2024 (12) TMI 163 - HC - Money Laundering

Money Laundering - Validity of arrest of petitioner under Section 19 of the PMLA - Seeking quashing of Arrest Memo and Arrest Order for arrest of petitioner - violation of Section 19 of Prevention of Money Laundering Act, 2002 - constitutional safeguards against arbitrary detention - petitioner was not provided with reasons to believe - HELD THAT - The arrest of the petitioner did not fall foul of provision of Section 19 of the PMLA, and that judicial review (not merits review) of the grounds for arrest (which subsume the reasons to believe, as per the ED) does not invite an adverse inference from this Court. Needless to state that, as pointed out by the Supreme Court itself in Arvind Kejriwal 2024 (7) TMI 760 - SUPREME COURT , all grounds can be agitated by the petitioner/accused at the stage of plea of bail, and the Court may have a larger canvas before itself to consider the petitioner s plea, if and when taken up. Needless to state, any observation by this Court in this judgement is only for the purposes of assessing the challenge to the legality of arrest of the petitioner, and may not be construed as a conclusive opinion on the merits of the case. The present petition is dismissed.

2024 (7) TMI 760 - SC

Issues Involved:
1. Grounds of Arrest
2. Information to the Accused and Compliance
3. Reasons to Believe
4. Need and Necessity to Arrest
5. Relevance of Exculpatory Material
6. Judicial Review, and No Merits Review
7. Supreme Court's Decision in the PIL
8. Issue of Attachment of Property
9. Alleged Non-Cooperation of Petitioner
10. The Remand Orders

Issue-wise Detailed Analysis:

1. Grounds of Arrest:
The Court examined whether the grounds of arrest, which contain the reasons to believe, were based on the entire material in possession of the arresting officer. It was clarified that the grounds of arrest must be communicated to the accused in writing, as per the Supreme Court's decision in Arvind Kejriwal, which strengthened the view in Vijay Madanlal Choudhary. The grounds of arrest in this case were detailed and provided to the petitioner at the time of arrest.

2. Information to the Accused and Compliance:
The Court noted that the accused must be informed of the grounds of arrest within 24 hours, which aligns with the requirement to produce the person before the Special Court within the same period. This compliance is crucial to avoid illegal detention. The Court found that the petitioner was informed of the grounds of arrest promptly.

3. Reasons to Believe:
The reasons to believe must be recorded in writing by the competent officer based on material in possession, establishing the arrestee's guilt. The Court highlighted that the ED was not obligated to provide these reasons separately at the time of arrest, as the arrest occurred before the Arvind Kejriwal judgment, which introduced this requirement. The grounds of arrest themselves contained the substance of the reasons to believe.

4. Need and Necessity to Arrest:
The Court discussed the necessity to arrest beyond the conditions in Section 19 of the PMLA. The Supreme Court in Arvind Kejriwal referred the question of "need and necessity to arrest" to a larger bench. The Court found that the arresting officer's assessment of the necessity to arrest was justified based on the grounds of arrest, which indicated large-scale diversion of funds and potential tampering with evidence.

5. Relevance of Exculpatory Material:
The Court emphasized that the arresting officer must consider all material, including exculpatory evidence. The petitioner argued that exculpatory materials were ignored, but the Court found that the arresting officer had considered the relevant material, and the exculpatory evidence presented by the petitioner was either not in possession of the officer or not conclusive.

6. Judicial Review, and No Merits Review:
Judicial review is confined to ensuring that the reasons to believe are based on material establishing guilt under the PMLA. The Court cannot engage in a merits review or mini-trial. The opinion of the arresting officer is open to judicial review but not merits review. The Court found no errors warranting interference with the arrest.

7. Supreme Court's Decision in the PIL:
The Supreme Court's directions in the PIL did not mandate arrest but only investigation. The Court clarified that the proceedings before the Supreme Court were not the basis for the grounds of arrest, and the arrest was independently justified.

8. Issue of Attachment of Property:
The Court noted that the independent power of attachment does not negate the power to arrest. The ED's decision to arrest was not solely for investigation but also to prevent further offences and ensure the presence of the petitioner.

9. Alleged Non-Cooperation of Petitioner:
The right against self-incrimination protects the petitioner from arrest solely based on non-cooperation. However, non-cooperation, along with other factors, can justify arrest. The Court found that the ED had sufficient grounds beyond mere non-cooperation.

10. The Remand Orders:
The remand orders were not routine or mechanical and were passed after due consideration of the material on record. The Court held that the remand orders did not cure any constitutional infirmities in the arrest, but the arrest itself was not unconstitutional.

Conclusion:
The Court concluded that the arrest of the petitioner did not violate Section 19 of the PMLA, and judicial review did not reveal any adverse inference. The petition challenging the legality of the arrest was dismissed, with the Court noting that the petitioner could raise all grounds at the stage of a bail plea.

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