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2024 (7) TMI 760

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.... ground of violation of Section 19 of the Prevention of Money Laundering Act, 2002 For short, the "PML Act", and the proceedings pursuant thereto including the order of remand dated 22.03.2024 to the custody of DoE passed by the Special Judge, has been rejected. 2. At the outset, we must clarify that this is not an appeal against refusal or grant of bail. Instead, this appeal impugns the validity of arrest under Section 19 of the PML Act. It raises a pivotal question regarding the scope and ambit of the trial court/courts to examine the legality of the arrest under Section 19. The issue is legal in nature, and with the ratio being propounded in detail, the decision becomes complex and legalistic. While introducing the Prevention of Money Laundering (Amendment) Bill, 2012 in the Rajya Sabha on 17.12.2012, the then Finance Minister, Mr. P Chidambaram, stated, "Firstly, we must remember that money-laundering is a very technically-defined offence. It is not the way we understand 'moneylaundering in a colloquial sense." This has been quoted with approval in Vijay Madanlal Choudhary and others v. Union of India and others, (2022) SCC OnLine SC 929, at paragraph 35. 3. On 17.08.2022, t....

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....peal is that Arvind Kejriwal was arrested in violation of Section 19(1) of the PML Act. It is contended that the arrest was illegal, which makes the order of remand to custody of the DoE passed by the Special Court dated 01.04.2024 also illegal. Therefore, it would be apt to begin by referring to Section 19 and elucidating how the Courts have interpreted and applied the section. 8. Section 19 of the PML Act reads: "19. Power to arrest.-(1) If the Director, Deputy Director, Assistant 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 subsection (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, i....

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....he grounds of arrest must necessarily be meaningful so as to serve the intended purpose. It may be noted that Section 45 of the Act of 2002 enables the person arrested under Section 19 thereof to seek release on bail but it postulates that unless the twin conditions prescribed thereunder are satisfied, such a person would not be entitled to grant of bail. The twin conditions set out in the provision are that, firstly, the Court must be satisfied, after giving an opportunity to the public prosecutor to oppose the application for release, that there are reasonable grounds to believe that the arrested person is not guilty of the offence and, secondly, that he is not likely to commit any offence while on bail. To meet this requirement, it would be essential for the arrested person to be aware of the grounds on which the authorized officer arrested him/her under Section 19 and the basis for the officer's 'reason to believe' that he/she is guilty of an offence punishable under the Act of 2002. It is only if the arrested person has knowledge of these facts that he/she would be in a position to plead and prove before the Special Court that there are grounds to believe that he/she is no....

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....s the investigation is to be concluded within 24 hours as a matter of rule. Therefore, the investigating agency has to satisfy the magistrate with adequate material on the need for custody of the arrestee. Magistrates must bear this crucial aspect in mind while examining and passing an order on the DoE's prayer for custodial remand. More significantly, the magistrate is under the bounden duty to ensure due compliance with Section 19(1) of the PML Act. Any failure to comply would entitle the arrestee to be released. Section 167 of the Code, therefore, enjoins upon the magistrate the necessity to satisfy due compliance of the law by perusing the order passed by the authority under Section 19(1) of the PML Act. Upon such satisfaction, the magistrate may consider the request for custodial remand. 14. Pankaj Bansal (supra) reiterates V. Senthil Balaji (supra) to hold that the magistrate/court has the duty to ensure that the conditions in Section 19(1) of the PML Act are duly satisfied and that the arrest is valid and lawful. This is in lieu of the mandate under Section 167 of the Code. If the court fails to discharge its duty in right earnest and with proper perspective, the remand ord....

