PANKAJ BANSAL vs UNION OF INDIA, 2023

PANKAJ BANSAL vs UNION OF INDIA, 2023

Case Title and Citation

PANKAJ BANSAL VERSUS UNION OF INDIA & ORS. (along with connected matters) Citation: 2023 INSC 866 Case Numbers: Criminal Appeal Nos 3051-3052 of 2023 Date of Judgment: October 3, 2023

Factual Background

The genesis of the appeals traced back to FIR No. 0006 dated 17.04.2023, registered by the Anti-Corruption Bureau, Panchkula, alleging offenses of corruption, bribery, and criminal conspiracy. The accused named in that FIR included Sudhir Parmar (Special Judge), Ajay Parmar, and Roop Bansal (Promoter of M3M Group). While Basant Bansal was mentioned in the body of the FIR as one of the owners of M3M Group, Pankaj Bansal’s name did not appear in the FIR. The Directorate of Enforcement (ED) registered a second ECIR (ECIR/GNZO/17/2023) on 13.06.2023 based on this FIR. Previously, the appellants (Pankaj Bansal and Basant Bansal) had secured interim protection/anticipatory bail from the Delhi High Court on 09.06.2023 regarding a first ECIR. On 14.06.2023, while they were at the ED office complying with summons related to the first ECIR, they were served with fresh summons related to the second ECIR. Basant Bansal was arrested at 6:00 pm, and Pankaj Bansal was arrested at 10:30 pm on the same day under Section 19(1) of the Prevention of Money Laundering Act, 2002 (PMLA). They were then produced before the learned Vacation Judge/Additional Sessions Judge, Panchkula, and remanded to ED custody. The appellants challenged their arrest and subsequent remand orders before the Punjab & Haryana High Court, which dismissed their writ petitions. The appellants contended that their arrest was illegal, unconstitutional, and a wanton abuse of power, as the safeguards provided in Section 19 PMLA were violated.

Issue(s)

1. Whether the arrest of the appellants under Section 19 of the PMLA was valid and lawful.
2. Whether the impugned remand orders passed by the Vacation Judge/Additional Sessions Judge, Panchkula, measured up to the requirements of satisfying compliance with Section 19 PMLA.
3. Whether the ED’s act of merely reading out or permitting the reading of the grounds of arrest, without furnishing a written copy to the arrested person, fulfills the constitutional mandate of Article 22(1) and the statutory mandate of Section 19(1) of the PMLA.

Decision of the Supreme Court

The Supreme Court allowed the appeals. The Court set aside the impugned orders of the Division Bench of the Punjab & Haryana High Court, the arrest orders, arrest memos, and all subsequent remand orders passed by the Vacation Judge/Additional Sessions Judge, Panchkula. The appellants were directed to be released forthwith.

Reason for the decision

1. Mandatory Provision of Written Grounds: The Court held that to give true meaning to the constitutional and statutory mandate of Section 19(1) PMLA of informing the arrested person of the grounds of arrest, it is necessary that a copy of such written grounds of arrest must be furnished to the arrested person as a matter of course and without exception. The mere reading out or permitting the reading of the grounds is inadequate compliance.
2. Constitutional Purpose of Information: Conveyance of this information is vital, not only to apprise the arrested person of the reason for arrest, but also to enable him/her to seek legal counsel and present a case to the Special Court to meet the stringent twin conditions for bail under Section 45 PMLA.
3. Arbitrary Exercise of Power: The sequence of events reflected a “complete and utter lack of bonafides” on the part of the ED. The ED recorded the second ECIR and acted upon it immediately after the appellants secured interim protection regarding the first ECIR, despite the foundational FIR dating back months. The method of summoning the appellants on one pretext (first ECIR) and arresting them on another (second ECIR) within a short span “reeks of arbitrary exercise of power”.
4. Failure of Judicial Application of Mind in Remand: The remand order by the Vacation Judge reflected a “total failure” in discharging his duty. The Judge did not record a finding that he perused the grounds of arrest to ascertain whether the ED had recorded reasons to believe the appellants were guilty of an offense under the PMLA, which is a mandatory prerequisite under Section 19 PMLA and Section 167 Cr.P.C..

Conclusion

The arrest of the appellants was held to be unlawful because the ED failed to comply with the mandatory safeguard under Section 19(1) of the PMLA, specifically by not furnishing written grounds of arrest. The ED’s conduct was also found to be arbitrary and lacking in probity, having utilized the PMLA to immediately nullify the interim protection secured by the appellants. Since the initial arrest was illegal, the subsequent remand orders could not be sustained.