2026 (1) TMI 327 - HC - Money Laundering

PMLA s.19 arrest over 'reasons to believe' and grounds of arrest challenge fails; detention upheld for proper compliance

The dominant issue was whether the petitioner's arrest under s.19(1)-(2) PMLA was vitiated for alleged non-compliance, including that the 'reasons to ... Money Laundering - validity of arrest of petiitoner - arrest is violative of the safeguards contained in Section 19(1) and 19(2) of PMLA or not - both reasons to believe and grounds of arrest are a mere sham - Material in possession on the basis of which the arresting officer has arrived at a subjective satisfaction of guilt of the petitioner is incomplete, inchoate and inconclusive - non-cooperation could be the basis of arrest u/s 19(1) of the PMLA or not - HELD THAT:- The accused cannot be arrested on the anvil of investigation borrowed from the predicate offence. Independent investigation leading to prima facie satisfaction of the three cardinal points is mandatory. It is trite law that guilt can be established only on admissible evidence to be led before the Court and cannot be based on inadmissible evidence. Power to arrest under Section 19(1) of the Act is not for the purpose of investigation and such power can be exercised only when the designated officer is able to form an opinion by recording reasons in writing that the arrestee is guilty. The material which exonerates the arrestee should also be considered. The mandate laid down under Section 19 of the PMLA has been complied with by the arresting officer in effecting arrest of the petitioner. In view thereof, the petitioner is not entitled to release on such score - It is made clear that this Court has not gone into the merits of the case since release of the petitioner has been sought solely on the ground of non-compliance of Section 19 of the PMLA. In the event the petitioner seeks bail on merits, the appropriate Court may deal with the same independently in accordance with law without being influenced by any observation which may have been made in this judgment. Petition dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether the petitioner's arrest under Section 19(1) of the PMLA was vitiated for non-compliance with the statutory safeguards, including the requirement of 'material in possession', recording 'reasons to believe' in writing, and informing the arrestee of the 'grounds of arrest' as soon as may be. 2. Whether Section 19(2) of the PMLA was violated because the arrest order and accompanying material were forwarded to the Adjudicating Authority three days after arrest, and whether such forwarding satisfied the statutory requirement of being done 'immediately after arrest'. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of arrest under Section 19(1) PMLA (material in possession; recorded reasons to believe; communication of grounds) Legal framework (as discussed by the Court): The Court identified three pre-conditions for a valid arrest under Section 19(1): (i) the authorised officer must have 'material in his possession'; (ii) on that basis, the officer must form and record in writing 'reasons to believe' that the person is guilty of an offence punishable under the PMLA; and (iii) the person arrested must be informed of the 'grounds of arrest' as soon as may be. The Court further confined writ scrutiny to checking compliance with these safeguards and not to evaluating the sufficiency/adequacy of the material at the investigative stage. Interpretation and reasoning: The Court found it undisputed that the 'grounds of arrest' and 'reasons to believe' were furnished to the petitioner immediately upon arrest, satisfying the communication requirement. On the petitioner's contention that the arrest was based merely on investigation 'borrowed' from the predicate offence, the Court examined the documents produced and held that they prima facie suggested an independent investigation by the enforcement agency, resulting in collection of material against the petitioner and a recorded 'reasons to believe' note. The Court held that the arresting officer's subjective satisfaction regarding the material and necessity to arrest appeared to be in accordance with law, and that the Court could not, at this stage, scrutinise the sufficiency or correctness of the underlying facts and material. Conclusion: Section 19(1) was held to have been sufficiently and adequately complied with; the arrest was not vitiated on the ground of non-compliance with Section 19(1). Issue 2: Compliance with Section 19(2) PMLA (forwarding arrest order and material to Adjudicating Authority 'immediately after arrest') Legal framework (as discussed by the Court): The Court treated forwarding of the arrest order and the material to the Adjudicating Authority under Section 19(2) as a mandatory safeguard, while considering the practical content of the statutory phrase 'immediately after arrest' in the factual context presented. Interpretation and reasoning: The petitioner was arrested on April 4, 2025, and the forwarding to the Adjudicating Authority occurred on April 7, 2025. The Court accepted the explanation that the documents were handed over to the petitioner after working hours on April 4, and that the intervening two days were holidays, making April 7 the earliest working day for dispatch. The Court also relied on its prior holding (as applied to the present facts) that where 'grounds of arrest' and 'reasons to believe' are furnished immediately upon arrest, the Court can ascertain that the arresting officer already had the material prior to arrest, supporting compliance. In this backdrop, the three-day gap was treated as justified on the attending circumstances and not as a breach of Section 19(2). Conclusion: Section 19(2) was held complied with on the facts; forwarding on the next working day after intervening holidays did not vitiate the arrest. Overall dispositive holding: Since the petitioner sought release solely on alleged non-compliance with Section 19, and the Court found Section 19(1) and Section 19(2) complied with, the petitioner was held not entitled to release on that ground and the writ petition was dismissed. The Court expressly did not examine the case on merits, leaving bail on merits to be considered independently by the appropriate court.