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Issue with Tenure Extension of ED Director


Recently, the Centre has informed the Supreme Court (SC) that the tenure of the Chief of Enforcement Directorate (ED) will not continue in office beyond November 2023.


GS II: Polity and Governance

Dimensions of the Article:

  1. What is the Issue?
  2. Enforcement Directorate
  3. Functions of Enforcement Directorate

What is the Issue?


  • The President of India issued two ordinances in November 2021 allowing the tenure of the Director of the ED to be extended from two years to up to five years, with the possibility of three annual extensions.
  • The SC upheld the extension of ED Chief but only in rare and exceptional cases for a short period.
  • The court clarified that there is no restriction on the Central Government’s power to appoint the ED beyond a two-year period.

Reasons for the Extension:

  • The Union Finance Ministry stated that continuity of the head of the organisation is required for several cases which are at crucial juncture and require historical knowledge and background for supervision of such cases.
  • A newly appointed director would take considerable time to take stock and acclimatise to the new office and the working of the ED and could find it difficult to operate at an optimal level of efficiency.

Pending Review:

  • The government’s recent extension of the tenure is cited as a reason for a pending review by the Financial Action Task Force (FATF).
  • The decision has been challenged in the SC again, as some are questioning the legality of extending the tenure beyond what was previously deemed acceptable by the court. The case is currently pending.

Enforcement Directorate

  • The Directorate of Enforcement (ED) is a law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India.
  • It is part of the Department of Revenue, Ministry of Finance, Government Of India.
  • It is composed of officers from the Indian Revenue Service, Indian Corporate Law Service, Indian Police Service and the Indian Administrative Service.
  • The origin of this Directorate goes back to 1 May 1956, when an ‘Enforcement Unit’ was formed, in Department of Economic Affairs, for handling Exchange Control Laws violations under Foreign Exchange Regulation Act, 1947.
  • In the year 1957, this Unit was renamed as ‘Enforcement Directorate’.
Functions of Enforcement Directorate
  • The prime objective of the Enforcement Directorate is the enforcement of two key Acts of the Government of India namely, the Foreign Exchange Management Act 1999 (FEMA) and the Prevention of Money Laundering Act 2002 (PMLA).
  • The ED’s (Enforcement Directorate) official website enlists its other objectives which are primarily linked to checking money laundering in India.
  • In fact this is an investigation agency so providing the complete details on public domain is against the rules of GOI.
  • The ED investigates suspected violations of the provisions of the FEMA. Suspected violations includes; non-realization of export proceeds, “hawala transactions”, purchase of assets abroad, possession of foreign currency in huge amount, non-repatriation of foreign exchange, foreign exchange violations and other forms of violations under FEMA.
  • ED collects, develops and disseminates intelligence information related to violations of FEMA, 1999. The ED receives the intelligence inputs from Central and State Intelligence agencies, complaints etc.
  • ED has the power to attach the asset of the culprits found guilty of violation of FEMA. “Attachment of the assets” means prohibition of transfer, conversion, disposition or movement of property by an order issued under Chapter III of the Money Laundering Act [Section 2(1) (d)].
  • To undertake, search, seizure, arrest, prosecution action and survey etc. against offender of PMLA offence.
  • To provide and seek mutual legal assistance to/from respective states in respect of attachment/confiscation of proceeds of crime and handed over the transfer of accused persons under Money Laundering Act.
  • To settle cases of violations of the erstwhile FERA, 1973 and FEMA, 1999 and to decide penalties imposed on conclusion of settlement proceedings.

-Source: Indian Express

February 2024