ED arrest invalid despite sufficient evidence for failing to provide written grounds under Section 19 PMLA

The Punjab and Haryana HC examined compliance with Section 19 of the PMLA regarding arrest procedures. While the ED possessed sufficient material documented in a 17-page investigation report to believe the petitioner was guilty of money laundering offenses, and proper approvals were obtained, the court found the arrest invalid. Following the SC precedent in Pankaj Bansal v. Union of India, the court held that grounds of arrest must be conveyed in writing to the accused to enable meaningful defense under Section 45's bail provisions. Since this requirement was not met, the petitioner's arrest and subsequent remand orders were unsustainable, and the petition was allowed.

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Issues Involved:
1. Legality of the arrest under Section 19 of the Prevention of Money Laundering Act (PMLA).
2. Compliance with mandatory procedural safeguards under PMLA.
3. Validity of remand orders and subsequent custody.
4. Requirement of furnishing written grounds of arrest.

Summary:

1. Legality of the Arrest:
The petitioner challenged his arrest under Section 19 of the PMLA, arguing that there was no material in possession of the Enforcement Directorate (ED) to justify the arrest. The Court found that the ED had sufficient material and had recorded reasons to believe that the petitioner was guilty of money laundering. However, the Court noted that the grounds of arrest were not conveyed in writing to the petitioner, which is a requirement as per the recent Supreme Court judgment in Pankaj Bansal Versus Union of India.

2. Compliance with Procedural Safeguards:
The Court examined whether the procedural safeguards under Section 19 of the PMLA were followed. It was found that the ED had recorded the reasons for arrest in writing and informed the petitioner of the grounds of arrest orally. The petitioner had also signed the grounds of arrest. Despite this, the Court held that merely reading out the grounds of arrest does not fulfill the statutory and constitutional mandate, which requires that the grounds of arrest be furnished in writing.

3. Validity of Remand Orders:
The petitioner also challenged the remand orders passed by the Special Court, Panchkula. The Court found that the remand orders did not adequately reflect the satisfaction of the Court regarding compliance with Section 19 of the PMLA. The orders were deemed routine and mechanical, lacking proper application of mind.

4. Requirement of Written Grounds of Arrest:
The Court emphasized the importance of furnishing written grounds of arrest to the accused, as mandated by Article 22(1) of the Constitution and Section 19 of the PMLA. This requirement ensures that the accused can effectively exercise their right to seek bail and defend themselves. The Court rejected the argument that this requirement should apply only prospectively, noting that the Supreme Court had already declared the arrest of Pankaj Bansal illegal for the same reason.

Conclusion:
The Court held that the arrest of the petitioner was illegal due to non-compliance with the requirement of furnishing written grounds of arrest. Consequently, the remand orders and subsequent custody were also deemed invalid. The petitioner was ordered to be released forthwith unless required in connection with any other case.

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