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TMI Blog2024 (12) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... s only for the purposes of assessing the challenge to the legality of arrest of the petitioner, and may not be construed as a conclusive opinion on the merits of the case. The present petition is dismissed. - HON'BLE MR. JUSTICE ANISH DAYAL For the Petitioner Through: Mr. Vikram Chaudhari and Mr. Pramod Kumar Dubey, Sr. Advs. with Mr. Avi Singh, Mr. Shambhu K. Thakur, Mr. Sumer Singh Boparai, Mr. Ayush Puri, Ms. Arveen Sekhon, Mr. Shikhar Garg, Mr. Ashutosh Jain, Mr. Vinayak Bhandari, Mr. Sirhaan Seth, Mr. Shobh Nath Maurya, Mr. Rishabh Basra, Mr. Vishal Singh, Mr. Sultan Jafri, Mr. Sidhant Saraswat, Mr. Ayush Sachan, Mr. Vaibhav Kapur, Ms. Muskan Sharma and Mr. Varun Bhati, Advocates. For the Respondents Through: Mr. Anurag Ahluwalia CGSC Mr. Tarveen Singh Nanda GP Ms. Hridyanshi Sharma Adv. for Respondent No. 1/Union of India. Mr. Zoheb Hossain, Spl. Counsel for ED, Mr. Vivek Gurnani, Panel Counsel for ED, and Mr. Pranjal Tripathi, Advocate with Mr. Rakesh Kumar, IO for ED. JUDGMENT INDEX I. Proceedings before this Court 3 II. Factual Background 5 III. Relevant Statutory Provisions 12 IV. Judicial Precedents Cited 15 V. Submissions on behalf of Petitioner 16 VI. Submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guments, and compilation of judgements relied upon; further arguments were addressed by Senior Counsel for petitioner on two further dates; subsequently, arguments were addressed by Special Counsel for respondent who also handed up a note of arguments; on the next date, counsel for respondent handed up another note and a compilation of judgements. Yet another compilation of judgements was handed by Senior Counsel for petitioner; respondent s counsel continued arguments; thereafter final arguments were heard from both sides and judgement was reserved. II. FACTUAL BACKGROUND 5. Mr. Vikram Chaudhary, Senior Counsel for the petitioner, has presented a sequence of dates and events which, as per petitioner, would itself bear out that the petitioner s arrest was illegal. 6. The petitioner is a 63-year-old former promoter of M/s Amtek Auto Ltd. ( AAL ) which, over a period of time, burgeoned into various subsidiary and sister companies, that are broadly referred to as the Amtek Group . Post global slowdown in 2008, Amtek faced liquidity constraints, as per the petitioner, leading to delay in meeting loan payments and commitments to interest. On 15th March 2016, ACI Ltd. ( ACIL ) was declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count, which was listed as fraud upon directions of the Delhi High Court in January 2024. 13. A PIL being W.P. (Crl.) 246/2022 was filed before the Supreme Court, directing ED to carry out the investigation concerning the Amtek Group. Per directions issued on 15th March 2024, ECIRs were assigned to Gurugram Zonal Office and renumbered as ECIRs bearing nos. GNZO/13/2024 and ECIR GNZO/14/2024. 14. ED made a request to CBI seeking material i.e. chargesheet and relied upon documents in the FIR, which was rejected by the CBI by letter dated 3rd May 2024. An application was moved by the ED before Special Judge (PMLA) on 15th May 2024, seeking copy of FIR along with chargesheet and other relevant documents. On 26th July 2024, Special Judge (PMLA) rejected the application by the ED seeking copy of FIR, chargesheet, and relied upon documents. 15. Petitioner appeared before the ED, pursuant to summons under Section 50 PMLA, on 19th June 2024 and his statement was recorded. On 20th June 2024, ED carried out search and seizure proceedings at petitioner s residence and statement was recorded under Section 17 PMLA. Petitioner again appeared on 5th July 2024 pursuant to summons; he was then asked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lieve (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-section (1) shall, within twenty-four hours, be taken to a [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 [Special Court or] Magistrate's Court. (emphasis added) 20.2 Rule 2(g) of the Prevention of Money-Laundering (The Forms and the Manner of Forwarding a Copy of Order of Arrest of a Person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uly filled in, signed and his name legibly written below his signature. The seal of the office of the Adjudicating Authority shall be affixed before forwarding the Form-II to the Arresting Officer as a token of receipt of the sealed envelope. (2) The Adjudicating Authority shall, on opening of the sealed envelope, forward Form-I duly filled in, signed and his name legibly written below his signature. The seal of the office of the Adjudicating Authority shall be affixed before forwarding the Form-I to the Arresting Officer as a token of receipt of the copy of order of the arrest and the material. (3) The Adjudicating Authority shall