ARVIND KEJRIWAL v. DIRECTORATE OF ENFORCEMENT (2)

Citation: 2023 SCC Online SC 1244

Court: Allahabad High Court (Lucknow Bench)

Bench: Arvind Kejriwal

Case summary

believe" should be furnished to the arrestee to enable him to exercise his right to challenge the validity of the arrestee - An officer cannot be allowed to selectively pick and choose material implicating the person to

Judgment text

SUPREME COURT OF INDIA Arvind Kejriwal v. Directorate of Enforcement Criminal Appeal No. 2493 of 2024 [2024] 7 S. C. R. 2363 : 2024 INSC 512 Arvind Kejriwal v. Directorate of Enforcement (Criminal Appeal No. 2493 of 2024) 12 July 2024 [Sanjiv Khanna* and Dipankar Datta, JJ. ] Issue for Consideration Validity of arrest of the appellant under Section 19 of the Prevention of Money Laundering Act, 2002; scope and ambit of the Courts to examine the legality of the arrest under Section 19; whether the Court while examining the validity of arrest in terms of Section 19(1) of the PML Act will also go into and examine the necessity and need to arrest; whether interim bail ought to be granted to the appellant. Headnotes† Prevention of Money Laundering Act, 2002 - s. 19(1) - "need and necessity to arrest", if a separate ground to be considered beyond the conditions stipulated in s.

19(1) - Appellant challenged his arrest by ED in the Excise Policy case wherein he was described as the key conspirator in formulation of the said policy framed for the sale of liquor in NCT of Delhi, which allegedly favoured certain persons in exchange for kickbacks from liquor businessmen and resulted in huge losses to the government exchequer - It was further inter alia alleged that the appellant was involved in the use of proceeds of crime generated in the Goa election campaign of Aam Aadmi Party - Arrest was challenged as illegal contending that he was arrested in violation of s. 19(1), the "reasons to believe" did not mention and record reasons for "necessity to arrest" and there was no necessity to arrest the appellant on 21. 03.

2024 as the RC (by CBI)/ECIR (by ED) were registered in August 2022 and also most of the material relied upon in the "reasons to believe" were prior to July 2023 - Whether mere satisfaction of the formal parameters to arrest sufficient or is the satisfaction of necessity and need to arrest, beyond mere formal parameters required: * Author 2364 Held: Such review might be conflated with stipulations in s. 41 of the Code of Criminal Procedure, 1973 which lays down certain conditions for the police to arrest without warrant - However, s. 19(1) does not permit arrest only to conduct investigation - Conditions of s. 19(1) have to be satisfied - Clauses (a), (c), (d) and (e) to s. 41(1)(ii) of the CrPC, apart from other considerations, may be relevant - Vijay Madanlal Choudhary, a three Judge Bench decision states that the safeguards provided as pre-conditions in s.

19(1) of the PML Act have to be fulfilled by the designated officer before affecting arrest - The safeguards are of a higher standard and ensure that the designated officer does not act arbitrarily, and is made accountable for their judgment about the 'necessity to arrest' the person alleged to be involved in the offence of money laundering, at the stage before the complaint is filed - "necessity to arrest" is not mentioned in s.

19(1) however, it has been judicially recognised in Arnesh Kumar laying down that "necessity to arrest" must be considered by an officer before arresting a person - Power to arrest must be exercised cautiously to prevent severe repercussions on the life and liberty of individuals and such power must be restricted to necessary instances and must not be exercised routinely - Right to life and liberty is sacrosanct, and the appellant has suffered incarceration of over 90 days and as the questions of law inter alia as regards whether the "need and necessity to arrest" is a separate ground to challenge the arrest u/s. 19(1) of the PML Act is referred to larger Bench, the appellant is granted interim bail in the ECIR recorded by respondent-ED, on the conditions as imposed, which may be extended/recalled by the larger Bench. [Paras 18, 67, 74, 84, 85] Prevention of Money Laundering Act, 2002 - s.

19(1) - Validity of arrest - "Need and necessity to arrest" - Parameters to be considered - Questions of law referred to larger Bench: Held: Questions as regards whether the"need and necessity to arrest" is a separate ground to be considered beyond the conditions stipulated in s. 19(1); whether it refers to the satisfaction of formal parameters to arrest and take a person into custody, or it relates to other personal grounds and reasons regarding necessity to arrest a person; and if questions (a) and (b) are affirmatively answered, what are the parameters and facts to be taken into consideration while examining the question of "need and necessity to arrest". [Para 85] Arvind Kejriwal v. Directorate of Enforcement Prevention of Money Laundering Act, 2002 - s.

19(1) - Preconditions to arrest under - Power to arrest - Judicial review - Plea of the respondent-Directorate of Enforcement that there should not be judicial scrutiny of the power to arrest as it will interfere with the investigation: Held: Rejected - The exercise of the power to arrest is not exempt from the scrutiny of courts - A decision-making error u/s. 19(1) can lead to the arrest and deprivation of liberty of the arrestee - Courts have the power of judicial review and must examine that the exercise of the power to arrest meets the statutory conditions - The legislature imposed strict conditions as preconditions to arrest and was aware that the arrest may be before or prior to initiation of the criminal proceedings/prosecution complaint and did not exclude the examination of the said preconditions being satisfied in a particular case - This flows from the mandate of s.