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....ntal right vitiates the process of arrest and remand. The fact that the chargesheet has been filed in the matter would not validate the otherwise illegality and unconstitutionality committed at the time of arrest and grant of remand custody of the accused. Reference is also made to the principle behind Article 22(5) of the Constitution. Thus, this Court held that not complying with the constitutional mandate under Article 22(1) and the statutory mandate of the UAPA, on the requirement to communicate grounds of arrest or grounds of detention, would lead to the custody or detention being rendered illegal. 17. In Vijay Madanlal Choudhary and others v. Union of India and others, (2022) SCC Online SC 929 a three Judge Bench of this Court distinguished between the stringent requirements stipulated in Section 19(1) of the PML Act, and the power of arrest given to the police in cognisable offences under Section 41 of the Code 19 "41. When police may arrest without warrant.-(1) Any police officer may without an order from a Magistrate and without a warrant, arrest any person- (a) who commits, in the presence of a police officer, a cognizable offence; (b) against whom a reasonable compl....

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....been made, or credible information has been received, or a reasonable suspicion exists, of his having been concerned in, any act committed at any place out of India which, if committed in India, would have been punishable as an offence, and for which he is, under any law relating to extradition, or otherwise, liable to be apprehended or detained in custody in India; or (h) who, being a released convict, commits a breach of any rule made under sub-section (5) of Section 356; or (i) for whose arrest any requisition, whether written or oral, has been received from another police officer, provided that the requisition specifies the person to be arrested and the offence or other cause for which the arrest is to be made and it appears therefrom that the person might lawfully be arrested without a warrant by the officer who issued the requisition." Reference was made to Section 104 of the Customs Act, 1962, For short, "Customs Act" which was elucidated and considered by the Constitution Bench of this Court in Ramesh Chandra Mehta v. State of West Bengal (1969) 2 SCR 461, and in Union of India v. Padam Narain Aggarwal and others (2008) 13 SCC 305. On the safeguards against the abuse ....

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....r standard. They ensure that the designated officer does not act arbitrarily, and is made accountable for their judgment about the 'necessity to arrest' the person The aspect of necessity to arrest, has been independently examined later alleged to be involved in the offence of money laundering, at the stage before the complaint is filed. Paragraph 89 reads as under: "89...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 as being involved in the commission of offence of money-laundering even before filing of the complaint before the Special Court under section 44(1)(b) of the 2002 Act in that regard. If the action of the authorised officer is found to be vexatious, he can be proceeded with and inflicted with punishment specified under section 62 of the 2002 Act. The safeguards to be adhered to by the jurisdictional police officer before effecting arrest ....

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....iny and examination, if the arrestee specifically challenges their arrest. If we do not hold so, then the restraint prescribed by the legislature would, in fact and in practice, be reduced to a mere formal exercise. Given the conditions imposed, the nature of the power and the effect on the rights of the individuals, it is nobody's case, and not even argued by the DoE, that the authorised officer is entitled to arrest a person without following the statutory requirements. 20. However, it has been argued by the DoE that the power to arrest is neither an administrative nor a quasi-judicial power as the arrest is made during investigation. Judicial scrutiny is not permissible as it will interfere with investigation, or at best should be limited to subversive abuse of law. Discretion and right to arrest vests with the competent officer, whose subjective opinion should prevail. 21. We do not agree and must reject this argument. We hold that the power of judicial review shall prevail, and the court/magistrate is required to examine that the exercise of the power to arrest meets the statutory conditions. The legislature, while imposing strict conditions as preconditions to arrest, was a....

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.... person is guilty of money-laundering offence, if revealed before the inquiry/ investigation required to proceed against the property being proceeds of crime including to the person involved in the process or activity connected therewith, may have deleterious impact on the final outcome of the inquiry/investigation. So long as the person has been informed about 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. 179. 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 i....

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....the offence of money laundering, creates a unique mechanism for inquiry/investigation into the offence. An analogy cannot be drawn with the provisions of the Code. ECIR is an internal document for initiating penal action or prosecution. Having held so in paragraphs 178 and 179, it is observed that Section 19(1) of the PML Act postulates that after arrest, as soon as may be, the arrestee should be contemporaneously informed of the grounds of arrest to ensure compliance with Article 22(1) of the Constitution. Non-supply of ECIR is not to be faulted. ECIR may contain details of material in possession of the authority, which if revealed before the inquiry/investigation, may have a deleterious impact on the final outcome of the inquiry/investigation. The judgment states that the accused, upon filing of the prosecution complaint, will get all relevant materials forming part of the complaint. For the same reason, it is argued by the DoE that the accused is entitled to the "grounds of arrest" and not the "reasons to believe". Grounds of arrest may only summarily refer to the reasons given for arrest. 24. In the present case, we are examining Section 19(1) of the PML Act and the rights of ....