maintain registers and other records such as acknowledgement slip register, dak register, and register showing details of receipt of the copy of the order of the arrest along with the material for the purposes of this rule and shall ensure that necessary entries are made in the registers immediately on receipt of such order and the material. IV. JUDICIAL PRECEDENTS CITED 21. Principal case laws cited and relied upon by the Senior Counsel for petitioner are as follows: i. Vijay Madan Lal Chaudhary v. Union of India 2022 SCC OnLine SC 929; ii. Prem Prakash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner traversed the evolution of law regarding Section 19 PMLA by the Supreme Court, through the various decisions listed above in paragraph 21. 26. Relying on the July 2022 decision in Vijay Madanlal Chaudhry (supra), particularly paragraphs 322 and 325, it was submitted that Section 19, PMLA provides discretion to arrest a person and there are inbuilt safeguards such as recording of reasons to believe the involvement of the person in the offence, recording in writing of grounds of arrest, and information to the person and then to the AA. This was to ensure that the authorised officers do not act arbitrarily, but are accountable for their judgment, not necessarily to arrest. If found vexatious, officers can be proceeded with and punishment can be inflicted under Section 52 of the PMLA. Arrest must be made if there was necessity to arrest. 27. Relying on paragraphs 21, 28, and 39 of Pankaj Bansal (supra), an October 2023 decision of the Supreme Court, it was submitted that a mandate was introduced to supply a copy of written grounds of arrest to arrested person as a matter of course and without exception. Also, failure of the accused to respond to questions put to them by ED, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tock Exchange Limited (2008) 14 SCC 171, and Roop Bansal v. Union of India 2023 SCC Online P H 3597. 31.2 The remand application failed to disclose whether compliance under Section 19 (2), PMLA to immediately forward a copy of the arrest order to the ED, along with the material, was done by the arresting officer. The ED stated that compliance was made on 10th July 2024 at 10:00 am, however, the statement appears to be a bald statement without any evidence. Further, it is not known whether the entire material in possession was forwarded to the ED or not. 31.3 The arresting officer has adopted a pick-and-choose mechanism, and ignored the documents which were exculpatory in nature, inter alia the report of MKA, exemplified through the letter dated 17th September 2019, reports of auditors of three other group companies stating no fraud had taken place, the Delhi High Court setting aside the fraud declaration by IDBI Bank and Bank of Maharashtra, stay on declaration of wilful defaulter by the Bombay High Court and the Delhi High Court, culmination of insolvency proceedings into successive resolution plans in the companies, omission to consider the Ernst Young transaction audit report, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of furnishing reasons to believe was to enable the arrestee to challenge the validity of arrest; arrest was based on opinion of the officer which is open to judicial review, not merits review; courts could not inquire into the correctness or otherwise of the facts, except where they were not supported by any evidence, or the finding was perverse, or the conclusion was illogical; all other attempts to challenge the material relied upon by the ED can be raised at the time of a bail application under Section 45 PMLA. It was highlighted that detailed grounds of arrest, running into 30 pages in 35 paragraphs, discussing the material in possession, forming the reasons to believe that the petitioner was guilty, cannot be considered as insufficient. 32.2 The allegation, that exculpatory material was not considered, has no basis. The opinion of the arresting officer is formed on the basis of material in possession as on the date of arrest. It is not the case of the petitioner that the so-called exculpatory material being referred to, was in possession of the I.O on the date of arrest. Notwithstanding, the letter of MKA of 17th September 2019 was of no consequence, considering that a scanned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the SFIO and the CBI shall continue and will not be prejudiced by this order. Both the agencies shall fully cooperate with and complement the ED in the process of collection of evidence. Copies of the enquiry reports submitted on behalf of the SFIO and the CBI shall be provided to learned Amicus Curiae as well as learned counsel for the petitioner. 16. We also make it clear that mere closure/settlement of the accounts by the banks concerned shall not come into the way of the ED to investigate the matter fully and also regarding the entire amounts involved in the fraud. 