TaxTMI 
TaxTMI 
2024 (12) TMI 163
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.... Submissions on behalf of Petitioner 16 VI. Submissions on behalf of Respondent 21 VII. Analysis 26 [VII.A] Relevant Extracts from Case Laws 27 [VII.A.1] Grounds of Arrest 27 [VII.A.2] Reasons to Believe 34 [VII.A.3] Judicial Review 36 [VII.A.4] No merits review 40 [VII.A.5] Inclusion of exculpatory material 41 [VII.A.6] Need and necessity to arrest 42 [VII.B] Principles Culled Out 44 [VII.B.1] On Grounds of Arrest 44 [VII.B.2] Information to the Accused and Compliance 45 [VII.B.3] Reasons to Believe 46 [VII.B.4] Need and Necessity to Arrest 47 [VII.B.5] Relevance of Exculpatory Material 48 [VII.B.6] Judicial Review 48 [VII.B.7] Non-Cooperation of the Petitioner 49 [VII.B.8] Remand Orders 49 [VII.C] Assessment on Facts 49 [VII.C.1] Grounds of Arrest 50 [VII.C.2] The ED Investigation 53 [VII.C.3] Grounds of Arrest and the Remand Order 56 [VII.C.4] Exclusion of Exculpatory Material ....
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....al. 6. The petitioner is a 63-year-old former promoter of M/s Amtek Auto Ltd. ("AAL") which, over a period of time, burgeoned into various subsidiary and sister companies, that are broadly referred to as the 'Amtek Group'. Post global slowdown in 2008, Amtek faced liquidity constraints, as per the petitioner, leading to delay in meeting loan payments and commitments to interest. On 15th March 2016, ACI Ltd. ("ACIL") was declared a Non-Performing Account ("NPA") by IDBI Bank (a financial institution). Subsequently in 2018, the Bank of Maharashtra also declared it is an NPA. In the meantime, the Corporate Insolvency Resolution Proceedings ("CIRP") was initiated against AAL and other associate companies in 2017-2018. ACIL, petitioner, and other entities were declared 'wilful defaulter' by IDBI Bank on 25th July 2018, which was subsequently stayed by the Bombay High Court by order dated 24th October 2018 in W.P. 3656/2018. 7. A preliminary Forensic Audit Report ("FAR") was prepared by M/s M.K. Agarwal and Co. ("MKA") on 30th July 2018. On 17th September 2019, by a letter, the Forensic Auditor clarified that no angle of fraud was discovered. Meanwhile, declaration of 'wilful defaulter....
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.... rejected the application by the ED seeking copy of FIR, chargesheet, and relied upon documents. 15. Petitioner appeared before the ED, pursuant to summons under Section 50 PMLA, on 19th June 2024 and his statement was recorded. On 20th June 2024, ED carried out search and seizure proceedings at petitioner's residence and statement was recorded under Section 17 PMLA. Petitioner again appeared on 5th July 2024 pursuant to summons; he was then asked to appear on 9th July 2024, on which day he was arrested. The Arrest Order dated 09th July 2024 is reproduced as under: 16. Ground of arrest were served to the petitioner on 09th July 2024; the portion highlighting the role of the petitioner as well as conclusions arrived at, are extracted as under for ready reference: 17. On 10th July 2024 petitioner was remanded to ED custody for 7 days. Further orders of remand were passed on 17th July 2024, 24th July 2024, and 7th August 2024. 18. On coming to know of the PIL and orders passed by the Supreme Court in Jaskaran Singh Chawla (supra), petitioner filed an intervention application and a writ petition challenging the arrest. On 13th August 2024, the Supreme Court directed that petitioner....
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.... (1) shall, within twenty-four hours, be taken to a [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 to the [Special Court or] Magistrate's Court." (emphasis added) 20.2 Rule 2(g) of the Prevention of Money-Laundering (The Forms and the Manner of Forwarding a Copy of Order of Arrest of a Person along with the Material to the Adjudicating Authority and its Period of Retention) Rules, 2005 ("Arrest Rules"): "(g) "material" means any information or material in the possession of the Director or Deputy Director or Assistant Director or any authorised officer, as the case may be, on the basis of which he has recorded reasons under sub-section (1) of Section 19 of the Act;" 20.3 Rule 2(h), Arrest Rules: (h) "order" means the order of arrest of a person and includes the grounds for such arrest under sub-section (1) of Section 19 of the Act; 20.4 Rule 3, Arrest Rules: "3. Manner of forwarding a copy of the order of arrest and the material to the Adjudicating Authority.- (1) The Arresting Officer....
