S. 19 PMLA| ED Officials Must Inform Arrest Grounds To Accused On Day Of 'Unlawful Restraint' Even If No Formal Arrest Is Made: P&H High Court

The Punjab & Haryana High Court has ordered the release of two directors of a Pharma Company arrested by ED officials in a money laundering case, observing that taking the accused persons in custody (unlawful restraint) without an official arrest memo will be counted as the day of the arrest and they are required to be informed about the ground of arrest on that day itself.

The Court further added that not furnishing the grounds of arrest on the day of custody will be violative of the mandatory provision of Section 19 of the Prevention of Money Laundering Act, 2002 (PMLA).

For context, Section 19 of the PMLA Act provides for inbuilt safeguards to be adhered to by the authorized officers, such as recording reasons in writing for the belief regarding the involvement of the person in the offence of money laundering and informing (in writing) the person being arrested of the grounds of his arrest. However, recently the Supreme Court clarified that the accused need not be informed of the grounds of the arrest in writing at the time of the arrest and they need to be furnished within 24 hours, but the accused must be orally told about the grounds at the time of arrest.

A division bench of Justice Sureshwar Thakur and Justice Sudeepti Sharma rejected the argument that the detainees had accompanied the ED officials voluntarily in pursuance of the summon and declared taking them to the ED office as "unlawful restrain."

"Unless the accused had willingly accompanied the E.D. officials concerned, thus in their private vehicles or in the vehicle of their relatives, thereupon theirs in the above mode of theirs accompanying the E.D. officials to the E.D. headquarters...would be construed to be theirs thereby then, thus becoming unlawfully restrained," observed the Court.

It added that in the instant case, the accused persons had accompanied, the E.D. officials, on October 27, in their "respectively seized vehicle or in the vehicles belonging to the E.D. officials."

Therefore, the Court added, it cannot be construed that they either voluntarily or willingly accompanying them, to the E.D. headquarters, nor thereby the said manner of accompanying of the accused with the E.D. officials, can be termed to be in pursuance of summon made for interrogation.

It was also noted that in the garb of the summon made on October 27, the ED officials attempted to give the otherwise unlawful restraint, "untenable colour of the accused voluntarily accompanying, the ED officials to the E.D. headquarters."

The Court made these observations while dealing with two writ petitions filed by two directors of a Pharma Company, Pranav Gupta and Vineet Gupta, who also happen to be founders of Ashoka University, challenging their remand orders in a money laundering case.

The accused persons were arrested on October 28 after the remand order passed by a Chandigarh Court. The Court was considering the question of whether the arrest of the petitioners was made in compliance with Sections 17-A, 18(1), and, in Section 19(1) of the PMLA.

The counsel for the petitioners argued that they were unlawfully restrained on October 27 and a formal arrest memo was drawn on the next day and since no grounds were provided on October 27, the arrest was in violation of a mandatory provision of Section 19 of PMLA and hence, they were liable to obtain bail.

Considering the submissions the Court noted that the "date of causing unlawful restraint, to the petitioners, is the reckonable date and not the date of makings of the formal arrest of the accused, through drawings arrest memo.

The bench opined that the manner of taking the accused persons to the ED office in the seized vehicles would amount to "unlawful restraint."

"However, when on the said date the accused were not supplied with the grounds of arrest or the reasons to believe, that they have committed offences punishable under the Act of 2002," the Court added.

The Court found that there was a  "non-application of mind" in passing the remand order for the arrest of the accused persons. Additionally, not furnishing the grounds of arrest on the day of the "unlawful restraint" would violate Section 19 of PMLA.

Relying on the Apex Court's decision in Pankaj Bansal's case, the Court declared the arrest as  "non-est and void" and directed them to be released from judicial custody. 

Citation: 2023 LiveLaw (PH) 273 

Sr. Advocates R.S. Rai, Anand Chibbar with Advocates  Surjeet Bhadu, Rubina Vermani, Advocate, Shikar Sarin, Sanya Thakur, Veer Singh,  Srishti Verma, Agam Bansal for the petitioner (in CWP-24787-2023).

Sr. Advocate Puneet Bali with Advocates Vipul Joshi, Surjeet Bhadu, Veer Singh, Sanya Thakur, Prashant Kapila, Srishti Verma,  Agam Bansal for the petitioner (in CWP-25048-2023)

Title: Pranav Gupta v. Union of India & Anr.

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