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TMI Blog2024 (7) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Court, or court of judicial/metropolitan magistrate having jurisdiction. The exercise of the power to arrest is not exempt from the scrutiny of courts. The power of judicial review remains both before and after the filing of criminal proceedings/prosecution complaint. It cannot be said that the courts would exceed their power, when they examine the validity of arrest under Section 19(1) of the PML Act, once the accused is produced in court in terms of Section 19(3) of the PML Act. Power to arrest under Section 19(1) is not for the purpose of investigation. Arrest can and should wait, and the power in terms of Section 19(1) of the PML Act can be exercised only when the material with the designated officer enables them to form an opinion, by recording reasons in writing that the arrestee is guilty. Section 45 of the PML Act does not stipulate the stage when the accused may move an application for bail. A bail application can be submitted at any stage, either before or after the complaint is filed. Whether the charge is framed or evidence is recorded or not recorded, is immaterial. Clearly, the fact that the prosecution complaint has not been filed, the charge has not been framed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid questions. The questions framed above, if required, can be reformulated, substituted and added to. - SANJIV KHANNA And DIPANKAR DATTA , JJ. For the Appellant : Dr. Abhishek Manu Singhvi, Sr. Adv. Mr. Amit Desai, Sr. Adv. Mr. Vikram Chaudhari, Sr. Adv. Mr. Vivek Jain, AOR Mr. Mohd. Irshad, Adv. Mr. Rajat Bhardwaj, Adv. Mr. Karan Sharma, Adv. Ms. Suchitra Kumbhat, Adv. Mr. Amit Bhandari, Adv. Mr. Sadiq Noor, Adv. Mr. Rajat Jain, Adv. Mr. Mohit Siwach, Adv. Mr. Kautubh Khanna, Adv For the Respondent : Mr. Tushar Mehta, SG Mr. Mukesh Kumar Maroria, AOR JUDGMENT SANJIV KHANNA, J. This appeal filed by the appellant Arvind Kejriwal assails the judgment and order dated 09.04.2024 passed by the single Judge of the High Court of Delhi whereby the Criminal Writ Petition filed by Arvind Kejriwal under Articles 226 and 227 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, 1973 For short, the Code , challenging his arrest by the Directorate of Enforcement For short, DoE , vide the arrest order dated 21.03.2024, on the ground of violation of Section 19 of the Prevention of Money Laundering Act, 2002 For short, the PML Act , and the proceedings pursuant th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RC are the predicate offence for investigation/inquiry into the scheduled offences under the PML Act. On 26.11.2022, the DoE filed the first prosecution complaint. On 20.12.2022, the Special Court took cognisance. Since then, the DoE has filed seven supplementary prosecution complaints. In the last complaint, that is, the Seventh Supplementary Prosecution Complaint dated 17.05.2024, Arvind Kejriwal has been named as an accused. 6. On 30.10.2023, Arvind Kejriwal was issued notice under Section 50 of the PML Act for his appearance and recording of statement. Thereafter, eight summons were issued till his arrest on 21.03.2024. DoE states that Arvind Kejriwal failed to appear and join the investigation. Arvind Kejriwal claims that the summons and notices under Section 50 were illegal, bad in law and invalid. We are not directly examining the question of validity of the summons and notices, though the effect and failure to appear is one of the aspects which will be noticed subsequently. 7. The cardinal ground taken in the present appeal is that Arvind Kejriwal was arrested in violation of Section 19(1) of the PML Act. It is contended that the arrest was illegal, which makes the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refer to some judgments of this Court on the importance of Section 19(1) and the effect on the legality of the arrest upon failure to comply with the statutory requirements. 10. In Pankaj Bansal v. Union of India and others, 2023 SCC Online SC 1244 interpreting Section 19 of the PML Act with reference to Article 22(1) of the Constitution of India, 22. Protection against arrest and detention in certain cases. (1) No person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest nor shall he be denied the right to consult, and to be defended by, a legal practitioner of his choice. this Court has observed: 32. In this regard, we may note that Article 22(1) of the Constitution provides, inter alia, that no person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest. This being the fundamental right guaranteed to the arrested person, the mode of conveying information of the grounds of arrest must necessarily be meaningful so as to serve the intended purpose. It may be noted that Section 45 of the Act of 2002 enables the person arrested under Section 19 thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined in Vijay Madanlal Choudhary (supra) which has been referred to subsequently. The ECIR is not a public document. Thus, to introduce checks and balances, Section 19(1) imposes safeguards to protect the rights and liberty of the arrestee. This is in compliance with the mandate of Article 22(1) of the Constitution of India. 