The Punjab & Haryana High Court has ruled for the release of two directors from a pharmaceutical company who were detained by the Enforcement Directorate in a case of money laundering. The court noted that detaining the accused without an official arrest memo constitutes the start of their arrest period, and they must be informed of the reasons for their arrest on the same day.
Brief Facts:
The petitioners were officially arrested and placed in judicial custody on October 28, 2023, although they were effectively restrained on October 27, 2023. On the latter date, no reasons for the arrest were provided to them. Consequently, they have submitted this petition seeking to have their arrest declared unlawful and to secure their release from judicial custody.
Contentions of the Petitioner:
The counsel representing the petitioners made a compelling argument that their clients were subjected to unlawful restraint on October 27, without being provided with any legal grounds for such action. This was followed by the formal drafting of an arrest memo on the subsequent day, October 28. The counsel emphasized that the absence of provided grounds on October 27 constituted a clear violation of the mandatory provisions outlined in Section 19 of the Prevention of Money Laundering Act (PMLA). Based on this argument, the counsel asserted that the petitioners were entitled to obtain bail, as their arrest did not comply with the necessary legal procedures as mandated by the PMLA.
Contentions of the Respondent:
The counsel representing the respondent presented the argument that the petitioners were not formally arrested but merely detained for interrogation at the Enforcement Directorate's headquarters in Delhi when they were issued a summons and subsequently placed in designated vehicles on October 27, 2023. He stressed that their official arrest, as documented in the arrest memo, occurred on October 28, 2023. This date, he asserts, should be regarded as the pivotal point for adjudicating whether there was any violation of mandatory legal provisions regarding the arrest process.
Observations of the Court:
The Bench, while addressing two writ petitions filed by petitioners, who are directors and founders of Ashoka University, against their remand orders in a money laundering case, made significant observations. Drawing upon the Supreme Court’s decision in Pankaj Bansal Versus Union of India and others, the Court declared their arrest as "non-est and void."
It was noted that the failure to furnish grounds for arrest at the time of custody violated the mandatory provision of Section 19 of the Prevention of Money Laundering Act, 2002 (PMLA). The division bench dismissed the claim that the detainees had voluntarily accompanied the Enforcement Directorate (ED) officials following a summon, labelling their transport to the ED office in either seized vehicles or those belonging to the ED officials as "unlawful restraint."
The Court emphasized that the actions on October 27, where the accused accompanied the ED officials, could not be considered voluntary or in response to the summon for interrogation. This act, cloaked as a response to the summon, was deemed an attempt by the ED officials to lend a semblance of legitimacy to what was essentially unlawful restraint.
Additionally, the Court pointed out a "non-application of mind" in issuing the remand order for the accused's arrest. It underscored that not providing the reasons for arrest on the day of this "unlawful restraint" further breached the stipulations of Section 19 of PMLA. The bench concluded that the true date of relevance in this case was the date of the "unlawful restraint" imposed on the petitioners, not the date when the formal arrest memo was drawn up. The manner in which the accused were taken to the ED office was ruled as constituting "unlawful restraint."
The decision of the Court:
In this case, considering all the observations made and the overall context of this case, the court allowed the writ petition and directed that the petitioners shall be released from judicial custody.
Case Title: Pranav Gupta v. Union of India & Anr.
Coram: Hon’ble Mr. Sureshwar Thakur, Hon’ble Mrs. Justice Sudeepti Sharma
Case No.: CWP No. 24787 of 2023
Advocate for the Applicant: Mr. R.S. Rai, Mr. Anand Chibbar, Mr. Surjeet Bhadu, Ms. Rubina Vermani, Mr. Shikar Sarin, Ms. Sanya Thakur, Mr. Veer Singh, Ms. Srishti Verma, Mr. Agam Bansal
Advocate for the Respondent: Mr. Puneet Bali, Mr. Vipul Joshi, Mr. Surjeet Bhadu, Mr. Veer Singh, Mr. Sanya Thakur, Mr. Prashant Kapila, Ms. Srishti Verma, Mr. Agam Bansal
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