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TMI Blog2021 (5) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... t the remand proceedings are void and set aside the remand order dated: 11.11.2020 (Annexure-H) including any orders pursuant thereto; in ECIR /BGZO/32/2020 before the Court of 34th Additional City Civil & Sessions Judge & Special Judges for CB & PMLA Cases Bangalore. 1.4. Grant such other relief that this Hon'ble Court deems fit in the facts and circumstances of the cases. 2. Facts as per petition: 2.1. The Petitioner claims to be a respectable and law-abiding citizen. The Respondent had summoned the Petitioner to appear before him on 30/09/2020 in connection with an investigation under the PMLA. The Petitioner appeared before the Respondent and co-operated in the investigation proceedings. It was then that the Petitioner learnt that the Narcotics Control Bureau, Bengaluru ['NCB' for short] had registered a case under the Narcotic Drugs and Psychotropic Substances Act, 1985 ['NDPS Act' for short] against one Mr. Mohammed Anoop and others; when the respondent allegedly became aware of certain monetary transaction between the Petitioner and the said Mohammed Anoop. 2.2. The Respondent recorded an Enforcement Case Information Report (ECIR) in ECIR/BGZO/32/2020 on 09/09/2020 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/11/2020. 2.7. On 11/11/2020, the Respondent filed an application for remand of the Petitioner for judicial custody. The Petitioner opposed such an application on the following grounds: 2.7.1. That the very arrest of the Petitioner is illegal as the mandatory safeguards under Section 19 PMLA were not followed at the time of the arrest. There was no written record of grounds of arrest at the time of arrest, and a copy of the grounds of arrest, if any, was not served on the Petitioner. 2.7.2. That in the light of the constitutional mandate under Article 21 and the safeguards contemplated under Section 19 PMLA, the words "inform him of the grounds of such arrest" cannot be an empty formality of a mere oral communication of the arrest or the grounds of arrest to the accused. 2.7.3. That if the arrest is not as per the procedure established by law, it becomes illegal; 2.7.4. That the illegality of the arrest strikes at the very root of the matter and renders the arrest void ab initio. In such circumstances, all the consequential proceedings would also render themselves unsustainable in law. 2.7.5. The sole ground for the arrest of the Petitioner, as could be discerned from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of Arrest and as stated in the 4 Remand Applications. Therefore, the two reasons for exercising powers under Section 19 PMLA to arrest the Petitioner are (i) the apprehension that he would destroy/tamper with the evidence and (ii) to safeguard the proceeds of crime. Firstly, the entire evidence of the alleged proceeds of the crime was in the form of bank accounts and incorporation documents of certain companies. Moreover, the proceeds of the alleged crime were in cash and bank transactions already lying in the bank accounts, over which the Respondent has ample powers of attachment and seizure and had exercised it. In the remand application dated 02/11/2020, the Respondent had already stated that he had recovered the digital evidence from the Petitioner and Mohammed Anoop. Under Sections 5 and 17 PMLA, the Respondent has ample powers to attach, freeze and seize any accounts, assets and properties, and for exercising such powers, the arrest of the Petitioner was not the right remedy. 2.7.9. As such, the arrest of the Petitioner suffered from two severe infirmities, namely, one a failure to follow the constitutional mandate and two, arresting him for prevention of destruction/tam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es are not followed, it would result in an arrest without following due procedure and would fall foul of the constitutional mandate under Article 21. 2.15. Furnishing of a copy of the grounds of arrest to the detenue is one of the safeguards put in place by the parliament against arbitrary arrest as can be seen, from the Notes on Clauses. Accompanying the PML Bill, 1999, in which the Government clarified on how the proposed law ensures prevention of arbitrary arrests, as follows: "Clause 18 proposes to empower the Director, the Deputy Director, the Assistant Director or any other authorized officer to arrest a person if he has reason to believe that the person is guilty of an offence under the proposed legislation. Necessary safeguards such as furnishing the grounds of arrest and production before the Judicial Magistrate or a Metropolitan Magistrate within twenty-four hours are also sought to be provided". 2.16. In the case of Rajbhusan Omprakash Dixit - v- Union of India (supra), the Hon'ble Delhi High Court, while holding that it is mandatory to issue a copy of the grounds of arrest in writing to the accused, observed as follows - "Rules 2 (1) (g) and (h) of the PMLA Arre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by various police stations of Bengaluru City and the FIR registered by the Narcotics Control Bureau for the offence under various provisions of the NDPS Act revealed deep-rooted drug trafficking network in Bengaluru City in an organized manner involving highly influential Indian Nationals & foreign nationals and also about the involvement of high profile individuals as part of the organized crime. 3.2. It is the case of the Complainant that the accused persons in the above said first information reports registered by different police stations in Bengaluru City and Narcotics Control Bureau had generated huge proceeds of crime and that the said proceeds of crime are being held by the said accused persons projecting the same as untainted money and property. 3.3. It is alleged that Mr. Mohammed Anoop, who is a drug dealer, was arrested by the NCB, Bengaluru, for having been found in possession of 60 gms of MDMA tablets (Psychotropic substance) which is beyond the permissible limits. Shri. Rijesh Ravindran and Smt. Anika D were arrested by the NCB for involvement in drug business. 