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.... argument of the other side that the accused or arrested persons are not even informed of the case against them, is contrary to the plain language of the Act, as the Act itself mandates that the person arrested is to be informed of the ground of his arrest... xx xx xx 16(lix). Reliance is then placed on the decision of this court in Union of India v. Padam Narain Aggarwal, wherein the court examined the power to arrest under section 104 of the 1962 Act. Relying on the decision, it was stated that the power to arrest is statutory in character and cannot be interfered with and can only be exercised on objective considerations free from whims, caprice or fancy of the officer. The law takes due care to ensure individual freedom and liberty by laying down norms and providing safeguards so that the authorities may not misuse such power. It is submitted that the requirement of "reason to believe" and "recording of such reasons in writing" prevent arbitrariness and makes the provision compliant with article 14. This is reinforced from the fact that only 313 arrests have been made under the PMLA in 17 years of operations of the PMLA. 16(lx). Canadian judgment in Gifford v. Kelson was ....

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....o referred to and quoted from the Canadian judgment in Gifford (supra). Existence and validity of the "reasons to believe" goes to the root of the power to arrest. The subjective opinion of the arresting officer must be founded and based upon fair and objective consideration of the material, as available with them on the date of arrest. On the reading of the "reasons to believe" the court must form the 'secondary opinion' on the validity of the exercise undertaken for compliance of Section 19(1) of the PML Act when the arrest was made. The "reasons to believe" that the person is guilty of an offence under the PML Act should be founded on the material in the form of documents and oral statements. 30. Referring to the legal position, this Court in Dr. Partap Singh and Another v. Director of Enforcement, Foreign Exchange Regulation Act and others ( 1985 ) 3 SCC 72 has observed: "9. When an officer of the Enforcement Department proposes to act under Section 37 undoubtedly, he must have reason to believe that the documents useful for investigation or proceeding under the Act are secreted. The material on which the belief is grounded may be secret, may be obtained through Intelligence....

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....tant Collector of Customs this Court repelled the challenge to the validity of the search of the premises of the appellant and the seizure of the documents found therein. The search was carried out under the authority of an authorisation issued under Rule 126(L)(2) of the Defence of India (Amendment) Rules, 1963 (Gold Control Rules) for search of the premises of the appellant. The validity of the authorisation was challenged on the ground of mala fides as also on the ground that the authorisation did not expressly employ the phrase 'reason to believe' occurring in Section 105 of the Customs Act. Negativing both the contentions, Subba Rao, C.J. speaking for the Court observed that the subject underlying Section 105 of the Customs Act which confers power for issuing authorisation for search of the premises and seizure of incriminating articles was to search for goods liable to be confiscated or documents secreted in any place, which are relevant to any proceeding under the Act. The legislative policy reflected in the section is that the search must be in regard to the two categories mentioned in the section. The Court further observed that though under the section, the officer concer....

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....ad observed: "It is enough to say that the Reserve Bank in its dealings with banking companies does not act on suspicion but on proved facts." Thereafter, it was further observed: "But this seems certain that the action (winding up) would not be taken up without scrutinising all the evidence and checking and re-checking all the findings." 32. Accordingly, in Barium Chemicals Ltd. (supra), it was held that the expression "reason to believe" is not a subjective process altogether, not lending itself even to a limited scrutiny of the court that such "reason to believe" or opinion is not formed on relevant facts or within the limits. 33. Section 26 of the IPC, defines the expression "reason to believe" as sufficient cause to believe a thing and not otherwise. Joti Parshad v. State of Haryana 1993 Supp (2) SCC 497, referring to Section 26 of the IPC, has observed: "5... "Reason to believe" is not the same thing as "suspicion" or "doubt" and mere seeing also cannot be equated to believing. "Reason to believe" is a higher level of state of mind. Likewise "knowledge" will be slightly on a higher plane than "reason to believe". A person can be supposed to know where there is a di....

