India: ED Is Required To Furnish Grounds Of Arrest To The Accused In Writing: Supreme Court

The Supreme Court held, in Pankaj Bansal vs. Union of India¹, that, at the time of arrest of an accused pursuant to the provisions of the Prevention of Money Laundering Act, 2002 ("PMLA"), the Directorate of Enforcement ("ED") is required to furnish the grounds of arrest in writing to the accused.

Overview of relevant facts

• The Supreme Court ("SC") was hearing a special leave petition filed by Mr. Pankaj Bansal and Mr. Basant Bansal ("Appellants"), challenging two orders passed by the Division Bench of the Punjab and Haryana High Court ("P&H High Court"), which had refused to quash the arrest orders of the Appellants, upholding their remand to the custody of the ED and, thereafter, judicial custody.

• On the basis of certain FIRs filed against the management of the IREO Group in relation to two residential projects, the ED recorded Enforcement Case Information Report dated June 15, 2021 ("First ECIR") in connection with alleged money-laundering offences. Neither of the Appellants were arrayed as accused in these FIRs or the First ECIR. Subsequently, an FIR dated April 17, 2023 ("April FIR") was filed, which named Mr. Basant Bansal but not Mr. Pankaj Bansal, the other Appellant.

• In apprehension of action being taken against them in context of the First ECIR, the Appellants sought and received interim protection by way of anticipatory bail from the Delhi High Court till July 05, 2023.

• Pursuant to the April FIR, the ED recorded another ECIR on June 13, 2023 ("Second ECIR"), naming therein, inter alia, "others who are named in the FIR/unknown persons", and on the same day, a summons was issued against the Appellants in connection with the First ECIR.

• The Appellants presented themselves in front of the ED on June 14, 2023, pursuant to the summons. The Appellants were arrested on that day in connection with the Second ECIR, in exercise of the powers under Section 19(1) of PMLA. The ED claimed that the written grounds of arrest were read out and explained to the Appellants.

• Thereafter, the Appellants were produced before the Vacation Judge/Additional Sessions Judge, Panchkula ("ASJ"), who granted custody to the ED and, subsequently, judicial custody.

• The Appellants challenged the remand order of the ASJ, claiming that their arrest was a wanton abuse of power/authority and process, blatantly illegal and unconstitutional, and in violation of the safeguards provided in Section 19 of PMLA.

Ruling of the Supreme Court

• The primary issue dealt with by the Supreme Court pertained to the manner of informing the accused of the grounds of his arrest, as required under Section 19(1) of PMLA as well as under Article 22(1) of the Constitution of India. It was observed that the provisions of PMLA were silent as to the manner in which such information was to be given and that there appeared to be inconsistencies in the practices followed by the ED in this regard. The Supreme Court also referred to judgments of Delhi High Court² and the Bombay High Court³, which had held that there was no requirement that the grounds of arrest be informed to the accused in writing.

• The Supreme Court, however, disagreed with the rulings of these High Courts. It provided two primary reasons why the grounds of arrest should be provided to the accused in writing.

• Firstly, in the event the grounds are orally informed to the accused and the fact of such information is disputed, the issue of proper compliance could potentially devolve into a case of the word of the authorised officer against the word of the accused. This was a crucial issue, since non-compliance with this provision would automatically entitle to the accused to be released.

• Secondly, the Supreme Court noted that the intent of the requirement to inform the accused of the grounds of arrest was not merely to apprise the accused of the reasons but to enable the accused to seek legal counsel and thereafter, if so desired, to apply and present a case for bail. The Supreme Court observed that it would be almost impossible for the accused to record and remember all the grounds as orally narrated for future recall to avail legal remedies, particularly if the grounds were voluminous and considering the fraught frame of mind of a person just arrested. This would negate the purpose of this statutory and constitutional protection accorded to an accused.

• The Supreme Court clarified that, in the event the grounds of arrest contained any sensitive material pertaining to the investigation, the same could be redacted.

• Therefore, overruling the aforementioned judgments of the Delhi High Court and the Bombay High Court, the Supreme Court held that a copy of written grounds of appeal is required to be furnished to the arrested.

• The Supreme Court also took objection to the conduct of the ED, noting that the ED, being a premier investigating agency, is expected conduct its actions transparently, above board, and conforming to the pristine standards of fair play and not in a vindictive manner. The Supreme Court observed that the ED had failed to meet these thresholds in the present case. The Supreme Court particularly took issue with the way in which the ED recorded the Second ECIR immediately after the Appellants secured anticipatory bail in relation to the First ECIR and then issued a summons in relation to one ECIR and then arrested the Appellants in relation to the second. The Supreme Court also noted that the Appellants were arrested within 24 hours of recording the Second ECIR and it was not clear when the investigating officer would have had time to properly inquire into the matter.

• The Supreme Court also noted that the ASJ had not even recorded a finding that he had perused the grounds of arrest to ascertain that the ED had recorded the reasons to believe the guilt of the Appellants and the provisions of Section 19 of PMLA had been complied with.

• In light of the fact that the grounds of arrest were orally informed to the Appellants and that the conduct of the ED reeked of arbitrary exercise of power, the Supreme Court held that the arrest of the Appellants in the case at hand was in non-compliance with the provisions of Section 19(1) of PMLA and the arrest and subsequent remand could not be sustained.

This ruling of the Supreme Court establishes a critical procedural aspect in the manner of arrest of accused under PMLA, reading into the provisions of Section 19(1) the requirement of written communication of the grounds of arrest. The Supreme Court went beyond the mere letter of the law and analysed the intent of the provision (in consonance with Article 22(1) of the Constitution of India) to ensure protection of individuals from potential arbitrary acts of investigative authorities.

Footnotes

1. Special Leave Petition (Crl.) Nos. 9220-21 of 2023; decision dated October 03, 2023.

2. Moin Akhtar Qureshi vs. Union of India and others, WP (Crl.) No. 2465 of 2017.

3. Chhagan Chandrakant Bhujbal vs. Union of India and others 2017 Cri LJ (NOC 301) 89.

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