3.4. The Narcotics Control Bureau, Bengaluru registered a case vide F.No. 48/1/14/2020/BZU dated 22. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Petitioner did not cooperate with the investigation. As the Petitioner was evasive, and in order to effectively conduct an investigation into the aforesaid case and by then the involvement of the Petitioner for the offence of money laundering was prima-facie established, the Complainant Directorate arrested the accused/applicant and produced him before the Court with a request to grant his custody for custodial interrogation. 3.10. The Court having perused the entire case diary and all the original statements of the accused persons recorded under Sec. 50(3) of PMLA Act and being satisfied with the fact that the Complainant had made out a reason to believe that the accused/applicant has been guilty of the offence punishable under the PMLA Act, was pleased to grant custody of the Petitioner for custodial interrogation under order-dated 29.10.2020. Subsequently, statements of the Petitioner was recorded by the ED u/s 50(3) of PMLA, which disclosed his active connivance in the offence, and therefore the Petitioner's further custody was sought, and the same was allowed by the Court on 02.11.2020, 07.11.2020 and the custody of the Petitioner was granted to the DTE till 11.11.2020. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29,654 7 2018-19 5,489,000 1,320,637 Total 5,17,36,600 1,16,76,276 3.12.8. The claim of the applicant that the money transferred to Mohammed Anoop was sourced from the loan taken in his partnership firm M/s Old Coffee House's name from Punjab National bank, Trivandrum, which is purportedly against the mortgage of his mother-in-law's immovable property, is found to be untrue. On analysis of bank accounts, it is seen that the cash was deposited in the accounts of Petitioner just before the fund transfers to Mohammed Anoop. Further: 3.12.9. There is no interest payment by Shri. Mohammed Anoop on loan taken from the Petitioner. 3.12.10. The loan is stated to be taken by Petitioner in the name of M/s. Old Coffee House Restaurant as a Business loan, and he is paying huge interest on service of this loan. Petitioner however, never had not shown this loan in his Income Tax Returns starting from FY 2012-13 to till date. 3.12.11. The repayment of interest on the loan by Petitioner was made through cash deposits in the said loan account, and the source of said cash deposits is not known. 3.12.12. The contention of Petitioner is that the money given to Mohammed Anoop i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he companies where Petitioner is a Director. However, it was revealed as per the said search operation that no company by the aforementioned names ever existed on the said premises and the said companies having fake addresses were floated by Petitioner. The details of these companies have been obtained from MCA website. Further investigation is underway. 3.18. During the search operations, u/s 17(1) of the PMLA, conducted on the residential address of the accused herein, one IndusInd Bank debit card bearing the name of Shri Mohammed Anoop, who is a drug dealer, was found at the residential premises of the petitioner. On the opposite side of the said debit card, the signature of the Petitioner has been found. Details of the said debit card were sought from the concerned bank, and it was revealed that the said debit card pertains to the bank account of Hayaat restaurant. It is the same nonfunctional restaurant that was financed by the accused herein and was operated by Shri Mohammed Anoop, a drug dealer and a Benamidar of the Petitioner. Subsequently, details of the bank account connected with the said debit card were sought from IndusInd Bank, and the bank informed that there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.10.2020, and the Respondent herein has provided a copy of the arrest order, grounds of arrest to the Petitioner and also allowed him to inform his relatives as per the guidelines laid down by the Hon'ble Supreme court in case of D K Basu vs State of West Bengal 1997 (1) SCC 416. The copy of served documents has already been submitted to the sessions court. The respondent has followed all conditions laid down in section 19 of the PMLA Act for the arrest of the accused. This fact is also self-evident from the fact that the Petitioners' signature is affixed on each page of the arrest order as well as the grounds of arrest, meaning thereby that he was informed of his grounds of arrest. 3.22. That, furthermore, two associates have also disclosed in their statement that the Petitioner herein is involved in financing the drug business of the co-accused/Mohammed Anoop and others involved in the crime. Statements of the accused/applicant recorded by the ED, u/s 50(3) of PMLA, disclosed his active connivance in the offence, and therefore the applicant's further custody was sought. Petitioner thus bringing the profits from the illegal business of drug dealings into the mainstream financia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n may suffice, but the 'guilt' standard which offers the highest degree of protection from arrest must influence this Court to read the text purposively, obliging the investigating officer to communicate the grounds of arrest in writing. 