ARVIND KEJRIWAL vs DIRECTORATE OF ENFORCEMENT, 2024

ARVIND KEJRIWAL vs DIRECTORATE OF ENFORCEMENT, 2024

Case Title and Citation: ARVIND KEJRIWAL V. DIRECTORATE OF ENFORCEMENT 2024 INSC 512 (12 July 2024)

Factual Background

The case originated from the formulation and adoption of the Delhi Excise Policy 2021 for the sale of liquor in the National Capital Territory. The Directorate of Enforcement (DoE) registered an Enforcement Case Information Report (ECIR) alleging that the policy resulted in financial benefits for accused individuals and substantial government revenue loss. The DoE claimed that Mr. Arvind Kejriwal, the Chief Minister of Delhi and Convenor of the Aam Aadmi Party (AAP), was the key conspirator who framed the policy in exchange for bribes, and that proceeds of crime were used to fund the AAP’s election campaign in Goa. Mr. Kejriwal was issued eight summons under Section 50 of the Prevention of Money Laundering Act (PMLA) but failed to comply. Subsequently, he was arrested by the DoE on 21 March 2024. He challenged the legality of his arrest before the Delhi High Court, which dismissed his plea on 9 April 2024, leading to the present appeal before the Supreme Court. The Supreme Court had previously granted him interim bail until 1 June 2024 due to the Lok Sabha elections.

Issue(s)

1. Whether the arrest of Mr. Arvind Kejriwal by the DoE complied with the statutory preconditions laid out in Section 19 of the PMLA.
2. Whether the “need and necessity to arrest” is an independent and essential legal ground that can be used to challenge the validity of an arrest order under Section 19(1) of the PMLA.
3. Whether the High Courts and trial courts possess the power of judicial review to examine the legality and validity of an arrest order made under Section 19 of the PMLA.

Decision of the Supreme Court The Supreme Court granted interim bail to Mr. Kejriwal, directing his release subject to several conditions, including that he must surrender on 2 June 2024.

Crucially, the Court referred complex legal questions concerning the interpretation of “need and necessity to arrest” under Section 19 of the PMLA to a larger bench for consideration.

Reason for the decision

1. Mandatory Judicial Review: The Court affirmed that the power of judicial review must prevail over arrests made under the PMLA. The court’s power extends to examining whether the DoE’s actions comply with the strict preconditions of Section 19. Since an administrative authority makes the arrest decision, judicial review is necessary to prevent the loss of liberty and ensure the arrest is not arbitrary.
2. “Reasons to Believe” Must Be Shared: The stringent PMLA requirements mandate that the officer must possess material giving them “reason to believe” the arrestee is guilty, and this belief must be recorded in writing. The Court held that the accused must be furnished a copy of the “reasons to believe” to enable them to meaningfully challenge the validity of their arrest, as the arrest can be challenged on both the existence and the soundness of these reasons.
3. Scrutiny of Material: The arresting officer must objectively consider all evidence, including any material that might absolve the arrestee of guilt, and cannot make an arrest by selectively choosing incriminating material. The arrest must be based on a belief that is “founded on evidence” and not on mere suspicion.
4. Necessity Referred to Larger Bench: The Court acknowledged the importance of considering the “necessity to arrest” as recognized in general law. However, because the expression is not explicitly stated in Section 19(1) of the PMLA, and given the stringency of the existing safeguards, the Court referred the question of whether “need and necessity” is a separate and challengeable ground to a larger bench.
5. Justification for Interim Bail: The Court released Mr. Kejriwal temporarily because the right to life and liberty is sacrosanct (Article 21), he had already endured over 90 days of incarceration, and the complex legal questions referred to the larger bench require in-depth consideration.

Conclusion

The Supreme Court used the appeal to reinforce the constitutional safeguards inherent in Section 19 of the PMLA, asserting the courts’ fundamental duty to exercise judicial review over arrests to ensure strict compliance with legal procedures and protect personal liberty. While the Court found the DoE had recorded its “reasons to believe” the guilt of the accused, it granted interim bail and referred the critical issue of whether the “necessity to arrest” must be explicitly demonstrated by the DoE to a larger bench, recognizing the severity of the power to arrest without a warrant.