TaxTMI 
TaxTMI 
2023 (12) TMI 785
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....the arrest of the appellant on 27.06.2023 by the respondent Directorate of Enforcement (hereinafter referred to as the ED) was illegal and violative of the fundamental rights guaranteed to the appellant under Articles 14, 20 and 21 of the Constitution of India, and seeking direction to release the appellant forthwith. The appellant had also sought direction to quash the order of remand dated 28.06.2023 passed by the ASJ/05, PMLA, Patiala House Courts, New Delhi (hereinafter referred to as the "Special Court"), in ECIR No. STF/21/2021. 3. Dehors the facts, a neat question of law that has been raised before this Court is, whether the action of the respondent ED in handing over the document containing the grounds of the arrest to arrestee and taking it back after obtaining the endorsement and his signature thereon, as a token of he having read the same, and in not furnishing a copy thereof to the arrestee at the time of arrest would render the arrest illegal under Section 19 of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as PMLA)? FACTUAL MATRIX: - 4. The bare minimum facts required to decide the above questions of law are as follows: - (i) ....
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....) The appellant filed a Writ Petition being no. W.P. (Crl.) No.336/2023 before this Court challenging the order dated 22.07.2023 passed by the Special Court dismissing his bail application. The said writ petition came to be withdrawn by the appellant with liberty to approach the High Court. (x) Thereafter, the appellant filed the writ petition being W.P. (Crl.) No. 2408/2023, which came to be dismissed by the High Court vide the impugned order dated 22.09.2023. 5. The respondent ED has filed an affidavit to counter the allegations made in the Appeal by the appellant, and asserted that the arrest was in accordance with Section 19 of the PMLA. Paragraph 16 of the counteraffidavit being relevant is reproduced herein below: - "16. The arrest was in accordance with Section 19 of PMLA in so far as the Grounds of Arrest in writing were handed over to the arrestee Ram Kishor Arora who after reading the same affixed his signature on each page of the Grounds of Arrest. Further, after going through the Grounds of Arrest the Arrestee Ram Kishor Arora on last page in his own handwriting wrote that - "I have been informed and have also read the above mention grounds....
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....Director or any other officer authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession, reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest. (2) The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under sub-section (1), forward a copy of the order along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such order and material for such period, as may be prescribed. (3) Every person arrested under sub-section (1) shall, within twenty-four hours, be taken to a 1[Special Court or] Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest ....
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....aj Bansal case (supra) to furnish the grounds of arrest in writing, would be applicable "henceforth" as mentioned therein, meaning thereby it would have the prospective and not retrospective effect as sought to be submitted on behalf of the appellant. ANALYSIS : - 10. The validity of the various provisions including Section 19 of the PMLA was examined by the Three-Judge Bench in Vijay Madanlal Choudhary case (supra) in which the Bench while upholding the validity of Section 19 of the PMLA held that the said provision has reasonable nexus with the purposes and objects sought to be achieved by the PMLA. The relevant observations are reproduced herein below: - "324. ........In other words, the role of the Authorities appointed under Chapter VIII of the 2002 Act is such that they are tasked with dual role of conducting inquiry and collect evidence to facilitate adjudication proceedings before the Adjudicating Authority in exercise of powers conferred upon them under Chapters III and V of the 2002 Act and also to use the same materials to bolster the allegation against the person concerned by way of a formal complaint to be filed for offence of money-laundering under the ....
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....ht to be arrested has been guilty of commission of such offence. The power to arrest thus is circumscribed by objective considerations and cannot be exercised on whims, caprice or fancy of the officer. 37. The section534 also obliges the Customs Officer to inform the person arrested of the grounds of arrest as soon as may be. The law requires such person to be produced before a Magistrate without unnecessary delay. 38. The law thus, on the one hand, allows a Customs Officer to exercise power to arrest a person who has committed certain offences, and on the other hand, takes due care to ensure individual freedom and liberty by laying down norms and providing safeguards so that the power of arrest is not abused or misused by the authorities. ...." (emphasis supplied) 325. The safeguards provided in the 2002 Act and the preconditions to be fulfilled by the authorised officer before effecting arrest, as contained in Section 19 of the 2002 Act, are equally stringent and of higher standard. Those safeguards ensure that the authorised officers do not act arbitrarily, but make them accountable for their judgment about the necessity to arrest any person a....
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....grounds of his arrest that is sufficient compliance of mandate of Article 22(1) of the Constitution. Moreover, the arrested person before being produced before the Special Court within twenty-four hours or for that purposes of remand on each occasion, the Court is free to look into the relevant records made available by the Authority about the involvement of the arrested person in the offence of money-laundering. In any case, upon filing of the complaint before the statutory period provided in 1973 Code, after arrest, the person would get all relevant materials forming part of the complaint filed by the Authority under Section 44(1)(b) of the 2002 Act before the Special Court. 459. Viewed thus, supply of ECIR in every case to person concerned is not mandatory. From the submissions made across the Bar, it is noticed that in some cases ED has furnished copy of ECIR to the person before filing of the complaint. That does not mean that in every case same procedure must be followed. It is enough, if ED at the time of arrest, contemporaneously discloses the grounds of such arrest to such person. Suffice it to observe that ECIR cannot be equated with an FIR which is mandatorily r....
