TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 1077
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....ntly, release the petitioner from custody. ii) Quash reasons to believe dated 18.07.2025 under Section 19(1) of the PMLA and grounds of arrest dated 18.07.2025 issued by the respondent. Iii) Quash the remand order dated 18.07.2025 and remand order dated 23.07.2025 passed by the Special Court (PMLA), Raipur in ECIR/RPZO/04/2024 along with all proceedings and orders emanating therefrom; and iv) Pass such other order as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case." 2. Facts of the case in brief are that the petitioner was apprehended on 18.07.2025 by the respondent/ED purportedly in connection with an investigation under the Prevention of Money Laundering Act, 2002 (PMLA) allegedly linked to the Liquor Scam. 3. The investigation by the ED originated on the basis of various complaints and reports, inter alia, from the Income Tax Department, Anti Corruption Bureau (ACB) and Economic Offences Wing (EOW), between 2022 and 2024, relating to alleged illicit financial transactions and proceeds of crime purportedly involving the petitioner. Despite the existence of these complaints and investigation spanning over three....
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....quashing of the arrest effected by the Enforcement Directorate (ED) on the grounds delineated below, argued on the following grounds: ABSENCE OF "NEED AND NECESSITY TO ARREST" It is submitted that the mandate of Section 528 of the BNSS confers this Court with ample powers to quash any criminal proceedings or orders, including arrests, where such action is vitiated by illegality arbitrariness, or abuse of process. It is submitted that the petitioner's arrest is manifestly illegal as there was neither need nor necessity for such a custodial action. The petitioner was never served with summons under Section 50 of the PMLA, nor afforded any opportunity to cooperate with the investigation over three years. In the matter of Arvind Kejriwal Vs. ED (2025) 2 SCC 248, the Apex Court has emphasized in para 74,76, 85 and 87 that failure to exhaust lesser intrusive remedies such as summons before resorting to arrest betrays arbitrariness and illegality. It reads as follows: "74. It has been strenuously urged on behalf of Arvind Kejriwal that the arrest would falter on the ground that the "reasons to believe" do not mention and record reasons for "necessity to arrest". The term "nec....
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....erial 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 the period prior to July 2023. Thus, it was not necessary to arrest Arvind Kejriwal on 21.03.2024 based on the said material. Lastly, in Pankaj Bansal (supra), this Court observed: "28. Mere non-cooperation of a witness in response to the summons issued under Section 50 of the Act of 2002 would not be enough to render him/her liable to be arrested under Section 19..." 87. We are conscious that the principle of parity or equality enshrined under Article 14 of the Constitution cannot be invoked for repeating or multiplying irregularity or illegality. If any advantage or benefit has been wrongly given, another person cannot claim the same advantage as a matter of right on account of the error or mistake. However, this principle may not apply where two or more courses are available to the authorities. The doctrine of need and necessity to arrest possibly accepts the said principle. Section 45 gives primacy to the opinion of the DoE when it....
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.... On 26th June 2024, respondents No. 1 & 2 conducted its first search at the petitioner's residence after investigating the impugned ECIR for nine months. Prior to the search and seizure, the petitioner was never summoned. 13. Admittedly, petitioner's father was released by the learned Special Judge under the PML Act on finding his arrest illegal on 25th July 2024. On 29th July 2024 under the pretext of second search, the ED conducted a fifteen hours interrogation of the petitioner and then arrested him on the basis of bank statements of MIL, Balaji Corporation and Mahan Synthetics and secondly, on the ground that the petitioner was giving "evasive replies" on being confronted with the said bank statements. 14. Mr. Kadam would argue that even prior to 29th July 2024 respondent Nos. 1 & 2 were well aware of all the transactions that took place in MIL, Balaji Corporation and Mahan Synthetics (from which funds were diverted in to the petitioner's accounts) as can be seen from the fact that investigation into the alleged offence was being conducted since 26thJune 2024 ie. for a period of nine months. XXXX XXXXX XXXX 16. Such information relating t....