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....is entitled to challenge his arrest under Section 19(1) of the PML Act, the court to examine the validity of arrest must catechise both the existence and soundness of the "reasons to believe", based upon the material available with the authorised officer. It is difficult to accept that the "reasons to believe", as recorded in writing, are not to be furnished. As observed above, the requirements in Section 19(1) are the jurisdictional conditions to be satisfied for arrest, the validity of which can be challenged by the accused and examined by the court. Consequently, it would be incongruous, if not wrong, to hold that the accused can be denied and not furnished a copy of the "reasons to believe". In reality, this would effectively prevent the accused from challenging their arrest, questioning the "reasons to believe". We are concerned with violation of personal liberty, and the exercise of the power to arrest in accordance with law. Scrutiny of the action to arrest, whether in accordance with law, is amenable to judicial review. It follows that the "reasons to believe" should be furnished to the arrestee to enable him to exercise his right to challenge the validity of arrest. 37. W....

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....ucid, and therefore a deeper and in-depth scrutiny is required. Arrest, after all, cannot be made arbitrarily and on the whims and fancies of the authorities. It is to be made on the basis of the valid "reasons to believe", meeting the parameters prescribed by the law. In fact, not to undertake judicial scrutiny when justified and necessary, would be an abdication and failure of constitutional and statutory duty placed on the court to ensure that the fundamental right to life and liberty is not violated. 40. At this stage, we must consider the arguments presented by the DoE, which rely on judgments regarding the scope of judicial interference in investigations, including the power of arrest. Reference in this regard was made to The King Emperor v. Khawaja Nazir Ahmad, AIR 1945 PC 18 Dukhishyam Benupani, Asst. Director, Enforcement Directorate (FERA) v. Arun Kumar Bajoria, (1998) 1 SCC 52 State of Bihar and another v. J.A.C. Saldanha and others, (1980) 1 SCC 554 and M.C. Abraham and another v. State of Maharashtra and others. (2003) 2 SCC 649 In our opinion, these decisions do not apply to the present controversy, as the power of arrest in this case is governed by Section 19(1) of ....

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....ccasions for nonbailable and cognizable offences. The power under Section 437(1) of the Code is exercised by the court, other than the High Court or the Sessions Court. In other cases, Section 437(3) of the Code will apply. Gurcharan Singh (supra) distinguishes between the language of two sub-sections of Section 437 - Section 437(1) and 437(7). It is observed that 437(7) does not apply at the investigation stage, but rather after the conclusion of trial and before the court delivers its judgment. Thus, the use of the expression 'not guilty' pertains to releasing the accused who is in custody, on a bond without surety, for appearance to hear the judgment delivered. Notably, Section 437(6) states that if the trial of a person accused of a non-bailable offence is not completed within sixty days from the first date fixed for taking evidence, the magistrate to their satisfaction shall release such person on bail, provided they have been in custody throughout this period. The magistrate may direct otherwise only for reasons recorded in writing. Section 439 of the Code, which relates to the power of the High Court or the Sessions Court to grant bail, remains free from the legislative cons....

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....tion to the stipulations under the Code. 43. At this stage, it is important to distinguish between Section 19(1) and Section 45 of the PML Act. We have already quoted Section 19, but would like to quote Section 45 which reads as under: "45. Offences to be cognizable and non-bailable.- (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence under this Act shall be released on bail or on his own bond unless- (i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail: Provided that a person, who, is under the age of sixteen years, or is a woman or is sick or infirm or is accused either on his own or along with other co-accused of money-laundering a sum of less than one crore rupees, may be released on bail, if the Special Court so directs: Provided further that the Special Court shall not take cognizance of any offence punishable u....

