Dilbag Singh Alias Dilbag Sandhu vs Union Of India And Another

Reserved on : 02.02.2024 Pronounced on : 08.02.2024

1. CRM-M-2191-2024 (O&M)

Dilbag Singh @ Dilbag Sandhu ...Petitioner

Versus

Union of India and another ...Respondents

2. CRM-M-3385-2024 (O&M)

Kulwinder Singh ...Petitioner

Versus

Union of India and another ...Respondents

CORAM: HON'BLE MR. JUSTICE VIKAS BAHL

Present: Mr. Chetan Mittal, Sr. Advocate with Mr. Anshul Mangla, Advocate and Mr. Udit Garg, Advocate and Mr. Himanshu Gupta, Advocate and Mr. Vinay Arya, Advocate and Mr. Ritvik Garg, Advocate for the petitioner(s).

Mr. Zoheb Hossain, Special Counsel for ED (through VC) Mr. Jagjyot Singh Lalli, DSG, Mr. Lokesh Narang, Sr. Panel Counsel ED Mr. Simon Benjamin, SPP, ED and Mr. Manish Verma, Advocate and Mr. Vivek, Advocate and Mr. Kartik Sabharwal, Advocate and Ms. Abhipriya Raj, Advocate for ED.

****

VIKAS BAHL, J. (ORAL)

1. Present order shall dispose of two petitions filed under Section

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482 of the Code of Criminal Procedure, 1973 (for short 'CrPC') i.e. CRM-

M-2191-2024 filed by Dilbag Singh @ Dilbag Sandhu and CRM-M-3385-

2024 filed by Kulwinder Singh, since common questions of law and facts

arise in both the cases and also since both the petitions arise from the same

ECIR.

2. This judgment has been divided into the following sections: -

1. Prayers made in both the petitions Paras 3 & 4 Pg 2 to 4

2. Brief facts of the case Paras 5 to 7 Pg 4 to 8

3. Arguments on behalf of the petitioners Paras 8 to 13 Pg 8 to 20

4. Arguments on behalf of the respondents Paras 14 to 19 Pg 20 to 30

5. Arguments on behalf of the petitioners in Paras 20 to 29 Pg 30 to 42 rebuttal

6. Findings of this Court Paras 30 to 75 Pg 42 to 110

a) Non-application of mind and non- Paras 30 to 41 Pg 42 to 61 recording of compliance of the conditions/stipulations contained in Section 19 by the Special Court while passing the impugned orders

b) Illegal detention/wrongful restraint of the Paras 42 to 54 Pg 61 to 79 petitioners from 04.01.2024 to 08.01.2024 amounting to arrest on 04.01.2024 itself and consequential violations of Section 19 of PMLA read with Section 167 CrPC on account of non-production of petitioners within 24 hours

c) Violation of the provisions of Section Paras 55 to 60 Pg 79 to 91 19(2) of the 2002 Act

d) Non-compliance of Section 19(1) of the Paras 61 to 66 Pg 91 to 102 2002 Act

7. Additional Issues Paras 67 to 75 Pg 103 to 110

8. Conclusion/Relief Paras 76 to 79 Pg 110 to 111

3. The following prayers have been made in the case of petitioner

Dilbag Singh @ Dilbag Sandhu: -

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"It is, therefore, most respectfully prayed that the present petition may kindly be allowed and the (a) Impugned Arrest Order dated 08.01.2024 (Annexure P-3) passed by respondent No.2; (b) Impugned Arrest Memo dated 08.01.2024 (Annexure P-4) prepared by respondent No.2;

(c) Impugned Order dated 09.01.2024 (Annexure P-7) passed by Sessions Judge-cum-Special Judge (under PMLA, 2002), Gurugram passed in application vide CRM No.35 of 2024 (Annexure P-6) in ECIR No.GNZO/19/2023 dated 23.09.2023 under Section 65 of the PMLA Act, 2002 may kindly be set-aside since the petitioner was illegally arrested and remanded to ED Custody in gross abuse and violation of the provisions of Prevention of Money-Laundering Act, 2002 {PMLA, 2002} in view of the law laid down by the Hon'ble Supreme Court in Vijay Madanlal Choudhary & Ors. v. Union of India & Ors. 2022 LiveLaw (SC) 633; V. Senthil Balaji vs. The State represented by Deputy Director and others, 2023 LiveLaw (SC) 611; and Pankaj Bansal v. Union of India & Ors. Criminal Appeal Nos.3051-3052 of 2023 D/d 03.10.2023.

It is further prayed that appropriate interim orders/directions may kindly be issued to the respondents to release the petitioner forthwith from the custody during the pendency of the present petition.

It is further prayed that this Hon'ble Court may pass any other order or direction which it may deem fit and appropriate in the facts and circumstances of the present case."

4. Prayers in the case of petitioner Kulwinder Singh are as

follows: -

"It is, therefore, most respectfully prayed that the

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present petition may kindly be allowed and the (a) Impugned Arrest Order dated 08.01.2024 (Annexure P-

2) passed by respondent No.2; (b) Impugned Arrest Memo dated 08.01.2024 (Annexure P-3) prepared by respondent No.2; (c) Impugned Order dated 09.01.2024 (Annexure P-7) and 16.01.2024 (Annexure P-9) passed by Sessions Judge-cum-Special Judge (under PMLA, 2002), Gurugram passed in application vide CRM No.35 of 2024 (Annexure P-6) in ECIR No.GNZO/19/2023 dated 23.09.2023 under Section 65 of the PMLA Act, 2002 may kindly be set-aside since the petitioner was illegally arrested and remanded to ED Custody in gross abuse and violation of the provisions of Prevention of Money-Laundering Act, 2002 {PMLA, 2002} in view of the law laid down by the Hon'ble Supreme Court in Vijay Madanlal Choudhary & Ors. v. Union of India & Ors. 2022 LiveLaw (SC) 633; V. Senthil Balaji vs. The State represented by Deputy Director and others, 2023 LiveLaw (SC) 611; and Pankaj Bansal v. Union of India & Ors. Criminal Appeal Nos.3051-3052 of 2023 D/d 03.10.2023.

It is further prayed that appropriate interim orders/directions may kindly be issued to the respondents to release the petitioner forthwith from the custody during the pendency of the present petition.

It is further prayed that this Hon'ble Court may pass any other order or direction which it may deem fit and appropriate in the facts and circumstances of the present case."

BRIEF FACTS OF THE CASE:-

5. 8 FIRs were registered at Police Station Yamuna Nagar, District

Haryana. The details of the said FIRs as given in para 1 of the reply dated

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22.01.2024 filed in the case of petitioner Dilbag Singh @ Dilbag Sandhu are

given herein under:-

S.No. FIR Schedule Offence 1. 0226 dt. 14.10.2022 Sections 120-B & 420 of India Penal Code, 1860 2. 0116 dt. 23.03.2023 Sections 120-B, 411, 420 of India Penal Code, 1860 3. 0111 dt. 01.06.2023 Sections 420, 467 & 471 of India Penal Code, 1860

4. 0206 dt. 19.09.2022 Section 420 of India Penal Code, 1860

5. 0216 dt. 30.09.2022 Section 471 of India Penal Code, 1860

6. 0204 dt. 14.09.2022 Sections 120-B & 420 of India Penal Code, 1860

7. 0033 dt. 10.02.2023 Sections 420, 467 & 471 of India Penal Code, 1860

8. 0054 dt. 16.02.2023 Sections 420, 467 & 471 of India Penal Code, 1860

6. It is not in dispute that both the petitioners have till date,

muchless till the date of arrest i.e. 08.01.2024, not been made an accused in

the above-said FIRs. In Para A(1) of the reply dated 22.01.2024, filed in the

case of petitioner Dilbag Singh @ Dilbag Sandhu, averments have been

made to indicate that even the petitioners were accused in the eight FIRs, but

on a specific query raised, both learned senior counsel for the petitioners as

well as learned counsel for the respondents have fairly stated that the

petitioners till date have not been made an accused in any of the said eight

FIRs. In the reply dated 30.01.2024 filed in the case of petitioner Kulwinder

Singh, the facts have been correctly stated and the word "petitioner" has not

been mentioned in the said paragraph i.e. A(1). Since the above-said FIRs

were registered under Sections 120-B, 411, 419, 420, 467 and 471 IPC,

which are scheduled offences under Part A Paragraph I of the Schedule

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appended to The Prevention of Money Laundering Act, 2002 (hereinafter

referred to as "the 2002 Act), the Directorate of Enforcement recorded an

ECIR bearing No.GNZO/19/2023 dated 23.09.2023 against various accused

persons, Screen Plants and Stone Crushers in order to investigate the

commission of the offence of money laundering as defined under Section 3

and punishable under Section 4 of the 2002 Act. A search was carried out

from 04.01.2024 (0825 hours) to 08.01.2024 (1300 hours), at the residential

premises of the petitioner Dilbag Singh @ Dilbag Sandhu and Rajinder

Singh, located at 410, Friends Colony, Yamuna Nagar and another search

was also carried out from 04.01.2024 to 08.01.2024 at the premises of

petitioner Kulwinder Singh, House No.62, Sector 14, HUDA, Yamuna

Nagar. It is the case of the petitioners that they were illegally

detained/arrested on 04.01.2024. It is the case of the prosecution that

petitioner Dilbag Singh @ Dilbag Sandhu was arrested on 08.01.2024 at

12.15 PM from the above-said house and the petitioner Kulwinder Singh

was arrested on 08.01.2024 at 02.20 PM from House No.62, Sector 14,

HUDA, Yamuna Nagar. It is the case of the prosecution that searches were

carried out at other places also. As per the case of the prosecution, the

written grounds of arrest were given to both the petitioners on 08.01.2024. In

the grounds of arrest with respect to petitioner Dilbag Singh @ Dilbag

Sandhu, reference was made to the above-said 8 FIRs, more so, FIR No.226

dated 14.10.2022, in which, it was alleged that the Plant & Machinery of one

Om Guru Unit was dismantled a year ago, but on the examination of sale-

purchase record, it was found that purchases had been made from

10.05.2022 to 17.06.2022 and the sellers with respect to the same were M/s

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Mubarikpur Royalty Company, PS Buildtech and the quantity involved in

the same was 168830 MT (value of approx. Rs.8.4 crore) and the purchase

records were not found on e-Rawana portal, which indicated that the above

purchases were done through fake e-Rawana. In the said grounds of arrest, it

was further stated that it had been found that an order was passed by the

NGT on 31.05.2022 directing both JSM Foods Pvt. Ltd. and PS Buildtech

not to mine boulder and gravel on the mining sites in question and vide order

dated 18.11.2022, huge penalties were imposed against M/s Development

Strategies India Private Limited, Delhi Royalty Company and Mubarikpur

Royalty Company and that during investigation, it was revealed that

petitioner Dilbag Singh @ Dilbag Sandhu was the authorized signatory in

two of the bank accounts of Development Strategies India Private Limited

and his wife & son had invested huge amounts in Delhi Royalty Company. It

was further stated that petitioner Dilbag Singh @ Dilbag Sandhu had

willfully adopted an attitude of non-cooperation by either evading the

queries or giving misleading/part evasive replies. Similarly, as per the case

of the prosecution, the grounds of arrest in writing were given to the

petitioner Kulwinder Singh on 08.01.2024, in which also, the above said

background was given and thereafter, it was stated that the said Kulwinder

Singh through his relatives and close persons was also involved in the said

mining activities.

7. On 09.01.2024, both the petitioners were produced before the

Special Court (PMLA) Gurugram, Haryana and two separate applications

were filed by respondent No.2, under Section 65 of the 2002 Act read with

Section 167 of the CrPC seeking remand of the petitioners, in which, vide

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two separate orders dated 09.01.2024, seven days custody of both the

petitioners was granted to the Enforcement Directorate by the Special Judge,

Gurugram. On 16.01.2024, both the petitioners were produced before the

Special Court (PMLA) Gurugram, Haryana for extension of custody of both

the petitioners and two separate applications were filed on 16.01.2024 under

Section 65 of 2002 Act read with Section 167 of the CrPC for the said

purpose. The Special Judge (PMLA), Gurugram, vide a common order dated

16.01.2024 was pleased to extend the remand custody of both the petitioners

for a further period of 7 days. On 23.01.2024, both the petitioners were

produced before the Additional Sessions Judge, Gurugram and vide a

common order dated 23.01.2024, both the petitioners were remanded to

judicial custody till 06.02.2024 and since then, both the petitioners are in

judicial custody, being lodged in Bhondsi Jail. It is in the said background

that the present two petitions have been filed.

ARGUMENTS ON BEHALF OF THE PETITIONERS

8. Learned Senior Counsel for the petitioners has first submitted

that as per the provisions of Section 19(2) of the 2002 Act, the concerned

officer immediately after arresting the accused persons under Sub-Section

(1) of the said Section is required to forward a copy of the order along with

material in his possession to the Adjudicating Authority in a sealed envelope

in the manner which may be prescribed and the said Adjudicating Authority

is required to keep the said order and the material for such period as may be

prescribed. It is further submitted that in exercise of the powers conferred by

Sub-Section (1) read with Clauses (a) and (b) of Sub-Section (2) of Section

73 of the 2002 Act, the Central Government has framed The Prevention of

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Money-Laundering (the Forms and Manner of Forwarding a Copy of the

Order of Arrest of a Person along with the Material to the Adjudicating

Authority and the Period of Retention) Rules 2005 (hereinafter to be referred

as "the 2005 Rules(I)" and as per Sub-Rules (2) & (4) of the said Rules, the

arresting officer is required to place an acknowledgment slip in Form-1

appended to the (2005 Rules (I)) inside the envelope before sealing it and is

also required to place the sealed envelope inside the outer envelope along

with an acknowledgment slip in Form-II appended to the Rules and send the

copy of the order of arrest and the material to the Adjudicating Authority

after complying with the said procedure. It is submitted that as per Rule 4,

the Adjudicating Authority or in his absence, the designated officer of the

office of the Adjudicating Authority upon receipt of the outer sealed

envelope along with Form-II is required to fill in and sign the Form-II and

also affix its seal and, thereafter forward the Form-II to the Arresting Officer

as a token of receipt of the sealed envelope. It is submitted that the entire

procedure has been provided under Rules 3 and 4 and the said provisions

read along with Section 19(2) of 2002 Act would clearly show that the copy

of the order of arrest and the material is to be supplied to the Adjudicating

Authority immediately after arresting the person concerned. It is argued that

in the present case, there is total non-compliance of Section 19(2) inasmuch

as there is neither any reference of the compliance of the said provision in

the application under Section 65 of the 2002 Act read with Section 167

CrPC filed by the respondent authorities seeking custody of the petitioners

to the Directorate of Enforcement nor is there any such mention of its

compliance in the grounds of arrest, in the personal search memo, arrest

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memo, arrest order or even panchnama. It is submitted that in none of the

said documents, even a remote reference has been made to the compliance of

the provisions of Section 19(2) nor any fact has been mentioned to reflect

the said compliance. It is further argued that a perusal of the order dated

09.01.2024 (Annexure P-7), vide which, the Special Court (PMLA)

Gurugram had allowed the application of the Directorate of Enforcement

under Section 65 of the 2002 Act read with Section 167 CrPC and had

remanded the petitioners to the custody of the Enforcement Directorate for a

period of seven days, would also show that in the said order, there is

complete non-application of mind with respect to compliance of the

provisions of Section 19(2) of 2002 Act and that no reference has been made

in the said order as to when the copy of the order along with the material in

the possession of the Arresting Officer was forwarded to the Adjudicating

Authority in a sealed envelope. No record has been referred to show that the

material has been forwarded in the manner as it is required to be done under

the 2005 Rules (I). It is submitted that although, a specific plea has been

raised by the petitioners in the grounds of the petitions, yet in the reply dated

22.01.2024 filed by the respondents, no specific reference has been made to

even remotely show the compliance of the provisions of Section 19(2) of

2002 Act.

9. Learned Senior Counsel for the petitioners has relied upon the

judgment of the Hon'ble Supreme Court in V. Senthil Balaji Vs. State

represented by Deputy Director and others, reported as 2023 SCC Online

SC 934 to argue that the compliance of the provisions of Section 19

including that of Section 19(2) is a solemn function of the arresting authority

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which brooks no exception. It is submitted that in the said judgment, it has

further been observed that the Magistrate concerned before whom the case

has come up for the purpose of remand has to satisfy himself about the

compliance of the safeguards provided/enshrined under Section 19 of the

PMLA Act, 2002. Further reliance has been placed upon the judgment of the

Hon'ble Supreme Court in Pankaj Bansal Vs. Union of India and others

reported as 2023 SCC Online SC 1244 to contend that in the said judgment,

it has been specifically observed by the Hon'ble Supreme Court that the

Court which is seized of the exercise under Section 167 Cr.P.C. of

remanding the person arrested by the ED has a duty to verify and ensure that

the conditions under Section 19 of the 2002 Act are duly satisfied and that

arrest is valid and lawful and that in the eventuality, the court fails to

discharge its duties, the order of remand would have to fail on the said

ground alone. Learned Senior Counsel for the petitioners has further placed

reliance upon the judgment of the Hon'ble Supreme Court in Vijay

Madanlal Chaudhary and others Vs. Union of India and others, reported

as 2022 SCC Online SC 929 more so paras 322 and 325 in support of his

arguments that the conditions as mentioned in Section 19 including Section

19(2) are stringent and of high standard and the same are required to be

complied with and it is the safeguards in the said premises which ensure that

the authorized officers do not act arbitrarily. It is submitted that it comes

about clearly in the abovesaid judgment that rendering the due compliance

of the provisions of Section 19 including section 19(2) is required to be

adhered to by the Arresting Officer.

10. Learned Senior Counsel for the petitioners has further submitted

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that even a perusal of the order dated 16.01.2024, vide which, the

Directorate of Enforcement was granted an additional custody of seven days

of the petitioners, would show that there is no observation/finding with

respect to the compliance of any of the provisions of Section 19 much less of

Section 19(2). It is submitted that on account of the said ground alone, the

present petitions deserve to be allowed and the arrest order dated 08.01.2024

as well as the remand order dated 09.01.2024 and 16.01.2024 deserve to be

set aside and the petitioners deserve to be released.

11. Learned Senior Counsel for the petitioners has next submitted

that as per the provisions of Section 19(1) of 2002 Act, when the officer

concerned, on the basis of the material in his possession and after having

reason to believe (which reason is required to be recorded in writing) is of

the opinion that the persons concerned are guilty of the offence punishable

under this Act, then the officer concerned has the power to arrest the said

persons and is required to inform the said persons of the grounds of arrest

and is further required to produce the said persons within 24 hours before the

Special Court or Judicial Magistrate or Metropolitan Magistrate having

jurisdiction as per Section 19(3) of the 2002 Act. It is submitted that a

reading of the said provisions would show that from the date of their arrest,

the persons concerned are required to be produced before the Court within a

period of 24 hours as has been detailed in Section 19(3) of the abovesaid

Act. It is argued that in the present case, both the petitioners were illegally

detained on 04.01.2024 and were not permitted to go out of their house and

thus, in effect, they were arrested on 04.01.2024 itself. It is argued that the

fact that the petitioners were illegally detained in the premises in which

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search was conducted is clear from the documents on record and also from

the reply filed on behalf of the respondent authorities, specific reference

being made to para 29(h), 35 and 29(b) of the said reply. It is submitted that

in the said reply, averments have been made that the petitioners were free in

their residence from 04.01.2024 to 08.01.2024 and they were permitted to

loiter within the said premises during the search period which continued

from 04.01.2024 to 08.01.2024. Reliance has also been placed upon

panchnama with respect to both the petitioners. The Panchnama in the case

of petitioner Kulwinder Singh which has been annexed as Annexure P-1

along with CRM-M-3385-2024 has been highlighted to show that in the

same, it was specifically mentioned that all the persons who were present at

the premises were also allowed proper rest, food breaks and washroom

breaks. It is submitted that to the similar effect are the averments made in the

panchnama with respect to the petitioner-Dilbag Singh @ Dilbag Sandhu

and that averments made in the present petitions, reply as well as the facts

which emerged from the documents on record would clearly show that the

petitioners were confined to the premises in question where the search was

taking place for a period of more than four days and were not permitted to

leave the premises and were thus, kept in forced custody. Learned Senior

Counsel for the petitioners has relied upon a judgment of the Division Bench

of this Court in Pranav Gupta Vs. Union of India and others reported as

2023 SCC Online P&H 3598 to contend that in such a situation, the date of

arrest is not to be construed as the date on which the petitioners are formally

arrested but is to be construed as the date when restraint is placed on the

petitioner. Reliance has also been placed upon the judgment of the Bombay

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High Court in the case of Ashak Hussain Allah Detha @ Siddique and

another Vs. The Assistant Collector of Customs (P) Bombay and another,

reported as 1990 SCC Online Bombay 3 to contend that it has been

observed in the said judgment that the word "arrest" has not been defined in

the Code of Criminal Procedure or any other law and the true meaning of the

said word "arrest" is when the arrester takes a person into his custody or by

action or words restrains him from moving anywhere beyond his control and

in case there is any restraint on the personal liberty of the person, then the

same would come within the meaning of detention/arrest. Reliance has also

been placed upon a judgment of the Andhra Pradesh High Court in Mrs.