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....ng the arrest and interrogation of the petitioner's father, after whose release by the Special Court, the petitioner came to be arrested on 29th July 2024 during alleged second search within four days of release of petitioner's father. The material in possession of respondent No. 1 & 2 prior to the arrest of the petitioner as demonstrated by the respondents appears to be with it and,therefore, respondent No. 1 & 2 could have arrested the petitioner at the time of alleged first search which was conducted on 26th June 2024 itself. XXXX XXXXX XXXX 25. These are prima facie observations without going into the merits and demerits of the case and, therefore, we deem it necessary to grant an interim relief of bail to the petitioner in light of the fact that the right to life and liberty is sacrosanct in view of the constitutional mandate." DELAYED ARREST SMACKS OF MALAFIDES 9. It has been further contended that despite the ED having already formed an adverse opinion regarding the petitioner's involvement upon search under Section 17 of the PMLA on 10.03.2025, the arrest is belated by four months and thus arbitrary and legally unsustainable. Apex Court in the matter....
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....ng to the learned ASG did provide a complete picture about the grounds of arrest of the Appellant therein. However, Paragraph No. 50 of the said Judgment, which has been quoted above, does show that the Apex Court was of the opinion that the copy of the remand application in the purported exercise of communication of the grounds of arrest in writing was not provided to the Appellant therein or his Counsel which is not in the present case. b) Full Cooperation During Search: Petitioner answered all questions raised during the Section 17 PMLA search and promptly provided detailed explanations before the Adjudicating Authority. The submission of comprehensive replies by the petitioner at every stage further debunks the foundation of non-cooperation. MECHANICAL AND TEMPLATED GROUNDS OF ARREST 11. The "Grounds of Arrest" are verbatim reproduction of generic templated statements, bereft of case-specific reasoning or individualized satisfaction, contrary to the requirements as mandated by Article 22 (1) of the Constitution and jurisprudence of the Apex Court. In Prabir Purkayastha Vs. State (NCT of Delhi), (2024) 8 SCC 254 laid down by the Apex Court, in para 48, it....
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....ed 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 aware that the arrest may be before or prior to initiation of the criminal proceedings/prosecution complaint. The legislature, neither explicitly nor impliedly, excludes the court surveillance and examination of the preconditions of Section 19(1) of the PML Act being satisfied in a particular case. This flows Criminal Appeal No. 2493 of 2024 Page 14 of 64 from the mandate of Section 19(3) which requires that the arrestee must be produced within 24 hours and taken to the Special Court, or court of judicial/metropolitan magistrate having jurisdiction. The exercise of the power to arrest is not exempt from the scrutiny of courts. The power of judicial review remains both before and after the filing of criminal proceedings/prosecution complaint. It cannot be said that the courts would exceed their power, when they examine the validity of arrest under Section 19(1) of the PML Act, once the accused is produced in court in terms of Section 19(3) of the PML Act. XXXX XXXXX XXXX 31. Providing the written "g....
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....IT the assessee challenged the action taken under Section 34 and amongst others it was contended on his behalf that the reasons which induced the Income Tax Officer to initiate proceedings under Section 34 were justiciable, and therefore, these reasons should have been communicated by the Income Tax Officer to the assessee before the assessment can be reopened. It was also submitted that the reasons must be sufficient for a prudent man to come to the conclusion that the income escaped assessment and that the Court can examine the sufficiency or adequacy of the reasons on which the Income Tax Officer has acted. Negativing all the limbs of the contention, this Court held that "if there are in fact some reasonable grounds for the Income Tax Officer to believe that there had been any non-disclosure as regards any fact, which could have a material bearing on the question of under-assessment, that would be sufficient to give jurisdiction to the Income Tax Officer to issue notice under Section 34. The Court in terms held that whether these grounds are adequate or not is not a matter for the court to investigate. 10. The expression subjective satisfaction of the Officer. The belie....
