'If ED Arrest Ignores Materials Favouring Accused, Won't It Be Ground For Bail?' : Supreme Court While Hearing Arvind Kejriwal's Plea

The Supreme Court on Wednesday (May 16) extensively heard the petition filed by Delhi Chief Minister Arvind Kejriwal challenging his arrest by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act, 2002 (PMLA) in connection with the Delhi liquor policy case.

A bench of Justices Sanjiv Khanna and Dipankar Datta, which last week allowed Kejriwal's release on interim bail till June 1 for the purposes of election campaigning, heard the arguments of the ED for nearly the whole day. During the proceedings, the primary argument raised by Solicitor General of India Tushar Mehta was the objection to the maintainability of the petition. According to the SG, the remedy of bail under Section 45 PMLA cannot be circumvented by filing a petition under Article 226/227 of the Constitution read with Section 482 of the Code of Criminal Procedure.

'Courts can interfere if arrest conditions are violated' : Bench

The SG said that Section 19 PMLA has certain inbuilt safeguards against arbitrary arrests, as it can be carried out only after a high-rank official arrives at a satisfaction based on reasons recorded in writing. He argued that the violation of the conditions for arrest under Section 19 can be examined only by the trial court. "More rigorous the provisions of arrest, less the scrutiny by courts," the SG submitted.

However, the bench, orally expressing reservations about accepting this argument, wondered if the jurisdiction of constitutional courts is completely excluded as per the SG, in case there are violations of the conditions for arrest.

"If arrest is affecting Section 19, are you saying that no plea under Article 226 lies? Can you take it that far?," Justice Datta asked.

Justice Khanna added, "If there is a violation of S.19 conditions, obviously courts can interfere. Either remand court, or High Court..226 remedy can't be excluded. We don't exercise that jurisdiction, because there are alternative remedies. But we can't overlook when there is a grave case".

The SG replied that in the present proceedings, Kejriwal is calling upon the Court to conduct a "mini-trial" over the subjective satisfaction of the Investigating Officer regarding the necessity of arrest. He added that Kejriwal considers himself as a "special citizen" who is too big to avail the ordinary remedies. The SG speculated whether an ordinary citizen would be able to avail the extraordinary remedy before higher courts bypassing regular courts. He also highlighted that subsequent remand orders of judicial custody were passed with the consent of Kejriwal.

The bench however observed that Kejriwal did not by-pass procedure and infact approached the trial Court first. The SG was also reminded that when Kejriwal approached the top Court on first instance, the doors were not opened for him.

Justice Datta further posed to the SG whether an accused, while applying for bail, can argue that the arrest was illegal. "Under S.45 PMLA, the onus is on the accused. Is it open for him to show to the Special Judge that arrest is not legal and therefore give me bail?," the judge asked. Answering in the negative, the SG said that such an argument cannot be made at the stage of Section 45 PMLA. "That is the difference between PMLA and CrPC," Justice Datta then remarked.

Speaking of the scope of the proceedings, Justice Khanna stated that the issue before the bench pertained to the contours of Section 19 and the limits of judicial scrutiny. The judge asked if the Court should apply the standard "whether a reasonable person conversant with law on the subject would have on this material passed the order." On this, SG replied that the Court should not substitute the view of the Investigating Officer with its view. "Whether material is sufficient to form reasons to believe cannot be examined as court of appeal," he said.

Can ED officer ignore materials favoring the accused while exercising power of arrest? : SC

Another pertinent query raised by the bench was whether the investigating officer can ignore exculpatory materials while exercising the powers of arrest. This was in the context of the argument raised by Kejriwal that there were several witness statements exculpating him, which were ignored by the ED and that the officers cherry-picked incriminating materials to arrest him.

"Assume IO has material in possession. On one hand incriminating, on the other exculpatory. There can't be a dispute that IO has to be fair. If he ignores the latter absolutely and says I have reasons, would it not afford ground for bail?," Justice Datta questioned, before adding, "You have to look into the material. Otherwise how do we come to finding it is based on no material? You can't say only one side has to be seen by IO" .

"If there are 10 evidences, Investigating Officer has to weigh what he trusts. Would that exercise be done by court again to come to a different conclusion?" SG submitted in response.

Justice Datta countered, "You say if IO considers material... but if that does not happen, can court not go into it? Is application of mind not required? What are the tests of perversity?".

Emphasizing the need for application of mind, the judge further said, "Adequacy, sufficiency we won't go into. But there has to be application of mind. If there are material favoring accused, he has to make it apparent...We won't be substituting the view. But if you don't consider favorable part, that perhaps could afford a ground".

When Additional Solicitor General SV Raju took to arguments, he submitted that the satisfaction of the officer under Section 19 is "purely subjective" and it does not require that all materials have to be reflected in the reasons to arrest.

"It is not necessary that all this (material) needs to be reflected in the reasons for arrest. There may be some materials, X Y, which are recorded in the reasons. There may be other materials A B C which are not recorded in the order. That will not vitiate the arrest," ASG said. He asserted that the Court cannot have a "fishing enquiry" on that aspect. The ASG also contended that the test is whether there was material in possession to form reasons for arrest.

