2024 (4) TMI 535 - HC - Money Laundering

Seeking release on ground of arrest of petitioner being illegal and in violation of principles laid down by the Hon ble Supreme Court in case of Pankaj Bansal v. Union of India 2023 (10) TMI 175 - SUPREME COURT - In case of Pankaj Bansal, the Hon ble Supreme Court has inter alia held that the grounds of arrest must be communicated in writing to the person being so arrested through exercise of powers under Section 19 of PMLA, and failure to do so would render the arrest illegal. Challenge to arrest of the petitioner by Directorate of Enforcement on the ground that the arrest was in violation of Section 19 of Prevention of Money Laundering Act, 2002 - Article 226 and 227 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, 1973 - challenge to order by which petitioner was remanded to custody of Directorate of Enforcement. MATERIAL AGAINST THE PETITIONER COLLECTED BY THE DIRECTORATE OF ENFORCEMENT - HELD THAT - Once there is prima-facie material regarding laundering of the kickbacks on Goa Elections and the money being already spent for the said purpose in the year 2022 itself, the recovery in the year 2024 or non-recovery of any remaining amount will become clear only once prosecution complaint is filed. The Courts in all criminal cases wait for the chargesheet/prosecution complaints to be filed and the entire evidence being placed before it against an accused before giving a finding on a prima-facie case for the purpose of cognizance, charge or final acquittal at the appropriate stages of trial and not when the investigation against an accused has begun and chargesheet/prosecution complaint is yet to be filed. A different criteria cannot be adopted in the present case for the said purpose. The material which has been encapsulated here reveals that Sh. Arvind Kejriwal had allegedly conspired with other persons and was involved in the formulation of Delhi Excise Policy 2021-22, in the process of demanding kickbacks from the South Group, as well as in generation, use and concealment of proceeds of crime. He is allegedly involved in the offence of money laundering in two capacities. Firstly, in his personal capacity as he was involved in formulation of the Excise Policy and in demanding kickbacks. Secondly, in his capacity as the National Convenor of Aam Aadmi Party as per Section 70(1) of PMLA, for use of proceeds of crime of Rs. 45 crores in the election campaign of Aam Aadmi Party in Goa Elections 2022, which are prima facie apparent from the material relied upon by the respondent in this regard as well as the statement recorded on 08.03.2024 of one of the candidates of Aam Aadmi Party in Goa Elections 2022. ARGUMENT REGARDING STATEMENTS OF WITNESSES AND APPROVERS BEING UNRELIABLE AND UNTRUSTWORTHY - HELD THAT - The petitioner herein wants this Court to conduct a mini trial and give a conclusive finding regarding validity and authenticity of statement of witnesses, test the evidentiary value and intent behind statements of the approvers, which is not permissible in law - In any case, this Court has not examined and relied solely on the statements of these approvers to examine the legality of arrest of the petitioner on the anvil of Section 19 of PMLA as there is other material collected by the investigating agency also which has been placed before this Court and discussed in preceding paragraphs which reveals the role of the present petitioner in the alleged Delhi Excise Policy scam. This Court is further of the opinion that merely because the approver has chosen to reveal some new facts at a later stage, only after initially concealing them including the role of Sh. Kejriwal, the same cannot be a ground to disregard their statements completely. This is because an accused may realise his or her mistake at a later stage and may offer to state the true facts in exchange for securing pardon as per the law - individuals may evolve in their understanding of their actions and the legal consequences thereof, and these developments even otherwise are covered within the framework of the judicial process and the law of the country. WHETHER THE ARREST OF THE PETITIONER IS IN VIOLATION OF DIRECTIONS OF HON BLE SUPREME COURT IN CASE OF PANKAJ BANSAL VS. UNION OF INDIA? - HELD THAT - The cumulative effect of the material collected so far by the Directorate of Enforcement regarding the role of the petitioner, both in his personal capacity in formulation of Delhi Excise Policy 2021-22 and demanding kickbacks from the South Group, and in his capacity as National Convenor of Aam Aadmi Party in utilisation of proceeds of crime during Goa Elections 2022, reflecting the reasons to believe that the petitioner was guilty of offence of money laundering in terms of Section 19 of PMLA, and the need to interrogate the petitioner and confront him with the statements of witnesses, and other material as well as digital evidence, coupled with the conduct of petitioner of not joining investigation pursuant to service of nine summons for a period of six months, necessitated the arrest of petitioner Sh. Arvind Kejriwal. Therefore, prima facie, the mandatory provisions of Section 19 of PMLA have been satisfied by the Directorate of Enforcement while arresting the petitioner Sh. Kejriwal, in compliance of judgment of Pankaj Bansal, and there is material at this stage which points out towards the guilt of the petitioner for commission of offence of money laundering. WHETHER THE REMAND ORDER DATED 22.03.2024 HAS BEEN PASSED IN MECHANICAL AND ROUTINE MANNER? - HELD THAT - This Court observes that the contention