2024 (8) TMI 1666 - HC - Money Laundering

Money-laundering accused challenges non-bailable warrants, arrest grounds u/s19, ED remand and discharge; all orders upheld

Non-bailable warrants under the PMLA were challenged as illegal, but the HC held they were a last resort after repeated non-appearance despite summons and ... Money Laundering - provisional attachment order - issuance of fresh warrants of arrest against the petitioner and co-accused - petitioner was remanded to the custody of Enforcement Directorate (ED), by learned Special Judge for a period of 05 days - declination of application filed by the petitioner under Section 227 of the Code for discharge - reasons to believe and grounds of arrest made after the arrest of petitioner - breach of Section 19(1) of the PMLA. Issuance of fresh arrest warrants - HELD THAT:- The non-bailable warrants were issued against the petitioner as a last resort when he failed to appear before the E.D as well as learned Special Judge, despite issuance of summons under Section 50 of PMLA and non-bailable warrants on various occasions. There is sufficient material to the effect that petitioner knowingly and deliberately avoided the process of law and remained hidden at unknown places to thwart the ongoing investigation. Thus, the E.D was quite justified while approaching learned Special Judge and obtaining the non-bailable warrants, time and again to enforce the provisions of PMLA. Consequently, there would be no hesitation to observe that petitioner is trying to rake up the issue regarding non- bailable warrants which has already attained finality upto Hon'ble the Supreme Court. It has also come on record that petitioner tried to escape on the pretext of urinating on the way from Dehradun to Gurugram; but could not succeed and he was again apprehended by E.D officials with the help of local Police. Thus, all these facts clearly indicate that petitioner has no respect for the rule of law; rather tried to flee from the justice. Despite repeated non-bailable warrants issued by learned Special Judge, petitioner has made the process of law as a mockery; hence no interference is warranted with the order dated 29.04.2017 (P-17); rather the same is perfectly legal and valid. Hence, rightly been executed by E.D officials with the assistance of local Police. Validty of remand order granting Enforcement Directorate custody - HELD THAT:- Due to unavoidable circumstances, E.D could not produce the petitioner before learned Special Judge on 30.04.2024 at PWD Guest House, where he was staying temporarily, due to some exigencies. E.D made efforts to produce petitioner before learned Duty Magistrate, but remained unsuccessful and the factual position is already narrated under preceding paragraph No.6.6; hence not repeated here. Ultimately, after serving 'grounds of arrest' (P-18); arrest order (P-19) and arrest memo. (P-20) to petitioner on 30.04.2024, he was produced before learned Special Judge in the opening hours of Court on 01.05.2024 along with an application for seeking his remand for 14 days to confront him with relevant documents, placement of funds, detect the money trail and unearth the involvement of other persons. The learned Special Judge rightly granted remand of petitioner for 05 days uptill 06.05.2024 which was later on extended, from time to time. This Court has also gone through the impugned order along with the material available on record and no ground is made out to interfere with the same; rather the remand was rightly granted to question the petitioner for completion of ongoing investigation and to know the real facts of the case. Otherwise, there was no option for E.D to complete the investigation. The order is well reasoned, containing satisfaction upon perusal of the entire records, thus, warranting no interference by this Court. Dismissal of discharge application - HELD THAT:- Filing of complaint is duly acknowledged on behalf of the petitioner as well. Therefore, at this stage, there was no occasion for the petitioner to move an application for his discharge before learned Special Judge on 01.05.2024. Moreover, there is sufficient material on record against the petitioner for his complicity in the present case; therefore; no ground is made out to interfere with the order dated 01.05.2024. Besides, in the present factual situation, learned Special Judge while considering the application for discharge was not supposed to record the findings like acquittal or conviction of the petitioner in PMLA case. Grounds of arrest - arrest order - arrest memo - HELD THAT:- The 'grounds of arrest' along with arrest order and arrest memo. were read out as well as handed over to petitioner at the time of his arrest on 30.04.2024 at 18:45 hours. Even father of petitioner, namely, Dharam Singh Chhoker was also informed in this regard - in consonance with the provisions of Section 19(3) of the PMLA, petitioner was produced before learned Special Judge in the opening hours of the Court on 01.05.2024 along with remand application; thus, it is wrong to contend on behalf of petitioner that there was non-compliance in this regard. Moreover, it is a matter of records that learned Duty Magistrate in its report dated 01.05.2024 confirmed that E.D had produced petitioner at 12:30 a.m during night of 30.04.2024 and as such, the same is well within 24 hours and it is so recorded by learned Special Judge in his order dated 01.05.2024. The 'grounds of arrest'; arrest order and; arrest memo. were duly and validly served upon petitioner at the time of his arrest on 30.04.2024. That apart, 'reasons to believe' were also recorded by E.D officials. Thus, there has been due compliance of Section 19 of the PMLA, in letter and spirit. In Arvind Kejriwal's case [2024 (7) TMI 760 - SUPREME COURT], Hon'ble the Supreme Court while making a reference to the larger Bench opined that (i) 'reasons to believe' that person to be arrested is guilty of an offence are to be recorded; (ii) The arrestee, as soon as may be, must be informed of 'grounds of arrest'; 'reasons to believe' should be furnished to the arrestee. However, at the same time, Hon'ble the Supreme Court issued a caveat that 'where the non-disclosure of the 'reasons to believe' with redaction is justified and claimed, the Court must be informed. The file, including the documents, must be produced