still persistent. The Supreme Court last appointed a judge in September 2019, and it currently has four vacancies, which is expected to be increased further this year.
6. The procedure lacks uniformity- Sometimes a judge of HC is elevated as chief justice of the same HC while in other cases he/she is made chief justice of some other high court.
7. Proactive decisions on improving transparency were rolled back to secrecy. This includes the practice of disclosing the reasons while announcing the collegium’s decision.

Suggestions and Way Forward

1. The Centre needs to act on collegium’s decision within a specific time frame so that delays are minimized. Many names for appointments to the High Courts of Bombay and Allahabad are pending before the government since May 2020.
2. Both the Centre and Judiciary must stop the blame game and focus collectively on reforming the appointment process. A consensus needs to be developed on a memorandum of procedure. This procedure has to include few important provisions such as,
   • Involving an agreement between the judiciary and the government which contains a set of guidelines for making appointments to the higher judiciary.
   • It should be based on four criteria, such as transparency, eligibility criteria for judicial appointments, a permanent secretariat to assist the collegium, and a mechanism for complaints against candidates.
3. At present, the collegium only puts out a public statement on who has been recommended. But it does not disclose who has been dropped out and for what reason. So, the collegium system must revert to an earlier practice of providing rational reasons for its decision.
4. Further, a written manual should be released by the Supreme Court. The manual should be followed in letter and spirit during appointments and transfers.
5. The Supreme Court should also release the records of all collegium meetings in the public domain in order to ensure transparency and a rule-based process.
6. Apart from reforming the collegium system, the quality of judges can also be improved through the implementation of All India Judicial Services (AIJS).

Conclusion

The system of appointments should be improved expeditiously as High Courts across the country are short of over 400 judges. A future rise in the pendency of cases can be tackled only when the judiciary and executive are willing to negotiate with a citizen-centric spirit. For that, reforming the collegium system is a good step in the right direction.