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....rlier, the Officer issuing the search warrant had material which he rightly claimed to be adequate for forming the reasonable belief to issue the search warrant." 34. This decision relates to the power of authored officers to conduct search and seizure operations under Section 37 of the Foreign Exchange Regulation Act, 1973. The aforesaid observations would be equally relevant, though in the context of the power to arrest, a power which is more drastic and intrusive. Thus, the nature of inquiry to be undertaken by the courts has to be in-depth and detailed. XXXX XXXXX XXXX 44. We now turn to the scope and ambit of judicial review to be exercised by the Court. Judicial review does not amount to a mini-trial or a merit review. The exercise is confined to ascertain whether the "reasons to believe" are based upon material which 'establish' that the arrestee is guilty of an offence under the PML Act. The exercise is to ensure that the DoE has acted in accordance with the law. The courts scrutinize the validity of the arrest in exercise of power of judicial review. If adequate and due care is taken by the DoE to ensure that the "reasons to believe" justify the ....
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....e 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." 2. Arrest grounded on the whole material, including exculpatory; Reference is made to para 31 and 35. The investigating officer is also required to look at the whole material and cannot ignore material that exonerates the arrestee. A wrong application of law or arbitrary exercise of duty by the designated officer can lead to illegality in the process. The court can exercise judicial review to strike down such a decision. Referring to errors in the decision-making process, Arvind Kejriwal (supra) records how such errors can vitiate the judgment or decision of the statutory authority. The relevant portion reads: "67. Error in decision making process can vitiate a judgment/decision of a statutory authority. In terms of Secti....
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....of concern. Doubts will only arise when the reasons recorded by the authority are not clear and lucid, 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." 37. On the different facets of judicial review available with the Court while examining the legality of arrests, Arvind Kejriwal (supra) states: "65. ...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. 66. In Amarendra Kumar Pandey v. Union of India, this Court elaborated on the different facets of judicial review regarding subjective opinion or satisfaction. It was held that the courts should not inquire i....
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.... Another v. Union of India and Others, 2024 INSC 113. It comprises four prongs - (i) legitimate aim/purpose - The first step is to examine whether the act/measure restricting the fundamental right has a legitimate aim and/or purpose; (ii) rational connection -The second step is to examine whether the restriction has rational connection with the aim; (iii) minimal impairment/necessity test - The third step is to examine whether there should have been a less restrictive alternate measure that is equally effective; and (iv) balancing stage - The last stage is to strike an appropriate balance between the fundamental right and the pursued public purpose. be recorded in writing) that any Section 133 or Section 135 or Section person has been guilty of an offence 135-A or Section 136, he may arrest punishable under this Act, he may such person and shall, as soon as arrest such person and shall, as soon may be, inform him of the grounds for as may be, inform him of the grounds such arrest." MALAFIDE AND ARBITRARINESS 14. The peculiar timing of arrest - in absence of new material and following the recording of statements of co-accused absconder demon....
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.... the safeguards envisaged under the Code of Criminal Procedure, 1973 (Cr.P.C.) and offends the principles of fair trial and due process. LEGAL POSITION GOVERNING COMPLAINTS UNDER THE PMLA 18. The procedure prescribed for filing of complaints under Section 44 of the PMLA read with Section 200 to 204 of the Cr.P.C. is distinct from that of a police report under Section 173 of the Cr.P.C. The process under the PMLA unfolds as follows : 1. Cognizance: Upon completion of investigation, the Enforcement Directorate is required to file a complaint before the Special Court (PMLA) whereupon the Court may take cognizance under Section 200 Cr.P.C. 2. Enquiry : Thereafter an enquiry is conducted in terms of Sections 201 to 204 Cr.P.C. 3. Exchange of Documents : The stage of supply of documents arises under Sections 207 and 208 Cr.P.C. 4. Framing of Charges : The trial commences only after framing of charges, as held in Hardeep Singh Vs. State of Punjab, (2014) 3 SCC 92, para 117.2. 19. It is now authoritatively settled by the Apex Court in Tarsem Lal Vs. Enforcement Directorate (2024) 7 SCC 61, paras 33.1 and 33.2, that the procedure prescribed under....