Iqbal Kaur Kwatra Vs. DGP, reported as 1996(1) APLJ 370 (HC) Andhra

Pradesh. It is argued that the restraint from 04.01.2024 to 08.01.2024 would

in effect be house arrest/illegal detention and thus, period of 24 hours within

which the petitioners were required to be produced before the concerned

Court having jurisdiction would commence from 04.01.2024 itself and not

from 08.01.2024. On the aspect of house arrest, reliance has been placed

upon the judgment passed by the Hon'ble Supreme Court in Gautam

Navlakha Vs. National Investigation Agency, reported as (2022) 13 SCC

542 to contend that it has been observed by the Hon'ble Supreme Court in

para 60 of the said judgment that house arrest is also custody and forced

detention. It is argued that since, the petitioners admittedly were not

produced before the Court of competent jurisdiction within 24 hours of their

arrest/illegaldetention/wrongful confinement i.e., from 04.01.2024, thus,

their arrest and all subsequent proceedings thereafter are illegal and against

law.

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12. Learned senior counsel for the petitioners has further submitted

that as per the provisions of Section 19(3) of the 2002 Act, every person who

has been arrested under Sub-Section (1) of the said provision is mandatorily,

within 24 hours of the said arrest required to be produced before the Special

Court, Judicial Magistrate or the Metropolitan Magistrate as the case may

be, having jurisdiction. It is submitted that Section 167(2) of the Cr.P.C. uses

the term "whether he has or he does not have the jurisdiction to try the case"

whereas the provisions of Section 19 specifically require that the Special

Court / Judicial Magistrate / Metropolitan Magistrate should have

jurisdiction with respect to the case in question. It is further argued that the

Special Courts to try offence under the 2002 Act are to be constituted under

the provisions of Section 43 of the Act and explanation to Section 44 of the

2002 Act provides that the jurisdiction of the Special Courts while dealing

with the offence under the Act during investigation, enquiry or trial would

not be dependent upon any orders passed in respect to the scheduled offence.

It is argued that in exercise of powers conferred under Section 43, the

Central Government has issued a notification dated 19.01.2021 (Annexure

P-8) as per which for the offences which have been committed in the

revenue district of Yamuna Nagar, the competent Court of jurisdiction is the

Court of Sessions Judge, Ambala and not Sessions Judge, Gurugram where

the petitioners have been produced. It is argued that for the purpose of

compliance of Section 19(3), the competence of the Court was to be seen on

09.01.2024 itself when the petitioners were first produced before the said

Court. Learned senior counsel for the petitioners has submitted that a perusal

of the application for remand in both the cases as well as the other

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documents including the grounds of arrest do not even remotely show that

any part of the offence has been committed within the territorial jurisdiction

of the Special Court at Gurugram. It is submitted that the offence for which

the petitioners are being prosecuted is the offence of money laundering and

thus, for the Court to have jurisdiction for the purposes of Section 19(3) and

also for the purpose of trying the same, the offence of money laundering

should have been committed within the jurisdiction of the said Court. It is

further submitted that a perusal of the order dated 09.01.2024 (Annexure P-

7) would show that even a passing reference with respect to the compliance

of provisions of Section 19(3) of the 2002 Act has not been remotely made

by the Special Court, PMLA, Gurugram while allowing the application of

the Enforcement Directorate under Section 65 of the 2002 Act read with

Section 167 CrPC. It is argued that even while passing the order dated

16.01.2024, the Special Judge has erroneously observed that the said aspect

can only be determined at the time of taking cognizance on the complaint, if

any, filed by the Directorate Enforcement without considering that as per

settled law, it is the duty of the Magistrate to peruse the record and satisfy

itself that the mandatory requirements of Section 19 including Section 19(3)

of the 2002 Act have been met. It is submitted that a perusal of paragraph 12

of the said order dated 16.01.2024 would show that the sole plea raised on

behalf of the respondent authorities was that certain raids were conducted at

Faridabad and thus, the Sessions Court at Gurugram had jurisdiction. It is

submitted that merely because raids are conducted at various places, without

there being any material referred to in the impugned order or in the

application for remand to show that the offence in question i.e., money

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laundering has been committed within the jurisdiction of the Court, it would

not confer jurisdiction to the said Court where the alleged raid has been

conducted. It is submitted that at any rate, since there is no application of

mind by the Magistrate on the said aspect while passing of the order on first

remand although as per the judgments of the Hon'ble Supreme Court in V.

Senthil Balaji (supra), Pankaj Bansal (supra) and Vijay Madanlal

Choudhary (supra), it was incumbent upon the Magistrate to have

considered the said aspect, the impugned action of the authorities deserves to

be set aside on the said ground alone.

13. Learned Senior counsel for the petitioners has further submitted

that the grounds of arrest with respect to both the petitioners do not disclose

the actual material upon which the arresting officer has reached the

conclusion that the petitioners are guilty of any offence under the 2002 Act.

It is further submitted that the grounds of arrest are absolutely vague,

inasmuch as, it is not even stated in the same as to what is the connection of

the two petitioners who were not even accused in any of the FIR with the

said FIRs, which have been tabulated in the grounds of arrest, nor any

specific statement has been referred to, nor any specific material has been

referred to, much less, annexed along with the grounds of arrest so as to

show/inform the petitioners as to what is the case against them. It is stated

that such vague grounds of arrest violate the right of the petitioners under

Article 22 of the Constitution of India as well as the right of the petitioners

to defend themselves and to overcome the stringent provisions of Section 45

of the 2002 Act to be released on bail. It is argued that since the petitioners

have not been supplied with a copy of the ECIR, thus, the grounds of arrest

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are the most important document on the basis of which the petitioners are to

be informed about the case against them so as to enable the petitioners to

prepare their defence and set up a case to agitate before the Courts that the

petitioners' case satisfies the conditions of Section 45 of the 2002 Act. It is

further argued that even if the grounds of arrest of both the petitioners are

taken on their face value, still, no person including the Arresting Officer

could come to a conclusion that there is reason to believe that the petitioners

are guilty of the offences committed under the 2002 Act. Learned senior

counsel for the petitioners has made a specific reference to the applications

filed in both the cases and has submitted that the grounds of arresting the

petitioners were stated to be their non-cooperation and the petitioners having

given vague and evasive replies. It is stated that in the present case, no

notice under Section 50 had been issued to either of the two petitioners

before the search had been conducted and it is impossible to know as to on

what basis the said plea had been taken in the grounds of arrest. It is further

submitted that it has been repeatedly held that merely by stating that the

petitioners were evasive cannot be made the basis of arresting the petitioners

as the Enforcement Directorate cannot expect an admission of guilt from

them. Specific reference has been made to the judgment of the Hon'ble

Supreme Court in Pankaj Bansal's case (supra) in support of the said

argument. Further reliance has been placed upon the judgment of the

Division Bench of this Court in case titled as 'Roop Bansal Vs. Union of

India and others, reported as 2023 SCC Online P&H 3597. Learned senior

counsel for the petitioners has further referred to the application under

Section 65 of the 2002 Act read with Section 167 CrPC filed by the

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authorities with respect to both the petitioners and has submitted that the

same do not reflect the compliance of Section 19(1) of the 2002 Act. It is

argued that even a perusal of the impugned order would show that there is

no finding in the said order to the effect that the Court had satisfied itself and

had perused the grounds of arrest to ascertain whether the Enforcement

Directorate had recorded the reasons to believe that the petitioners were

guilty of an offence under the 2002 Act and there was proper compliance of

the mandate of the said section. It is argued that in Pankaj Bansal's case

(supra), it was specifically observed that it is the duty of the magistrate to

carry out the said exercise and come to a finding regarding the said aspect,

which has not been done in the present case and thus, the impugned action of

the authorities deserves to be set aside on the said ground also. It is further

stated that even as per the additional reply filed, more so, para No.3(a) to

(d), it has been stated by the authorities that on 10.01.2024 the officer of the

Directorate preliminary scrutinized all the seized material. It is argued that

the petitioners even as per the case of the respondent authorities were

arrested on 08.01.2024 and the remand applications were filed and granted

on 09.01.2024, whereas, even as per their own pleadings, the first occasion

on which they scrutinized the seized material is on 10.01.2024 and thus, it is

apparent that the arrest has been made and remand has been sought without

even scrutinizing the material on record and thus, the mandatory requirement

of Section 19(1) of the authorities forming the reason to believe that both the

petitioners were guilty of the offence has not been not complied with. It is

further submitted that from the said averment, it is clear that the material

was never produced before the Special Court before the remand was ordered

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on 09.01.2024 as it is their own case that they have scrutinized the material

on 10.01.2024. It is also pointed out that neither in the pleadings nor in the

grounds of arrest nor in the applications of remand, it has been averred by

the respondents that the Arresting Officer had recorded the reasons in

writing of his belief based on the material in his possession that the

petitioners were guilty of the offence punishable under the 2002 Act.

ARGUMENTS ON BEHALF OF THE RESPONDENTS

14. Learned counsel for the respondents has first referred to Section

19(3) of the 2002 Act and has submitted that both the petitioners in both the

petitions had been produced before the competent Special Court having

jurisdiction, both with respect to subject matter as well as territorial within

24 hours as provided by Section 19(3) of the 2002 Act. Reference has been

made to Annexure R-2 annexed along with the additional reply dated

29.01.2024 filed on behalf of the respondents, which is the Panchnama dated

05.01.2024. It is submitted that a perusal of the said Panchnama shows that

the officers of the Enforcement Directorate had conducted search at House

no.816, Sector 15-A, Faridabad and the said search had started at 08:25 AM

on 04.01.2024 and concluded at 02:20 AM on 05.01.2024 and several

recoveries including cash of Rs.7,74,600/- had been found out of which an

amount of Rs.7.50 lacs was seized and balance amount of Rs.24,600/- was

released for household expenses. It is submitted that the said house belongs

to one Raman Ojha who, as has been averred in paragraph 2 of the said

additional reply, was also a member of the syndicate and was 50% partner in

Delhi Royalty Company which was the partnership firm in which huge

amounts of proceeds of crime were deposited in cash in the bank account of

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Delhi Royalty Company and said Raman Ojha was the authorised signatory

in the bank account no.50200034561986 of the Delhi Royalty Company.

Learned counsel for the respondents has further pointed out that it has been

averred in paragraph 2 that the money was routed to the accounts of

petitioner Dilbag Singh, his family members and their businesses. It is

argued that the said Delhi Royalty Company, as stated in paragraph 2 of the

additional reply is the same company, regarding which reference has been

made in the grounds of arrest of the petitioner Dilbag Singh and it has also

been stated in the said grounds of arrest that the wife of petitioner Dilbag

Singh namely Neetu Kaur and his son namely Uday Singh Sandhu have

invested huge amounts in the said Delhi Royalty Company. It is argued that

thus, a part of the cause of action for the offence of money laundering had

arisen in Faridabad which is under the jurisdiction of the Gurugram Special

Court. Learned counsel has referred to the provisions of Section 177 and 178

of the Cr.P.C. 1973 to highlight the fact that in a situation where the offence

consists of several acts done in different local areas, then the same can be

tried in any of the Courts having jurisdiction over any such local areas. It is

argued that since the offence of money laundering as has been defined in

Section 3, is very wide and it includes concealment, possession, acquisition

and use of the proceeds of crime, thus, any Special Court having jurisdiction

other than the place where the proceeds of crime are either concealed or

possessed and thereafter recovered, would have jurisdiction to try the said

offence and would also be the competent Court of jurisdiction within the

meaning of Section 19(3) of the 2002 Act. In support of his arguments,

learned counsel for the respondents has relied upon the judgments of the

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Hon'ble Supreme Court in Rana Ayyub vs. Directorate of Enforcement

through its Assistant Director reported as 2023 SCC Online SC 109 and has

highlighted paragraphs 3 to 6, 18, 38 to 40 and 45 of the said judgment.

Further reference has been made to Section 462 of the Cr.P.C. 1973 to argue

that no finding, sentence or order of any Criminal Court is to be set aside

merely on the ground that the inquiry, trial or other proceedings took place

in a wrong sessions division, district or sub division unless it appears that

such error has in fact occasioned a failure of justice.

15. Learned counsel has submitted that although the Gurugram

Court has jurisdiction as a part of the crime was committed within its

jurisdiction but even assuming that a part of the crime was not committed

within the jurisdiction of the Gurugram Court, then also the same would not

call for setting aside the orders of remand as the same would be saved in

view of the provisions of Section 462 Cr.P.C., moreso when the petitioners

have not been able to show any prejudice caused to them or that there has

been any failure of justice in the petitioners being produced before the

Gurugram Court. For the said aspect, reliance has been placed upon the

judgment of the Hon'ble Supreme Court in Krishna Kumar Variar vs.

Share Shoppe, reported as (2010)12 SCC 485 as well as the judgment of the

Hon'ble Supreme Court in Kaushik Chatterjee vs. State of Haryana & Ors.

reported as (2020) 10 SCC 92. Learned counsel for the respondents has also

referred to Section 46 and Section 65 of the 2002 Act to highlight the fact

that the provisions of the Code of Criminal Procedure, which are not

inconsistent with the provisions of the 2002 Act, are to apply to the

proceedings under the 2002 Act also and that since there is nothing

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inconsistent to the provisions of Sections 177, 178 and 462 of the Cr.P.C. in

the 2002 Act, thus, the said provisions would apply to the 2002 Act with full

vigour. Learned counsel for the respondents has further submitted that

without prejudice to the arguments already raised, the correct interpretation

of the provisions of Section 19(3) of the 2002 Act would be that a person,

who has been arrested under sub-section (1) of Section 19, could be

produced before any Special Court and the use of the word "jurisdiction" in

the said sub section would only be in a situation where the said persons are

to be produced before the Judicial Magistrate or Metropolitan Magistrate.

Since the Judicial Magistrate or the Metropolitan Magistrate would

otherwise have no jurisdiction to try the offence as it is only a Special Court,

(which has been notified by the Central Government in consultation with the

Chief Justice of the High Court under Section 43 to be a Special Court)

which is competent to hold the trial with respect to offences under the 2002

Act and the said Court has to be a Court of Sessions and cannot be a Court

of Judicial Magistrate or Metropolitan Magistrate. It is submitted that

Section 44 of the 2002 Act also supports the said interpretation. It is next

contended by learned counsel for the respondents that the order dated

16.01.2024 has not been assailed by the petitioner Dilbag Singh in his

petition and the plea with respect to jurisdiction was specifically raised in

the said order and the Special Judge vide the said order has rejected the said

plea and the same has not been challenged in the petition by the petitioner

Dilbag Singh. With respect to the said, reliance has been placed upon the

judgment of the Hon'ble Supreme Court in case titled as "Mumbai

International Private Limited Vs. Golden Chariot Airport and another",

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reported as (2010) 10 SCC 422, more so paras No.45, to contend that once

the petitioner had elected to raise the plea before the Special Court and after

having suffered an order, the non-challenge of the same would bar the

petitioner from raising the said plea in view of the doctrine of election. Further reliance has been placed upon the judgment of the Hon'ble Supreme

Court of India in case titled as "State of Punjab and others Vs. Gurdev

Singh", reported as 1991(4) SCC 1 to contend that even an order which is a

nullity has to be challenged. It has been further pointed out that the reliance

sought to be placed upon paragraph 3(d) of the additional affidavit on behalf

of the petitioner to contend that for the first time, the respondent authorities

had scrutinized the material on 10.01.2024, is incorrect, inasmuch as, there

is no admission in the said paragraph stating that the authorities for the first

time scrutinized the material and whereas, a perusal of Annexure R-2

annexed along with the additional affidavit shows that the panchnama is

dated 05.01.2024 with respect to the search carried out in the premises at

Faridabad and the same is prior to 09.01.2024, the date on which the

petitioners were produced before the Special Court. Reference has also been

made to an order dated 09.01.2024, more so, paragraph 7 to show that the

material was also produced before the Special Court and the argument with

respect to the said material being produced was raised before the Special

Court. It is thus submitted that the pleas raised by the petitioner are

misconceived and deserve to be rejected.

16. To rebut the argument made on behalf of the petitioners with

respect to their illegal detention from 04.01.2024, learned counsel for the

respondents has referred to page 12 of the petition of Dilbag Singh to

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highlight that as per the case of the petitioners, they were detained in

custody since 04.01.2024. It is argued that the said averments have been

specifically replied in para 29(b) of the first reply dated 22.01.2024 filed in

the case of Dilbag Singh in which it has been stated that no person was

detained during the search proceedings and all the persons were given proper

rest and food during the course of the said proceedings. Para 35 of the said

reply has also been highlighted to show that in response to the averments

made in ground (c) in petition, it has been submitted that there were no

restrictions imposed upon the petitioners until their arrest on 08.01.2024 and

the petitioners and other persons were free to loiter within (wrongly

mentioned as with) their own premises during the duration of search as per

general practice and the same cannot be termed as detention and that Section

17 of PMLA which deals with search and seizure mandates certain

requirements which were duly complied with. Learned counsel for the

respondents has further referred to the additional reply dated 29.01.2024 to

show that it has been averred therein that by virtue of Rule 3 sub rules 7 and

8 of The Prevention of Money-laundering (Forms, Search and Seizure [or

Freezing] and the Manner of Forwarding the Reasons and Material to the

Adjudicating Authority, Impounding and Custody of Records and the Period

of Retention) Rules 2005 (hereinafter referred to as "2005 Rules II), the

petitioners and other persons who were present at the premises were in

possession/control of the locker, safe, almirah, documents etc. and thus, it

was important to secure their presence within the premises in order to have

access to, inspect/examine their contents and to avoid any sort of tampering

with the potential proceeds of crime and also that they were allowed to

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follow their daily routine and were not detained or compulsorily retained in

the premises. It has further been averred that the petitioners were there

within the premises on their own will and themselves offered to be in the

premises during the course of the search.

17. Learned counsel has referred to the 2005 Rules (II) more so,

Rule 3 Sub Rule 7 and Sub Rule 8 as well as Rule 4 Sub Rule 2 in support of

his arguments to the effect that since, the occupant of the building has been

permitted to attend the search and also the respondent authorities have the

power to require any person who is the owner or is in immediate possession

to open the locker or safe and also to allow access to inspect the same, thus,

keeping the petitioners in the premises was necessary for carrying out the

search. It is further submitted that even as per Rule 4 Sub Rule 2, the seizure

memo was to be delivered to the occupant of the building and the provisions

of Sub Rules 3 and 4 are also to the similar effect and thus, the presence of

the petitioners who are owners/occupants of the building was required for

the said purpose. Learned counsel has also relied upon the provisions of

Section 100 of Cr.P.C. more so sub sections 6 and 7 to argue that since the

occupant of the place searched was to be permitted to attend the search and

thereafter the copy of list prepared of the seized materials was to be

delivered to the said persons thus, it was necessary for the said persons to be

present at the time of search and inspection. On the said aspect, reliance has

been placed upon the judgment of the Delhi High Court in Gautam Thapar

Vs. Directorate of Enforcement, reported as 2021 SCC Online Delhi 4599

and also the judgment of the Hon'ble Supreme Court in Sundeep Kumar

Bafna Vs. State of Maharashtra and another reported as 2014(16) SCC

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623. It is submitted that on the basis of the abovesaid facts and law laid

down in the abovesaid judgments, it cannot be said that the petitioners were

in illegal custody.

