MR. BINEESH KODIYERI vs. DIRECTORATE OF ENFORCEMENT

WP No. 13261 of 2020 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16TH DAY OF MARCH, 2021 BEFORE THE HON’BLE MR. JUSTICE SURAJ GOVINDARAJ WRIT PETITION NO. 13261 OF 2020 (GM-RES) BETWEEN: MR. BINEESH KODIYERI S/O MR. KODIYERI BALAKRISHNAN AGED ABOUT 37 YEARS KOOTAMVILLA LANE, MARUTHANKUZHI THIRUVANANTHAPURAM DISTRICT KERALA STATE – 695013

… PETITIONER (BY SRI. ARAVIND KAMATH, SR. COUNSEL FOR SRI. RENJITH SHANKER.V, ADVOCATE) AND: DIRECTORATE OF ENFORCEMENT REPRESENTED BY ITS DEPUTY DIRECTOR GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE BENGALURU

… RESPONDENT (BY SRI. S.V. RAJU, ASG; SRI. ZOHEB HUSSAIN, SPECIAL COUNSEL FOR ED-VC; SRI. MADHAV KASHYAP A/W SRI. P. PRASANNA KUMAR, ADVOCATE; SRI. A. VENKATESH & SRI. AGNI SEN, ADVOCATES) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSITUTION OF INDIA AND UNDER SECTION 482 OF THE CR.P.C., PRAYING TO CALL FOR RECORDS IN PROCEEDINGS ON THE FILE OF THE RESPONDENTS AND DECLARE THAT THE ARREST OF THE PETITIONER BY THE RESPONDENT BY ARREST ORDER DATED 29.10.2020 ANNEXURE-K IN PROCEEDINGS ILLEGAL AND VIOD AB

WP No. 13261 of 2020 2 INITION FOR WANT OF COMPLIANCE WITH MANDATORY REQUIREMENTS UNDER SECTION 19 OF THE PREVENTION OF MONEY LAUNDERING ACT 202 AND THE PML ARRSEST RULES AND ETC. THIS WRIT PETITION COMING ON FOR ORDERS AND HAVING BEEN RESERVED FOR ORDERS ON 23.12.2020, THIS DAY, THE COURT PRONOUNCED THE FOLLOWING: ORDER 1. The above petition is filed seeking for: 1.1. Calling for records in proceedings bearing No. ECIR/BGZO/32/2020 on the file of the Respondent 1.2. Declare that the arrest of the Petitioner by the Respondent by arrest order dated 29/10/2020 (Annexure K ) in proceedings bearing No. EXIR / BGZO/32/2020 is illegal and void ab initio for want of compliance with mandatory requirements. Under section 19 of the Prevention of Money Laundering Act 2002 (‘PMLA’, for short) and the PML Arrest Rules.

WP No. 13261 of 2020 3 1.3. As a consequence thereof declare that the remand proceedings are void and set aside the remand order dated: 11.11.2020 (Annexure-H) including any orders pursuant thereto; in ECIR / BGZO/32/2020 before the Court of 34th Additional City Civil & Sessions Judge & Special Judges for CB & PMLA Cases Bangalore 1.4. Grant such other relief that this Hon’ble Court deems fit in the facts and circumstances of the cases. 2. Facts as per petition: 2.1. The Petitioner claims to be a respectable and law-abiding citizen. The Respondent had summoned the Petitioner to appear before him on 30/09/2020 in connection with an investigation under the PMLA. The Petitioner appeared before the Respondent and co-

WP No. 13261 of 2020 4 operated in the investigation proceedings. It was then that the Petitioner learnt that the Narcotics Control Bureau, Bengaluru [‘NCB’ for short] had registered a case under the Narcotic Drugs and Psychotropic Substances Act, 1985 [‘NDPS Act’ for short] against one Mr. Mohammed Anoop and others; when the respondent allegedly became aware of certain monetary transaction between the Petitioner and the said Mohammed Anoop. 2.2. The Respondent recorded an Enforcement Case Information Report (ECIR) in ECIR/BGZO/32/2020 on 09/09/2020 and as part of investigation of the said case the Respondent had summoned the Petitioner. However, a copy of the ECIR has not been furnished to the Petitioner till date. The petitioner is not Accused in the case registered by the NCB till the date of filing of this Writ Petition.

WP No. 13261 of 2020 5 2.3. On 16/10/2020, the Respondent summoned the Petitioner yet again. The Petitioner appeared before the Respondent and recorded his statement. Thereafter, the Respondent summoned the Petitioner again on 29/10/2020 and recorded his statement. The Respondent has not provided copies of such statements to the Petitioner. At about 02:15 PM, the Respondent arrested the Petitioner under Section 19 PMLA. At the time of arrest, the Respondent did not serve on the Petitioner a copy of the Arrest Order, nor did he furnish the Written Grounds of Arrest to the Petitioner. The Respondent also failed to inform the relatives/ friends of the Petitioner in compliance with the guidelines laid down by the Hon’ble Supreme Court in the case of D.K. Basu –v- State of West Bengal [(1997) 1 SCC 416].

WP No. 13261 of 2020 6 2.4. Thereafter, the Respondent produced the Petitioner before the Court of 34th Additional City Civil & Sessions Judge and Special Judge for CBI & PMLA Cases, Bengaluru (“Special Court”) on 29/10/2020. The respondent filed an application for remand of the Petitioner to the custody of the Respondent for the purpose of interrogation. In the said application, the Respondent disclosed the reasons for the arrest of the Petitioner. The said application was the first document by which the Petitioner came to know about the reasons for his arrest. 2.5. By an order dated 29/10/2020, the Special Court remanded the Petitioner to the Respondent’s custody for 4 days. After that, the Respondent produced the Petitioner before the Special Court on 02/11/2020 and sought further custody by filing an application dated 02/11/2020 for

WP No. 13261 of 2020 7 remand. On consideration of the said application, the Special Court remanded the Petitioner to the Respondent’s custody for five more days by an order dated 02/11/2020. In the meantime, the Petitioner withdrew the Bail Application filed earlier and filed a fresh one. 2.6. On 07/11/2020, the Respondent yet again sought the custody of the Petitioner by filing an application for remand. By an order dated 07/11/2020, the Special Court remanded the Petitioner to the custody of the Respondent until 11/11/2020. 2.7. On 11/11/2020, the Respondent filed an application for remand of the Petitioner for judicial custody. The Petitioner opposed such an application on the following grounds:

WP No. 13261 of 2020 8 2.7.1. That the very arrest of the Petitioner is illegal as the mandatory safeguards under Section 19 PMLA were not followed at the time of the arrest. There was no written record of grounds of arrest at the time of arrest, and a copy of the grounds of arrest, if any, was not served on the Petitioner. 2.7.2. That in the light of the constitutional mandate under Article 21 and the safeguards contemplated under Section 19 PMLA, the words “inform him of the grounds of such arrest” cannot be an empty formality of a mere oral communication of the arrest or the grounds of arrest to the accused.

WP No. 13261 of 2020 9 2.7.3. That if the arrest is not as per the procedure established by law, it becomes illegal; 2.7.4. That the illegality of the arrest strikes at the very root of the matter and renders the arrest void ab initio. In such circumstances, all the consequential proceedings would also render themselves unsustainable in law. 2.7.5. The sole ground for the arrest of the Petitioner, as could be discerned from the remand applications filed by the Respondent, was that the Respondent had exercised his powers under Section 19 PMLA to arrest the Petitioner in order to safeguard the entire proceeds of the crime. The reasons stated by the Respondent in

WP No. 13261 of 2020 10 various documents on the grounds for arrest is captured in a table produced below: Sl. No. Nature of record Reasons stated for arrest u/s 19 PMLA 1. Remand Application dated 29/10/2020 To safeguard the entire proceeds of crime involved in money laundering which is in his possession and his associates, the applicant department invoked Sec. 19(1) PMLA and arrested the accused. (para 8) 2. Remand Application dated 02/11/2020 To safeguard the entire proceeds of crime involved in money laundering which is in his possession and his associates, the applicant department invoked Sec.19(1) PMLA and arrested the accused. (para 15) 3. Remand Application dated 07/11/2020 To safeguard the entire proceeds of crime involved in money laundering which is in his possession and his associates, the applicant department invoked

WP No. 13261 of 2020 11 Sec.19(1) PMLA and arrested the accused (para 17) 4. Remand application dated 11/11/2020 To safeguard the entire proceeds of crime involved in money laundering which is in his possession and his associates, the applicant department invoked Sec.19(1) PMLA and arrested the accused (para 18) 2.7.6. As compared to the above, in the Grounds of Arrest drawn by the Respondent, the reason for the arrest is stated as follows - “if accused is not arrested immediately he will certainly destroy/tamper the other evidences in the form of materials gathered by the investigation officer.” 2.7.7. If the reasons for arrest as stated in the Grounds of Arrest are juxtaposed with the Remand Applications, the following will emerge:

WP No. 13261 of 2020 12 Reasons stated in Grounds of Arrest for invoking powers u/s 19 PMLA Reasons stated in Remand Applications for invoking powers u/s 19 PMLA If the accused is not arrested immediately, he will certainly destroy/tamper the other evidences in the form of materials gathered by the investigation officer. To safeguard the entire proceeds o crime involved in money laundering which is in his possession and his associates, the applicant department invoked Sec. 19(1) PMLA and arrested the accused. 2.7.8. There is complete variance in the reason for the arrest of the Petitioner as stated in the Grounds of Arrest and as stated in the 4 Remand Applications. Therefore, the two reasons for exercising powers under Section 19 PMLA to arrest the Petitioner are (i) the apprehension that he would destroy/tamper with the evidence and (ii) to safeguard the proceeds of crime. Firstly, the entire evidence of the alleged proceeds of the crime was in the form of bank

WP No. 13261 of 2020 13 accounts and incorporation documents of certain companies. Moreover, the proceeds of the alleged crime were in cash and bank transactions already lying in the bank accounts, over which the Respondent has ample powers of attachment and seizure and had exercised it. In the remand application dated 02/11/2020, the Respondent had already stated that he had recovered the digital evidence from the Petitioner and Mohammed Anoop. Under Sections 5 and 17 PMLA, the Respondent has ample powers to attach, freeze and seize any accounts, assets and properties, and for exercising such powers, the arrest of the Petitioner was not the right remedy. 2.7.9. As such, the arrest of the Petitioner suffered from two severe infirmities,

WP No. 13261 of 2020 14 namely, one a failure to follow the constitutional mandate and two, arresting him for prevention of destruction/ tampering evidence, when the entire evidenced was already in the custody of the Respondent and for safeguarding the proceeds of crime, which too were in the control of the Respondent. 2.8. By an order dated 11/11/2020, the Special Court remanded the Petitioner to judicial custody for 14 days and directed that the case be listed on 18/11/2020 to hear the bail application. 2.9. On an application being made by the respondent, the Special Court issued certified copies of the grounds of arrest as well as the arrest order on 12/11/2020.

WP No. 13261 of 2020 15 2.10. Prior to 12/11/2020, the Petitioner had not at all been served with grounds of arrest and arrest order. Although the Respondent obtained signatures of the Petitioner on various documents, including the grounds of arrest and arrest order, he had not provided copies of them to the Petitioner at or during the time of the arrest. On this behalf, while in judicial custody, the Petitioner has sworn to an affidavit that he had not been served with the copies of the said documents. 2.11. The arrest of a person which deprives his liberty and grant of bail, which restores the liberty, are interconnected where the grant of bail is subject to onerous conditions, the right to arrest is also subjected to a similar degree of onerousness.

WP No. 13261 of 2020 16 2.12. In special laws like the PMLA, which can result in serious deprivation of liberty of a person with onerous conditions for its restoration, the parliament has ensured that there are necessary safeguards against arbitrary arrest by imposing certain mandatory conditions for arrest. 2.13. The said conditions are-the officer should (i) on the basis of material in his possession (ii) have reason to believe which he should record in writing (iii) that the accused person is guilty of an offence punishable under the Act. 2.14. All the three conditions have to be essentially satisfied for arresting the person while under the Cr. P.C. the grounds for arrest is mere suspicion the grounds for arrest under the PMLA is the other end of the spectrum where the officer should come to a conclusion that the accused

WP No. 13261 of 2020 17 person is guilty of an offence under the Act Moreover such conclusion should be recorded in writing, which is a further safeguard against arbitrary arrest. Finally, such a record in writing must be served on the accused. All these should be done at the time of the arrest. If any of the said procedures are not followed, it would result in an arrest without following due procedure and would fall foul of the constitutional mandate under Article 21. 2.15. Furnishing of a copy of the grounds of arrest to the detenue is one of the safeguards put in place by the parliament against arbitrary arrest as can be seen, from the Notes on Clauses. Accompanying the PML Bill, 1999, in which the Government clarified on how the proposed law ensures prevention of arbitrary arrests, as follows:

WP No. 13261 of 2020 18 “Clause 18 proposes to empower the Director, the Deputy Director, the Assistant Director or any other authorized officer to arrest a person if he has reason to believe that the person is guilty of an offence under the proposed legislation. Necessary safeguards such as furnishing the grounds of arrest and production before the Judicial Magistrate or a Metropolitan Magistrate within twenty- four hours are also sought to be provided”. 2.16. In the case of Rajbhusan Omprakash Dixit – v- Union of India (supra), the Hon’ble Delhi High Court, while holding that it is mandatory to issue a copy of the grounds of arrest in writing to the accused, observed as follows – “Rules 2 (1) (g) and (h) of the PMLA Arrest Rules define “material” and “order” respectively. Rule 2(1) (h) states that “order” means the order of arrest “and includes the grounds of such arrest under sub Section (i) of Section 19 of the Act. “The arrest order is specified in Form III. In terms of Rule 6 it is required to be signed by the arresting officer while exercising the power under Section 19(1) PMLA. Form III itself indicates that the

WP No. 13261 of 2020 19 arrest order is to be communicated to the person arrested. The foot of Form III reads thus: “To ….......................................................... .............................. (Name and Complete address of the person arrested)” When Form III uses the word “Order” that has to include, as per Rule 2 (1) (h) of the PML Arrest Rules, the grounds of arrest. The underlying object of the said Rules is not merely to inform the person arrested of the grounds of arrest, but to also furnish him a copy thereof. Even Rule3(1) of the PML Arrest Rules requires the order and material to be forwarded to the Adjudicating Authority. 2.17. The arrest of the petitioner is in contravention to the provisions of Section 41 Cr. P.C. read with the ratio of law laid down by the Supreme Court in Arnesh Kumar –V- State of Bihar, reported in (2014) 8 SCC 273 which makes it mandatory that in any case where the offence is

WP No. 13261 of 2020 20 punishable with imprisonment for a term which may extend to 7 years, the accused may not be automatically arrested and the Magistrate may not authorize the detention casually and mechanically. Mandate under chapter XII of the Code of Criminal procedure is a reiteration of the mandate under Article 21 of the Constitution of India, which has been violated in the present case. 2.18. Under the Scheme of the PMLA, a valid investigation in any offence punishable under Section 4 of the PMLA made after complying with the provisions of the Code would culminate with the filing of a complaint, if the offence is made out, or would culminate with the filing of a closure report if no offence is made out qua any accused.