4.4. The respondent, Investigating Officer, was therefore obliged to communicate the grounds of arrest by serving a copy of the grounds of arrest on the Petitioner 4.5. In this regard he refers to the Notes on Clauses appended to the PML Bill 1999 which reads as under: "Clause 18 proposes to empower the Director, the Deputy Director, the Assistant Director or any other authorized officer to arrest a person if he has reason to believe that the person is guilty of an offence under the proposed legislation. Necessary safeguards such as furnishing the grounds of arrest and the production before the Judicial Magistrate or a Metropolitan Magistrate within twenty-four hours are also sought to be provided." (emphasis supplied) 4.6. The legislative intent was to include 'furnishing of grounds of arrest' as a necessary safeguard from the arbitrary exercise of the power of arrest. Furnishing of the Grounds of arrest, in no sense of the term, can be inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , not suffice. Merely reading out the grounds of arrest to the detenu would defeat the very object of requiring the reasons to believe to be recorded in writing and communicated to the detenu. As explained the Constitution Bench of the Supreme Court in C.B. Gautam (supra), in the context of the IT Act, the obligation to record reasons and convey the same to the party concerned operates as a deterrent against possible arbitrary action by the quasi-judicial or the executive authority invested with judicial powers. Also it is not understood why the DOE did not want to provide the detenu the copy of grounds of arrest as recorded by it. It would not prejudice the DOE in any way. 47. The Notes on Clauses accompanying the PML Bill, 1999 clarified what was intended as follows: "Clause 18 proposes to empower the Director, the Deputy Director, the Assistant Director or any other authorized officer to arrest a person if he has reason to believe that the person is guilty of an offence under the proposed legislation. Necessary safeguards such as furnishing the grounds of arrest and production before the Judicial Magistrate or a Metropolitan Magistrate within twenty-four hours are also sough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional mandate as well as the law as explained in D K Basu v. Union of India (1997) 1 SCC 416. 26. In the present case, the grounds of arrest, even according to the SFIO, were only "explained" to the Petitioner. Nowhere is it noted that he was attempted to be served with the grounds of arrest and he refused to receive the grounds. It is only said that he refused to sign the arrest memo in acknowledgment of his having been "explained" the grounds of arrest. Although Section 212 (8) states that he should be "informed" of the grounds of arrest, Rule 4 of the SFIO Arrest rules read with the Arrest form appended thereto mandates serving upon the Petitioner the copy of the Arrest Order containing the grounds of arrest in Column 15. Even till the filing of the present petition or even thereafter the Arrest order was not served on the Petitioner. 4.11.3. Arnesh Kumar v. State of Bihar (2014) 8 SCC 273 8. An accused arrested without warrant by the police has the constitutional right under Article 22(2) of the Constitution of India and Section 57 Cr.P.C. to be produced before the Magistrate without WP No. 13261 of 2020 unnecessary delay and in no circumstances beyond 24 hours excluding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons have been recorded for arrest and if so, prima facie those reasons are relevant, and secondly, a reasonable conclusion could at all be reached by the police officer that one or the other conditions stated above are attracted. To this limited extent the Magistrate will make judicial scrutiny. 4.11.4. State of Punjab v. Davinder Pal Singh Bhullar, (2011) 14 SCC 770 107. It is a settled legal proposition that if initial action is not in consonance with law, all subsequent and consequential proceedings would fall through for the reason that illegality strikes at the root of the order. In such a fact situation, the legal maxim sub lato fundament to cadit opus meaning thereby that foundation being removed, structure/work falls, comes into play and applies on all scores in the present case. 4.12. By referring to Section 19 of the PMLA, he submits that the purpose of arresting a person under the PMLA, the Investigating officer has to come to a conclusion prior to the arrest that the person to be arrested has committed the offence and or is guilty of having committed the offence. The degree of satisfaction that is required to be achieved prior to arrest is that of the accused i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st police station. (3) Nothing in this section shall be deemed to authorize such arrest for any act which is an offence under Chapter IV unless such act has been prohibited under clause (c) of section 30. Suspicion standard: 4.17. Reasonable suspicion that the accused has committed the offence is the standard under Section 41 of the Cr.P.C. which is reproduced hereunder: 41. When police may arrest without warrant. (1) Any police officer may without an order from a Magistrate and without a warrant, arrest any person- (a) who has been concerned in any cognizable offence, or against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists, of his having been so concerned; or (b) who has in his possession without lawful excuse, the burden of proving which excuse shall lie on such person, any implement of house- breaking; or (c) who has been proclaimed as an offender either under this Code or by order of the State Government; or (d) in whose possession anything is found which may reasonably be suspected to be stolen property and who may reasonably be suspected of having committed an offence with reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a police station has and is subject to under the Code of Criminal Procedure, 1898 (5 of 1898). (4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), an offence relating to"- A. Prohibited goods; or B. Evasion or attempted evasion of duty exceeding fifty lakhs rupees, shall be congnizable (5) Save as otherwise provided in sub-section (4), all other offences under the Act shall be non-cognizable. (6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), an offence punishable under section 135 relating to:- (a) Evasion or attempted evasion of duty exceeding fifty lakh rupees; or (b) Prohibited goods notified under section 11 which are also notified under sub-clause (c) of (I) of sub-section (1) of section 135, or (c) Import or export of any goods which have not been declared in accordance with the provisions of this Act and the market price of which exceeds on e crore rupees; or (d) Fraudulently availing of or attempt to avail of drawback or any exemption from duty provided under this Act, if the amount of drawback or exemption from duty exceeds fifty lakh rupees. (7) Save as otherwise provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended to these rules and shall serve it on the arrestee and obtain written acknowledgement of service. 