2021 (10) TMI 201 - HC - Money Laundering

Court upholds legality of arrest and detention, dismissing petition due to compliance with law

The court dismissed the petition, affirming the legality of the arrest and the petitioner's production before the magistrate within the 24-hour period. ... Distinction between custody and arrest - PMLA scheme on search, seizure and arrest under Sections 17, 18 and 19 - time of arrest for purpose of production within twenty-four hours under Section 19(3) - illegality in inception vitiating subsequent proceedingsDistinction between custody and arrest - PMLA scheme on search, seizure and arrest under Sections 17, 18 and 19 - time of arrest for purpose of production within twenty-four hours under Section 19(3) - Whether the petitioner was arrested when restraint was first imposed during the search at 8:30 AM or only when formal arrest was recorded at 7:55 PM, and whether he was required to be produced before the Special Court within twenty-four hours from 8:30 AM. - HELD THAT: - The Court applied the settled distinction that custody and arrest are not synonymous: custody or restraint may exist without a formal arrest, and an 'arrest' in the statutory/procedural sense requires intent and seizure/detention under legal authority. Under the Prevention of Money Laundering Act, arrest is to be effected under Section 19(1) after process under Sections 17(1) and 18(1) (search and seizure and collection of material) is complete. Section 19(3) obliges production before the Court within twenty four hours of the arrest made under Section 19(1). On the admitted facts the authorised officers entered under Section 17(1) at 8:30 AM, conducted search and seizure under Section 18(1) until mid afternoon, recorded statements and only thereafter, at 7:55 PM, arrested the petitioner under Section 19(1). The production before the Special Court on 04.08.2021 at about 4 PM was within twenty four hours of that formal arrest. The Court therefore held that the petitioner's contention that the earlier restraint during the search converted into an arrest for the purpose of the twenty four hour rule was not tenable in the context of the PMLA scheme and the established jurisprudence distinguishing custody from formal arrest. [Paras 11, 13, 15, 16, 17]The arrest was effected at 7:55 PM under Section 19(1) after completion of Sections 17 and 18 processes, and the petitioner was produced within twenty four hours as required by Section 19(3); petition dismissed.Final Conclusion: The High Court dismissed the petition: the court found that under the PMLA arrest occurs under Section 19(1) after search and seizure under Sections 17 and 18 are complete, and the petitioner was produced within twenty four hours of that formal arrest, hence no illegality was made out. Issues Involved:1. Legality of the arrest of the petitioner.2. Compliance with the 24-hour rule for producing the petitioner before the magistrate.3. Requirement for providing reasons in judicial orders.Issue-wise Detailed Analysis:1. Legality of the arrest of the petitioner:The petitioner challenged the legality of his arrest, arguing that he was effectively restrained at 8:30 AM on 03.08.2021 during a raid, although the arrest memo recorded the arrest time as 7:55 PM on the same day. The petitioner cited precedents such as Ashfak Hussain Allah Detha vs. Assistant Collector of Customs, Ramu vs. State of Karnataka, and State of Punjab vs. Davinder Pal Singh Bhullar, to argue that arrest commences with the restraint on liberty, not the time recorded by arresting officers. The court examined these precedents and clarified that the terms 'custody' and 'arrest' are not synonymous. The court held that the petitioner was formally arrested at 7:55 PM after the completion of search and seizure procedures under Sections 17(1) and 18(1) of the PMLA, and thus, the arrest was legal.2. Compliance with the 24-hour rule for producing the petitioner before the magistrate:The petitioner contended that he was not produced before the magistrate within 24 hours of his effective arrest at 8:30 AM. The court referred to the Supreme Court's judgment in Directorate of Enforcement v. Deepak Mahajan and other cases to elucidate that arrest under Section 19(1) of the PMLA follows the completion of search and seizure procedures. The court found that the petitioner was arrested at 7:55 PM on 03.08.2021 and produced before the magistrate at 4 PM on 04.08.2021, adhering to the 24-hour rule as mandated by Section 19(3) of the PMLA.3. Requirement for providing reasons in judicial orders:The petitioner argued that the Special Judge's order dismissing his application did not provide any reasons, making it unreasoned and liable to be set aside. The petitioner cited Jitender Kumar @ Jitender Singh vs. The State of Bihar, where the Supreme Court emphasized the necessity of giving reasons in judicial orders. The court acknowledged this principle but found that the Special Judge's order was consistent with the procedural requirements under the PMLA. The court concluded that the petitioner's arrest and subsequent judicial procedures were conducted in compliance with the law, and thus, the petition lacked merit.Conclusion:The court dismissed the petition, affirming that the arrest was legal and the petitioner was produced before the magistrate within the stipulated 24-hour period. The court also noted that the Special Judge's order was consistent with legal requirements, even though it lacked detailed reasoning. The petition and any pending applications were dismissed.