The word arrest comes from the French word “arre^t” which means to stop or stay. The concept of arrest is one of the most important constituents of criminal jurisprudence around the world. It restricts the liberty of the person who encroaches upon the liberty of the other or who causes such an apprehension to other person. Under, Chapter 5 of the BNSS arrest is set to motion by law enforcement primarily on account of committing or participation in an alleged crime by a person or even on the basis of reasonable suspicion. However, under the Prevention of Money Laundering Act of 2002, this standard doesn’t apply.
Before delving into the parameters of arrest under the PMLA 2002, it is imperative that we first understand what the statute is and which objectives it intends to achieve.
The Object of PMLA Ac, 2002
The Prevention of Money Laundering Act of 2002 was enacted by the Republic of India in light of India’s commitment to the United Nations in 1998 to enact an anti-money laundering law. The PMLA is a distinct and sui-generis legislation which provides for the prevention of money laundering and recovery plus confiscation of the proceeds of crime, while ensuring punishment to the offender.
Money laundering in simple terms comprises of the process of making genuine that money/assets which has been acquired through acts and omissions contrary to law. Section 71 of the PMLA 2002 clearly provides that it being a special statute prevails over anything inconsistent contained in any law for the time being in force. Ergo, when it comes to arrest, the power of arrest and the procedure for arrest has been provided in Section 19 and arrests of persons in cases of money laundering will not be governed by the BNSS.
Section 19 of the PMLA
Section 19 of the PMLA has 3 sub-sections to it. Let us focus our discussion on sub-section 1. The bare provision of Section 19(1) is-
“If the Director, Deputy Director or Assistant Director or any other officer authorized in this behalf by the Central Government by general or special order, has on the basis of material in his possession, reason to belief (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.”
A cursory view of sub-section 1 makes it clear that it is a pre-arrest and during arrest provision in the sense that while it grants the power of arrest to the ED it incorporates that before and in the middle of such exercise of power, certain safeguards have to be complied with by the ED to ensure fairness and expunge away arbitrariness.
The Hon’ble Apex Court of India in the celebrated judgment of Vijay Madanlal Choudhary & Others v Union of India & Others[1] while interpreting Section 19 PMLA had laid down the following factors for arrest to get triggered-
- The power to arrest can only be exercised by the Director, Deputy Director, Assistant Director or any other authorized who has been authorized by the Union government through a general or special order. No one else including the police can arrest any person in a case of money laundering.
- The officer must already be in seisin of materials on the basis of which he is able to form reasons to believe that the person is guilty of the offence of money laundering.
- It is mandatory that the reasons to believe must exist prior to the arrest of a person and the reasons to believe must be recorded in writing by the officer.
- The power of arrest, even in case the officer has formed an opinion that the person is guilty of money laundering, is not mandatory.
- In case the officer proceeds to arrest a person, it is incumbent upon him to supply the grounds of arrest which will be peculiar in every case to the arrestee as soon as may be. The expression “as soon as may be” implies a time period of 24 hours.
The officer has to consider both exculpatory and inculpatory material
The formation of the opinion that is reason to believe that the person is guilty of the offence of money laundering must be based on material which the officer already has access to i.e. lying in his possession. Here, it is very important to point out that the officer has to consider both exculpatory and inculpatory material so as to come to the right opinion i.e. whether the person is guilty under PMLA and should arrest be made. Non-consideration of exculpatory material will amount to dereliction of duty on part of the officer.
Ergo, it is only upon the fulfilment of the criteria, mentioned in the preceding page, for arrest that the power to arrest may be exercised by the officer. Section 19, we can clearly say does not give unbridled powers to arrest to the ED. The power is fenced to ensure balance between personal liberty of an individual and interest of the state.
There have been landmark developments in the form of case laws on this concept which have gone to clarify and make more lucid the correct position of arrest under the PMLA. Needless, to say that these developments take into active cognizance the seriousness of the crime of money laundering and the freedom of an individual. Let us now focus our attention to few of the same.
Pankaj Bansal v Union of India & Others
Pankaj Bansal v Union of India & Others[2] has said in clear terms that non-supply of the grounds of arrest will vitiate the arrest made under Section 19. So, the ED has to inform and furnish to the accused the grounds for his arrest in writing. This ensures suffice compliance with Article 22 of the Constitution and provides an opportunity to the accused to effectively apply for and seek bail.
V. Senthil Balaji v The State
In the case of V. Senthil Balaji v The State represented by Deputy Director & Ors[3], the Hon’ble Supreme Court of India held that the power of arrest is available to the ED for the purposes of investigation/inquiry. The interplay between Section 167 of the CrPC and Section 19 was dealt in here by the esteemed court.
The court held that while remanding an accused to the custody of the ED or otherwise, a remand court at the stage of Section 167 has to peruse the order of arrest and take into consideration relevant material placed before it so that it can decide whether the arrest has been effected in accordance with the procedure laid down by Section 19 PMLA.
