The Supreme Court in the judgment of Pankaj Bansal vs Union of India, has held that Section 19(1) of the Prevention of Money Laundering Act (“PMLA”), 2002 requires the Enforcement Directorate (“ED”) to inform the accused of the grounds of arrest and further necessitates providing such grounds in a written format.
FACTS:
In this landmark case, the Apex Court directed release of the members of the real estate group (M3M). The appellants, Pankaj Bansal and Basant Bansal, are key members of M3M Group, a real estate company. The ED registered two ECIRs (Enforcement Case Information Reports) against the IREO Group and its associates, based on two FIRs (First Information Reports) filed by different agencies. the appellants were named and implicated in the second ECIR and the second FIR, which involved allegations of bribery, corruption, and criminal conspiracy against the IREO Group and its associates, including some public servants and a special judge. The ED issued summons to the appellants to appear before them, in relation to the first ECIR. While they were at the ED office, they were served with summons to appear before another investigating officer on the same day in relation to the second ECIR. The appellants were arrested by the ED on 14th June,2023, under Section 19 of the PMLA, which empowers the ED to arrest any person who is guilty of an offence punishable under the Act. The appellants challenged their arrest orders and sought their release from custody.
However, the High Court dismissed their writ petitions and upheld their arrest orders. The High Court found that the appellants were given a fair opportunity to defend themselves and that the charges against them were proved by sufficient evidence. Hence, the appeal.
ISSUES:
The primary issue or contention for consideration before the Hon’ble Supreme Court was whether under Section 19 (1) of the PMLA, the ED is required to prescribe the reasons for arresting the accused in writing for the arrest to be considered valid
Also whether communication of the grounds of arrest is mandatory and a constitutional right?
JUDGMENT:
The Hon’ble Supreme Court set aside the order of High Court and set aside the arrest orders on the ground that the ED must record in writing the reasons for forming the belief that the person is guilty of an offence punishable under the PMLA. The Hon’ble Supreme Court also held that the ED must communicate the written grounds of arrest to the person arrested as soon as possible and forward a copy of the same to the Adjudicating Authority in a sealed envelope. The Supreme Court observed that these steps are mandatory under Article 22(1) of the Constitution of India, which guarantees the right to be informed of the grounds of arrest and non compliance of the said requirement by the ED shall vitiate the arrest and shall entitle the accused to be set free unconditionally. Therefore, in the instant case, the Hon’ble Court ordered the immediate release of real estate group M3M’s directors Pankaj Bansal and Basant Bansal in the money laundering case.
Case Analysis:
In this landmark case, the Supreme Court has assailed the importance of duly following the procedure under Section 19 (1) of PMLA before making an arrest.
Fundamental Right to be Informed of Grounds of Arrest: The Hon’ble Court has emphasized the importance of Article 22(1) of the Constitution which guarantees the fundamental right of every arrested person to be informed of the grounds for their arrest as soon as possible.This right is considered essential to prevent arbitrary arrests and to protect individuals from unjustified detention. This constitutional mandate is not a procedural activity but a mandatory requirement.
The Accused has full right and be informed about the grounds of his arrest in written. The Court observed that this right is meant to enable the arrested person to seek legal remedies, such as bail, and to challenge the validity and legality of his arrest. The Court further observed that providing written grounds of arrest would also ensure transparency, accountability and fairness in the functioning of the ED and would prevent any abuse or misuse of power or vindictiveness on its part. The Court cautioned that any deviation from this requirement would render the arrest illegal and unconstitutional.
The essence or importance of this judgment upholds the procedural aspects and constitutional validity of arrest made under PMLA and emphasizes the fundamental procedural rights available to the individuals detained under PMLA.