Appeal against the rejection of writ petition filed questioning the validity of section 19 PMLA
This appeal filed by the appellant – Arvind Kejriwal assails the judgment and order dated 09.04.2024 passed by the single Judge of the High Court of Delhi whereby the Criminal Writ Petition filed by Arvind Kejriwal under Articles 226 and 227 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, 19731, challenging his arrest by the Directorate of Enforcement2, vide the arrest order dated 21.03.2024, on the ground of violation of Section 19 of the Prevention of Money Laundering Act, 20023, and the proceedings pursuant thereto including the order of remand dated 22.03.2024 to the custody of DoE passed by the Special Judge, has been rejected.
2. At the outset, we must clarify that this is not an appeal against refusal or grant of bail. Instead, this appeal impugns the validity of arrest under Section 19 of the PML Act. It raises a pivotal question regarding the scope and ambit of the trial court/courts to examine the legality of the arrest under Section 19. The issue is legal in nature, and with the ratio being propounded in detail, the decision becomes complex and legalistic.
Mr. Arvind Kejriwal is not an accused till the charge sheets (including two supplementary chargesheets) were filed by the CBI and cognizance taken by the special court on the allegation of excise policy framed for sale of liquor in Delhi
3. On 17.08.2022, the Central Bureau of Investigation registered RC No. 0032022A0053 for the offences punishable under Section 120B read with Section 477A of the Indian Penal Code, 1860 and Section 7 of the Prevention of Corruption Act, 1988. The registration was based on a complaint dated 20.07.2022, made by the Lieutenant Governor of the Government of National Capital Territory of Delhi, and on the directions of the competent authority conveyed by the Director, Ministry of Home Affairs, Government of India.
4. Later, on 25.11.2022, the CBI filed a chargesheet. Thereafter, on 25.04.2023 and 08.07.2023, two supplementary chargesheets were filed. On 15.12.2022, the Special Court took cognisance of the offences. The chargesheets inter alia allege that the excise policy, framed for the sale of liquor in NCT of Delhi, was a product of criminal conspiracy. It was hatched by a cartel of liquor manufacturers, wholesalers and retailers and it provided undue pecuniary gain to public servants and other accused in the conspiracy. It resulted in huge losses to the government exchequer and ultimately to the public. Arvind Kejriwal is not an accused in the said chargesheets.
Though the DOE (Directorate of Enforcement) has filed the first complaint as early on 26.11.2022 since then the DOE has filed seven supplementary complaints in which the Kejriwal was added as accused in the last complaint
5. On 22.08.2022, the DoE recorded ECIR No. HIU-II/14/2022 based on offences detailed under the RC registered by CBI. The offences under the RC are the predicate offence for investigation/inquiry into the scheduled offences under the PML Act. On 26.11.2022, the DoE filed the first prosecution complaint. On 20.12.2022, the Special Court took cognisance. Since then, the DoE has filed seven supplementary prosecution complaints. In the last complaint, that is, the Seventh Supplementary Prosecution Complaint dated 17.05.2024, Arvind Kejriwal has been named as an accused.
Kejriwal argued that the summons and notices sent by the PMLA were illegal
6. On 30.10.2023, Arvind Kejriwal was issued notice under Section 50 of the PML Act for his appearance and recording of statement. Thereafter, eight summons were issued till his arrest on 21.03.2024. DoE states that Arvind Kejriwal failed to appear and join the investigation. Arvind Kejriwal claims that the summons and notices under Section 50 were illegal, bad in law and invalid.
Ground of appeal: Arrest was in violation of section 19(1) PMLA
7. The cardinal ground taken in the present appeal is that Arvind Kejriwal was arrested in violation of Section 19(1) of the PML Act. It is contended that the arrest was illegal, which makes the order of remand to custody of the DoE passed by the Special Court dated 01.04.2024 also illegal. Therefore, it would be apt to begin by referring to Section 19 and elucidating how the Courts have interpreted and applied the section.
9. A bare reading of the section reflects, that while the legislature has given power to the Director, Deputy Director, Assistant Director, or an authorised officer to arrest a person, it is fenced with preconditions and requirements, which must be satisfied prior to the arrest of a person. The conditions are –
- The officer must have material in his possession.
