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TMI Blog2024 (10) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 2002 (for short " the P.M.L Act"). No "reasons to believe" as mandated under Section 17 of the P.M.L Act were served on him. 2. Without going into the merits of the case, a short point which needs to be looked into is, as to whether arrest of the petitioner by the respondents was in consonance with the ratio laid down by the Supreme Court in the case of Arvind Kejriwal Vs. Directorate of Enforcement 2024 SCC Online SC 1703, in the sense, whether there was sufficient material with the authorized officer who had recorded his "reasons to believe" in writing and whether there was a necessity to arrest the petitioner? 3. We heard Mr. Kadam, learned Senior Counsel for the petitioner and Mr. Venegavkar, learned Special Public Prosecutor, for respondent Nos. 1 and 2 - Directorate of Enforcement for quite some time. 4. At the outset, Mr. Kadam, learned Senior Counsel would argue that arrest of the petitioner and his detention by respondent Nos. 1 and 2 on 29th July, 2024 around 7.00 a.m by seven to nine officers, who approached his residence under the pretext of search and seizure was illegal, untenable and against the principles enunciated in various pronouncement of the Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bhishek Morarka iii. Adon Retails iv. Manish Mandhana v. Letter of Karvy Pvt. Ltd. vi. Statement of Purushottam Mandhana vii. Statement of present petitioner III. Money Trial as far as Petitioner is concerned: i. Bank account of Mandhana Industries ii. Balaji Corporation and iii. Mahan Synthetics Note: All the bank statements show transfer of proceeds of crime received from 8 consortium banks being transferred in the personal bank account of the Petitioner - Bank statement of Petitioners 3 accounts reflects receipt of Rs.79.73 crores. - Petitioner's statement showing failure to explain - Material to show that he is not anywhere connected with MIL or its sister concerns - Statement showing money utilized for personal needs and benefits like loan repayment, and share trading Note: Thus, there is sufficient material in possession of the IO to form an opinion and reason to believe that the petitioner is in actual possession, utilisation, of the proceeds of crime thus committing an offence under Section 3 of PMLA. Hence, came to be arrested under Section 19 of PMLA". 8. On the other hand, Mr. Kadam, learned Senior Counsel took us through th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts) as can be seen from the fact that investigation into the alleged offence was being conducted since 26th June, 2024 i.e for a period of nine months. 15. Our attention has also been invited to a remand application dated 19th July, 2024 seeking the custody of the petitioner's father which records; (i) During investigation, around 200 bank accounts of MIL were collected and examined; (ii) Bank statements of accounts of Balaji Corporation had been examined (iii) Bank statements of accounts of Mahan Synthetics Textiles Pvt. Ltd had been examined. 16. Such information relating to the aforesaid three companies from which funds were received was always within the knowledge of the respondents, however, till the conduction of second search, they did not find it necessary to arrest the petitioner. It is only after petitioner's father was released by holding his arrest illegal, did the respondent Nos. 1 and 2, under the garb of second search at the same residence, interrogated the petitioner on the material that was already available with them only to create a spacious "reason to believe". Mr. Kadam would lastly argue that the "reason to believe" was entirely premised on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 19 (1) of the PML Act. 25. On the aspect of the checks on the power to arrest under the PML Act, we would like to quote from the submission made on behalf of the DoE, as recorded in Vijay Madanlal Choudhary (supra). Specific reliance was placed on a Canadian judgment in the case of Gifford v. Kelson (1943) 51 Man. R.120. The relevant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 21. In case of Arvind Kejriwal (supra), the Supreme Court has further elaborated the expression "reasons to believe" by stating that it is not synonymous with subjective satisfaction of the officer. The belief must be held in good faith; it cannot merely be a pretence. In the same case, it was held that it is open to the Court to examine the question whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section. It would be apposite to extract paragraphs 72 to 74 in the case of Arvind Kejriwal (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 exhaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nner. .Section 41(1)(ii)(d) - preventing the person from making any inducement or threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the court or police. .Section 41(1)(ii)(e) - to ensure presence of the person in the Court, whenever required, which without arresting cannot be ensured. However, Section 19 (1) of the PML Act does not permit arrest only to conduct investigation. Conditions of Section 19 (1) have to be satisfied. Clauses (a), (c), (d) and (e) to Section 41(1)(ii) of the Code, apart from other considerations, may be relevant". 22. No doubt, the Supreme Court referred the question of law for consideration by a larger Bench in respect of "need and necessity to arrest" by contending as to whether it can be a separate ground to challenge the order of arrest passed in terms of section 19 (1) of the PML Act along with another question as to whether the "need and necessity to arrest" refers to the satisfaction of formal parameters to arrest and take a person into custody, or it relates to another personal grounds and reasons regarding necessity to arrest a person in the facts and circumstances of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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