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....ve, and is only subject to appeal before the higher courts, the DoE's opinion is not in the same category as it is open to judicial review. 45. In Vijay Madanlal Choudhary (supra), the three Judge Bench has in paragraph 131 referred to the decision in Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra and another (2005) 5 SCC 294, a case of Maharashtra Control of Organised Crime Act, 1999 For short, "MCOCA", which observes as under: "44. The wording of Section 21(4), in our opinion, does not lead to the conclusion that the court must arrive at a positive finding that the applicant for bail has not committed an offence under the Act. If such a construction is placed, the court intending to grant bail must arrive at a finding that the applicant has not committed such an offence. In such an event, it will be impossible for the prosecution to obtain a judgment of conviction of the applicant. Such cannot be the intention of the legislature. Section 21(4) of MCOCA, therefore, must be construed reasonably. It must be so construed that the court is able to maintain a delicate balance between a judgment of acquittal and conviction and an order granting bail much before commencement....

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....nial of bail, the parameters or the stipulation in State of Orissa v. Debendra Nath Padhi, (2005) 1 SCC 568 which states that evidence or material not relied by the prosecution cannot be examined at the stage of charge, will not apply. The reason is simple and straightforward. Right to bail under Section 45 of the PML Act is not dependant on the stage of the proceedings. The power of the court under Section 45 is unrestricted with reference to the stage of the proceedings. All material and evidence that can be led in the trial and admissible, whether relied on by the prosecution or not, and can be examined. It goes without saying that the oral evidence when recorded in the Court can be taken into consideration. On the question of burden of proof, Section 24 of the PML Act can be relied on by the prosecution. However, at the same time, the observations of this Court in Vijay Madanlal Choudhary (supra) with reference to clauses (a) and (b) of Section 24, as well as the burden of proof placed on the prosecution to the extent indicated in paragraph 57 refer to at least three foundational facts. These foundational facts are - criminal activity relating to the scheduled offence has been ....

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....r in India or abroad either directly or through any sister concerns/related entities; The final price to the retailer shall be fixed by the excise commissioner as per the formula prescribed which will include the profit margin of 12% for the wholesale license holders. * A cartel was formed wherein one group/person effectively would be controlling manufacturing, wholesale and retail entitles of liquor business in return for bribes/kickbacks. * The excise policy 2021 was implemented on 17.11.2021, which continued till 31.08.2022, after which the government discontinued the policy and went back to the old regime. * The role of Arvind Kejriwal is elaborated. He has been described as the kingpin/key conspirator in formulation of the policy, which favoured certain persons in exchange for kickbacks from liquor businessmen. Further, Arvind Kejriwal was involved in the use of proceeds of crime generated in the Goa election campaign of Aam Aadmi Party For short, "AA Party", in which he is the convenor and the ultimate decision maker. * C. Arvind, the then Secretary of Manish Sisodia, in his statement dated 07.12.2022, has stated that the policy was given to him in the form of a dra....

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....ment of Magunta Srinivasulu Reddy dated 16.07.2023 recorded under Section 50 of the PML Act; and his statement dated 17.07.2023 recorded under Section 164 of the Code. K. Kavitha had offered to pay Rs. 100 crore to AA Party for the excise policy. She had spoken and interacted with Arvind Kejriwal. She had asked Magunta Srinivasulu Reddy to arrange Rs. 50 crores. He had his son Raghav Magunta to further deal with K. Kavitha. Raghav Magunta had agreed to pay Rs.30 Crores. Raghav Magunta had paid Rs. 25 crores in cash to Butchi Babu and Abhishek Boinpally. * Raghav Magunta in his statement dated 26.07.2023 recorded under Section 50 of the PML Act, and statement dated 27.07.2023 recorded under Section 164 of the Code, has accepted that he had paid Rs.25 crores in cash to Abhishek Boinpally and Butchi Babu in view of the agreement between him, his father - Magunta Srinivasulu Reddy and K. Kavitha. Raghav Magunta's father - Magunta Srinivasulu Reddy had met Arvind Kejriwal in mid-March 2021. Arvind Kejriwal had invited him to do business under the new excise policy, and in turn Arvind Kejriwal wanted funding for the upcoming elections in Punjab and Goa. * Proceeds of crime of about R....