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....ourt. Such invocation, it is submitted, is misconceived in law, as the scope of interference under Section 528 BNSS is narrow, supervisory and confined only to the examination of legality and procedural propriety of the arrest-not to a re-appreciation or re-evaluation of the evidentiary material forming the basis thereof. 27. It is submitted that once the mandatory requirements of Section 19 of the PMLA are complied with-namely, the existence of material in possession of the authorized officer and the recording of the "reasons to believe" that the person is guilty of an offence under the Act-the arrest cannot be judicially interfered with at the instance of the accused. LIMITED SCOPE OF JUDICIAL REVIEW: 28. It is submitted that the judicial review of arrest under the PMLA is not a merit based inquiry into the sufficiency or reliability of material but is limited to testing whether the arresting officer acted within the bounds of statutory authority and observed the procedural safeguards under the Act. In Arvind Kejriwal Vs. Directorate of Enforcement (2024) SCC OnLine SC 1703, it has been held that: "At the stage of arrest under Section 19 of the PMLA, the Court c....
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.... of the material on the basis of which such belief is formed by the authorized officer, would not be a matter of scrutiny by the Courts at such a nascent stage of inquiry or investigation. 11. As held in Adri Dharan Das vs. State of W.B.4, ordinarily arrest is a part of the process of investigation intended to secure several purposes. The accused may have to be questioned in detail regarding various facets of motive, preparation, commission and aftermath of crime and the connection of other persons, if any, in the crime. There may be circumstances in which the accused may provide information leading to discovery of material facts. It may be necessary to curtail his freedom in order to enable the investigation to proceed without hindrance and to protect witnesses and persons connected with the victim of the crime, to prevent his disappearance, to maintain law and order in the society etc. For these or such other reasons, arrest may become an inevitable part of the process of investigation. 12. It is pertinent to note that the Special Acts are enacted to achieve specific purposes and objectives. The power of judicial review in cases of arrest under such Special Acts....
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....e present case. The authorized officer of the Directorate being duly empowered under the Act, was in possession of substantial and credible material including : a) statements of key witnesses recorded under Section 50 of the PMLA, namely Lakshminarayan Bansal and Chaitanya Baghel. b) documentary evidence recovered during searches conducted on 10.03.2025 and 04.04.2025 revealing infusion of unaccounted funds into the petitioner's real estate ventures, and c) financial trail analyses corroborating the nexus between the petitioner and the proceeds of crime. Upon examination of the above material, the authorized officer duly recorded "reasons to believe" in writing on 18.07.2025 that the petitioner was guilty of an ofence under Section 3 of the PMLA. The said reasons were furnished to the petitioner at the time of arrest, in strict compliance with the mandate of Section 19(1) of the Act. The arrest, therefore, stands squarely within the four corners of law and is not vitiated on any ground of illegality or procedural irregularity. DISCRETION TO ARREST-NOT SUBJECT TO JUDICIAL SUBSTITUTION. 32. The next contention of the learned counsel for the ....
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.... custody, the arrest merges into the judicial process, and any challenge to the arrest per se becomes legally infructuous and unsustainable. 36. The Apex Court in the matter of Pragyna Singh Thakur Vs. State of Maharashtra (2011) 10 SCC 445, has held that even if there was any procedural irregularity or alleged violation at the stage of arrest the same stands cured upon judicial remand, as the custody thereafter is by virtue of the order of a competent court. The Court observed that : "60...... Even if it is assumed for the sake of argument that there was any violation by the police by not producing the appellant within 24 hours of arrest, the appellant could seek her liberty only so long as she was in the custody of the police and after she is produced before the Magistrate and remanded to custody by the learned Magistrate, the appellant, cannot seek to be at liberty on the ground that there had been non-compliance with Article 22(2) or Section 167(2) Cr.P.C. by the police." 37. Likewise, in Pranab Chatterjjee Vs.State of Bihar (1970) 3 SCC 926, the Apex Court has held that in a challenge to detention the legality of custody is to be tested with reference to the sub....
