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TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 512
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.... violates his fundamental rights guaranteed under Articles 14, 19, 21 and 22 of the Constitution of India. The petitioner further prays for quashing and setting aside the orders dated 14th August 2025, 20th August 2025 and all other orders passed in Remand Application No. 1136 of 2025 by the learned Additional Sessions Judge (PMLA) and for a direction for his release from custody. 2. The petitioner joined the Vasai-Virar City Municipal Corporation ("VVCMC") as a Deputy Director, Town Planning on 13th August 2010. Between 2019 and 2023, the following four First Information Reports ("FIR") were registered at the Tulinj police station and Achole police station: (i) FIR No. 1348 of 2019 dated 26th November 2019 registered under sections 420, 467 and 471 of the Indian Penal Code, 1860 ("IPC"); (ii) FIR No. 195 of 2022 dated 26th April 2022 registered under section 420 of IPC; (iii) FIR No. 196 of 2022 dated 27th April 2022 registered under sections 420, 467 and 471 of IPC; and (iv) FIR no.69 of 2023 dated 2nd February 2023 registered under section 420 of IPC. 3. The allegations in these FIRs pertain to illegal construction of 41 buildings by dev....
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....2019, 195/2022, 196/2022 and 69/2023], which concern illegal construction by developers between 2013 and 2021. The petitioner is neither named as an accused in those FIRs nor in any charge-sheet filed pursuant thereto. According to the learned senior counsel, the jurisdictional facts sine qua non for constituting the offence of money laundering under sections 2(1)(u) and the offence under section 3 of the PMLA are absent, as no criminal activity relating to a scheduled offence is attributable to the petitioner. It was urged that the allegation against the petitioner arises from FIR no. 330 of 2025 registered under the PC Act for taking commission/bribes for granting development permissions. The alleged offence is distinct and require a separate factual foundation; and any investigation into bribery falls within the domain of the police and not the ED. The learned senior counsel contended that section 3 of the PMLA does not criminalize possession of property, but only the processes or activities connected with "proceeds of crime". According to him, the ED cannot first register an ECIR and thereafter seek to establish a predicate offence to validate its actions. This is jurisdictiona....
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....he ED revealed a large cartel including the petitioner, architects, liasioners, developers and other VVCMC officials responsible for illegal construction and large scale corruption in VVCMC. During the search operations, large number of documents, unaccounted cash, digital devices, agreements and bank statements have been seized from various persons. Statements of various persons are recorded under section 50 of the PMLA and the incriminating What'sApp chats disclose use of coded language for bribe/commission payments. The custodial interrogation of the petitioner has revealed that the petitioner was involved in corrupt practices during his tenure at VVCMC. The petitioner not only turned a blind eye to the illegal constructions, but protected them in lieu of fixed rate for bribes. The information of unaccounted cash and jewellery was shared under section 66(2) of the PMLA with the jurisdictional police, leading to registration of FIR no.330 of 2025, investigation of which is on-going. Thus, it is only after the predicate offence was registered on 1st August 2025 that an Addendum to ECIR was made on 4th August 2025 and the petitioner was arrested by the ED on 13th August 2025. It is....
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.... the person could not be a matter of judicial review, inasmuch as when the arrest is made by the authorised officer on he having been satisfied about the alleged commission of the offences under the special Act, the matter would be at a very nascent stage of the investigation or inquiry. The very use of the phrase "reasons to believe" implies that the officer should have formed a prima facie opinion or belief on the basis of the material in his possession that the person is guilty or has committed the offence under the relevant special Act. Sufficiency or adequacy of the material on the basis of which such belief is formed by the authorised officer, would not be a matter of scrutiny by the courts at such a nascent stage of inquiry or investigation. 93. As held in Adri Dharan Das v. State of W.B.63, 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 o....
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....formed exercise of their powers, such power has to be exercised very cautiously keeping in mind that such exercise of power of judicial review may not lead to judicial overreach, undermining the powers of the statutory authorities. To sum up, the powers of judicial review may not be exercised unless there is manifest arbitrariness or gross violation or non-compliance of the statutory safeguards provided under the special Acts, required to be followed by the authorised officers when an arrest is made of a person prima facie guilty of or having committed offence under the special Act." 10. In the present case, the record reveals that due process prescribed under the PMLA has been followed before arresting the petitioner. While investigating into the illegalities at VVCMC, the petitioner was examined on several occasions and his residences were raided by the ED. On 23rd June 2025, the ED recorded reasons and issued a show cause notice under section 8(1) of the PMLA. The material gathered during investigation was shared with the jurisdictional police under section 66(2) of the PMLA, culminating in registration of FIR no.330 of 2025 on 1st August 2025. Upon arrest on 13th August 2025....
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....he scheduled offence. The definition is wide and will encompass a situation like the present one. If a person takes a bribe, he acquires proceeds of crime. Therefore, prima facie the recovery of unaccounted cash, jewellery and other incriminating articles and the statement of witnesses recorded under section 50 of the PMLA taken together provided sufficient foundation for the Arresting Officer to believe that the petitioner is prima facie guilty of money laundering. The relevant grounds mentioned in the arrest memo extracted below indicate that there is tangible material and credible evidence of the involvement of the petitioner in the commission of predicate offence: "GROUNDS OF ARREST FOR INVOKING SECTION 19 OF PMLA, 2002 FOR ARREST OF SHRI Y.S. REDDY IN ECIT/MBZO-II/10/2025 You, Y S REDDY, are hereby informed that during the ongoing inquiry and investigation under PMLA by the Directorate of Enforcement, various incriminating records (including the digital devices), Whatsapp Chats and statements of various persons were taken on record, wherein it has been revealed that: 1. You have deliberately and intentionally committed omission to perform your lawful....
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....ning of VVCMC, VVCMC and in view of the authority and influence inherent to such an offence you held, there exists a grave and reasonable apprehension that you may exercise undue influence, inducement, or threat and coercion upon Builders, Architects, Liasoners and officials of VVCMC. There is every likelihood that you by utilising his official position will influence, induce and threaten the material witnesses and co-accused persons, thereby impeding the further course of investigation. On the basis of aforesaid facts and circumstances and material in possession, I have reasons to believe that you have not only acquired, possessed, concealed and utilized the proceeds of crime of several crores of rupees, but also actually involved and knowingly assisted in layering and laundering of proceeds of crime, and thus you are guilty of the offence of money laundering as defined under section 3 of PML Act, 2022 punishable under section 4 of MPL Act, 2022. Accordingly, there exists sufficient reasons to believe that your arrest is necessary for various reasons as already detailed in the 'reasons to believe' being served along with this 'grounds of arrest'. In view....
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....PMLA. This law is well settled by the Hon'ble Supreme Court in "Vijay Madanlal Choudhary", the relevant portions of which read as under: "134. From the bare language of Section 3 of the 2002 Act, it is amply clear that the offence of money laundering is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence. The process or activity can be in any form - be it one of concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so. Thus, involvement in any one of such process or activity connected with the proceeds of crime would constitute offence of money laundering. This offence otherwise has nothing to do with the criminal activity relating to a scheduled offence - except the proceeds of crime derived or obtained as a result of that crime. 135. Needless to mention that such process or activity can be indulged in only after the property is derived or obtained as a result of criminal activity (a scheduled offence). It would be an offence of m....