4.21. Section 19 of the PMLA also envisages guilt standard the same is reproduced hereunder once again for easy reference: Section 19: Power to arrest.- (1) If the Director, Deputy Director, Assistant Director, or any other officer authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest. (2) The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under sub-section (1), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such order and material for such period, as may be prescribed. (3) Every person arrested under sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest for an offence under PMLA and since the arrest can be made only after coming to a conclusion by the Investigating officer that the detenue/arrestee is guilty of the offence, a Court of law can grant bail only after the accused were to prove or demonstrate that he is not guilty of the said offence. 4.28. Section 5 of the PMLA empowers the designated authorities to provisionally attach the suspected proceeds of crime, which could include attachment of Bank accounts, properties, both movable and immovable, thereby preserving and protecting the proceeds of crime and consequently reducing the need to arrest a person against whom offence under the PMLA has been alleged. This, in essence, would mean that there is no power vested with the Investigating officer to arrest a person merely for the reason of protecting the proceeds of crime, which can be done by way of an attachment. 4.29. In the present case, the Investigating officer having sought for remand of the petitioner only on the ground that the proceeds of the crime have to be protected, the same does not satisfy the guilt standard and therefore, the arrest of the petitioner is to be treated to be illegal and not that empowere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g channels; the petitioner is alleged to have transferred Rs. 46,75,000/- to the account of Mohammed Anoop. The transfer of funds through normal banking channels does not amount to money laundering and therefore, there could never have been a conclusion of guilt drawn against the petitioner. On the above basis, he submits that the guilt standard not having been established; the petitioner could not have been arrested. 5. Sri. Surya Prakash V.Raju, learned Senior counsel and Additional Solicitor General of India, submitted as under: GROUNDS OF ARREST: 5.1. The petitioner has not only been informed of the arrest but also has been provided with grounds of arrest. The said grounds were informed and provided on 29.10.2020, the date of the arrest itself, which is in compliance with the decision of the Apex Court in D.K.Basu -v- State of West Bengal [(1997) 1 SCC 416]. This he submits is established by the factum of signature of the petitioner on the foot of the arrest order dated 29.10.2020, as also the grounds of arrest dated 29.10.2020. It is only on the basis of the said information and provision of the grounds of arrest that the petitioner informed his brother of his arrest and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter to the appellant (or in this case his solicitor) amounts to the communication of its contents on the day of receipt. In my view the word 'inform' is to be construed so as to give effect to that assumption. Added to this is the fact that Parliament has chosen to subject extradition proceedings to a clearly defined timetable under which steps have to be taken within limited periods. That is the case both with the procedure relating to appeals and with the process of extradition itself if there is no appeal. In each case time runs from the date on which the Secretary of State informs the person concerned of the order (s.117[of the Extradition Act 2003]). It is important, therefore, for that date to be capable of being ascertained with certainty. The time of transmission of fax and e-mail is recorded electronically and in the ordinary way there would be a very strong presumption that a letter dispatched by first class mail had been delivered the next business day. To interpret section 100(1) as requiring the Secretary of State of bring the existence of the order to the actual notice of the person concerned, or that of his solicitor, as opposed to simply requiring the delivery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said provision "as soon as may be", makes it clear that grounds of arrest are not to be to be supplied at the time of arrest itself or immediately on arrest, but as soon as may be. If it was the intention of the Legislature that in the Arrest Order itself the grounds of arrest should be stated, that too in writing, the Legislature would have made strict provision to that effect by using the word 'immediately' or 'at the time of arrest'. The fact that Legislature has not done so but used the words 'as soon as may be', thereby indicating that there is no statutory requirement of grounds of arrest to be communicated in writing and that too at the time of arrest or immediately after the arrest. The use of the words 'as soon as may be' implies that such grounds of arrest should be communicated at the earliest. 