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.... Viewed in this context, the remand order dated 15.06.2023 passed by the learned Vacation Judge/Additional Sessions Judge, Panchkula, reflects total failure on his part in discharging his duty as per the expected standard. The learned Judge did not even record a finding that he perused the grounds of arrest to ascertain whether the ED had recorded reasons to believe that the appellants were guilty of an offence under the Act of 2002 and that there was proper compliance with the mandate of Section 19 of the Act of 2002. He merely stated that, keeping in view the seriousness of the offences and the stage of the investigation, he was convinced that custodial interrogation of the accused persons was required in the present case and remanded them to the custody of the ED! The sentence - 'It is further (sic) that all the necessary mandates of law have been complied with' follows - 'It is the case of the prosecution....' and appears to be a continuation thereof, as indicated by the word 'further', and is not a recording by the learned Judge of his own satisfaction to that effect." 40. It is next contended that the learned Special Court was not required to conduct a detailed or roving i....
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....ile in the former case a writ of Habeas Corpus may be entertained, in the latter the only remedy available is to seek a relief statutorily given. In other words, a" challenge to an order of remand on merit has to be made in tune with the statute, while non-compliance of a provision may entitle a party to invoke the" extraordinary jurisdiction. In an arrest under Section 19 of the PMLA, 2002 a writ would lie only when a person is not produced before the Court as" mandated under sub-section (3), since it becomes a judicial custody thereafter and the concerned Court would be in a better position to consider due compliance." 31. Suffice it is to state that when reasons are found, a remedy over an order of remand lies elsewhere. Similarly, no such writ would be maintainable when there is no express challenge to a remand order passed in exercise of a judicial function by a Magistrate. 56. While authorizing the detention of an accused, the Magistrate has got a very wide discretion. Such an act is a judicial function and therefore, a reasoned order indicating application of mind is certainly warranted. He may or may not authorize the detention while exercising his judicia....
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....ith the provisions of the Customs Act, it noted that the term "arrest" has neither been defined in the 1973 Code nor in the Indian Penal Code, 1860 nor in any other enactment dealing with offences. This word has been derived from the French word "arrater" meaning "to stop or stay". It signifies a restraint of a person. It is, thus, obliging the person to be obedient to law. Further, arrest may be defined as "the execution of the command of a court of law or of a duly authorized officer". Even, this decision recognizes the power of the authorized officer to cause arrest during the inquiry to be conducted under the concerned legislations." 45. It has been held by the Apex Court in V .Senthil Balaji (supra) that the power of arrest under Section 19 of the PMLA is meant for investigation alone. "48. The power of arrest under Section 19 of the PMLA, 2002 is meant for investigation alone. A clear position which is taken note of in Vijay Madanlal Choudhary (supra) : 89. This argument clearly overlooks the overall scheme of the 2002 Act. As noticed earlier, it is a comprehensive legislation, not limited to provide for prosecution of person involved in the offence of mo....
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....for indulging in alleged criminal activity. The respondent has rightly adverted to somewhat similar provisions in other legislations, such as Section 35 of FERA and Section 102 of Customs Act including the decisions of this Court upholding such power of arrest at the inquiry stage bestowed in the Authorities in the respective legislations. In Romesh Chandra Mehta, the Constitution Bench of this Court enunciated that Section 104 of the Customs Act confers power to arrest upon the Custom Officer if he has reason to believe that any person in India or within the Indian Customs waters has been guilty of an offence punishable under Section 135 of that Act. Again, in the case of Padam Narain Aggarwal, while dealing with the provisions of the Customs Act, it noted that the term "arrest" has neither been defined in the 1973 Code nor in the Indian Penal Code, 1860 nor in any other enactment dealing with offences. This word has been derived from the French word "arrater" meaning "to stop or stay". It signifies a restraint of a person. It is, thus, obliging the person to be obedient to law. Further, arrest may be defined as "the execution of the command of a court of law or of a duly authoriz....