WP No. 13261 of 2020 21 2.19. On the above grounds the Petitioner seeks for allowing of the Writ Petition and for the impugned orders to be quashed. 3. In the objections filed by the Respondent it is stated that: 3.1. It is the case of the complainant that the information received by the Directorate of Enforcement (DTE) with reference to 13 different FIRs registered by various police stations of Bengaluru City and the FIR registered by the Narcotics Control Bureau for the offence under various provisions of the NDPS Act revealed deep-rooted drug trafficking network in Bengaluru City in an organized manner involving highly influential Indian Nationals & foreign nationals and also about the

WP No. 13261 of 2020 22 involvement of high profile individuals as part of the organized crime. 3.2. It is the case of the Complainant that the accused persons in the above said first information reports registered by different police stations in Bengaluru City and Narcotics Control Bureau had generated huge proceeds of crime and that the said proceeds of crime are being held by the said accused persons projecting the same as untainted money and property. 3.3. It is alleged that Mr. Mohammed Anoop, who is a drug dealer, was arrested by the NCB, Bengaluru, for having been found in possession of 60 gms of MDMA tablets (Psychotropic substance) which is beyond the permissible limits. Shri. Rijesh Ravindran and Smt. Anika

WP No. 13261 of 2020 23 D were arrested by the NCB for involvement in drug business. 3.4. The Narcotics Control Bureau, Bengaluru registered a case vide F.No. 48/1/ 14/2020/BZU dated 22.08.2020 u/s 22, 27A, 28 and 29 of NDPS Act, 1985 against Mr. Mohammed Anoop and others. 3.5. Offences under Section 22 & 27A of Narcotics Drugs and Psychotropic Substances Act, 1985 are scheduled offences under Section 2(1)(x) & (y) of the PMLA. Therefore, the Directorate of Enforcement has recorded Enforcement Case Information Report in ECIR No. BGZO/32/ 2020 on 09.09.2020 and initiated investigation under the PMLA. 3.6. Post recording of ECIR on 09.09.2020, the Complainant took up the further investigation

WP No. 13261 of 2020 24 of the above case and initially sought for the issuance of body warrant as against the accused/Mohammed Anoop and body warrant was issued. Accordingly, the said Mohammed Anoop was produced before the Court on 17.10.2020. On the said date, the Complainant/ DTE sought custody of the said accused/Mohammed Anoop; the Court, being satisfied, handed over the custody of accused/Mohammed Anoop to the Complainant for custodial interrogation. 3.7. In his statement under Section 50(3) of PMLA, Shri. Mohammed Anoop admitted that he is involved in the sale and purchase of illegal narcotics drugs. Fund trail investigation was carried out subsequently, which established that a huge amount of unaccounted cash was

WP No. 13261 of 2020 25 regularly credited into the bank accounts by Mr. Bineesh Kodiyeri, the petitioner herein. 3.8. During his statement recorded under Sec. 50(3) of the PMLA Act, the said Accused/ Mohammed Anoop has accepted his active involvement in the commission of an offence punishable under the provisions of the NDPS Act. He has also accepted his active involvement in the offence of money laundering and his association with the petitioner herein. 3.9. The said statement of the accused/Mohammed Anoop under Sec. 50(3).of PMLA Act is admissible evidence in law, the Complainant on evaluation of the disclosures made by the accused/Mohammed Anoop, issued summons to the Petitioner to appear before it, to answer several queries raised during the course of

WP No. 13261 of 2020 26 investigation. Though the Petitioner appeared before the Directorate on 06.10.2020, the Petitioner was evasive and did not provide satisfactory replies to the queries raised by the Investigating Agency. The Petitioner was asked to appear again; however, the Petitioner did not appear before the investigating agency. Subsequently, the Petitioner appeared before the investigating agency on 29.10.2020. Even on the said date, the Petitioner did not cooperate with the investigation. As the Petitioner was evasive, and in order to effectively conduct an investigation into the aforesaid case and by then the involvement of the Petitioner for the offence of money laundering was prima-facie established, the Complainant Directorate arrested the accused/applicant and produced him before the

WP No. 13261 of 2020 27 Court with a request to grant his custody for custodial interrogation. 3.10. The Court having perused the entire case diary and all the original statements of the accused persons recorded under Sec. 50(3) of PMLA Act and being satisfied with the fact that the Complainant had made out a reason to believe that the accused/applicant has been guilty of the offence punishable under the PMLA Act, was pleased to grant custody of the Petitioner for custodial interrogation under order-dated 29.10.2020. Subsequently, statements of the Petitioner was recorded by the ED u/s 50(3) of PMLA, which disclosed his active connivance in the offence, and therefore the Petitioner’s further custody was sought, and the same was allowed by the Court on 02.11.2020,

WP No. 13261 of 2020 28 07.11.2020 and the custody of the Petitioner was granted to the DTE till 11.11.2020. [[ [ 3.11. During the course of the investigation of the case, Shri. Mohammed Anoop revealed in his statement dated 20.10.2020 deposed under Section 50(3) of PMLA that he was made a Benamidar of a restaurant of Petitioner. He also accepted in his statement dated 20.10.2020 that Petitioner is his boss, and he did whatever Petitioner told him to do, for which Petitioner used to pay. It is also revealed that the accused/Mohammed Anoop has no independent business or standing in the society and that he is being used as a benamidar by the Petitioner herein to invest money in the drug trade and drug trafficking

WP No. 13261 of 2020 29 3.12. It is stated that the investigation has revealed that: 3.12.1. Mohammed Anoop is closely linked with the Petitioner, and all his financial dealings were done on the instructions of the Petitioner, who had paid huge amounts of unaccounted money to Mohammed Anoop. 3.12.2. There are 100s of telephone calls/messages between the accused/Mohammed Anoop & the Petitioner herein. 3.12.3. The investigations also revealed the Petitioner herein had come to Bengaluru from March to May 2020 and stayed in Royal Suite Apartment run by the accused/Mohammed

WP No. 13261 of 2020 30 Anoop for more than two months. Now, the Narcotics Control Bureau has seized the contraband from the same premise belonging to the accused/Mohammed Anoop. This would further establish the involvement of the applicant herein in the entire case 3.12.4. On verification of bank accounts of Petitioner, huge amounts of cash were seen deposited in his bank accounts, especially IDBI Bank bearing account no. 1154104000000754 and 1154104000000745, HDFC bank bearing account no. 50100190259640 etc.

WP No. 13261 of 2020 31 3.12.5. Petitioner has not given any satisfactory reply about the source of such huge cash deposits in his accounts. The deposits are not commensurate with the Income Tax Returns filed in the relevant years. 3.12.6. There is no explanation offered as regards the source of the huge deposits or any explanation whatsoever. 3.12.7. The huge difference between cash deposits in his bank accounts and the declared income as per his ITR’s is tabulated below:

WP No. 13261 of 2020 32 3.12.8. The claim of the applicant that the money transferred to Mohammed Anoop was sourced from the loan taken in his partnership firm M/s Old Coffee House’s name from Punjab National bank, Trivandrum, which is purportedly against the mortgage of his mother-in-law’s immovable property, is found to be untrue. On analysis of bank accounts, it is seen Sl. No. Financial year Cash deposits (in Rs.) Declared Income as per ITR (in Rs.) 1 2012-13 5,106,000 672,339 2 2013-14 6,566,000 536,035 3 2014-15 5,355,000 535,957 4 2015-16 5,629,000 4,978,509 5 2016-17 11,899,000 2,538,802 6 2017-18 11,692,600 1,629,654 7 2018-19 5,489,000 1,320,637 Total 5,17,36,600 1,16,76,276

WP No. 13261 of 2020 33 that the cash was deposited in the accounts of Petitioner just before the fund transfers to Mohammed Anoop. Further: 3.12.9. There is no interest payment by Shri. Mohammed Anoop on loan taken from the Petitioner. 3.12.10. The loan is stated to be taken by Petitioner in the name of M/s. Old Coffee House Restaurant as a Business loan, and he is paying huge interest on service of this loan. Petitioner however, never had not shown this loan in his Income Tax Returns starting from FY 2012-13 to till date.

WP No. 13261 of 2020 34 3.12.11. The repayment of interest on the loan by Petitioner was made through cash deposits in the said loan account, and the source of said cash deposits is not known. 3.12.12. The contention of Petitioner is that the money given to Mohammed Anoop is out of the loan taken from Punjab national bank; however, the bank account statement did not substantiate the same. 3.13. During the statement recorded Under Section 50(3) of PMLA, Shri Mohammed Anoop stated that there are two companies viz. Rianha Event Management Pvt Ltd, registered under ROC Ernakulum, Kerala and Yoush Events Management & Productions Pvt. Ltd., registered

WP No. 13261 of 2020 35 under ROC Bengaluru, Karnataka, where he is a Director along with Shri Rijesh Ravindran. The investigation of these companies is under progress to ascertain their involvement in Money Laundering activities. It is also revealed that Shri. Mohammed Anoop does not have any other business apart from the business of Drug dealing, and therefore, the money generated by him is nothing but proceeds from the drug dealings and is thus tainted money. 3.14. The statement of Shri Suhas Krishne Gowda, (who is a common friend of Petitioner and Shri. Mohammed Anoop and they all together having common WhatsApp group where there are only 3 members) was recorded on 30.10.2020 u/ s 50(3) of the PMLA, wherein he stated that Petitioner used to finance Shri Mohammed Anoop in his illegal drug dealing business. He

WP No. 13261 of 2020 36 also stated that one Shri Sonet Lobo was a close friend of Mohammed Anoop, and he is also aware of the same fact. 3.15. Subsequently, the statement of Shri Sonet Lobo was recorded on 31.10.2020 under section 50(3) of the Act who inter alia also confirmed that Petitioner consumed cocaine along with Shri Mohammed Anoop and others and was involved in financing illegal drug. Therefore, the above two associates have disclosed in their statement that the accused/petitioner herein is not only involved in financing the drug business but also consumed cocaine along with the accused/Mohammed Anoop & others involved in the crime. 3.16. Petitioner also revealed that he was settled in Dubai from the year 2008 to 2013 and also

WP No. 13261 of 2020 37 enjoyed the status of NRI for the said period. During his stay in Dubai he was also involved in a bank fraud case. DTE is in the process of obtaining details of fraud and related documents from the Authorities concerned in UAE for the purpose of further investigation. 3.17. On 04.11.2020, search operations u/s 17(1) of the PMLA were conducted on the declared premises of M/ s Beecapital Forex Trading Pvt. Ltd, Bengaluru, and M/s Bcapital Financial Services Private Limited which are the companies where Petitioner is a Director. However, it was revealed as per the said search operation that no company by the aforementioned names ever existed on the said premises and the said companies having fake addresses were floated by Petitioner. The details of these companies have been obtained

WP No. 13261 of 2020 38 from MCA website. Further investigation is underway. 3.18. During the search operations, u/s 17(1) of the PMLA, conducted on the residential address of the accused herein, one IndusInd Bank debit card bearing the name of Shri Mohammed Anoop, who is a drug dealer, was found at the residential premises of the petitioner. On the opposite side of the said debit card, the signature of the Petitioner has been found. Details of the said debit card were sought from the concerned bank, and it was revealed that the said debit card pertains to the bank account of Hayaat restaurant. It is the same non- functional restaurant that was financed by the accused herein and was operated by Shri Mohammed Anoop, a drug dealer and a Benamidar of the Petitioner. Subsequently,

WP No. 13261 of 2020 39 details of the bank account connected with the said debit card were sought from IndusInd Bank, and the bank informed that there is a cash deposit of Rs 20 lakhs. The cash which was deposited by Mohammad Anoop in the bank account of Hayaat hotel was sourced from the only business that he was carrying, and that is the illegal business of drug dealing. The finding of debit card linked to the bank account of Hayaat hotel from the house of Petitioner crystallizes the fact that he is the beneficiary of the profits generated from the business of drug dealing carried by Mr. Mohammad Anoop. It is a classic case of money laundering wherein the profits generated from the illegal business of drug dealing (which is the tainted money) is deposited in the bank account of Hayaat hotel to give it a colour of untainted money as cash

WP No. 13261 of 2020 40 generated from the legal business of running of a hotel. It is suspected that the said cash was further withdrawn through the use of the debit card by Petitioner, thus bringing the profits from the illegal business of drug dealings into the mainstream financial system to escape from the clutches of law enforcement agencies including the Enforcement Directorate. The above facts revealed that Petitioner is guilty of the offence of money laundering as per the provision of section 3 of PMLA, 2002. 3.19. During the scrutiny of the bank accounts of Petitioner, it is seen that huge cash deposits were made in his personal accounts by one Mr. Ani Kuttan, who is a driver of Petitioner who lives in Trivandrum. Petitioner has not divulged the source of money deposited in his statements recorded u/s 50(3) of PMLA act

WP No. 13261 of 2020 41 2002. The statement of Mr. Ani Kuttan is essential to ascertain the facts related to cash deposits. The complainant had issued summons dated 09.11.2020 and 17.11.2020 under Section 50(2) of PMLA to Shri. AniKuttan. He is yet to appear and depose his statement under Section 50(3) of PMLA. 3.20. Further, One Mr. Arun S., who is the partner of Petitioner in M/s. Old Coffee House Restaurant has deposited huge amount of cash as well as has made high-value credits in the bank accounts maintained by Petitioner. The statement of Mr. Arun S under Section 50(3) of PMLA is essential for ascertaining the reasons for such high-value credits in the bank account of Petitioner as the reply of Petitioner is not satisfactory in nature. Summons dated 09.11.2020 and 7.11.2020 under Section 50(2)

WP No. 13261 of 2020 42 of PMLA was issued to Shri. Arun.S. He is yet to appear. 3.21. The petitioner was arrested on 29.10.2020, and the Respondent herein has provided a copy of the arrest order, grounds of arrest to the Petitioner and also allowed him to inform his relatives as per the guidelines laid down by the Hon’ble Supreme court in case of D K Basu vs State of West Bengal 1997 (1) SCC 416. The copy of served documents has already been submitted to the sessions court. The respondent has followed all conditions laid down in section 19 of the PMLA Act for the arrest of the accused. This fact is also self- evident from the fact that the Petitioners’ signature is affixed on each page of the arrest order as well as the grounds of arrest, meaning

WP No. 13261 of 2020 43 thereby that he was informed of his grounds of arrest. 3.22. That, furthermore, two associates have also disclosed in their statement that the Petitioner herein is involved in financing the drug business of the co-accused/Mohammed Anoop and others involved in the crime. Statements of the accused/applicant recorded by the ED, u/s 50(3) of PMLA, disclosed his active connivance in the offence, and therefore the applicant’s further custody was sought. Petitioner thus bringing the profits from the illegal business of drug dealings into the mainstream financial system to escape from the clutches of law enforcement agencies, including the Enforcement Directorate. The facts revealed that Petitioner is guilty of the offence of money

