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PATNA HIGH COURT
Bibek Chaudhuri, J.
Ajay Singh – Petitioner
versus
Directorate of Enforcement, through the Director and Ors. – Respondents
Criminal Writ Jurisdiction Case No.2167 of 2024
Decided on 5.2.2025
(A) Prevention of Money Laundering Act, 2002 – Section 19 – Constitution of India – Articles 21 and 226 – Arrest and extension of remand – Challenge as to – It is alleged that syndicate members were engaged in sand mining and they participated in auction process through dummy entities – Term “reason to believe” is of great implication and Arresting Officer is under obligation to establish at initial stage of arrest of a person that he is having sufficient material which has “reason to believe” that the person is guilty under the Act – Communication of grounds of arrest, as mandated by Article 22(1) of Constitution and Section 19, PMLA, is meant to serve this higher purpose and must be given due important – Term “reason to believe” cannot be equated with term reasonable complaint or credible information or reasonable suspicion contained in Section 41(1)(B) of Cr.P.C. – ”Reason to believe” is tangible evidence or material which constitutes sufficient cause to believe existence of certain facts – This reason to believe goes to root of power of arrest – Subjective opinion of Arresting Officer is based upon fair and objective consideration of material as available with him on the date of arrest. (Paras 28, 30 and 62)
(B) Prevention of Money Laundering Act, 2002 – Section 19 – Constitution of India – Articles 21 and 226 – Arrest and extension of remand – Challenge as to – Power to arrest under Section 19(1) of PMLA is not for the purpose of investigation – Arrest can and should wait and power in terms of Section 19(1) of PMLA can be exercised only when material with designated officers enables them to form an opinion by recording reasons in writing that arrestee is guilty – It is not alleged in ECIR that petitioner is licence holder of any of sand blocks – It is also not alleged that men and agents of petitioner or its company were engaged for illegal extraction and storage of sand at storing places – ED could not collect any evidence to prove that petitioner was engaged in illegal mining operation in State of Bihar – There is absolutely no evidence that petitioner directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any sand scam connected with proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property – Petitioner’s arrest is illegal and in violation of safeguards contained in Section 19(1) of PMLA – Any illegal detention is violative of right to life and personal liberty enshrined under Article 21 of Constitution of India – Petitioner to be released from judicial custody. (Paras 65, 68, 71, 77, 78,
80, 81, 82 and 83)
Result: Writ petition allowed.
JUDGMENT (CAV)
The instant writ petition has been filed for the following reliefs: -
“(i) To issue an appropriate writ, order or direction for declaring the arrest of Petitioner on 28.09.2024 in connection with ECIR/PTZO/07/2022 dated 10.01.2022 read with Addendum ECIR dated 04.06.2023 and 09.11.2023 registered by Directorate of Enforcement, Patna Zonal Office, as wholly illegal and arbitrary in nature and in violation of Section 19 of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as “PMLA”)
(ii) This Hon’ble Court may adjudicate and hold that since the arrest of the Petitioner by the Directorate of Enforcement is illegal and in violation of section 19 of PMLA, the consequential orders of remand passed by Learned Special Court, PMLA, Patna dated 28.09.2024 and 05.10.2024 and all other future orders extending the remand of the Petitioner are also illegal.
(iii) To issue a further appropriate writ, order or direction for the forthwith release of the Petitioner from judicial custody.
(iv) This Hon’ble Court may award the cost of litigation and suitable compensation to the Petitioner for the loss and damages caused on account of the illegal and arbitrary actions of the Respondent(s) Authorities.
(v) To grant any other relief or reliefs which the Petitioner may be found entitled to in the facts and circumstances of the case.”
2. The salient facts necessary for the adjudication of the instant writ petition are as follows:
“One M/s Aditya Multicom Private Limited (hereinafter described as “M/s AMPL” for short) was granted settlement of all sand quarries (Ghats) for extraction of sand in the district of Aurangabad and Rohtas during the period between 1st January, 2015 and 31st of December, 2019. The said settlement was time to time extended after it was initially granted for five years till 30th of September, 2021 by four separate grants. However, M/s AMPL surrendered its settlement on 30th of April, 2021 w.e.f. 1st of May, 2021. Initial dispute arose between Mines and Geological Department, Government of Bihar and M/s AMPL over payment of royalty for the surrendered period and also with respect of M/s AMPL entitlement to sell sand which was stocked at K-license sites, i.e., storage sites. The Mines and Geological Department cancelled the K-licenses obtained by M/s AMPL in the said two districts vide order, dated 17th of August, 2021 and 7th of July, 2021, respectively, and seized the sand stocked by M/s AMPL. Subsequent to the cancellation of license and seizure of sand, the officials attached to Mining Department lodged several F.I.R.s against M/s AMPL, alleging, inter alia, that it had misappropriated the sand stocked at K-license site without issuance of e-transit challans, causing loss of revenue to the Government. In all, 13 numbers of F.I.R. was registered against the said company and its Directors. On the basis of Dehri Nagar P. S. Case No. 407 of 2021, the Enforcement Directorate (hereinafter referred to as “ED” for short) registered ECIR/PTZO/07/2022, dated 10th of January, 2022 for the scheduled offence allegedly committed by M/s AMPL and its Directors under Sections 411 and 420 of the Indian Penal Code. The basis of the aforesaid case registered by ED is that the de facto complainant of Dehri Nagar P. S. Case No. 407 of 2021 alleged that M/s AMPL has embazelled sand valued at Rs. 24,42,67,900/- stored at two different places vide two K-licences issued to it by District Mining Office, Rohtas. However, the properties were suspected to be proceeds of crime. It is further alleged that only 600000 cubic ft. of sand was to be extracted/stored in the sites in respect of which K-license were granted, but there was 7784350 cubic ft. of sand stored in the said sites as per the report provided by the Project Management Unit. It was also alleged that the authorized staff/Director of the license holder sold the sand stealthily without issuing any pre-paid challans and thereby causing loss to the tune
Money Laundering – Power to arrest under Section 19 (1) of PMLA is not for the purpose of investigation – Arrest can and should wait and power in terms of Section 19(1) of PMLA can be exercised only ....
The court ruled that the arrest of the petitioner was unlawful due to insufficient evidence linking him to illegal mining, which is not a scheduled offence under the Prevention of Money Laundering Ac....
The necessity of providing documented 'reasons to believe' at the time of arrest under Section 19 of PMLA is a statutory requirement that must be adhered to for the arrest to be lawful.
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The court held that the petitioner is entitled to bail under Section 45 of the Prevention of Money Laundering Act, 2002 as there were no reasonable grounds for believing that she had committed an off....
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