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....records such as acknowledgement slip register, dak register, and register showing details of receipt of the copy of the order of the arrest along with the material for the purposes of this rule and shall ensure that necessary entries are made in the registers immediately on receipt of such order and the material." IV. JUDICIAL PRECEDENTS CITED 21. Principal case laws cited and relied upon by the Senior Counsel for petitioner are as follows: i. Vijay Madan Lal Chaudhary v. Union of India 2022 SCC OnLine SC 929; ii. Prem Prakash v Union of India, 2024 INSC 637; iii. Manish Sisodia v. Directorate of Enforcement 2024 SCC OnLine SC 1920; iv. Arvind Kejriwal v. Directorate of Enforcement 2024 INSC 512; v. Arnesh Kumar v. State of Bihar (2014) 8 SCC 273; vi. Prabir Purkayastha v. State 2024 INSC 414; vii. Pankaj Bansal v Union of India 2023 SCC OnLine SC 1244; viii. V. Senthil Balaji v. State 2023 SCC OnLine SC 934; ix. Prakash Industries Ltd. Union of India 2023 SCC OnLine Del 336; x. K. Govindaraj v. Union of India 2024 SCC OnLine Mad 3500. 22. Respondent's counsel, in addition to the cases already cited by the petitioner, relied upon the following judgements: i....
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....rbitrarily, but are accountable for their judgment, not necessarily to arrest. If found vexatious, officers can be proceeded with and punishment can be inflicted under Section 52 of the PMLA. Arrest must be made if there was 'necessity' to arrest. 27. Relying on paragraphs 21, 28, and 39 of Pankaj Bansal (supra), an October 2023 decision of the Supreme Court, it was submitted that a mandate was introduced to supply a copy of written grounds of arrest to arrested person as a matter of course and without exception. Also, failure of the accused to respond to questions put to them by ED, would not be sufficient in itself for the IO to opine that they were liable to be arrested since the provision requires reasons to believe that they were guilty and mere non-cooperation would not be enough. 28. In the May 2024 decision of Prabir Purkayastha (supra), particularly paras 29, 46 and 48, the Supreme Court adverted to Article 22 (1) and 22 (5) of the Constitution of India, 1950 noting the pari materia provisions under Preventive Detention Laws endorsing the requirement to communicate the grounds of arrest to be conveyed to accused, in writing, expeditiously. 29. In the July 2024 decision ....
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.... adopted a pick-and-choose mechanism, and ignored the documents which were exculpatory in nature, inter alia the report of MKA, exemplified through the letter dated 17th September 2019, reports of auditors of three other group companies stating no fraud had taken place, the Delhi High Court setting aside the 'fraud' declaration by IDBI Bank and Bank of Maharashtra, stay on declaration of 'wilful defaulter' by the Bombay High Court and the Delhi High Court, culmination of insolvency proceedings into successive resolution plans in the companies, omission to consider the Ernst & Young transaction audit report, omission to collect the CBI charge-sheet and the 'relied upon documents' and not completing that process. 31.4 The reason to arrest must be coupled with the 'necessity to arrest'. There was no necessity to arrest as CBI had not supplied documents to the ED and the ED had proceeded in haste. The alleged reason by the ED that properties were being alienated, was an afterthought. The proper recourse would be attachment under Section 5 PMLA and not to exercise arrest under Section 19. 31.5 Non-cooperation by the petitioner, for the purpose of investigation, cannot serve as a groun....