12. V. Senthil Balaji v. State and others (2024) 3 SCC 51 similarly states that the designated officer can only arrest once they record reasons to believe in writing, that the person being arrested is guilty of the offence punishable under the PML Act. It is mandatory to record the reasons to believe to arrive at the opinion that the arrestee is guilty of the offence, and to furnish the reasons to the arrestee. This ensures an element of fairness and accountability. 13. The decision in V. Senthil Balaji (supra) has also examined the interplay between Section 19 of the PML Act and Section 167 of the Code. The magistrate is expected to do a balancing act as the investigation is to be concluded within 24 hours as a matter of rule. Therefore, the investigating agency has to satisfy the magistrate with adequate material on the need for custody of the arrestee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue whether the arrest of the person is lawful at its inception, is open for consideration and must be answered. 16. Recently, in Prabir Purkayastha v. State (NCT of Delhi), 2024 SCC OnLine SC 934 this Court reiterated the aforesaid principles expounded in Pankaj Bansal (supra). The said principles were applied to the pari materia provisions Sections 43A, 43B and 43C of the UAPA of the Unlawful Activities (Prevention) Act, 1967. The Court explained that Section 19(1) of the PML Act is meant to serve a higher purpose, and also to enforce the mandate of Article 22(1) of the Constitution. The right to life and personal liberty is sacrosanct, a fundamental right guaranteed under Article 21 and protected by Articles 20 and 22 of the Constitution. Reference was made to the observations of this Court in Roy V.D. v. State of Kerala (2000) 8 SCC 590 that the right to be informed about the grounds of arrest flows from Article 22(1) of the Constitution and any infringement of this fundamental right vitiates the process of arrest and remand. The fact that the chargesheet has been filed in the matter would not validate the otherwise illegality and unconstitutionality committed at the time of arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble information has been received that he has committed a cognizable offence punishable with imprisonment for a term which may extend to more than seven years whether with or without fine or with death sentence and the police officer has reason to believe on the basis of that information that such person has committed the said offence; (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 such thing; or (e) who obstructs a police officer while in the execution of his duty, or who has escaped, or attempts to escape, from lawful custody; or (f) who is reasonably suspected of being a deserter from any of the Armed Forces of the Union; or (g) who has been concerned in, or against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists, of his having been concerned in, any act committed at any place out of India which, if committed in India, would have been punishable as an offence, and for whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... committed certain offences, and on the other hand, takes due care to ensure individual freedom and liberty by laying down norms and providing safeguards so that the power of arrest is not abused or misused by the authorities. It is keeping in view these considerations that we have to decide correctness or otherwise of the directions issued by a Single Judge of the High Court. Blanket order of bail may amount to or result in an invitation to commit an offence or a passport to carry on criminal activities or to afford a shield against any and all types of illegal operations, which, in our judgment, can never be allowed in a society governed by the rule of law. 18. Vijay Madanlal Choudhary (supra) affirms the aforesaid ratio, and states that the safeguards provided as preconditions in Section 19(1) of the PML Act have to be fulfilled by the designated officer before affecting arrest. The safeguards are of a higher standard. They ensure that the designated officer does not act arbitrarily, and is made accountable for their judgment about the necessity to arrest the person The aspect of necessity to arrest, has been independently examined later alleged to be involved in the offence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly agree with the ratio of the decisions in Pankaj Bansal (supra) and Prabir Purkayastha (supra), which enrich and strengthen the view taken in Vijay Madanlal Choudhary (supra), on the interpretation of Section 19 of the PML Act. Power to arrest a person without a warrant from the court and without instituting a criminal case is a drastic and extreme power. Therefore, the legislature has prescribed safeguards in the form of exacting conditions as to how and when the power is exercisable. The conditions are salutary and serve as a check against the exercise of an otherwise harsh and pernicious power. 