Chhattisgarh High Court Upholds ED Arrest Of Chaitanya Baghel In Liquor Scam Case, Says Procedural Lapses Do Not Constitute Illegality

The Chhattisgarh High Court has refused to quash the arrest and consequential criminal proceedings initiated against Chaitanya Baghel (petitioner) for his alleged involvement in the Chhattisgarh Liquor Scam.While the petitioner pointed out a slew of procedural lapses and irregularities in his arrest, such as— non-issuance of summons, baseless claims of non-cooperation, template grounds of arrest, and unwarranted coercive action, Justice Arvind Kumar Verma, refusing to interfere with the arrest and the proceedings, held,“… allegations of illegality in further investigation are not substantiated by any cogent material. The scheme of the PMLA permits the Investigating Agency to collect further evidence after filing of a complaint subject to the prior permission of the Special Court. As regards the non-cooperation and mechanical arrest, this Court finds that the issue involves disputed factual questions that cannot be conclusively determined in exercise of writ jurisdiction. The Grounds of Arrest, though brief, refer to the necessity of preventing destruction of evidence, influencing of witnesses and tracing of proceeds of crime. Whether such reasons are adequate or not, is a matter of assessment by the trial court.”Referring to Section 19 of Prevention of Money Laundering Act, 2002 (PMLA)—which empowers an authorised officer to arrest a person if he, based on material in his possession, has “reason to believe” that such person is guilty of an offence under PMLA, and Section 50— which vests in the Director, Additional Director, Joint Director, Deputy Director or Assistant Director the power to summon any person whose attendance may be necessary from giving evidence or for producing records during the course of investigation, the Single Judge added,“… Section 19 and Section 50 of the PMLA are distinct provisions and operate in distinct and well defined domains. The power under Section 50 of the PMLA (is not a pre-condition for arrest under Section 19 of the PMLA. These are two separate and distinct conditions under the PMLA itself. Non-issuance of notice under Section 50 of the PMLA cannot be restrained to the Investigating Officer for arrest of accused under Section 19 of the PMLA. Therefore, non-issuance of notice under Section 50 of the PMLA to the petitioner is a procedural lapse which does not amount to illegality.”Facts and Submissions:On the basis of a host of complaints and reports from the Income Tax Department, Anti-Corruption Bureau (ACB) and Economic Offences Wing (EOW), relating to illicit financial transactions in the alleged Liquor Scam, the petitioner was apprehended by the Enforcement Directorate on 18.07.2025 for investigation under PMLA.The petitioner argued that his arrest was manifestly illegal as neither was there any need or necessity for such custodial action, nor was he issued summons at any stage for recording of statements, and he consequently remained unaware of any proceedings initiated against him. Additionally, the ED, after searching the petitioner's residence, recorded a reason to believe that the was guilty of offences under PMLA,. However, after an inordinate delay of over four months, without disclosure of any new material or grounds justifying the delay, the petitioner was arrested. It was argued that since the alleged incriminatory material was already seized by investigating authorities as early as 2022, and in the absence of any new material, the necessity of arrest was nullified. Additionally, in the absence of any summons issued, the allegations of non-cooperation of the petitioner were also contended to be baseless. Instead, it was submitted that the petitioner extended full cooperation during the search and comprehensively answered all questions raised by the Adjudicating Authority. It was also contended that the arrest was premised entirely on alleged coerced statements from a co-accused, Lakshmi Narayan Bansal and that the ED was conducting continuous investigation without prior permission from the competent Court and such conduct, in absence of judicial sanction, is impermissible and renders the entire exercise of investigation and the consequential arrest void ab-initio.On the contrary, ED argued that supervisory jurisdiction of the High Court cannot be invoked as the scope of interference under Section 528 of BNSS is confined to examination of legality and procedural propriety of arrest and not to re-appreciation or re-evaluation of evidentiary material. It was thus submitted that once mandatory requirements of Section 19 of PMLA are complied with, namely— existence of material in possession of the authorised officer and recording of “reasons to believe” that the person is guilty of an offence under PMLA, the arrest cannot be judicially interfered with. Thus, it was submitted that judicial review of arrest under PMLA is not a merit based inquiry into sufficiency or reliability of material but is limited to testing whether arresting officer acted within the...

Chhattisgarh High Court Upholds ED Arrest Of Chaitanya Baghel In Liquor Scam Case, Says Procedural Lapses Do Not Constitute Illegality

Saahas Arora

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