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2024 (10) TMI 59 - HC - Money LaunderingMoney Laundering - reasons to believe - Invocation of writ jurisdiction as well as inherent jurisdiction of this Court under section 482 of the Code of Criminal Procedure, 1973 - illegal arrest and detention of the petitioner - whether arrest of the petitioner by the respondents was in consonance with the ratio laid down by the Supreme Court in the case of Arvind Kejriwal Vs. Directorate of Enforcement 2024 (7) TMI 760 - SUPREME COURT , in the sense, whether there was sufficient material with the authorized officer who had recorded his reasons to believe in writing and whether there was a necessity to arrest the petitioner? HELD THAT - In Vijay Madanlal Choudhary, the Supreme Court on the aspect of the checks on the power to arrest stated that there must be material in possession with the Authority before the powers of arrest can be exercised as opposed to the Cr.P.C. which gives the power of arrest to any police officer and the officer can arrest any person merely on the basis of a complaint, credible information or reasonable suspicion against such person. Thirdly, there should be reason to believe that the person being arrested is guilty of the offence punishable under the PMLA in contrast to the provision in Cr. P.C, which mainly requires reasonable apprehension/suspicion of commission of offence. In case of Arvind Kejriwal 2024 (7) TMI 760 - SUPREME COURT , the Supreme Court has further elaborated the expression reasons to believe by stating that it is not synonymous with subjective satisfaction of the officer. The belief must be held in good faith; it cannot merely be a pretence. In the same case, it was held that it is open to the Court to examine the question whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section. The respondent Nos. 1 and 2 seem to have already in possession of sufficient material qua the petitioner and his companies as well as alleged transactions during the arrest and interrogation of the petitioner s father, after whose release by the Special Court, the petitioner came to be arrested on 29th July, 2024 during alleged second search within four days of release of petitioner s father. The material in possession of respondent Nos. 1 and 2 prior to the arrest of the petitioner as demonstrated by the respondents appears to be with it and, therefore, respondent Nos. 1 and 2 could have arrested the petitioner at the time of alleged first search which was conducted on 26th June, 2024 itself. Thus, it is the subjective satisfaction of the respondents sans rational connection to their formation of belief i.e reasons to believe. It is deemed necessary to grant an interim relief of bail to the petitioner in light of the fact that the right to life and liberty is sacrosanct in view of the constitutional mandate. Pending the disposal of the petition, the petitioner shall be released on executing a P.R bond in the sum of Rs. 1,00,000/- with one or two sureties in the like amount to the satisfaction of the learned Special Judge under PML Act, City Civil and Sessions Court, Mumbai - In case the petitioner is unable to furnish sureties of the amount aforesaid, he be released on furnishing cash security in the sum of Rs. 1,00,000/- for a period of four weeks - The petitioner shall co-operate with the respondents as and when summoned - List the petition for admission on 12.11.2024.
Issues Involved:
1. Legality of the petitioner's arrest and detention. 2. Compliance with the "reasons to believe" requirement under Section 17 of the Prevention of Money Laundering Act (PMLA). 3. Necessity and justification for the petitioner's arrest. 4. Examination of material evidence and procedural safeguards under PMLA and Code of Criminal Procedure (Cr.P.C). Issue-wise Detailed Analysis: 1. Legality of the Petitioner's Arrest and Detention: The petitioner invoked the writ jurisdiction and inherent jurisdiction of the High Court under Section 482 of the Cr.P.C., challenging the legality of his arrest and detention by the Enforcement Directorate (ED) on 29th July 2024. The petitioner argued that his arrest was illegal, untenable, and against the principles enunciated by the Supreme Court in various pronouncements, including Arvind Kejriwal vs. Directorate of Enforcement (2024 SCC Online SC 1703). 2. Compliance with the "Reasons to Believe" Requirement: The petitioner contended that no "reasons to believe" as mandated under Section 17 of the PMLA were served on him. The ED justified the arrest by stating that the grounds of arrest were furnished to the petitioner in ECIR No. ECIR / MBZO-II/40/2023, asserting that there existed "sufficient reasons to believe" based on the grounds enunciated in the arrest grounds. The Competent Authority furnished the "reasons to believe" to the petitioner, stating that he was guilty of money laundering under Section 3 of the PMLA, punishable under Section 4, leading to his arrest under Section 19(1) of the PMLA. 3. Necessity and Justification for the Petitioner's Arrest: The ED argued that the arrest was necessary to prevent the destruction and tampering of evidence, confront the petitioner with various persons involved in the activities, trace out diverted funds, prevent the petitioner from influencing witnesses, and identify other persons involved. However, the petitioner argued that he had cooperated with the investigation, and his arrest was unnecessary and based on material already in possession of the ED. The Court observed that the ED already had sufficient material regarding the alleged proceeds of crime and the transactions involving the petitioner and his companies, questioning the necessity of the arrest. 4. Examination of Material Evidence and Procedural Safeguards: The Court examined the material evidence, including documents and statements related to various entities and individuals, bank statements, and the money trail concerning the petitioner. The Court referred to the Supreme Court's elaboration on the scope of Section 19(1) of the PMLA, emphasizing the requirement of recording "reasons to believe" in writing and the necessity of a higher threshold for making an arrest. The Court held that the ED's subjective satisfaction lacked a rational connection to their formation of belief, making the arrest prima facie unjustified. Conclusion: The Court granted interim relief of bail to the petitioner, emphasizing the sacrosanct nature of the right to life and liberty under the constitutional mandate. The petitioner was ordered to be released on executing a P.R bond of Rs. 1,00,000/- with sureties, cooperate with the investigation, and adhere to specific conditions to avoid tampering with evidence or influencing witnesses. The petition was listed for admission on 12.11.2024.
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