A Critique Of Supreme Court's 'RK Arora' Judgment Giving ED 24 Hours To Furnish Written Reasons For Arrest

The Supreme Court's judgment in Pankaj Bansal v. Union of India, delivered on October 3, 2023, came at a time when there were widespread concerns regarding the sweeping powers of the Enforcement Directorate in arresting people. In that judgment, a two-judgment comprising Justices AS Bopanna and PV Sanjay Kumar held that the ED has to compulsorily furnish the grounds of arrest to the accused in writing and that the agency cannot arrest people by simply citing non-cooperation to the summons. Furthermore, the Court issued a stern admonition, asserting that the Enforcement Directorate must refrain from "vindictive conduct" and emphasized the need for its actions to be "transparent, above board, and conforming to the pristine standards of fair play in action."

However, on December 15, 2023, a coordinate bench of the Supreme Court, in Ram Kishor Arora v. Union of India, somewhat diluted the dictum in Pankaj Bansal regarding the supply of grounds of arrest in writing. The court ruled that the Enforcement Directorate (ED) is now only obligated to inform the accused of the grounds orally at the time of arrest, with written reasons to be provided within 24 hours. Additionally, the bench declared that the Pankaj Bansal ruling would not apply retrospectively, ensuring that arrests made before the date of pronouncement of Pankaj Bansal judgment date would not be deemed illegal for the absence of written reasons.

In both Pankaj Bansal and RK Arora cases, the arrested persons were not furnished a copy of the document containing the grounds of arrest and they were merely allowed to read the grounds of arrest. While such arrest was held to be illegal in Pankaj Bansal as the written copy was not furnished, in RK Arora no illegality was found regarding the arrest

The judgment in RK Arora, which dilutes a safeguard against arbitrary arrests, deserves critical scrutiny, both on grounds of merits as well as judicial propriety.

Procedure for ED arrest

According to Section 19 of the Prevention of Money Laundering Act(PMLA), ED officials can arrest a person only if they have reasons to believe that the person is guilty of any offence under the PMLA. Moreover, the officer has to record these reasons in writing too. The Section further mandates that the arrested person must be informed of the grounds of arrest, as soon as may be.

Pankaj Bansal interpreted the Section in the light of the Constitutional mandate under Article 22 to hold that the grounds of arrest must be informed in writing. Immediate documentation of the grounds of arrest with the furnishing of a copy of the reasons to the accused is a safeguard against arbitrary arrests, as the accused has prompt access to the written reasons for arrest. This can ensure that the officer forms proper reasons before arresting a person. When this requirement is deferred by 24 hours, there are chances of after-thought and post-facto justifications creeping in, giving room for foul play. The complaints of ED carrying out fishing and roving enquiries(for example, the Madras High Court order restraining ED summons against TN District Collectors in sand mining cases, Kerala High Court order in KIIFB masala bond case) underscore such concerns. Incidentally, the Punjab and Haryana High Court, a few days before the RK Arora judgment, ruled that the ED has to supply reasons at the time when the persons are taken into custody.

Reading a non-existence conflict between Pankaj Bansal and Vijay Madanlal Chaudhary

In RK Arora, the bench comprising Justices Bela M Trivedi and Satish Chandra Sharma seemed to suggest that Pankaj Bansal was not binding since it was at variance from the 3-judge bench judgment in Vijay Madanlal Chaudhary v. Union of India. In Vijay Madanlal, the Supreme Court had upheld Section 19 of the Prevention of Money Laundering Act, which confers the power of arrest to authorized officials of the ED. The bench in RK Arora expressed that “ any observation made or any finding recorded by the Division Bench of lesser number of Judges contrary to the said ratio laid down in Vijay Madanlal Choudhary (supra) would be not in consonance with the jurisprudential wisdom expounded by the Constitution Benches.”

The RK Arora judgment overlooks the fact that Pankaj Bansal addressed the issue of supplying written reasons for arrest after noticing the silence of Vijay Madanlal on this matter. While Vijay Madanlal stressed the necessity of informing the accused about the grounds of arrest, it remained ambiguous about the mode of communication. Pankaj Bansal, in recognizing this gap, specifically highlighted the absence of clarity in Vijay Madanlal. Arguing that Pankaj Bansal contradicts the ratio in Vijay Madanlal might be inaccurate, as the latter judgment doesn't delve into this particular aspect. Both judgments converge in asserting that the accused should be informed of the grounds of arrest, with Pankaj Bansal further specifying the requirement for providing these grounds in writing. Harmonizing these decisions is not a challenging task.