32.6 The setting aside of the fraud account declaration was basis State Bank of Indias v. Rajesh Aggarwal (supra) on the grounds of natural justice and was not merely on merits. The Supreme Court in Punjab National Bank v. Vijay Soni, SLP (Civil) 47470/2023 while staying a decision of the Madhya Pradesh High Court in Surendra Patwa v. Reserve Bank of India, WP 23800/2021 stated that registration of an FIR could not be quashed for non-compliance of a circular, which was subsequently further stayed by the Supreme Court in CBI v. Surendra Patwa SLP (Crl) 15952/2024 order dated 17th May 2024. 32.7 As regards the declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, it is not necessary to exercise powers under Section 5 PMLA before Section 19 PMLA. 32.12 In Pankaj Bansal (supra), in paragraph 28, the Supreme Court highlighted that mere non-cooperation would not be enough to arrest a person under Section 19, however, non-cooperation along with other factors, can form need and necessity to arrest. Reliance in this regard was placed on P. Chidambaram (supra) in paragraph 59. 32.13 Remand order is not routine or mechanical, as is evident from bare perusal, since it has been passed after due consideration of material on record. 32.14 The arrest itself is part of investigation, as noted in Vijay Madanlal Chaudhary (supra), as also in V. Senthil Balaji (supra), in particular paragraph 48 which notes opinion in Vijay Madanlal Chaudhary (supra). 32.15 In H.M. Rishbud (supra), the Supreme Court notes that investigation under Cr.P.C., includes the arrest of suspected offender. It is also opined so, by the Supreme Court in Naser Bin Abu Bakr Yafai (supra). VII. ANALYSIS 33. Heard counsel for both parties and perused the voluminous material placed on record including list of dates and events, various notes of arguments, notes on relevant extracts from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and guilty of the offence . Before that, we will 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, 9 interpreting Section 19 of the PML Act with reference to Article 22 (1) of the Constitution of India,10 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 to seek release on bail but it postulates that unless the twin conditions prescribed thereunder are satisfied, such a person would not be entitled to grant of bail. The twin conditions set out in the provision are that, firstly, the Court must be satisfied, after gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfy the magistrate with adequate material on the need for custody of the arrestee. Magistrates must bear this crucial aspect in mind while examining and passing an order on the DoE s prayer for custodial remand. More significantly, the magistrate is under the bounden duty to ensure due compliance with Section 19 (1) of the PML Act . Any failure to comply would entitle the arrestee to be released. Section 167 of the Code, therefore, enjoins upon the magistrate the necessity to satisfy due compliance of the law by perusing the order passed by the authority under Section 19 (1) of the PML Act. Upon such satisfaction, the magistrate may consider the request for custodial remand. 14. Pankaj Bansal (supra) reiterates V. Senthil Balaji (supra) to hold that the magistrate/court has the duty to ensure that the conditions in Section 19 (1) of the PML Act are duly satisfied and that the arrest is valid and lawful. This is in lieu of the mandate under Section 167 of the Code. If the court fails to discharge its duty in right earnest and with proper perspective, the remand order would fail on the ground that the court cannot validate an unlawful arrest made under Section 19 (1). The Court relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aundering, at the stage before the complaint is filed. Paragraph 89 reads as under: 89 The safeguards provided in the 2002 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. The safeguards to be adhered to by the jurisdictional police officer before effecting arrest as stipulated in the 1973 Code, are certainly not comparable. Suffice it to observe that this power has been given to the high-ranking officials with further conditions to ensure that there is objectivity and their own accountability in resorting to arrest of a person even before a formal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the arrest being rendered illegal and invalid. Paragraph 131 of Vijay Madanlal Choudhary (supra), which has been quoted subsequently, states that Section 19 (1) requires in-depth scrutiny by the designated officer. A higher threshold is required for making an arrest, necessitating a review of the material available to demonstrate the person s guilt. Production of the reasons to believe before the Special Court/magistrate, cannot be construed and is not the same as furnishing or providing the reasons to believe to the arrestee who has a right to challenge his arrest in violation of Section 19 (1) of the PML Act. 