[PMLA] Enforcement Directorate Can't Restrain Movement Of Persons Whose Premises Are Being Searched: Punjab & Haryana High Court

The Punjab & Haryana High Court has made it clear that the Enforcement Directorate (ED) cannot restrain the movements of the persons, whose premises are being searched in money laundering cases.

Perusing the PMLA Rules, 2005  Justice Vikas Behl said, "there is nothing which stops the persons whose premises are being searched from carrying out their daily routine including going to their offices/place of work and the authorities have a right to require the said persons to open any lock, safe, almirah and in case of non-compliance, the authorities have further power to break open the same and thus, it cannot be said that the authorities have a right to restrain the movements of the said persons i.e. the petitioners in the present case within the premises."

These observations were made while setting aside the arrest orders, arrest memos, and remand orders passed by Gurugram courts under the Prevention of Money Laundering (PMLA) of former Yamunanagar MLA Dilbag Singh and another person in a money laundering case related to allegations of illegal mining.

It was alleged that the petitioners along with their family members were illegally detained by the ED from January 4 to January 8, 2024, when the search and seizure at their houses took place.

After perusing the record, the Court opined that "it is apparent that respondent authorities had illegally confined and unlawfully restrained the petitioners in the premises in question from 04.01.2024 to 08.01.2024 and thus, in effect had arrested the petitioners on 04.01.2024 itself."

The Court noted that as per Section 18 of the 2002 Act, in case where the ED  have reason to believe, which is to be recorded in writing that any person has secreted about his person or in anything under his possession, ownership or control, any record or proceeds of crime which could be useful or relevant for the purpose of proceedings under the Act, then the said person can be searched and the said property/record can be seized.

"Even in such a situation, the person so searched, if he so requires, is required to be taken within 24 hours to the nearest Gazetted Officer," it added.

The Court pointed out that the provision of Section 18 of PMLA was not complied with and noted that neither the authorities produced the petitioners before the concerned Court within 24 hours from the date of their actual arrest i.e. 04.01.2024 nor had they complied with the other conditions mentioned in Section 19(1), 19(2), 19(3) of the Prevention of Money Laundering Act, 2002.

Reliance was also placed upon the High Court's decision Pranav Gupta v. Union of India & Anr, wherein it was observed that the arrest would be counted from the date of unlawful restraint and not from the date of formal and actual arrest.

The Court also referred to Vijay Madanlal Choudhary vs Union of India 2022 LiveLaw (SC) 633, to underscore that the conditions and the procedure as mentioned in Section 19 are mandatory and any violation of the same would make the arrest and subsequent proceedings illegal.

Consequently, the Court held that the arrest and all subsequent orders including remand orders are illegal and against the law and deserved to be set aside.

Senior Advocate Chetan Mittal and Advocates Anshul Mangla, Udit Garg, Himanshu Gupta, Vinay Arya and Ritvik Garg for the petitioners.

Special Counsel Zoheb Hossain, Deputy Solicitor General Jagjyot Singh Lalli, Senior Panel Counsel Lokesh Narang, Special Public Prosecutor Simon Benjamin and Advocates Manish Verma, Vivek, Kartik Sabharwal and Abhipriya Raj for the ED.

Citation: 2024 LiveLaw (PH) 68