regarding remand order having been passed in mechanical and routine manner is without any merit, considering the observations made by the learned Special Court including ensuring due compliance of Section 19 of PMLA, taking note of material available against the petitioner and the need for his custodial interrogation - Though not argued before this Court on behalf of the petitioner, this Court still deems it crucial to note that though the present petition was filed challenging the first remand order dated 22.03.2024 passed by the learned Special Court, however, the remand of petitioner Sh. Kejriwal had thereafter been extended vide order dated 28.03.2024 wherein the petitioner himself had submitted before the learned Special Court that he was ready and willing to cooperate with the investigating agency and he had no objection if the custody remand was extended further. Moreover, at this point of time, the petitioner is not in the custody remand of Directorate of Enforcement, rather is in judicial custody by virtue of order dated 01.04.2024 which has neither been challenged till date, nor any application has been filed seeking bail in the present case. The learned Senior counsel for the petitioner had not raised any objection to the judicial remand of the petitioner when he was remanded to judicial custody on 01.04.2024 by the learned Special Court. TIMING OF ARREST VIS-A-VIS THE CONDUCT OF PETITIONER OF NOT JOINING INVESTIGATION FOR SIX MONTHS DESPITE SERVICE OF 09 SUMMONS - HELD THAT - The petitioner himself was aware about the case, as many of his co-accused persons were in judicial custody in the same ECIR, and he had knowledge about the statements recorded in the ECIR. Therefore, to say that he did not attend those summons since he did not know why he was being summoned has no merit. This Court holds that this Court would not lay down two different categories of laws, one for common citizens, and the other granting special privilege to be extended by investigating agency to a Chief Minister or any other person in power only on the basis of being in that public office since that public office is enjoyed by that public figure due to the mandate of the public. This Court is of the opinion that to hold that the timing was chosen by the investigating agency will be accepting a misplaced argument. It was the petitioner himself who had delayed the investigation to the point of time of his arrest, when the Courts had refused to grant him relief from arrest, or from joining investigation. Therefore, there is nothing before this Court to reach a conclusion that the timing of arrest was deliberate by the Directorate of Enforcement, and that conduct of Sh. Kejriwal was not responsible for a situation in which there was no other option other than to arrest to make him join the investigation. This Court holds that the issue of arrest has to be adjudicated as to whether it was illegal or not within the parameters of law, by application of law and not by political rhetoric. Was there any Necessity to Arrest the Petitioner? - HELD THAT - The observations of the Hon ble Apex Court in case of Vijay Madanlal Choudhary 2022 (7) TMI 1316 - SUPREME COURT were reiterated in case of V. Senthil Balaji 2023 (8) TMI 410 - SUPREME COURT , and Pankaj Bansal and it was observed that it is necessary for the officer concerned to record reasons for his belief that a person is guilty of an offence under PMLA and needs to be arrested. The conduct of the petitioner Sh. Kejriwal of not joining investigation left little option with the Directorate of Enforcement other than his arrest for the purpose of investigation of a pending case, in which other co-accused are in judicial custody, and the investigating agency is also running against time in view of the order of the Hon ble Supreme Court vide which it was ordered that the trial in this case should proceed expeditiously. Considering the fact that the Directorate of Enforcement was in possession of material on the basis of which it had reasons to believe that the petitioner was guilty of offence of money laundering, it would have had no recourse available but to arrest the petitioner and to seek his remand so as to confront him with the statements of witnesses and approvers and other incriminating material collected during the course of investigation. In the case at hand, it is important to clarify that the matter before this Court is not a conflict between the Central Government and the petitioner Sh. Arvind Kejriwal. Instead, it is a case between the petitioner Sh. Arvind Kejriwal and the Directorate of Enforcement. This Court is only following its constitutional duty of following the Constitution and the judicial precedents mandated by the Hon ble Supreme Court. This Court will therefore decide the case following this constitutional duty and will concentrate on the allegations and material collected by the Directorate of Enforcement placed before it and apply law, which is the only domain in which this Court can tread. This Court is of the opinion that the arrest of petitioner Sh. Arvind Kejriwal was not in contravention with the law laid down by the Hon ble Apex Court in case of Pankaj Bansal in respect of Section 19 of PMLA. Similarly, the impugned remand order dated 22.03.2024 passed by the learned Special Court does not suffer from any infirmity or illegality - since the arrest of the petitioner and the impugned remand order dated 22.03.2024 are held valid, the prayer seeking release of petitioner is also liable to be rejected. The present petition stands dismissed along with pending applications.