before the Court. Thereupon, the Court should examine the request and if they find justification, a portion of the 'reasons to believe' and the document may be withheld. This requires consideration and decision by the Court. In the present case, 'grounds of arrest' were duly supplied to petitioner at the time of his arrest. The 'reasons to believe' were also recorded by the officers and this Court has minutely gone through the same. There is no quarrel that object and purpose of Section 482 of the Code is to secure the ends of justice and not to frustrate the same. As already discussed, in the present case, huge proceeds of crime have been identified, and prima facie, the offence of money laundering is clearly made out against the petitioner - also it is duly established that petitioner is the beneficial owner of Mahira Group of companies as well as other shell companies and has been found involved in money laundering; thus present petition is nothing, but complete misuse of the process of Court as well as law. Thus, about 1500 prospective home buyers have invested their hard earned money with the hope that they will get shelter, but the entire money of Rs. 363 crore (approx.) has been misappropriated and laundered by the petitioner in conspiracy with other co-accused; thus, there is no option, except to dismiss the petition - petition dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1) Whether the fresh non-bailable warrants of arrest issued by the Special Court were legally justified on the facts, and warranted interference under Section 482 of the Code. 2) Whether the remand order granting Enforcement Directorate custody was valid, based on judicial application of mind and the available remand material. 3) Whether dismissal of the discharge application was correct when cognizance on the complaint under the PMLA had not yet been taken. 4) Whether the petitioner's arrest was illegal for non-compliance with Section 19 of the PMLA (including service of 'grounds of arrest', recording of 'reasons to believe', forwarding to the Adjudicating Authority, and production before the jurisdictional court within 24 hours). 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of fresh non-bailable warrants of arrest Interpretation and reasoning: The Court examined the record showing repeated summons and multiple prior attempts to secure appearance through warrants. It found that warrants were issued only as a last resort after the petitioner deliberately avoided the process and remained unavailable despite repeated coercive measures. The Court accepted that the Enforcement Directorate sought local police assistance for execution and that execution became possible only after specific information about the petitioner's location was received. Conclusions: The Court held the fresh warrants were legal and valid, and declined to interfere. It found the petitioner had knowingly and deliberately evaded lawful process, and the issuance/execution of warrants did not warrant quashing in exercise of inherent jurisdiction. Issue 2: Validity of the remand order granting Enforcement Directorate custody Interpretation and reasoning: The Court held that the petitioner was produced before the Special Court at the opening hours on the next day after service of arrest-related documents, and the remand request was supported by the stated investigative requirements (confrontation with documents, tracing funds, detecting money trail, and identifying involvement of other persons). The Court found that the Special Court applied judicial mind, considered the remand papers and 'grounds of arrest', and recorded satisfaction that proceeds of crime and money laundering were prima facie indicated. Conclusions: No ground was made out to interfere with the remand order. The Court upheld the remand as reasoned and necessary for the ongoing investigation. Issue 3: Validity of dismissal of discharge application Interpretation and reasoning: The Court accepted that, as of the date the discharge application was moved, cognizance on the complaint under the PMLA had not yet been taken. In that situation, the Court concluded there was 'no occasion' for a discharge application at that stage. It further observed that sufficient material existed indicating the petitioner's complicity, and that the Special Court was not expected to record findings akin to acquittal/conviction while dealing with such an application in the prevailing posture. Conclusions: The Court upheld dismissal of the discharge application and declined interference, while noting the petitioner could raise pleas at the stage of cognizance and consideration of charges. Issue 4: Legality of arrest and compliance with Section 19 PMLA (including 'grounds of arrest', 'reasons to believe', Section 19(2) forwarding, and production within 24 hours) Legal framework: The Court examined Section 19 of the PMLA, including (i) communication of 'grounds of arrest' to the arrestee, (ii) recording of 'reasons to believe' in writing, (iii) forwarding the arrest order/grounds/material to the Adjudicating Authority, and (iv) production before the jurisdictional court within 24 hours. Interpretation and reasoning: On facts, the Court found the 'grounds of arrest', arrest order, and arrest memo were read out and handed over at the time of arrest under the PMLA at 18:45 hours on 30.04.2024. It also accepted that 'reasons to believe' were recorded in writing by the competent officer and were shown to the Court in sealed cover; the Court perused them and treated them as supporting the arrest decision. Regarding Section 19(2), the Court held compliance existed because the material was sent to the Adjudicating Authority immediately after arrest through email on 30.04.2024 and also through sealed cover on 01.05.2024. As to Section 19(3), the Court held the petitioner was produced before the Special Court within the required period; it relied on record noting an attempt to produce before the Duty Magistrate at night and actual production before the Special Court on the next day. Conclusions: The Court conclusively held that the arrest-related documents were duly and validly served, 'reasons to believe' were recorded, and there was due compliance of Section 19 of the PMLA 'in letter and spirit'. Consequently, the challenge to the arrest and consequential orders failed.