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. Issues: Whether the arrest and remand of the petitioner complied with Section 19 of the Prevention of Money Laundering Act, 2002 (including recording of reasons to believe, existence of material in possession prior to arrest, furnishing grounds of arrest to the arrestee and forwarding of the material to the Adjudicating Authority under Section 19(2)).Analysis: The statutory pre-conditions under Section 19 require (i) that the authorised officer have material in possession, (ii) that the officer record reasons to believe in writing based on that material, and (iii) that the arrestee be informed of the grounds of arrest; further Section 19(2) requires forwarding the order and material to the Adjudicating Authority. Judicial review of arrests under special statutes is confined to manifest arbitrariness or gross non-compliance with statutory safeguards, and does not extend to assessing sufficiency or adequacy of the material at the investigative stage. The records prima facie show that material was collected by the authorised officer leading to recorded reasons to believe and that grounds of arrest were furnished to the arrestee immediately on arrest. The delay in forwarding the material to the Adjudicating Authority was explained as due to timing of delivery and intervening holidays and falls within a reasonable time given the circumstances.Conclusion: The arrest and remand complied with the requirements of Section 19 of the Prevention of Money Laundering Act, 2002 and the petition challenging the arrest is not maintainable on the ground of non-compliance with Section 19; outcome is against the petitioner and in favour of the respondent.