The court emphasized that arrests under the Prevention of Money Laundering Act must comply with statutory safeguards, including the necessity of arrest and proper documentation of reasons, failing which the arrest is deemed unlawful.

Headnote:(A) Constitution of India - Articles 226 and 227 - Prevention of Money Laundering Act, 2002 - Section 19 - Appeal against arrest - The appellant challenged the legality of his arrest by the Directorate of Enforcement, claiming violation of Section 19 of the PML Act. The court emphasized that the arrest must comply with statutory safeguards, including the requirement for the officer to have material in possession and to record reasons for belief in writing. The court found that the arrest was not justified as the necessary conditions were not met. (Paras 1-88)

(B) Judicial Review - The court held that the power of judicial review applies to the legality of arrests under the PML Act, ensuring that the arresting authority adheres to statutory requirements. The necessity of arrest must be justified, and failure to consider exculpatory evidence can render the arrest unlawful. (Paras 60-80)

Facts of the case:
The appellant was arrested on allegations of involvement in a money laundering conspiracy related to an excise policy in Delhi. The Directorate of Enforcement claimed he was a key conspirator benefiting from kickbacks. (Paras 1-4)

Findings of Court:
The court found that the arrest did not meet the statutory requirements of Section 19 of the PML Act, leading to its illegality. The necessity for arrest was not established. (Paras 1-88)

Issues: The main issues included whether the arrest complied with Section 19 of the PML Act and the necessity of the arrest. (Paras 1-88)

Ratio Decidendi: The court ruled that the arrest was unlawful due to non-compliance with statutory safeguards, emphasizing the importance of judicial scrutiny in such cases. (Paras 1-88)

Result: The appellant was granted interim bail pending further proceedings. (Para 85)

JUDGEMENT

SANJIV KHANNA, J. This appeal filed by the appellant – Arvind Kejriwal assails the judgment and order dated 09.04.2024 passed by the single Judge of the High Court of Delhi whereby the Criminal Writ Petition filed by Arvind Kejriwal under Articles 226 and 227 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, 1973 1, challenging his arrest by the Directorate of Enforcement2, vide the arrest order dated 21.03.2024, on the ground of violation of Section 19 of the Prevention of Money Laundering Act, 2002 3, and the proceedings pursuant thereto including the order of remand dated 22.03.2024 to the custody of DoE passed by the Special Judge, has been rejected.

2. At the outset, we must clarify that this is not an appeal against refusal or grant of bail. Instead, this appeal impugns the validity of arrest under Section 19 of

1 For short, the “Code”.

2 For short, “DoE”.

3 For short, the “PML Act”.

20.07.2022, made by the Lieutenant Governor of the Government of National Capital Territory7 of Delhi, and on the directions of the competent authority conveyed by the Director, Ministry of Home Affairs, Government of India.

4. Later, on 25.11.2022, the CBI filed a chargesheet. Thereafter, on 25.04.2023 and 08.07.2023, two supplementary chargesheets were filed. On 15.12.2022, the Special Court took cognisance of the offences. The chargesheets inter alia allege that the excise policy, framed for the sale of liquor in NCT of Delhi, was a product of criminal conspiracy. It was hatched by a cartel of liquor manufacturers, wholesalers and retailers and it provided undue pecuniary gain to public servants and other accused in the conspiracy. It resulted in huge losses to the government exchequer and ultimately to the public. Arvind Kejriwal is not an accused in the said chargesheets.

4 While introducing the Prevention of Money Laundering (Amendment) Bill, 2012 in the Rajya Sabha on

17.12.2012, the then Finance Minister, Mr. P Chidambaram, stated, “Firstly, we must remember that money-laundering is a very technically-defined offence. It is not the way we understand ‘money-

laundering in a colloquial sense.” This has been quoted with approval in Vijay Madanlal Choudhary and others v. Union of India and others, (2022) SCC OnLine SC 929, at paragraph 35.

5 For short, “CBI”.

6 For short, “IPC”.

7 For short, “NCT”.

5. On 22.08.2022, the DoE recorded ECIR No. HIU-II/14/2022 based on offences detailed under the RC registered by CBI. The offences under the RC are the predicate offence for investigation/inquiry into the scheduled offences under the PML Act. On 26.11.2022, the DoE filed the first prosecution complaint. On

20.12.2022, the Special Court took cognisance. Since then, the DoE has filed seven supplementary prosecution complaints. In the last complaint, that is, the Seventh Supplementary Prosecution Complaint dated 17.05.2024, Arvind Kejriwal has been named as an accused.

6. On 30.10.2023, Arvind Kejriwal was issued notice under Section 50 of the PML Act for his appearance and recording of statement. Thereafter, eight summons were issued till his arrest on 21.03.2024. DoE states that Arvind Kejriwal failed to appear and join the investigation. Arvind Kejriwal claims that the summons and notices under Section 50 were illegal, bad in law and invalid.8

7. The cardinal ground taken in the present appeal is that Arvind Kejriwal was arrested in violation of Section 19 (1) of the PML Act. It is contended that the arrest was illegal, which makes the order of remand to custody of the DoE passed by the Special Court dated 01.04.2024 also illegal. Therefore, it would be apt to begin by referring to Section 19 and elucidating how the Courts have interpreted and applied the section.

8. Section 19 of the PML Act reads: “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 8 We are not dir

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2024 Supreme(Online)(SC) 7703

SUPREME COURT OF INDIAARVIND KEJRIWAL – AppellantVersusDIRECTORATE OF ENFORCEMENT – RespondentCrl.A. No.-002493-002493 - 2024

The court emphasized that arrests under the Prevention of Money Laundering Act must comply with statutory safeguards, including the necessity of arrest and proper documentation of reasons, failing which the arrest is deemed unlawful.

Cases Referred (1)

SUPREME COURT OF INDIA
ARVIND KEJRIWAL – Appellant
Versus
DIRECTORATE OF ENFORCEMENT – Respondent
Crl.A. No.-002493-002493 - 2024