The has quashed a series of passed against Jitendra Pandey, declaring his arrest by the as illegal and a violation of both and . In a significant ruling that examines the boundaries of investigative authority, Justice Milind N. Jadhav ordered the immediate release of the petitioner from , noting that the agency’s decision to arrest him without presenting fresh incriminating material or demonstrating supervening circumstances amounted to a .
The judgment centres on the procedural conflict between the ’s power to arrest under , and its statutory mandate to conduct investigations through summons and evidence collection under Section 50. Justice Jadhav emphasized that the agency cannot rely on the same body of evidence to secure court-sanctioned , only to abruptly switch tracks and invoke the “drastic and extreme” power of arrest when no new developments have surfaced.
The case originated from an investigation into a massive alleged . in Thane registered an FIR in regarding alleged fraudulent foreign remittances involving approximately ₹1,618 crore. The subsequently registered an Enforcement Case Information Report in . Authorities alleged that the petitioner, in conspiracy with others, orchestrated the formation of 97 partnership agreements and 18 private limited companies using the details of unsuspecting individuals to facilitate illicit activity. Investigators claimed these entities were used to open 269 mule bank accounts to remit roughly ₹7,569 crore abroad through forged documents, including invoices, bills of lading, and tax certificates, with the ultimate intent of evading customs duties via under-invoicing.
Evaluating the Necessity of Custodial Coercion
Despite being arraigned as an accused in a supplementary filed in , the petitioner consistently asserted that he had cooperated with investigators. Records placed before the court revealed that Pandey had appeared before the directorate on 38 separate occasions over an 18-month period, from to , to provide statements. The agency, however, maintained that the petitioner was evasive and withheld crucial information regarding the ultimate beneficiaries of the funds, the identities of foreign recipients, and the network of intermediaries involved in the alleged hawala operations.
The agency’s counsel argued that the petitioner controlled bank accounts used for remittances exceeding ₹7,358 crore and that his was essential to untangle the web of dummy firms and recover the . They contended that the petitioner had engaged in layering these proceeds through various accounts held by family members and associates. Despite these arguments, Justice Jadhav found the timeline of the investigation problematic. He noted that the agency had previously sought and obtained permission from the to record the petitioner’s statements specifically to address the existing material.
"Once a very valuable statutory power having been invoked by Respondent No.1 under Section 50 and more specifically under Section 50(2) and (3), then it cannot be open to Respondent No.1 to forego the same and notwithstanding completion of that action invoke Section 19 to arrest the Petitioner,"
the court observed. The Bench held that the agency could not simply abandon the court-authorized investigative path to arrest the individual on the exact same material it had already used to justify further questioning.
Balancing Liberty and Investigative Rigour
The court’s scrutiny was anchored in the stringent requirements of Section 19(1) of the Prevention of Money Laundering Act. The provision demands that an authorized officer must possess specific material and, on that basis, record in writing their "" that the individual is guilty. The judgment underscored that this power is not intended to facilitate the investigation itself but is a restrictive measure to be exercised only when the grounds for arrest have crystalized.
Justice Jadhav reiterated that in cases involving complex economic offences, the court must be cautious not to engage in , yet it remains the ultimate safeguard against arbitrary state action. By referring to previous legal precedents, the court affirmed that the "" recorded by the agency are not merely internal confidential documents but are essential components that the accused is entitled to review to challenge the validity of their deprivation of liberty.
"The power to arrest a person without a warrant and without instituting a criminal case is a drastic and extreme power. Therefore, the legislature had prescribed safeguards in the language of Section 19 itself which act as exacting conditions as to how and when the power is exercisable,"
the court noted, quoting the legal framework for protected rights. The judge found that because no new, incriminating, or extraneous material had been discovered between
, and the date of the petitioner's arrest on
, the arrest failed to meet the threshold of necessity.
The consequence of the ruling was immediate: the court ordered the quashing of dated June 23, June 29, and . The directorate’s request for a stay on the operation of the judgment to allow for a potential appeal before the was declined. The petitioner has been directed to be released from forthwith based on the court’s order. This decision reaffirms the principle that while investigative agencies possess broad powers to combat financial crimes, those powers are strictly tethered to the requirement of fresh, demonstrable evidence, ensuring that the investigative process does not infringe upon without compelling, verified justification.
money laundering investigation - custodial interrogation rights
