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TMI Blog2023 (12) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... enches 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt ), in ECIR No. STF/21/2021. 3. Dehors the facts, a neat question of law that has been raised before this Court is, 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 Prevention of Money Laundering Act, 2002 (hereinafter referred to as PMLA)? FACTUAL MATRIX: - 4. The bare minimum facts required to decide the above questions of law are as follows: - (i) The appellant was the founder of M/s Supertech Limited, a real estate company which along with its group companies had undertaken various projects in Delhi NCR and at other places in Uttar Pradesh during the period 1988-2015. (ii) Due to various reasons, 26 FIRs came to be registered against the appellant in various jurisdictions. (iii) On 09.09.2021, the respondent ED registered an ECIR bearing no. ECIR/21/STF/2021 against M/s Supertech Ltd. and others and started investigation under the PMLA. The appellant was also summo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st was in accordance with Section 19 of the PMLA. Paragraph 16 of the counteraffidavit being relevant is reproduced herein below: - 16. The arrest was in accordance with Section 19 of PMLA in so far as the Grounds of Arrest in writing were handed over to the arrestee Ram Kishor Arora who after reading the same affixed his signature on each page of the Grounds of Arrest. Further, after going through the Grounds of Arrest the Arrestee Ram Kishor Arora on last page in his own handwriting wrote that I have been informed and have also read the above mention grounds of arrest Therefore, the ratio of Pankaj Bansal judgement will not be applicable in the instant case. A copy of Grounds of arrest is annexed herewith and marked as Annexure R-1. 6. The appellant without specifically denying the said assertion made by the respondent ED in paragraph 16 of the counter-affidavit, filed the response by filing an affidavit in rejoinder. The response of the appellant in the rejoinder to paragraph 16 of the counter-affidavit reads as under:- i. It is respectfully submitted that the very fact that the respondent has now annexed the copy of the grounds of arrest establishes the fact that the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-section (1) shall, within twenty-four hours, be taken to a 1[Special Court or] Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest to the 1[Special Court or] Magistrate's Court. SUBMISSIONS BY THE LEARNED COUNSELS: - 8. The Learned Senior Counsel Mr. Abhishek Manu Singhvi placing heavy reliance on the recent decision of this Court in Pankaj Bansal vs. Union of India and Others (2023) SCC Online SC 1244 , submitted that mere informing the accused (the appellant herein) orally about the grounds of arrest and making him read the same and obtaining his signature thereon, and not furnishing in writing the grounds of arrest to the accused has been held to be not in consonance with the provisions contained in Section 19(1) of the PMLA. He further submitted that taking note of the inconsistent practice being followed by the officers of the respondent-ED, it has been direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is such that they are tasked with dual role of conducting inquiry and collect evidence to facilitate adjudication proceedings before the Adjudicating Authority in exercise of powers conferred upon them under Chapters III and V of the 2002 Act and also to use the same materials to bolster the allegation against the person concerned by way of a formal complaint to be filed for offence of money-laundering under the 2002 Act before the Special Court, if the fact situation so warrant. It is not as if after every inquiry prosecution is launched against all persons found to be involved in the commission of offence of money-laundering. It is also not unusual to provide for arrest of a person during such inquiry before filing of a complaint for indulging in alleged criminal activity. The respondent has rightly adverted to somewhat similar provisions in other legislations, such as Section 35 of FERA and Section 102 of Customs Act including the decisions of this Court upholding such power of arrest at the inquiry stage bestowed in the Authorities in the respective legislations. In Romesh Chandra Mehta 532, the Constitution Bench of this Court enunciated that Section 104 of the Customs Act co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02 Act and the preconditions to be fulfilled by the authorised officer before effecting arrest, as contained in Section 19 of the 2002 Act, are equally stringent and of higher standard. Those safeguards ensure that the authorised officers do not act arbitrarily, but make them accountable for their judgment about the necessity to arrest any person as being involved in the commission of offence of money-laundering even before filing of the complaint before the Special Court under Section 44(1)(b) of the 2002 Act in that regard. If the action of the authorised officer is found to be vexatious, he can be proceeded with and inflicted with punishment specified under Section 62 of the 2002 Act . 326. Considering the above, we have no hesitation in upholding the validity of Section 19 of the 2002 Act. We reject the grounds pressed into service to declare Section 19 of the 2002 Act as unconstitutional. On the other hand, we hold that such a provision has reasonable nexus with the purposes and objects sought to be achieved by the 2002 Act of prevention of money-laundering and confiscation of proceeds of crime involved in moneylaundering, including to prosecute persons involved in the process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the person before filing of the complaint. That does not mean that in every case same procedure must be followed. It is enough, if ED at the time of arrest, contemporaneously discloses the grounds of such arrest to such person. Suffice it to observe that ECIR cannot be equated with an FIR which is mandatorily required to be recorded and supplied to the accused as per the provisions of 1973 Code. Revealing a copy of an ECIR, if made mandatory, may defeat the purpose sought to be achieved by the 2002 Act including frustrating the attachment of property (proceeds of crime). Non-supply of ECIR, which is essentially an internal document of ED, cannot be cited as violation of constitutional right. Concededly, the person arrested, in terms of Section 19 of the 2002 Act, is contemporaneously made aware about the grounds of his arrest. This is compliant with the mandate of Article 22(1) of the Constitution. It is not unknown that at times FIR does not reveal all aspects of the offence in question. In several cases, even the names of persons actually involved in the commission of offence are not mentioned in the FIR and described as unknown accused. Even, the particulars as unfolded are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and the statutory mandate of Section 19(1) of the Act of 2002 of informing the arrested person of the grounds of arrest, we hold that it would be necessary, henceforth, that a copy of such written grounds of arrest is furnished to the arrested person as a matter of course and without exception. The decisions of the Delhi High Court in Moin Akhtar Qureshi (supra) and the Bombay High Court in Chhagan Chandrakant Bhujbal (supra), which hold to the contrary, do not lay down the correct law. 14. 