19. Given that the legislature has prescribed preconditions to prevent abuse and unauthorised use of statutory power, the wielding of such power by an authorized person or authority cannot be conclusive. The exercise of the power and satisfaction of the conditions must and should be put to judicial scrutiny and examination, if the arrestee specifically challenges their arrest. If we do not hold so, then the restraint prescribed by the legislature would, in fact and in practice, be reduced to a mere formal exercise. Given the conditions imposed, the nature of the power and the effect on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etrimental to investigation. Therefore, it is urged that reasons to believe need not be supplied to the arrestee. Paragraphs 178 and 179 of Vijay Madanlal Choudhary (supra) read: 178. The next issue is: whether it is necessary to furnish copy of ECIR to the person concerned apprehending arrest or at least after his arrest? section 19(1) of the 2002 Act postulates that after arrest, as soon as may be, the person should be informed about the grounds for such arrest. This stipulation is compliant with the mandate of article 22(1) of the Constitution. Being a special legislation and considering the complexity of the inquiry/ investigation both for the purposes of initiating civil action as well as prosecution, non-supply of ECIR in a given case cannot be faulted. The ECIR may contain details of the material in possession of the Authority and recording satisfaction of reason to believe that the person is guilty of money-laundering offence, if revealed before the inquiry/ investigation required to proceed against the property being proceeds of crime including to the person involved in the process or activity connected therewith, may have deleterious impact on the final outcome of the inq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of prejudice pressed into service by the petitioners for non-supply of ECIR deserves to be answered against the petitioners. For, the arrested person for offence of moneylaundering is contemporaneously informed about the grounds of his arrest ; and when produced before the Special Court, it is open to the Special Court to call upon the representative of ED to produce relevant record concerning the case of the accused before him and look into the same for answering the need for his continued detention. Taking any view of the matter, therefore, the argument under consideration does not take the matter any further. 23. The paragraphs in Vijay Madanlal Choudhary (supra), while recording that there is a difference between ECIR and FIR, hold that the ECIR need not to be furnished to the accused, unlike an FIR recorded under Section 154 of the Code. The PML Act, a special legislation for the offence of money laundering, creates a unique mechanism for inquiry/investigation into the offence. An analogy cannot be drawn with the provisions of the Code. ECIR is an internal document for initiating penal action or prosecution. Having held so in paragraphs 178 and 179, it is observed that Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant paragraphs in Vijay Madanlal Choudhary (supra) read: 16(liii). Secondly, there must be material in possession with the Authority before the power 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. Also, such reasons to believe must be reduced in writing. Fifthly, as per the constitutional mandate of article 22(1), the person arrested is required to be informed of the grounds of his arrest. It is submitted that the argument of the other side that the accused or arrested persons are not even informed of the case against them, is contrary to the plain language of the Act, as the Act itself mandates that the person arrested is to be informed of the ground of his arrest xx xx xx 16(lix). Reliance is then placed on the decision of this court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must give meaningful, true and full play to the legislative intent. We would subsequently examine the expressions reason to believe , guilty of an offence punishable under this Act and material in some detail. 28. Providing the written grounds of arrest , though a must, does not in itself satisfy the compliance requirement. The authorized officer s genuine belief and reasoning based on the evidence that establishes the arrestee s guilt is also the legal necessity. As the reasons to believe are accorded by the authorised officer, the onus to establish satisfaction of the said condition will be on the DoE and not on the arrestee. 29. On the necessity to satisfy the preconditions mentioned in Section 19(1) of the PML Act, we have quoted from the judgment of this Court in Padam Narain Aggarwal (supra) and also referred to and quoted from the Canadian judgment in Gifford (supra). Existence and validity of the reasons to believe goes to the root of the power to arrest. The subjective opinion of the arresting officer must be founded and based upon fair and objective consideration of the material, as available with them on the date of arrest. On the reading of the reasons to believe the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Court in terms held that whether these grounds are adequate or not is not a matter for the court to investigate. 10. The expression reason to believe 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. To this limited extent the action of the Income Tax Officer in starting proceedings under Section 34 is open to challenge in a court of law. (See Calcutta Discount Co. Ltd. v. ITO). In R.S. Seth Gopikrishan Agarwal v. R.N. Sen, Assistant Collector of Customs this Court repelled the challenge to the validity of the search of the premises of the appellant and the seizure of the documents found therein. The search was carried out under the authority of an authorisation issued under Rule 126(L)(2) of the Defence of India (Amendment) Rules, 1963 (Gold Control Rules) for search of the premises of the appellant. The validity of the authorisation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wers on a minister or official. However read, they must be intended to