18. Learned counsel for the respondents has further submitted that

the plea on the aspect of grounds of arrest which has been raised by the

petitioners is in ground 3 and the averment in the said ground is only to the

effect that in the grounds of arrest, the arresting officer had stated that the

petitioners did not cooperate with the investigation and had given vague and

evasive replies on account of which the petitoners have been arrested. It is

submitted that the said reason is not the sole reason for arresting the

petitioners and the reasons for arresting the petitioners are clearly coming

from the grounds of arrest which have been annexed along with the petition

and in the said grounds of arrest, the details of the FIR which are pertaining

to the scheduled offences had been mentioned and the background of the

case had been given and every such aspect has been mentioned which in

accordance with law was required to be mentioned in the grounds of arrest.

It is stated that in paragraph 13, it has also been stated by the Assistant

Director that on the basis of the material placed on record, he had reason to

believe that the petitioners in both the cases are guilty of the offence of

money laundering as defined under Section 3 and punishable under Section

4 of the PMLA. It is argued that the petitioners have not laid any specific

challenge to the said grounds of arrest and have not even averred that the

said grounds of arrest are insufficient or that by reading the grounds of

arrest, the offence is not made out. It is argued that since the petitioners had

filed the petitions, the onus to show that the contents of the grounds of arrest

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were incorrect and that the petitioners were not linked to the facts and

circumstances which had been mentioned in the grounds of arrest, was on

the petitioners, which they have failed to discharge. It is thus submitted that

the said ground of challenge is also absolutely misplaced and deserves to be

rejected.

19. On the aspect of non-compliance of the conditions contained in

Section 19(2) of the 2002 Act, learned counsel for the respondents has

referred to para No.325 of the judgment in Vijay Madanlal Chaudhary's

case (supra) to contend that reference was only made to 'pre-conditions' to

be fulfilled by the authorized officer before effecting arrest. It is argued that

provisions of Section 19(2) of the 2002 Act deal with a situation which is

subsequent to the arrest and thus, intent of the Hon'ble Supreme Court while

observing that the conditions in Section 19 of the 2002 Act are stringent and

are of a higher standard, is with reference to the provisions of Section 19(1)

of the 2002 Act and not with reference to Section 19(2) of the 2002 Act. It is

further argued that the condition under Section 19(1) of the 2002 Act is

referable to Article 22 of the Constitution of India, but the compliance of

Section 19(2) of the 2002 Act is not referable to the same and thus, delay in

compliance of the same would be a mere irregularity and not an illegality. It

is further submitted that even in case compliance of Section 19(2) of the

2002 Act is taken to be mandatory, then, also breach of the same cannot be

the basis for setting aside the impugned order and for holding the arrest of

the petitioners to be illegal, as no prejudice has been shown by the

petitioners on account of the said alleged breach. Learned counsel has

further referred to paragraph No.39 of V. Senthil Balaji's case (supra) to

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contend that it had been observed in the said para that any non-compliance

of the mandate of Section 19(1) of the 2002 Act would vitiate the very arrest

itself, but although with respect to sub-section 19(2), it had been stated that

the same is a solemn function of the arresting authority which brooks no

exception, yet the consequence of the same has not been mentioned in the

said paragraph. Further reliance has been placed upon the judgment of the

Hon'ble Delhi High Court in the case of Neeraj Singal Vs. Directorate of

Enforcement, pronounced on 08.01.2024, to contend that in the said case,

the accused was arrested on 09.06.2023 at 10:25 PM, which was a Friday

night and the compliance of Section 19(2) of the 2002 Act was done on

12.06.2023 on account of the fact that 10.06.2023 and 11.06.2023 were

Saturday and Sunday, on which dates the office of the Adjudicating

Authority was closed, was accepted as due compliance of Section 19(2) of

the 2002 Act. Learned counsel has further referred to Section 157 of the

Code of Criminal Procedure to highlight the fact that even in the said

provision there is a requirement that the police officer concerned is required

to forthwith send a report i.e. FIR to the Magistrate. It is stated that the said

provisions are similar to the provisions of Section 19(2) of the 2002 Act and

the Hon'ble Supreme Court in the case of Sheo. Shankar Singh Vs. State of

Uttar Pradesh, reported as (2013) 12 SCC 539, in paras No.30 and 31, had

observed that mere delay in sending the FIR to the magistrate by itself

would not have any effect on the case of the prosecution unless serious

prejudice was demonstrated to have been suffered by the accused therein. On the said aspect, reliance has also been placed upon a judgment of the

Hon'ble Supreme Court in case titled as "State of Rajasthan Vs. Daud

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Khan", reported as 2016(2) SCC 607. It is argued that in the present case, no

such prejudice has been demonstrated. Learned counsel for the respondents

has further referred to para No.3 of the additional reply dated 29.01.2024 (at

internal page 16) to contend that the reasons for delay in compliance of the

provisions of Section 19(2) of the 2002 Act have been detailed in the said

para and the said reasons are sufficient to show the compliance of Section

19(2) of the 2002 Act. Reference was also made to the remand order passed

by the Special Court dated 09.01.2024 to contend that the Court had

considered the remand papers and other relevant material and the allegations

made by the prosecution including the fact that the petitioners' attitude was

non-cooperative and after considering everything had observed that a prima

facie case for the commission of the offence under the 2002 Act had been

found and thereafter granted seven days custody to the Directorate of

Enforcement. It is submitted that compliance of Section 19(2) is not required

to be shown to the Magistrate as the same is to be forwarded to the

Adjudicating Authority. It is further submitted that the said order is legal and

in accordance with law and reflects due application of mind and thus,

deserves to be upheld. It is further submitted that in the present case since no

personal search of the petitioners has been done before arrest, thus, Section

18 of the 2002 Act has not been invoked.

ARGUMENTS OF LEARNED SENIOR COUNSEL FOR THE

PETITIONERS IN REBUTTAL

20. Learned senior counsel for the petitioners in rebuttal has

submitted that the facts of the present case would clearly reveal that there

was illegal detention of both the petitioners from 04.01.2024 to 08.01.2024.

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It is submitted that respondent no.2 has filed an additional reply dated

29.01.2024 in the case of the petitioner-Dilbag Singh @ Dilbag Sandhu

which cannot be read to contradict the averments which have been made in

the first reply dated 22.01.2024 as no amendment of the first reply has been

sought nor the same has been allowed. It is stated that even if in case the

said additional reply is taken into consideration, then also a perusal of

Ground F (at internal page 18) of the reply would show that reliance has

been placed by the respondent authorities on Rule 3(7) and (8) of the 2005

Rules (II) and it has been averred in the said reply that the petitioners and

other persons present in the premises were in possession / control of locker,

safe, almirah, documents etc. and hence it was important to secure their

presence within the premises. Learned senior counsel has highlighted the

words "to secure their presence within the premises" and has submitted that

the said expression used in the reply furthers the case of the petitioners that

they were illegally detained from 04.01.2024 till 08.01.2024 in the house

against their wishes and were not permitted to go out. In support of the said

argument, learned senior counsel for the petitioners has referred to Section

17 of the 2002 Act which deals with search and seizure and also 'the 2005

Rules' which have been relied upon by the respondent. It is argued that as

per sub rule 8 of Rule 3 of the 2005 Rules (II), an occupant or some person

on his behalf has been given the right to attend the search and the said

provision alone would show that the petitioners or any person who is an

occupant could not have been detained in the premises for carrying out the

search as staying in the premises is an option with the occupant or a person

on his behalf. It is argued that the said provision completely demolishes the

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stand of the respondent authorities to the effect that for the purpose of

search, they have the right to keep the petitioners and others persons in the

premises so as to further their search. It is argued that even in sub Rule 7,

which has been relied upon by the respondent authorities, the expression

"may" and not "shall" has been used and thus, a person, who is the owner

and is in possession, may be required to open the same and allow access and

where such person fails to comply with any such requirement, then the

authorities are entitled to break open the lock of such box, locker, safe etc.

and thus, even reading of the said provisions shows that even in case of non-

presence or non-compliance of the order of the authorities, the authorities

would have a right to break open the box etc., thus, not hampering their

search.

21. Learned senior counsel has further referred to the Panchnama in

both the cases to further argue that even a perusal of the said two

Panchnamas would clearly show that no such direction was ever given to the

petitioners and the other persons on 5th, 6th, 7th and 8th January, 2024 and

there is no document placed on record to show that the authorities have ever

directed either of the two petitioners to open any box, locker, safe, almirah

etc. for the purpose of search and inspection. It is argued that as per

Panchnama (Annexure P-1) in the case of petitioner-Dilbag Singh @ Dilbag

Sandhu, it has been mentioned that search had started from 08:25 hours on

04.01.2024 and had concluded on 08.01.2024 at 13:00 hours and the details

of the acts done at the time of the said search have been mentioned and it has

been stated that the actual search had started at 08:40 hours on 04.01.2024

and it is only on 04.01.2024 that the officer had searched the premises by

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checking the documents in the cupboard / almirahs, drawers etc. and there is

no such averment in the said Panchnama with respect to any subsequent

search of compounds/almirahs etc. on any subsequent date after 04.01.2024

and thus, keeping the petitioners in the premises without their consent for

the purpose of the search would amount to illegal detention. Reference has

also been made to the Panchnama in the case of petitioner-Kulwinder Singh

which has also been annexed as Annexure P-1 in the said petition and it has

been argued that even in the said case, the search had started on 04.01.2024

and it is only on 04.01.2024 when the lock of the room, the key of which

was not available, was broken by calling a locksmith and the said person

was called by Rakesh Kumar, Assistant Director and the breaking of the lock

was done in the presence of one Manoj Kumar son of Bhim Singh, who had

been working as Accountant for the last 5 years for Kulwinder Singh. It is

submitted that it has been further recorded in the said panchnama that on the

same day, the almirah which was in the said room, was also opened by

breaking the lock of the same and thereafter, no such incident has been

mentioned on the subsequent dates i.e., 05th, 6th, 7th and 8th January, 2024. In

the concluding part of the said Panchnama in the case of petitioner-

Kulwinder Singh, it has been specifically mentioned that "everyone present

at the premises was allowed proper rest, food break and washroom break"

and from the same, it is apparent that there was complete control of the

respondent on the movements of the petitioners and their family members

and it is the respondent authorities who were allowing the petitioners and

family members to take rest, food and washroom breaks. Learned senior

counsel for the petitioners has submitted that in case the plea of the

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respondent authorities to the effect that the respondent authorities are

entitled to secure the presence of the petitioners and to keep them in the

premises for the purpose of search, is taken to be true, then in such a

situation the said act would also violate Section 18 of the 2002 Act which as

per the case of the respondent authorities has not been invoked in the case of

the petitioners. It is argued that a perusal of Section 18 of the 2002 Act

would show that in case an authority has reason to believe which has to be

recorded in writing that any person has secreted about his person or in

anything under his possession, ownership or control, any record or proceeds

of crime which may be useful for or relevant to any proceedings under the

Act, then the said authority is entitled to search that person and seize such

record or property which may be useful for or relevant to any proceedings

under the Act and in case of his doing so, it is incumbent to take the said

person within twenty four hours to the nearest Gazetted Officer, superior in

rank to him, or a Magistrate and also as per sub section (4) of the said

Section, the person cannot be detained by the authorities for more than

twenty-four hours prior to taking him before the Gazetted Officer, superior

in rank to him, or the Magistrate and under sub section (5) after the said

person has been produced before the Gazetted Officer or a Magistrate in

case the said officer sees no reasonable ground for search, then the said

person is to be immediately discharged. It is submitted that since it is the

admitted case of the respondent authorities that Section 18 has not been

invoked, thus, the plea as sought to be raised in the reply and during the

course of arguments, would be violative of the mandatory provisions of

Section 18 of the 2002 Act. Learned Senior counsel for the petitioners on the

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said aspect has relied upon a judgment of the Hon'ble Chhattisgarh High

Court in case titled as "Subhash Sharma Vs. Directorate of Enforcement of

Government of India", reported as 2022 (ILR) Chhattisgarh 2202, more so

paras No.10 to 15 of the same. It is argued that the petitioners have a strong

objection to the averments made in the last para (at page 19 of the additional

reply dated 29.01.2024) and have submitted that the same are contrary to the

documents and the earlier reply filed and has been filed only to overcome

the submissions made on behalf of the petitioners on the first date of

hearing. It is argued that it is the case of the petitioners right from the

beginning that they had been illegally detained and the same was contrary to

their will and thus, a bald assertion made in the last part of the additional

reply, being contrary and an after thought, deserves to be rejected.

22. Learned senior counsel for the petitioners has submitted that a

reading of Section 19(1) of the 2002 Act would clearly show that before

arresting a person, it is necessary for the officer concerned to have reason to

believe, which is required to be recorded in writing that the person sought to

be arrested is guilty of the offence punishable under the Act and the said

reason to believe has to be on the basis of material in his possession. It is

argued that the above-said provision necessarily envisages that the material

which the officer has collected and on the basis of which he has formed the

said reason to believe has to be with the officer on the date of making the

arrest and as soon as may be, he is required to inform the accused about the

grounds of such arrest. It is further argued that under sub-section (2) of the

2002 Act, the said officer is duty bound to send the said material which is

already collected to the Adjudicating Authority in a sealed envelope so that

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the said material cannot be tampered with and the officer in case is called

upon to demonstrate that on the date when the arrest was made he had the

material for his reason to believe that the person arrested was guilty and if

there is any delay in sending the said material the same could result in such a

situation where the material which is subsequent to arrest could also be

sought to be forwarded so as to justify the arrest which had taken place prior.

It is stated that it is for the said reason that the expression "immediately after

arrest", which signifies a higher decree of urgency, rather than, the

expression "as soon as may be" has been used in sub-section (2) of the 2002

Act. It is argued that as per the latest judgment of the Hon'ble Supreme

Court in "Ram Kishor Arora Vs. Directorate of Enforcement", reported as

2023 (SCC Online) SCC 1682, the Hon'ble Supreme Court has come to the

conclusion that the expression "as soon as may be" would mean within 24

hours of the arrest of the accused, within which he had to be informed in

writing about the grounds of arrest. It is further stated that the said time of

24 hours has been given in view of the expression used in Section 19(1) of

the 2002 Act and also in view of the fact that on the basis of the material

already in possession, the grounds of arrest had to be drafted by the officer

concerned. It is stated that on the other hand, under sub-section (2) the

expression used is "immediately" and the same necessarily means that much

prior to elapsing of 24 hours from the time of arrest the material is to be sent

to the Adjudicating Authority as the said material is already in possession of

the authority before arresting the person concerned. It is further stated that

sending of the said material within the period of 24 hours and prior to the

person being produced before the magistrate for the purpose of remand

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would be necessary so as to demonstrate to the magistrate that there is

complete compliance of Sections 19(1) and 19(2) of the 2002 Act and it is

only in case the material has been sent and the said fact has specifically been

mentioned in the application for remand that the Special Court would be

able to appreciate the said fact and record so in his order as per the mandate

of law. It is stated that in the present case, since it is the admitted case of the

respondents authority that they had not sent the material which they had

collected on the date when the remand was granted i.e. 09.01.2024 on the

first occasion, clearly shows that there is clear violation of the provision of

Section 19(2) of the 2002 Act, which has further been compounded by there

being no observation in the impugned order with respect to the compliance

of the said provision of Section 19(2) of the 2002 Act.

23. Learned senior counsel for the petitioners has vehemently

submitted that a perusal of para 3 of the additional reply dated 29.01.2024

would clearly show that there is complete non-compliance of Section 19(1)

of the 2002 Act as well as 19(2) of the 2002 Act. It is further submitted that

the entire sequence of events, as per the stand of the respondents, has been

stated in para Nos.3(a) to 3(e) and the said sequence of events shows that

certain cash, documents and vehicles were seized, regarding which

preliminary scrutiny was required to be done as per the stand of the

respondents and it has further been stated that the final search was conducted

till 03:00 PM, which was after the arrest of the petitioners as the petitioners

were arrested at 12:15 PM and 2:20 PM on 08.01.2024. It is argued that it is

no where stated that before the arrest, the material had already been

scrutinized by them and on the basis of the material, the arresting officer had

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formed the reason to believe and no where stated that the said reason to

believe was recorded in writing, thus, violating Section 19(1) of the 2002

Act also. It is argued that even as per the averments in sub-clause (c), the

only issue, as per the case of the respondents which the Special Court was

considering was the point of jurisdiction and no averment has been made

that the compliance of Sections 19(1) and 19(2) of the 2002 Act, was also

being considered or was actually considered. It is submitted that sub-clause

(d) would clearly show that even as per the stand of the respondents, the

preliminary scrutiny of documents was done on 10.01.2024 i.e. after two

days of the arrest of the petitioners and after the remand had already been

sought and it is thus apparent that the arrest was made without even

scrutinizing the material and thus, the question of the arresting officer

having the reason to believe on the basis of the said record that the

petitioners were guilty of the offence, does not arise. It is stated that

although it had been stated that there were 110 officers who were involved

in the said process in addition to 100 CRPF persons, yet, the simple act of

forwarding the material already in possession of the officers concerned was

not done by respondent No.2 and thus, the reasons for non-forwarding the

material under Section 19(2) of the 2002 Act given in the additional reply

dated 29.01.2024 are completely unjustifiable and thus, there is non-

compliance of the conditions of Section 19(2) of the 2002 Act also, in the

present case.

24. Learned Senior Counsel for the petitioners has further referred

to paragraphs 29(h) and (i) (Internal page 18) of the first reply dated

22.01.2024 filed on behalf of the authorities and has submitted that even in

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the said paragraph it has not been averred by the respondent authorities that

on the basis of the material in their possession they had reason to believe

that the petitioners were guilty of an offence punishable under the Act, rather

it has only been stated that the arrest was made upon finding a "prima facie

case of commission of money laundering against the petitioner" and on the

observation that the petitioner was involved in the commission of offence

and the said reason could not be a sufficient reason for arresting the

petitioners. It is further submitted that both the petitioners are not accused in

any of the FIRs, reference of which has been made in the grounds of arrest

and a perusal of the grounds of arrest does not show that the proceeds of

crime which are stated to be allegedly in possession of the petitioner or

allegedly recovered from the petitioners are relatable or having any link with

the scheduled offences given in the eight FIRs as mentioned in the grounds

of arrest.

25. Learned Senior Counsel for the petitioners has further submitted

that a perusal of para 311 of the judgment passed in Vijay Madanlal

Choudhary's case (supra) clearly states that reasons to believe are required

to be recorded in writing and "contemporaneously" forwarded to the

Adjudicating Authority along with material in his possession in a sealed

envelope to be preserved by the Adjudicating Authority. Reference has been

made to the New International Webster's Comprehensive Dictionary of the

English Language to highlight that the word "contemporaneous" means "at

the same time". It is submitted that thus, the intent of the legislature was that

the material should be sent contemporaneously/immediately to the

Adjudicating Authority so as to avoid any manipulation or subsequent

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addition of documents to justify prior arrest. It is further submitted that in

the said judgment of Vijay Madanlal Choudhary's case (supra) in paragraph

322, it has been observed that the safeguards which have been provided are

to ensure fairness, objectivity and accountability of the authorised officer

and the said term objectivity has also been used in the subsequent judgment

in Pankaj Bansal's case (supra) in Paragraph 5.

26. Learned senior counsel for the petitioners has relied upon the

judgment of the Hon'ble Supreme Court of India in case titled as "State of

Punjab vs. Davinder Pal Singh Bhullar and others" reported as (2011) 14

Supreme Court Cases 770 to contend that it is a settled proposition of law

that in case initial action/order is found to be illegal, then all subsequent and

consequential proceedings would fall automatically and the said principle is

applicable to judicial, quasi judicial and administrative proceedings equally

and that in case an order at the initial stage is bad in law, then all further

proceedings, consequent thereto, would be non-est and have to be

necessarily set aside. It is argued that in the said judgment, it was observed

by the Hon'ble Supreme Court that once the impugned order has been found

to be illegal, then the consequential subsequent proceedings, orders, FIR,

investigation stand vitiated and are liable to be declared non-est and set

aside.

