The Punjab and Haryana High Court, while dismissing a petition challenging the arrest made by ED under the PMLA, observed that any arrest shall be illegal when it directly contradicts the legal requirements mandated by the PMLA, especially under Section 19 and the concept of 'reason to believe' is not merely procedural but a substantive safeguard that underpins the legality of an arrest under the PMLA.
Brief Facts:
The petitioner was facing allegations of money laundering under the Prevention of Money Laundering Act (PMLA), 2002. The ED initiated an investigation after a case was registered by the CBI on 06.08.2020 against him for siphoning off ₹1530.99 crores obtained as loans from a consortium of banks. The investigation revealed that funds meant for the operation of a company owned by the petitioner and his family were diverted to personal accounts and other businesses, and the proceeds of the crime were traced to companies owned by the petitioner. The petitioner was arrested on 18.01.2024 after allegedly failing to cooperate with the investigation. The petitioner challenged the legality of his arrest and subsequent remand orders, claiming a violation of Section 19 of PMLA, 2002, as well as fundamental rights under Articles 21 and 22 of the Constitution of India.
Contentions of the Applicant:
The learned counsel appearing on behalf of the petitioner argued that his arrest was illegal due to non-compliance with Section 19 of the PMLA and the “reasons to believe” for his arrest were not furnished, as mandated by the statute, and that the grounds of arrest provided were inadequate, being mere reproductions of allegations from the CBI’s charge sheet. Further, it was contended that he had cooperated with the investigation and that his arrest was made solely on the grounds of “non-cooperation,” which is not a valid basis for arrest under the law. It was further argued that the petitioner’s rights under Articles 21 and 22 had been violated and that he had already spent substantial time in custody.
Contentions of the Respondent:
The learned counsel appearing on behalf of the respondent argued that the petitioner’s arrest was lawful and in compliance with Section 19 of the PMLA. The grounds of arrest were clearly conveyed to the petitioner, and the necessity of custodial interrogation was justified due to the magnitude of the financial crime involved, which amounted to ₹1530.99 crores. It was further contended that the petitioner’s non-cooperation during the investigation, along with his failure to disclose relevant information, necessitated his arrest.
Observations of the Court:
The court, after referring to the material on record, noted that in compliance with the statutory mandate of S. 19 of PMLA, the arresting officer at the arrest stage had apprised the petitioner of his reasons of belief, and the grounds that necessitated such an arrest and further the safeguards under Section 19 were adhered to, validating the arrest, and there is no failure to entitle the petitioner to be released by exercising the extraordinary powers of the High Court under S. 482 CrPC.
Further, the court observed that an arrest made under Section 19 of the 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 and 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.
Further the court observed that the necessity of the petitioner's arrest was primarily not because of his non-cooperation, not confessing to the guilt, but because of the magnitude of the money laundering of the mammoth proportions.
The Decision of the Court:
The court dismissed the petition, holding that the arrest of the petitioner was lawful and in compliance with the provisions of Section 19 of the PMLA, 2002.
Case Title: Neeraj Saluja vs. Union of India and Anr.
Coram: Hon’ble Mr Justice Anoop Chitkara
Case No.: CRM. M. 10124 of 2024
Advocate for the Applicant: Mr. Mukul Rohatgi, Mr. R.S. Rai, Senior Advocate Mr. Anand Chhibbar, Mr. Shikhar Sarin, Ms. Rubina Virmani and Mr. Ankur Saigal
Advocate for the Respondent: Mr. S.V. Raju, Mr. Zoheb Hossain, Mr. Lokesh Narang, Mr. Harmeet Singh Oberoi, Mr. Samrat Goswami, Ms. Abhipriya Rai.
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