serve in some sense as a condition limiting the exercise of an otherwise arbitrary power. But if the question whether the condition has been satisfied is to be conclusively decided by the man who wields the power the value of the intended restraint is in effect nothing. No doubt he must not exercise the power in bad faith; but the field in which this kind of question arises is such that the reservation for the case of bad faith is hardly more than a formality. While agreeing with the first part of the aforesaid quotation, the Constitution Bench went on to refer to Joseph Kuruvilla Vellukunnel v. Reserve Bank of India and others AIR 1962 SC 1371 , wherein Hidayatullah, J., speaking for the majority, had observed: It is enough to say that the Reserve Bank in its dealings with banking companies does not act on suspicion but on proved facts. Thereafter, it was further observed: But this seems certain that the action (winding up) would not be taken up without scrutinising all the evidence and checking and re-checking all the findings. 32. Accordingly, in Barium Chemicals Ltd. (supra), it was held that the expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld, by probable reasoning, conclude or infer regarding the nature of things concerned. Such circumstances need not necessarily be capable of absolute conviction or inference; but it is sufficient if the circumstances are such that it creates a chain of probable reasoning leading to the conclusion or inference about the nature of the thing. Wednesbury unreasonableness strikes at irrationality when a decision is so outrageous in its defiance of logic or of accepted standards that no sensible person who had applied his mind to the question to be decided would have arrived at it. See Council of Civil Services Union v. Minister of State for Civil Services, (1984) 3 All. ER 935. 36. Once we hold that the accused is entitled to challenge his arrest under Section 19(1) of the PML Act, the court to examine the validity of arrest must catechise both the existence and soundness of the reasons to believe , based upon the material available with the authorised officer. It is difficult to accept that the reasons to believe , as recorded in writing, are not to be furnished. As observed above, the requirements in Section 19(1) are the jurisdictional conditions to be satisfied for arrest, the vali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew does not amount to a mini-trial or a merit review. The exercise is confined to ascertain whether the reasons to believe are based upon material which establish that the arrestee is guilty of an offence under the PML Act. The exercise is to ensure that the DoE has acted in accordance with the law. The courts scrutinize the validity of the arrest in exercise of power of judicial review. If adequate and due care is taken by the DoE to ensure that the reasons to believe justify the arrest in terms of Section 19(1) of the PML Act, the exercise of power of judicial review would not be a cause of concern. Doubts will only arise when the reasons recorded by the authority are not clear and lucid, and therefore a deeper and in-depth scrutiny is required. Arrest, after all, cannot be made arbitrarily and on the whims and fancies of the authorities. It is to be made on the basis of the valid reasons to believe , meeting the parameters prescribed by the law. In fact, not to undertake judicial scrutiny when justified and necessary, would be an abdication and failure of constitutional and statutory duty placed on the court to ensure that the fundamental right to life and liberty is not violate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in charge of a police station or is brought before a court, other than the High Court or the Court of Sessions. It is observed that the accused would be released on bail, except for in cases specified in clauses (i) and (ii) of Section 437(1) of the Code. Section 437(1)(i) applies at the stage of initial investigation where a person has been arrested for an offence punishable with death or imprisonment for life. Section 437(1)(ii) imposes certain fetters on the power of granting bail in specified cases when the offence is cognizable and the accused has been previously convicted with death, imprisonment for life, or 7 years or more, or has previously been convicted on two or more occasions for nonbailable and cognizable offences. The power under Section 437(1) of the Code is exercised by the court, other than the High Court or the Sessions Court. In other cases, Section 437(3) of the Code will apply. Gurcharan Singh (supra) distinguishes between the language of two sub-sections of Section 437 Section 437(1) and 437(7). It is observed that 437(7) does not apply at the investigation stage, but rather after the conclusion of trial and before the court delivers its judgment. Thus, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, is whether the arrest of the person during the course of investigation complies with the law. The language of Section 19(1) is clear, and should not be disregarded to defeat the legislative intent to provide stringent safeguards against pre-trial arrest during pending investigations. Framing of the charge and putting the accused on trial cannot be equated with the power to arrest. A person may face the charge and trial even when he is on bail. Notably, Section 439 of the Code does not impose statutory restrictions, except under Section 437(3) when applicable, on the court s power to grant bail. However, Section 45 of the PML Act prescribes specific fetters in addition to the stipulations under the Code. 43. At this stage, it is important to distinguish between Section 19(1) and Section 45 of the PML Act. We have already quoted Section 19, but would like to quote Section 45 which reads as under: 45. Offences to be cognizable and non-bailable. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence under this Act shall be released on bail or on his own bond unless (i) the Public Prosecutor has been given an opport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st is based on the opinion of such officer, which opinion is open to judicial review, however not merits review, in terms of the well-settled principles of law. Contrastingly, under Section 45, it is the Special Court which undertakes the exercise. The Special Court independently examines pleas and contentions of both the accused and the DoE, and arrives at an objective opinion. The Special Court is not bound by the opinion of the designated/authorised officer recorded in the reasons to believe . A court s opinion is different and cannot be equated to an officer s opinion. While the Special Court s opinion is determinative, and is only subject to appeal before the higher courts, the DoE s opinion is not in the same category as it is open to judicial review. 45. In Vijay Madanlal Choudhary (supra), the three Judge Bench has in paragraph 131 referred to the decision in Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra and another (2005) 5 SCC 294 , a case of Maharashtra Control of Organised Crime Act, 1999 For short, MCOCA , which observes as under: 44. The wording of Section 21(4), in our opinion, does not lead to the conclusion that the court must arrive at a positive findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addressed. Section 45 of the PML Act does not stipulate the stage when the accused may move an application for bail. A bail application can be submitted at any stage, either before or after the complaint is filed. Whether the charge is framed or evidence is recorded or not recorded, is immaterial. Clearly, the fact that the prosecution complaint has not been filed, the charge has not been framed, or evidence is either not recorded or partly recorded, will not prevent the court from examining the application for bail within the parameters of Section 45 of the PML Act. As the issue would relate to grant or denial of bail, the parameters or the stipulation in State of Orissa v. Debendra Nath Padhi, (2005) 1 SCC 568 which states that evidence or material not relied by the prosecution cannot be examined at the stage of charge, will not apply. The reason is simple and straightforward. Right to bail under Section 45 of the PML Act is not dependant on the stage of the proceedings. The power of the court under Section 45 is unrestricted with reference to the stage of the proceedings. All material and evidence that can be led in the trial and admissible, whether relied on by the prosecution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atements have been recorded. Salient features of the excise policy that establish criminality are: o The wholesale entity should not be a manufacturer/winery/ brewery/bottler of liquor in India or abroad either directly or through any sister entities; The manufacturer/winery/brewery/bottler of liquor has to choose a distributor holding wholesale license for supply of Indian and foreign liquor as an exclusive distributor; The wholesale licensee shall not directly or indirectly have any retail wings. The retail license holder shall not be a manufacturer/winery/brewery/bottler of liquor in India or abroad either directly or through any sister concerns/related entities; The final price to the retailer shall be fixed by the excise commissioner as per the formula prescribed which will include the profit margin of 12% for the wholesale license holders. A cartel was formed wherein one group/person effectively would be controlling manufacturing, wholesale and retail entitles of liquor business in return for bribes/kickbacks. The excise policy 2021 was implemented on 17.11.2021, which continued till 31.08.2022, after which the government discontinued the policy and went back to the old regim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... op political leaders in Delhi, that is, Arvind Kejriwal and Manish Sisodia, through Arun Pillai. Arun Pillai had assured him and had coordinated with Vijay Nair. Later on he met Arvind Kejriwal in a brief meeting of 10 minutes or so in which Vijay Nair was also present. He was told by Arvind Kejriwal to trust Vijay Nair who was very smart and could handle big and small issues. Arvind Kejriwal spoke about the new liquor policy which would be a win-win for all. On Arvind Kejriwal s role of demanding kickbacks, reference is made to the statement of Magunta Srinivasulu Reddy dated 16.07.2023 recorded under Section 50 of the PML Act; and his statement dated 17.07.2023 recorded under Section 164 of the Code. K. Kavitha had offered to pay Rs. 100 crore to AA Party for the excise policy. She had spoken and interacted with Arvind Kejriwal. She had asked Magunta Srinivasulu Reddy to arrange Rs. 50 crores. He had his son Raghav Magunta to further deal with K. Kavitha. Raghav Magunta had agreed to pay Rs.30 Crores. Raghav Magunta had paid Rs. 25 crores in cash to Butchi Babu and Abhishek Boinpally. Raghav Magunta in his statement dated 26.07.2023 recorded under Section 50 of the PML Act, and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the funds being used in the election expenses, including its generation. Thus, he is both individually and vicariously liable for generation and utilisation of the proceeds of crime. Lastly, Arvind Kejriwal was afforded multiple opportunities to cooperate with the investigation. In spite of summons being issued to him on nine occasions, he wilfully disobeyed them by not appearing. 