WP No. 13261 of 2020 44 laundering as per the provision of section 3 of PMLA, 2002. 4. Shri Aravind kamath, learned Senior counsel submitted as under: GROUNDS OF ARREST: 4.1. Section 19 of the PMLA would be the basis of his entire argument which reads as under: 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 basis of material in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest. (2) The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under sub-section (1), forward a copy of the order, along with the material in his

WP No. 13261 of 2020 45 possession, referred to in that sub- section, to the Adjudicating Authority, in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such order and material for such period, as may be prescribed. (3) Every person arrested under sub- section (1) shall within twenty-four hours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest to the Magistrate’s Court. 4.2. Failure on the part of the respondent- Investigating Officer to serve a written copy of the grounds of arrest is violative of the mandatory procedural requirement under Section 19 PMLA. 4.3. The requirement to inform the Accused of the grounds of arrest must not be given a mere textual interpretation. A cross-statute study of

WP No. 13261 of 2020 46 arrest provisions would reflect that the legislature has been consistent in the use of the words ‘inform’ and not used the word ‘communicate’, the meaning and construction to be placed on the word ‘inform’ ought to vary according to the particular arresting standard that is found to be used. In the context of a ‘suspicion’ standard or even a ‘commission’ standard, mere oral intimation may suffice, but the ‘guilt’ standard which offers the highest degree of protection from arrest must influence this Court to read the text purposively, obliging the investigating officer to communicate the grounds of arrest in writing. 4.4. The respondent, Investigating Officer, was therefore obliged to communicate the grounds of arrest by serving a copy of the grounds of arrest on the Petitioner

WP No. 13261 of 2020 47 4.5. In this regard he refers to the Notes on Clauses appended to the PML Bill 1999 which reads as under: “Clause 18 proposes to empower the Director, the Deputy Director, the Assistant Director or any other authorized officer to arrest a person if he has reason to believe that the person is guilty of an offence under the proposed legislation. Necessary safeguards such as furnishing the grounds of arrest and the production before the Judicial Magistrate or a Metropolitan Magistrate within twenty-four hours are also sought to be provided.” (emphasis supplied) 4.6. The legislative intent was to include ‘furnishing of grounds of arrest’ as a necessary safeguard from the arbitrary exercise of the power of arrest. Furnishing of the Grounds of arrest, in no sense of the term, can be interpreted to mean the mere taking of the signature of the arrested person on the grounds of arrest. 4.7. Furnishing a copy of the grounds of arrest would not only operate as a safeguard from arbitrary

WP No. 13261 of 2020 48 arrest but would also enable the accused to assist his legal team in preparing for the bail hearing as the accused will have to demonstrate that he is ‘not guilty’ of the offence of money laundering, unlike in other offences where the accused is merely required to show that there are no reasonable grounds to believe that he has committed the offence. 4.8. While non-communication of the grounds of arrest would greatly prejudice the accused, there are no reasons forthcoming as to how the Respondent-Enforcement Directorate would be affected by furnishing a copy of the grounds of arrest. Merely reading out the grounds of arrest to the detenue would defeat the very object of requiring the reasons to believe to be recorded in writing and communicated to the detenu.

WP No. 13261 of 2020 49 4.9. Further, reference to the foot of Form III of PMLA Rules 2 read with Rules 2 (1) (g) and (h) of the PMLA Rules would lead to the inevitable conclusion that the basic idea is not merely to inform the person arrested of the grounds of arrest but to also furnish him a copy thereof. 4.10. The Petitioner was constrained to avail a certified copy of the grounds of arrest from the records of the Special Court on 12/11/2020, i.e., 14 days after the arrest, by which time, 3 remand hearings had taken place. 4.11. In this regard, he relies on the following decisions: 4.11.1. The judgment of the Hon’ble Delhi High Court in the case of Rajbhushan Omprakash Dixit vs Union Of India & Anr. in W.P.(CRL) 363/2018 &

WP No. 13261 of 2020 50 Crl.M.A. 2151/2018 dated 19.02.2018 more particularly paragraphs 46 to 50 thereof which are reproduced hereunder for easy reference: 46. The power of arrest specified in Section 19 of the PMLA undoubtedly displaces the corresponding powers of arrest vested in a police officer under the Cr PC. Section 19 PMLA requires certain conditionalities to be fulfilled prior to the arrest. In particular the reasons to believe have to be recorded in writing in the file. The second aspect of Section 19 of PMLA is the communication of the grounds of arrest. Although Section 19 uses the word „inform‟ in the context in which it appears a mere communication of the grounds would, in the considered view of the Court, not suffice. Merely reading out the grounds of arrest to the detenu would defeat the very object of requiring the reasons to believe to be recorded in writing and communicated to the detenu. As explained the Constitution Bench of the Supreme Court in C.B. Gautam (supra), in the context of the IT Act,

WP No. 13261 of 2020 51 the obligation to record reasons and convey the same to the party concerned operates as a deterrent against possible arbitrary action by the quasi-judicial or the executive authority invested with judicial powers. Also it is not understood why the DOE did not want to provide the detenu the copy of grounds of arrest as recorded by it. It would not prejudice the DOE in any way. 47. The Notes on Clauses accompanying the PML Bill, 1999 clarified what was intended as follows: “Clause 18 proposes to empower the Director, the Deputy Director, the Assistant Director or any other authorized officer to arrest a person if he has reason to believe that the person is guilty of an offence under the proposed legislation. Necessary safeguards such as furnishing the grounds of arrest and production before the Judicial Magistrate or a Metropolitan Magistrate within twenty-four hours are also sought to be provided.” (emphasis supplied) 48. Rules 2 (1) (g) and (h) of the PMLA Arrest Rules define “material” and “order” respectively. Rule 2 (1) (h) states that „order‟ means the order of arrest “and includes the grounds of such arrest under sub

WP No. 13261 of 2020 52 Section (i) of Section 19 of the Act.” The arrest order is specified in Form III. In terms of Rule 6 it is required to be signed by the arresting officer while exercising the power under Section 19 (1) PMLA. Form III itself indicates that the arrest order is to be communicated to the person arrested. The foot of Form III reads thus: “To................................................ ......................................... [Name and complete address of the person arrested]” 49. When Form III uses the word „order‟ that has to include, as per Rule 2 (1) (h) of the PML Arrest Rules, the grounds of arrest. The basic idea is not merely to inform the person arrested of the grounds of arrest but to also furnish him a copy thereof. Even Rule 3 (1) of the PML Arrest Rules requires the order and material to be forwarded to the Adjudicating Authority. 50. Admittedly the arrest of the Petitioner in the present case has taken place without following Section 19 PMLA read with the relevant PML Arrest Rules and Form III. The grounds of arrest were furnished not “as soon as may be” as mandated by Section 19 (1) PMLA but only along with the short reply filed on 13th

WP No. 13261 of 2020 53 February 2018 more than two weeks after the arrest. Also, it is doubtful that the said grounds would have been furnished if the present petition had not been filed. That prima facie renders the arrest of the Petitioner illegal. Added to this is the failure to follow the detailed guidelines pertaining to arrest as laid down in D.K. Basu v. State of West Bengal (supra) which as clarified by the Supreme Court in para 37 (SCC) of the said decision applies with equal force to “other governmental agencies” which expressly included the DOE. 4.11.2. The Judgment of the Delhi High Court in the case of Neeraj Singal vs Union Of India And Ors. in W.P.(CRL) 2453/2018 dated 29.08.2018, more particularly paragraphs 25 and 26 thereof which are reproduced hereunder for easy reference: 25. Rule 4 of the SFIO Arrest Rules which mandates that the person

WP No. 13261 of 2020 54 arrested should be served with a copy of the arrest order which contains the grounds of arrest comports with the constitutional mandate as well as the law as explained in D K Basu v. Union of India (1997) 1 SCC 416. 26. In the present case, the grounds of arrest, even according to the SFIO, were only “explained” to the Petitioner. Nowhere is it noted that he was attempted to be served with the grounds of arrest and he refused to receive the grounds. It is only said that he refused to sign the arrest memo in acknowledgment of his having been “explained” the grounds of arrest. Although Section 212 (8) states that he should be “informed” of the grounds of arrest, Rule 4 of the SFIO Arrest rules read with the Arrest form appended thereto mandates serving upon the Petitioner the copy of the Arrest Order containing the grounds of arrest in Column 15. Even till the filing of the present petition or even thereafter the Arrest order was not served on the Petitioner. 4.11.3. Arnesh Kumar v. State of Bihar (2014) 8 SCC 273 8. An accused arrested without warrant by the police has the constitutional right under Article 22(2) of the Constitution of India and Section 57 Cr.P.C. to be produced before the Magistrate without

WP No. 13261 of 2020 55 unnecessary delay and in no circumstances beyond 24 hours excluding the time necessary for the journey: 8.1. During the course of investigation of a case, an accused can be kept in detention beyond a period of 24 hours only when it is authorised by the Magistrate in exercise of power under Section 167 Cr.P.C. The power to authorise detention is a very solemn function. It affects the liberty and freedom of citizens and needs to be exercised with great care and caution. Our experience tells us that it is not exercised with the seriousness it deserves. In many of the cases, detention is authorised in a routine, casual and cavalier manner. 8.2. Before a Magistrate authorises detention under Section 167 Cr.P.C., he has to be first satisfied that the arrest made is legal and in accordance with law and all the constitutional rights of the person arrested are satisfied. If the arrest effected by the police officer does not satisfy the requirements of Section 41 of the Code, Magistrate is duty-bound not to authorise his further detention and release the accused. In other words, when an accused is produced before the Magistrate, the police officer effecting the arrest is required to furnish to the Magistrate, the facts, reasons and its

WP No. 13261 of 2020 56 conclusions for arrest and the Magistrate in turn is to be satisfied that the condition precedent for arrest under Section 41 Cr.P.C. has been satisfied and it is only thereafter that he will authorise the detention of an accused. 8.3. The Magistrate before authorising detention will record his own satisfaction, may be in brief but the said satisfaction must reflect from his order. It shall never be based upon the ipse dixit of the police officer, for example, in case the police officer considers the arrest necessary to prevent such person from committing any further offence or for proper investigation of the case or for preventing an accused from tampering with evidence or making inducement, etc. the police officer shall furnish to the Magistrate the facts, the reasons and materials on the basis of which the police officer had reached its conclusion. Those shall be perused by the Magistrate while authorising the detention and only after recording his satisfaction in writing that the Magistrate will authorise the detention of the accused. 8.4. In fine, when a suspect is arrested and produced before a Magistrate for authorising detention, the Magistrate has to address the question whether specific reasons have been recorded for arrest and if so, prima facie those

WP No. 13261 of 2020 57 reasons are relevant, and secondly, a reasonable conclusion could at all be reached by the police officer that one or the other conditions stated above are attracted. To this limited extent the Magistrate will make judicial scrutiny. 4.11.4. State of Punjab v. Davinder Pal Singh Bhullar, (2011) 14 SCC 770 107. It is a settled legal proposition that if initial action is not in consonance with law, all subsequent and consequential proceedings would fall through for the reason that illegality strikes at the root of the order. In such a fact situation, the legal maxim sub lato fundament to cadit opus meaning thereby that foundation being removed, structure/work falls, comes into play and applies on all scores in the present case. 4.12. By referring to Section 19 of the PMLA, he submits that the purpose of arresting a person under the PMLA, the Investigating officer has to come to a conclusion prior to the arrest that the person to be arrested has committed the offence and or is guilty of having committed the offence. The degree of satisfaction that is required to be

WP No. 13261 of 2020 58 achieved prior to arrest is that of the accused is guilty of having committed the offence. 4.13. This degree of satisfaction is to be reflected in the grounds of arrest, which is to be provided to the accused. Various penal enactments have different standards for the purpose of arresting, i.e. to say the arresting standard under different enactments is different. Under the PMLA, arresting standard is guilt standard. Though the Investigating officer has the power to arrest, i.e. there is a source of power. The legality of the arrest has to be adjudicated on the basis of the width of the power being exercised, i.e. whether the power is exercised in a proper manner or not. This width of power can be measured by the extent of the discretion conferred on the arresting officer. Where there is wide discretion for arrest, there is weaker protection to the

WP No. 13261 of 2020 59 accused from arbitrary arrest. Narrower the width or narrower the discretion, there is a greater certainty that is required on part of the Investigating officer before the arrest. 4.14. In this regard he refers to various penal enactments to demonstrate different standards under those enactments which is termed as cross statute study. 4.15. Under Section 6 of the Railways Properties (Unlawful Possession) Act, 1966, the test is concerned with standard “reasonable suspicion that the accused is concerned with the offence”. The said section is reproduced herein for easy reference: “6. Power to arrest without warrant.—Any superior officer or member of the Force may, without an order from a Magistrate and without a warrant, arrest any person who has been concerned in an offence punishable under this

WP No. 13261 of 2020 60 Act or against whom a reasonable suspicion exists of his having been so concerned”. 4.16. Similar is the situation under Section 64 of the Indian Forest Act, 1927 which reads as under: 64. Power to arrest without warrant.— (1) Any Forest-officer or Police-officer may, without orders from a Magistrate and without a warrant, arrest any person against whom a reasonable suspicion exists of his having been concerned in any forest-offence punishable with imprisonment for one month or upwards. (2) Every officer making an arrest under this section shall, without unnecessary delay and subject to the provisions of this Act as to release on bond, take or send the person arrested before the Magistrate having jurisdiction in the case, or to the officer in charge of the nearest police station. (3) Nothing in this section shall be deemed to authorize such arrest for any act which is an offence under Chapter IV unless such act has been prohibited under clause (c) of section 30. Suspicion standard: 4.17. Reasonable suspicion that the accused has committed the offence is the standard under

WP No. 13261 of 2020 61 Section 41 of the Cr.P.C. which is reproduced hereunder: 41. When police may arrest without warrant. (1) Any police officer may without an order from a Magistrate and without a warrant, arrest any person- (a) who has been concerned in any cognizable offence, or against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists, of his having been so concerned; or (b) who has in his possession without lawful excuse, the burden of proving which excuse shall lie on such person, any implement of house- breaking; or (c) who has been proclaimed as an offender either under this Code or by order of the State Government; or (d) in whose possession anything is found which may reasonably be suspected to be stolen property and who may reasonably be suspected of having committed an offence with reference to such thing; or (e) who obstructs a police officer while in the execution of his duty, or who has escaped, or attempts to escape, from lawful custody; or

WP No. 13261 of 2020 62 (f) who is reasonably suspected of being a deserter from any of the Armed Forces of the Union; or (g) who has been concerned in, or against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists, of his having been concerned in, any act committed at any place out of India which, if committed in India, would have been punishable as an offence, and for which he is, under any law relating to extradition, or otherwise, liable to be apprehended or detained in custody in India; or (h) who, being a released convict, commits a breach of any rule made under sub- section (5) of section 356; or (i) for whose arrest any requisition, whether written or oral, has been received from another police officer, provided that the requisition specifies the person to be arrested and the offence or other cause for which the arrest is to be made and it appears therefrom that the person might lawfully be arrested without a warrant by the officer who issued the requisition. (2) Any officer in charge of a police station may, in like manner, arrest or cause to be arrested any person, belonging to one or more of the categories of persons specified in section 109 or section 110.