Summary

Issues Involved:
1. Legality of the arrest of the petitioner.
2. Validity of the remand order dated 22.03.2024.
3. Entitlement of the petitioner to be released from custody.

Issue 1: Legality of the Arrest of the Petitioner
The petitioner challenged his arrest u/s 19 of the Prevention of Money Laundering Act, 2002 (PMLA), alleging it was arbitrary and violated the principles laid down by the Hon'ble Supreme Court in Pankaj Bansal v. Union of India 2023 SCC OnLine SC 1244. The Directorate of Enforcement (ED) had conducted a search on 21.03.2024 at the petitioner's residence and arrested him the same day in connection with ECIR No. HIU-II/14/2022 regarding his involvement in money laundering related to the Delhi Excise Policy 2021-2022. The petitioner was served with grounds of arrest and was produced before the learned Special Court, which granted ED's request for custody.

The court noted that the petitioner had repeatedly failed to join the investigation despite being served nine summonses over six months. The court held that the ED had complied with the mandatory provisions of Section 19 of PMLA, including informing the petitioner of the grounds of arrest, recording reasons in writing, and forwarding the material to the adjudicating authority. The court found that there was sufficient material in possession of ED, including statements of witnesses and digital evidence, to form a reason to believe that the petitioner was guilty of the offence of money laundering.

Issue 2: Validity of the Remand Order Dated 22.03.2024
The petitioner also challenged the remand order dated 22.03.2024, alleging it was passed in a mechanical and routine manner. The court referred to the law governing remand under Section 167 of Cr.P.C. and PMLA, emphasizing that the remand order must be reasoned and reflect judicial application of mind. The court found that the learned Special Court had satisfied itself regarding the compliance of Section 19 of PMLA and had recorded reasons for granting ED's request for remand. The remand was sought to interrogate the petitioner regarding his role, confront him with statements and digital evidence, and identify other associates involved in the offence.

Issue 3: Entitlement of the Petitioner to be Released from Custody
The petitioner argued that his arrest was timed to affect the upcoming Lok Sabha Elections 2024, thereby violating his right to campaign and participate in democratic activities. The court noted that the petitioner had delayed joining the investigation for six months and had not challenged the summonses or sought pre-arrest bail until March 2024. The court held that the timing of the arrest was a consequence of the petitioner's own conduct and not a deliberate act by ED to affect the elections. The court found no merit in the argument that the arrest was mala fide or arbitrary.

Conclusion
The court dismissed the petition, holding that the arrest and remand of the petitioner were in compliance with the law and the principles laid down by the Hon'ble Supreme Court. The court emphasized that the judiciary is concerned with upholding constitutional morality and the rule of law, independent of political considerations. The petitioner's request for release from custody was also rejected.