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TMI Blog2024 (10) TMI 904X X X X Extracts X X X X X X X X Extracts X X X X ..... the arrest conformed with the requirements of section 19 of the PMLA Act, 2002 - An illegal arrest, as determined by a breach of the fundamental requirements of Section 19, invalidates the arrest and prevents the possibility of re-arrest based on the same justifications. This is because the violation infringed upon the individual's constitutional rights. A perusal of the grounds of arrest explicitly reveal and point to the effect that the Arresting Officer had conveyed his intention, reasons, grounds and believe to arrest the petitioner. The order of grounds of arrest is in conformity with the requirement of Section 19 of PMLA Act. The satisfaction of the concerned Officer is also duly reflected in the wordings and the necessity of arrest and has also clearly revealed. Thus, there is no fault in the grounds of arrest and consequent arrest. One of the reasons which necessitated the petitioner s arrest was the non-recovery of massive amount of proceeds of crime. The grounds of arrest are self-sufficient and need no other clarity from this Court. Petition dismissed. - HON'BLE MR. JUSTICE ANOOP CHITKARA Present : For the Petitioner : Mr. Mukul Rohatgi, Senior Advocate (Throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through illegal gains causing wrongful loss to the Bank. As per para 3 (D) of the reply, SELT had exported the products; however, the amount received from such exports to Rs. 191 crores was not realized, leading to SELT defaulting on its lenders. The investigation pointed out that the accused illegally diverted Rs. 191 crore, which was due on account of exports. As per para 3, (E) of the reply, based on the findings of the Forensic Audit report dated 30.01.2017, on 28.02.2016, the consortium of banks declared the account of SELT as Non-Performing Assets, and subsequently, the account was declared as a fraud on 18.04.2018. The investigation revealed that after SELT's account had turned into NPA, a company named M/s Regnant Exim Private Limited was set up to divert the revenue from SELT's manufacturing units. The ED investigated the Directors and shareholders of M/s Regnant Exim Private Limited under Section 50 of PMLA, which revealed the establishment of this company by the petitioner through current and former employees of SELT who were appointed to siphon off revenue of SELT instead of re-paying loan amount to the Bank. The investigation pointed out that proceeds of Rs.40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products in market. Further, he was authorized signatory to various banking transactions including obtaining and utilization of loan proceeds. Moreover, he had full control over the Board Meetings where decision regarding investment in the subsidiaries was taken, purchase of flat in Mumbai, credit to advance payments, export related orders and procurement of machinery and was fully involved in running the company including review of progress, budget, annual revenue of the company, its future prospects. He was at the helm of the affairs and he was involved in all the decisions with regard to company. Further, the credit facilities availed by SELT were illegally diverted / siphoned off, as explained above, by Neeraj Saluja causing wrongful loss to the banks and wrongful gain to themselves. 3. I have heard Mr. Mukul Rohatgi, Sr. Advocate, Mr. R.S. Rai, Sr. Advocate, Mr. Anand Chhibbar, Sr. Advocate counsel for the petitioner, and Mr. S.V. Raju, Additional Solicitor General of India, with Mr. Zoheb Hossain, Special Counsel and Mr. Lokesh Narang, Senior Panel Counsel for the respondent. 4. Mr. Mukul Rohatgi, Ld. The Senior Advocate for the petitioner brought to the attention of this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to assess and evaluate, as mandated in 'V. Senthil Balaji' and reiterated in 'Pankaj Bansal.' n) Fourthly, the non-cooperation of the Petitioner is the sole ground of arrest despite being violative of the Judgment of the Hon ble Supreme Court in Pankaj Bansal v. Union of India (2023) SCC OnLine SC 1244. o) Fifthly, no satisfaction regarding the necessity of arresting the petitioner is recorded. p) Sixthly, the ED has merely copy-pasted the allegations of the CBI Chargesheet filed in the predicate offense, and no independent material has been considered by the Investigating Agency depicting the guilt of the petitioner, and there was nothing from whose evaluation they could form reason to believe, pointing towards the petitioner's guilt, which was to be mandatorily recorded in writing; q) Seventhly, there was a complete violation of the mandatory requirements of Section 19, which calls for mandatory compliance with all the steps before affecting an arrest under the 2002 Act. r) Last but not least, the Trial Court did not make an independent application of mind; thus, the remand order is mundane. 5. Mr. Mukul Rohatgi, Ld. Senior Advocate contended that ED explicitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the Arrest Order dated 18.01.2024 and the Remand orders dated 19.01.2024 and subsequent Remand orders. It is submitted that remedies under Article 226 of the Constitution and Section 482 Cr.P.C. are distinct and operate in different fields. It is also well settled that Section 482 of the Cr. P.C. cannot be resorted to for seeking quashing of the executive or statutory actions which otherwise do not relate to preventing the abuse of the process of Court. Reliance in this regard is placed on Kurukshetra University v. State of Haryana (1977) 4 SCC 451 , wherein the Hon'ble Supreme Court had taken the view that the High Court could not quash an FIR in the exercise of its inherent power u/s 482 of the Cr.P.C. when no proceeding was pending in any Court in pursuance of the FIR. However, it is also well settled that the High Court can exercise Suo Motu power under Article 226 of the Constitution, and the vocabulary of the petition would not be decisive. If that be the case, a Writ against an arrest after a remand order has been passed can only be issued on the grounds of violating a Fundamental Right or Constitutional Infirmity. In this regard, reliance is placed on Para 18 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e necessity of arrest: the accused was withholding exclusive information within his knowledge. (e) Unlike the present remand order, the Hon'ble Supreme Court in Pankaj Bansal found that there was total non-application of mind, and there was no satisfaction recorded regarding the reason to believe that the accused was guilty. (f) The stay on the ground of Rajesh Aggarwal, of the predicate case, is an irrelevant consideration as held by the Hon'ble Supreme Court in Aditya Tripathi, and prima facie, the stay is bad in law. Secondly, the stay for the same reason in the E.D. case is also contrary to the statutory mandate of the Explanation to Section 44 of the PMLA. (g) Lastly, the petitioner has a remedy of applying for bail on merits and satisfying the twin conditions u/s 45 of the PMLA. Since no regular bail application has been filed before this Hon'ble Court, the application for interim bail would also not be maintainable. 