2023 (12) TMI 785 - SC - Money Laundering

Legality of arrest - whether the action of the respondent ED in handing over the document containing the grounds of the arrest to arrestee and taking it back after obtaining the endorsement and his signature thereon, as a token of he having read the same, and in not furnishing a copy thereof to the arrestee at the time of arrest would render the arrest illegal under Section 19 of the PMLA 2002? HELD THAT - The validity of the various provisions including Section 19 of the PMLA was examined by the Three-Judge Bench in Vijay Madanlal Choudhary case 2022 (7) TMI 1316 - SUPREME COURT in which the Bench while upholding the validity of Section 19 of the PMLA held that the said provision has reasonable nexus with the purposes and objects sought to be achieved by the PMLA. It hardly needs to be emphasized that as well settled, it is in order to guard against the possibility of inconsistent decisions on the points of law by different Division Benches that the Rule of precedent has been evolved. It is in order to promote the consistency and certainty in the development of law and its contemporary status that the statement of law by a Division Bench is considered binding on a Division Bench of the same or lesser number of Judges. There remains no shadow of doubt that the law laid down by the Three-Judge bench in Vijay Madanlal Choudhary case that Section 19(1) of the PMLA has a reasonable nexus with the purposes and objects sought to be achieved by the PML Act and that the said provision is also compliant with the mandate of Article 21(1) of the Constitution of India, any observation made or any finding recorded by the Division Bench of lesser number of Judges contrary to the said ratio laid down in Vijay Madanlal Choudhary would be not in consonance with the jurisprudential wisdom expounded by the Constitution Benches - The Three-Judge Bench in Vijay Madanlal Choudhary case having already examined in detail the constitutional validity of Section 19 of PMLA on the touchstone of Article 22(1) and upheld the same, it holds the field as on the date. In so far as the facts of the present case are concerned, it is not disputed that the appellant was handed over the document containing grounds of arrest when he was arrested, and he also put his signature below the said grounds of arrest, after making an endorsement that I have been informed and have also read the above-mentioned grounds of arrest. The appellant in the rejoinder filed by him has neither disputed the said endorsement nor his signature below the said endorsement. The only contention raised by the learned Senior Counsel is that he was not furnished a copy of the document containing the grounds of arrest at the time of arrest. Since the appellant was indisputably informed about the grounds of arrest and he having also put his signature and the endorsement on the said document of having been informed, it is held that there was due compliance of the provisions contained in Section 19 of PMLA and his arrest could neither be said to be violative of the said provision nor of Article 22(1) of the Constitution of India. The Appeal being devoid of merits is dismissed.

Summary

Issues Involved:
1. Legality of the arrest of the appellant by the ED under Section 19 of PMLA.
2. Compliance with the requirement of informing the grounds of arrest under Article 22(1) of the Constitution of India.

Summary:

Legality of the Arrest:
The appellant challenged the legality of his arrest by the ED on the grounds that he was not furnished with a copy of the grounds of arrest at the time of his arrest, claiming it violated Section 19 of the Prevention of Money Laundering Act (PMLA). The appellant argued that mere informing the accused orally and obtaining his signature without providing a written copy did not meet legal requirements. The respondent ED countered that the arrest was in accordance with Section 19 of PMLA, asserting that the grounds of arrest were handed over to the appellant, who read and signed them.

Compliance with Informing Grounds of Arrest:
The court analyzed the requirement under Section 19 of PMLA and Article 22(1) of the Constitution, which mandates that a person must be informed of the grounds of arrest. The court referred to the precedent set in Vijay Madanlal Choudhary v. Union of India, which upheld the constitutionality of Section 19 of PMLA, stating that informing the person of the grounds of arrest orally is sufficient compliance. The court also considered the recent decision in Pankaj Bansal v. Union of India, which directed that a copy of the written grounds of arrest must be furnished to the arrested person henceforth, meaning from the date of that judgment.

Analysis of Compliance:
The court emphasized that the expression "as soon as may be" in Section 19 of PMLA implies informing the arrested person within a reasonable time, ideally within 24 hours. The court found that the appellant was informed of the grounds of arrest and had acknowledged this by signing the document. Therefore, there was sufficient compliance with Section 19 of PMLA and Article 22(1) of the Constitution.

Conclusion:
The court concluded that the appellant's arrest was legal and in compliance with the statutory and constitutional requirements. The appeal was dismissed as devoid of merits.