WP No. 13261 of 2020 63 Commission standard: 4.18. “Reason to believe that accused has committed the offence”. Section 104 of the Customs Act 1962 which is reproduced hereunder for easy reference: 104. Power to arrest.— (1) If an officer of customs empowered in this behalf by general or special order of the [Principal Commissioner of Customs or Commissioner of Customs] has reason to believe that any person in India or within the Indian customs waters has committed an offence punishable under section 132 or section 133 or section 135 or section 135A or section 136, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.] (2) Every person arrested under sub-section (1) shall, without unnecessary delay, be taken to magistrate. (3) Where an officer of customs has arrested any person under sub-section (1), he shall, for the purpose of the releasing such person on bail or otherwise, have the same power and be subject to the same provisions as the officer-in-charge of a police station has and is subject to under the 2Code of Criminal Procedure, 1898 (5 of 1898).

WP No. 13261 of 2020 64 (4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), an offence relating to”- A. Prohibited goods; or B. Evasion or attempted evasion of duty exceeding fifty lakhs rupees, shall be congnizable (5) Save as otherwise provided in sub-section (4), all other offences under the Act shall be non-cognizable. (6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), an offence punishable under section 135 relating to:- (a) Evasion or attempted evasion of duty exceeding fifty lakh rupees; or (b) Prohibited goods notified under section 11 which are also notified under sub-clause (c) of (I) of sub-section (1) of section 135, or (c) Import or export of any goods which have not been declared in accordance with the provisions of this Act and the market price of which exceeds on e crore rupees; or (d) Fraudulently availing of or attempt to avail of drawback or any exemption from duty provided under this Act, if the amount of drawback or exemption from duty exceeds fifty lakh rupees.

WP No. 13261 of 2020 65 (7) Save as otherwise provided in sub-section (6), all other offences under this Act shall be bailable. 4.19. Similar is situation under Section 69 of Central Goods and Service Tax Act, 2017 which is reproduced hereunder: 1) Where the Commissioner has reasons to believe that a person has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of section 132 which is punishable under clause (i) or (ii) of sub-section (1), or sub-section (2) of the said section, he may, by order, authorise any officer of central tax to arrest such person. (2) Where a person is arrested under sub-section (1) for an offence specified under subsection (5) of section 132, the officer authorised to arrest the person shall inform such person of the grounds of arrest and produce him before a Magistrate within twenty-four hours. (3) Subject to the provisions of the Code of Criminal Procedure, 1973,–– (a) where a person is arrested under sub-section (1) for any offence specified under sub-section (4) of section 132, he shall be admitted to bail or in default of bail, forwarded to the custody of the Magistrate;

WP No. 13261 of 2020 66 (b) in the case of a non-cognizable and bailable offence, the Deputy Commissioner or the Assistant Commissioner shall, for the purpose of releasing an arrested person on bail or otherwise, have the same powers and be subject to the same provisions as an officer-in-charge of a police station. Guilt standard: 4.20. “Reason to believe that accused is guilty of an offence”- Under Section 212(8) of the Companies Act, 2013 which is reproduced hereunder: 212. Investigation into affairs of Company by Serious Fraud Investigation Office: (8) If the Director, Additional Director or Assistant Director of Serious Fraud Investigation Office authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of any offence punishable under sections referred to in sub-section (6), he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.

WP No. 13261 of 2020 67 Rule 4. The Director, Additional Director or Assistant Director, while exercising powers under sub_section (8) of section 212of the Act, shall sign the arrest order together with personal search memo in the Form appended to these rules and shall serve it on the arrestee and obtain written acknowledgement of service. 4.21. Section 19 of the PMLA also envisages guilt standard the same is reproduced hereunder once again for easy reference: Section 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 basis of material in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest. (2) The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under sub-section (1), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall

WP No. 13261 of 2020 68 keep such order and material for such period, as may be prescribed. (3) Every person arrested under sub-section (1) shall within twenty-four hours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest to the Magistrate’s Court. 4.22. By reference to the aforesaid statutes and standards, Shri Aravind Kamath, learned Senior counsel contends that there is a difference in each of the aforesaid standards. The suspicion standard being the lowest, and the guilt standard being the highest. In that, a mere suspicion would be sufficient to arrest a person under the IPC/Cr.P.C, but however, under the PMLA for a person to be arrested, the Investigating officer has to come to a prima facie conclusion that the person to be arrested is indeed guilty of the offence. It is only if such a

WP No. 13261 of 2020 69 conclusion is arrived at that a person can be arrested; if not, no arrest could be made. 4.23. He submits that the power to arrest, as also the power to grant bail, are both interlinked and intertwined. By arresting a person, he is deprived of liberty, while by granting bail, liberty is restored by a Court. 4.24. In a case where reasonable suspicion applies, the person could be arrested on the basis of Investigating officer having arrived at a reasonable suspicion; while granting bail, the Court would consider whether there are reasonable grounds to believe that the arrestee has committed the offence or not. 4.25. In terms of PMLA, the power to arrest would only be exercised where the Investigating officer comes to a conclusion that the person to be

WP No. 13261 of 2020 70 arrested is guilty, under Section 45 of PMLA, while granting bail the Court would have to consider whether the arrestee/detenue is not guilty of the offence, only then the detenue would be enlarged on bail. 4.26. In this regard, it is contended that the standard required to be ascertained on the basis of the statute permitting the arrest is a crucial factor for the purpose of arresting a person. If the said standard is not met, in that event, the powers under that particular statute to arrest a person cannot be exercised. 4.27. The standard of arrest, as also standard of granting bail, would go hand in hand and are antithetical to each other. By incorporating the guilt standard under Section 19, the legislature has specifically intended to limit the width of the

WP No. 13261 of 2020 71 power to arrest for an offence under PMLA and since the arrest can be made only after coming to a conclusion by the Investigating officer that the detenue/arrestee is guilty of the offence, a Court of law can grant bail only after the accused were to prove or demonstrate that he is not guilty of the said offence. 4.28. Section 5 of the PMLA empowers the designated authorities to provisionally attach the suspected proceeds of crime, which could include attachment of Bank accounts, properties, both movable and immovable, thereby preserving and protecting the proceeds of crime and consequently reducing the need to arrest a person against whom offence under the PMLA has been alleged. This, in essence, would mean that there is no power vested with the Investigating officer to arrest a person merely

WP No. 13261 of 2020 72 for the reason of protecting the proceeds of crime, which can be done by way of an attachment. 4.29. In the present case, the Investigating officer having sought for remand of the petitioner only on the ground that the proceeds of the crime have to be protected, the same does not satisfy the guilt standard and therefore, the arrest of the petitioner is to be treated to be illegal and not that empowered under Section 19 of the PMLA. Therefore, he submits that for the purpose of ascertaining the quilt of the accused, the defence of the accused also ought to be considered by the Investigating Officer, and arrest ought not to have been made without so considering the defence.

WP No. 13261 of 2020 73 4.30. This Court is required to ascertain if the guilt standard is established by the material on record necessitating the arrest of the petitioner, and in this regard, only facts prior to the arrest are required to be considered, not facts which have come into being subsequent to the arrest. 4.31. In the present case, the only allegation against the petitioner are that from 2012-13 to 2018-19 there have been cash deposits of Rs.5,17,36,600/- in the account of the petitioner, there being a huge difference between the said cash deposit and the income of the petitioner, that there has been the creation of Benami funds as also shell companies by the petitioner. On the basis of the statement made by Suhas Krishnegouda that the petitioner had consumed drugs, he used to travel to Dubai, Debit card of Mohammed Anoop was in the

WP No. 13261 of 2020 74 custody of the petitioner, Hayaat Hotel was being run by Mohammed Anoop as Benami of the petitioner, cash deposits made in the account of the alleged driver of the petitioner, etc. 4.32. As regards all of these allegations, Shri Aravind Kamath, Learned Senior Counsel submits that the Investigating Officer did not call upon the petitioner to explain or furnish an explanation as regards these allegations thereby depriving the petitioner of answering them so as to avoid arrest. If it all he had been provided with an opportunity to reply to the allegations, he would have replied in such a manner as to convince the Investigating officer that there was no need for the arrest of the petitioner.

WP No. 13261 of 2020 75 4.33. There is no basis to contend that the amount deposited in either the account of the petitioner or in the name of the company or in the Company of Mohammed Anoop are proceeds of crime, viz., drug trafficking. Merely on a suspicion that the said amounts are such proceeds of crime, no arrest could have been made of the petitioner. 4.34. It was required of the Investigating officer to have by a detailed order record the guilt of the petitioner as regards the offences alleged against the petitioner. The transaction between the petitioner and Mohammed Anoop is through normal banking channels; the petitioner is alleged to have transferred Rs.46,75,000/- to the account of Mohammed Anoop. The transfer of funds through normal banking channels does not amount to money laundering and therefore,

WP No. 13261 of 2020 76 there could never have been a conclusion of guilt drawn against the petitioner. On the above basis, he submits that the guilt standard not having been established; the petitioner could not have been arrested. 5. Sri. Surya Prakash V.Raju, learned Senior counsel and Additional Solicitor General of India, submitted as under: GROUNDS OF ARREST: 5.1. The petitioner has not only been informed of the arrest but also has been provided with grounds of arrest. The said grounds were informed and provided on 29.10.2020, the date of the arrest itself, which is in compliance with the decision of the Apex Court in D.K.Basu –v- State of West Bengal [(1997) 1 SCC 416]. This he submits is established by the factum of signature of the

WP No. 13261 of 2020 77 petitioner on the foot of the arrest order dated 29.10.2020, as also the grounds of arrest dated 29.10.2020. It is only on the basis of the said information and provision of the grounds of arrest that the petitioner informed his brother of his arrest and the grounds thereof, who had got filed a bail application on the very same day of the petitioner being produced before the Special Court on 29.10.2020. 5.2. On 11.11.2020, when the petitioner was remanded to judicial custody, it was for the first time that contention had been taken that the petitioner had not been provided with grounds of arrest, which came to be rejected by the Special Court taking into consideration the signature of the petitioner on the grounds of arrest.

WP No. 13261 of 2020 78 5.3. Based on the information provided, Mr.Benoy Kodiyeri, the petitioner’s brother whose mobile number had been endorsed on the said grounds of arrest had got a bail application filed. If not for the said providing of grounds of arrest, the petitioner’s brother could not have got filed an application for regular bail under Section 439 of Cr.P.C. in the Special Court on 29.10.2020 itself. 5.4. On this basis, he submits that the petitioner, having been informed of the grounds of arrest having been provided with copies of grounds of arrest, the Investigating officer has complied with his obligations. 5.5. Alternatively, he submits that under Section 19 of the PMLA, what is required is for the accused to be informed of the grounds of his arrest as

WP No. 13261 of 2020 79 soon as may be and not providing of copies of the grounds of arrest. In this regard, he relies upon the Strouds dictionary which are reproduced hereunder: Stroud’s Judicial Dictionary of words and Phrases Inform. “Be informed of the reasons” (Criminal Justice Act 1967 (c.80) s.62(3). It is not necessary that a prisoner should be informed in writing of the reasons for his recall to prison. It is enough to show that in all the circumstances, it was clear that he understood the reasons (R. v. Secretary of State for the Home Department, Ex.P. Gunnell [1985] Crim. L.R.105). A requirement to inform is more extensive than a requirement to notify (Ali v. Birmingham City Council [2009] EWCA Civ 1279) “I think it can reasonably be inferred, therefore, that when Parliament decided to impose a duty on the Secretary of State to ‘inform’ the appellant it was entitled to, and did, assume that the appellant (or anyone else who could properly be informed on his behalf) would inform himself of the contents of a letter, e-mail or fax immediately upon its receipt. For practical purposes, therefore, it must have proceeded on the basis that delivery of the letter to the appellant (or in this case his solicitor) amounts to the communication of its

WP No. 13261 of 2020 80 contents on the day of receipt. In my view the word ‘inform’ is to be construed so as to give effect to that assumption. Added to this is the fact that Parliament has chosen to subject extradition proceedings to a clearly defined timetable under which steps have to be taken within limited periods. That is the case both with the procedure relating to appeals and with the process of extradition itself if there is no appeal. In each case time runs from the date on which the Secretary of State informs the person concerned of the order (s.117[of the Extradition Act 2003]). It is important, therefore, for that date to be capable of being ascertained with certainty. The time of transmission of fax and e-mail is recorded electronically and in the ordinary way there would be a very strong presumption that a letter dispatched by first class mail had been delivered the next business day. To interpret section 100(1) as requiring the Secretary of State of bring the existence of the order to the actual notice of the person concerned, or that of his solicitor, as opposed to simply requiring the delivery of a letter or electronic message containing the necessary information, would render the date of performance of the duty very uncertain and would risk seriously undermining the statutory provisions. For all these reasons consider that the appellant was informed of the order on 16th June when the letter reached his solicitor’s office as an attachment to an e-mail. A copy of the notice of appeal was not given to the CPS until 1st July and accordingly, whether the last day for

WP No. 13261 of 2020 81 giving notice was 29th June (as I think) or 30th June, the appeal was out of time. It follows that this Court has no jurisdiction to entertain it and it must be dismissed.” (Salazar-Duarte vs. The Government of the United State of America [2010] EWHC 3150 (Admin).] 5.6. He also relies on the decision of the Court of Appeal (Civil Division) in the case of Edward James Gunnell vs. The Chairman of the Parole Board-and-The Secretary of State for Home Affairs, 1985 WL 311403. In the aforementioned case, while interpreting section 62(3) of the Criminal Justice Act, 1957, which required that a person being recalled to prison must be “informed of the reasons for his recall”, the Court repelled the argument that section 62(3) necessitated that reasons be provided in writing to the person being recalled to prison. 5.7. By relying on the decision of the Bombay High Court in the case of Chaggan Chandrakant

WP No. 13261 of 2020 82 Bhujbal vs. Union of India & Ors. 2018 SCC Online Bom 9938 he submits that what is contemplated under the PMLA Rules, 2005 is that the accused is to be provided reasons for arrest, it does not contemplate that the same is to be provided in writing, the relevant paragraphs are reproduced hereunder for easy reference: 189. As regards the Petitioner’s grievance that the grounds of arrest were not communicated to him in writing, this grievance also cannot be accepted to hold the breach of any statutory safeguard, because neither Section 19(1) nor the definition of the word ‘order’ as given in Sub- Clause (h) of Rule 2, provides that the grounds for such arrest are to be provided in writing to the person arrested. It indicates that oral communication of the grounds of arrest is not only a substantial but proper compliance of the provision. 190. The provision of Section 19(1) also does not state that the grounds of arrest are to be informed to the person arrested, immediately. The use of the word in the said provision “as soon as may be”, makes it clear that grounds of arrest are not to be to be supplied at the time of