27. Learned Senior Counsel for the petitioners has further relied

upon a judgment of the Hon'ble Supreme Court in Pebam Ningol Mikoi

Devi Vs. State of Manipur and others, reported as 2010(9) SCC 618 to

contend that even under the Acts which require subjective satisfaction, as

contrary to the objective satisfaction required under the 2002 Act, Hon'ble

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the Supreme Court had gone into the question as to whether the material to

form the said subjective satisfaction justifying the detention was there in

existence or not. It is submitted that the Hon'ble Supreme Court had relied

upon an earlier judgment passed in State of Rajasthan Vs. Daud Khan

reported as (2016) 2 SCC 607, to state that the material which forms

subjective satisfaction is also required to be communicated to the detenue. It

is submitted that in the said case, the detention was held to be bad and was

set aside. It is further submitted that the custody of the Enforcement

Directorate is now over and the petitioners have been sent to judicial custody

and thus, even on the said aspect, no useful purpose would be served by

keeping the petitioners in further incarceration. It is further submitted that

reading of Section 19(3) of the 2002 Act would clearly show that the word

"jurisdiction" is referable to Special Courts, Judicial Magistrates and also

the Metropolitan Magistrates as the case may be and not just Judicial

Magistrates and Metropolitan Magistrates. It is further submitted that the

expression "jurisdiction" has been used in the said provision and not

territorial jurisdiction.

28. Learned Senior Counsel for the petitioners has referred to

Section 4(4) of Code of Criminal Procedure to contend that with respect to

offences under the Acts other than IPC, the investigation, inquiry and trial is

to be conducted subject to the enactment for the time being in force

regulating the manner or place of investigating, inquiring into, trying or

otherwise dealing with such offences and thus it is the provisions of PMLA

which would prevail in the instant case.

29. Learned Senior Counsel for the petitioners has submitted that

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panchnama dated 05.01.2024 (Annexure R-2) and the alleged recovery of

Rs.7.50 lacs from Faridabad has no connection with the petitioners as the

said premises is neither owned nor possessed by either of the two petitioners

and even as per the case of the respondent authorities, the same is owned and

possessed by one Raman Ojha with which the petitioners have no

connection. It is argued that the alleged recovery from the residence of the

third person cannot be stated to be the recovery from the present petitioners

so as to confer the jurisdiction on the Court at Gurugram, more so on

09.01.2024 when the petitioners were produced before the said Court. It is

reiterated that the petitioners are residents of Yamuna Nagar and the search

was also carried out in their premises at Yamuna Nagar and there is nothing

stated in the application for remand of both the petitioners to even remotely

show any recovery or part of the cause of action which might have arisen

within the jurisdiction of the Special Court at Gurugram.

FINDINGS OF THIS COURT

30. This Court has heard the arguments raised on behalf of the

petitioners as well as the respondents and has perused the paper books and is

of the opinion that both the petitions deserve to be allowed for the reasons

enumerated hereinbelow.

(I) NON-APPLICATION OF MIND AND NON-RECORDING OF COMPLIANCE OF THE CONDITIONS/STIPULATIONS CONTAINED IN SECTION 19 BY THE SPECIAL COURT WHILE PASSING THE IMPUGNED REMAND ORDERS

31. At the outset, it would be trite to note the relevant provisions of

law as well as the relevant judgments on the said issue. Section 19 of the

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2002 Act which deals with the power to arrest and is relevant for the purpose

of adjudicating the present issue is reproduced hereinbelow:-

"Section 19. Power to arrest.

(1) If the Director, Deputy Director, Assistant Director or any other officer authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession, reason to believe (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.

(2) 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.

(3) Every person arrested under sub-section (1) shall, within twenty-four hours, be taken to a [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 [Special Court or] Magistrate's Court."

A perusal of the above Section would show that the same

contains three Sub-Sections. Under Sub-Section 1, the concerned officer

who could be the Director, Deputy Director, Assistant Director or any other

officer authorized in this behalf by the Central Government, may arrest a

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person after, on the basis of the material in his possession, he has reason to

believe, which belief has to be recorded in writing, that any person is guilty

of an offence punishable under the Act. Sub-Section 1 further provides that

after the arrest, the person so arrested, is required to be informed about the

grounds of such arrest "as soon as may be". Sub-Section 2 of Section 19

provides that the officer, who has arrested the person concerned, is

"immediately" required to forward a copy of the order along with the

material in his possession, on the basis of which he had reason to believe

that the said person was guilty of the offence punishable under the Act, to

the Adjudicating Authority in a sealed envelope in the manner as may be

prescribed. Sub-Section 3 further provides that the person arrested shall

within 24 hours be taken to the Special Court or Judicial Magistrate or a

Metropolitan Magistrate, as the case may be having jurisdiction.

32. The Hon'ble Supreme Court in the case of V.Senthil Balaji

(supra) had observed that the provisions of Section 19 are mandatory and the

compliance of the said provisions is a solemn function of the arresting

authority which brooks no exception and that the officer concerned is to

strictly comply with the mandate of Section 19 in its letter and spirit, failing

which he would be visited with the consequences as have been mentioned

under the 2002 Act. It was further observed that the Court/Magistrate before

whom the person arrested is produced within the period of 24 hours, as

prescribed under Section 19(3), has a distinct role to play and it is his

bounden duty to see to it that Section 19 of the 2002 Act has been duly

complied with and any failure would entitle the person arrested to be

released. It was observed that the said Court/Magistrate shall peruse the

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order passed by the authority under Section 19(1) of the 2002 Act and would

satisfy itself about the compliance of the safeguards as mandated under

Section 19 of the 2002 Act and after being so satisfied, the competent

Court/Magistrate could consider the request for custody in favour of the

respondent authority. In para 95, the Hon'ble Supreme Court had concluded

that any non-compliance of the mandate of Section 19 of the 2002 Act

would enure to the benefit of the person arrested. Paras 39, 42, 73, 74 and

95(ii) of the said judgment are reproduced hereinbelow:-

"39. To effect an arrest, an officer authorised has to assess and evaluate the materials in his possession. Through such materials, he is expected to form a reason to believe that a person has been guilty of an offence punishable under the PMLA, 2002. Thereafter, he is at liberty to arrest, while performing his mandatory duty of recording the reasons. The said exercise has to be followed by way of an information being served on the arrestee of the grounds of arrest. Any non-compliance of the mandate of Section 19(1) of the PMLA, 2002 would vitiate the very arrest itself. Under sub- section (2), the Authorised Officer shall immediately, after the arrest, forward a copy of the order as mandated under sub- section (1) together with the materials in his custody, forming the basis of his belief, to the Adjudicating Authority, in a sealed envelope. Needless to state, compliance of sub-section (2) is also a solemn function of the arresting authority which brooks no exception.

42. This provision is a reiteration of the mandatory compliance of Section 19 of the PMLA, 2002. It is in the nature of a warning to an officer concerned to strictly comply with the mandate of Section 19 of the PMLA, 2002 in letter and spirit failing which he would be visited with the consequences. It is

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his bounden duty to record the reasons for his belief in coming to conclusion that a person has been guilty and therefore, to be arrested. Such a safeguard is meant to facilitate an element of fairness and accountability.

73. We have already touched upon the mandatory function that a Magistrate is to undertake while dealing with a case of remand. He is expected to do a balancing act. As a matter of rule, the investigation is to be completed within 24 hours and therefore it is for the investigating agency concerned to satisfy the Magistrate with adequate material on the need for its custody, be it police or otherwise. This important factor is to be kept in mind by him while passing the judicial order. We reiterate that Section 19 of the PMLA, 2002, supplemented by Section 167 of the CrPC, 1973 does provide adequate safeguards to an arrested person. If Section 167 of the CrPC, 1973 is not applicable, then there is no role for the Magistrate either to remand or otherwise.

74. Such a Magistrate has a distinct role to play when a remand is made of an accused person to an authority under the PMLA, 2002. It is his bounden duty to see to it that Section 19 of the PMLA, 2002 is duly complied with and any failure would entitle the arrestee to get released. The Magistrate shall also peruse the order passed by the authority under Section 19(1) of the PMLA, 2002. Section 167 of the CrPC, 1973 is also meant to give effect to Section 19 of the PMLA, 2002 and therefore it is for the Magistrate to satisfy himself of its due compliance. Upon such satisfaction, he can consider the request for custody in favour of an authority, as Section 62 of the PMLA, 2002, does not speak about the authority which is to take action for non-compliance of the mandate of Section 19 of the PMLA, 2002. A remand being made by the Magistrate upon a person being produced before him, being an Independent entity, it is well open to him to

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invoke the said provision in a given case. To put it otherwise, the Magistrate concerned is the appropriate authority who has to be satisfied about the compliance of safeguards as mandated under Section 19 of the PMLA, 2002. On the role required to be played by the Magistrate, qua a remand, we do not wish to go any further as it has been dealt with by this Court in Satyajit Ballubhai Desai v. State of Gujarat, (2014) 14 SCC 434:

"9. Having considered and deliberated over the issue involved herein in the light of the legal position and existing facts of the case, we find substance in the plea raised on behalf of the appellants that the grant of order for police remand should be an exception and not a rule and for that the investigating agency is required to make out a strong case and must satisfy the learned Magistrate that without the police custody it would be impossible for the police authorities to undertake further investigation and only in that event police custody would be justified as the authorities specially at the magisterial level would do well to remind themselves that detention in police custody is generally disfavoured by law. The provisions of law lay down that such detention/police remand can be allowed only in special circumstances granted by a Magistrate for reasons judicially scrutinised and for such limited purposes only as the necessities of the case may require. The scheme of Section 167 of the Criminal Procedure Code, 1973 is unambiguous in this regard and is intended to protect the accused from the methods which may be adopted by some overzealous and unscrupulous police officers which at times may be at the Instance of an interested party also. But it is also equally true that the police custody although is not the be-all and end-all of the whole investigation, yet it is

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one of its primary requisites particularly in the investigation of serious and heinous crimes. The legislature also noticed this and has therefore, permitted limited police custody"

95. SUMMATION OF LAW:

xxx xxx ii. Any non-compliance of the mandate of Section 19 of the PMLA, 2002 would enure to the benefit of the person arrested. For such non-compliance, the Competent Court shall have the power to initiate action under Section 62 of the PMLA, 2002."

33. The Hon'ble Supreme Court in Pankaj Bansal's case (supra),

had further reiterated the fact that the Court which is seized of the exercise

under Section 167 Cr.P.C. of remanding the person arrested has a duty to

verify and ensure that the conditions in Section 19 of the 2002 Act are duly

satisfied and in the event, the Court fails to discharge its duty in right earnest

and in proper perspective, the order of remand would have to fail on the said

ground alone. In the said case, the Hon'ble Supreme Court had observed that

the concerned Judge had not even recorded a finding that he had perused the

grounds of arrest to ascertain whether the officer concerned had recorded the

reasons to believe that the appellants therein were guilty of the offence under

the 2002 Act and that there was proper compliance of the mandate of

Section 19 of the 2002 Act and after considering the said aspects and other

relevant aspects, had allowed the appeal and set aside the order passed by

the Division Bench of the High Court as well as the impugned arrest orders

and the arrest memo along with the orders of remand and all other

consequential orders and had released the appellant therein. Paras 16 to 19 of

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the said judgment are reproduced hereinbelow:-

"16. This Court had occasion to again consider the provisions of the Act of 2002 in V. Senthil Balaji vs. The State represented by Deputy Director and others , and more particularly, Section 19 thereof. It was noted that the authorized officer is at liberty to arrest the person concerned once he finds a reason to believe that he is guilty of an offence punishable under the Act of 2002, but he must also perform the mandatory duty of recording reasons. It was pointed out that this exercise has to be followed by the information of the grounds of his arrest being served on the arrestee. It was affirmed that it is the bounden duty of the authorized officer to record the reasons for his belief that a person is guilty and needs to be arrested and it was observed that this safeguard is meant to facilitate an element of fairness and accountability. Dealing with the interplay between Section 19 of the Act of 2002 and Section 167 Cr.P.C, this Court observed that the Magistrate is expected to do a balancing act as the investigation is to be completed within 24 hours as a matter of rule and, therefore, it is for the investigating agency to satisfy the Magistrate with adequate material on the need for custody of the accused. It was pointed out that this important factor is to be kept in mind by the Magistrate while passing the judicial order. This Court reiterated that Section 19 of the Act of 2002, supplemented by Section 167 Cr.P.C., provided adequate safeguards to an arrested person as the Magistrate has a distinct role to play when a remand is made of an accused person to an authority under the Act of 2002. It was held that the Magistrate is under a bounden duty to see to it that Section 19 of the Act of 2002 is duly complied with and any failure would entitle the arrestee to get released. It was pointed out that Section 167 Cr.P.C is meant to give effect to Section 19 of the Act of 2002 and,

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therefore, it is for the Magistrate to satisfy himself of its due compliance by perusing the order passed by the authority under Section 19(1) of the Act of 2002 and only upon such satisfaction, the Magistrate can consider the request for custody in favour of an authority. To put it otherwise, per this Court, the Magistrate is the appropriate authority who has to be satisfied about the compliance with safeguards as mandated under Section 19 of the Act of 2002. In conclusion, this Court summed up that any non-compliance with the mandate of Section 19 of the Act of 2002, would enure to the benefit of the person arrested and the Court would have power to initiate action under Section 62 of the Act of 2002, for such non-compliance. Significantly, in this, the grounds of arrest were furnished in writing to the arrested person by the authorized officer.

17. In terms of Section 19(3) of the Act of 2002 and the law laid down in the above decisions, Section 167 Cr.P.C. would necessarily have to be complied with once an arrest is made under Section 19 of the Act of 2002. The Court seized of the exercise under Section 167 Cr.P.C. of remanding the person arrested by the ED under Section 19(1) of the Act of 2002 has a duty to verify and ensure that the conditions in Section 19 are duly satisfied and that the arrest is valid and lawful. In the event the Court fails to discharge this duty in right earnest and with the proper perspective, as pointed out hereinbefore, the order of remand would have to fail on that ground and the same cannot, by any stretch of imagination, validate an unlawful arrest made under Section 19 of the Act of 2002.

18. In the matter of Madhu Limaye and others was a 3-Judge Bench decision of this Court wherein it was observed that it would be necessary for the State to establish that, at the stage of remand, the Magistrate directed detention in jail custody after applying his mind to all relevant matters and if the arrest

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suffered on the ground of violation of Article 22(1) of the Constitution, the order of remand would not cure the constitutional infirmities attaching to such arrest.

19. Viewed in this context, the remand order dated 15.06.2023 passed by the learned Vacation Judge/Additional Sessions Judge, Panchkula, reflects total failure on his part in discharging his duty as per the expected standard. The learned Judge did not even record a finding that he perused the grounds of arrest to ascertain whether the ED had recorded reasons to believe that the appellants were guilty of an offence under the Act of 2002 and that there was proper compliance with the mandate of Section 19 of the Act of 2002. He merely stated that, keeping in view the seriousness of the offences and the stage of the investigation, he was convinced that custodial interrogation of the accused persons was required in the present case and remanded them to the custody of the ED! The sentence - 'It is further (sic) that all the necessary mandates of law have been complied with' follows - 'It is the case of the prosecution....' and appears to be a continuation thereof, as indicated by the word 'further', and is not a recording by the learned Judge of his own satisfaction to that effect."

34. It would be relevant to note that the Hon'ble Supreme Court in

the case of Ram Kishor Arora (supra) had observed that since, in the

judgment of Pankaj Bansal (supra), it had directed to furnish the grounds of

arrest in writing as a matter of course, "henceforth" thus, it was observed

that the said requirement of furnishing the grounds of arrest in writing to the

arrested person would be mandatory/obligatory after the date of the said

judgment and that non-furnishing of the grounds of arrest in writing till the

date of pronouncement of the judgment in the case of Pankaj Bansal

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(supra) could not be faulted upon. It would be relevant to note that the

judgment in the case of Pankaj Bansal (supra) was pronounced on

03.10.2023 whereas both the petitioners, in the present case, have been

arrested as per the case of the prosecution on 08.01.2024 and as per the case

of the petitioners on 04.01.2024, which is after the date of pronouncement of

the said judgment. In the case of Ram Kishor Arora (supra), the Hon'ble

Supreme Court had further observed that the term "as soon as may be"

appearing in Section 19(1) would mean reasonably convenient or reasonably

requisite time to inform the arrestee about the grounds of arrest, which

would be within 24 hours of his arrest. In the said case, the sole ground of

challenge as noticed in para 3 and para 24 of the judgment was that the

appellant therein had not been furnished the copy of the grounds of arrest at

the time of his arrest and since in that case the arrest of the said person was

on 27.06.2023 which was prior to the date of pronouncement of the

judgment in the case of Pankaj Bansal i.e. 03.10.2023, no relief was granted

to the appellant therein. In the judgment of Ram Kishor Arora (supra), it

was observed that after 03.10.2023, in case a person is arrested and is

informed or made aware orally about the grounds of arrest at the time of his

arrest and is furnished written communication about the grounds of arrest

within a period of 24 hours of his arrest, then that would be sufficient,

instead of his having to be given written grounds of arrest immediately at the

time of arrest. Further, in the abovesaid case of Ram Kishor Arora (supra),

the judgment of the Hon'ble Supreme Court in the case of Vijay Madanlal

Choudhary (supra) was reiterated. In the said judgment of Vijay Madanlal

Choudhary (supra), the Hon'ble Supreme Court while upholding the

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constitutional validity of certain provisions of the 2002 Act had observed

that Section 19 provides for inbuilt safeguards to be adhered to by the

authorized officers which included recording reasons for the belief that the

person to be arrested is guilty of an offence punishable under the Act and the

same had to be recorded in writing and the grounds of such arrest are to be

informed to the accused person and the officer concerned who has arrested

the person has to forward the copy of the order along with the material in his

possession in a sealed cover to the Adjudicating Authority. Relevant portion

of para 322 of the said judgment is reproduced hereinbelow:-

"ARREST

322. Section 19 of the 2002 Act postulates the manner in which arrest of person involved in money-laundering can be effected. Subsection (1) of Section 19 envisages that the Director, Deputy Director, Assistant Director, or any other officer authorised in this behalf by the Central Government, if has material in his possession giving rise to reason to believe that any person has been guilty of an offence punishable under the 2002 Act, he may arrest such person. Besides the power being invested in high- ranking officials, Section 19 provides for inbuilt safeguards to be adhered to by the authorised officers, such as of recording reasons for the belief regarding the involvement of person in the offence of money-laundering. That has to be recorded in writing and while effecting arrest of the person, the grounds for such arrest are informed to that person. Further, the authorised officer has to forward a copy of the order, along with the material in his possession, in a sealed cover to the Adjudicating Authority, who in turn is obliged to preserve the same for the prescribed period as per the Rules. This safeguard is to ensure fairness, objectivity and accountability of the authorised officer in forming opinion as recorded in writing

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regarding the necessity to arrest the person being involved in offence of money-laundering. Not only that, it is also the obligation of the authorised officer to produce the person so arrested before the Special Court or Judicial Magistrate or a Metropolitan Magistrate, as the case may be, within twenty-four hours. This production is also to comply with the requirement of Section 167 of the 1973 Code. There is nothing in Section 19, which is contrary to the requirement of production under Section 167 of the 1973 Code, but being an express statutory requirement under the 2002 Act in terms of Section 19(3), it has to be complied by the authorised officer."

35. In para 325, further reference was made to the fact that the

Central Government by virtue of Section 73 of the 2002 Act had framed the

2005 Rules(I) which deal with the forms and manner of forwarding the copy

of order of arrest of a person along with the material to the Adjudicating

Authority.

36. The law laid down in the abovesaid judgments clearly shows

that it is incumbent upon the Special Court/concerned Court at the time of

remanding the accused to the custody of ED, to peruse the order of arrest

and to see due compliance of provisions of Section 19 of the 2002 Act and

also reflect the same in the order of remand by making a specific observation

regarding the same.

