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.

JUDGMENT :

Anoop Chitkara, J.

PREDICATE OFFENCES [FOR THE CURRENT ECIR]:

SCHEDULED OFFENCES [IN THE PRESENT PETITION]:

1. An industrialist incarcerated on the allegations of illegally diverting Rs.1530.99 crores from the loan amount for a purpose other than it was sanctioned, and subsequently, the above-captioned complaint was registered under PMLA for proceeds of crime based on the predicate offense, instead of filing a bail petition under Section 439 CrPC/483 BNSS had come up before this under Section 482 CrPC for quashing of arrest order and subsequent remand orders being illegal and contrary to judicial precedents.

2. The facts of the case are taken from the reply filed by the respondent- ED. The CBI registered the above-captioned predicate offense against the petitioner and some of his family members for causing wrongful loss to a consortium of banks led by the Central Bank of India to the tune of Rs.1530.99 crores by illegally diverting the loan amount for purposes other than it was sanctioned. As per para 3 (C) of the reply, the investigation conducted by ED pointed towards loan disbursement to a company 'SEL Textiles Ltd' for manufacturing plants and working capital. However, the petitioner, in connivance with the co-accused, illegally diverted some part of the loan amount to the tune of Rs.81.03 crores to two companies, namely M/s Silverline Corporation Limited and M/s Rhythm Textiles and Apparels Park Limited, owned and controlled by him without explicit permission from the Consortium of Banks. As per the investigation conducted by ED, the said amount has proceeds of crime generated by the accused through illegal gains causing wrongful loss to the Bank. As per para 3 (D) of the reply, SELT had exported the products; however, the amount received from such exports to Rs.191 crores was not realized, leading to SELT defaulting on its lenders. The investigation pointed out that the accused illegally diverted Rs.191 crore, which was due on account of exports. As per para 3, (E) of the reply, based on the findings of the Forensic Audit report dated 30.01.2017, on 28.02.2016, the consortium of banks declared the account of SELT as Non-Performing Assets, and subsequently, the account was declared as a fraud on 18.04.2018. The investigation revealed that after SELT's account had turned into NPA, a company named M/s Regnant Exim Private Limited was set up to divert the revenue from SELT's manufacturing units. The ED investigated the Directors and shareholders of M/s Regnant Exim Private Limited under Section 50 of PMLA, which revealed the establishment of this company by the petitioner through current and former employees of SELT who were appointed to siphon off revenue of SELT instead of re-paying loan amount to the Bank. The investigation pointed out that proceeds of Rs.40 crores had yet to be recovered from M/s Regnant Exim Private Limited, which showed the intentional siphoning of the money and the said amount in the proceeds of crime. As per para 3(F) of the reply, the petitioner diverted Rs.35.19 crores from SELT to M/s 3-A Exports as advance payment, and this firm was owned by Dhiraj Saluja- brother of the petitioner Neeraj Saluja, and this amount of Rs.35.19 crores constitute the proceeds of crime. As per para 3(G) of the reply, the petitioner and other accused illegally diverted a loan amount of Rs.9.51 crores for purchasing a flat in Mumbai for personal use. As per para 3(H) of the reply, the petitioner’s company used three entities based in Germany and France to import machinery, whereas the actual manufacturers were in Japan, and the payments were made in the bank account m