WP No. 13261 of 2020 83 arrest itself or immediately on arrest, but as soon as may be. If it was the intention of the Legislature that in the Arrest Order itself the grounds of arrest should be stated, that too in writing, the Legislature would have made strict provision to that effect by using the word ‘immediately’ or ‘at the time of arrest’. The fact that Legislature has not done so but used the words ‘as soon as may be’, thereby indicating that there is no statutory requirement of grounds of arrest to be communicated in writing and that too at the time of arrest or immediately after the arrest. The use of the words ‘as soon as may be’ implies that such grounds of arrest should be communicated at the earliest. 191. Here, in the case it is not disputed that the detailed grounds of arrest were furnished in the Remand Report filed before the Special Court, immediately within 24 hours, when the Petitioner was produced before the Special Court. On the basis of the said Remand Report containing the grounds of arrest, the Special Court has passed detailed order, justifying the arrest and granting two days remand to the custody of Enforcement Directorate. 192. It is significant to note that at the stage when the Petitioner was produced before the Special Court, immediately on the next date, the Petitioner has not raised any grievance before the Special Court that he has not been communicated or informed the grounds of arrest. If it was really the fact that he was not communicated the grounds of arrest, as stated in the Arrest Order, which bears his signature, it

WP No. 13261 of 2020 84 goes without saying that the Petitioner, who was ably represented by his Senior Counsel at the time of his first remand and even for subsequent remands, would not have failed to raise this grievance, especially when the Special Court has even taken care to ask the Petitioner, whether he has any complaint. Thus, the Petitioner was given ample opportunity to raise the grievance, if he was really not informed of the grounds of his arrest. 193. It is also significant to note that the Petitioner has not raised this grievance about the grounds of arrest being not informed to him at the time of his arrest, not only when he was first produced for remand before the Magistrate but even thereafter also from time to time when he was remanded to Judicial Custody after the expiry of every 15 days. He has also not raised this grievance in his bail application(s) filed before the Special Court and this Court. If, now after the rejection of those bail applications and after the lapse of more that eight months, he is raising this grievance, then it is obvious that it is clearly an after thought, to advance his case for writ of habeas corpus. 194. Even assuming and accepting that such grounds of arrest were required to be informed to him in writing and immediately at the time of arrest, there is substantial compliance of this statutory safeguard as such grounds were informed to him in the Arrest Order itself and again on the next day as can be seen from the Remand Report and Remand Order. These grounds were also informed to him in the

WP No. 13261 of 2020 85 complaint, which was lodged within 15 days on 30th March, 195. Therefore, there is more than substantial compliance of the provisions. 5.8. He relies on the decision in Moin Akhtar Quereshi vs. UOI & Ors. 2017 SCC OnLine Del 12108, the relevant paragraphs are reproduced hereunder for easy reference: 65. On consideration of the aforesaid decision relied upon by learned counsels, the position, in law, which emerges is as follows: i. The procedural safeguards in clause (1) of Article 22 are meant to afford the earliest opportunity to the arrested person to remove any mistake, misapprehension or misunderstanding in the minds of the arresting authority and, also, to known exactly what the accusation against him is so that he can exercise the second right, namely, of consulting a legal practitioner of his choice and to be defended by him. Clause (2) of Article 22 provides the material safeguard that the arrested person must be produced before a Magistrate within 24 hours of such arrest so that an independent authority exercising judicial powers may, without delay, apply its mind to his case. See Madhu Limaye (Supra).

WP No. 13261 of 2020 86 ii. Neither Section 19(1) of PMLA nor the definition of the expression ‘order’ as given in Sub-Clause (h) of Rule 2, of the PMLA Arrest Rules provide that the grounds for such arrest are mandatorily required to be provided in writing to the person arrested at the time of his arrest. Oral communication of the grounds of arrest is not only a substantial, but proper compliance of the provision. Section 19(1) also does not state that the grounds of arrest are to be informed to the person arrested, immediately. The use of the word in Section 19(1) “as soon as may be” makes it clear that grounds of arrest may not be supplied at the time of arrest itself or immediately on arrest, but as soon as may be. See Chhagan Chandrakant Bhujbal (Supra). iii. There is basic and fundamental difference between detention of a person under the provisions of law providing for preventive detention, and detention of a person arrested, accused of commission of an offence. In the case of a person arrested on accusation of commission of an offence, he is required to be produced before the Magistrate within 24 hours. He has the right to consult and to be defended by a legal practitioner of his choice. The purpose of information of the grounds of arrest is to enable him to apply for his release on bail when he is produced before the Magistrate. Therefore, the principles laid down and decisions rendered in cases of preventive detention and under Article 22(5) of the Constitution of India cannot be pressed into service for appreciating the ambit and scope of

WP No. 13261 of 2020 87 provisions of Section 50 of the Code of Criminal Procedure. Communication referred to in Section 50 of the Code of Criminal Procedure need not be, in every case, in writing. What is important is communication, or knowledge, or information regarding the particulars of the offence for which the arrest is made, or the grounds for such arrest. The obligation to “forthwith communicate to him full particulars of the offence for which he is arrested” in Section 50 of the Code, can be said to be discharged if it is done with all reasonable dispatch and without avoidable delay. It can also be interpreted to mean, as soon as possible, without any delay. See Sunil Chainani (Supra) iv. The words used in Article 22(1) are that no person arrested shall be detained in custody without informing him, as soon as may be, of the grounds of such arrest. Thus if the person is not informed as soon as may be, his further detention may become invalid or unlawful. But it cannot be said that his initial arrest itself becomes illegal. See Sunil Chainani (Supra). v. Once it has been shown that the arrest made by the police officer is illegal, it is necessary for the State to establish that, at the stage of remand, the magistrate directed detention in jail custody after applying his mind to all relevant matters. See Madhu Limaye (supra). vi. A writ of habeas corpus is not to be entertained when a person is committed to judicial custody or police custody by the competent Court by an order which prima facie

WP No. 13261 of 2020 88 does not appear to be without jurisdiction or passed in an absolutely mechanical manner or wholly illegal. See N. Ratnakumari (Supra), Kanu Sanyal (Supra), Manubhai R.P. (Supra). vii. Once it is established that, at the stage of remand of the Petitioner, the Special Court has directed detention of the Petitioner after applying its mind to all the relevant factors, the orders of remand having thus cured the Constitutional infirmities, if any and such orders, prima facie, being not passed without jurisdiction or in a wholly illegal manner, then, the Writ for Habeas Corpus itself is not maintainable. See Chhagan Chandrakant Bhujbal (Supra). viii. If on the date of the hearing of the writ petition, it is shown that the detention of a particular person is valid, mere fact that his detention had been invalid earlier would not entitle such a petitioner to have any redress in a habeas corpus petition. Even if detention of a particular person is not in accordance with law earlier, but if by happening of subsequent events his detention presently is legally valid, then there does not arise any question of releasing such a person from custody. See Rakesh Kumar (Supra). ix. A writ of habeas corpus would be totally misplaced where an accused is facing prosecution for the offences, cognizance whereof has already been taken by the competent court and he is in custody pursuant to the order of remand made by the said Court. See Saurabh Kumar (Supra).

WP No. 13261 of 2020 89 67. The Constitution consciously uses the expression “informed” in sub-Article (1) of Article 22 in contradistinction with the expression “communicate” used in sub-Article (5) of Article 22 of the Constitution. This distinction in the usage of the two expressions has to be viewed in the context in which they are so used. When a person is arrested and detained in custody, he is entitled to know as to why he is so arrested, so that he is able to remove any mistake, misapprehension or misunderstanding in the mind of the arresting authority and to know exactly what the accusation against him is. This right of the arrestee is enables him to exercise his right to consult a legal practitioner of his choice and his right to be defended by the legal practitioner of his choice. 5.9. On these grounds he submits that grounds of arrest have been provided to the petitioner as per the signatures appended to the said grounds of arrest. Even if the same is denied by the petitioner the fact that a bail application had got filed would indicate that the grounds of arrest at least had been informed. This information is sufficient compliance with the

WP No. 13261 of 2020 90 requirements of Section 19 of the PMLA. The said information having been provided, the petitioner cannot raise this as a ground now. 5.10. As regards the decision in Rajabhushan Omprakash Dixit vs. Union of India & Ors. 2018 (168) DR.7292 ; Neeraj Singal vs. Union of India and Ors. 2019 CriL.7 191 and the judgment of the Hon'ble Supreme Court in the case of In the matter of Madhu Limaye, 1969 (1) SCC 292, he submits that the Judgment of the Delhi High Court in Rajbhushan Omprakash Dixit’s case (supra) is per incurium as it has taken a contradictory view to that of an earlier Bench of co-equal strength of the same Court in Moin Akthar Khureshi’s case (supra) by holding that the grounds of arrest have to be provided in writing to the accused person.

WP No. 13261 of 2020 91 [ 5.11. In this regard he relies on the decision of the Apex Court in Sandeep Kumar Bafna v. State of Maharashtra reported in (2014) 16 SCC 623. The said para is reproduced herein for easy reference: 19. It cannot be overemphasised that the discipline demanded by a precedent or the disqualification or diminution of a decision on the application of the per incuriam rule is of great importance, since without it, certainty of law, consistency of rulings and comity of courts would become a costly casualty. A decision or judgment can be per incuriam any provision in a statute, rule or regulation, which was not brought to the notice of the court. A decision or judgment can also be per incuriam if it is not possible to reconcile its ratio with that of a previously pronounced judgment of a co-equal or larger Bench; or if the decision of a High Court is not in consonance with the views of this Court. It must immediately be clarified that the per incuriam rule is strictly and correctly applicable to the ratio decidendi and not to obiter dicta. It is often encountered in High Courts that two or more mutually irreconcilable decisions of the Supreme Court are cited at the Bar. We think that the inviolable recourse is to apply the earliest view as the succeeding ones would fall in the category of per incuriam.

WP No. 13261 of 2020 92 5.12. Siddharam Satlingappa Mhetre v. State of Maharashtra, (2011) 1 SCC 694 138. The analysis of English and Indian law clearly leads to the irresistible conclusion that not only the judgment of a larger strength is binding on a judgment of smaller strength but the judgment of a coequal strength is also binding on a Bench of Judges of coequal strength. In the instant case, judgments mentioned in paras 124 and 125 are by two or three Judges of this Court. These judgments have clearly ignored the Constitution Bench judgment of this Court in Sibbia case [(1980) 2 SCC 565 : 1980 SCC (Cri) 465] which has comprehensively dealt with all the facets of anticipatory bail enumerated under Section 438 CrPC. Consequently, the judgments mentioned in paras 124 and 125 of this judgment are per incuriam. 5.13. To contend that a decision or a Judgment could be per incurium if it cannot be reconciled with an earlier decision rendered by a Bench of co-equal strength.

WP No. 13261 of 2020 93 5.14. On the basis of the above, he submits that the decision of Rajbhushan’s case is per in curium and cannot be relied upon by the petitioner. 5.15. As regards Madhu Limaye's case, he submits that in that case, the grounds of arrest had not even been made known to the petitioners, and a habeas corpus petition had been filed. In the present case, the grounds of arrest have been made known and a copy provided; therefore, the said decision is not applicable. 5.16. As regards the decision in Neeraj Singhals’s case, he submits that the said decision has been stayed by the Apex Court by order dated 4.09.2018 in Crl.A.No.1115/2018, hence the petitioner cannot rely upon the decision in the said case. Even otherwise, he submits that in that case accused had not been provided with

WP No. 13261 of 2020 94 grounds of arrest, whereas in the present case, he has been so provided. Therefore, the said decision would also not apply on merits. GUILT STANDARD: 5.17. As regards the cross statute study and submissions made in relation thereto and more particularly as regards Guilt Standard, he submits that merely because the word ‘guilt’ has been used under Section 19, it does not mean that the said finding of guilt beyond a reasonable doubt is to be established by the Investigating officer prior to the arrest of the accused. 5.18. A similar expression, “reasonable grounds for believing that he has been guilty of an offence punishable with death or imprisonment for life" is found under Section 437 of Cr.P.C. By usage of the said word ‘guilt’, it does not mean that the

WP No. 13261 of 2020 95 accused is to be guilty of the offence punishable with death or imprisonment for life. The Investigating Officer is not a judge of a Court of law to adjudicate on the guilt or otherwise before arresting a person. 5.19. In criminal matters, there is no requirement for the Investigating Officer to issue a show-cause notice calling upon the accused to provide his defence, consider the same and pass a reasoned order and thereafter arrest the accused. In this regard, he relies upon the decision of the Apex Court in Prahlad Singh Bhati v. NCT, Delhi, reported in (2001) 4 SCC 280, more particularly para 8 thereof which is reproduced hereunder for easy reference: 8. The jurisdiction to grant bail has to be exercised on the basis of well-settled principles having regard to the circumstances of each case and not in an

WP No. 13261 of 2020 96 arbitrary manner. While granting the bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character, behaviour, means and standing of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public or State and similar other considerations. It has also to be kept in mind that for the purposes of granting the bail the legislature has used the words “reasonable grounds for believing” instead of “the evidence” which means the court dealing with the grant of bail can only satisfy it (sic itself) as to whether there is a genuine case against the accused and that the prosecution will be able to produce prima facie evidence in support of the charge. It is not expected, at this stage, to have the evidence establishing the guilt of the accused beyond reasonable doubt. 5.20. By relying on the same, he submits that what is required at the stage of considering an application for bail under Section 437 is whether there is prima facie evidence in support of the

WP No. 13261 of 2020 97 charge that the accused is guilty of the offence punishable with death or imprisonment for life. It is not expected at that stage for the Investigating officer to provide evidence to establish the guilt beyond a reasonable doubt. 5.21. He relies on the decision in Gurcharan Singh v. State (Delhi Admn.), (1978) 1 SCC 118, more particularly para 21 which is reproduced hereunder for easy reference:- 21. Section 437 CrPC is concerned only with the Court of Magistrate. It expressly excludes the High Court and the Court of Session. The language of Section 437(1) may be contrasted with Section 437(7) to which we have already made a reference. While under sub-section (1) of Section 437 CrPC the words are: “If there appear to be reasonable grounds for believing that he has been guilty”, sub-section (7) says: “that there are reasonable grounds for believing that the accused is not guilty of such an offence”. This difference in language occurs on account of the stage at which the two sub-sections operate. During the initial investigation of a case in order to confine a person in detention, there should only appear reasonable grounds for believing

WP No. 13261 of 2020 98 that he has been guilty of an offence punishable with death or imprisonment for life. Whereas after submission of charge-sheet or during trial for such an offence the Court has an opportunity to form somewhat clear opinion as to whether there are reasonable grounds for believing that the accused is not guilty of such an offence. At that stage the degree of certainty of opinion in that behalf is more after the trial is over and judgment is deferred than at a pre-trial stage even after the charge-sheet. There is a noticeable trend in the above provisions of law that even in case of such non-bailable offences a person need not be detained in custody for any period more than it is absolutely necessary, if there are no reasonable grounds for believing that he is guilty of such an offence. There will be, however, certain overriding considerations to which we shall refer hereafter. Whenever a person is arrested by the police for such an offence, there should be materials produced before the Court to come to a conclusion as to the nature of the case he is involved in or he is suspected of. If at that stage from the materials available there appear reasonable grounds for believing that the person has been guilty of an offence punishable with death or imprisonment for life, the Court has no other option than to commit him to custody. At that stage, the Court is concerned with the existence of the materials against the accused and not as to whether those materials are credible or not on the merits.