37. This Court would now consider as to whether the Special Court,

in the present case, has passed the order of remand in accordance with law

and in accordance with the provisions of Section 19 and law laid down in the

abovesaid judgments.

38. Relevant portion of order dated 09.01.2024 passed in the case of

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the petitioner-Dilbag Singh @ Dilbag Sandhu is reproduced hereinbelow:-

"18. I have given my due consideration to the facts & circumstances of the case and the above mentioned arguments. The remand papers and other relevant documents have also been perused carefully.

19. A perusal of record shows that in the present case there is no denial of the fact that for the commission of scheduled offence, nine FIRs have been lodged in two Police Stations of District Yamuna Nagar, i.e. Two FIRs in Police Station Bilaspur and seven FIRs in Police Station Pratap Nagar. It has been alleged by the applicant-Directorate of Enforcement that during the course of investigation of the above mentioned FIRs, it was found that ultimate beneficiary of cheating/fraud was the accused who had dealt with proceeds of crime. In such circumstances, in my considered opinion, at this prima facie stage when investigation is still at infant stage this arguments of learned counsel for the accused is not tenable that a false story has been cooked-up by the Directorate of Enforcement with regard to commission of offence under the Prevention of Money Laundering Act, 2002, and the accused has no nexus whatsoever with the same.Such a conclusion can be drawn at the time of conclusion of trial only.

20. It has been alleged by the Directorate of Enforcement that during search of the premises of the accused various E- Rawana bills and cheque books of many firms, which were part of syndicate were traced and that the above mentioned recoveries further augment the claim of the applicant/Directorate of Enforcement with regard to involvement of accused in the commission of offence.

21. Here this fact cannot be ignored that there are very specific and categorical allegation of the applicant-Directorate of Enforcement that during the course of investigation when the

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statement of the accused was recorded, his attitude was non- cooperative, and that for majority of questions he has given either misleading replies or his replies were evasive.

22. Since the allegations against the accused are very serious and the Directorate of Enforcement is seeking to decode the money trail, role of the accused, viz-a-viz his persons/aids, who facilitated the offence of money laundering, so as to get to know as to how the accused persons were successful in generating proceeds of crime, in my opinion, a valid ground exists for the applicant/Directorate of Enforcement for custodial interrogation of the accused. In my considered opinion, once ECIR has been registered and during investigation, a prima facie case for the commission of offence under the Prevention of Money Laundering Act, 2002 has been found, the applicant/Directorate of Enforcement is duty bound to trace the money, reveal the modus oprendi adopted by the accused for generating proceeds of crime and its circulation from one source to another. In my considered opinion the above mentioned goal can be achieved only when the opportunity is given to the applicant-Directorate of Enforcement to interrogate the accused in custody.

23. As a sequel to above mentioned discussion, in my considered opinion the applicant-Directorate of Enforcement has a good and sufficient reason to claim the custody of accused person for his interrogation. However, in my opinion in view of facts and circumstances of the instant case and other mitigating circumstances, it shall be just & proper that the accused is remanded into custody of Directorate of Enforcement for a period of 07 (seven) days.

24. In view of above mentioned observations, the application in hand is hereby partly accepted and the accused is remanded into ED custody for a period of 07 days. The accused be produced in the court on 16.1.2024. It is further directed that

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the Investigating Officer of the case shall get the accused examined medically before proceeding for custodial interrogation and his custody shall not be transferred to any other agency without prior order of the competent authority.

25. At this stage, an application has been moved by the learned counsel for the accused seeking for permission to interact with the accused during the remand period. In addition to above the learned counsel for the accused has also requested to provide facility of medicines and other facilities as advised by the Medical Officer.

22. In view of above mentioned application, it is hereby ordered that the Investigating Officer shall allow the accused to meet his counsel on each and every date, during custody period, for one hour daily, i.e. from 09:00 a.m. to 10:00 a.m. It is further directed that all the facilities as prescribed/advised by the Medical Officer, including medicines & equipments shall be provided by the Directorate of Enforcement.

23. The papers be put up on 16.1.2024."

To the similar effect is the order dated 09.01.2024 passed in the

case of petitioner-Kulwinder Singh. A perusal of the above and the whole

order would show that not even a passing reference much less finding has

been made on the aspect that the Court had satisfied itself that the officer

concerned immediately after the arrest of the accused persons had forwarded

the copy of the order along with the material in his possession to the

Adjudicating Authority in a sealed envelope in the manner as has been

prescribed. Thus, compliance of Section 19(2) has not been noticed and it

has not even been remotely observed that the said mandatory provision has

been complied with by the concerned officer of the Enforcement Directorate.

It would be relevant to note that as per the additional reply dated 29.01.2024

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filed on behalf of respondent No.2 {para (E)(3)(d)} in the case of petitioner-

Dilbag Singh @ Dilbag Sandhu, it is the admitted case of the respondent

authorities that on the date of passing of the order dated 09.01.2024, the

compliance of the provision of Section 19(2) had not been fulfilled by the

respondent authorities. The detailed discussion regarding the same would be

done in the subsequent paragraphs while dealing with the other issues in the

present case. Similarly, even with respect to the provisions of Section 19(3),

the fact that the petitioner had been produced before the Court having

jurisdiction and that the Court concerned was having jurisdiction in the

matter has not been recorded. It would be relevant to note that in the

impugned order, it has been recorded that the person arrested is a resident of

Yamuna Nagar and the eight FIRs which are stated to be with respect to the

scheduled offences were registered in District Yamuna Nagar. No reference

with respect to any averments in the application or any material so as to

show that the offence of money laundering had been committed within the

jurisdiction of the Court at Gurugram, has even been remotely made in the

order. In Section 19(3), the word "having jurisdiction" has been used in

contradistinction to Section 167(2) of Cr.P.C. where it has been stated that

the Magistrate to whom the accused person is to be forwarded may, whether

he has or has not jurisdiction to try the case, from time to time authorize the

detention of the accused. This Court is aware of the fact that the final

question as to whether the Court at Gurugram would have the jurisdiction to

try the case or not would be dependent upon the entire material which would

be produced by the Enforcement Directorate and even if a part of the

proceeds of crime is recovered from the place within the jurisdiction of the

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Court at Gurugram, then the plea of the prosecution to the effect that the

Court at Gurugram would have the jurisdiction would in all likelihood be

accepted. The issue which the Court is considering presently is not as to

whether the Court at Gurugram would have the jurisdiction to try the offence

but is as to the aspect of the application of mind of the Special Court with

respect to compliance of provisions of Section 19 including that of Section

19(3). Since, the petitioners were produced before the Special Court at

Gurugram on 09.01.2024 thus, it was incumbent upon the said Court to

consider the material to see as to whether as on 09.01.2024, any cause had

arisen so as to produce the petitioners before the said Court and in case any

such cause had arisen then to specifically state so in the order of remand. In

the instant case, the same has not been done by the Court concerned.

39. Importantly, the Special Court has also not made any

observations with respect to the due compliance by the authority of Section

19(1). There is no reference in the order of remand to state that the Court

had perused the order, if any, recording the reason to believe that the

petitioners are guilty of the offence punishable under the 2002 Act or the

grounds of arrest in writing and had satisfied itself that the arresting officer,

on the basis of material in his possession, had reason to believe that the

petitioners were guilty of the offence punishable under the Act. No such fact

has been recorded in the impugned order. On the said aspect, it has only

been observed in the impugned order that once ECIR has been registered

and during investigation, a prima facie case for the commission of the

offence under the 2002 Act has been found, then the Directorate of

Enforcement is bound to trace the money for which it required to interrogate

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the petitioners in custody. The said order is thus, illegal and deserves to be

set aside on the said ground alone.

40. Even in the subsequent order of remand dated 16.01.2024,

which was a common order passed in the case of both the petitioners, no

reference has been made with respect to the compliance of provisions of

Section 19(1) and 19(2). With respect to compliance of Section 19(3), the

following findings have been given:-

"13. Since investigation in the instant case is at infant stage and facts are yet to crystallize, in my opinion, at this stage it cannot be ascertained as to whether any part of offence has been committed by the accused within the territorial jurisdiction of this Special Court or not. In my opinion such question can be determined only at the time of taking of cognizance on the complaint, if filed by the Directorate of Enforcement."

A perusal of the above would show that it has been observed

that it cannot be ascertained as to whether any part of the offence has been

committed by the accused within the territorial jurisdiction of the said Court

or not. Even the order dated 23.01.2024 annexed as Annexure R-11 along

with the reply filed in the case of petitioner-Kulwinder Singh, vide which,

both the petitioners have been remanded to judicial custody till 06.02.2024

would also show that the Additional Sessions Judge, Gurugram has not

made even a remote reference with respect to the compliance of the

provisions of Sections 19(1), 19(2) or 19(3). It is thus, apparent that the

Court while passing the remand orders has neither applied its mind to the

compliance of the provisions of Section 19, nor recorded the same in the

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remand orders.

41. The argument on behalf of counsel for the respondents to the

effect that the order passed is speaking and has been passed after taking into

consideration the entire material which included the remand papers and

other relevant documents which had been produced, is liable to be rejected.

From a perusal of the provisions of law and the judgments referred to in the

preceding paragraphs, it is clear that it was the requirement of the Court to

have specifically recorded in the order the fact that the provisions of

Sections 19(1), 19(2) and 19(3) have been duly complied with and that the

Court had perused the written reasons to believe, as mandated under Section

19(1) of the 2002 Act and was satisfied that it had been so recorded therein

that the petitioners were guilty of the offence punishable under the Act and

that the said order along with the material had been forwarded to the

Adjudicating Authority and also that a part of the cause of action had arisen

within the territorial jurisdiction of the Special Court at Gurugram and the

same having not been done in the present case calls for setting aside the

impugned orders/action of the respondent authorities on the said ground

alone.

(II) ILLEGAL DETENTION/WRONGFUL RESTRAINT OF THE

PETITIONERS FROM 04.01.2024 TO 08.01.2024 AMOUNTING TO

ARREST ON 04.01.2024 ITSELF AND CONSEQUENTIAL

VIOLATIONS OF SECTION 19 OF PMLA READ WITH SECTION

167 CR.P.C. ON ACCOUNT OF NON-PRODUCTION OF

PETITIONERS WITHIN 24 HOURS

42. It is the case of both the petitioners that the petitioners along

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with their family members were illegally detained by the respondents on

04.01.2024 itself at the time when search and seizure of the houses had

started and were illegally detained from 04.01.2024 to 08.01.2024 and were

illegally shown to have been arrested only on 08.01.2024. Reference has

been made to the panchnama in the case of both the petitioners. Relevant

portion of the panchnama of petitioner-Kulwinder Singh is reproduced

hereinbelow:-

"Everyone present at the premises was allowed proper rest, food breaks and washroom breaks."

A perusal of the above statement in the panchnama supports the

case of the petitioners that they were not permitted to leave the house during

the time of their search and were detained and their movement was

controlled by the authorities and it was the authorities who had allowed them

to take rest, food breaks and washroom breaks. Even in the panchnama of

petitioner-Dilbag Singh @ Dilbag Sandhu, it has been mentioned that the

petitioner, Rajinder Singh and their family members were given proper rest

and food during the course of search. A reply dated 22.01.2024 on behalf of

respondent No.2 was filed in the case of petitioner-Dilbag Singh @ Dilbag

Sandhu. Paragraphs 29(h) and 35 of the said reply is reproduced

hereinbelow:-

"29(h) The Petitioner was not detained from 04.01.2024 and he was free in his residence until his arrest on 08.01.2024 upon "prima facie" case of commission of money laundering against him. Even the Panchnama endorses this fact that:

Dilbag Singh, Rajinder Singh and their family members had proper rest and food during the course of search

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proceedings.

35. The content of Ground C is expressly denied as being wrong, and vexatious in nature. In response, it is submitted that no restrictions were imposed upon the Petitioner until his arrest on 08.01.2024. The Petitioner and other persons were free and at their own sweet will to loiter with their own premises during the duration of the search as general practice and this cannot be termed as detention. In fact Section 17 PMLA which deals with search and seizure mandates certain requirements which were all duly complied with. In order to ensure the sanctity of the search and seizure and to ensure the safeguards, in exercise of powers under Section 73 PMLA, the central government has framed "The Prevention of Money-

Laundering (Forms, Search and Seizure or Freezing and the Manner of Forwarding the Reasons and Material to the Adjudicating Authority, Impounding and Custody of Records and the Period of Retention Rules 2005", which were also followed scrupulously by the Respondent No.2."

To the similar effect is the reply filed in the case of petitioner-

Kulwinder Singh. Para 36 of the reply filed in the case of petitioner-

Kulwinder Singh is reproduced hereinbelow:-

"36. The content of Ground C is expressly denied as being wrong, and vexatious in nature. In response, it is submitted that no restrictions were imposed upon the Petitioner until his arrest on 08.01.2024. The Petitioner and other persons were free and at their own sweet will to loiter within their own premises during the duration of the search as general practice and this cannot be termed as detention. In fact, Section 17 PMLA which deals with search and seizure mandates certain requirements which were all duly complied with. In order to ensure the sanctity of the search and seizure and to ensure the safeguards,

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in exercise of powers under Section 73 PMLA, the central government has framed "The Prevention of Money-

Laundering (Forms, Search and Seizure or Freezing and the Manner of Forwarding the Reasons and Material to the Adjudicating Authority, Impounding and Custody of Records and the Period of Retention Rules 2005", which were also followed scrupulously by the Respondent No.2.

Further, the Petitioner and other persons present at the premises were in possession/control of the locker, safe, almirah, documents etc. and hence it was important to secure their presence within the premises in order to have access to inspect/examine the content and to avoid any sort of tampering with the potential proceeds of crime"

A perusal of the said reply would show that it is the stand of the

respondents that the petitioners were free to move in their residence and

could loiter within (wrongly mentioned as with and specific query was put to

the respondent's counsel and it has been fairly stated that the word "with" is

to be read as within and the said fact is also apparent from the reply filed in

the case of petitioner-Kulwinder Singh where word "within" has been

mentioned) their own premises. Further it has been averred that sanctity of

the search was to be maintained and reference in this regard was made to the

2005 Rules (II). Even a perusal of the above reply lends credence to the plea

raised on behalf of the petitioners to the effect that they were not permitted

to go out of their house and were illegally detained in the house for the

period of the search from 04.01.2024 to 08.01.2024. An additional reply

dated 29.01.2024 was filed on behalf of respondent No.2 in the case of

petitioner-Dilbag Singh @ Dilbag Sandhu. Relevant portion of para F of the

said reply is reproduced hereinbelow:-

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"F. Procedure relating to Search:

No person, including the Petitioner, were detained during the search proceedings and they had proper rest and food during the course of proceedings. Further by virtue of Rule 3(7) and (8) of The Prevention of Money-Laundering (Forms, Search and Seizure or Freezing and the Manner of Forwarding The Reasons and Material To The Adjudicating Authority, impounding and custody of records and the Period of Retention) Rules, 2005, the Petitioner and other persons present at the premises were in possession/control of the locker, safe, almirah, documents etc. and hence it was important to secure their presence within the premises in order to have access to inspect/examine the content and to avoid any sort of tampering with the potential proceeds of crime. Also, they were allowed to follow their daily routine. In no circumstances they were detained or asked compulsorily be in the premises."

43. From the above averments, the arguments raised on behalf of

the petitioners to the effect that the petitioners were detained in the premises

in question against their consent stands fully fortified as it has been stated in

the abovesaid reply that the same was done to secure the presence of the

petitioners within the premises in order to have access to locker, safe,

almirah, documents etc.. Strong reliance has been placed upon by the

counsel for respondent No.2, even during the course of arguments, on the

provisions of Rule 3 Sub-Rules 7 and 8 of the 2005 Rules (II) to contend

that the presence of the petitioners and the other family members was

required within the premises so as to enable them to make effective search as

several things including locker, safe, almirah had to be opened. Sub-Rules 7

and 8 of Rule 3 are reproduced hereinbelow:-

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"3. Procedure relating to search.--

(7) The authority may require any person who, is the owner, or has the immediate possession, or control, of any box, locker, safe, almirah or any other receptacle situated in such building, place, vessel, vehicle or aircraft, to open the same and allow access to inspect or examine its contents, and, where the keys thereof are not available or where such person fails to comply with any such requirement, may break open the lock of such box, locker, safe, almirah or other receptacle which the authority may deem necessary for carrying out all or any of the purposes specified by the Director in this behalf. (8) The occupant of the building, place, vessel, vehicle or aircraft searched, including the person in charge of such vessel, vehicle or aircraft, or some person on his behalf, shall be permitted to attend during the search."

44. The issue as to whether the detention of the petitioners for the

purpose of the said search as per the case of respondent No.2 was valid or

not and as to whether the petitioners could have been restrained for more

than four days i.e. from 04.01.2024 to 08.01.2024 from moving out of the

house in order to enable the authorities to have access to the lockers, safe,

almirahs would be considered after considering the true import of Sub-Rules

7 and 8 and the law on the said aspect.

45. A perusal of Sub-Rule 8 would show that the occupant of the

building or some person on his behalf has a right to attend the search. A

reading of the said provision would show that attending of the search is an

enabling right of a person who is an occupant of the building etc. and once

the said occupant i.e. in the present case the petitioners, requested the

authorities that they be permitted to attend the search, then the authorities are

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duty bound to permit them to attend the search. Reading of the said

provision would show that the occupant of the building cannot be forced to

attend the search much less to stay confined in the premises for days

altogether till the time the search is concluded. In case the argument raised

on behalf of respondent No.2 to the effect that the petitioners would have to

be present in the premises all the time when the search is going on is

accepted, then the question of giving any right to the occupant or some

person on his behalf to attend the search would not arise as it would then be

necessary for him to be available in the premises throughout the search.

Even Sub-Rule 7 would not further the case of respondent No.2 inasmuch as

the said Sub-Rule, provides that in case the keys are not available or the

person to whom the direction or request has been made to open the

locker/box fails to comply with the same, then the authority has the power to

break open the lock of the said locker, safe, almirah and thus, even in case of

non-compliance of the direction of the authorities, no hindrance is caused in

the search. Joint reading of the above provisions would clearly show that

there is nothing which stops the persons whose premises are being searched

from carrying out their daily routine including going to their offices/place of

work and the authorities have a right to require the said persons to open any

lock, safe, almirah and in case of non-compliance, the authorities have

further power to break open the same and thus, it cannot be said that the

authorities have a right to restrain the movements of the said persons i.e. the

petitioners in the present case within the premises.

46. Importantly, a perusal of the panchnama in the case of both the

petitioners would show that it is on 04.01.2024 alone that the search was

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made of the cupboard, almirah, drawer etc. and no such search had been

carried out on 05.01.2024, 06.01.2024, 07.01.2024 and 08.01.2024 and thus,

even in case the argument of respondent No.2 is accepted then also it cannot

be said that the petitioners were legally detained for all the days from

04.01.2024 to 08.01.2024. In the panchnama (Annexure P-1) of petitioner-

Dilbag Singh @ Dilbag Sandhu, it has been mentioned that search had

started at 8:25 hours on 04.01.2024 and it continued uptill 13 hours (1 pm)

on 08.01.2024 and the actual search started at 8.40 hours on 04.01.2024 on

which day, the documents in the cupboard, almirah, drawers, bed boxes and

other part of the house were searched and the vehicle parked inside the

house was also searched. A further perusal of the panchnama would show

that there is no reference made with respect to any search made of any box,

locker, safe, almirah etc. as mentioned in Sub-Rule 7 from 05.01.2024 to

08.01.2024. Similarly, as per the panchnama, in the case of petitioner-

Kulwinder Singh, the said Kulwinder Singh was called in the premises at

11:50 am on 04.01.2024 and on the said date, since, key of one room was

not available and it couldn't be found, a Locksmith was called to break open

the lock and the said lock was opened at 12.30 pm on 04.01.2024 and

another lock of Godrej safe was also broken at 04.20 pm by calling a

Locksmith. Other than this, there is no mention of any further search of any

almirah, safe, locker, locks etc. which was required by the authorities to be

done from 05.01.2024 to 08.01.2024.