191. Here, in the case it is not disputed that the detailed grounds of arrest were furnished in the Remand Report filed before the Special Court, immediately within 24 hours, when the Petitioner was produced before the Special Court. On the basis of the said Remand Report containing the grounds of arrest, the Special Court has passed detailed order, justifying the arrest an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y learned counsels, the position, in law, which emerges is as follows: i. The procedural safeguards in clause (1) of Article 22 are meant to afford the earliest opportunity to the arrested person to remove any mistake, misapprehension or misunderstanding in the minds of the arresting authority and, also, to known exactly what the accusation against him is so that he can exercise the second right, namely, of consulting a legal practitioner of his choice and to be defended by him. Clause (2) of Article 22 provides the material safeguard that the arrested person must be produced before a Magistrate within 24 hours of such arrest so that an independent authority exercising judicial powers may, without delay, apply its mind to his case. See Madhu Limaye (Supra). ii. Neither Section 19(1) of PMLA nor the definition of the expression 'order' as given in Sub-Clause (h) of Rule 2, of the PMLA Arrest Rules provide that the grounds for such arrest are mandatorily required to be provided in writing to the person arrested at the time of his arrest. Oral communication of the grounds of arrest is not only a substantial, but proper compliance of the provision. Section 19(1) also does not state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his mind to all relevant matters. See Madhu Limaye (supra). vi. A writ of habeas corpus is not to be entertained when a person is committed to judicial custody or police custody by the competent Court by an order which prima facie does not appear to be without jurisdiction or passed in an absolutely mechanical manner or wholly illegal. See N. Ratnakumari (Supra), Kanu Sanyal (Supra), Manubhai R.P. (Supra). vii. Once it is established that, at the stage of remand of the Petitioner, the Special Court has directed detention of the Petitioner after applying its mind to all the relevant factors, the orders of remand having thus cured the Constitutional infirmities, if any and such orders, prima facie, being not passed without jurisdiction or in a wholly illegal manner, then, the Writ for Habeas Corpus itself is not maintainable. See Chhagan Chandrakant Bhujbal (Supra). viii. If on the date of the hearing of the writ petition, it is shown that the detention of a particular person is valid, mere fact that his detention had been invalid earlier would not entitle such a petitioner to have any redress in a habeas corpus petition. Even if detention of a particular person is not in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person. 5.11. In this regard he relies on the decision of the Apex Court in Sandeep Kumar Bafna v. State of Maharashtra reported in (2014) 16 SCC 623. The said para is reproduced herein for easy reference: 19. It cannot be over-emphasised that the discipline demanded by a precedent or the disqualification or diminution of a decision on the application of the per incuriam rule is of great importance, since without it, certainty of law, consistency of rulings and comity of courts would become a costly casualty. A decision or judgment can be per incuriam any provision in a statute, rule or regulation, which was not brought to the notice of the court. A decision or judgment can also be per incuriam if it is not possible to reconcile its ratio with that of a previously pronounced judgment of a co-equal or larger Bench; or if the decision of a High Court is not in consonance with the views of this Court. It must immediately be clarified that the per incuriam rule is strictly and correctly applicable to the ratio decidendi and not to obiter dicta. It is often encountered in High Courts that two or more mutually irreconcilable decisions of the Supreme Court are cited at the Bar. We thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accused. 5.18. A similar expression, "reasonable grounds for believing that he has been guilty of an offence punishable with death or imprisonment for life" is found under Section 437 of Cr.P.C. By usage of the said word 'guilt', it does not mean that the accused is to be guilty of the offence punishable with death or imprisonment for life. The Investigating Officer is not a judge of a Court of law to adjudicate on the guilt or otherwise before arresting a person. 5.19. In criminal matters, there is no requirement for the Investigating Officer to issue a show-cause notice calling upon the accused to provide his defence, consider the same and pass a reasoned order and thereafter arrest the accused. In this regard, he relies upon the decision of the Apex Court in Prahlad Singh Bhati v. NCT, Delhi, reported in (2001) 4 SCC 280, more particularly para 8 thereof which is reproduced hereunder for easy reference: 8. The jurisdiction to grant bail has to be exercised on the basis of well-settled principles having regard to the circumstances of each case and not in an arbitrary manner. While granting the bail, the court has to keep in mind the nature of accusations, the nature of evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of charge-sheet or during trial for such an offence the Court has an opportunity to form somewhat clear opinion as to whether there are reasonable grounds for believing that the accused is not guilty of such an offence. At that stage the degree of certainty of opinion in that behalf is more after the trial is over and judgment is deferred than at a pre-trial stage even after the charge-sheet. There is a noticeable trend in the above provisions of law that even in case of such non-bailable offences a person need not be detained in custody for any period more than it is absolutely necessary, if there are no reasonable grounds for believing that he is guilty of such an offence. There will be, however, certain overriding considerations to which we shall refer hereafter. Whenever a person is arrested by the police for such an offence, there should be materials produced before the Court to come to a conclusion as to the nature of the case he is involved in or he is suspected of. If at that stage from the materials available there appear reasonable grounds for believing that the person has been guilty of an offence punishable with death or imprisonment for life, the Court has no other o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, even if the same is required to be established at this stage. 