49. If we go by the narration of facts and assertions made in the reasons to believe , the subjective satisfaction that Arvind Kejriwal is guilty, on the basis of the material relied is clearly recorded. The reasons to believe refer to the material to show involvement of Arvind Kejriwal in the offence of money laundering. 50. However, the assertion on behalf of Arvind Kejriwal is that the reasons to believe do not mention and evaluate all or entire material. It selectively refers to incriminating material by giving it a semblance of good faith exercise. In reality, the reasons are a sham, and the exercise is undertaken in a predetermined and biased manner. The expression material in Section 19(1) of the PML Act refers to the all or entire material in possession of the DoE. Thus, all or entire material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted on 11.02.2023. Raghav Magunta in his first statement recorded before his arrest on 16.09.2022 and 5 statements recorded between 10.02.2023 and 17.02.2023 did not implicate or make any assertion against Arvind Kejriwal. Regular bail application filed by Raghav Magunta was dismissed by the Special Judge on 20.04.2023. Raghav Magunta s wife attempted suicide on 01.05.2023, and on this ground he sought interim bail. The interim bail application was dismissed by the Special Judge on 08.05.2023. Thereupon, Raghav Magunta had moved the High Court on 11.05.2023 for grant of interim bail, which application was withdrawn on 29.05.2023. While doing so, certain observations made by the Special Judge in the order dated 08.05.2023 were expunged. On 07.06.2023, the maternal grandmother of Raghav Magunta suffered injuries and was admitted to an Intensive Care Unit. The High Court granted an interim bail to Raghav Magunta for a period of 15 days on this ground. This order was challenged by the DoE before this Court. This Court vide order dated 09.06.2023 reduced the interim bail period from 15 days to 6 days. On 16.07.2023 and 17.07.2023, Magunta Srinivasulu Reddy gave statements under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rime. The statements are not of such sterling quality as to justify arrest of the Chief Minister, who is a prominent leader of a national political party and an opposition leader. There is no documentary proof to show that AA Party has received kickback from the funds received from the cartel, let alone utilising them in the Goa election campaign. Rajesh Joshi of Chariot was granted bail by the Special Judge vide order dated 06.05.2023 as huge amount of Rs.20-30 crores alleged to have been transferred was not established. The payment alleged to have been made for election related to jobs of meagre amount in lakhs. Contention of the DoE that P. Sarath Reddy, Magunta Srinivasulu Reddy, Raghav Magunta, and Butchi Babu in their earlier statements were quiet and did not link Arvind Kejriwal is contested on the ground that the statements were recorded by the officers of DoE who had the discretion to put questions and also in recording the contents. 51. Arvind Kejriwal submits that the reasons to believe selectively refer to the implicating material, and ignore the exculpatory material. Thus, there is no attempt to evaluate the entire material and evidence on record. The co - accused, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he legislative intent which imposes stringent conditions. As a general rule of interpretation, penal provisions must be interpreted strictly. 49 See Vijay Madanlal Choudhary (supra) at paragraph 31 The proceeds of crime being the core of the ingredients constituting the offence of money-laundering, that expression needs to be construed strictly. In that, all properties recovered or attached by the investigating agency in connection with the criminal activity relating to a scheduled offence under the general law cannot be regarded as proceeds of crime. There may be cases where the property involved in the commission of scheduled offence attached by the investigating agency dealing with that offence, cannot be wholly or partly regarded as proceeds of crime within the meaning of section 2(1)(u) of the 2002 Act so long as the whole or some portion of the property has been derived or obtained by any person as a result of criminal activity relating to the stated scheduled offence Also see M. Ravindran v. Intelligence Officer, Directorate of Revenue Intelligence, (2021) 2 SCC 485 at paragraph 17.9. Additionally, it is well-settled that in case of any ambiguity in the construction of a pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the contours of judicial review expounded in Padam Narain Aggarwal (supra), and Dr. Pratap Singh (supra). We have also referred to the principles of Wednesbury reasonableness. See supra note 33 60. In Amarendra Kumar Pandey v. Union of India and others, (2022) SCC Online SC 881 this Court elaborated on the different facets of judicial