Pankaj Bansal v. Union of India and Ors., Criminal Appeal Nos. 3051 – 3052 of 2023 – Decided on 19th September 2023

Accused should be informed about the grounds of arrest under Section 19 of the Prevention of Money Laundering Act, 2002 and non-compliance with this requirement vitiates an arrest, and entitles the accused to be set free unconditionally.

Summary:

The judgment is a landmark decision by the Supreme Court of India that upheld the constitutional rights of the persons arrested under the Prevention of Money Laundering Act, 2002 (PMLA). The judgment laid down the powers and restrictions upon the authorized officer of the Enforcement Directorate (ED) while making an arrest under Section 19 of the PMLA. The Supreme Court holds it mandatory to record in writing the reasons for forming the belief that the person is guilty of an offence punishable under the Act. The written grounds of arrest must be communicated to the person arrested as soon as possible, and a copy of the same must be forwarded to the Adjudicating Authority in a sealed envelope.

Facts of the Case:

The appellants, Pankaj Bansal and Basant Bansal, are key members of M3M Group, a real estate company. The ED registered two ECIRs (Enforcement Case Information Reports) against the IREO Group and its associates, based on two FIRs (First Information Reports) filed by different agencies. the appellants were named and implicated in the second ECIR and the second FIR, which involved allegations of bribery, corruption, and criminal conspiracy against the IREO Group and its associates, including some public servants and a special judge. The ED issued summons to the appellants on June 13, 2023, to appear before them on June 14, 2023, in relation to the first ECIR. While they were at the ED office, they were served with summons to appear before another investigating officer on the same day in relation to the second ECIR. The appellants were arrested by the ED on June 14, 2023, under Section 19 of the Prevention of Money Laundering Act, 2002 (PMLA), which empowers the ED to arrest any person who is guilty of an offence punishable under the Act. The appellants challenged their arrest orders and sought their release from custody. They also challenged the constitutionality and validity of Section 19 of the PMLA.

The High Court dismissed their writ petitions and upheld their arrest orders. The High Court found that the appellants were given a fair opportunity to defend themselves and that the charges against them were proved by sufficient evidence. Hence, the appeal.

Issues Raised:

• Whether Section 19(1) of the Prevention of Money Laundering Act, 2002 (PMLA) requires the authorized officer of the Enforcement Directorate (ED) to record in writing the reasons for forming the belief that the person proposed to be arrested is guilty of an offence punishable under the Act.
• Whether the communication of the grounds of arrest is mandatory under Article 22(1) of the Constitution of India, which guarantees the right to be informed of the grounds of arrest.

Judgment:

 The Supreme Court reversed the High Court’s order and quashed their arrest orders. The Supreme Court held that the ED must record in writing the reasons for forming the belief that the person is guilty of an offence punishable under the PMLA. The Supreme Court also held that the ED must communicate the written grounds of arrest to the person arrested as soon as possible and forward a copy of the same to the Adjudicating Authority in a sealed envelope. The Supreme Court observed that these steps are mandatory under Article 22(1) of the Constitution of India, which guarantees the right to be informed of the grounds of arrest.

Analysis

This judgment of the Supreme Court is a landmark decision that has strengthened the constitutional protections for the persons arrested under the Prevention of Money Laundering Act, 2002 (PMLA). The Court emphasized that the knowledge of the grounds of arrest is a mandatory requirement under Article 22(1) of the Constitution, which guarantees the fundamental right of every arrested person to be informed of the grounds for such arrest as soon as possible. The Court observed that this right is meant to enable the arrested person to seek legal remedies, such as bail, and to challenge the validity and legality of his arrest. The Court further observed that providing written grounds of arrest would also ensure transparency, accountability and fairness in the functioning of the ED and would prevent any abuse or misuse of power or vindictiveness on its part. The Court cautioned that any deviation from this requirement would render the arrest illegal and unconstitutional.

In essence, this judgment signifies a significant stride in rendering the fundamental procedural rights applicable to individuals detained under the PMLA more efficacious and substantive. It reiterates the paramount importance of upholding human dignity and personal liberty within the framework of a democratic society.