5.27. In that, the relationship between Sri. Mohammed Anoop and the petitioner has been established, there is no denial of the same by the petitioner. Sri. Mohammed Anoop had been arrested by the NCB for having in his possession narcotic drugs and psychotropic substances of commercial quantity; NCB has registered a case against Mohammed Anoop under Section 22 and 27-A of NDPS Act which are scheduled offences under the PMLA. On the arrest of Mohammed Anoop, he has deposed that the petitioner is his boss, they have huge money transactions, huge amounts of monies have been deposited in the Bank accounts of Mohammed Anoop by the petitioner, the petitioner has been making use of the accounts to start restaurant established benami by the petitioner. By using a debit card in the name of Mohammed Anoop, the money has been used by the petitioner. Mohammed Anoop had categorically stated that he had only followed the instructions of the petitioner. The amount deposited in the accounts are not commensurate with the income tax returns of the petitioner; though it was contended that the petitioner had borrowed the money by mortgag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued processes or warrant for the production of the accused if he is not produced before him cannot, in view of A. Lakshamanrao case be regarded as correct. The power under Section 344 can be exercised even before the submission of the charge-sheet, (of, Chandradip v. State [(1955) 3 BLJR 323] and Ajit Singh v. State, [(1970) 76 Cri LJ 1075] ) that is, at the stage when the investigation is still not over. If the view we hold is correct that Section 344 operated, the Magistrate, provided he complied with the condition in the Explanation, was competent to pass remand orders from time to time subject to each order being not for a period exceeding fifteen days. There can be no doubt that the Magistrate had satisfied that condition. The judgment of the High Court in para 11 points out that the prosecution case was that the appellant had himself made a confession before the police. That was in addition to a confession by two others which implicated the appellant in the commission of offences under Section 395 of the Code. 5.31. Prestige Lights Ltd. v. SBI, reported in (2007) 8 SCC 449, more particularly para 33 to 35 thereof which are reproduced hereunder for easy reference: 33. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y functioning of the writ courts would become impossible. 5.32. Dalip Singh v. State of U.P., reported in (2010) 2 SCC 114 more particularly para 1 to 10 thereof which are reproduced hereunder for easy reference: 1. For many centuries Indian society cherished two basic values of life i.e. "satya" (truth) and "ahimsa" (non-violence). Mahavir, Gautam Buddha and Mahatma Gandhi guided the people to ingrain these values in their daily life. Truth constituted an integral part of the justice delivery system which was in vogue in the pre- Independence era and the people used to feel proud to tell truth in the courts irrespective of the consequences. However, post-Independence period has seen drastic changes in our value system. The materialism has overshadowed the old ethos and the quest for personal gain has become so intense that those involved in litigation do not hesitate to take shelter of falsehood, misrepresentation and suppression of facts in the court proceedings. 2. In the last 40 years, a new creed of litigants has cropped up. Those who belong to this creed do not have any respect for truth. They shamelessly resort to falsehood and unethical means for achieving their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came to know about these orders only when the respondents appeared in response to the notice and filed their counter-affidavit. In our view, the said interim orders have a direct bearing on the question raised and the non-disclosure of the same certainly amounts to suppression of material facts. On this ground alone, the special leave petitions are liable to be rejected. It is well settled in law that the relief under Article 136 of the Constitution is discretionary and a petitioner who approaches this Court for such relief must come with frank and full disclosure of facts. If he fails to do so and suppresses material facts, his application is liable to be dismissed. We accordingly dismiss the special leave petitions." 6. In S.P. Chengalvaraya Naidu v. Jagannath [(1994) 1 SCC 1 : JT (1993) 6 SC 331] the Court held that where a preliminary decree was obtained by withholding an important document from the court, the party concerned deserves to be thrown out at any stage of the litigation. 7. In Prestige Lights Ltd. v. SBI [(2007) 8 SCC 449] it was held that in exercising power under Article 226 of the Constitution of India the High Court is not just a court of law, but is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Article 226 of the Constitution is extraordinary, equitable and discretionary and it is imperative that the petitioner approaching the writ court must come with clean hands and put forward all the facts before the Court without concealing or suppressing anything and seek an appropriate relief. If there is no candid disclosure of relevant and material facts or the petitioner is guilty of misleading the Court, his petition may be dismissed at the threshold without considering the merits of the claim. The same rule was reiterated in G. Jayashree v. Bhagwandas S. Patel [(2009) 3 SCC 141]. 5.33. He submits that there is an arrest made of the petitioner under the NDPS Act would indicate that the NCB is of the opinion that the petitioner is involved in such offences. NCB is yet to file a charge sheet which can be filed in the time frame specified under Section 36-A of the NDPS Act. Just because the charge sheet is yet to be filed, it cannot be contended by the petitioner that there is no charge sheet against the petitioner alleging any predicate offence which has been committed by him. 5.34. Even if a charge sheet or a complaint has not been filed for the predicate offence in te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrest would mean to detain and restrain a person. 