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. In this regard, we may refer to the pronouncement of the Constitution Bench judgment in Union of India and Another vs. Raghubir Singh (Dead) by LRs. Etc. (1989) 2 SCC 754. 7. ..The position is substantially different under a written Consti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnificance not merely because they constitute an adjudication on the rights of the parties and resolve the dispute between them, but also because in doing so they embody a declaration of law operating as a binding principle in future cases. In this latter aspect lies their particular value in developing the jurisprudence of the law. 9. The doctrine of binding precedent has the merit of promoting a certainty and consistency in judicial decisions, and enables an organic development of the law, besides providing assurance to the individual as to the consequence of transactions forming part of his daily affairs. And, therefore, the need for a clear and consistent enunciation of legal principle in the decisions of a Court. 10. to 26 . 27. What then should be the position in regard to the effect of the law pronounced by a Division Bench in relation to a case raising the same point subsequently before a Division Bench of a smaller number of Judges? There is no constitutional or statutory prescription in the matter, and the point is governed entirely by the practice in India of the courts sanctified by repeated affirmation over a century of time. It cannot be doubted that in order to promo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsistency in the enunciation of legal principles in the decisions of this Court. It is in the above context, this Court in the case of Raghubir Singh [(1989) 2 SCC 754] held that a pronouncement of law by a Division Bench of this Court is binding on a Division Bench of the same or smaller number of Judges. It is in furtherance of this enunciation of law, this Court in the latter judgment of Parija [(2002) 1 SCC 1] held that : (SCC p. 4, para 6) But if a Bench of two learned Judges concludes that an earlier judgment of three learned Judges is so very incorrect that in no circumstances can it be followed, the proper course for it to adopt is to refer the matter before it to a Bench of three learned Judges setting out, as has been done here, the reasons why it could not agree with the earlier judgment. If, then, the Bench of three learned Judges also comes to the conclusion that the earlier judgment of a Bench of three learned Judges is incorrect, reference to a Bench of five learned Judges is justified. (emphasis supplied) 16. In Sundeep Kumar Bafna vs. State of Maharashtra (supra) also the above stated jurisprudence has been followed: - 19. It cannot be overemphasised that the disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce punishable under the PMLA, the concerned officer is at liberty to arrest him, while performing his mandatory duty of recording the reasons, and that the said exercise has to be followed by way of an information being served on the arrestee of the grounds of arrest. In Pankaj Bansal case also the court after highlighting the inconsistent practice being followed by the respondent-ED about the mode of informing the person arrested, held that it would be necessary henceforth, that a copy of such written grounds of arrest is furnished to the arrested person as a matter of course and without exception. 19. In view of the above, the interpretation of the expression as soon as may be assumes significance. In our opinion, the interpretation of the said expression should not detain us more in view of the Constitution Bench Judgment in case of Abdul Jabar Butt and Another vs. State of Jammu Kashmir. AIR 1957 SC 281. In the said case, the Constitution Bench while interpreting Section 8 of Jammu Kashmir Preventive Detention Act 2011, had an occasion to interpret the expression as soon as may be and it observed thus:- 6. Sub-section (1) imposes on the Government two duties, namely, (i) the du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The scheme underlying Article 22 of the Constitution highlights the importance attached in our constitutional set-up to the personal freedom of an individual. Sub-articles (1) and (2) refer to the protection against arrest and detention of a person under the ordinary law. Persons arrested or detained under a law providing for preventive detention are dealt with in sub-articles (4) to (7). Sub-article (5) says that when a person is detained in pursuance of an order under a law providing for preventive detention the grounds on which the order is made have to be communicated to the person concerned as soon as may be and he has to be afforded earliest opportunity to represent against the order. The object of communicating the grounds is to enable the detenu to make his representation against the order. The words as soon as may be in the context must imply anxious care on the part of the authority concerned to perform its duty in this respect as early as practicable without avoidable delay. 21. In view of the above, the expression as soon as may be contained in Section 19 of PMLA is required to be construed as- as early as possible without avoidable delay or within reasonably convenien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the arrested person as a matter of course and without exception. Hence non furnishing of grounds of arrest in writing till the date of pronouncement of judgment in Pankaj Bansal case could neither be held to be illegal nor the action of the concerned officer in not furnishing the same in writing could be faulted with. As such, the action of informing the person arrested about the grounds of his arrest is a sufficient compliance of Section 19 of PMLA as also Article 22(1) of the Constitution of India, as held in Vijay Madanlal (supra). 24. 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, Mr. Singhvi is that he was not furnished a copy of the document containing the grounds of arrest at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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