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...., running into 30 pages in 35 paragraphs, discussing the material in possession, forming the reasons to believe that the petitioner was guilty, cannot be considered as insufficient. 32.2 The allegation, that exculpatory material was not considered, has no basis. The opinion of the arresting officer is formed on the basis of 'material in possession' as on the date of arrest. It is not the case of the petitioner that the so-called exculpatory material being referred to, was 'in possession of the I.O' on the date of arrest. Notwithstanding, the letter of MKA of 17th September 2019 was of no consequence, considering that a scanned copy, given as an annexure in these proceedings, was not verified; the alleged author of the letter, since being deceased. Moreover, the said letter, spoke about replies given by the management, 'in respect of certain points' and therefore, it was unclear as to which points had been responded to. The right to seek production of documents under Section 91, Code of Criminal Procedure, 1973 ("Cr.P.C.") was available only after framing of charges, at the stage of trial, as per Devendra Nath Padhi (supra). 32.3 The FAR by MKA notes that they have not examined th....
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....ts involved in the fraud." 32.6 The setting aside of the fraud account declaration was basis State Bank of Indias v. Rajesh Aggarwal (supra) on the grounds of natural justice and was not merely on merits. The Supreme Court in Punjab National Bank v. Vijay Soni, SLP (Civil) 47470/2023 while staying a decision of the Madhya Pradesh High Court in Surendra Patwa v. Reserve Bank of India, WP 23800/2021 stated that registration of an FIR could not be quashed for non-compliance of a circular, which was subsequently further stayed by the Supreme Court in CBI v. Surendra Patwa SLP (Crl) 15952/2024 order dated 17th May 2024. 32.7 As regards the declaration of 'wilful defaulter' being stayed, it cannot have any bearing on the PMLA proceedings which is an independent and stand-alone offence, as stated in Vijay Madanlal Chaudhary (supra) paragraph 269. The successful resolution plans with respect to group companies shall not take away the criminality. The Supreme Court in Ram Narain Popli (supra) stated that repayment was not an indication of lack of dishonest intention. Sometimes payments were made to create confidence for future transactions where money could be dishonestly misappropriated.....
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....consideration of material on record. 32.14 The arrest itself is part of investigation, as noted in Vijay Madanlal Chaudhary (supra), as also in V. Senthil Balaji (supra), in particular paragraph 48 which notes opinion in Vijay Madanlal Chaudhary (supra). 32.15 In H.M. Rishbud (supra), the Supreme Court notes that investigation under Cr.P.C., includes the arrest of suspected offender. It is also opined so, by the Supreme Court in Naser Bin Abu Bakr Yafai (supra). VII. ANALYSIS 33. Heard counsel for both parties and perused the voluminous material placed on record including list of dates and events, various notes of arguments, notes on relevant extracts from precedents, and compilations of judgements. 34. At the outset, it may be clarified that the present petition is not filed praying for enlarging the petitioner on bail, however, it is filed challenging the validity of arrest of petitioner under Section 19 of the PMLA. In context of the facts of this case and law that has developed on this subject, thus far, in recent times, issues arising for assessment before this Court are enumerated as under: i. Grounds of Arrest; ii. Information to the petitioner/accused, and complian....
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....itution provides, inter alia, that no person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest. This being the fundamental right guaranteed to the arrested person, the mode of conveying information of the 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 b....
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....he 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 order would fail on the ground that the court cannot validate an unlawful arrest made under Section 19 (1). The Court relied on In the matter of Madhu Limaye and others, which held that it is necessary for the State to establish that, at the stage of remand, while directing detention in custody, the magistrate has applied their mind to all relevant matters. If the arrest itself is unconstitutional viz. Article 22 (1) of the Constitution, the remand would not cure the constitutional infirmities attached to such arrest. The principle stands expanded, as the violation....
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....t 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 as stipulated in the 1973 Code, are certainly not comparable. Suffice it to observe that this power has been given to the high-ranking officials with further conditions to ensure that there is objectivity and their own accountability in resorting to arrest of a person even before a formal complaint is filed under section 44 (1) (b) of the 2002 Act. Investing of power in the high-ranking officials in this regard has stood the test of reasonableness in Premium Granites (supra), wherein the court restated the position that requirement of giving reasons for exercise of power by itself excludes chances of arbitrariness. Further, in Sukhwinder Pal Bipan Kumar (supra), the court restated the position that where th....