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....ers of a civil court, is different and distinct from the power under Section 19 to arrest a person. These are two separate and distinct provisions. The exercise of the powers under one, cannot be restrained on the apprehension that it could lead to the exercise of powers under the other....." Therefore the petitioner's contention that non-issuance of summons vitiates the arrest is untenable. RIGHT OF FURTHER INVESTIGATION UNDER THE PMLA 50. The contention that the ED cannot conduct further investigation is devoid of merit. Section 44 of the PMLA read with its Explanation (I) explicitly provides for the filing of a "subsequent complaint" based on further investigation: "The complaint shall be deemed to include an subsequent complaint in respect of further investigation... whether against the same or additional accused." This statutory provision authorizes continued investigation and filing of supplementary complaints. 51. It is a well settled proposition that further investigation is a statutory right vested in the investigating agency, and no prior permission from the Magistrate or the Special Court is required before carrying out such investigation. In Stat....
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....harges that the court informs him of the same, the trial commences only on charges being framed. Thus, we do not approve the view taken by the courts that in a criminal case, trial commences on cognizance being taken." 55. Accordingly, since the trial in the present case has not commenced, the ED retains full authority to conduct further investigation and file supplementary prosecution complaints. NON-COOPERATION AS A PART OF GROUNDS FOR ARREST 56. The contention of the petitioner that non-cooperation cannot be a ground for arrest under Section 19 of the PMLA is wholly misplaced and contrary to the settled legal postilion. The arrest in the present case was not founded solely on non-cooperation but on the subjective satisfaction of the Investigating Officer based on tangible material revealing the necessity for arrest as contemplated under Section 19(1) of the PMLA. 57. In Pankaj Bansal Vs. Union of India (supra), the Apex Court has held as under: "28. Mere non-cooperation or failure to answer questions satisfactorily would not by itself justify arrest under Section 19. However, non-cooperation can form part of the grounds of arrest along with other incriminati....
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....onducting mini trial at various stage of investigation." 62. It is further submitted that the necessity to arrest under the scheme of PMLA is distinct from the formation of "reasons to believe" under Section 19(1). The statute contemplates that once the authorized officer, on the basis of material in possession has reasons to believe that a person is guilty of the offence of money laundering, such reasons having been duly recording in writing, the subjective satisfaction of the authorized officer cannot be substituted or second guessed by this Court in exercise of its limited jurisdiction under Section 528 of the BNSS, 2023 or Article 226 of the Constitution of India. NEED AND NECESSITY TO ARREST THE ACCUSED -GUIDED BY SECTION 41 CR.P.C. 63. The Apex Court in Arvind Kejriwal Vs. Directorate of Enforcement, 2024, SCC OnLine SC 312,at para 74 held that the necessity and justification to arrest under Section 19 PMLA must be discerned from principles analogous to those under Section 41(1)(ii) Cr.P.C. including: (a) preventing the accused from committing further offences; (b) ensuring proper investigation; (c) prevention disappearance or tampering wit....
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....ave promptly put her in the dock because of her incriminating answers overlooks s. 132 (proviso). In India the privilege of refusing to answer has been removed so that temptation to tell a lie may be avoided but it was necessary to give this protection. The protection is further fortified by Art. 20(3) which says 'that no person accused of any offence shall be compelled to be a witness against himself. This article protects a person who is accused of an offence and not those questioned as witnesses. A person who voluntarily answer questions from the witness box waives the privilege which is against being compelled to be a witness against himself, because he is then not a witness against himself but against others. Section 132 of the Indian Evidence Act sufficiently protects him since his testimony does not go against himself. In this respect the witness is in no worse position than the accused who volunteers to give evidence on his own behalf or on behalf of a co-accused. There too the accused waives the privilege conferred on him by the article since he is subjected to cross-examination and may be asked questions incriminating him. The evidence of Ethyl Wong cannot, therefore,....
