Oral Communication Of Grounds Of Arrest Proper Compliance Of S.19(1) PMLA For Arrests Made Prior To 'Pankaj Bansal': Delhi High Court

The Delhi High Court on Monday observed that oral communication of “grounds of arrest” to an accused is proper compliance of Section 19(1) of Prevention of Money Laundering Act, 2002, for arrests made prior to the Supreme Court ruling in Pankaj Bansal v. Union of India, delivered on October 3, 2023. 

Justice Vikas Mahajan made the observation while upholding the arrest of Neeraj Singal, former Managing Director of Bhushan Steel Limited, in a money laundering case related to Enforcement Directorate's probe in a bank fraud case.

The court dismissed Singal's plea challenging his arrest affected by the probe agency on June 09 last year as well as his bail plea in the case.

The court observed that at the time of Singal's arrest (i.e. June 09, 2023), oral communication of the grounds of arrest was proper compliance of the provisions of Section 19(1) of the PMLA.

The requirement of furnishing the grounds in writing was only mandated by the Pankaj Bansal judgment, with prospective effect, from October 3.

[In Pankaj Bansal case, the Apex Court had 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. However, on December 15, 2023, a coordinate bench in Ram Kishor Arora v. Union of India, ruled that 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.]

The ED alleged that Singal has caused loss to the public to the tune of more than Rs. 46,000 Crores.

“…there is absolutely no doubt that at the time of arrest of the petitioner i.e., on 09.06.2023, the law laid down in Moin Akhtar Qureshi (supra) was holding the field, which position continued till the pronouncement of decision in Pankaj Bansal (supra) whereby Moin Akhtar Qureshi (supra) and Chhagan Chandrakant Bhujbal (supra) were specifically overruled,” the court said.

It added that as per the last month's Supreme Court ruling in Ram Kishor Arora v. Union of India, non-furnishing of grounds of arrest in writing till the date of pronouncement of judgment in Pankaj Bansal case could neither be held to be illegal nor the action of the concerned officer in not furnishing the same in writing could be faulted with.

“For the sake of completeness it may be mentioned here that the aforesaid question now stands settled by the decision of Supreme Court in Pankaj Bansal (supra) but the directions contained therein making it mandatory for the arresting officer to communicate the grounds of arrest to the arrestee in writing, are prospective in nature,” the court said.

Justice Mahajan said that the 'ground of arrest' shown to Singal at the time of his arrest ran into three pages which was signed by two independent witnesses, thereby lending credence to the same.

The court rejected the contention of Senior Advocate Vikas Pahwa, appearing for Singal, that Singal's signature on the 'ground of arrest' is only a token of acknowledgement of the compliance of mandate of D.K. Basu case.

“No provision of law has been pointed out and there seems to be none which requires that each page of 'ground of arrest' is to be signed by the petitioner. That apart, it has to be borne in mind that in the present case, the petitioner was arrested prior to the decision of Pankaj Bansal (supra) when oral communication of the grounds of arrest was proper compliance of the provisions of Section 19(1) of the PMLA,” the court said.

It added that merely because each page of the 'ground of arrest' is not signed by Singal cannot be a reason to disbelieve the existence of the said document, or to negate the fact that the grounds of arrest were shown and informed to him.

“The search panchnama also reveals that the arrest was affected at the residence of the petitioner in the presence of two independent witnesses. The wife of the petitioner has also signed the panchnama. Merely because there is some typographical error in the 'Arrest Order' with regard to the place of arrest, the same will not enure to the benefit of the petitioner and vitiate his arrest,” the court observed.

The court also rejected Singal's contention that the concerned ED officer did not forward a copy of the arrest order, along with the material in his possession, immediately to the Adjudicating Authority in terms of the mandate of Section 19 (2) of the PMLA.

“The petitioner was arrested on 09.06.2023 at 10:25 pm, which happened to be a Friday night. There is substance in the contention of Mr. Hossain that on Saturday i.e. 10.06.2023 and Sunday i.e. 11.06.2023 the office of the Adjudicating Authority remained closed, therefore, copy of arrest order along with other relevant material was immediately forwarded on 12.06.2023,” the court said.

Counsel for Petitioner: Mr. Kapil Sibal, Sr. Advocate, Dr. Abhishek Menu Singhvi, Sr. Advocate, Mr. Vikas Pahwa, Sr. Advocate with Ms. Ranjana Roy Gawai, Mr. Ujjwal Jain, Ms. Shambhavi Kashyap, Mr. Adit Pujari, Mr. Avishkar Singhvi, Mr. Garnil Singh and Mr. V. Wadhwa, Advs

Counsel for Respondent: Mr. Zoheb Hossain, Spl. Counsel with Mr. Vivek Gurnani, Mr. Baibhav, Ms. Manisha Dubey, Ms. Pranjal Tripathi, Advocates, Mr. Anuj Kumar, AD-ED and Mr. Sanket Sinha, AEO-ED

Title: NEERAJ SINGAL v. DIRECTORATE OF ENFORCEMENT

Citation: 2024 LiveLaw (Del) 31

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