47. It would be relevant to note that even as per the provisions of

Section 18 of the 2002 Act, in case where the respondent authorities have

reason to believe which is to be recorded in writing that any person has

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secreted about his person or in anything under his possession, ownership or

control, any record or proceeds of crime which could be useful or relevant

for the purpose of proceedings under the Act, then the said person can be

searched and the said property/record can be seized. Even in such a

situation, the person so searched, if he so requires, is required to be taken

within 24 hours to the nearest Gazetted Officer, superior in rank to the

officer searching or to a Magistrate and as per Sub-Section 4, the authority

cannot detain the said person for more than 24 hours prior to taking him

before the Gazetted Officer or to the Magistrate concerned and as per Sub-

Section 5, the Gazetted Officer or the Magistrate before whom any such

person is brought, if sees no reasonable ground for search, shall forthwith

discharge such person. Thus, even in case personal search is to be carried

out, specific time has been given within which the person is to be taken to

the Gazetted Officer/Magistrate and the period for which the person can be

detained by the authority can not exceed 24 hours. In the present case, it is

the admitted case of the respondents in the reply that they have not invoked

the provisions of Section 18 of the 2002 Act and thus, to detain/restrain the

petitioners for a period of more than four days within the premises would

amount to illegal detention/unlawful restraint and the petitioners would be

deemed to have been arrested on 04.01.2024.

48. Before referring to the law on the said point, it would also be

relevant to note that a plea has been raised in the additional reply dated

29.01.2024 to the effect that the petitioners were in the premises out of their

own will, which is contradictory to the pleas taken in the earlier reply dated

22.01.2024 in which it was averred that the petitioner and the other persons

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were free at their own sweet will to loiter within their own premises during

the duration of the search as general practice (the word "with" has been

wrongly written and learned counsel appearing for the respondents has fairly

submitted that the word "with" be read as "within"). Learned Senior Counsel

for the petitioners had raised a strong objection to the taking of the said plea in

the additional reply dated 29.01.2024 as neither any such plea was raised in the

written statement dated 22.01.2024 nor any amendment of the earlier written

statement was sought and it was argued that the said plea has been raised in the

additional reply dated 29.01.2024 after the petitioners had opened their

arguments. It is further submitted that the said plea is even contrary to the

averments in the panchnama as well as to the other pleas averred by the

respondents which have been reproduced hereinabove. This Court is of the

view that the said argument raised on behalf of the petitioners carries weight

and deserves to be accepted. Even during the course of arguments on behalf of

respondent No.2, contradictory stands have been sought to be taken as on the

one hand, it has been argued that the presence of the petitioners was required

in the premises where the search was conducted for the purpose of search, for

which the presence of the petitioners was secured, within the premises,

whereas on the other hand, it was sought to be argued on behalf of respondent

No.2 that the authorities did not restrain the petitioners from going out of the

premises. Moreover, the plea raised in the additional reply dated 29.01.2024 to

the effect that the petitioners stayed within the premises on their own will,

without further mentioning that the petitioner and the other persons were free

to loiter within their own premises during the duration of the search, as

had been stated in the first reply dated 22.01.2024 would show that the

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respondents as an afterthought have tried to improve on their case and thus,

the said plea is liable to be rejected.

49. The Division Bench of this Court in the case of Pranav Gupta

(supra), while considering the issue as to whether restraint put on the

petitioners therein tantamounted to there being actual arrest on 27.10.2023 i.e.

the date prior to the date of actual arrest shown i.e. 28.10.2023, observed that

the arrest would be reckonable from the date of unlawful restraint and not from

the date of formal and actual arrest and the argument on behalf of the

respondents to the effect that the accused therein was only taken in the vehicle

in pursuance of the summons having been issued to him was rejected as it was

found that the accused therein was taken in the seized car/car belonging to the

ED which could not be stated to be voluntary. In the said judgment, on the

abovesaid account, arrest of the petitioners was declared to be non-est and

void. Relevant portion of the said judgment is reproduced hereinbelow:-

"9. On a studied analysis being made of the said arguments, it appears, that the learned ASG concerned, has visibly over focused upon drawing a semantic distinction inter-se arrest and custody, thus through his making reliance upon the judgments (supra).

10. Moreover, he has also emphasized, that the above manner of accompanyings of the accused in the respective vehicles, which were respectively seized, and/or, belonged to the E.D. officials concerned, were only in pursuance to the summons, as became issued upon them. In addition, though he has attempted to thereby make a submission, that the said purported restraint, was not arrest, rather the date of drawing of the formal arrest memo, is the reckonable date rather for all the relevant purpose(s).

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12. The reason for making the above conclusion, spurs from the judgment (supra), as cited before this Court by the learned Senior counsels wherein, it has been most candidly expressed, that the date of causing unlawful restraint, upon the petitioners, is the reckonable date, than the date of makings of the formal actual arrest of the accused, thus through the drawings of arrest memo(s).

14. The argument, if any, as addressed before this Court by the learned ASG concerned, that the said accompanying of the accused in the vehicles (supra), was only in pursuance to summons, becoming issued upon them, for ensuring that thereby, they are interrogated at the E.D. headquarters located at Delhi, is but also liable to be rejected.

15. The reasons for rejecting the above argument, but is again planked, upon the trite evident fact, that unless the accused had willingly accompanied the E.D. officials concerned, thus in their private vehicles or in the vehicle of their relatives, thereupon theirs in the above mode of theirs accompanying the E.D. officials to the E.D. headquarters, located at Delhi, would be construed to be theirs thereby then, thus becoming unlawfully restrained. However, when the material in the above regard is grossly amiss, rather material emerges, that the accused had accompanied, the E.D. officials, on 27.10.2023, thus in the respectively seized vehicle or in the vehicles belonging to the E.D. officials. Therefore, the said mode of the accused accompanying the E.D. officials, thus cannot be construed to be theirs either voluntarily or willingly accompanying them, to the E.D. headquarters, nor thereby the said manner of accompanyings of the accused with the E.D. officials, can be termed to be in pursuance to theirs becoming summoned, thus for their interrogation being made, at the E.D. headquarters located at Delhi. It appears that in the garb of the summons of 27.10.2023, the E.D. officials has

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attempted to give the otherwise unlawful restraint, thus the untenable colour of the accused voluntarily accompanying, the E.D. officials to the E.D. headquarters, located at Delhi.

17. Though, learned ASG concerned, has emphasized upon the factum, that since the learned Magistrate concerned, has made orders of remand vis-a-vis the accused, therefore the said orders of remand are construable to be condoning the above lapses.

18. However, the above argument, cannot become accepted by this Court, in view of the mandate recorded by the Hon'ble Apex Court in case titled as "V. Senthil Balaji V. State Represented by Deputy Director and Others" reported in 2023 SCC Online SC 934, wherein, it has been expostulated, that when material, does emerge rather suggestive that the parameters laid thereins, relating to application of judicial mind by the learned trial Judge concerned, to the makings of the relevant statutory breaches but become infringed, thus in his making the impugned order of remand, as such, upon, the vice of non-application of mind rather emerging, thus planked, upon breach being caused to the mandate of Section 19 of the Act of 2002, thereby the orders of remand are illegal."

50. In the case of Ashak Hussain Allah Detha @ Siddiqui (supra),

it was observed that in substance, arrest was restraint on a man's personal

liberty by the power or colour of lawful authority and it also amounts to

restraint on or deprivation of one's personal liberty and in case the authority

clothed with the power to arrest, actually imposes the restraint by physical

act or words, then the same would amount to arrest and the question as to

whether the person is arrested would depend on the fact as to whether he has

been deprived of his personal liberty to go where he pleases irrespective of

the label which the Investigating Officer may affix on the act of restraint and

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even the actual date of arrest would not be an index to see as to what is the

actual date of arrest and the arrest would commence when restraint has been

placed on the liberty of the accused and not the time of arrest recorded by

the arresting officer. Relevant portion of paras 9, 10, 12, 13 of the said

judgment are reproduced hereinbelow:-

"9. xxx xxx. The Prosecution urges that after the "arrest"

they were not detained beyond 24 hours. This submission is a distortion of the true meaning of the constitutional guarantee against detention without the sanction of judicial Tribunal. The word "arrest" has not been defined in the Code of Criminal Procedure or in any other law. The true meaning needs to be understood. The word "arrest" is a term of art. It starts with the arrester taking a person into his custody by action on or words restraining him from moving anywhere beyond the arrester's control, and it continues until the person so restrained is either released from custody or, having been brought before a Magistrate, is remanded in custody by the Magistrate's judicial act Christie v. Leachinsky, (1947) 1 All ER 567; Holgate Mohammed v. Duke, (1984) 1 All ER 1054. Both quoted in WORDS AND PHRASES LEGALLY DEFINED Vol.

1, Third Edition page 113.). In substance, "arrest" is the restraint on a man's personal liberty by the power or colour of lawful authority. In its natural sense also "arrest" means the restraint on or deprivation of one's personal liberty.

10. It is thus clear that arrest being a restraint on the personal liberty, it is complete when such restraint by an authority, commences. Whether a person is arrested or not does not depend on the legality of the Act. It is enough if an authority clothed with the power to arrest, actually imposes the restraint by physical act or words. Whether a person is

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arrested depends on whether he has been deprived of his personal liberty to go where he pleases. It stands to reason, therefore, that what label the investigating officer affixes to his act of restraint is irrelevant. For the same reason, the record of the time of arrest is not an index to the actual time of arrest. The arrest commences with the restraint placed on the liberty of the accused and not with the time of "arrest" recorded by the Arresting Officers.

12. xxx xxx. There is no authority in the Investigating Officers to detain a person for the purpose of interrogation or helping them in the enquiry.

13. On this principle it follows that the detention of the Applicants on the mid-night of 19th July, 1989 was illegal if it was not for having committed an offence under the N.D.P.S. Act. If it was for having committed an offence, the detention was "arrest" and it commenced at the mid-night of 19th July, 1989."

51. In the case of Mrs. Iqbal Kaur Kwatra (supra), the Division

Bench of the Andhra Pradesh High Court at Hyderabad has held as under:-

"19. It is well settled that "police custody" does not necessarily mean custody after formal arrest. It also includes "some form of police surveillance and restriction on the movements of the person concerned by the police". The word "custody" does not necessarily mean detention or confinement. A person is in custody as soon as he comes into the hands of a police officer.

23. Thus it is seen that a police officer cannot detain any person in custody without arresting him and any such detention will amount to a wrongful confinement within the meaning of Section 340 of the Indian Penal Code. Actual arrest and detention do not appear to be necessary. A person in custody cannot be detained without producing him before a

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Magistrate under the colourable pretention that no actual arrest is made and the burden of proving the reasonable ground is on the arrester that the time occupied in the journey was reasonable with reference to the distance traversed as also other circumstances and in case of continuation of detention for twenty-four hours, particularly, when the police officer has reason to believe that the investigation cannot be completed within twenty-four hours, he must produce the accused forthwith before the Magistrate and cannot wait for twenty-four hours."

52. From the abovesaid facts and circumstances and also the law

laid down in the abovesaid judgments, it is apparent that respondent

authorities had illegally confined/unlawfully restrained the petitioners in the

premises in question from 04.01.2024 to 08.01.2024 and thus, in effect had

arrested the petitioners on 04.01.2024 itself but had not produced the

petitioners before the concerned Court within 24 hours from the date of their

actual arrest i.e. 04.01.2024 nor had complied with the other conditions

mentioned in Section 19(1), 19(2), 19(3) and thus, arrest and all subsequent

orders including remand orders are illegal and against law and deserve to be

set aside. Before concluding the discussion on the present point, it would be

relevant to consider the judgments referred to by the counsel for respondent

No.2 on the point in issue. The judgment of the Single Bench of the Delhi

High Court in case of Gautam Thapar (supra) relied upon by the counsel for

the respondents would not further the case of the respondents. The facts in

the said case were completely different from the facts in the present case

inasmuch as the said case was not a case where there was unlawful

restraint/illegal detention for a period of more than four days nor there was

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any averment of the respondent authorities in the said case in the reply as is

there in the present case which clearly shows that the petitioners, in the

present case, were confined to the four walls of the premises in question

from 04.01.2024 to 08.01.2024. The judgments relied upon on behalf of the

petitioners, relevant portion of which is reproduced hereinabove, are on the

other hand fully applicable to the facts of the present case.

53. Similarly, the facts in the case of Sundeep Kumar Bafna

(supra) are completely different from the facts of the present case. Paragraph

9 of the said judgment gives the meaning of custody as has been stated in

various dictionaries. Para 9 and relevant portion of para 10 of the said

judgment are reproduced herein as under:-

"9. Unfortunately, the terms "custody", "detention" or "arrest" have not been defined in the CrPC, and we must resort to few dictionaries to appreciate their contours in ordinary and legal parlance.

9.1 The Oxford Dictionary (online) defines custody as imprisonment, detention, confinement, incarceration, internment, captivity; remand, duress, and durance. 9.2 The Cambridge Dictionary (online) explains custody as the state of being kept in prison, especially while waiting to go to court for trial.

9.3 Longman Dictionary (online) defines custody as when someone is kept in prison until they go to court, because the police think they have committed a crime.

9.4 Chambers Dictionary (online) clarifies that custody is "the condition of being held by the police; arrest or imprisonment; to take someone into custody to arrest them."

9.5 Chambers Thesaurus supplies several synonyms, such as detention, confinement, imprisonment, captivity, arrest,

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formal incarceration.

9.6 The Collins Cobuild English Dictionary for Advance Learners states in terms of that someone who is in custody or has been taken into custody or has been arrested and is being kept in prison until they get tried in a court or if someone is being held in a particular type of custody, they are being kept in a place that is similar to a prison.

9.7 The Shorter Oxford English Dictionary postulates the presence of confinement, imprisonment, durance and this feature is totally absent in the factual matrix before us. 9.8 The Corpus Juris Secundum under the topic of Escape & Related Offenses; Rescue adumbrates that "Custody, within the meaning of statutes defining the crime, consists of the detention or restraint of a person against his or her will, or of the exercise of control over another to confine the other person within certain physical limits or a restriction of ability or freedom of movement." 9.9 This is how Custody is dealt with in Blacks Law Dictionary, (5th Edn. 2009):-

Custody- The care and control of a thing or person. The keeping, guarding, care, watch, inspection, preservation or security of a thing, carrying with it the idea of the thing being within the immediate personal care and control of the person to whose custody it is subjected. Immediate charge and control, and not the final, absolute control of ownership, implying responsibility for the protection and preservation of the thing in custody. Also the detainer of a mans person by virtue of lawful process or authority. The term is very elastic and may mean actual imprisonment or physical detention or mere power, legal or physical, of imprisoning or of taking manual possession. Term custody within statute requiring that petitioner be in custody to be entitled to federal habeas corpus relief does

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not necessarily mean actual physical detention in jail or prison but rather is synonymous with restraint of liberty. U. S. ex rel. Wirtz v. Sheehan. Accordingly, persons on probation or released on own recognizance have been held to be in custody for purposes of habeas corpus proceedings.

10. A perusal of the dictionaries thus discloses that the concept that is created is the controlling of a persons liberty in the course of a criminal investigation, or curtailing in a substantial or significant manner a persons freedom of action." xxx xxx

54. Moreover, the said case does not in any way further the case of

the respondent authorities. Thus, the order of arrest and the impugned orders

of remand and all the subsequent proceedings arising thereto deserve to be

set aside on this ground also.

(III) VIOLATION OF THE PROVISIONS OF SECTION 19(2) OF

THE 2002 ACT

55. A perusal of Section 19(1), 19(2) and 19(3) of the 2002 Act,

which have been reproduced hereinabove, would show that there are

mandatory conditions which are required to be fulfilled, both before and

immediately after effecting the arrest which are enumerated hereunder:-

i) The Director / Competent officer may arrest a person

only after, on the basis of material in his possession, he has

reason to believe, which reasons have to be recorded in writing,

that the person sought to be arrested is guilty of the offence

punishable under the Act.

ii) After the person has been arrested, he is required to be

informed of the grounds of arrest "as soon as may be". The said

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grounds of arrest have to be in writing as per the law laid down

in the case of Pankaj Bansal (supra). The expression "as soon

as may be" has been interpreted in the case of Ram Kishor

Arora (supra) to mean upto 24 hours from the time of arrest.

iii) Sub section 2 of Section 19 further provides that

immediately after arresting the person under sub section (1), the

copy of the order along with material in the possession of the

officer concerned, as has been referred to in sub section (1) has

to be forwarded to the Adjudicating Authority in a sealed

envelope in the manner prescribed.

iv) Under sub-Section (3), the person so arrested is

mandatorily required to be taken to the Special Court or Judicial

Magistrate or Metropolitan Magistrate as the case may be,

having jurisdiction, within 24 hours. The relevant portion of the

judgment of the Hon'ble Supreme Court in V. Senthil Balaji

(supra) which has been reproduced in the earlier part of this

judgment specifically holds that the compliance of sub section

(2) is a solemn function of the arresting authority and the same

brooks no exception. In paragraph 74 of the said judgment, it

has further been specifically stated that the Magistrate has to

satisfy himself of the compliance of the safeguards as

mandated under Section 19 of the 2002 Act. Similarly, in the

case of Pankaj Bansal (supra), the relevant portion of which

has been reproduced in the earlier part of this judgment, it has

been observed that the concerned Court while remanding the

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accused person has to "ensure that the conditions in Section 19

are duly satisfied" and that there is proper compliance of the

mandate of Section 19 the 2002 Act. Even explanation to

Section 45 of the 2002 Act states that the officers authorised

under the Act are empowered to arrest the accused without

warrant subject to fulfilment of the conditions under Section

19 in addition to the conditions enshrined under Section 45.

Paragraph 322 of Vijay Madanlal Chaudhary (supra) which

has also been reproduced in the earlier part of this judgment

also furthers the proposition that the conditions and the

procedure as mentioned in Section 19 are mandatory and any

violation of the same would make the arrest and subsequent

proceedings illegal. It is the admitted stand of respondent no.2

that upto 09.01.2024, when both the petitioners were produced

before the Special Court and their remand was sought and

granted by the Court, there was no compliance of Section 19(2)

and the same was done subsequently only. The question which

would arise in the present case, with respect to the present issue,

would be the construction to be placed on the word

"immediately" used in Section 19(2) and as to whether the same

would show a higher degree of urgency than the term "as soon

as may be". The Hon'ble Supreme Court in the case of Ram

Kishor Arora while interpreting the expression "as soon as may

be" contained in Section 19(1) observed that the said period

would be 24 hours from the time of arrest and while observing

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so it was noticed that by way of safeguard, a duty is cast upon

the concerned officer to forward the copy of the order along

with the material in his possession to the Adjudicating

Authority immediately after the arrest of the person. Paragraph

21 of the judgment in the case of Ram Kishor Arora is

reproduced hereinbelow:-

"21. In view of the above, the expression "as soon as may be"

contained in Section 19 of PMLA is required to be construed as- "as early as possible without avoidable delay" or "within reasonably convenient" or "reasonably requisite" period of time. Since by way of safeguard a duty is cast upon the concerned officer to forward a copy of the order along with the material in his possession to the Adjudicating Authority immediately after the arrest of the person, and to take the person arrested to the concerned court within 24 hours of the arrest, in our opinion, the reasonably convenient or reasonably requisite time to inform the arrestee about the grounds of his arrest would be twenty-four hours of the arrest."