Pankaj Bansal offers a comprehensive rationale for its stance. It articulates two primary reasons behind the insistence on providing written reasons. Firstly, it considers the benefit to the agency itself, noting that documented reasons preemptively address potential objections raised by the accused regarding the arrest. Violation of Section 19 will vitiate the arrest, as held in Senthil Balaji case. Without such documentation, the situation devolves into a credibility contest, leaving the courts in a challenging position to assess compliance with Section 19. Secondly, the judgment underscores the significance of safeguarding personal liberty. Given the stringent bail provision in Section 45 of the Prevention of Money Laundering Act (PMLA), which requires an accused to establish a lack of guilt, furnishing written grounds of arrest becomes pivotal for the accused to pursue legal remedies effectively. “It is only if the arrested person has knowledge of these facts that he/she would be in a position to plead and prove before the Special Court that there are grounds to believe that he/she is not guilty of such offence, so as to avail the relief of bail. Therefore, communication of the grounds of arrest, as mandated by Article 22(1) of the Constitution and Section 19 of the Act of 2002, is meant to serve this higher purpose and must be given due importance,” the judgment held. The judgment also balanced the concerns of the agency by clarifying that sensitive information can be redacted from the grounds supplied to the arrestee. Unfortunately, the RK Arora judgment does not engage with these salutary reasons given in Pankaj Bansal at all.

Question of judicial propriety

RK Arora, after criticizing Pankaj Bansal for allegedly diluting Vijay Madanlal, proceeded to dilute Pankaj Bansal by saying that the grounds of arrest need to be given in writing by the ED within 24 hours of the arrest.  Pankaj Bansal did not expressly say that the written reasons must be given at the time of the arrest itself. However, the overall intent of the judgment seemed to be that the furnishing of written reason must be contemporaneous and immediate. This is clear from the observation in the judgment that the production of grounds of arrest at the time of the remand of the petitioners did not serve the intended purpose. 

After a homily about judicial propriety, it is quite ironic that RK Arora read down a judgment delivered by a coordinate bench. It is well settled that a coordinate bench cannot overrule or read down a judgment delivered by a bench of co-equal strength and the appropriate course of action in case of a disagreement is to refer the matter to a larger bench. The only way a coordinate bench judgment can be overcome is by making an affirmative declaration that it is per incuriam (bad in law) for ignoring an earlier precedent and hence non-binding. However, RK Arora does not go that far expressly, except making certain implied suggestions, which are also not on firm grounds. As explained above, Pankaj Bansal is not rendered in ignorance of Vijay Madanlal; rather it considers the precedent in detail and decides an issue on which Vijay Madanlal was silent.

Even if it is assumed for argument's sake that Pankaj Bansal is per incuriam for deviating from Vijay Madanlal, then by applying the same yardstick, RK Arora will also become per incurium since it has also ruled that written reasons have to be given, albeit within 24 hours of arrest. The bench in RK Kishore faulted Pankaj Bansal for adopting this mandate of written supply of reasons, as Vijay Madanlal did not specify so. Paradoxically, RK Kisore can also be faulted for the same reason.

On retrospectivity of Pankaj Bansal

The RK Arora judgment's assertion that the Pankaj Bansal ruling will not have retrospective application warrants scrutiny. As a general principle, judgments are presumed to apply retrospectively unless explicitly stated otherwise within the judgment itself (see reference: Assistant Commissioner, Income Tax, Rajkot versus Saurashtra Kutch Stock Exchange Limited, 2008, 14 SCC 171).

The perspective that Pankaj Bansal should not apply retrospectively appears to hinge on the use of the term "henceforth" in conjunction with the directive for the Enforcement Directorate (ED) to provide written reasons.  What RK Arora overlooks is a crucial detail—Pankaj Bansal had unequivocally declared the petitioner's arrest illegal solely because the grounds of arrest were not provided in writing. If the court had intended to restrict this condition to prospective application, the petitioner's arrest would not have been deemed illegal in that specific case. 

The Pankaj Bansal judgment stood as a beacon, casting a vital check on arbitrary arrests. However, within a mere two months, this silver lining has been overshadowed, veiling the initial progress made.

(The author is the Managing Editor of LiveLaw. He can be reached at manu@livelaw.in)