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....orming his mandatory duty of recording the reasons. The said exercise has to be followed by way of an information being served on the arrestee of the grounds of arrest. Any non-compliance of the mandate of Section 19(1) of the PMLA, 2002 would vitiate the very arrest itself. Under sub-section (2), the Authorised Officer shall immediately, after the arrest, forward a copy of the order as mandated under sub-section (1) together with the materials in his custody, forming the basis of his belief, to the Adjudicating Authority, in a sealed envelope. Needless to state, compliance of sub-section (2) is also a solemn function of the arresting authority which brooks no exception." 13. In Pankaj Bansal case (supra), the two-Judge Bench after analyzing the provisions contained in Section 19(1) of PMLA observed as under:- "39. On the above analysis, to give true meaning and purpose to the constitutional and the statutory mandate of Section 19(1) of the Act of 2002 of informing the arrested person of the grounds of arrest, we hold that it would be necessary, henceforth, that a copy of such written grounds of arrest is furnished to the arrested person as a matter of course and withou....
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....ati v. State of Kerala [(1973) 4 SCC 225 : 1973 Supp SCR 1] , Indira Nehru Gandhi v. Raj Narain [1975 Supp SCC 1 : (1976) 2 SCR 347] , Minerva Mills Ltd. v. Union of India [(1980) 2 SCC 591] and recently in S.P. Sampath Kumar v. Union of India [(1987) 1 SCC 124 : (1987) 1 SCR 435 : (1987) 2 ATC 82] .) With this impressive expanse of judicial power, it is only right that the superior courts in India should be conscious of the enormous responsibility which rest on them. This is specially true of the Supreme Court, for as the highest Court in the entire judicial system the law declared by it is, by Article 141 of the Constitution, binding on all courts within the territory of India. 8. Taking note of the hierarchical character of the judicial system in India, it is of paramount importance that the law declared by this Court should be certain, clear and consistent. It is commonly known that most decisions of the courts are of significance not merely because they constitute an adjudication on the rights of the parties and resolve the dispute between them, but also because in doing so they embody a declaration of law operating as a binding principle in future cases. In this latt....
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....t in the administration of judicial system and following the decision in Raghubir Singh's case (supra) observed as under: - "22. A careful perusal of the above judgments shows that this Court took note of the hierarchical character of the judicial system in India. It also held that it is of paramount importance that the law declared by this Court should be certain, clear and consistent. As stated in the above judgments, it is of common knowledge that most of the decisions of this Court are of significance not merely because they constitute an adjudication on the rights of the parties and resolve the disputes between them but also because in doing so they embody a declaration of law operating as a binding principle in future cases. The doctrine of binding precedent is of utmost importance in the administration of our judicial system. It promotes certainty and consistency in judicial decisions. Judicial consistency promotes confidence in the system, therefore, there is this need for consistency in the enunciation of legal principles in the decisions of this Court. It is in the above context, this Court in the case of Raghubir Singh [(1989) 2 SCC 754] held that a pronouncemen....
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.... and objects sought to be achieved by the PML Act and that the said provision is also compliant with the mandate of Article 21(1) of the Constitution of India, any observation made or any finding recorded by the Division Bench of lesser number of Judges contrary to the said ratio laid down in Vijay Madanlal Choudhary (supra) would be not in consonance with the jurisprudential wisdom expounded by the Constitution Benches in cases referred above. The Three-Judge Bench in Vijay Madanlal Choudhary case (supra) having already examined in detail the constitutional validity of Section 19 of PMLA on the touchstone of Article 22(1) and upheld the same, it holds the field as on the date. 18. It is true that the expression "as soon as may be" has not been specifically explained in Vijay Madanlal Choudhary (supra). Even the said expression has not been interpreted in either V. Senthil Balaji or in Pankaj Bansal case. In V. Senthil Balaji, it is held inter alia that after forming a reason to believe that the person has been guilty of an offence punishable under the PMLA, the concerned officer is at liberty to arrest him, while performing his mandatory duty of recording the reasons, and that ....
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....served that the expression meant with a "reasonable despatch" and then went on to say that "what was reasonable must depend on the facts of each case and no arbitrary time limit could be set down". In Keshav Nilakanth Joglekar v. Commissioner of Police, Greater Bombay [ Supreme Court Petition No. 102 of 1956, decided on September 17, 1956] the word "forthwith" occurring in Section 3(3) of the Indian Preventive Detention Act (4 of 1950) came up for consideration. After observing that the word "forthwith" occurring in Section 3(3) of that Act did not mean the same thing as "as soon as may be" used in Section 7 of the same Act and that the former was more peremptory than the latter, this Court observed that the time that was allowed to the authority to communicate the grounds to the detenue and was predicated by the expression "as soon as may be" was what was "reasonably convenient" or "reasonably requisite". 20. Again, a three-judge bench in Durga Pada Ghosh vs. State of West Bengal (1972) 2 SCC 656 while considering the scheme of Article 22 of the Constitution held as under: - "8. The scheme underlying Article 22 of the Constitution highlights the importance attached in ....
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....rest as soon as may be i.e as early as possible and within reasonably convenient and requisite time of twenty-four hours of his arrest, that would be sufficient compliance of not only Section 19 of PMLA but also of Article 22(1) of the Constitution of India. 23. As discernible from the judgment in Pankaj Bansal Case also noticing the inconsistent practice being followed by the officers arresting the persons under Section 19 of PMLA, directed to furnish the grounds of arrest in writing as a matter of course, "henceforth", meaning thereby from the date of the pronouncement of the judgment. The very use of the word "henceforth" implied that the said requirement of furnishing grounds of arrest in writing to the arrested person as soon as after his arrest was not the mandatory or obligatory till the date of the said judgment. The submission of the learned Senior Counsel Mr. Singhvi for the Appellant that the said judgment was required to be given effect retrospectively cannot be accepted when the judgment itself states that it would be necessary "henceforth" that a copy of such written grounds of arrest is furnished to the arrested person as a matter of course and without exception. ....