2024 (10) TMI 904 - HC - Money Laundering

ED arrest upheld in Rs 1530 crore money laundering case under Section 19 PMLA

Neeraj Saluja Versus Union of India and another

Punjab and Haryana HC dismissed a petition challenging arrest under PMLA in a money laundering case involving diversion of Rs. 1530.99 crores from ... Money Laundering - proceeds of crime - predicate offence - diversion of Rs. 1530.99 crores from the loan amount for a purpose other than it was sanctioned - power to arrest - reasons to believe - HELD THAT:- The issue regarding providing ‘reasons to believe’ to the person being arrested by ED has been dealt with expansively by the Hon’ble Supreme Court in ARVIND KEJRIWAL VERSUS DIRECTORATE OF ENFORCEMENT [2024 (7) TMI 760 - SUPREME COURT], wherein it has been held that it is difficult to accept that the “reasons to believe,” as recorded in writing, are not to be furnished, and the requirements in Section 19 (1) PMLA, are the jurisdictional conditions to be satisfied for arrest, the validity of which can be challenged by the accused and examined by the Court. In compliance with the statutory mandate of S. 19 of PMLA, the arresting officer at the arrest stage had apprised the petitioner of his reasons of belief and the grounds that necessitated such an arrest. Consequently, the arrest conformed with the requirements of section 19 of the PMLA Act, 2002 - An illegal arrest, as determined by a breach of the fundamental requirements of Section 19, invalidates the arrest and prevents the possibility of re-arrest based on the same justifications. This is because the violation infringed upon the individual's constitutional rights. A perusal of the grounds of arrest explicitly reveal and point to the effect that the Arresting Officer had conveyed his intention, reasons, grounds and believe to arrest the petitioner. The order of grounds of arrest is in conformity with the requirement of Section 19 of PMLA Act. The satisfaction of the concerned Officer is also duly reflected in the wordings and the necessity of arrest and has also clearly revealed. Thus, there is no fault in the grounds of arrest and consequent arrest. One of the reasons which necessitated the petitioner’s arrest was the non-recovery of massive amount of proceeds of crime. The grounds of arrest are self-sufficient and need no other clarity from this Court. Petition dismissed. Issues Involved:1. Legality of the arrest and remand orders under the Prevention of Money Laundering Act (PMLA).2. Compliance with statutory requirements, specifically Section 19 of the PMLA.3. Sufficiency and communication of 'reasons to believe' and 'grounds of arrest.'4. Involvement of the petitioner in money laundering and the necessity of custodial interrogation.5. Application of judicial precedents and constitutional safeguards.Issue-wise Detailed Analysis:1. Legality of the Arrest and Remand Orders:The petitioner challenged the legality of the arrest and subsequent remand orders, arguing that they were contrary to judicial precedents and statutory mandates. The petitioner sought quashing of the arrest order dated 18.01.2024 and the remand orders, claiming they were illegal and violated the principles established under the PMLA and constitutional provisions. The court examined whether the arrest adhered to the legal standards set forth in the PMLA, particularly Section 19, and whether the remand orders were issued following due process.2. Compliance with Statutory Requirements (Section 19 of PMLA):Section 19 of the PMLA outlines the power to arrest, requiring the arresting officer to have 'reason to believe' based on material evidence that the person is guilty of an offense under the Act. The petitioner argued that the arrest did not comply with these requirements, as the 'reasons to believe' were not communicated. The court scrutinized whether the arresting officer had documented and communicated these reasons adequately, as mandated by the Act. The judgment emphasized that compliance with Section 19 is crucial for the legality of the arrest.3. Sufficiency and Communication of 'Reasons to Believe' and 'Grounds of Arrest':The petitioner contended that the 'reasons to believe' were not furnished, violating the mandate of Section 19 (1) PMLA and constitutional safeguards under Articles 21 and 22. The court assessed whether the arresting officer had provided sufficient grounds for the arrest and whether these were communicated to the petitioner. The judgment highlighted that the 'reasons to believe' serve as a substantive safeguard, ensuring that any deprivation of liberty is justified and legally sound.4. Involvement of the Petitioner in Money Laundering and Necessity of Custodial Interrogation:The Enforcement Directorate (ED) argued that the petitioner was involved in a significant money laundering operation, justifying the need for custodial interrogation to uncover the full extent of the crime. The court evaluated the evidence presented by the ED, including the diversion of funds and the establishment of companies to siphon off proceeds of crime. The court also considered whether the petitioner's non-cooperation warranted his arrest and whether the magnitude of the alleged crime justified such action.5. Application of Judicial Precedents and Constitutional Safeguards:The petitioner cited several Supreme Court judgments, including Pankaj Bansal v. Union of India and Arvind Kejriwal v. Directorate of Enforcement, arguing that their arrest violated established legal principles. The court examined these precedents to determine their applicability to the case at hand. The judgment reaffirmed that any arrest under the PMLA must strictly adhere to statutory requirements and constitutional safeguards, ensuring that the individual's rights are protected.In conclusion, the court dismissed the petition, finding that the arrest and remand orders complied with the statutory requirements of the PMLA and were justified based on the evidence and circumstances presented. The judgment emphasized the importance of adhering to legal mandates and ensuring that any deprivation of liberty is both justified and necessary.