WP No. 13261 of 2020 99 5.22. By relying on the above, he submits that at the stage of considering an application under Section 437 Court is only concerned with existence of prima facie material against the accused as regards alleged offence and not whether the material are credible and or established. 5.23. As regards the Judgment relied upon by Sri. Aravind Kamath learned Senior Counsel in C.B.Gautham –vs- Union of India and Others [(1992) 108 CTR (SC) 304], he submits that said Judgment was rendered under the provisions of Income Tax Act, 1961, which is a quasi-criminal offence where notices should be issued. The present matter is a criminal offence having an impact on the society, the said judgment is not applicable.

WP No. 13261 of 2020 100 5.24. He relies on the decision in the case of P.Chidambaram vs Central Bureau Of Investigation [(2009)9 SCC 24 para 26] more particularly para 26 thereof which is reproduced hereunder for easy reference: 26. As discussed earlier, insofar as the “flight risk” and “tampering with evidence” are concerned, the High Court held in favour of the appellant by holding that the appellant is not a “flight risk” i.e. “no possibility of his abscondence”. The High Court rightly held that by issuing certain directions like “surrender of passport”, “issuance of look out notice”, “flight risk” can be secured. So far as “tampering with evidence” is concerned, the High Court rightly held that the documents relating to the case are in the custody of the prosecuting agency, Government of India and the Court and there is no chance of the appellant tampering with evidence. 5.25. He submits that the purpose of arrest is not only to secure the presence of the accused but also for various purposes detailed hereinabove. He submits that it is not required for an investigation to be completed to arrest a person.

WP No. 13261 of 2020 101 Arrest, search, seizure, survey, etc. are only to further the investigation. There is no timeframe in which they could be either resorted to early in the stage of the investigation, during the stage of investigation or after investigation. 5.26. On facts, he submits that there is enough and more material available on record to establish the guilt of the accused-petitioner, even if the same is required to be established at this stage. 5.27. In that, the relationship between Sri. Mohammed Anoop and the petitioner has been established, there is no denial of the same by the petitioner. Sri. Mohammed Anoop had been arrested by the NCB for having in his possession narcotic drugs and psychotropic substances of commercial quantity; NCB has registered a case against Mohammed Anoop under Section 22 and 27-A of

WP No. 13261 of 2020 102 NDPS Act which are scheduled offences under the PMLA. On the arrest of Mohammed Anoop, he has deposed that the petitioner is his boss, they have huge money transactions, huge amounts of monies have been deposited in the Bank accounts of Mohammed Anoop by the petitioner, the petitioner has been making use of the accounts to start restaurant established benami by the petitioner. By using a debit card in the name of Mohammed Anoop, the money has been used by the petitioner. Mohammed Anoop had categorically stated that he had only followed the instructions of the petitioner. The amount deposited in the accounts are not commensurate with the income tax returns of the petitioner; though it was contended that the petitioner had borrowed the money by

WP No. 13261 of 2020 103 mortgaging the property of his mother-in-law, the same is found to be false. 5.28. Apart therefrom he has referred to various other statements, seizure and other material to establish the guilt of the petitioner. CHARGE AGAINST THE ARRESTED PERSON FOR HAVING COMMITTED THE PREDICATE OFFENCE: 5.29. Sri.S.V.Raju, learned Senior counsel and ASG submitted that the remand application which had been filed insofar as the petitioner was concerned was under Section 167(2) of Cr.P.C. r/w 51 and 53 of NDPS Act by the NCB, which would establish that there is an investigation in progress against the petitioner filed by the NCB for violation of the NDPS Act. It is on that basis petitioner was remanded to the custody of NCB from 17.11.2020 to 20.11.2020.

WP No. 13261 of 2020 104 5.30. In this regard, he relies on the following Judgments of the Apex Court Gouri Shankar Jha v. State of Bihar, (1972) 1 SCC 564 more particularly para 12 thereof, which is reproduced hereunder for easy reference: 12. Thus, Section 167 operates at a stage when a person is arrested and either an investigation has started or is yet to start, but is such that it cannot be completed within 24 hours. Section 344, on the other hand, shows that investigation has already begun and sufficient evidence has been obtained raising a suspicion that the accused person may have committed the offence and further evidence may be obtained, to enable the police to do which, a remand to jail custody is necessary. The fact that Section 344 occurs in the chapter dealing with inquiries and trials does not mean that it does not apply to cases in which the process of investigation and collection of evidence is still going on. That is clear from the very language of sub-section (1-A) under which the Magistrate has the power to postpone the commencement of the inquiry or trial. That would be the stage prior to the commencement of the inquiry or trial which would be the stage of investigation. See A. Lakshamanrao v. Judicial Magistrate [(1970) 3 SCC 501 : AIR 1971 SC 186] . Therefore, it is not as if the stage at which the Magistrate passed the remand orders was still

WP No. 13261 of 2020 105 the stage when Section 167 applied and not Section 344. The decision of the Orissa High Court in Artatran v. Orissa, [AIR 1956 Ori 129] to the effect that Section 344 does not apply at the stage of investigation and can apply only after the Magistrate has taken cognizance of and issued processes or warrant for the production of the accused if he is not produced before him cannot, in view of A. Lakshamanrao case be regarded as correct. The power under Section 344 can be exercised even before the submission of the charge-sheet, (of, Chandradip v. State [(1955) 3 BLJR 323] and Ajit Singh v. State, [(1970) 76 Cri LJ 1075] ) that is, at the stage when the investigation is still not over. If the view we hold is correct that Section 344 operated, the Magistrate, provided he complied with the condition in the Explanation, was competent to pass remand orders from time to time subject to each order being not for a period exceeding fifteen days. There can be no doubt that the Magistrate had satisfied that condition. The judgment of the High Court in para 11 points out that the prosecution case was that the appellant had himself made a confession before the police. That was in addition to a confession by two others which implicated the appellant in the commission of offences under Section 395 of the Code. 5.31. Prestige Lights Ltd. v. SBI, reported in (2007) 8 SCC 449, more particularly para 33 to

WP No. 13261 of 2020 106 35 thereof which are reproduced hereunder for easy reference: 33. It is thus clear that though the appellant Company had approached the High Court under Article 226 of the Constitution, it had not candidly stated all the facts to the Court. The High Court is exercising discretionary and extraordinary jurisdiction under Article 226 of the Constitution. Over and above, a court of law is also a court of equity. It is, therefore, of utmost necessity that when a party approaches a High Court, he must place all the facts before the Court without any reservation. If there is suppression of material facts on the part of the applicant or twisted facts have been placed before the Court, the writ court may refuse to entertain the petition and dismiss it without entering into merits of the matter. 34. The object underlying the above principle has been succinctly stated by Scrutton, L.J., in R. v. Kensington Income Tax Commrs. [(1917) 1 KB 486 : 86 LJKB 257 : 116 LT 136 (CA)] , in the following words: “[I]t has been for many years the rule of the court, and one which it is of the greatest importance to maintain, that when an applicant comes to the court to obtain relief on an ex parte statement he should make a full and fair disclosure of all the material facts—facts, not law. He must not misstate the law if he can help it—the court is supposed to know the law. But it knows nothing about the facts, and the

WP No. 13261 of 2020 107 applicant must state fully and fairly the facts, and the penalty by which the court enforces that obligation is that if it finds out that the facts have not been fully and fairly stated to it, the court will set aside, any action which it has taken on the faith of the imperfect statement.” (emphasis supplied) 35. It is well settled that a prerogative remedy is not a matter of course. In exercising extraordinary power, therefore, a writ court will indeed bear in mind the conduct of the party who is invoking such jurisdiction. If the applicant does not disclose full facts or suppresses relevant materials or is otherwise guilty of misleading the court, the court may dismiss the action without adjudicating the matter. The rule has been evolved in larger public interest to deter unscrupulous litigants from abusing the process of court by deceiving it. The very basis of the writ jurisdiction rests in disclosure of true, complete and correct facts. If the material facts are not candidly stated or are suppressed or are distorted, the very functioning of the writ courts would become impossible. 5.32. Dalip Singh v. State of U.P., reported in (2010) 2 SCC 114 more particularly para 1 to 10 thereof which are reproduced hereunder for easy reference:

WP No. 13261 of 2020 108 1. For many centuries Indian society cherished two basic values of life i.e. “satya” (truth) and “ahimsa” (non-violence). Mahavir, Gautam Buddha and Mahatma Gandhi guided the people to ingrain these values in their daily life. Truth constituted an integral part of the justice- delivery system which was in vogue in the pre- Independence era and the people used to feel proud to tell truth in the courts irrespective of the consequences. However, post-Independence period has seen drastic changes in our value system. The materialism has overshadowed the old ethos and the quest for personal gain has become so intense that those involved in litigation do not hesitate to take shelter of falsehood, misrepresentation and suppression of facts in the court proceedings. 2. In the last 40 years, a new creed of litigants has cropped up. Those who belong to this creed do not have any respect for truth. They shamelessly resort to falsehood and unethical means for achieving their goals. In order to meet the challenge posed by this new creed of litigants, the courts have, from time to time, evolved new rules and it is now well established that a litigant, who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands, is not entitled to any relief, interim or final. 3. In Hari Narain v. Badri Das [AIR 1963 SC 1558] this Court adverted to the aforesaid rule and revoked the leave granted to the appellant by making the following observations: (AIR p. 1558)

WP No. 13261 of 2020 109 “It is of utmost importance that in making material statements and setting forth grounds in applications for special leave made under Article 136 of the Constitution, care must be taken not to make any statements which are inaccurate, untrue or misleading. In dealing with applications for special leave, the Court naturally takes statements of fact and grounds of fact contained in the petitions at their face value and it would be unfair to betray the confidence of the Court by making statements which are untrue and misleading. Thus, if at the hearing of the appeal the Supreme Court is satisfied that the material statements made by the appellant in his application for special leave are inaccurate and misleading, and the respondent is entitled to contend that the appellant may have obtained special leave from the Supreme Court on the strength of what he characterises as misrepresentations of facts contained in the petition for special leave, the Supreme Court may come to the conclusion that in such a case special leave granted to the appellant ought to be revoked.” 4. In Welcom Hotel v. State of A.P. [(1983) 4 SCC 575 : 1983 SCC (Cri) 872 : AIR 1983 SC 1015] the Court held that a party which has misled the Court in passing an order in its favour is not entitled to be heard on the merits of the case. 5. In G. Narayanaswamy Reddy v. Govt. of Karnataka [(1991) 3 SCC 261 : AIR 1991 SC 1726] the Court denied relief to the appellant who had concealed the fact that the award was

WP No. 13261 of 2020 110 not made by the Land Acquisition Officer within the time specified in Section 11-A of the Land Acquisition Act because of the stay order passed by the High Court. While dismissing the special leave petition, the Court observed: (SCC p. 263, para 2) “2. … Curiously enough, there is no reference in the special leave petitions to any of the stay orders and we came to know about these orders only when the respondents appeared in response to the notice and filed their counter- affidavit. In our view, the said interim orders have a direct bearing on the question raised and the non-disclosure of the same certainly amounts to suppression of material facts. On this ground alone, the special leave petitions are liable to be rejected. It is well settled in law that the relief under Article 136 of the Constitution is discretionary and a petitioner who approaches this Court for such relief must come with frank and full disclosure of facts. If he fails to do so and suppresses material facts, his application is liable to be dismissed. We accordingly dismiss the special leave petitions.” 6. In S.P. Chengalvaraya Naidu v. Jagannath [(1994) 1 SCC 1 : JT (1993) 6 SC 331] the Court held that where a preliminary decree was obtained by withholding an important document from the court, the party concerned deserves to be thrown out at any stage of the litigation. 7. In Prestige Lights Ltd. v. SBI [(2007) 8 SCC 449] it was held that in exercising power under Article 226 of the Constitution of India the High Court is not just a court of law, but is also a

WP No. 13261 of 2020 111 court of equity and a person who invokes the High Court's jurisdiction under Article 226 of the Constitution is duty-bound to place all the facts before the Court without any reservation. If there is suppression of material facts or twisted facts have been placed before the High Court then it will be fully justified in refusing to entertain a petition filed under Article 226 of the Constitution. This Court referred to the judgment of Scrutton, L.J. in R. v. Kensington Income Tax Commissioners, and observed: (Prestige Lights Ltd. case In exercising jurisdiction under Article 226 of the Constitution, the High Court will always keep in mind the conduct of the party who is invoking such jurisdiction. If the applicant does not disclose full facts or suppresses relevant materials or is otherwise guilty of misleading the court, then the Court may dismiss the action without adjudicating the matter on merits. The rule has been evolved in larger public interest to deter unscrupulous litigants from abusing the process of court by deceiving it. The very basis of the writ jurisdiction rests in disclosure of true, complete and correct facts. If the material facts are not candidly stated or are suppressed or are distorted, the very functioning of the writ courts would become impossible. 8. In A.V. Papayya Sastry v. Govt. of A.P the Court held that Article 136 does not confer a right of appeal on any party. It confers discretion on this Court to grant leave to appeal in appropriate cases. In other words, the Constitution has not made the Supreme Court a

WP No. 13261 of 2020 112 regular court of appeal or a court of error. This Court only intervenes where justice, equity and good conscience require such intervention. 9. In Sunil Poddar v. Union Bank of India [(2008) 2 SCC 326] the Court held that while exercising discretionary and equitable jurisdiction under Article 136 of the Constitution, the facts and circumstances of the case should be seen in their entirety to find out if there is miscarriage of justice. If the appellant has not come forward with clean hands, has not candidly disclosed all the facts that he is aware of and he intends to delay the proceedings, then the Court will non-suit him on the ground of contumacious conduct. 10. In K.D. Sharma v. SAIL [(2008) 12 SCC 481] the Court held that the jurisdiction of the Supreme Court under Article 32 and of the High Court under Article 226 of the Constitution is extraordinary, equitable and discretionary and it is imperative that the petitioner approaching the writ court must come with clean hands and put forward all the facts before the Court without concealing or suppressing anything and seek an appropriate relief. If there is no candid disclosure of relevant and material facts or the petitioner is guilty of misleading the Court, his petition may be dismissed at the threshold without considering the merits of the claim. The same rule was reiterated in G. Jayashree v. Bhagwandas S. Patel [(2009) 3 SCC 141] .

