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2023 (11) TMI 157 - HC - Money LaunderingMoney Laundering - proceeds of crime - Schedule/Predicate Offence - attachment of properties - whether in the present case, the provisions of Section 19 of the PMLA were duly complied with? - HELD THAT - From the documents submitted by the respondents, during the course of arguments, it becomes clear that there was material in possession of the Assistant Director of the ED on the basis of which he had reason to believe that the petitioner should be arrested. The document dated 08.06.2023 which has duly been perused by us runs into 17 pages wherein the details of the investigation carried out and the material in possession of the Officer concerned has been referred to. All that had been revealed during the course of investigation was duly put in writing . Detailed reference was made to the material in possession - Both officers perused the facts as given in the noting/document dated 08.06.2023 and concurred with the proposal submitted by the Assistant Director and approved the same. There was, therefore, sufficient compliance of the provisions of Section 19 of the PMLA with regard to the authorities having material in their possession giving them reason to believe (recorded in writing) that the petitioner was guilty of an offence punishable under the PMLA and that he was required to be arrested. The question which would, therefore, arise would be as to whether this would be sufficient compliance of the provisions of Section 19 of the PMLA or not. In view of the ratio laid down by the Hon ble Apex Court in the case of PANKAJ BANSAL VERSUS UNION OF INDIA ORS. 2023 (10) TMI 175 - SUPREME COURT , the answer would be in the negative. It has categorically been held in Pankaj Bansal Versus Union of India and others s case that the grounds of arrest would have to be conveyed in writing. The Hon'ble Apex Court noted that the mode of conveying information of the grounds of arrest must necessarily be meaningful so as to serve the intended purpose. Reference was made to Section 45 of the PMLA which enables the arrested person to seek release on bail. It was noticed that Section 45 prescribes twin conditions which are required to be satisfied in the absence of which, the arrested person would not be entitled to bail. The Hon'ble Apex Court held that to meet the requirement of Section 45 of the PMLA, it would be essential for the arrested person to be aware of the grounds of arrest and the basis for the officer's 'reason to believe' that the arrested person was guilty of offence punishable under the PMLA. Only if the arrested person has knowledge of these facts that he/she would be in a position to plead and prove before the Special Court that there are grounds to believe that he/she is not guilty of such offence, so as to avail the relief of bail. It was held that the communication of the grounds of arrest, as mandated by Article 22 (1) of the Constitution and Section 19 of the PMLA, is, therefore, meant to serve this higher purpose and must be given due importance. It is, therefore, clear that the mandate that grounds of arrest would have to be conveyed in writing to the accused would not operate prospectively. The arrest of the petitioner and the subsequent orders remanding the petitioner to the custody of the ED cannot be sustained. The present petition is, therefore, allowed.
Issues Involved:
1. Legality of the arrest under Section 19 of the Prevention of Money Laundering Act (PMLA). 2. Compliance with mandatory procedural safeguards under PMLA. 3. Validity of remand orders and subsequent custody. 4. Requirement of furnishing written grounds of arrest. Summary: 1. Legality of the Arrest: The petitioner challenged his arrest under Section 19 of the PMLA, arguing that there was no material in possession of the Enforcement Directorate (ED) to justify the arrest. The Court found that the ED had sufficient material and had recorded reasons to believe that the petitioner was guilty of money laundering. However, the Court noted that the grounds of arrest were not conveyed in writing to the petitioner, which is a requirement as per the recent Supreme Court judgment in Pankaj Bansal Versus Union of India. 2. Compliance with Procedural Safeguards: The Court examined whether the procedural safeguards under Section 19 of the PMLA were followed. It was found that the ED had recorded the reasons for arrest in writing and informed the petitioner of the grounds of arrest orally. The petitioner had also signed the grounds of arrest. Despite this, the Court held that merely reading out the grounds of arrest does not fulfill the statutory and constitutional mandate, which requires that the grounds of arrest be furnished in writing. 3. Validity of Remand Orders: The petitioner also challenged the remand orders passed by the Special Court, Panchkula. The Court found that the remand orders did not adequately reflect the satisfaction of the Court regarding compliance with Section 19 of the PMLA. The orders were deemed routine and mechanical, lacking proper application of mind. 4. Requirement of Written Grounds of Arrest: The Court emphasized the importance of furnishing written grounds of arrest to the accused, as mandated by Article 22(1) of the Constitution and Section 19 of the PMLA. This requirement ensures that the accused can effectively exercise their right to seek bail and defend themselves. The Court rejected the argument that this requirement should apply only prospectively, noting that the Supreme Court had already declared the arrest of Pankaj Bansal illegal for the same reason. Conclusion: The Court held that the arrest of the petitioner was illegal due to non-compliance with the requirement of furnishing written grounds of arrest. Consequently, the remand orders and subsequent custody were also deemed invalid. The petitioner was ordered to be released forthwith unless required in connection with any other case.
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