56. In paragraph 311 of Vijay Madanlal Chaudhary (supra) while

considering the provisions of Section 5 (2) and 17(2) of the 2002 Act, which

also require the competent officer to immediately after attachment under

Section 5(1) and after search and seizure under Section 17(1), to forward a

copy of the order along with material in his possession to the Adjudicating

Authority, the Hon'ble Supreme Court of India was pleased to use the term

"contemporaneously" and had observed that the reasons to believe were

required to be recorded in writing and contemporaneously forwarded to the

Adjudicating Authority along with the material in possession in the sealed

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envelope. The relevant portion of paragraph 311 of the said judgment is

reproduced hereinbelow:-

"311. Undoubtedly, the 2002 Act is a special self-contained law; and Section 17 is a provision, specifically dealing with the matters concerning searches and seizures in connection with the offence of money-laundering to be inquired into and the proceeds of crime dealt with under the 2002 Act. We have already noted in the earlier part of this judgment that before resorting to action of provisional attachment, registration of scheduled offence or complaint filed in that regard, is not a precondition. The authorised officer can still invoke power of issuing order of provisional attachment and contemporaneously send information to the jurisdictional police about the commission of scheduled offence and generation of property as a result of criminal activity relating to a scheduled offence, which is being made subject matter of provisional attachment. Even in the matter of searches and seizures under the 2002 Act, that power can be exercised only by the Director or any other officer not below the rank of Deputy Director authorised by him. They are not only high- ranking officials, but have to be fully satisfied that there is reason to believe on the basis of information in their possession about commission of offence of moneylaundering or possession of proceeds of crime involved in moneylaundering. Such reason(s) to believe is required to be recorded in writing and contemporaneously forwarded to the Adjudicating Authority along with the material in his possession in a sealed envelope to be preserved by the Adjudicating Authority for period as is prescribed under the Rules framed in that regard. Such are the inbuilt safeguards provided in the 2002 Act."

57. The word "contemporaneous" has been defined in the New

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International Webster's Comprehensive Dictionary of the English language

Deluxe Encyclopedic Edition in the following manner:-

"Living or occurring at the same time"

58. From the perusal of provisions of Section 19 and the law laid

down in the above said judgments, it is apparent that the legislature has

purposely chosen to use the expression "immediately" in Section 19(2) and

expression "as soon as may be" in Section 19(1) as the order along with the

material which is required to be forwarded to the Adjudicating Authority

would already be in the possession of the competent officer carrying out the

arrest, as before arresting on the basis of the said material in his possession,

he has formulated reason to believe to be recorded in writing that the said

person was guilty and thus, the act of sending the said material should be

done immediately and the same would be required to be done prior to when

the person so arrested is produced before the Special Court or Judicial

Magistrate or Metropolitan Magistrate, as the case may be having

jurisdiction, as it has been repeatedly held by the Hon'ble Supreme Court

that it is incumbent upon the Court concerned to satisfy itself of the

compliance of the conditions contained in Section 19 which would also

include the compliance of Section 19(2), before passing the order of remand.

In case the material on the basis of which the officer arresting the person,

had reason to believe that the accused persons were guilty of the offence

under the Act, is not forwarded before the accused is presented before the

Court concerned, then it would not be possible for the Court concerned to

carry out its duty to see the compliance of Section 19 moreso Section 19(2).

Moreover, in case respondent no.2 is permitted to render compliance of the

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said provision of Section 19(2) after some delay i.e., beyond the period when

the accused are to be presented before the concerned Court, then in such a

situation it would not be possible to affirmatively come to a conclusion that

the reasons to believe that the person is guilty before arresting were actually

recorded in writing or not and were based upon the material already in

possession of the competent officer prior to arresting the accused. In case

there is non-compliance of the provisions of Section 19(2) prior to the date

when the accused persons are presented before the concerned Court for the

first time, then the next opportunity for the Court concerned to verify

compliance of the same would only arise when the accused is presented on

the next occasion before the Special Court which could be 7 days as in the

present case. The argument made on behalf of respondent no.2 that the

provisions of Section 19(2) are not mandatory and delay, if any, in sending

the same would not call for setting aside the order of remand or holding the

arrest to be illegal is misconceived and is, thus, rejected. A reading of the

law laid down in the judgment of Vijay Madanlal Chaudhary's (supra), V.

Senthil Balaji's (supra) and Pankaj Bansal's (supra), and also the other

judgments which have been referred to hereinabove, would show that

compliance of Section 19 including Section 19(2) is mandatory and for the

non-compliance of the same, arrest and the order of remand would be

required to be set aside.

59. In the present case, admittedly, the compliance of Section 19(2)

was not done till 09.01.2024, and the orders of remand dated 09.01.2024 of

both the petitioners do not even remotely show that the Special Court had

observed anything regarding its compliance. Even the order dated

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16.01.2024 passed by the Special Court extending the remand of both the

petitioners does not even remotely mention that there was any compliance of

Section 19(2). The same is the position with respect to the order dated

23.01.2024 annexed as Annexure R-11 along with the reply filed by

respondent no.2 in CRM-M-3385-2024 vide which the petitioners have been

remanded to the judicial custody till 06.02.2024. Respondent no.2 has in

their additional reply dated 29.01.2024 in the case of Dilbag Singh given the

series of events which as per their case had taken place from the time of

search till the time of scrutiny of documents. Paragraphs E[(3)(a) to (3)(d)]

of the same are reproduced hereinbelow:-

"3. That in light of the above well settled legal principles, it is submitted that the following series of events explaining the timeline of the present case with respect to the arrest and compliance of Section 19(2), shows beyond any pale of doubt that the respondent Directorate has acted without any undue delay in compliance with Section 19 of the PMLA.

a) It is submitted that this Directorate initiated search operation at 23 different locations in the districts of Yamuna Nagar, Karnal, Mohali, Sonepat and Faridabad with manpower of around 110 Enforcement Directorate officers/ officials along with approximately 100 CRPF personnel on 04.01.2024. To conduct the search, 110 officers of Enforcement Directorate were mobilized from various office of ED such as Gurugram, Srinagar, Jammu, Jalandhar, Chandigarh, Delhi, Dehradun etc. To conduct the search of this level, is humongous task as it requires co-ordination with multiple teams situated at multiple locations. There was seizure of cash (5.29 Cr), gold bullion (Valued at 1.89 CR), vehicle (2), various electronic devices & documents from multiple search premises

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which needed to be collected at one place and preliminary scrutiny was required. The final search operation was concluded at around 03:00 pm on 08.01.2024 (after) the arrest of the petitioner and another co-accused Kulwinder Singh.

b) During the whole proceedings, Investigating officer was continuously on the move and coordinating with multiple teams and also performing his own duties. The petitioner was arrested on 08.01.2024 at 12:15 pm and the other co-accused was arrested on the same day at 02:20 pm. They both were brought to this Gurugram Zonal office situated at #22, The Green, Rajokri, New Delhi at around 09:00 pm and were taken for medical examination in Civil Hospital, sector 10, Gurugram as per prescribed norms. Their medical was completed at around 11:45 PM on 08.01.2024.

c) After that both the accused were brought to the office. Further, the remand application was prepared late night and the next day on 09.01.2024 at 10:00 am both the accused were produced before the Special Court (PMLA), Gurugram seeking for their remand on 09.01.2024. Matter was taken up around 10:30 AM and thereafter, the Ld. Special Court (PMLA) Gurugram after hearing the arguments from both the sides adjourned the matter to 2:00 PM in order to peruse the relevant material available with Directorate to satisfy itself with respect to point of jurisdiction. At 2.00 PM, the Directorate produced the case file along with Reason to Believe (RTB) of the arrestees before the Ld. Judge and the Ld. Judge again deferred the matter for 4.00 PM thereby giving reasonable opportunity to the other side to present its arguments. During arguments, the Directorate, also requested the Hon'ble Judge for transit remand with respect to the remand applications. Later, after perusal of the case file, remand application and hearing arguments of both the sides, the Ld. Special Judge had

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pronounced the order in the evening at around 5:30 PM, copy of which was received around 7:30 PM on 09.01.2024

d) Thereafter, on 10.01.2024, without any delay, the officials of the Directorate preliminary scrutinized all the seized material which was collected from 23 different teams. After summarizing the seizure, officer prepared the application & other material as prescribed which was to be sent to adjudicating authority. Later on, both letters intimating about the search and arrest, along with requisite documents as prescribed were dispatched to the Ld. Adjudicating Authority on 10.01.2024. However, by the time officer reached the office around 5:30 PM of the Ld. Adjudicating Authority situated in New Delhi, dispatcher had left the office hence, this office could get the receiving only on 11.01.2024 (Annexure-R7)."

A perusal of the above reply would show that it has been

admitted by respondent no.2 that till 09.01.2024 no compliance of Section

19(2) was made. It is the own case of respondent no.2 that 110 officers of

the Directorate of Enforcement along with 100 CRPF personnel were

involved in the search operation and yet respondent no.2 was not able to

forward the material which they had already collected as per their case, to

the Adjudicating Authority. In case the plea sought to be raised in the

additional reply is accepted, then the same reason could be given by

respondent no.2 for non-supply of the grounds of arrest within 24 hours and

also for non-production of the petitioners within the said period of 24 hours.

Preparation of the grounds of arrest involves application of mind and even in

the said situation, the Hon'ble Supreme Court of India in Ram Kishor

Arora's (supra) had observed that 24 hours should be granted for the same

whereas forwarding the material already seized is more of a ministerial act

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and thus, should be sent immediately and in any case within 24 hours. A

perusal of the above paragraph would also show that it was stated in sub

clause (d) that the preliminary scrutiny of the seized material was done after

09.01.2024 on 10.01.2024 i.e., after the date of the arrest and after the date

of remand. Moreover, as per the stand of respondent no.2 in para 3(a) and (c)

the search operation continued even after the petitioners had been arrested

and that the Special Court on 09.01.2024 had considered the material only

with respect to the point of jurisdiction, whereas no observation regarding

the said point of jurisdiction has been made in the order dated 09.01.2024. Reliance placed upon the judgment of the Single Bench of the Delhi High

Court in the case of Neeraj Singal (supra) moreso, paragraph 60 of the said

judgment by the learned counsel for the respondent does not further the case

of the respondent. A perusal of paragraph 60 of the said judgment would

show that in the said case, the petitioner therein was arrested on 19.06.2023

at 10:25 PM which happened to be a Friday night and thereafter on Saturday

i.e., 10.06.2023 and Sunday i.e., 11.06.2023, the office of Adjudicating

Authority was closed and immediately thereafter, the copy of the arrest order

along with the relevant material was forwarded on 12.06.2023 and the Delhi

High Court after taking into consideration the provisions of Section 10 of the

General Clauses Act 1897 which provided that where a period prescribed for

the purpose of an act in a Court or office expired on a holiday, then the said

Act should be considered to have been done within that period, if it is done

on the next date on which the Court / Office opens and on the basis of the

said peculiar facts of that case it was observed that there was no delay in

forwarding the copy of the arrest order along with the material to the

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Adjudicating Authority. In the above said case, it was impossible for the

authorities to have complied with the provision of Section 19(2) within 24

hours as on Saturday and Sunday, the office of the Adjudicating Authority

was closed and it was observed that in view of the provisions of Section of

10 of the General Clauses Act, the act done on the following day was taken

to be done within the period required. In the case at hand, it is not the case of

respondent no.2 that either on 08.01.2024 or on 09.01.2024 there was a

holiday in the office of the Adjudicating Authority.

60. Further reliance sought to be placed upon the judgment of the

Hon'ble Supreme Court of India in Sheo. Shankar Singh (supra) as well as

State of Rajasthan Vs. Daud Khan (supra), by the learned counsel for the

respondent would also not further the case of respondent no.2. In the said

cases, the Hon'ble Supreme Court was considering the provisions of Section

157 of Cr.P.C., with respect to cases where the FIR had been registered

under the provisions of IPC and not under the provisions of a special Act

like the 2002 Act. In the case of Sheo. Shankar Singh (supra), the appellant

therein had been convicted and it was argued on their behalf that the absence

of any proof of forwarding the FIR copy to the Magistrate concerned was

violative of Section 157 Cr.P.C. and thus the very registration of the FIR had

become doubtful and while rejecting the said argument, the Hon'ble

Supreme Court had observed that the FIR was recorded on 13.06.1979 and

was forwarded on 14.06.1979 and moreover, a perusal of the judgments of

the High Court as well as trial Court disclosed that no case of any prejudice

was shown nor even raised on behalf of the appellants based on alleged

violation of Section 157 Cr.P.C. It would be relevant to note that Section

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157 Cr.P.C. does not come into play necessarily after the arrest of accused

person whereas the provision of Section 19 (2) of the 2002 Act would come

into play only after a person has been arrested and thus, the compliance of

the provisions of Section 19 are mandatory, as has been repeatedly held by

the Hon'ble Supreme Court. Moreover, the 2002 Act is a special Act and the

provision for bail as contained in Section 45 is different from the provision

for bail for the offences under the IPC and much stringent conditions have

been provided in Section 45 of the 2002 Act and thus, the compliance of the

provisions of Section 19 of the 2002 Act which enables the competent

officer to arrest a person has to be of a much higher degree. It would also be

relevant to note that the Hon'ble Supreme Court in the case of Youth Bar

Association vs. Union of India reported as 2016(9) SCC 473 has directed

that the copy of the FIR unless the offence is sensitive in nature is required

to be uploaded on the website within 24 hours of the registration of the FIR. At any rate, in view of the observations made by the Hon'ble Supreme Court

in the case of Vijay Madanlal Chaudhary's (supra), V. Senthil Balaji's

(supra) and Pankaj Bansal's (supra), the relevant portion of which has been

reproduced hereinabove, it is apparent that compliance of Section 19

including Section 19(2) is mandatory and brooks no exception. Accordingly,

in view of the above facts and circumstances, it is held that there is violation

of the provisions of Section 19(2) of the 2002 Act on account of which also

the impugned action is bad in law and is liable to be set aside.

(IV) NON-COMPLIANCE OF SECTION 19(1) OF THE 2002 ACT

61. Section 19(1) which has been reproduced in the earlier part of

the judgment states that the competent officer may arrest a person after he

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has reason to believe (on the basis of material in his possession, to be

recorded in writing) that any person is guilty of an offence punishable under

the Act and as soon as may be inform him of the grounds of such arrest. In

pursuance of the law laid down by the Hon'ble Supreme Court in Pankaj

Bansal (supra), the said grounds of arrest are to be supplied in writing and

the expression "as soon as may be" has been held to mean "within 24 hours"

in the case of Ram Kishor Arora (supra). The Hon'ble Supreme Court in the

case of Pankaj Bansal (supra) had observed that failure of a person to

respond to the questions put to them by the E.D. would not be sufficient in

itself for the Investigating Officer to opine that they were liable to be

arrested under Section 19 as the said provision specifically requires that the

Investigating Officer is to be of the opinion that there is reason to believe

that the person concerned was guilty of the offence under the Act and that,

mere non-cooperation of the said person in response to the summons issued

under Section 50 of the 2002 Act would not be enough to render him/her

liable to be arrested under Section 19. It was further observed that it was not

for the Enforcement Directorate to seek an admission of guilt from the

person summoned for interrogation as the same would be violative of his

fundamental right against self incrimination as provided for in Article 20

clause (3) of the Constitution. It was also held that the arrested person was

required to be made aware of the grounds of arrest by the authorised officer

containing the basis for the officer's "reason to believe" that he/she was

guilty of the offence punishable under the 2002 Act and it is only thereafter

that the arrested person could make out a case that he / she is not guilty of

such offence. Paragraphs 27, 28, 32 and 33 of the above said judgment are

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reproduced hereinabelow:-

"27. Further, when the second ECIR was recorded on 13.06.2023 'after preliminary investigations', as stated in the ED's replies, it is not clear as to 22 when the ED's Investigating Officer had the time to properly inquire into the matter so as to form a clear opinion about the appellants' involvement in an offence under the Act of 2002, warranting their arrest within 24 hours. This is a sine qua non in terms of Section 19(1) of the Act of 2002. Needless to state, authorities must act within the four corners of the statute, as pointed out by this Court in Devinder Singh v. State of Punjab , and a statutory authority is bound by the procedure laid down in the statute and must act within the four corners thereof.

28. We may also note that the failure of the appellants to respond to the questions put to them by the ED would not be sufficient in itself for the Investigating Officer to opine that they were liable to be arrested under Section 19, as that provision specifically requires him to find reason to believe that they were guilty of an offence under the Act of 2002. Mere non-cooperation of a witness in response to the summons issued under Section 50 of the Act of 2002 would not be enough to render him/her liable to be arrested under Section 19. As per its replies, it is the claim of the ED that Pankaj Bansal was evasive in providing relevant information. It was however not brought out as to why Pankaj Bansal's replies were categorized as 'evasive' and that record is not placed before us for verification. In any event, it is not open to the ED to expect an admission of guilt from the person summoned for interrogation and assert that anything short of such admission would be an 'evasive reply'. In Santosh S/o Dwarkadas Fafat vs. State of Maharashtra, this Court noted that custodial interrogation is not for the purpose of

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'confession' as the right against self-incrimination is provided by Article 20(3) of the Constitution. It was held that merely because an accused did not confess, it cannot be said that he was not co-operating with the investigation. Similarly, the absence of either or both of the appellants during the search operations, when their presence was not insisted upon, cannot be held against them.

xxx xxx xxx

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,

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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.

33. We may also note that the language of Section 19 of the Act of 2002 puts it beyond doubt that the authorized officer has 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 of 2002. Section 19(2) requires the authorized officer to forward a copy of the arrest order along with the material in his possession, referred to in Section 19(1), to the Adjudicating Authority in a sealed envelope. Though it is not necessary for the arrested person to be supplied with all the material that is forwarded to the Adjudicating Authority under Section 19(2), he/she has a constitutional and statutory right to be 'informed' of the grounds of arrest, which are compulsorily recorded in writing by the authorized officer in keeping with the mandate of Section 19(1) of the Act of 2002. As already noted hereinbefore, It seems that the mode of informing this to the persons arrested is left to the option of the ED's authorized officers in different parts of the country, i.e., to either furnish such grounds of arrest in writing or to allow such grounds to be read by the arrested person or be read over and explained to such person."

62. The Hon'ble Supreme Court of India in Pebam Ningol Mikoi

Devi (supra) while examining the provisions of the National Security Act

1980 and Article 22 of the Constitution of India observed that even when the

detention of a person is based on subjective satisfaction of the authority

concerned, then also in support of the said subjective satisfaction, reference

should be made to some pertinent material. In the said judgment, reliance

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was placed upon the judgment of the Hon'ble Supreme Court in "State of

Rajasthan vs. Talib Khan" reported as (1996) 11 SCC 393 which required

the communication of the grounds of detention to the detenue together with

documents in support of the subjective satisfaction reached at by the

detaining authority. It was further observed that individual liberty is a

cherished right and is one of the most valuable fundamental rights

guaranteed by the Constitution to the citizens of this country. Paragraphs 3,

16, 22, 23, 24 and 25 of the said judgment are reproduced hereinbelow:-

"3. Individual liberty is a cherished right, one of the most valuable Fundamental Rights guaranteed by the Constitution to the citizens of this Country. On "liberty", William Shakespeare, the great play writer, has observed that "a man is master of his liberty". Benjamin Franklin goes even further and says that "any society that would give up a little liberty to gain a little security will deserve neither and lose both". The importance of protecting liberty and freedom is explained by the famous lawyer Clarence Darrow as "you can protect your liberties in this world only by protecting the other man's freedom; you can be free only if I am free." In India, the utmost importance is given to life and personal liberty of an individual, since we believe personal liberty is the paramount essential to human dignity and human happiness.

xxx xxx xxx

16. The High Court has responded to each of these, by holding that the allegations projected in the grounds of detention have been corroborated in material particulars. Further, the allegations were not vague or ambiguous, and the material was sufficient for the detaining Authority to arrive at the subjective satisfaction that the detenu was acting in a manner prejudicial to the maintenance of the public order. The

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High Court has also pointed out that the statement incriminating himself under Section 161 was prepared by a public servant, and there is a presumption of regularity, which the appellant has a burden to disprove in order to prove them false and fabricated, which was not done in this case. It highlighted that the exercise of discretionary power involved objective and subjective elements, and the subjective elements if derived from objective elements cannot be questioned on grounds of adequacy of subjective satisfaction by a judicial review.

xxx xxx xxx

22. Some of the decisions of this Court may be of relevance in determining in what manner such subjective satisfaction of the Authority must be arrived at, in particular on Section 3(2) of the National Security Act. In Fazal Ghosi v. State of Uttar Pradesh, this Court observed that: (SCC p.505, para 3) "3....The District Magistrate, it is true, has stated that the detention of the detenus was effected because he was satisfied that it was necessary to prevent them from acting prejudicially to the maintenance of public order, but there is no reference to any material in support of that satisfaction. We are aware that the satisfaction of the District Magistrate is subjective in nature, but even subjective satisfaction must be based upon some pertinent material. We are concerned here not with the sufficiency of that material but with the existence of any relevant material at all."