Hearing the ASG, Justice Khanna opined that if the exculpatory materials are withheld, it would mean that the accused cannot rely on them to seek bail. "It would mean that no body can argue for bail as neither the Court nor the accused will have access to the documents," the judge said.

Moving on, ASG cited precedents which held that at the stage of discharge, the Court can only examine the materials produced by the investigating officer. If that is the yardstick for discharge, a different yardstick cannot apply for investigation, he submitted.

Justice Khanna in response commented, "Parameters are going to be different when you take away liberty."

To buttress the argument that there are sufficient materials in the case, the ASG pointed out that the Special Court has taken cognizance of the prosecution complaint(s) filed by the ED, which would mean that there is a prima facie case. The ASG also reiterated a submission made before the Delhi High Court two days back that the Aam Aadmi Party is also going to be made an accused in the case.

ED has sufficient evidence : ASG

During the course of submissions, the ASG further asserted that there was "direct" evidence to show that Kejriwal demanded Rs 100 crores, which went to AAP for Goa election expenses. At this juncture, Justice Khanna pointed out that in Manish Sisodia case, the Supreme Court had not accepted the aspect relating to proceeds of crime having gone to AAP. The ASG clarified that the Court's refusal was for the reason that AAP was not named as an accused, but that is no longer the case as AAP is soon going to be made one.

The ASG added that apart from vicarious liability as the head of the AAP, Kejriwal is also directly liable as the person who played a key role in formulating the excise policy. He repeated the submission made last week that there was evidence to show that Kejriwal's stay in a "7-star" hotel in Goa was partly funded by an accused.

When Justice Khanna referred to the statement of witness-Maguntha Sreenivasa Reddy to note that at first he claimed to have met Kejriwal in relation to some land for charitable purpose, the ASG replied that the IO had reasons to believe that the statement was incorrect.

"It is for IO to believe whether first reason of MSR's meeting with Kejriwal was correct, or the second. Court can't say no, no you have to rely on this and not that," ASG said. The ASG also stated that the witness statement was corroborated by statement recorded under Section 164 CrPC before Magistrate.

If we quash arrest, it will be because relevant materials were not considered : Bench

Justice Khanna made another pertinent comment during the hearing, that is: "We will not say we will form the reason to believe...if we have to quash, we will only say relevant material not taken into consideration." Witnessing the commotion brought forth by the remark, the bench clarified that it was speaking in the context of a general, hypothetical case, not the present case. 

Later, Justice Khanna added that if the ED's argument, that all materials need not be recorded at the time of arrest, is accepted, then the accused won't be able to effectively seek bail till the complaint is filed after the investigation.

"If this reasoning is accepted, that means till complaint is filed, there can't be any bail", the judge remarked.

Post-arrest materials cannot be relied upon : Bench 

At one point, the ASG urged that after Kejriwal's arrest as well, corroborating evidence has been found. Justice Khanna however commented :

"We have to put the curtain down at the date of arrest. You could have arrested anytime before. Question is, material should be sufficient prior to arrest. You can't rely on post-arrest material, unless you are talking about complaint".

Confiscation prior to conviction not necessary : ED

Responding to the queries raised by the Court earlier, the ASG stated that confiscation proceedings with respect to proceeds of crime are not a condition precedent for prosecution/conviction.

"Attachment is not necessary. Without that, there can be conviction," ASG said. The ASG also addressed arguments on how a political party can be brought under the PMLA as an "association of persons" in terms of Section 70 PMLA.

He emphasized during the hearing that satisfaction of Section 19 PMLA conditions, in the context of Kejriwal's arrest, was examined by 3 judicial orders - one, of the trial court while remanding, second, of the Division Bench of the High Court, and third, of the High Court Bench that passed the impugned order.

Since the bench could not conclude the hearing today, it posted the matter tomorrow, to enable the ASG to conclude and Sr Adv Singhvi to make the rejoinder arguments for Kejriwal.

Background

It may be recalled that Kejriwal was arrested by the Enforcement Directorate on March 21, after the Delhi High Court refused to grant him interim protection earlier in the day. He remained in custody thereafter, until he was granted benefit of interim release by the Supreme Court on May 10. The same will expire on June 2 and is subject to other conditions, including that he shall not attend CM office and/or sign official files (unless necessitated by LG).

While directing Kejriwal's release from custody, to enable him to campaign for the Lok Sabha elections, the top Court had observed that it was dealing with the case of an elected Chief Minister, not a habitual offender, and the general elections take place only once in 5 years.

It further questioned ED's timing of arrest, noting that the ECIR was registered in August, 2022, but Kejriwal came to be arrested about 1.5 years later (before elections).

The bench dispelled ED's contention regarding the interim bail (on account of elections) amounting to special treatment for politicians. It asserted that in every case, the peculiar facts and circumstances have to be seen and noted that Kejriwal had neither been convicted, nor was he a threat to society.

Notably, while it heard the parties on the question of interim relief, the bench had indicated that it would try to conclude arguments in the matter before summer break.

Case Title: Arvind Kejriwal v. Directorate of Enforcement, SLP(Crl) 5154/2024