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....nvestigation. 68. In the light of the foregoing submission, it is submitted that * the arrest of the petitioner was carried out in strict compliance with Section 19(1) of the PMLA: * There is no violation of any constitutional or statutory right; * the investigation is ongoing and substantiated by cogent material and corroborative evidence. 69. The petitioner's attempt to assail timing of arrest is in effect, a challenge to the subjective discretion of the investigating officer. It is settled law, as reiterated in Radhika Agarwal Vs. Directorate of Enforcement and Arvind Kejriwal Vs. Directorate of Enforcement that the Court exercising powers of judicial review does not ordinarily examine the adequacy or timing of investigative steps, unless it is shown to be actuated by malice or patently without jurisdiction and no such case is made out here. It is further submitted that the arrest dated 18.07.2025 was carried out strictly in accordance with law, after due satisfaction based on fresh developments and analysis of material collected post search, including statements recorded under Section 50 of the PMLA. The arrest was duly preceded by the recording....
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....r and objective consideration of the material and cannot be based on the officer's whims. • Written grounds of arrest: The person being arrested must be informed of the grounds for their arrest "as soon as may be". To ensure transparency and due process, the Supreme Court has ruled that a copy of the written grounds of arrest must be furnished to the arrested person without exception. • Judicial oversight: Following the arrest, the person must be produced before a Special Court, Judicial Magistrate, or Metropolitan Magistrate within 24 hours. The magistrate must be satisfied that the arresting officer has complied with all mandatory conditions under Section 19. "GROUNDS OF ARREST" UNDER SECTION 19 OF THE PMLA 74. Once the authorized officer forms reason to believe, the next step is to record and communicate the "grounds of arrest" to the person being arrested. These tests are designed to safeguard the constitutional rights of individuals against arbitrary use of power by the Enforcement Directorate (ED). Legal tests for arrest under PMLA Section 19(1) 1. Possession of "material": The authorized officer must have material in thei....
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.... power to summon any person whose attendance may be necessary from giving evidence or for producing records during the course of investigation. The statement recorded under this provision carries significant evidentiary value, being deemed to have the same sanctity as that of evidence recorded before a civil court. It is therefore not a mere procedural formality but a substantive safeguard intended to ensure transparency, fairness and accountability in the process of investigation. 77. The object of issuing a notice under Section 50 of the PMLA is two fold-firstly, to inform the person concerned of the nature and scope of the inquiry being conducted and secondly, to afford him an opportunity to place his version of facts or produce relevant material before the competent authority. Failure to issue such notice deprives the person of a valuable right to be heard and to clarify his position prior to the initiation of any coercive action. 78. Even where the statute does not expressly make the issuance of notice mandatory in every case, the principles of fairness and natural justice would require the authority to record reasons if such an opportunity is denied. The Apex Court has ....
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....HAS BEEN CONDUCTED WITHOUT PRIOR PERMISSION 81. The contention of learned Senior Counsel of the petitioner that the ED has conducted further investigation in respect of the petitioner without prior permission of the competent Court which is manifestly irregular and raises issues regarding the legality and propriety of such investigative action. Notwithstanding this, the custodial arrest was effected only after a lapse of four months, without any fresh material being collected. In the circumstances if the alleged guilt of the petitioner has already been concluded on 10.03.2025, the subsequent arrest delayed and unexplained is wholly impermissible. 82. In this regard the procedure prescribed under Sections 200-204 Cr.P.C. applies to the proceedings under the PMLA and not to the procedure contemplated under Section 173 Cr.P.C which relates to the police reports. However, the delay in effecting the arrest and the absence of prior judicial sanction for further investigation call for close scrutiny in accordance with procedural and substantive safeguards mandated under the PMLA and relevant Apex Court rulings in the matter of Pankaj Bansal Vs. Union of India (2023), Vijay Madanlal ....