review regarding subjective opinion or satisfaction. It was held that the courts should not inquire into correctness or otherwise of the facts found except where the facts found existing are not supported by any evidence at all or the finding is so perverse that no reasonable man would say that the facts and circumstances exist. Secondly, it is permissible to inquire whether the facts and circumstances so found to exist have a reasonable nexus with the purpose for which the power is to be exercised. In simple words, the conclusion has to logically flow from the facts. If it does not, then the courts can interfere, treating the lack of reasonable nexus as an error of law. Thirdly, jurisdictional review permits review of errors of law when constitutional or statutory terms, essential for the exercise of power, are misapplied or misconstrued. Fourt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground of criminality, viz. to promote cartelization and benefit from those providing bribes or kickbacks. We have briefly referred to the terms of the excise policy, albeit for clarity we would like to reproduce the findings recorded in the case of Manish Sisodia v. Central Bureau of Investigation 2023 SCC OnLine SC 1393 , a judgment authored by one of us (Sanjiv Khanna, J.), the relevant portion of which reads as under: 22. However, there is one clear ground or charge in the complaint filed under the PML Act, which is free from perceptible legal challenge and the facts as alleged are tentatively supported by material and evidence. This discussion is equally relevant for the charge-sheet filed by the CBI under the PoC Act and IPC. We would like to recapitulate the facts as alleged, which it is stated establish an offence under Section 3 of the PML Act and the PoC Act. These are: In a period of about ten months, during which the new excise policy was in operation, the wholesale distributors had earned Rs. 581,00,00,000 (rupees five hundred eighty one crores only) as the fixed fee. The one time licence fee collected from 14 wholesale distributors was about Rs. 70,00,00,000 (rupees s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither by himself or by another public servant. Explanation (2) construes the words and expression, obtains, accepts or attempts to obtain , as to cover cases where a public servant obtains, accepts or intends to obtain any undue advantage by abusing his position as a public servant or by using his personal interest over another public servant by any other corrupt or illegal means. It is immaterial whether such person being a public servant accepts or attempts to obtain the undue advantage directly or through a third party. 25. On this aspect of the offences under the PoC Act, the CBI has submitted that conspiracy and involvement of the appellant - Manish Sisodia is well established. For the sake of clarity, without making any additions, subtractions, or a detailed analysis, we would like to recapitulate what is stated in the chargesheet filed by the CBI against the appellant - Manish Sisodia: The existing excise policy was changed to facilitate and get kickbacks and bribes from the wholesale distributors by enhancing their commission/fee from 5% under the old policy to 12% under the new policy. Accordingly, a conspiracy was hatched to carefully draft the new policy, deviating from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /fee earned by the wholesale distributors of Rs. 338,00,00,000/- (rupees three hundred thirty eight crores only) constitute an offence as defined under Section 7 of the PoC Act, relating to a public servant being bribed. (As per the DoE, these are proceeds of crime). This amount was earned by the wholesale distributors in a span of ten months. This figure cannot be disputed or challenged. Thus, the new excise policy was meant to give windfall gains to select few wholesale distributors, who in turn had agreed to give kickbacks and bribes. No doubt, VAT and excise duty was payable separately. However, under the new policy the VAT was reduced to mere 1%. Vijay Nair had assured the liquor group that they would be made distributor of Pernod Ricard, one of the biggest players in the market. This did happen. 64. During the course of arguments, we had specifically asked the learned counsel appearing for Arvind Kejriwal to address arguments on facts. He did not, however, address arguments on the said aspect. It was also submitted on behalf of Arvind Kejriwal that he would not like to argue on the question of applicability of Section 70 of the PML Act to political parties or the issue whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power is exercised without application of mind, and by disregarding the law, it amounts to abuse of the law. 69. In Joginder Kumar v. State of Uttar Pradesh, (1994) 4 SCC 260 the distinction between the power to arrest and the necessity and need to arrest Necessity to arrest is not a precondition and safeguard mentioned in Section 19 of the PML Act, albeit treated as a part of the general law and exercise of the power to arrest. The legislature being aware of this interpretation has not excluded the application of this principle in Section 19 of the PML Act. , is explained in the following terms: 20 No arrest can be made because it is lawful for the police officer to do so. The existence of the power to arrest is one thing. The justification for the exercise of it is quite another. The police officer