8. Earlier, Mr. Zoheb Hossain and Mr. Lokesh Narang, Sr. Panel Counsel, ED, had also addressed arguments on various dates. To sum up, the cumulative arguments on the ED's behalf are that when the petitioner was arrested, there was a statutory reme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Article 22 warrants that when a person is detained in custody, he shall be informed as soon as may be of the grounds of such arrest, whereas under Section 19 of PMLA, based on the material when the officer had reasons to believe recorded in writing that person has been guilty of the offense, then he may arrest them and as soon as may inform such person of such arrest. Counsel for the respondent finally argued that if the authorized officer, after assessing the material in his possession and reasons to believe the accused is guilty, does not find the necessity of arrest, then the entire edifice on which the PMLA was enacted would crumble and no person can ever be arrested and consequently, sought dismissal of the present petition. 9. Money laundering, the offense of money laundering, the proceeds of crime, and punishment have been defined in S. 2 to 4 of The Prevention of Money-Laundering Act, 2002, in the following terms: 2(p) money-laundering has the meaning assigned to it in section 3; 2(u) proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1849 of 2021, In SLP (Crl.) No.5191 of 2021, decided on July 11, 2022, Hon ble Supreme Court holds, ECONOMIC OFFENSES (CATEGORY D) [66]. What is left for us now to discuss are the economic offences. The question for consideration is whether it should be treated as a class of its own or otherwise. This issue has already been dealt with by this Court in the case of P. Chidambaram v. Directorate of Enforcement, (2020) 13 SCC 791, after taking note of the earlier decisions governing the field. The gravity of the offence, the object of the Special Act, and the attending circumstances are a few of the factors to be taken note of, along with the period of sentence. After all, an economic offence cannot be classified as such, as it may involve various activities and may differ from one case to another. Therefore, it is not advisable on the part of the court to categorise all the offences into one group and deny bail on that basis 11. The power to arrest has been defined in S. 2 to 4 of PMLA, 2002, in the following terms: 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 specia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced under S. 45 of PMLA, 2002. 16. The arrest order dated 18.01.2024 accompanied with grounds of arrest have been annexed as Annexure P-12. Perusal of the arrest order points out that in the opinion of the Arresting Officer, the petitioner was guilty of the offences mentioned in ECIR and accordingly exercising his statutory powers conferred under Section 19 (1) of PMLA, he informed the petitioner about his believe and grounds of arrest and has handed over grounds of arrest at the time of his arrest. It would be appropriate to reproduce the grounds of arrest which reads as follows:- Grounds of Arrest of Neeraj Saluja 1. This Directorate recorded Case Number ECIR/JLZO/36/2020 on 08.10.2020 and initiated investigation under the provisions of PMLA, 2002 on the basis of FIR No. RC2232020A0004 dated 06.08.2020 registered by CBI, New Delhi under Sections 120B, 403, 420, 467, 468, 471 of Indian Penal Code, 1860 and 13(2) read with 13 (1) (d) of Prevention of Corruption Act, 1988 against you as well as other accused persons/entities. The said FIR was registered by CBI against M/s SEL Textiles Limited, wherein you were Director and were involved in day-to-day operation of the said entity, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The amount of 29.51 crores was the part of proceeds of crime generated by you in connivance with other accused persons for illegal gain while causing wrongful loss to the consortium of banks. 6. Investigation further disclosed that you along with other accused persons had illegally diverted the revenue generated by M/s SEL Textiles Limited to foreign countries, especially to United Arab Emirates Based entities, in form of export proceeds to the tune of Rs. 191 crores approx. which was never repatriated back to India causing default by M/s SEL Textiles Limited and loss to consortium of banks. 7. Investigation has further disclosed that after the account of M/s SEL Textiles Limited was declared Non-Preforming Assets (NPA) by the consortium of banks, led by Central Bank of India, you had set up two separate companies viz. M/s Declan Designers Engineers Private Limited and M/s Regnant Exim Private Limited for diverting the revenue from manufacturing units of M/s SEL Textiles Limited so that repayment of loans to banks could be avoided. Investigation has revealed that these companies were controlled/operated by you through current and former employees of SEL Manufacturing Company Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as arrested vide Annexure P-12 on 18.01.2024 and at that time, there was no stay of Division Bench of this Court, as such a subsequent stay cannot be a ground to declare a previous arrest as illegal. Petitioner s contention that once the Division Bench has stayed the further proceedings, it would make the previous arrest as illegal cannot be a ground for the reason that the Court had not quashed the proceedings but have only stayed the further proceedings in terms of the order. At the time when the authorized officer had arrested the petitioner and the concerned Judicial Magistrate had sent him to judicial custody, the said order of Division Bench is not in existence, as such it cannot have a retrospective effect. Consequently, the petitioner fails to make out a case to declare his arrest as illegal based on the subsequent stay of predicate offence by Division Bench of this Court. 19. An arrest made under Section 19 of PMLA Act shall be illegal when it violates Article 22 of the Constitution of India or was made without complying with the statutory requirements of S. 19 PMLA, or no reasons were mentioned for the necessity of such an arrest. 20. An illegal arrest, as determined by a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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