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....n who has not been named as accused in the complaint already filed in respect of same offence of money-laundering, including to request the Court to proceed against such other person appearing to be guilty of offence under Section 319 of the 1973 Code, which otherwise would apply to such a trial." It has been empahsized that the primary objective of any further investigation is to uncover the truth and ensure justice is served. In the context of the PMLA, the Apex Court has held that the ED retains the statutory authority to conduct further investigation even after filing of the prosecution complaint. This authority is subject to the safeguards enshrined in the statute and must be exercised in accordance with the principles of fairness and reasonableness. 84. Similarly, in Pankaj Bansal Vs.Union of India (2023), it was held that further investigation cannot be conducted in a manner that infringes the statutory rights of the accused or circumvents procedural safeguards including the requirement of prior permission where mandated. It is pertinent to mention that the ED has authority to conduct further investigation even after filing of the prosecution complaint under the PMLA. ....
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.... filed, whether he has been named in the complaint or not. Such a provision, in fact, is a wholesome provision to ensure that no person involved in the commission of offence of money laundering must go unpunished. It is always open to the authority authorised to seek permission of the court during the trial of the complaint in respect of which cognizance has already been taken by the court to bring on record further evidence which request can be dealt with by the Special Court in accordance with law keeping in mind the provisions of the 1973 Code as well. It is also open to the authority authorised to file a fresh complaint against the person who has not been named as accused in the complaint already filed in respect of same offence of money laundering, including to request the court to proceed against such other person appearing to be guilty of offence under Section 319 of the 1973 Code, which otherwise would apply to such a trial." 3. To sum up the contention of the petitioner, this Court has held that: (I) The authorities of the Enforcement Directorate can bring on record further evidence during the trial; (ii) the further evidence can be brought on re....
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....scheme of the PMLA permits the Investigating Agency to collect further evidence after filing of a complaint subject to the prior permission of the Special Court. 90. As regards the non-cooperation and mechanical arrest, this Court finds that the issue involves disputed factual questions that cannot be conclusively determined in exercise of writ jurisdiction. The Grounds of Arrest, though brief, refer to the necessity of preventing destruction of evidence, influencing of witnesses and tracing of proceeds of crime. Whether such reasons are adequate or not, is a matter of assessment by the trial court. 91. With respect of Mr. Lakshmi Narayan Bansal, while the record does not indicate warrant of arrest remains unexecuted, the mere non-arrest of a co-accused does not, by itself, establish mala fides or illegality in the proceedings against the petitioner. At best, it may constitute an irregularity, but such irregularity does not vitiate the entire process. 92. Learned counsel for the respondent/Enforcement Directorate contended that under Section 19(1) of the PMLA, 2002, which specifies that "he may arrest such person" confers a discretion upon the Investigating Officer. Accord....
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.... xxx xxx xxx xxx xxx xxx (viii) Section 409 (that is to say, offence relating to criminal breach of trust by public servant, etc.); xxx xxx xxx 98. It is also pertinent to mention here that Section 43 of the Cr.P.C. provides arrest by private person and procedure on such arrest. Section 43 Cr.P.C. contemplates that any private person may arrest or cause to be arrested any person who in his presence commits a non-bailable and cognizable offence, or any proclaimed offender, and, without unnecessary delay, shall make over or cause to be made over any person so arrested to a police officer, or, in the absence of a police officer, any private take such person or cause him to be taken in custody to the nearest police station. 99. Further despite full knowledge of the issuance of permanent warrant of arrest as informed by the learned counsel for the accused in remand proceeding before the Special Judge, the respondent recorded the statement of Mr. Bansal on two occasions ie. 26.07.2025 and 10.09.2025 under Section 50 of the PMLA yet failed to arrest him. It is well settled that an Investigating Agency cannot exercise discretion to override a judicial ma....