Non-adherence to the conditions stipulated in Section 19 PMLA will lead to the impairment of arrest and as a consequence subsequent order/proceeding will also be struck down.
Tarsem Lal v Directorate of Enforcement
Furthermore, in Tarsem Lal v Directorate of Enforcement[4], it was propounded by the Supreme Court that the power under Section 19 cannot be exercised after the special court takes cognizance of the prosecution complaint u/s 44 of the PMLA. The courts have applied breaks on the powers of the ED to arrest any person after the court becomes seizes of the matter. This ruling is meant to serve the higher interest of justice and liberty of an individual.
Arvind Kejriwal v Directorate of Enforcement
The recent judgment passed by the Hon’ble Supreme Court in the case of Arvind Kejriwal v Directorate of Enforcement[5] has now made it crystal clear that the reasons to belief will now also be supplied to the arrestee apart from the grounds of arrest. This interpretation of law by the Hon’ble Supreme Court is a step in the right direction as it allows the arrestee to adequately prepare for his defence and satisfy the twin conditions of bail contained in Section 45 of the PMLA.
Another factum which has emerged from the judgment authored by HMJ Sanjiv Khanna is that the court has referred the question of “need and necessity” being part of section 19(1) to a larger bench for consideration. Much is awaited on what will the decision of the country’s top court will be.
However, whatever be the decision the author sincerely hopes that the Hon’ble Supreme Court will do justice to the delicate balance between the country’s economic sovereignty in acting with brute force against money laundering and the cherished right to life of the Indian citizen.
The bare text of the second subsection to Section 19 of the PMLA says-
“The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under sub-section (1), forward a copy of the order along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such order and material for such period, as may be prescribed.”
This particular sub-section is post arrest provision and it finds relation to Section 157 of the Cr.P.C. The Cr.P.C, now the BNSS, makes it incumbent upon the officer in charge of police station who has reason to suspect the commission of cognizable offence to send an occurrence report to the Magistrate and then proceed for investigation. It is meant to introduce judicial supervision beforehand the police commence it role in the criminal justice machinery.
On similar lines, is Section 19(2) PMLA. It ensures that the arresting officer supplies the arrest order, reasons to believe and material in his in seisins to the Ld. AA in order to avoid tampering and uphold the spirit of fair investigation. The material must be supplied immediately after the arrest of such person, however the word immediately does not imply the same day as of arrest[6].
It is the author’s understanding that the word “immediately” as incorporated in Section 19(2) indicates the supply of the materials to the Ld. AA in an effective and efficient manner would constitute 24 hours commencing from the time of supply of grounds of arrest to the accused. The reason for such an opinion is that we can lose sight of the word “immediately” which mandates urgency and has a close nexus to the words “as soon as possible.”
Now with respect to the 24 hours commencing not from the arrest of person but from the time of supply of grounds of arrest is for the purposes to maintain a fair balance between mandate of the agency and rights of the arrestee. Also is the fact, that by supplying the accused with the grounds of arrest and reasons to belief Furthermore, since the materials have to be sent in the proper manner and given the administrative compliances, the agency may require some time.
Also is the fact that the Hon’ble Supreme Court till date has not explicitly propounded that non-adherence to 19(2) will impair the arrest. The pronouncement of the court is limited to Section 19(1) PMLA. Therefore, such liberal yet time bound interpretation can be adopted.
The last and third sub-section pertains to the duty on part of the ED to produce the arrestee before the jurisdictional court within 24 hours of arrest. The bare text of the same is as follows-
“Every person arrested under sub-section (1) shall, within twenty-four hours, be taken to a 1[Special Court or] Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction:
Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest to the 1[Special Court or] Magistrate’s Court.”
Sub-section 3 is also a mandatory requirement and is in consonance with the constitutional right guaranteed under Article 22. When any person is arrested by the ED under Section 19(1), he has to be compulsorily produced before the jurisdictional court (court which can try the offence of money laundering- Section 44 & 45). Here there is a noteworthy difference between Article 22 and Section 19. While the former says the word nearest magistrate, the latter indicates jurisdictional court where the offence has been committed.
Since 19(3) is a requirement which is based on constitutional principles, the violation of the same by the ED will lead to vitiation of arrest.
To conclude, the author can fervidly submit that the power of the ED to arrest any person is not unfettered. With statutory incorporated checks and balances together with constitutional based jurisprudence (includes both interest of state and individual), Section 19 is here to stand. Remember, the standard of arrest is guilt of the arrestee, not reasonable suspicion.
The article has been written by Siddharth Arora, Advocate (PH/4087/2021) associated with Mr Narang, Senior Panel Counsel for Union of India.
[1] (2022) SCC Online SC 929
[2] 2023 INSC 866
[3] 2023 INSC 677
[4] 2024 INSC 434
[5] 2024 INSC 512
[6] 2024 SCC Online P & H 4151