(emphasis supplied)

23. In Shafiq Ahmed v. District Magistrate, Meerut, this Court opined :-

"Preventive detention is a serious inroad into the freedom of individuals. Reasons, purposes and the manner of such detention must, therefore, be subject to closest scrutiny

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and examination by the courts."

(emphasis supplied) This Court further added: (Shafiq Ahmad case, SCC p.561, para 5) "5. ...there must be conduct relevant to the formation of the satisfaction having reasonable nexus with the action of the petitioner which are prejudicial to the maintenance of public order. Existence of materials relevant to the formation of the satisfaction and having rational nexus to the formation of the satisfaction that because of certain conduct "it is necessary" to make an order "detaining" such person, are subject to judicial review."

(emphasis supplied)

24. In State of Punjab v. Sukhpal Singh, this Court held:

(SCC p.43, para 9) "9. ...the grounds supplied operate as an objective test for determining the question whether a nexus reasonably exists between grounds of detention and the detention order or whether some infirmities had crept in."

(emphasis supplied)

25. In State of Rajasthan v. Talib Khan, this Court observed that: (SCC p.398 para 8) "8. ...what is material and mandatory is the communication of the grounds of detention to the detenu together with documents in support of subjective satisfaction reached by the detaining authority."

(emphasis supplied)"

63. In the present case it is the admitted case of the parties that both

the petitioners are not accused till date in the 8 FIRs which have been

reproduced in the grounds of arrest of both the petitioners. It is further the

admitted case of the parties that no notice under Section 50 which empowers

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the competent authority to summon any person and also to produce the

documents as required, has been issued to either of the two petitioners. From

the discussion made hereinabove, it is also clear that the petitioners were in

the premises where the search was being conducted from 04.01.2024 to

08.01.2024. A perusal of the grounds of arrest of both the petitioners would

show that although it has been stated by the competent officer that the

petitioners have adopted an attitude of non-cooperation by evading the

queries and by giving misleading answers but no specific instance regarding

the same has been mentioned. General observations have been made on the

said aspect. Paragraph E[(3)(a) to (3)(d)] of the additional reply dated

29.01.2024 filed in the case of Dilbag Singh has been reproduced in the

earlier part of the judgment and a perusal of the same would show that in

paragraph 3(a), it had been stated that the preliminary scrutiny of documents

was required to be done and it had further been stated that search operation

had continued till 03:20 PM on 08.01.2024 and both the petitioners were

arrested prior in time to the conclusion of search inasmuch as the petitioner

Dilbag Singh was arrested at 12:15 PM and Kulwinder Singh was arrested at

02:15 PM on 08.01.2024. Importantly in clause (d) it was stated that it is on

10.01.2024, that the preliminary scrutiny of all the seized material was done.

By filing the said additional reply dated 29.01.2024, respondent no.2 has

tried to show the sequence of events in order to explain the delay in

compliance of Section 19(2) but a closer perusal of the said paragraph would

show that in case the preliminary scrutiny of documents had been done on

10.01.2024, subsequent to 08.01.2024 when the petitioners were arrested,

then the question of the arresting officer having formed the reason to believe

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in writing that the petitioners were guilty of an offence under the 2002 Act

on the basis of the material in his possession, becomes highly doubtful.

Moreover, no reference has been made in the sequence of events as to when

the reasons to believe as required under Section 19(1) of the 2002 Act were

reduced into writing.

64. It would be further relevant to note that even a perusal of the

remand application dated 09.01.2024 in the case of Dilbag Singh as well as

in the case of Kulwinder Singh does not even remotely record the fact that

the arresting officer had recorded the reasons of his belief in writing. In

paragraph 18 of the application for remand in the case of Dilbag Singh, it

has been observed that the petitioner was "prima facie guilty for commission

of the offence of money laundering on the basis of investigation carried out"

and there was no recording of the fact in the said application that the

arresting officer had reason to believe in writing that the petitioner Dilbag

Singh was guilty of an offence punishable under the Act and thus, even in

case the averments in the grounds of arrest are taken on their face value, then

also the mandatory conditions under Section 19(1) are not fulfilled.

Paragraphs 15, 16 and 18 of the application for remand filed in the case of

Dilbag Singh are reproduced hereinbelow:-

"15. In view of above, since the accused Dilbag Singh willfully adopted an attitude of non-cooperation either by evading the query or by giving misleading, part and evasive replies. By such action of willful noncooperation, the accused made a deliberate effort to hamper the investigation by not disclosing the facts and information which is in his exclusive knowledge pertaining to proceeds of crime received and generated from illegal mining activities, thereby, leaving no other option but to invoke the

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provision of Section 19 of PMLA, 2002 for taking investigation to a logical conclusion and to unearth proceeds of crime.

16. Accordingly, accused Dilbag Singh was arrested on 08.01.2024 at 12.15pm from his residence House No. 410, Friends Colony, Yamuna Nagar, Haryana 135001 in accordance with the procedure established under section 19 PMLA.

xxx xxx xxx

18. That, this Directorate requires custodial interrogation of accused Dilbag Singh in order to discover and identify further proceeds of crime and to enquire upon certain crucial aspects of the investigation related to illegal mining and transfer of funds as he was found to be "prima facie" guilty for commission of offence of money-laundering, on the basis of investigation carried out and evidences collected so far as well as material in possession of this Directorate."

65. To the similar effect are the averments made in the application

for remand dated 09.01.2024 in the case of Kulwinder Singh and in

paragraph 14 of the said application, it has been observed that the petitioner

Kulwinder Singh was found to be prima facie guilty for commission of the

offence of money laundering on the basis of the investigation carried out.

Moreover, it is the case of respondent no.2 that search was continuing even

after arresting the petitioners and thus, the question of assimilation of

material and formulation of reasons to believe as required under Section

19(1) prior to arresting the petitioners moreso after application of mind

becomes highly doubtful. A further perusal of paragraph 39 of the reply

dated 22.01.2024 filed in the case of Dilbag Singh would show that it had

been observed that the arrest was made after having reason to believe that

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the prima-facie offence of money laundering is made out against the

petitioners. Relevant part of paragraph 39 is reproduced hereinbelow:-

"The arrest was made after having reasons to believe that a "prima facie" case of offence of money laundering is made out against the petitioner person."

66. To the similar effect is the averment made in paragraph 29 of

the said reply which has already been reproduced in the earlier part of the

judgment. Thus, even as per the stand of respondent no.2, the arrest was

made after finding a prima-facie case against the petitioners and not after

there was reason to believe on the basis of material in their possession that

the petitioners were guilty of the offence punishable under the Act. In the

grounds of arrest, reference has been made to one Om Guru Unit regarding

which the petitioners are not stated to be either owners or in possession

thereof. Further reference has been made to the orders passed by the NGT

and the order dated 18.11.2022 has been annexed as Annexure R-4 along

with the additional reply dated 29.01.2024 filed in the case of Dilbag Singh

and a perusal of the same would show that M/s Development Strategies

India Private Limited of which the petitioner Dilbag Singh is stated to be an

authorised signatory had a mining lease whereas in the grounds of arrest the

fact that the said company had a mining lease has not been mentioned and in

the same, it is not coming out clearly as to what is the starting point showing

the involvement of the petitioners with respect to the alleged proceeds of

crime relatable to the 8 FIRs. The subsequent paragraphs i.e. paragraphs 6 to

14 in the grounds of arrest are all vague and general and no reference to any

concrete material has been mentioned in the same. The plea of respondent

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no.2 that the petitioners were non-cooperative is also vague. The argument

raised on behalf of the petitioners to the effect that such vague grounds of

arrest violate the fundamental right of the petitioners as it is very difficult for

the petitioners to prepare their defence in view of the provisions of Section

45 of the 2002 Act is also weighty. In the said circumstances, it cannot be

said that respondent no.2 has rendered full compliance of the mandatory

provisions of Section 19(1) of the Act.

ADDITIONAL ISSUES

67. Section 19 sub-section (3) of the 2002 Act provides that every

person arrested under sub-section (1) of the said provision shall within 24

hours of the said arrest be produced before the Special Court, Judicial

Magistrate or the Metropolitan Magistrate as the case may be, having

jurisdiction. On the basis of the arguments raised on behalf of the petitioners

and the respondents, there are two aspects which this Court was called upon

to consider. The first aspect was the non-application of mind by the Special

Court, while passing the orders of remand, regarding satisfying itself with

respect to the compliance of the conditions contained in Section 19

including Section 19(3) of the 2002 Act. The said aspect has been discussed

in detail under ground No.1 and has been held in favour of the petitioners.

The second aspect is as to whether prior to 09.01.2024 when the petitioners

were produced before the Special Court at Gurugram, there was some

recovery/part of cause of action within the jurisdiction of the Gurugram

Court so as to meet the compliance of Section 19(3) of the 2002 Act.

Although in the application for remand filed on 09.01.2024, no such

recovery has been referred to but in the additional reply dated 29.01.2024

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filed on behalf of respondent No.2 in the case of petitioner Dilbag Singh @

Dilbag Sandhu, it has been stated that an amount of Rs.7.50 lakhs was seized

from the residence of one Raman Ojha, who is stated to be a 50% partner in

Delhi Royalty Company which was a partnership firm and thus, the said

Court at Gurugram had the jurisdiction at the time of passing of the order of

remand dated 09.01.2024. In this regard, reference has been made to the

panchnama dated 05.01.2024 (Annexure R-2) by the learned counsel for

respondent No.2. A perusal of the said panchnama shows that House

No.816, Sector 15-A, Faridabad, belonging to Raman Ojha was searched on

04.01.2024 and from the same an amount of Rs.7.50 lakhs was seized. It is

the case of the petitioners that the said recovery has no connection with the

petitioners and the said panchnama does not relate to any recovery having

been made from any of the premises owned or possessed by either of the two

petitioners. It is further the case of the petitioners that the said alleged

recovery from the residence belonging to a third person cannot be stated to

be a recovery from the present petitioners so as to confer jurisdiction on the

Court at Gurugram on 09.01.2024 when the petitioners were produced

before the said Court. It is further the case of both the petitioners that they

are residents of Yamuna Nagar and their premises which were searched are

situated at Yamuna Nagar and the Special Court at Gurugram had no

jurisdiction with respect to offences having been committed at Yamuna

Nagar and as per the notification dated 19.01.2021 (Annexure P-8), for

offences which have been committed in the revenue district of Yamuna

Nagar, the competent Court of jurisdiction is the Court of Sessions Judge,

Ambala.

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68. Several arguments on the aspect as to whether the Court at

Gurugram would have jurisdiction or not to finally try the case have been

raised from both sides. The Hon'ble Supreme Court in Rana Ayyub's case

(supra) had observed that the question of territorial jurisdiction requires an

enquiry into a question of fact as to the place where the alleged proceeds of

crime were concealed, possessed, acquired or used and the same would

depend upon the evidence that unfolds before the Trial Court. Thus, the said

question cannot be decided finally in the present petitions especially when

serious factual disputes have been raised by both the sides. Moreover, in the

present case, the complaint is yet to be filed by the respondents and it is only

at that stage after considering the entire material that the said issue could be

finally considered. However, as has been stated herein above, the above said

observations would not in any way take away the findings which have been

recorded in the earlier part of the present order under ground No.1, as in the

said ground the issue for consideration was the application of mind with

respect to the compliance of the provisions of Section 19 including Section

19(3) of the 2002 Act by the Special Court on the date the petitioners were

remanded and the ED was given their custody.

69. At this stage, it would be relevant to deal with the objection

raised on behalf of respondent No.2 with respect to the specific non-

challenge by the petitioner Dilbag Singh @ Dilbag Sandhu to the second

order dated 16.01.2024 granting extension of ED custody of both the

petitioners to respondent No.2. In this regard, it would be relevant to note

that the first petition bearing CRM-M-2191-2024 titled as Dilbag Singh @

Dilbag Sandhu was drafted on 11.01.2024 and the said case had come up for

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hearing before this Court on 15.01.2024. On 15.01.2024, this Court had

passed a detailed order directing the Registry to clarify as to whether the

present matter is to be heard by the Division Bench of this Court or is to be

listed before a Single Bench. The relevant part of the said order is

reproduced herein below: -

"Learned Senior Counsel for the petitioner has pointed out that the petitioner, in view of the abovesaid judgments, had filed writ petition under Article 226 of the Constitution of India but since an objection was raised regarding the maintainability of the same thus, the instant petition under Section 482 of Cr.P.C. has been filed.

Registry is thus, directed to clarify the following:-

1) Whether in view of the abovesaid cases which have been filed under Article 226 of the Constitution of India and have been entertained by the Hon'ble Division Bench, the present petition is to be listed before the Hon'ble Division Bench or Single Bench?

2) Whether in case the matter is to be listed before the Single Bench then as to whether the same is to be listed before the learned Single Judge hearing all matters under the Prevention of Money Laundering Act or before this Court which has been assigned roster dealing with all the criminal matters (SB) by or against sitting/former MP/MLA's?

Adjourned to 18.01.2024.

To be listed before appropriate Bench after considering the abovesaid aspects.

(VIKAS BAHL) 15.01.2024 JUDGE"

70. Thereafter, the Registry after obtaining orders from Hon'ble the

Acting Chief Justice, had put up the matter before this Court. It would be

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relevant to note that with respect to maintainability of the present petitions

under Section 482 CrPC, no objection has been raised by respondent No.2

during the course of arguments.

71. From the above, it is apparent that the first petition was filed

and taken up by this Court prior to 16.01.2023 and thus, the petitioner

Dilbag Singh @ Dilbag Sandhu could not challenge the said order in the said

petition. In the prayer clause, apart from there being specific challenge to the

arrest order, arrest memo, remand order dated 09.01.2024, a further prayer

was made that this Court may pass any other order or direction which it may

deem fit and appropriate in the facts and circumstances of the present case. It

would be relevant to note that the order dated 16.01.2024 has been placed on

record by respondent No.2 in their reply dated 22.01.2024 (Annexure R-8)

and that in the second petition i.e. CRM-M-3385-2024, filed by petitioner

Kulwinder Singh which came up for hearing before this Court for the first

time on 23.01.2024, on which date notice of motion was issued and the

matter was ordered to be heard alongwith CRM-M-2191-2024, the order

dated 16.01.2024 has been specifically challenged. The order dated

16.01.2024 is a common order passed in the case of both the petitioners

extending the period of remand of both the petitioners. Arguments have been

addressed on behalf of the petitioners challenging the said orders and also by

the respondents in defending both the orders and after considering the said

arguments, this Court has held that both the said orders deserve to be set

aside for the reasons which have been given herein above.

72. The Hon'ble Supreme Court in the case of Davinder Pal Singh

case (supra) had observed that it is a settled proposition of law that in case

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initial action/order is found to be illegal, then all subsequent and

consequential proceedings would fall automatically and the said principle is

applicable to judicial, quasi judicial and administrative proceedings equally

and after considering various judgments, it was further observed that once an

order at the initial stage is bad in law, then all further proceedings,

consequent thereto, would be non-est and have to be necessarily set aside

and on the basis of the said proposition of law, the Hon'ble Supreme Court

held that since the impugned order in the said case could not be sustained,

then as a consequence of the same, the subsequent proceedings, orders, FIR,

investigation would stand automatically vitiated and would be liable to be

set aside. Paragraphs No.107 to 111 of the said judgment are reproduced

herein below: -

"xxx xxx xxx

107. It is a settled legal proposition that if initial action is not in consonance with law, all subsequent and consequential proceedings would fall through for the reason that illegality strikes at the root of the order. In such a fact-situation, the legal maxim "sublato fundamento cadit opus" meaning thereby that foundation being removed, structure/work falls, comes into play and applies on all scores in the present case.

108. In Badrinath v. State of Tamil Nadu & Ors, AIR 2000 SC 3243; and State of Kerala v. Puthenkavu N.S.S. Karayogam & Anr., (2001) 10 SCC 191, this Court observed that once the basis of a proceeding is gone, all consequential acts, actions, orders would fall to the ground automatically and this principle is applicable to judicial, quasi-judicial and administrative proceedings equally.

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109. Similarly in Mangal Prasad Tamoli (dead) by Lrs. v. Narvadeshwar Mishra (dead) by Lrs. & Ors., (2005) 3 SCC 422, this Court held that if an order at the initial stage is bad in law, then all further proceedings, consequent thereto, will be non est and have to be necessarily set aside.

110. In C. Albert Morris v. K. Chandrasekaran & Ors., (2006) 1 SCC 228, this Court held that a right in law exists only and only when it has a lawful origin.

111. Thus, in view of the above, we are of the considered opinion that the orders impugned being a nullity, cannot be sustained. As a consequence, subsequent proceedings/orders/FIR/ investigation stand automatically vitiated and are liable to be declared non est. xxx xxx xxx

116. In view of the above, the appeals succeed and are accordingly allowed. The impugned orders challenged herein are declared to be nullity and as a consequence, the FIR registered by the CBI is also quashed."

73. To the similar effect is the law laid down by the Hon'ble

Supreme Court in the case titled as "Ritesh Tewari and another Vs. State of

U.P. and others", reported as (2010) 10 SCC 677. Paras No.32 to 35 of the

said judgment are as under: -

"32. It is settled legal proposition that if an order is bad in its inception, it does not get sanctified at a later stage. A subsequent action/development cannot validate an action which was not lawful at its inception, for the reason that the illegality strikes at the root of the order. It would be beyond the competence of any authority to validate such an order. It would be ironical to permit a person to rely upon a law, in violation of which he has

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obtained the benefits.

33. In C. Albert Morris v. K. Chandrasekaran this Court held that a right in law exists only and only when it has a lawful origin.

34. In Mangal Prasad Tamoli v. Narvadeshwar Mishra this Court held that if an order at the initial stage is bad in law, then all further proceedings consequent thereto will be non-est and have to be necessarily set aside.

35. In the instant case, as we have observed that the alleged sale deed dated 20-4-1992 in favour of Mayur Sahkari Avas Samiti has been avoid transaction, all subsequent transactions have merely to be ignored."

74. Since in the present case, the order of arrest, arrest memo and

the remand order dated 09.01.2024 are held to be illegal and against law for

the detailed reasons given herein above, thus, the subsequent order of

remand and other consequential orders are also liable to be set aside.

Moreover, this Court is of the view that even the order dated 16.01.2024 is

illegal and thus, deserves to be set aside.

75. The facts of the judgments relied upon by counsel for

respondent No.2 i.e. Mumbai International Private Limited case (supra)

and Gurdev Singh's case (supra), are distinguishable from the facts of the

present case and do not further the case of respondent No.2 and thus, the

objection raised on behalf of respondent No.2 is liable to be rejected and is

accordingly rejected.

CONCLUSION/RELIEF

76. As per the discussion herein above, both the petitions deserve to

be allowed and the impugned orders deserve to be set aside on the following

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grounds: -

"a) Non-application of mind and non-recording of compliance of the conditions/stipulations contained in Section 19 by the Special Court while passing the impugned orders.

b) Illegal detention/wrongful restraint of the petitioners from 04.01.2024 to 08.01.2024 amounting to arrest on 04.01.2024 itself and consequential violations of Section 19 of PMLA read with Section 167 CrPC on account of non-production of petitioners within 24 hours.

c) Violation of provisions of Section 19(2) of the 2002 Act.

d) Non-compliance of Section 19(1) of the 2002 Act."

77. The custody of the Enforcement Directorate is over and

presently the petitioners are in judicial custody.

78. Keeping in view the above-said facts and circumstances, both

the petitions are allowed and the impugned arrest orders, arrest memos along

with the orders of remand passed by the Special Judge, Gurugram and the

Additional Sessions Judge, Gurugram and all orders consequential thereto in

both the cases are set aside and both the petitioners are ordered to be

released forthwith, unless their incarceration is required in connection with

any other case.

79. All the pending miscellaneous application(s), if any, shall stand

disposed of, in view of the abovesaid judgment.

February 08, 2024 (VIKAS BAHL) naresh.k/pawan/davinder JUDGE

Whether speaking/reasoned:- Yes/No Whether reportable:- Yes/No

Neutral Citation No:=2024:PHHC:017817

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