must be able to justify the arrest apart from his power to do so. Arrest and detention in police lock-up of a person can cause incalculable harm to the reputation and self-esteem of a person. No arrest can be made in a routine manner on a mere allegation of commission of an offence made against a person. It would be prudent for a police officer in the interest of protection of the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to arrest . However, in paragraph 88 of the judgment, the Court has observed that the safeguard provided in Section 19(1) of the PML Act is to ensure fairness, objectivity and accountability of the authorised officer in forming opinion, as recorded in writing, regarding necessity to arrest a person involved in the offence of money laundering. Similar observations are made in paragraphs 15 and 22 of Pankaj Bansal (supra). 72. However, we must observe that in paragraph 32 of V. Senthil Balaji (supra), it is held that an authorised officer is not bound to follow the rigours of Section 41A of the Code as there is already an exhaustive procedure contemplated under the PML Act containing sufficient safeguards in favour of the arrestee. Thereafter, in paragraph 40 of V. Senthil Balaji (supra), it is observed: 40. To effect an arrest, an officer authorised has to assess and evaluate the materials in his possession. Through such materials, he is expected to form a reason to believe that a person has been guilty of an offence punishable under the PMLA, 2002. Thereafter, he is at liberty to arrest, while performing his mandatory duty of recording the reasons. The said exercise has to be fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant. 75. In Vijay Madanlal Choudhary (supra), this Court has held that when a person applies for bail or anticipatory bail under the PML Act, the conditions stipulated in Section 437/438/439 of the Code would equally apply, in addition to Section 45 of the PML Act. Therefore, it is urged that necessity to arrest, in the case of arrest under Section 19(1), would be an additional factor required to be considered beyond the conditions and factors stipulated in Section 19(1) of the PML Act. 76. DoE submits that the test of necessity to arrest is satisfied in view of Arvind Kejriwal failing to appear despite the issuance of 9 summons dated 30.10.2023, 18.12.2023, 22.12.2023, 12.01.2024, 31.01.2024, 14.02.2024, 21.02.2024, 26.02.2024, and 16.03.2024. It is also submitted that arrest is a part and parcel of investigation intended to secure evidence, leading to discovery of material facts and relevant information as held in P. Chidambaram v. Directorate of Enforcement. (2019) 9 SCC 24. 77. On behalf of Arvind Kejriwal, it is submitted that there was no necessity to arrest on 21.03.2024. The RC/ECIR were registered in the month of August 2022. Further, most of the material relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... test of proportionality comprises four steps: (i) The first step is to examine whether the act/measure restricting the fundamental right has a legitimate aim (legitimate aim/purpose). (ii) The second step is to examine whether the restriction has rational connection with the aim (rational connection). (iii) The third step is to examine whether there should have been a less restrictive alternate measure that is equally effective (minimal impairment/necessity test). (iv) The last stage is to strike an appropriate balance between the fundamental right and the pursued public purpose (balancing act). is more precise and sophisticated than other traditional grounds of review. The court is required to assess the balance struck by the decision maker, not merely whether it is within the range of rational or reasonable decisions. In this manner, proportionality goes further than the traditional grounds of review as it requires attention to the relative weight according to interest and considerations. State of Uttar Pradesh v. Lal, (2006) 3 SCC 276 which refers to several other cases, states that the proportionality test safeguards fundamental rights of citizens to ensure a fair balance betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnection with case ECIR No. HIU-II/14/2022 dated 22.08.2022, on the same terms as imposed vide the order dated 10.05.2024 which reads: (a) he shall furnish bail bonds in the sum of Rs.50,000/- with one surety of the like amount to the satisfaction of the Jail Superintendent; (b) he shall not visit the Office of the Chief Minister and the Delhi Secretariat; (c) he shall be bound by the statement made on his behalf that he shall not sign official files unless it is required and necessary for obtaining clearance/approval of the Lieutenant Governor of Delhi; (d) he will not make any comment with regard to his role in the present case; and (e) he will not interact with any of the witnesses and/or have access to any official files connected with the case. The interim bail may be extended, or recalled by the larger Bench. 86. We are conscious that Arvind Kejriwal is an elected leader and the Chief Minister of Delhi, a post holding importance and influence. We have also referred to the allegations. While we do not give any direction, since we are doubtful whether the court can direct an elected leader to step down or not function as the Chief Minister or as a Minister, we leave it to Arvi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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