WP No. 13261 of 2020 113 5.33. He submits that there is an arrest made of the petitioner under the NDPS Act would indicate that the NCB is of the opinion that the petitioner is involved in such offences. NCB is yet to file a charge sheet which can be filed in the time frame specified under Section 36-A of the NDPS Act. Just because the charge sheet is yet to be filed, it cannot be contended by the petitioner that there is no charge sheet against the petitioner alleging any predicate offence which has been committed by him. 5.34. Even if a charge sheet or a complaint has not been filed for the predicate offence in terms of the second proviso to Section 5 of PMLA, the DTE can attach properties of a person in possession of the proceeds of the crime even though he may not be charged with the alleged crime. There is an amendment to Section 17 of

WP No. 13261 of 2020 114 PMLA deleting the provision to Subsection (1) of Section 17; therefore, there is no longer a prerequisite to report a scheduled offence. A similar amendment has also been carried out in Section 18 of the PMLA. In view of the same, he submits that whether petitioner has been charged with any predicate offence or not, he can be arrested under the PMLA. 5.35. He submits that all the contentions relating to the above had also been raised in the bail petition, which came to be rejected by the Special Judge, as such re-argument on the same in the present proceedings is not permissible. 6. Heard Sri.Aravind Kamath, learned Senior counsel for the petitioner, Sri.S.V.Raju, learned Senior counsel

WP No. 13261 of 2020 115 and Additional Solicitor General of India, Perused papers. 7. On the basis of the pleadings filed and the arguments advanced, the points that would arise for determination of this Court are: i) Whether in terms of Section 19 of PMLA, the Investigating Officer or the Arresting Officer is required to inform the grounds of arrest to the person being arrested, if so, is it oral information or does it have to be in writing? ii) Whether the expression “reason to believe that any person has been guilty of an offence” found under Section 19 of the PMLA Act require a preliminary adjudication by the Investigating Officer as regards the guilt of the accused before arresting him? iii) Whether the objective satisfaction of the guilt of the accused is required to be reduced to writing on the grounds of arrest formulated by the Investigating Officer? iv) What order?

WP No. 13261 of 2020 116 8. I answer the above points as under: 9. ANSWER TO POINT NO.1: Whether in terms of Section 19 of PMLA, the Investigating Officer or the Arresting Officer is required to inform the grounds of arrest to the person being arrested, if so, is it oral information or does it have to be in writing? 9.1. The term 'Arrest' has not been defined under the Cr.P.C. or under the IPC, nor for that matter has it been defined under the PMLA. Arrest, as generally understood, is to restrain to stay, and in relation to a person connected to an offence or suspected to be connected to offence, an arrest would mean to detain and restrain a person. 9.2. Section 41 to 44 and 46 of Cr.P.C. deal with the arrest of a person, Section 41 empowering the

WP No. 13261 of 2020 117 police officer to arrest any person without a warrant, Section 42 empowering a Police officer to arrest a person who commits an offence in his presence, Section 43 enabling a private person to arrest any person who commits an offence in his presence and or a proclaimed offender, Section 44 deals with arrest by a Magistrate and Section 46 lays down the manner in which the arrest has to be made. 9.3. Extensive arguments have been addressed by both the Senior counsels on this aspect. Sri. Aravind Kamath, learned Senior counsel appearing for the petitioner by relying upon the decision of the Delhi High Court in Rajbhushan Omprakash Dixit’s case (supra), contended that the grounds for arrest is required to be furnished in writing and provided to the person arrested at the earliest

WP No. 13261 of 2020 118 point of time. The relevant paragraph has been extracted hereinabove. 9.4. Per contra Sri.S.V.Raju, learned Senior counsel and ASG submitted that the decision in Raj Bhushan’s case is per in curium inasmuch as the prior decision of the Coordinate Bench in Moin Khan Akhtar’s case has not been referred to or brought to the notice of the Court rendering Judgment in Rajbhushan’s case. Hence, he contended that when the decision of two coordinate Benches of co-equal strength cannot be reconciled, then the earlier Judgment would have to be taken into consideration. 9.5. Sri. Surya Prakash V.Raju, learned Senior counsel and Additional Solicitor General of India would submit that the grounds of arrest have been provided to the Petitioner, alternatively by

WP No. 13261 of 2020 119 referring to Strouds Judicial dictionary and the decision in Edward James Gunnell's case (supra) would contend that the word 'inform' would only mean 'communication' and not furnishing of the reasons for arrest and as such, even if the Petitioner were to contend that physical copy of the grounds of arrest was not furnished, the fact that the Petitioner was informed, which was in turn informed to Petitioner's brother would be sufficient compliance of the requirement of Section 19 and therefore, he submits that on facts even if this Court were to come to a conclusion that the physical copy of grounds of arrest has not been furnished, there being sufficient compliance, this Court ought not to intercede in the matter. In this regards, he relied upon the decision of the Bombay High Court in Chaggan Chandrakant

WP No. 13261 of 2020 120 Bhujbal's case (supra) and the decision of the Delhi High Court in Moin Akhtar Quereshi's case (supra), and by relying on the same, he submits that information is sufficient. 9.6. Under the Cr.P.C., a person can be arrested if the arresting officer or the arresting person has reason to believe that a person is guilty of an offence. As aforestated, the power of arrest would mean to detain or restrain a person hereby affecting his personal liberty guaranteed under Article 19 and 21 of the Constitution. Therefore, it is very much required that suitable and adequate safeguards for the exercise of this power are provided so that there is no abuse of such wide and far-reaching power. The power of arrest under Cr.P.C. is a general power, whereas the power to arrest under a special enactment is a special power

WP No. 13261 of 2020 121 conferred by the Special enactment, to be resorted to, used, as also circumscribed by the said special statute itself. 9.7. In the present case, the power to arrest is circumscribed by the PMLA itself. This power has to be exercised in the manner as provided under PMLA or not at all. Apart from the exercise of power to arrest in a particular manner, PMLA also provides or mandates that the arresting officer inform the arrestee of the grounds of his arrest at the earliest without any unnecessary delay so as to safeguard the individual freedom of that person who can on that basis apply for and seek for bail if so provided as held in Union of India –v- Padam Narayan Agarwal [(2008) 13 SCC 305].

WP No. 13261 of 2020 122 9.8. The question is as to whether the arresting officer is required to only inform the grounds of arrest or provide the same in writing to the person arrested for an offence under the PMLA. The PMLA has various provisions relating to the offence of money laundering as regards which stringent punishments are prescribed. Furthermore, in terms of Section 45 of the PMLA for the person arrested to seek bail, it is required that such a person establishes before the said Court that the accused is not guilty of the offence alleged against him. 9.9. There being conflicting decisions in Moin Akhtar Quereshi's case (supra) and Rajbhushan Omprakash Dixit's case (supra) by the Benches of the Delhi High Court of similar strength, I am of the considered opinion that it would not be proper for this Court to rely upon

WP No. 13261 of 2020 123 on either of two decisions, but to appreciate the present matter independently albeit considering the reasoning in the above matters. 9.10. The expression ‘inform him of grounds of such arrest”- under Section 19(1) of the PMLA would have to be read in conjunction with Section 45 of the PMLA and cannot be read in isolation. 9.11. There could be a loss in communication if the said information is provided orally, inasmuch as the accused being a legally illiterate person or a layman, if the accused were not able to understand the grounds of arrest if orally informed, he would not be in a position to convey or communicate the same to his near and dear ones or his lawyers so as to satisfy the requirement of Section 45 of the PMLA. More so

WP No. 13261 of 2020 124 when the requirement for granting bail is placed at such a high standard. 9.12. To enable the accused to make out a case for bail, it is required that there is no loss in communication, and the exact reasons or grounds of arrest are required to be conveyed to the accused. This, in my considered opinion, can only be done in writing, in a language known to the accused as also in English. 9.13. In terms of Section 45 of PMLA, such a person can seek bail and obtain bail only if such a person were to establish that he is not guilty of the offence alleged against him. The defence of the accused and/or claim that the accused is not guilty in order to be granted bail by a Court can only be adjudicated by the Court on a

WP No. 13261 of 2020 125 touchstone of the contents of the arrest order and reasons for arrest or grounds for arrest. 9.14. This works in two manners. Firstly that it is only if the grounds for arrest are available with the accused, the accused can endeavour to contradict the said grounds so as to, at this stage, prima facie establish he/she is not guilty of such an offence. Secondly, the court can take into consideration the reasons for arrest as stated in the grounds for arrest where the standard is reason to believe that the arrestee is guilty of the offence and juxtaposing the same to the requirement provided under Section 45 of the PMLA for grant bail, i.e. for the accused/arrestee to establish that the said arrestee is not guilty of the said offence. This, in my considered opinion, cannot be done without both the reasons for arrest, i.e. grounds for

WP No. 13261 of 2020 126 arrest, as also grounds for the grant of bail being placed before the said Judge, which would essentially mean that the same is to be in writing and be capable of being produced by the accused before such Court. 9.15. There is considerable force in the submission made by Sri. Aravind Kamath learned Senior counsel that one of the safeguards put in place by the legislature to prevent abuse of the powers vested with the Authority under the PMLA is providing grounds of arrest to the arrestee. These grounds of arrest would not only have to be provided to the arrestee but also would form part of the case diary or the investigation file. Thus unless there are grounds sufficient to arrest a person which is recorded in writing, no person could be arrested under the PMLA. This by itself would be a safeguard so as to prevent any

WP No. 13261 of 2020 127 arbitrary exercise of power and/or an indiscriminate arrest being carried out by the authorities under the PMLA. The reasoning of the Delhi High Court in Rajbhushan Omprakash Dixit's case (supra) and the dicta laid down therein would have to be read in consonance with the decision of the Apex Court in D.K.Basu's case (supra). At the time when the decision was rendered in D.K.Basu's case, the PMLA was not in force and as such, the safeguard provided in D.K.Basu's case would have to be extended by taking into consideration the powers of arrest under the PMLA. The decision, dicta and the safeguards laid down in D.K.Basu's case can not remain static; they being fundamental would apply in almost all cases, but, however, the safeguards provided therein would have to be expanded from time to

WP No. 13261 of 2020 128 time to cover arrest under special enactments by exercising special powers by the officers named in those enactments. The Hon'ble Delhi High Court has categorically held in Rajbhushan Omprakash Dixit's case (supra) that the grounds of arrest would have to be furnished as soon as an arrest is made to the "Arrestee" and use of the word 'furnish' would mean that a physical copy of the same be made available to the arrestee. This, in my considered opinion, would be the purport and intent of Section 19 of the PMLA. 9.16. The decision of the Delhi High Court in Neeraj Singal's case (supra) would not be applicable to the present case since the said decision was rendered in the background of Rule 4 of SFIO Arrest Rules.

WP No. 13261 of 2020 129 9.17. The law laid down by the Apex Court in Arnesh Kumar's case (supra) would be applicable to any arrest including that under Section 19 of PMLA. The Magistrate is required to ascertain if the arrest made was legally made and in accordance with law. Therefore, it is required that the reasons for arrest and/or the grounds for arrest are recorded in writing as required under Section 19 of the PMLA and produced before the Court of law. 9.18. In that view of the matter, unless the accused is aware of the exact grounds of arrest and/or as to what the said accused is required to answer to, so as to establish that he is not guilty of the offence, he would not be able to meet the requirement of Section 45 of the PMLA. I am of the considered opinion that it would, but, be required for the Arresting Officer to provide the

WP No. 13261 of 2020 130 grounds of arrest to any person being arrested under PMLA in writing, mere oral information would not be sufficient. In that regard, necessary acknowledgement from the arrestee would have to be obtained in writing confirming the receipt of the same in writing. 9.19. In the present case, the contention of Shri Aravind Kamath, learned Senior counsel is that the petitioner was not provided with grounds of arrest or the arrest order whereas Sri.S.V.Raju, learned Senior Counsel and ASG appearing for the respondent would contend that they have been so provided. 9.20. This aspect would have to be examined on the basis of the documents on record. The copies of the arrest order and grounds of arrest have been produced. A perusal of the same indicates that

WP No. 13261 of 2020 131 the petitioner has signed the same, thus indicating that those grounds were made known to and communicated to the petitioner. It cannot be therefore disputed that the grounds for arrest were communicated. 9.21. The question that remains is whether the same was handed over to the arrestee or not, which would have to be ascertained. In the present case, it can indeed be ascertained on the basis of the submission made by the Petitioner before the Special Court when the petitioner was produced before the Special Court. 9.22. On an enquiry made by the Special Court as regards the providing of the grounds of arrest, the petitioner has categorically stated that he has been so provided. The said enquiry and response to the enquiry has been recorded in the

WP No. 13261 of 2020 132 order sheet, the entries in the order sheet is sacrosanct, once such an entry is made, none including the accused/arrestee can dispute it, the matter would have been different if the arrestee had at that point of time answered in the negative. 9.23. Even in the bail application drafted and filed by a lawyer on the same day that the petitioner was produced before the Court, there was no allegation or contention taken up by the petitioner that the grounds of arrest have not been provided. Though initially a writ petition had been filed alleging that there was a violation of the guidelines laid down in D K Basu’s case, the same also came to be withdrawn. 9.24. In view of the fact that the petitioner has confirmed before the Special Court that he has

WP No. 13261 of 2020 133 been provided with the grounds of arrest and the bail application being filed, not making any allegation of such non-receipt in writing. The above allegation being made much later, I am of the considered opinion that in the present case, the arrest order and grounds of arrest have been conveyed to the petitioner; if not, it would not have been possible for the petitioner to have got filed his application for bail on the very same day when he was produced before the Special Court. 9.25. As observed above, since it is required that the arresting officer inform and provide the arrestee with the arrest order and grounds of arrest in writing, it would be required that the investigating officer establish the positive fact of having provided the same in writing, since the negative cannot be established by the arrestee. Hence, in such cases, apart from obtaining the

WP No. 13261 of 2020 134 acknowledgement of the arrestee on the said arrest order and grounds of arrest, it may also be advisable for the arresting officer to email the said arrest order and grounds of arrest to the arrestee’s email account, to the e-Mail account of the lawyer and or the near and dear ones of the arrestee, if the lawyer or the near and dear ones are provided with a physical copy of the arrest order or grounds of arrest to obtain their acknowledgement of having received the same. The court before whom the arrestee has been produced to mandatorily enquire about the providing of the physical copy of the arrest order and grounds for the arrest in writing and record the response of the arrestee in the order sheet under the signature of the arrestee and the like. 9.26. Thus I answer Point No.1 by holding that in terms of Section 19 of PMLA, the

WP No. 13261 of 2020 135 Investigating Officer or the arresting officer is required to inform and provide a physical copy of the arrest order and grounds of arrest to the person being arrested. Mere oral information would not be sufficient. 9.27. In the present case on facts having come to the conclusion that the grounds of arrest have been provided to the petitioner, I hold that requirement of Section 19 in providing grounds of arrest has complied with, and there is no infirmity in the same. 10. ANSWER TO POINT NO.2: Whether the expression “reason to believe that any person has been guilty of an offence” found under Section 19 of the PMLA Act requires a preliminary adjudication by the Investigating

WP No. 13261 of 2020 136 Officer as regards the guilt of the accused before arresting him? 10.1. Though extensive arguments have been advanced in this regard, the sum and substance of the arguments are: 10.2. Sri. Aravind Kamath learned Senior Counsel has strenuously contended that the standard required to be applied by the arresting officer at the time of arrest of a person for an offence under the PMLA is the guilt standard, whereas under various other enactments, the same is of a lower standard inasmuch as could be Suspicion standard, Reason to believe standard or concerned with the commission of offence standard etc. 10.3. Relying on these contentions, he has submitted that for an arrest of a person for offences under

WP No. 13261 of 2020 137 the PMLA, it is required for the authorities to come to a categorical conclusion that the person to be arrested is guilty of the offence. This finding of the arresting officer has to be recorded in writing and form part of the grounds of arrest. If the same does not form part of the grounds of arrest, no person could be arrested, and if so arrested, it would be violative of the requirements of Section 19 of the PMLA, and the arrest would have to be declared illegal. 10.4. Reference has been made to Section 6 of Railway Properties (Unlawful Possession) Act, Section 64 of the Indian Forest Act, to show that the standard of arrest is reasonable suspicion, reference is made to Section 41 of Cr.P.C to show that the standard of arrest is suspicion standard, 104 of Customs Act and

WP No. 13261 of 2020 138 Section 69 of the Central Goods and Service Tax Act, 2017 to show that the standard of arrest is Commission standard and Section 212(8) and 19 of the PMLA to distinguish the guilt standard contained therein. 10.5. Per contra, Sri. Surya Prakash V.Raju, learned Senior counsel and Additional Solicitor General, has submitted that the requirement of section 19 is not an adjudication of the guilt but is an objective satisfaction of the Investigating Officer and/or arresting officer, that the person to be arrested is guilty of an offence. The Investigating officer, on the basis of the material collected during the course of the investigation, is of the opinion that the person is involved and/or is guilty of the offences alleged, then such a person could be arrested under the PMLA.

