Mandatory safeguards under money-laundering arrest law must be strictly followed; failure vitiates arrest, remand, and custody.

Section 19 of the Prevention of Money-Laundering Act, 2002 was treated as mandatory, and the Court held that the remand court had to independently verify compliance with recorded reasons to believe, prompt forwarding of arrest material, and production within 24 hours. The remand orders were held illegal for non-application of mind because they did not reflect satisfaction on these statutory safeguards. Prolonged restraint of the petitioners during the search was also treated as arrest, and failure to produce them before the competent court within 24 hours vitiated the custody. Non-forwarding of the arrest material immediately, and absence of duly recorded reasons based on material in possession, further rendered the arrest and consequential custody orders illegal.

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Issues: (i) Whether the remand orders were vitiated for non-application of mind and for not recording compliance of the safeguards under Section 19 of the Prevention of Money-Laundering Act, 2002; (ii) Whether the petitioners' confinement during search from 04.01.2024 to 08.01.2024 amounted to arrest, making the subsequent production beyond 24 hours illegal; (iii) Whether there was violation of Section 19(2) of the Prevention of Money-Laundering Act, 2002 by failure to forward the arrest material to the Adjudicating Authority immediately; (iv) Whether there was non-compliance of Section 19(1) of the Prevention of Money-Laundering Act, 2002 in the absence of recorded reasons to believe based on material in possession.

Issue (i): Whether the remand orders were vitiated for non-application of mind and for not recording compliance of the safeguards under Section 19 of the Prevention of Money-Laundering Act, 2002.

Analysis: Section 19 requires recording in writing of reasons to believe, immediate forwarding of the arrest order and material to the Adjudicating Authority, and production before a court having jurisdiction within 24 hours. The remand court was bound to satisfy itself that these safeguards were complied with and to reflect such satisfaction in the remand order. The impugned remand orders recorded only a prima facie view of the investigation and custodial need, but did not record satisfaction regarding compliance of Section 19(1), 19(2) or 19(3).

Conclusion: The remand orders suffered from non-application of mind and were illegal.

Issue (ii): Whether the petitioners' confinement during search from 04.01.2024 to 08.01.2024 amounted to arrest, making the subsequent production beyond 24 hours illegal.

Analysis: The material on record, including the panchnamas and the respondents' own replies, showed that the petitioners were kept within the premises during the search and their movement was controlled by the authorities. The Court held that the right of an occupant to attend a search does not authorise prolonged restraint within the premises, and that such restraint amounted in substance to arrest. Since the petitioners were not produced before the competent court within 24 hours from 04.01.2024, the arrest and the ensuing remand process were hit by illegality.

Conclusion: The petitioners were deemed to have been arrested on 04.01.2024, and the failure to produce them within 24 hours vitiated the subsequent proceedings.

Issue (iii): Whether there was violation of Section 19(2) of the Prevention of Money-Laundering Act, 2002 by failure to forward the arrest material to the Adjudicating Authority immediately.

Analysis: Section 19(2) is mandatory and requires immediate forwarding of the arrest order and supporting material in a sealed envelope. The respondents admitted that the material was not forwarded before the first remand on 09.01.2024 and that preliminary scrutiny was completed only on 10.01.2024. That sequence was inconsistent with the statutory mandate and also prevented the remand court from verifying compliance at the proper time.

Conclusion: There was violation of Section 19(2), rendering the arrest and consequent custody illegal.

Issue (iv): Whether there was non-compliance of Section 19(1) of the Prevention of Money-Laundering Act, 2002 in the absence of recorded reasons to believe based on material in possession.

Analysis: The grounds of arrest and remand applications did not disclose any recorded reasons to believe based on material already in possession before arrest. The reasons recorded were expressed in vague and general terms, and the respondents' own timeline suggested that scrutiny of material occurred after arrest and after remand. The Court held that mere references to prima facie involvement or non-cooperation could not substitute the statutory requirement of a written and material-based reason to believe.

Conclusion: Section 19(1) was not duly complied with.

Final Conclusion: The arrest orders, arrest memos, remand orders and all consequential custody orders were set aside, and the petitioners were directed to be released forthwith unless required in any other case.

Ratio Decidendi: In proceedings under the Prevention of Money-Laundering Act, 2002, the safeguards in Section 19 are mandatory; the remand court must independently satisfy itself that the arresting officer recorded reasons to believe on the basis of material in possession and that the arrest material was immediately forwarded to the Adjudicating Authority, failing which the arrest and all consequential orders are vitiated.

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