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....on that Arvind Kejriwal is guilty, on the basis of the material relied is clearly recorded. The "reasons to believe" refer to the "material" to show involvement of Arvind Kejriwal in the offence of money laundering. 50. However, the assertion on behalf of Arvind Kejriwal is that the "reasons to believe" do not mention and evaluate "all" or "entire" material. It selectively refers to "incriminating" material by giving it a semblance of good faith exercise. In reality, the reasons are a sham, and the exercise is undertaken in a predetermined and biased manner. The expression "material" in Section 19(1) of the PML Act refers to the "all" or "entire" material in possession of the DoE. Thus, "all" or "entire" material must be examined and considered by the designated/authorised officer to determine the guilt or innocence of the person. The following aspects are highlighted : * P. Sarath Chandra Reddy was arrested on 10.11.2022. In his statements before the DoE on 16.09.2022 and 09.11.2022, which were recorded before his arrest, he did not make any allegation or comment against Arvind Kejriwal. On the contrary, in his statement dated 09.11.2022, on being questioned whether Rs.100 cror....

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....ed by the Special Judge on 08.05.2023. Thereupon, Raghav Magunta had moved the High Court on 11.05.2023 for grant of interim bail, which application was withdrawn on 29.05.2023. While doing so, certain observations made by the Special Judge in the order dated 08.05.2023 were expunged. On 07.06.2023, the maternal grandmother of Raghav Magunta suffered injuries and was admitted to an Intensive Care Unit. The High Court granted an interim bail to Raghav Magunta for a period of 15 days on this ground. This order was challenged by the DoE before this Court. This Court vide order dated 09.06.2023 reduced the interim bail period from 15 days to 6 days. On 16.07.2023 and 17.07.2023, Magunta Srinivasulu Reddy gave statements under Section 50 of the PML Act and Section 164 of the Code respectively, implicating and naming Arvind Kejriwal. On 18.07.2023, the High Court extended the interim bail granted to Raghav Magunta recording that the DoE had no objection. On 26.07.2023 and 27.07.2023, Raghav Magunta gave statements under Section 50 of the PML Act and Section 164 of the Code respectively, implicating and naming Arvind Kejriwal. On 10.08.2023, the interim bail granted to Raghav Magunta wa....

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....huge amount of Rs.20-30 crores alleged to have been transferred was not established. The payment alleged to have been made for election related to jobs of meagre amount in lakhs. * Contention of the DoE that P. Sarath Reddy, Magunta Srinivasulu Reddy, Raghav Magunta, and Butchi Babu in their earlier statements were quiet and did not link Arvind Kejriwal is contested on the ground that the statements were recorded by the officers of DoE who had the discretion to put questions and also in recording the contents. 51. Arvind Kejriwal submits that the "reasons to believe" selectively refer to the implicating material, and ignore the exculpatory material. Thus, there is no attempt to evaluate the entire material and evidence on record. The co - accused, in view of prolonged incarceration, strong-arm tactics and threats have been coerced to accept the DoE's version of facts. In support, it is highlighted that the DoE changed their position, viz. the co-accused conspirators, who were granted bail post the statements implicating Arvind Kejriwal. This establishes and shows prejudice and malicious intent. 52. In response, the DoE submits that the investigation in the present case is compl....

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.... connection with the criminal activity relating to a scheduled offence under the general law cannot be regarded as proceeds of crime. There may be cases where the property involved in the commission of scheduled offence attached by the investigating agency dealing with that offence, cannot be wholly or partly regarded as proceeds of crime within the meaning of section 2(1)(u) of the 2002 Act-so long as the whole or some portion of the property has been derived or obtained by any person 'as a result of' criminal activity relating to the stated scheduled offence..." Also see M. Ravindran v. Intelligence Officer, Directorate of Revenue Intelligence, (2021) 2 SCC 485 at paragraph 17.9. - "Additionally, it is well-settled that in case of any ambiguity in the construction of a penal statute, the courts must favour the interpretation which leans towards protecting the rights of the accused, given the ubiquitous power disparity between the individual accused and the State machinery. This is applicable not only in the case of substantive penal statutes but also in the case of procedures providing for the curtailment of the liberty of the accused." Secondly, any undue indulgence and latitu....