- On the basis of such material, the authorised officer should form and record in writing, “reasons to believe” that the person to be arrested, is guilty of an offence punishable under the PML Act.
- The person arrested, as soon as may be, must be informed of the grounds of arrest.
These preconditions act as stringent safeguards to protect life and liberty of individuals. We shall subsequently interpret the words “material”, “reason to believe”, 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, [2023 SCC Online SC 1244] 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 giving an opportunity to the public prosecutor to oppose the application for release, that there are reasonable grounds to believe that the arrested person is not guilty of the offence and, secondly, that he is not likely to commit any offence while on bail. To meet this requirement, it would be essential for the arrested person to be aware of the grounds on which the authorized officer arrested him/her under Section 19 and the basis for the officer’s ‘reason to believe’ that he/she is guilty of an offence punishable under the Act of 2002. It is only if the arrested person has knowledge of these facts that he/she would be in a position to plead and prove before the Special Court that there are grounds to believe that he/she is not guilty of such offence, so as to avail the relief of bail. Therefore, communication of the grounds of arrest, as mandated by Article 22(1) of the Constitution and Section 19 of the Act of 2002, is meant to serve this higher purpose and must be given due importance.”
In the Court’s view, Section 19 includes inbuilt checks that designated officers must adhere to. First, the “reasons to believe” of the alleged involvement of the arrestee have to be recorded in writing. Secondly, while affecting the arrest, the reasons shall be furnished to the arrestee. Lastly, a copy of the order of arrest along with the material in possession have to be forwarded to the safe custody of the adjudicating authority. This ensures fairness, objectivity and accountability of the designated officer while forming their opinion, regarding the involvement of the arrestee in the offence of money laundering.
ECIR is not a public document
11. Arrest under Section 19(1) of the PML Act may occur prior to the filing of the prosecution complaint and before the Special Judge takes cognizance. Till the prosecution complaint is filed, there is no requirement to provide the accused with a copy of the ECIR. The ECIR is not a public document. Thus, to introduce checks and balances, Section 19(1) imposes safeguards to protect the rights and liberty of the arrestee. This is in compliance with the mandate of Article 22(1) of the Constitution of India.
12. V. Senthil Balaji v. State and others ((2024) 3 SCC 51) similarly states that the designated officer can only arrest once they record “reasons to believe” in writing, that the person being arrested is guilty of the offence punishable under the PML Act. It is mandatory to record the “reasons to believe” to arrive at the opinion that the arrestee is guilty of the offence, and to furnish the reasons to the arrestee. This ensures an element of fairness and accountability.
73. In Prabir Purkayastha (supra), this Court went beyond the rigours of the PML Act/UAPA. Drawing a distinction between “reasons to arrest” and “grounds for arrest”, it held that while the former refers to the formal parameters, the latter would require all such details in the hands of the investigating officer necessitating the arrest. Thus, the grounds of arrest would be personal to the accused.
Question of law: Under PMLA Is mere satisfaction of the formal parameters to arrest sufficient?
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:
- Section 41(1)(ii)(a) – preventing a person from committing further offence.
- Section 41(1)(ii)(b) – proper investigation of the offence.
- Section 41(1)(ii)(c) – preventing a person from disappearing or tampering with evidence in any manner.
- 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.
- Section 41(1)(ii)(e) – to ensure presence of the person in the Court, whenever required, which without arresting cannot be ensured.
However, Section 19(1) of the PML Act does not permit arrest only to conduct investigation. Conditions of Section 19(1) have to be satisfied. Clauses (a), (c), (d) and (e) to Section 41(1)(ii) of the Code, apart from other considerations, may be relevant.
75. In Vijay Madanlal Choudhary (supra), this Court has held that when a person applies for bail or anticipatory bail under the PML Act, the conditions stipulated in Section 437 or 438 or 439 of the Code would equally apply, in addition to Section 45 of the PML Act. Therefore, it is urged that necessity to arrest, in the case of arrest under Section 19(1) would be an additional factor required to be considered beyond the conditions and factors stipulated in Section 19(1) of the PML Act.