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....cial Court/magistrate, cannot be construed and is not the same as furnishing or providing the "reasons to believe" to the arrestee who has a right to challenge his arrest in violation of Section 19 (1) of the PML Act. ... 28. Providing the written "grounds of arrest", though a must, does not in itself satisfy the compliance requirement. The authorized officer's genuine belief and reasoning based on the evidence that establishes the arrestee's guilt is also the legal necessity. As the "reasons to believe" are accorded by the authorised officer, the onus to establish satisfaction of the said condition will be on the DoE and not on the arrestee. ... 36. Once we hold that the accused 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 ca....
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....e is guilty of the offence under the PML Act. Guilt can only be established on admissible evidence to be led before the court, and cannot be based on inadmissible evidence. While there is an element of hypothesis, as oral evidence has not been led and the documents are to be proven, the decision to arrest should be rational, fair and as per law. Power to arrest under Section 19 (1) is not for the purpose of investigation. Arrest can and should wait, and the power in terms of Section 19 (1) of the PML Act can be exercised only when the material with the designated officer enables them to form an opinion, by recording reasons in writing that the arrestee is guilty. ... 44. In our opinion, the key distinction between Section 19 (1) and Section 45 is the authority undertaking the exercise, in each case. Under Section 19 (1), it is the designated/authorised officer who records in writing, their "reasons to believe" that the arrestee is 'guilty' of an offence under the PML Act. Thus, the arrest is based on the opinion of such officer, which opinion is open to judicial review, however not merits review, in terms of the well-settled principles of law. Contrastingly, under Section 45, i....
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.... any person as a result of that criminal activity; and the person concerned is directly or indirectly involved in any process or activity connected with the said property being proceeds of crime, have to be established. It is only on establishing the three facts that the offence of money laundering is committed. When the foundational facts of Section 24 are met, a legal presumption would arise that the proceeds of crime are involved in money laundering. The person concerned who has no causal connection with such proceeds of crime can disprove their involvement in the process or activity connected therewith by producing evidence or material in that regard. In that event, the legal presumption would be rebutted. ... 59. Having said so, we accept that a question would arise - does judicial review mean a detailed merits review? We have already referred to the contours of judicial review expounded in Padam Narain Aggarwal (supra), and Dr. Pratap Singh (supra). We have also referred to the principles of Wednesbury reasonableness. 60. In Amarendra Kumar Pandey v. Union of India and others, this Court elaborated on the different facets of judicial review regarding subjective opinion ....
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.... that is contested and has to be examined and decided. This argument does not persuade us, given the limited power of judicial review, to set aside and quash the "reasons to believe". Accepting this argument would be equivalent to undertaking a merits review. 66. Arvind Kejriwal can raise these arguments at the time when his application for bail is taken up for hearing. In bail hearings, the court's jurisdiction is wider, though the fetters in terms of Section 45 of the PML Act have to be met. Special Court would have to independently apply its mind, without being influenced by the opinion recorded in the "reasons to believe". To adjudicate on a bail application, pleas and arguments of Arvind Kejriwal and the DoE, including the material that can be relied on and the inferences possible shall be examined. The court will have to undertake the balancing exercise." [VII.A.5] Inclusion of exculpatory material "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, ....
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.... the mere satisfaction of the formal parameters to arrest sufficient? Or is the satisfaction of necessity and need to arrest, beyond mere formal parameters, required? We would concede that such review might be conflated with stipulations in Section 41 of the Code which lays down certain conditions for the police to arrest without warrant: o Section 41 (1) (ii) (a) - preventing a person from committing further offence. o Section 41 (1) (ii) (b) - proper investigation of the offence. o Section 41 (1) (ii) (c) - preventing a person from disappearing or tampering with evidence in any manner. o Section 41 (1) (ii) (d) - preventing the person from making any inducement or threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the court or police. o Section 41 (1) (ii) (e) - to ensure presence of the person in the Court, whenever required, which without arresting cannot be ensured. However, Section 19 (1) of the PML Act does not permit arrest only to conduct investigation. Conditions of Section 19 (1) have to be satisfied. Clauses (a), (c), (d) and (e) to Section 41 (1) (ii) of the Code, apart from other consid....