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. 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 arres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iberty is not violated. 41. DoE has drawn our attention to the use of the expression material in possession in Section 19 (1) of the PML Act instead of evidence in possession . Though etymologically correct, this argument overlooks the requirement that the designated officer should and must, based on the material, reach and form an opinion that the arrestee is guilty of the offence under the PML Act. Guilt can only be established on admissible evidence to be led before the court, and cannot be based on inadmissible evidence . While there is an element of hypothesis, as oral evidence has not been led and the documents are to be proven, the decision to arrest should be rational, fair and as per law. 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. 44. In our opinion, the key distinction between Section 19 (1) and Section 45 is the authority undertaking the exercise, in each case. Under Section 19 (1), it is the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) of Section 24, as well as the burden of proof placed on the prosecution to the extent indicated in paragraph 57 refer to at least three foundational facts. These foundational facts are criminal activity relating to the scheduled offence has been committed; property in question has been derived or obtained directly or indirectly by any person as a result of that criminal activity; and the person concerned is directly or indirectly involved in any process or activity connected with the said property being proceeds of crime, have to be established. It is only on establishing the three facts that the offence of money laundering is committed. When the foundational facts of Section 24 are met, a legal presumption would arise that the proceeds of crime are involved in money laundering. The person concerned who has no causal connection with such proceeds of crime can disprove their involvement in the process or activity connected therewith by producing evidence or material in that regard. In that event, the legal presumption would be rebutted. 59. Having said so, we accept that a question would arise does judicial review mean a detailed merits review? We have already referred to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... worthy of consideration, are in the nature of propositions or deductions. They are a matter of discussion as they intend to support or establish a point of view on the basis of inferences drawn from the material. It is contended that the statements relied upon by the DoE have been extracted under coercion, a fact that is contested and has to be examined and decided. This argument does not persuade us, given the limited power of judicial review, to set aside and quash the reasons to believe . Accepting this argument would be equivalent to undertaking a merits review. 66. Arvind Kejriwal can raise these arguments at the time when his application for bail is taken up for hearing. In bail hearings, the court s jurisdiction is wider, though the fetters in terms of Section 45 of the PML Act have to be met. Special Court would have to independently apply its mind, without being influenced by the opinion recorded in the reasons to believe . To adjudicate on a bail application, pleas and arguments of Arvind Kejriwal and the DoE, including the material that can be relied on and the inferences possible shall be examined. The court will have to undertake the balancing exercise. [VII.A.5] Inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II.A.6] Need and necessity to arrest 74. Therefore, the issue which arises for consideration is whether the court while examining the validity of arrest in terms of Section 19 (1) of the PML Act will also go into and examine the necessity and need to arrest. In other words, is the mere satisfaction of the formal parameters to arrest sufficient? Or is the satisfaction of necessity and need to arrest, beyond mere formal parameters, required? We would concede that such review might be conflated with stipulations in Section 41 of the Code which lays down certain conditions for the police to arrest without warrant: o Section 41 (1) (ii) (a) preventing a person from committing further offence. o Section 41 (1) (ii) (b) proper investigation of the offence. o Section 41 (1) (ii) (c) preventing a person from disappearing or tampering with evidence in any manner. o 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. o Section 41 (1) (ii) (e) to ensure presence of the person in the Court, whenever required, which without arresti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in Pankaj Bansal (supra) and Prabir Purkayastha (supra) that strengthened the view in Vijay Madanlal Choudhary (supra) were agreed to by the Supreme Court in Arvind Kejriwal (supra). The grounds of arrest are, therefore, to be communicated to the accused, in writing. [VII.B.2] Information to the Accused and Compliance 39. The arrested person is to be informed the grounds of arrest within 24 hours, which is also the period within which the person is to be produced before the Special Court. Non-compliance of the same will render it as illegal detention. Section 19 of the PMLA uses the phrase as soon as may be for the accused to be informed of the grounds of arrest; the said phrase was not interpreted in Vijay Madanlal Choudhary (supra), V. Senthil Balaji (supra), or in Pankaj Bansal (supra), and was crystalised as being within 24 hours of arrest in Ram Kishore Arora (supra), particularly in paragraph 21 of the decision, extracted as under: 21. In view of the above, the expression as soon as may be contained in Section 19 PMLA is required to be construed as as early as possible without avoidable delay or within reasonably convenient or reasonably requisite period of time. Since by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45 of the PMLA. An argument was made by Senior Counsel for petitioner that necessity to arrest would also be an additional factor required to be considered beyond the conditions laid down in Section 19 of the PMLA. Since Vijay Madanlal Choudhary (supra) was a decision rendered by a three-Judges Bench, the Supreme Court in Arvind Kejriwal (supra) referred the questions of law relating to need and necessity to arrest as a separate ground to challenge the order of arrest to a larger Bench. Paragraph 84 of Arvind Kejriwal (supra) is extracted as under: 84. In view of the aforesaid discussion, and as Vijay Madanlal Choudhary (supra) is a decision rendered by a three Judge Bench, we deem it appropriate to refer the following questions of law for consideration by a larger Bench: (a) Whether the need and necessity to arrest is a separate ground to challenge the order of arrest passed in terms of Section 19 (1) of the PML Act? (b) 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 other personal grounds and reasons regarding necessity to arrest a person in the facts and circumstances of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it has also been observed by the Supreme Court in CBI v. Anil Sharma, AIR 1997 SC 3806 that custodial interrogation is qualitatively more elicitation-oriented than questioning a suspect who is ensconced with a favourable order under Section 438 Cr.P.C. [VII.B.8] Remand Orders 45. In Madhu Limaye (supra), the Supreme Court held that the Magistrate, at the stage of remand, has to apply its mind to all relevant matters, and that the remand would not cure constitutional infirmities attached to arrest if the arrest itself is unconstitutional. Therefore, violation of Section 19 (1) of the PMLA would vitiate the arrest and a subsequent remand order, however, detailed, could not cure the same. This was recognised in Pankaj Bansal (supra) as well as in Arvind Kejriwal (supra). [VII.C] Assessment on Facts 46. Having considered the submissions of the respective counsels as well as having perused documents on record, this Court notes the following: a. The petitioner was arrested on 09th July, 2024 at 10:38 p.m. An arrest order was issued on 09th July, 2024 which notes the timing as 10:38 p.m., and that the arrestee was informed of the grounds of arrest. b. The grounds of arrest which accompa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 120B read with Sections 420 and 409 of the IPC, and Section 7(c) of the PC Act. 48.3 IDBI Bank, through the NPA Management Group ( NMG ) submitted a complaint on 28th June 2022 alleging criminal conspiracy, cheating, criminal breach of trust forgery for the purpose of cheating, and abuse of official position, resulting in a wrongful loss of Rs.384.35 Crores to a consortium of banks led by IDBI Bank (including Karur Vysya Bank), accusing ACIL, Arvind Dham, Aditya Malhotra, and Arvind Suraj. 48.4 On receipt of above complaint, the CBI registered another FIR bearing no. RC2232022A0009 on 21st December 2022 under Section 120B read with Sections 420, 406, and 468 of the IPC and Section 13 (2) read with Section 13 (1) (d) of the PC Act. 48.5 ACIL, which specialised in manufacturing high precision engineering automotive components, utilised Term Loan facilities under Multiple Banking Arrangements and Working facilities through a consortium led by Canara Bank. Bank of Maharashtra approved a Term Loan of Rs.200 Crores, funds were disbursed on 31st October 2012, but the accused company continued to default. In 2015, a Corrective Action Plan ( CAP ) was approved to bolster the working ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P, the loan funds were diverted to other companies totalling to Rs.356.98 Crores. The said amounts were shown for purchase of fixed assets/inventories which were neither physically available nor part of the record. 