9.2. Section 41 to 44 and 46 of Cr.P.C. deal with the arrest of a person, Section 41 empowering the police officer to arrest any person without a warrant, Section 42 empowering a Police officer to arrest a person who commits an offence in his presence, Section 43 enabling a private person to arrest any person who commits an offence in his presence and or a proclaimed offender, Section 44 deals with arrest by a Magistrate and Section 46 lays down the manner in which the arrest has to be made. 9.3. Extensive arguments have been addressed by both the Senior counsels on this aspect. Sri. Aravind Kamath, learned Senior counsel appearing for the petitioner by relying upon the decision of the Delhi High Court in Rajbhushan Omprakash Dixit's case (supra), contended that the grounds for arrest is required to be furnished in writing and provided to the person arrested at the earliest point of time. The relevant paragraph has been extracted hereinabove. 9.4. Per contra Sri.S.V.Raju, learned Senior counsel and ASG submitted that the decision in Raj Bhushan's case is per in curium inasmuch as the prior decision of the Coordinate Bench in Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the manner as provided under PMLA or not at all. Apart from the exercise of power to arrest in a particular manner, PMLA also provides or mandates that the arresting officer inform the arrestee of the grounds of his arrest at the earliest without any unnecessary delay so as to safeguard the individual freedom of that person who can on that basis apply for and seek for bail if so provided as held in Union of India -v- Padam Narayan Agarwal [(2008) 13 SCC 305]. 9.8. The question is as to whether the arresting officer is required to only inform the grounds of arrest or provide the same in writing to the person arrested for an offence under the PMLA. The PMLA has various provisions relating to the offence of money laundering as regards which stringent punishments are prescribed. Furthermore, in terms of Section 45 of the PMLA for the person arrested to seek bail, it is required that such a person establishes before the said Court that the accused is not guilty of the offence alleged against him. 9.9. There being conflicting decisions in Moin Akhtar Quereshi's case (supra) and Rajbhushan Omprakash Dixit's case (supra) by the Benches of the Delhi High Court of similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds for arrest, as also grounds for the grant of bail being placed before the said Judge, which would essentially mean that the same is to be in writing and be capable of being produced by the accused before such Court. 9.15. There is considerable force in the submission made by Sri. Aravind Kamath learned Senior counsel that one of the safeguards put in place by the legislature to prevent abuse of the powers vested with the Authority under the PMLA is providing grounds of arrest to the arrestee. These grounds of arrest would not only have to be provided to the arrestee but also would form part of the case diary or the investigation file. Thus unless there are grounds sufficient to arrest a person which is recorded in writing, no person could be arrested under the PMLA. This by itself would be a safeguard so as to prevent any arbitrary exercise of power and/or an indiscriminate arrest being carried out by the authorities under the PMLA. The reasoning of the Delhi High Court in Rajbhushan Omprakash Dixit's case (supra) and the dicta laid down therein would have to be read in consonance with the decision of the Apex Court in D.K.Basu's case (supra). At the time when the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner was not provided with grounds of arrest or the arrest order whereas Sri.S.V.Raju, learned Senior Counsel and ASG appearing for the respondent would contend that they have been so provided. 9.20. This aspect would have to be examined on the basis of the documents on record. The copies of the arrest order and grounds of arrest have been produced. A perusal of the same indicates that the petitioner has signed the same, thus indicating that those grounds were made known to and communicated to the petitioner. It cannot be therefore disputed that the grounds for arrest were communicated. 9.21. The question that remains is whether the same was handed over to the arrestee or not, which would have to be ascertained. In the present case, it can indeed be ascertained on the basis of the submission made by the Petitioner before the Special Court when the petitioner was produced before the Special Court. 9.22. On an enquiry made by the Special Court as regards the providing of the grounds of arrest, the petitioner has categorically stated that he has been so provided. The said enquiry and response to the enquiry has been recorded in the order sheet, the entries in the order sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of Section 19 of PMLA, the Investigating Officer or the arresting officer is required to inform and provide a physical copy of the arrest order and grounds of arrest to the person being arrested. Mere oral information would not be sufficient. 9.27. In the present case on facts having come to the conclusion that the grounds of arrest have been provided to the petitioner, I hold that requirement of Section 19 in providing grounds of arrest has complied with, and there is no infirmity in the same. 10. ANSWER TO POINT NO.2: Whether the expression "reason to believe that any person has been guilty of an offence" found under Section 19 of the PMLA Act requires a preliminary adjudication by the Investigating Officer as regards the guilt of the accused before arresting him? 10.1. Though extensive arguments have been advanced in this regard, the sum and substance of the arguments are: 10.2. Sri. Aravind Kamath learned Senior Counsel has strenuously contended that the standard required to be applied by the arresting officer at the time of arrest of a person for an offence under the PMLA is the guilt standard, whereas under various other enactments, the same is of a lower standard ina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lief to be recorded in writing) that any person has been guilty of an offence punishable under this Act.....". 