2023 (10) TMI 175 - Supreme Court

The core issue in these appeals is the challenge against orders dated July 20 and 26, 2023, passed by a Division Bench​​. The case's origin traces back to FIR No. 0006 dated April 17, 2023, filed by the Anti-Corruption Bureau Panchkula, Haryana, under various sections of the Prevention of Corruption Act 1988 and the IPC. This FIR included allegations of corruption, bribery, and criminal conspiracy against several individuals, including Mr. Sudhir Parmar, the then Special Judge CBI and ED Panchkula​​.

Prior to this FIR, between 2018 and 2020, 13 FIRs were registered against the IREO Group, alleging illegalities by its management. These FIRs led to Enforcement Case Information Reports and prosecution complaints against the group and its officials. However, neither the M3M Group nor the appellants were accused in these FIRs or ECIRs​​.

Appellants, anticipating action against them, secured interim protection from the Delhi High Court. The court noted their non-involvement in the first ECIR and granted them interim anticipatory bail​​. Subsequently, a second ECIR was recorded against several individuals, including the Bansals, based on FIR No. 0006​​. Despite the appellants' compliance with the ED's summons, they were arrested in connection with the second ECIR​​.

The appellants then approached the Delhi High Court, which directed them to seek remedy from the Punjab & Haryana High Court. Their subsequent writ petitions were dismissed by the Punjab & Haryana High Court​​. The appellants did not challenge the constitutional validity of Section 19 of the Act of 2002 but sought a 'reading down' of its provisions. They asserted that the remand orders were passed mechanically without proper compliance with the Act's mandates​​.

The Deputy Director of the ED responded to the allegations, justifying the arrests and asserting compliance with the Act's requirements. However, the appellants' involvement in the alleged offenses was not the primary issue; the focus was on the legality and validity of their arrest under Section 19 of the Act of 2002 and the subsequent remand orders​​.

The case involved significant legal deliberations on the provisions of the Act of 2002, especially Section 19, and the related judicial precedents, including the decisions in "Vijay Madanlal Choudhary" and "V. Senthil Balaji". These cases highlighted the stringent safeguards and high standards required for arrests under the Act of 2002, emphasizing the need for recording reasons for the belief of involvement in money laundering and informing the arrested person of the grounds for arrest​​.

In "Madhu Limaye and others", the Supreme Court noted that the Magistrate must apply their mind to all relevant matters at the stage of remand, and an arrest suffering from constitutional infirmities cannot be cured by an order of remand​​. The Supreme Court criticized the ED's conduct in this case, noting that the sequence of events surrounding the arrests of the appellants suggested a lack of good faith and transparency, which are expected from a premier investigating agency like the ED​​.

The Court found the ED's actions in recording the second ECIR and arresting the appellants soon after they secured interim protection in relation to the first ECIR as arbitrary and indicative of an abuse of power​​. It also noted the lack of a clear and consistent procedure followed by the ED in informing arrested persons of the grounds of their arrest, as required by the Constitution and the Act of 2002​​.

The Supreme Court ultimately held that the arrested person must be furnished with a copy of the written grounds of arrest, ensuring compliance with the constitutional and statutory mandates. It found that the appellants' arrests were not in compliance with Section 19(1) of the Act of 2002 and that the conduct of the ED was arbitrary. Consequently, the Court allowed the appeals, setting aside the impugned orders of the High Court, the arrest orders, and the remand orders, and ordered the release of the appellants unless their incarceration was required in connection with another case​​.

 

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Full Text:

2023 (10) TMI 175 - Supreme Court

Arrest Procedure: strict compliance with statutory grounds required to validate arrests and remand under anti-money-laundering law. The validity of arrests and remand hinges on recording and furnishing written reasons for belief in the arrested person's involvement and transparent communication of grounds; remand courts must apply independent mind and cannot cure constitutional infirmities arising from defective arrests, and investigative conduct suggesting arbitrariness or abuse of process undermines lawful custody.