76. DoE submits that the test of “necessity to arrest” is satisfied in view of Arvind Kejriwal failing to appear despite the issuance of 9 summons dated 30.10.2023, 18.12.2023, 22.12.2023, 12.01.2024, 31.01.2024, 14.02.2024, 21.02.2024, 26.02.2024, and 16.03.2024. It is also submitted that arrest is a part and parcel of investigation intended to secure evidence, leading to discovery of material facts and relevant information as held in P. Chidambaram v. Directorate of Enforcement [(2019) 9 SCC 24].
Test of proportionality
81. The proportionality test is more precise and sophisticated than other traditional grounds of review. The court is required to assess the balance struck by the decision maker, not merely whether it is within the range of rational or reasonable decisions. In this manner, proportionality goes further than the traditional grounds of review as it requires attention to the relative weight according to interest and considerations. State of Uttar Pradesh v. Lal [(2006) 3 SCC 276] which refers to several other cases, states that the proportionality test safeguards fundamental rights of citizens to ensure a fair balance between individual rights and public interest. It requires the court to judge whether the action taken was really needed and whether it was within the range of courses of action which could be reasonably followed. Proportionality is more concerned with the aims and intentions of the decision maker and whether the decision maker has achieved more or less the correct balance or equilibrium.
82. The principle of proportionality has been followed by this Court in several decisions such as Modern Dental College & Research Centre v. State of Madhya Pradesh, [(2016) 4 SCC 346] K.S. Puttaswamy (Retired) and Anr. (Aadhar) v. Union of India and Anr. (5J) [(2019) 1 SCC 1] and Anuradha Bhasin v. Union of India and Others [(2020) 3 SCC 637].
83. Recently, the Constitution Bench applied the doctrine of proportionality to strike down the Electoral Bond Scheme in Association for Democratic Reforms v. Union of India [(2024) 5 SCC 1]. In a way, the present case also relates to funding of elections, an issue which was examined in some depth in Association for Democratic Reforms (supra).
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 case?
(c) If questions (a) and (b) are answered in the affirmative, what are the parameters and facts that are to be taken into consideration by the court while examining the question of “need and necessity to arrest”?
Interim bail is granted after referring to a larger bench
85. As we are referring the matter to a larger Bench, we have to, despite our findings on “reasons to believe”, consider whether interim bail should be granted to Arvind Kejriwal. Given the fact that right to life and liberty is sacrosanct, and Arvind Kejriwal has suffered incarceration of over 90 days, and that the questions referred to above require in-depth consideration by a larger Bench, we direct that Arvind Kejriwal may be released on interim bail in connection with case ECIR No. HIU-II/14/2022 dated 22.08.2022, on the same terms as imposed vide the order dated 10.05.2024 which reads:
(a) he shall furnish bail bonds in the sum of Rs.50,000/- with one surety of the like amount to the satisfaction of the Jail Superintendent;
(b) he shall not visit the Office of the Chief Minister and the Delhi Secretariat;
(c) he shall be bound by the statement made on his behalf that he shall not sign official files unless it is required and necessary for obtaining clearance/approval of the Lieutenant Governor of Delhi;
(d) he will not make any comment with regard to his role in the present case; and
(e) he will not interact with any of the witnesses and/or have access to any official files connected with the case.
The interim bail may be extended, or recalled by the larger Bench.
87. Accordingly, the Registry is directed to place the matter before the Hon’ble Chief Justice of India for constitution of an appropriate Bench, and if appropriate, a Constitution Bench, for consideration of the aforesaid questions. The questions framed above, if required, can be reformulated, substituted and added to.
88. The observations made in this judgment are for deciding the present appeal and will not be construed as findings on merits of the case/allegations. Facts, as alleged, have to be established and proved. Application for regular bail, if pending consideration or required to be decided, shall be decided on its own merits.
Party
ARVIND KEJRIWAL ….. APPELLANT VERSUS DIRECTORATE OF ENFORCEMENT ….. RESPONDENT – Criminal Appeal No. 2493 of 2024 – 2024 INSC 512 – JULY 12, 2024.