WP No. 13261 of 2020 139 10.6. On the basis of the above contentions, it is clear that as per Shri Aravind Kamath, learned Senior Counsel, there has to be an adjudication of guilt to be made by the arresting officer, whereas as per Sri. Surya Prakash V.Raju, learned Senior counsel and ASG, it is objective satisfaction of the arresting officer. 10.7. In the background of the submissions made, there is a need to examine Section 19 of the PMLA which has been extracted hereinabove. The operative portion of the provision is “has on the basis of the material in his possession reason to believe (a reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act…..”.

WP No. 13261 of 2020 140 10.8. An examination of the above would indicate that the arresting officer should have "reason to believe" that "a person is guilty of an offence". The "reason to believe" cannot be said to be an adjudication which is required to be performed by the Investigating Officer as regards the guilt of the person being arrested; the Investigating officer cannot be a Judge, jury and executioner. The investigating officer is only to investigate and place the material before the competent court for adjudication. 10.9. If the submission of Shri. Aravind Kamath, learned Senior counsel is accepted, the same would be akin to putting the cart before the horse, inasmuch as the Investigating Officer or the arresting officer cannot be empowered to, or required to adjudicate on the guilt of the accused, whether it be called as guilt standard

WP No. 13261 of 2020 141 or otherwise as termed by Shri Aravind Kamath, learned Senior counsel. 10.10. The requirement under Section 19(1) as extracted above, is a "reason to believe on the basis of the material in his possession". This reason to believe, in my considered opinion, would be the objective satisfaction of the Investigating Officer on the basis of the material available with him since the Investigating officer has conducted the investigation and has secured material. 10.11. If, on the basis of the material available with him, the Investigating Officer were to come to a conclusion that there are reasons to believe that the person to be arrested is guilty of an offence punishable under the Act, then he can arrest such a person. The extrapolation of the

WP No. 13261 of 2020 142 requirement of guilt standard as contended by Shri Aravind Kamath learned Senior counsel would lead to an anomalous situation that cannot be countenanced on either law or on facts. 10.12. The submission by Sri. Aravind Kamath learned Senior counsel that conditions to be satisfied for the arrest under the different standards are different is correct. However, the learned Senior counsel has sought to extend the same and contends that the arresting officer has to by a detailed order in writing hold the arrestee guilty of the offence before the arrest under the PMLA. The opposite provisions do not reflect such a requirement; what is required is for the arresting officer to believe that on the basis of the material in his possession, the person to be arrested is guilty of the offence punishable

WP No. 13261 of 2020 143 under the PMLA and for the said reasons to be recorded in writing. This power of arrest being exercised during the course of an investigation is so done on the basis of the material in possession of the investigating officer and the standard though stated to be guilt standard, is a reason to believe standard inasmuch as the concerned officer should have reason to believe that the person is guilty of the offence punishable on the basis of the available information. So it is those reasons to believe which would be sufficient for the arrest of an accused. This in my considered opinion does not require for the arresting officer to pass an order recorded in writing holding the accused to be guilty, as sought to be contended by Shri Aravind Kamath.

WP No. 13261 of 2020 144 10.13. Shri. Aravind Kamath learned Senior counsel has on facts further contended that the purpose of arrest as stated in the remand application and as stated in the grounds for arrest are different inasmuch as one of the grounds stated is that the petitioner is required to be arrested since otherwise he may tamper with evidence, deal with the proceeds of crime, etc., there is considerable force in the said submission. In my opinion though the possibility of the arrestee tampering with evidence or would be a ground for arrest in respect of other offences, the same would not be a sufficient ground to arrest any person under the PMLA, this being so because firstly, the investigating officer would have in normal circumstances already have taken possession of the evidence, thus obviating the possibility of tampering and

WP No. 13261 of 2020 145 secondly, in terms of Section 5 of the PMLA, the Investigating officer has the power to attach proceeds of crime and safeguard the said proceeds of crime, thus obviating the possibility of the arrestee dealing with the proceeds of crime. 10.14. The further contention of Sri. Aravind Kamath, learned Senior counsel is that the proceeds of crime have been attached and that entire evidence being taken over by the respondents, there was no need for the Petitioner to be arrested. 10.15. This, in my considered opinion, cannot be a ground for consideration by this Court in the exercise of its jurisdiction under Article 226 of the Constitution. This would have to be considered by the Court considering a bail

WP No. 13261 of 2020 146 petition. Be that as it may, it is not that the entire investigation is completed; the investigation is underway. The arrest is made pending the completion of the investigation to prevent destruction or tampering with the evidence by the Petitioner, after having found that the Petitioner is prima facie guilty of the offence of money laundering and, as such, this contention of Sri. Aravind Kamath learned Senior counsel is rejected. 10.16. A perusal of Section 19(1), however, does not in any manner refer to or indicate the purpose of arrest as sought to be contended by Sri. Aravind Kamath, learned Senior counsel, nor is the power of arrest limited to safeguarding the evidence or prevention of dealing with the proceeds of the crime.

WP No. 13261 of 2020 147 10.17. The contention of Sri. Aravind Kamath, learned Senior counsel, that the Petitioner was arrested only to safeguard the proceeds of the crime cannot be countenanced on the facts. The arresting officer has come to a conclusion that on the basis of the documents and material available with him, the Petitioner is guilty of the offence of money laundering. It is only in furtherance of the same that the arrest is made and remand sought to safeguard the proceeds of the crime and/or to prevent the Petitioner from tampering with the evidence. The last two being in furtherance of the objective satisfaction of the arresting officer that the Petitioner is prima facie guilty of the offence of money laundering, it cannot be said that the only reason for the arrest is to safeguard the proceeds of the crime and/or prevent the

WP No. 13261 of 2020 148 tampering. The said contentions being taken up by the respondent-State in the application for remand; the same would not in any manner amount to being the basis of the arrest but for the continuance of the custody of the Petitioner. Therefore, the contention of Sri. Aravind Kamath learned Senior counsel that the arrest is only for the purpose of safeguarding the proceeds of the crime and/or for the respondent being prevented from tampering with evidence is rejected. 10.18. The only requirement under the Act is the "reason to believe" by the Investigating officer or the arresting officer that the person is "guilty of the offence". It is therefore not required for the Investigating officer to prove the purpose of arrest or even to make any submission as regards the requirement of arrest to protect the

WP No. 13261 of 2020 149 proceeds of the crime. Though of course, the same is not part of Section 19(1) as contended by Shri Aravind Kamath, learned Senior counsel, the same would be examined by the Court while granting bail to consider whether the person arrested is required to be retained in judicial custody for the reason that the said person may tamper with evidence and or with the proceeds of crime. Said factor would have to be considered at the time of granting of bail and not at the time of the arrest. Arrest and remand to police custody and thereafter to judicial custody, which would also include custodial interrogation, which is an essential weapon in the armoury of the Investigating Officer enabling the Investigating officer to properly and effectively investigate a particular offence.

WP No. 13261 of 2020 150 10.19. Sri.Surya Prakash V.Raju, learned Senior counsel and Additional Solicitor General of India submitted that there is enough and more material available on record to establish the guilt of the Petitioner and/or commission of the offences enumerated under the PMLA by the Petitioner. The Petitioner was given enough and more opportunities to explain the deposits made by the Petitioner of` huge amounts of cash, as also to answer the statements made by Mohammad Anoop, who is stated to have more or less confessed to crimes under NDPS Act and PMLA, despite which the Petitioner did not give any satisfactory reply as regards the source of the huge cash deposits and therefore, there being enough material on record to indicate the involvement of the Petitioner in the offence and of his guilt in regard to the said

WP No. 13261 of 2020 151 offences, the arrest made of the Petitioner is proper and correct. 10.20. Sri. Surya Prakash V.Raju, learned Senior counsel and Additional Solicitor General of India has also contended that this belief of the arresting officer is based on the statements given by Sri. Mohammed Anoop, Sri.Sonet Lobo, Sri.Suhas Krishnegowda, analysis of the Bank accounts, an inspection of the declared premises of M/s Beecapital Forex Trading Pvt. Ltd, Bengaluru, and M/s Bcapital Financial Services Private Limited, enquiry with the Bank from whom the Petitioner is stated to have borrowed monies on the basis of security of his mother-in-law's property, an investigation into IndusInd Bank debit card, the signature of the Petitioner on the backside of the debit card and the use thereof by the Petitioner, which are

WP No. 13261 of 2020 152 reasons sufficient to establish the commission of the offence, the involvement of the Petitioner and secondly the guilt of the Petitioner in respect of the said offences. 10.21. In the present case, the facts on record have been sufficient for the Investigating officer to arrive at a objective satisfaction that the petitioner is required to be arrested. 10.22. The facts have been stated in detail hereinabove.

Suffice to say that one Mohammed Anoop was arrested with possession of the drugs in commercial quantity, thereby having committed an offence under the NDPS Act. On his arrest during the course of his interrogation, Mohammed Anoop has stated that the petitioner is his boss; he would act as per the instructions of the petitioner. The

WP No. 13261 of 2020 153 petitioner has invested money in his businesses, and he has transferred monies to the petitioner for use. The quantum of money has also been detailed, and the material on record available with the Investigating officer that the declared income of the petitioner compared to the amounts deposited in cash do not match with each other, the explanation given by the petitioner that he had borrowed money by mortgaging the property belonging to his mother-in-law has been prima facie proved to be false since no such loan had been obtained by the petitioner.

No proper explanation was given by the petitioner during the course of his interrogation; there are serious offences that have been alleged against the said Mohammed Anoop and the petitioner and several others for offences under the NDPS

WP No. 13261 of 2020 154 Act, huge amounts of money had changed hands. It is suspected that these have been realized on account of trafficking or dealing with drugs which is a scheduled offence under the PMLA, therefore the money is suspected or believed to have been generated on account of such dealing with or trafficking in Narcotic or psychopathic substances, these monies would amount to proceeds of crime. 10.23. These being the basic facts, it is not required for this Court to deal with or advert to all the facts in detail in a petition under Section 482 of Cr. P.C or a Writ Petition read with Section 482 of the Cr. P.C. From the statements which are available on record, more so when the petitioner has not denied his relationship with Mohammed Anoop, it cannot be said that the material in possession of the Investigating

WP No. 13261 of 2020 155 Officer and/or arresting officer was not sufficient to come to a conclusion that the petitioner is guilty of offences punishable under the Act. Though, of course, the actual guilt or otherwise would have to be established during the course of trial and this prima facie objective satisfaction of the Investigating officer/arresting officer of the guilt of the petitioner cannot be a final determination. 10.24. Thus I answer Point No.2 by holding that the phrase “reason to believe that any person has been guilty of an offence” would mean the objective satisfaction of the Investigating Officer or the arresting officer that the person who is to be arrested is guilty of an offence punishable under the Act. It does not mean that the said Investigating officer or the arresting

WP No. 13261 of 2020 156 officer has to adjudicate on the guilt, pass a detailed order or record the same in writing to indicate as to why he is of the opinion that the person to be arrested is guilty of the offence, the recordal of the objective satisfaction with reference to the material on record would be sufficient compliance. 10.25. The purpose of arrest is not material at the time of the arrest inasmuch as it is only the satisfaction on the part of the arresting officer of the prima facie guilt of the person to be arrested which is sufficient. 10.26. While considering the grant of bail, the concerned Court would consider the purpose of the continued detention of the

WP No. 13261 of 2020 157 accused in custody, and if the Court were to come to a conclusion that it is not required to detain the accused further in custody for further time, then the accused may be enlarged on bail. 10.27. In the facts of the case I’am of the considered opinion on the basis of the discussion made as regards the facts that the investigating officer has in writing indicated as to why he is of the opinion that the petitioner is believed to be guilty of committing the offence, the recordal of the objective satisfaction with reference to the material on record is sufficient compliance of the requirement, and there is no infirmity in the arrest made.

WP No. 13261 of 2020 158 11. POINT No.3- Whether the objective satisfaction of the guilt of the accused is required to be reduced to writing in the grounds of arrest formulated by the Investigating Officer? 11.1. As referred to and answered Point No.2 above, the objective satisfaction of the guilt of the accused can only be ascertained from the material on record, it cannot be expected of an Investigating Officer to in detail record the same in writing and form a part of grounds of arrest formulated by the Investigating Officer. However, the grounds of arrest are required to be sufficiently detailed out as to why a person is being arrested, in brief state as to what is the material available with the Investigating officer which would link the person to be arrested to an offence under the Act and why the person is believed to be guilty of the commission of such

WP No. 13261 of 2020 159 an offence. These factors, if contained in the grounds of arrest, would be sufficient, it would not be required for a detailed adjudicatory order to be made by the Investigating Officer as to the guilt of the accused. 11.2. I answer point No.3 by holding that the objective satisfaction of the guilt of the accused is required to be reduced to writing in the grounds of arrest formulated by the Investigating Officer prior to the arrest and to be furnished in writing to the arrestee at the time of arrest or immediately thereafter. 11.3. In the facts of the case, I’am of the considered opinion that the grounds of arrest are in compliance with the above requirement.

WP No. 13261 of 2020 160 12. What order? On the basis of the above reasoning and discussion, the petition stands dismissed.

Sd/-

JUDGE ln