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....to be communicated to the accused, in writing. [VII.B.2] Information to the Accused and Compliance 39. The arrested person is to be informed the grounds of arrest within 24 hours, which is also the period within which the person is to be produced before the Special Court. Non-compliance of the same will render it as illegal detention. Section 19 of the PMLA uses the phrase "as soon as may be" for the accused to be informed of the grounds of arrest; the said phrase was not interpreted in Vijay Madanlal Choudhary (supra), V. Senthil Balaji (supra), or in Pankaj Bansal (supra), and was crystalised as being within 24 hours of arrest in Ram Kishore Arora (supra), particularly in paragraph 21 of the decision, extracted as under: "21. In view of the above, the expression "as soon as may be" contained in Section 19 PMLA is required to be construed as - "as early as possible without avoidable delay" or "within reasonably convenient" or "reasonably requisite" period of time. Since by way of safeguard a duty is cast upon the officer concerned to forward a copy of the order along with the material in his possession to the adjudicating authority immediately after the arrest of the person, a....
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....n 19 of the PMLA. Since Vijay Madanlal Choudhary (supra) was a decision rendered by a three-Judges' Bench, the Supreme Court in Arvind Kejriwal (supra) referred the questions of law relating to "need and necessity to arrest" as a separate ground to challenge the order of arrest to a larger Bench. Paragraph 84 of Arvind Kejriwal (supra) is extracted as under: "84. In view of the aforesaid discussion, and as Vijay Madanlal Choudhary (supra) is a decision rendered by a three Judge Bench, we deem it appropriate to refer the following questions of law for consideration by a larger Bench: (a) Whether the "need and necessity to arrest" is a separate ground to challenge the order of arrest passed in terms of Section 19 (1) of the PML Act? (b) Whether the "need and necessity to arrest" refers to the satisfaction of formal parameters to arrest and take a person into custody, or it relates to other personal grounds and reasons regarding necessity to arrest a person in the facts and circumstances of the said case? (c) If questions (a) and (b) are answered in the affirmative, what are the parameters and facts that are to be taken into consideration by the court while examining the quest....
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.... than questioning a suspect who is ensconced with a favourable order under Section 438 Cr.P.C. [VII.B.8] Remand Orders 45. In Madhu Limaye (supra), the Supreme Court held that the Magistrate, at the stage of remand, has to apply its mind to all relevant matters, and that the remand would not cure constitutional infirmities attached to arrest if the arrest itself is unconstitutional. Therefore, violation of Section 19 (1) of the PMLA would vitiate the arrest and a subsequent remand order, however, detailed, could not cure the same. This was recognised in Pankaj Bansal (supra) as well as in Arvind Kejriwal (supra). [VII.C] Assessment on Facts 46. Having considered the submissions of the respective counsels as well as having perused documents on record, this Court notes the following: a. The petitioner was arrested on 09th July, 2024 at 10:38 p.m. An arrest order was issued on 09th July, 2024 which notes the timing as 10:38 p.m., and that the arrestee was informed of the grounds of arrest. b. The grounds of arrest which accompanied the arrest order were substantially detailed, running into 36 paragraphs. It is not the case of the petitioner that they were not supplied with the....
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.... ("NMG") submitted a complaint on 28th June 2022 alleging criminal conspiracy, cheating, criminal breach of trust forgery for the purpose of cheating, and abuse of official position, resulting in a wrongful loss of Rs.384.35 Crores to a consortium of banks led by IDBI Bank (including Karur Vysya Bank), accusing ACIL, Arvind Dham, Aditya Malhotra, and Arvind Suraj. 48.4 On receipt of above complaint, the CBI registered another FIR bearing no. RC2232022A0009 on 21st December 2022 under Section 120B read with Sections 420, 406, and 468 of the IPC and Section 13 (2) read with Section 13 (1) (d) of the PC Act. 48.5 ACIL, which specialised in manufacturing high precision engineering automotive components, utilised Term Loan facilities under Multiple Banking Arrangements and Working facilities through a consortium led by Canara Bank. Bank of Maharashtra approved a Term Loan of Rs.200 Crores, funds were disbursed on 31st October 2012, but the accused company continued to default. In 2015, a Corrective Action Plan ("CAP") was approved to bolster the working capital. Despite efforts of lenders, the company defaulted, and in 2016, the Joint Lending Forum ("JLF") implemented the Strategic De....
