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2015 (1) TMI 1310 - HC - Money LaunderingMoney Laundering - Offence under PML Act - bail application - Held that - Assistant Director of Directorate of Enforcement respondent No.3 is competent and authorized officer under PML Act to order arrest under Section 19(1) of PML Act, and therefore, again there is no scope to read down, lay down, expound, interpret and deliberate upon the scope and perspective of Section 19 of PML Act in light of Section 49(3) read with the Rules notified under Notification GSR 446(E) dated 01.07.2005. Nexus is established between the criminal activity relating to schedule offence and the proceedings thereof for the offences of money laundering as defined under Section 3 read with Section 2(1)(u) of the PML Act. That during the process and investigation carried out by the Directorate of Enforcement, the petitioners are found to have been involved in money laundering racket and not naming the petitioners in the offences registered initially by investigating agency is now being prosecuted for the involvement under Section 3 of the PML Act by Directorate of Enforcement. The grounds of arrest was communicated to the accused after due medical check up as undertaken and he was also produced within the stipulated time before the designated Judge under PML Act at Ahmedabad and no complaint or grievance was ever made by the petitioners about any kind of ill treatment or coercion by the offices of Directorate of Enforcement. That in execution of arrest, all procedural requirements were complied with and the accused has signed receipt of grounds for arrest and even a friend of the accused viz. Mr. . Amit Solanki, C.A. Was handed over the belongings and signed the inventory annexed to the arrest memo. That learned Designated Judge was pleased to grant custody of the petitioners for a period of 4 days and in a pro in a procedure to remand etc. and rejection of prayer of temporary bail on 09.09.2014 by the designated court and filing of prosecution complaint dated 29.10.2014 against the petitioner and competency of the Assistant Director respondent No.3 to order arrest in compliance of Section 19(1) of PML Act surface on record, which is again in consonance with the safeguards enshrined under Article 22(1) of the Constitution of India and we find no breach of any procedural enumerated either under Article 19(1)of the PML Act or under Article 22(1) of the Constitution of India. It cannot be said that order of arrest suffers from vice of any illegality on the ground that it is ordered by the incompetent or unauthorized and there is no failure in adhering procedure laid down under Seton 19(1) of the PML Act and further no breach to the guidelines laid down in the case of D.K.Basu 1996 (12) TMI 350 - SUPREME COURT and it cannot be said that the petitioners are detained or confined illegally warranting issuance of writ of Habeas Corpus. At the same time respondent No.3 Assistant Director of Enforcement is competent and authorized to issue order of arrest under Section 19(1) of the PML Act and no case is made out to issue writ of quo warranto as prayed for.
Issues Involved:
1. Constitutionality of Section 45 of the Prevention of Money Laundering Act (PMLA), 2002. 2. Validity of the arrest under Section 19 of PMLA. 3. Compliance with procedural safeguards under Article 22 of the Constitution of India. 4. Competence of the Assistant Director to order arrest under PMLA. 5. Involvement of the petitioners in money laundering activities. Detailed Analysis: Constitutionality of Section 45 of PMLA: The petitioners challenged Section 45 of PMLA, arguing it was "unreasonable, unconstitutional, illegal, arbitrary, discriminatory, and ultra vires" Articles 14, 19, and 21 of the Constitution. They contended that the provision imposed onerous restrictions on bail for accused persons of scheduled offences, making it nearly impossible to secure bail. The court, however, upheld the constitutionality of Section 45, stating that the provision is necessary to address the severe threat posed by money laundering to the financial systems, integrity, and sovereignty of countries. The court emphasized that the legislative intent behind the provision was to ensure that individuals accused of serious offences under PMLA are not easily granted bail, thereby preventing them from continuing their illegal activities. Validity of the Arrest under Section 19 of PMLA: The petitioners argued that their arrest under Section 19 of PMLA was illegal as the arresting officer was not authorized and did not follow the mandatory procedures. The court found that the arrest was valid, stating that the Assistant Director of the Enforcement Directorate, who ordered the arrest, was duly empowered under the Act. The court noted that the arresting officer had "material in possession" and "reason to believe" that the petitioners were guilty of offences under PMLA, which were recorded in writing as required by law. The court also found that the procedural safeguards under Section 19 were followed, including informing the petitioners of the grounds for their arrest and producing them before a magistrate within 24 hours. Compliance with Procedural Safeguards under Article 22 of the Constitution: The petitioners claimed that their arrest violated Article 22 of the Constitution, which provides safeguards against arbitrary arrest and detention. The court held that the arrest complied with Article 22, as the petitioners were informed of the grounds for their arrest and were produced before a magistrate within the stipulated time. The court also referred to the guidelines laid down by the Supreme Court in D.K. Basu v. State of West Bengal, which were followed in this case. The court concluded that there was no violation of the petitioners' fundamental rights under Article 22. Competence of the Assistant Director to Order Arrest under PMLA: The petitioners contended that the Assistant Director of the Enforcement Directorate was not authorized to order their arrest under PMLA. The court rejected this argument, stating that the Assistant Director was duly appointed and authorized under Section 49 of PMLA and various notifications issued by the Ministry of Finance. The court clarified that the Assistant Director had the authority to exercise the powers conferred under Section 19 of PMLA, and there was no requirement for a separate notification for each arrest. Involvement of the Petitioners in Money Laundering Activities: The court examined the evidence presented by the Enforcement Directorate, which indicated that the petitioners were involved in a large-scale money laundering racket. The investigation revealed that the petitioners had assisted in transferring large sums of money through various transactions, which were layered to conceal their origin. The court noted that the petitioners were not named in the initial FIRs but were later found to be involved in the money laundering activities during the investigation. The court held that the petitioners' involvement in the offence was established, and their arrest was justified based on the material evidence. Conclusion: The court dismissed the petitions, upholding the constitutionality of Section 45 of PMLA and the validity of the arrest under Section 19. The court found that the procedural safeguards under Article 22 were followed, and the Assistant Director was competent to order the arrest. The involvement of the petitioners in money laundering activities was established, justifying their arrest and detention.
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