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....ld that the courts should not inquire into correctness or otherwise of the facts found except where the facts found existing are not supported by any evidence at all or the finding is so perverse that no reasonable man would say that the facts and circumstances exist. Secondly, it is permissible to inquire whether the facts and circumstances so found to exist have a reasonable nexus with the purpose for which the power is to be exercised. In simple words, the conclusion has to logically flow from the facts. If it does not, then the courts can interfere, treating the lack of reasonable nexus as an error of law. Thirdly, jurisdictional review permits review of errors of law when constitutional or statutory terms, essential for the exercise of power, are misapplied or misconstrued. Fourthly, judicial review is permissible to check improper exercise of power. For instance, it is an improper exercise of power when the power is not exercised genuinely, but rather to avoid embarrassment or for wreaking personal vengeance. Lastly, judicial review can be exercised when the authorities have not considered grounds which are relevant or has accounted for grounds which are not relevant. 61. Er....

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....rtion of which reads as under: "22. However, there is one clear ground or charge in the complaint filed under the PML Act, which is free from perceptible legal challenge and the facts as alleged are tentatively supported by material and evidence. This discussion is equally relevant for the charge-sheet filed by the CBI under the PoC Act and IPC. We would like to recapitulate the facts as alleged, which it is stated establish an offence under Section 3 of the PML Act and the PoC Act. These are: * In a period of about ten months, during which the new excise policy was in operation, the wholesale distributors had earned Rs. 581,00,00,000 (rupees five hundred eighty one crores only) as the fixed fee. * The one time licence fee collected from 14 wholesale distributors was about Rs. 70,00,00,000 (rupees seventy crores only). * Under the old policy 5% commission was payable to the wholesale distributors/licensees. The difference between the 12%; minus 5% of the wholesale profit margin plus Rs. 70,00,00,000/-; it is submitted, would constitute proceeds of crime, an offence punishable under the PML Act. The proceeds of crime were acquired, used and were in possession of the wh....

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....upt or illegal means. It is immaterial whether such person being a public servant accepts or attempts to obtain the undue advantage directly or through a third party. 25. On this aspect of the offences under the PoC Act, the CBI has submitted that conspiracy and involvement of the appellant - Manish Sisodia is well established. For the sake of clarity, without making any additions, subtractions, or a detailed analysis, we would like to recapitulate what is stated in the chargesheet filed by the CBI against the appellant - Manish Sisodia: * The existing excise policy was changed to facilitate and get kickbacks and bribes from the wholesale distributors by enhancing their commission/fee from 5% under the old policy to 12% under the new policy. Accordingly, a conspiracy was hatched to carefully draft the new policy, deviating from the expert opinion/views to create an eco-system to assure unjust enrichment of the wholesale distributors at the expense of government exchequer or the consumer. The illegal income (proceeds of crime, as per the DoE) would partly be recycled and returned in the form of bribes. * Vijay Nair, who was the middleman, a go-between, a member of AAP, and ....

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....butors in a span of ten months. This figure cannot be disputed or challenged. Thus, the new excise policy was meant to give windfall gains to select few wholesale distributors, who in turn had agreed to give kickbacks and bribes. * No doubt, VAT and excise duty was payable separately. However, under the new policy the VAT was reduced to mere 1%. * Vijay Nair had assured the liquor group that they would be made distributor of Pernod Ricard, one of the biggest players in the market. This did happen." 64. During the course of arguments, we had specifically asked the learned counsel appearing for Arvind Kejriwal to address arguments on facts. He did not, however, address arguments on the said aspect. It was also submitted on behalf of Arvind Kejriwal that he would not like to argue on the question of applicability of Section 70 of the PML Act to political parties or the issue whether he can be prosecuted being the person in-charge and responsible. As noticed above, the arrest of Arvind Kejriwal is on several counts, which are independent and separate from each other. 65. Arguments raised on behalf of Arvind Kejriwal, which tend to dent the statements and material relied upon b....