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....fixed assets/inventories which were neither physically available nor part of the record. 49.2 Loan exposure for the Amtek Group of Companies before entering CIRP was Rs.30,269.59 Crores. The Group continued to default despite best efforts of lenders led by the Reserve Bank of India. 49.3 The initial directors of the company were the petitioner, his wife Anita Dham, and his mother Late Smt. Manorma Dham. Petitioner was the key person in negotiating terms for raising finances and provided personal guarantees against the loans raised. A sample money trail made of ACIL as per the two FIRs reveals systematic diversion of loan funds and has been provided as part of the grounds of arrest in paragraph 31. Investigation of the money trail led to a bank account of WLD Investments Pvt. Ltd., an investment company which did not have a business, but its beneficial ownership was with the petitioner and his family. 49.4 Preliminary investigation revealed that the Amtek group used the WLD bank account to siphon off funds between 2007 till the time of the CIRP, which was to the tune of Rs.2,378.27 Crores. These funds were further diverted in other group companies including real estate companies ....
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.... and few more individuals who stated that the cash belonged to the petitioner's family were also recorded. 50. The petitioner has apparently transferred properties to his relatives to conceal them from insolvency proceedings e.g. land of 6.17 acres with residential house of 18,000 square feet built at Sultanpur, New Delhi were sold for Rs.6 Crores to Nischara Reality Pvt. Ltd. as agricultural land despite circle rate being 70.94 Crores. Petitioner continues to live at the residence by paying rent at A-212, Shivalik, New Delhi which has been sold to Anjali Malhotra, his sister who was living with the accused at undervalued rates. 51. Based on the above, the ED concluded that there was sufficient evidence that offences involving proceeds of crime were being indulged in by the petitioner; evidence in exclusive possession could be tampered with including statement from employees and associates; transfer of properties held by petitioner and his family in order to frustrate the proceedings under PMLA and IBC; likelihood of abuse of influence on parties who have made disclosures. 52. Further investigation was stated to be required for unearthing various assets which have been held by p....
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....nnot be considered as a conclusive finding of all forensic audit as rightly contended by Special Counsel for ED. It is merely a scanned and not a verified document and, in any event, the FAR itself has notable observations as mentioned in paragraph 32.3 above. The author of the said letter has since deceased and the letter is limited in its scope. The letter was based on 'certain points' and not with respect to the entire financial exposure. 56.2 Further, as far as the FAR by MKA is concerned, it has significant disclaimers which are noted in paragraph 32.3 above, and the solitary observation in the letter did not sit well with the larger conclusions of the forensic audit. 56.3 Moreover, the arresting officer had in his possession a letter from Kotak Mahindra Bank dated 26th February 2020 which had confronted MKA regarding the basis of the 'no fraud' opinion and, though it did not form part of the material in possession at that stage, supplied in September 2024 to the ED, raises serious questions on the FAR. 56.4 The three reports by KGS regarding three companies were also not in possession of the IO and, therefore, could not be considered as part of the material in possession. ....
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....plan is belied by the extent of the haircut that the resolution plan proposes above 99%, essentially leading to a possibility that these monies have been mis-utilised. [VII.C.5] Non-Cooperation of Petitioner 56.7 The aspect of non-cooperation of petitioner, as correctly pointed out by Senior Counsel for petitioner, may not be relevant considering that as stated above there is a right against self-incrimination provided by the Constitution of India. [VII.C.6] Need and Necessity to Arrest 57. Regarding the need and necessity of arrest while having finally referred the matter to a larger Bench, the Supreme Court in Arvind Kejriwal (supra) noted that such a parameter could be conflated with the parameters in Section 41 Cr.P.C. laying down additions for the police to arrest without warrant. Section 41 Cr.P.C. parameters include preventing a person from committing further offence, proper investigation of offence, preventing a person from disappearing or tampering with the evidence, preventing person making an inducement or threat of promise to dissuade from disclosing facts, to ensure presence of the person in Court whenever required. The Supreme Court notes that an arrest under Sect....