49.2 Loan exposure for the Amtek Group of Companies before entering CIRP was Rs.30,269.59 Crores. The Group continued to default despite best efforts of lenders led by the Reserve Bank of India. 49.3 The initial directors of the company were the petitioner, his wife Anita Dham, and his mother Late Smt. Manorma Dham. Petitioner was the key person in negotiating terms for raising finances and provided personal guarantees against the loans raised. A sample money trail made of ACIL as per the two FIRs reveals systematic diversion of loan funds and has been provided as part of the grounds of arrest in paragraph 31. Investigation of the money trail led to a bank account of WLD Investments Pvt. Ltd., an investment company which did not have a business, but its beneficial ownership was with the petitioner and his family. 49.4 Preliminary investigation revealed that the Amtek group used the WLD bank account to siphon off funds between 2007 till the time of the CIRP, which was to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and a 99.91% haircut by the creditors. 49.13 Seizure of cash of nearly Rs.2 Crores from the lockers held by a peon and few more individuals who stated that the cash belonged to the petitioner s family were also recorded. 50. The petitioner has apparently transferred properties to his relatives to conceal them from insolvency proceedings e.g. land of 6.17 acres with residential house of 18,000 square feet built at Sultanpur, New Delhi were sold for Rs.6 Crores to Nischara Reality Pvt. Ltd. as agricultural land despite circle rate being 70.94 Crores. Petitioner continues to live at the residence by paying rent at A-212, Shivalik, New Delhi which has been sold to Anjali Malhotra, his sister who was living with the accused at undervalued rates. 51. Based on the above, the ED concluded that there was sufficient evidence that offences involving proceeds of crime were being indulged in by the petitioner; evidence in exclusive possession could be tampered with including statement from employees and associates; transfer of properties held by petitioner and his family in order to frustrate the proceedings under PMLA and IBC; likelihood of abuse of influence on parties who have made disclosur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red also needs to be assessed by the Court as under: 56.1 The letter dated 17th September 2019 of MKA cannot be considered as a conclusive finding of all forensic audit as rightly contended by Special Counsel for ED. It is merely a scanned and not a verified document and, in any event, the FAR itself has notable observations as mentioned in paragraph 32.3 above. The author of the said letter has since deceased and the letter is limited in its scope. The letter was based on certain points and not with respect to the entire financial exposure. 56.2 Further, as far as the FAR by MKA is concerned, it has significant disclaimers which are noted in paragraph 32.3 above, and the solitary observation in the letter did not sit well with the larger conclusions of the forensic audit. 56.3 Moreover, the arresting officer had in his possession a letter from Kotak Mahindra Bank dated 26th February 2020 which had confronted MKA regarding the basis of the no fraud opinion and, though it did not form part of the material in possession at that stage, supplied in September 2024 to the ED, raises serious questions on the FAR. 56.4 The three reports by KGS regarding three companies were also not in pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er inculpatory material. The assertion that there was a successful resolution plan is belied by the extent of the haircut that the resolution plan proposes above 99%, essentially leading to a possibility that these monies have been mis-utilised. [VII.C.5] Non-Cooperation of Petitioner 56.7 The aspect of non-cooperation of petitioner, as correctly pointed out by Senior Counsel for petitioner, may not be relevant considering that as stated above there is a right against self-incrimination provided by the Constitution of India. [VII.C.6] Need and Necessity to Arrest 57. Regarding the need and necessity of arrest while having finally referred the matter to a larger Bench, the Supreme Court in Arvind Kejriwal (supra) noted that such a parameter could be conflated with the parameters in Section 41 Cr.P.C. laying down additions for the police to arrest without warrant. Section 41 Cr.P.C. parameters include preventing a person from committing further offence, proper investigation of offence, preventing a person from disappearing or tampering with the evidence, preventing person making an inducement or threat of promise to dissuade from disclosing facts, to ensure presence of the person in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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