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.... precondition and safeguard mentioned in Section 19 of the PML Act, albeit treated as a part of the general law and exercise of the power to arrest. The legislature being aware of this interpretation has not excluded the application of this principle in Section 19 of the PML Act., is explained in the following terms: "20...No arrest can be made because it is lawful for the police officer to do so. The existence of the power to arrest is one thing. The justification for the exercise of it is quite another. The police officer must be able to justify the arrest apart from his power to do so. Arrest and detention in police lock-up of a person can cause incalculable harm to the reputation and self-esteem of a person. No arrest can be made in a routine manner on a mere allegation of commission of an offence made against a person. It would be prudent for a police officer in the interest of protection of the constitutional rights of a citizen and perhaps in his own interest that no arrest should be made without a reasonable satisfaction reached after some investigation as to the genuineness and bona fides of a complaint and a reasonable belief both as to the person's complicity and e....

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....ing necessity to arrest a person involved in the offence of money laundering. Similar observations are made in paragraphs 15 and 22 of Pankaj Bansal (supra). 72. However, we must observe that in paragraph 32 of V. Senthil Balaji (supra), it is held that an authorised officer is not bound to follow the rigours of Section 41A of the Code as there is already an exhaustive procedure contemplated under the PML Act containing sufficient safeguards in favour of the arrestee. Thereafter, in paragraph 40 of V. Senthil Balaji (supra), it is observed: "40. To effect an arrest, an officer authorised has to assess and evaluate the materials in his possession. Through such materials, he is expected to form a reason to believe that a person has been guilty of an offence punishable under the PMLA, 2002. Thereafter, he is at liberty to arrest, while performing 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 t....

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....dition to Section 45 of the PML Act. Therefore, it is urged that necessity to arrest, in the case of arrest under Section 19(1), would be an additional factor required to be considered beyond the conditions and factors stipulated in Section 19(1) of the PML Act. 76. DoE submits that the test of "necessity to arrest" is satisfied in view of Arvind Kejriwal failing to appear despite the issuance of 9 summons dated 30.10.2023, 18.12.2023, 22.12.2023, 12.01.2024, 31.01.2024, 14.02.2024, 21.02.2024, 26.02.2024, and 16.03.2024. It is also submitted that arrest is a part and parcel of investigation intended to secure evidence, leading to discovery of material facts and relevant information as held in P. Chidambaram v. Directorate of Enforcement. (2019) 9 SCC 24. 77. On behalf of Arvind Kejriwal, it is submitted that there was no necessity to arrest on 21.03.2024. The RC/ECIR were registered in the month of August 2022. Further, most of the material relied upon in the "reasons to believe" are prior to July 2023. The statements under Section 50 of the PML Act and under Section 164 of the Code, or otherwise, of Magunta Srinivasulu Reddy, Raghav Magunta, Siddharth Reddy, etc., relate to th....

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....ne whether the restriction has rational connection with the aim (rational connection). (iii) The third step is to examine whether there should have been a less restrictive alternate measure that is equally effective (minimal impairment/necessity test). (iv) The last stage is to strike an appropriate balance between the fundamental right and the pursued public purpose (balancing act). is more precise and sophisticated than other traditional grounds of review. The court is required to assess the balance struck by the decision maker, not merely whether it is within the range of rational or reasonable decisions. In this manner, proportionality goes further than the traditional grounds of review as it requires attention to the relative weight according to interest and considerations. State of Uttar Pradesh v. Lal, (2006) 3 SCC 276 which refers to several other cases, states that the proportionality test safeguards fundamental rights of citizens to ensure a fair balance between individual rights and public interest. It requires the court to judge whether the action taken was really needed and whether it was within the range of courses of action which could be reasonably followed. Proport....