10.8. An examination of the above would indicate that the arresting officer should have "reason to believe" that "a person is guilty of an offence". The "reason to believe" cannot be said to be an adjudication which is required to be performed by the Investigating Officer as regards the guilt of the person being arrested; the Investigating officer cannot be a Judge, jury and executioner. The investigating officer is only to investigate and place the material before the competent court for adjudication. 10.9. If the submission of Shri. Aravind Kamath, learned Senior counsel is accepted, the same would be akin to putting the cart before the horse, inasmuch as the Investigating Officer or the arresting officer cannot be empowered to, or required to adjudicate on the guilt of the accused, whether it be called as guilt standard or otherwise as termed by Shri Aravind Kamath, learned Senior counsel. 10.10. The requirement under Section 19(1) as extracted above, is a "reason to believe on the basis of the material in his possession". This reason to believe, in my conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deal with the proceeds of crime, etc., there is considerable force in the said submission. In my opinion though the possibility of the arrestee tampering with evidence or would be a ground for arrest in respect of other offences, the same would not be a sufficient ground to arrest any person under the PMLA, this being so because firstly, the investigating officer would have in normal circumstances already have taken possession of the evidence, thus obviating the possibility of tampering and secondly, in terms of Section 5 of the PMLA, the Investigating officer has the power to attach proceeds of crime and safeguard the said proceeds of crime, thus obviating the possibility of the arrestee dealing with the proceeds of crime. 10.14. The further contention of Sri. Aravind Kamath, learned Senior counsel is that the proceeds of crime have been attached and that entire evidence being taken over by the respondents, there was no need for the Petitioner to be arrested. 10.15. This, in my considered opinion, cannot be a ground for consideration by this Court in the exercise of its jurisdiction under Article 226 of the Constitution. This would have to be considered by the Court considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeds of the crime. Though of course, the same is not part of Section 19(1) as contended by Shri Aravind Kamath, learned Senior counsel, the same would be examined by the Court while granting bail to consider whether the person arrested is required to be retained in judicial custody for the reason that the said person may tamper with evidence and or with the proceeds of crime. Said factor would have to be considered at the time of granting of bail and not at the time of the arrest. Arrest and remand to police custody and thereafter to judicial custody, which would also include custodial interrogation, which is an essential weapon in the armoury of the Investigating Officer enabling the Investigating officer to properly and effectively investigate a particular offence. 10.19. Sri.Surya Prakash V.Raju, learned Senior counsel and Additional Solicitor General of India submitted that there is enough and more material available on record to establish the guilt of the Petitioner and/or commission of the offences enumerated under the PMLA by the Petitioner. The Petitioner was given enough and more opportunities to explain the deposits made by the Petitioner of` huge amounts of cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o his mother-in-law has been prima facie proved to be false since no such loan had been obtained by the petitioner. No proper explanation was given by the petitioner during the course of his interrogation; there are serious offences that have been alleged against the said Mohammed Anoop and the petitioner and several others for offences under the NDPS Act, huge amounts of money had changed hands. It is suspected that these have been realized on account of trafficking or dealing with drugs which is a scheduled offence under the PMLA, therefore the money is suspected or believed to have been generated on account of such dealing with or trafficking in Narcotic or psychopathic substances, these monies would amount to proceeds of crime. 10.23. These being the basic facts, it is not required for this Court to deal with or advert to all the facts in detail in a petition under Section 482 of Cr. P.C or a Writ Petition read with Section 482 of the Cr. P.C. From the statements which are available on record, more so when the petitioner has not denied his relationship with Mohammed Anoop, it cannot be said that the material in possession of the Investigating Officer and/or arresting officer w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot be expected of an Investigating Officer to in detail record the same in writing and form a part of grounds of arrest formulated by the Investigating Officer. However, the grounds of arrest are required to be sufficiently detailed out as to why a person is being arrested, in brief state as to what is the material available with the Investigating officer which would link the person to be arrested to an offence under the Act and why the person is believed to be guilty of the commission of such an offence. These factors, if contained in the grounds of arrest, would be sufficient, it would not be required for a detailed adjudicatory order to be made by the Investigating Officer as to the guilt of the accused. 11.2. I answer point No.3 by holding that the objective satisfaction of the guilt of the accused is required to be reduced to writing in the grounds of arrest formulated by the Investigating Officer prior to the arrest and to be furnished in writing to the arrestee at the time of arrest or immediately thereafter. 11.3. In the facts of the case, I'am of the considered opinion that the grounds of arrest are in compliance with the above requirement. 12. What orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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