In the case of Ram Kishor Arora v Directorate of Enforcement, the Supreme Court had to deal again with the procedure by which the Enforcement Directorate (ED) is to arrest an accused. The appellant sought a declaration that his arrest by the ED was illegal and violated his fundamental rights guaranteed under articles 14, 20 and 21 of the constitution.
The issue was whether the ED officer, in giving an oral reason for the arrest, showing a document stating the reasons for arrest to the appellant, then taking it back after getting his signature to confirm he had read it but not providing a copy of it during the arrest, failed to comply with section 19 of the Prevention of Money Laundering Act, 2002 (PMLA).
The appellant was the founder of Supertech, a real estate company involved in various projects around the country up until 2015. A number of criminal reports were registered against the company and the appellant, including one in 2021 from the ED. The ED also interviewed the appellant under the PMLA.
In March 2022, insolvency proceedings were filed against the company with the National Company Law Tribunal. The ED made a provisional order, attaching personal properties of the appellant and filed a complaint with the adjudicating authority. That body issued a notice to the appellant under the PMLA calling on him to show cause why the properties provisionally attached should not be confirmed as those involved in money laundering. According to the appellant, before he could reply to that notice he was arrested by the ED on 27 June 2023. He claimed the ED did not serve him with the grounds for his arrest.
The appellant argued that the procedure adopted of merely informing him orally of the grounds for an arrest, making him read and sign a record of such grounds, and not furnishing in writing the grounds for arrest did not accord with section 19(1) of the PMLA. The process was inconsistent with the court’s decision in Pankaj Bansal v Union of India and Others that it would be necessary for a copy of the written grounds for an arrest to be furnished to the arrested person as a matter of course and without exception. That decision supported the previous judgment in V Senthil Balaji v State.
The respondent submitted that the case of Pankaj Bansal was decided per incuriam. The two-judge bench had not followed the prior three-judge bench judgment in Vijay Madanlal Choudhary and Ors v Union of India and Others with respect to compliance with section 19 of the PMLA. At most, the direction in Pankaj Bansal, that its judgment would apply “henceforth”, meant it would have only a prospective, not retrospective effect.
The court held that any contrary or inconsistent finding of a lesser number of judges than in the Vijay Madanlal Choudhary bench was contrary to the hierarchy of the courts. The three-judge bench decision in Vijay Madanlal Choudhary, having already analysed and upheld the validity and requirements of section 19 of the PMLA, must take precedence over Pankaj Bansal. The expression “as soon as may be”, in section 19 of the PMLA, had neither been explained in Vijay Madanlal Choudhary, nor dealt with consistently in V Senthil Balaji and Pankaj Bansal. It is to be construed as meaning “as early as possible without avoidable delay”, or “when reasonably convenient”, or a “reasonably requisite” period.
As a safeguard, section 19 provided that the concerned officer must forward a copy of the order together with the material in his possession to the adjudicating authority immediately after the peron’s arrest. The section further directed that the arrested person had to be taken to court within 24 hours of the arrest. The court held that the reasonably convenient or reasonably requisite duration within which to inform the person arrested of the grounds for his arrest was 24 hours from the arrest. Vijay Madanlal Choudhary held that as long as the person had been informed of the grounds for his arrest, that sufficiently complied with article 22(1) of the constitution, which enshrined the right to know the reason for an arrest. It is sufficient compliance with section 19 of the PMLA and with article 22(1) that the person arrested is informed or made aware orally of the grounds for arrest at the time of the arrest, and is then given a written communication as to those grounds as soon as possible, and at a reasonably convenient time within 24 hours.
The word “henceforth” in Pankaj Bansal, meant from the date of the judgment. It implied that the requirement in the judgment of furnishing the grounds for arrest in writing as soon as soon as possible after his arrest did not arise until that date. The actions of the officer concerned could not, in any event, be faulted. The appellant had been fully informed of the reason for his arrest, and signed to acknowledge the fact. The arrest complied with section 19 of the PMLA and with article 22(1) of the constitution. The appeal was dismissed.
The dispute digest is compiled by Numen Law Offices, a multidisciplinary law firm based in New Delhi & Mumbai. The authors can be contacted at support@numenlaw.com. Readers should not act on the basis of this information without seeking professional legal advice.
