2024 (5) TMI 1673 - HC - Money Laundering

Compliance with Section 19(1) PMLA: timely written grounds and acknowledgment suffice; remand proceedings remain valid.

Compliance with the statutory requirement for furnishing written grounds of arrest was found where the authorised officer recorded and handed over written ... Compliance with Section 19(1) of the PMLA - Written grounds of arrest communicated to arrestee - Service of summons and acknowledgement by signature - Forwarding material to Adjudicating Authority u/s 19(2) - Production before Special Court within twenty-four hours u/s 19(3) - Judicial satisfaction of Special Court while ordering remand - Prospective application of Pankaj Bansal principle - Whether the provisions of Section 19(1) of the PMLA were complied with before effecting the arrest of the petitioner. - HELD THAT:- The allegations against the petitioner are that he was a Director and guarantor of M/s TCL which also comprised of his other family members as Directors and guarantors. The company had obtained loans and credit facilities for a sum of over Rs. 46 crores and this amount is alleged to have been diverted to other companies contrary to the terms and conditions of extending the credit facilities. A sum of Rs. 3.12 crores is also stated to have been diverted into the personal account of the petitioner as well. It is trite that it is the duty of the Special Court that when the accused is produced before it in compliance of Section 19(3) of the PMLA, the Special Court shall satisfy itself regarding the compliance of Section 19(1) of the PMLA and whether the arrest has been made after following the procedure laid therein. In the present case, the Special Court had taken into account the nature of the case against the petitioner and the factum of his non-cooperation and other relevant factors while remanding the petitioner into police custody by its order dated 07.11.2023. Petitioner has also contended that the entire 'material in possession' against the arrested petitioner, including the memo of arrest and the grounds of arrest had been sent to the Adjudicating Authority on 08/09.11.2023 whereas it should have been sent immediately hence there is violation of Section 19(2) of PMLA. The argument is liable to be rejected because it is not specified that information has to be sent on the day the arrest is effected. Therefore, we do not find any illegality in the same being sent to the Adjudicating Authority a day after. Even if it has been sent after 02 days, it could not be said that the provisions of Section 19(2) of the PMLA have not been complied with. The expression 'as soon as possible' in relation to the communication of the grounds of arrest have been interpreted by the Supreme Court in the case of Ram Kishor Arora Vs. Directorate of Enforcement (supra) to be within 24 hours of the arrest but there is no such mandate for sending the material to the Adjudicating Authority the same day or within 24 hours. Therefore, it is difficult for this court to arrive at the conclusion that sending material in possession to the Adjudicating Authority after a day or two would not be a sufficient compliance of Section 19(2) of the PMLA. It is noteworthy that cognizance has been taken by the Special Court on 18.03.2024 which has not been challenged by the petitioner in any proceedings. He has also not filed petition for regular bail till date. Thus, we are of the considered opinion that the arrest of the petitioner is in consonance with Section 19(1) of the PMLA and we do not find any manifest illegality in the orders of remand and subsequent proceedings. Issues: (i) Whether the provisions of Section 19(1) of the Prevention of Money Laundering Act, 2002 were complied with before effecting the arrest; (ii) Whether the remand order dated 07.11.2023 and subsequent remand proceedings are vitiated for non-compliance with Section 19 of the PMLA.Issue (i): Whether Section 19(1) of the Prevention of Money Laundering Act, 2002 was complied with prior to arrest.Analysis: The authorised officer invoked powers under Section 19(1) on basis of material in possession, recorded written grounds of arrest and the arrestee's signature appears on the grounds of arrest. The written grounds were communicated on the day of arrest. Relevant Supreme Court precedents permit communication of written grounds within the timeframe construed as 'as soon as may be' and endorse that handing over and signing of the grounds constitutes compliance. The record shows the arrestee acknowledged the grounds and counsel was informed. Distinctions with cases where grounds were not furnished or where arrest immediately followed a separate ECIR were noted and found to be factually distinguishable.Conclusion: Section 19(1) of the Prevention of Money Laundering Act, 2002 was complied with prior to effecting the arrest. This conclusion is in favour of the respondent.Issue (ii): Whether the remand order dated 07.11.2023 and subsequent remand proceedings are vitiated for non-compliance with Section 19 of the PMLA.Analysis: The Special Court considered the grounds of arrest, the nature of allegations and non-cooperation in granting remand; the remand order records application of mind and is not a mechanical order. The material in possession was forwarded to the Adjudicating Authority within a short interval; there is no statutory mandate requiring same-day transmission and short delay does not amount to non-compliance. Relevant authority was applied to conclude that the remand proceedings were properly conducted.Conclusion: The remand order dated 07.11.2023 and subsequent remand proceedings are not vitiated and are valid. This conclusion is in favour of the respondent.Final Conclusion: The writ petition challenging the arrest and remand proceedings is without merit and is dismissed, with attendant interim applications disposed of.