LI Network
Published on: January 9, 2024 at 13:34 IST
The Delhi High Court, through Justice Vikas Mahajan, declared that the oral communication of the “grounds of arrest” to an accused aligns with the proper compliance of Section 19(1) of the Prevention of Money Laundering Act, 2002 (PMLA) for arrests made prior to the Supreme Court’s judgment in Pankaj Bansal v. Union of India on October 3, 2023.
The judgment came while upholding the arrest of Neeraj Singal, the former Managing Director of Bhushan Steel Limited, in connection with a money laundering case linked to the Enforcement Directorate’s investigation into a bank fraud.
Singal’s plea challenging his arrest on June 09, 2023, and his subsequent bail application were both dismissed by the court.
Justice Mahajan emphasized that at the time of Singal’s arrest, oral communication of the arrest grounds was considered a proper compliance with the provisions of Section 19(1) of the PMLA.
The Court clarified that the obligation to provide grounds in writing was introduced by the Pankaj Bansal judgment, effective from October 3, 2023.
In the Pankaj Bansal case, the Supreme Court mandated the Enforcement Directorate to furnish arrest grounds in writing, ruling out arrests based solely on non-cooperation with summons.
However, a subsequent bench in Ram Kishor Arora v. Union of India on December 15, 2023, determined that oral communication of grounds during arrest suffices, with written reasons to be provided within 24 hours. Importantly, the Pankaj Bansal ruling does not apply retrospectively, preserving the legality of arrests made before its pronouncement.
The Enforcement Directorate had alleged that Singal caused a public loss exceeding Rs. 46,000 Crores. The Court noted that at the time of Singal’s arrest, the law from Moin Akhtar Qureshi continued to be valid until the pronouncement of the Pankaj Bansal judgment.
Justice Mahajan highlighted that the recent Supreme Court ruling in Ram Kishor Arora affirmed that the absence of written grounds until the Pankaj Bansal judgment date does not render the arrest illegal. The Court stressed that the directions in the Pankaj Bansal case are prospective, addressing the post-arrest communication of grounds.
Regarding Singal’s arrest documentation, the court rejected the argument that his signature on the ‘ground of arrest’ merely acknowledged compliance with the D.K. Basu case mandate.
The court maintained that there is no legal requirement for each page of the document to be signed and affirmed the validity of the arrest based on oral communication of grounds.
Despite a typographical error in the ‘Arrest Order,’ the court held that it does not undermine the arrest’s validity.
Additionally, the Court dismissed Singal’s claim that the ED officer failed to promptly forward the arrest order to the Adjudicating Authority, explaining that the delay was due to the closure of the authority’s office over the weekend.