19(3) which requires that the arrestee must be produced within 24 hours and taken to the Special Court, or court of judicial/metropolitan magistrate having jurisdiction - The power of judicial review remains both before and after the filing of criminal proceedings/ prosecution complaint. [Paras 21, 61] Prevention of Money Laundering Act, 2002 - s. 19(1) - Penal Code, 1860 - s. 26 - "reasons to believe" - Rights of the accused - Whether the arrestee is entitled to be supplied with a copy of the "reasons to believe": Held: Yes - Providing the written "grounds of arrest", though a must, does not in itself satisfy the compliance requirement - The authorized officer's genuine belief and reasoning based on the evidence that establishes the arrestee's guilt is also the legal necessity - As the "reasons to believe" are accorded by the authorised officer, the onus to establish satisfaction of the said condition will be on the ED and not on the arrestee - s.

26 defines the expression "reason to believe" as sufficient cause to believe a thing and not otherwise - "reasons to believe" are the reasons for the formation of the belief which must have a rational connection with or an element bearing on the formation of belief - The reason should not be extraneous or irrelevant for the purpose of the provision - Existence and validity of the "reasons to believe" goes to the root of the power to arrest - The subjective opinion of the arresting officer must be founded and based upon fair and objective consideration of the material available on the date of arrest - On the reading of the "reasons to believe" the court must form the 2366 'secondary opinion' on the validity of the exercise undertaken for compliance of s.

19(1) when the arrest was made - The "reasons to believe" that the person is guilty of an offence under the PML Act should be founded on the material in the form of documents and oral statements - Accused is entitled to challenge his arrest u/s. 19(1) - Not furnishing a copy of the "reasons to believe" would prevent the accused from challenging their arrest, questioning the "reasons to believe", violating the personal liberty - The "reasons to believe" should be furnished to the arrestee to enable him to exercise his right to challenge the validity of arrest - However, in a one-off case, ED may claim redaction and exclusion of specific particulars and details however, the onus to justify redaction would be on the ED - This requires consideration and decision by the court and ED is not the sole judge. [Paras 28, 29, 33, 34, 36, 37] Prevention of Money Laundering Act, 2002 - s. 19(1) - Legality of arrest - Judicial review - Scope and ambit: Held: Judicial review of arrest u/s.

19(1) which is based on the opinion of the designated/authorised officer who records in writing, their "reasons to believe" that the arrestee is 'guilty' of an offence under the PML Act, is not merit based review - Judicial review does not amount to a mini-trial or a merit review - The exercise is confined to ascertain whether the "reasons to believe" are based upon material which 'establish' that the arrestee is guilty of an offence under the PML Act and to ensure that the ED acted in accordance with the law - The courts scrutinize the validity of the arrest in exercise of power of judicial review - In-depth judicial scrutiny is required when the reasons recorded by the authority are not clear and lucid - Arrest is to be made on the basis of the valid "reasons to believe", meeting the parameters prescribed by the law. [Paras 39, 44] Prevention of Money Laundering Act, 2002 - s.

19(1) - "reasons to believe" - Chats retrieved after the arrest of the appellant, not mentioned in the "reasons to believe" were referred in the additional note of ED - Examination of validity of the arrest of the appellant u/s. 19(1) on basis thereof: Held: Chats being retrieved after the arrest of the appellant and not being mentioned in the "reasons to believe" cannot be examined to determine the validity of the arrest in terms of s. 19(1) - The legality of the "reasons to believe" have to be examined based on what is mentioned and recorded therein and the material on Arvind Kejriwal v. Directorate of Enforcement record - However, the officer acting u/s. 19(1) cannot ignore or not consider the material which exonerates the arrestee - An officer cannot be allowed to selectively pick and choose material implicating the person to be arrested - The power to arrest u/s.

19(1) cannot be exercised as per the whims and fancies of the officer - The opinion of the officer is subjective, but formation of opinion should be in accordance with the law. [Paras 54-56] Prevention of Money Laundering Act, 2002 - s. 19(1) - Code of Criminal Procedure, 1973 - s. 41 - Distinction: Held: Arrest u/s. 41 can be made on the grounds mentioned in clauses (a) to (i) of s. 41(1) which include a reasonable complaint, credible information or reasonable suspicion that a person has committed an offence, or the arrest is necessary for proper investigation of the offence, etc. - Grounds mentioned in s. 41 are different from the juridical preconditions for exercise of power of arrest u/s. 19(1) of the PML Act - s. 19(1) conditions are more rigid and restrictive and the two provisions cannot be equated. [Para 40] Prevention of Money Laundering Act, 2002 - s.

19(1) - "reasons to believe" - Power of judicial review to set aside the "reasons to believe" is limited - Contents of the "reasons to believe" records the subjective satisfaction that the appellant is guilty inter alia stating the role of the appellant as the kingpin in formulation of the policy; his involvement in the use of proceeds of crime generated in the Goa election campaign of Aam Aadmi Party; being guilty as an individual as a part of the conspiracy in the formulation of the excise policy, and, also vicariously as the in-charge of AAP; and not cooperating with the investigation despite nine summons being issued to him - "reasons to believe" also referred to the "material" to show appellant's involvement in the offence of money laundering - However, the appellant contended that the "reasons to believe" did not mention and evaluate "all" or "entire" material and selectively referred to "incriminating" material and ignored the exculpatory material: Held: Though the arguments raised on behalf of the appellant as against the "reasons to believe", are worthy of consideration, but are in the nature of propositions or deductions - The power of judicial review to set aside and quash the "reasons to believe" is limited and accepting the arguments raised would be equivalent to undertaking a merits review.

[Para 65] 2368 Prevention of Money Laundering Act, 2002 - Policy on arrest by ED - Lack of uniformity, consistency - Data on the website of ED as regards the number of ECIRs recorded and the arrests made, raise questions as regards the policy on arrest by ED as to when a person involved in offences committed under the PML Act should be arrested: Held: ED should act uniformly, consistent in conduct, confirming one rule for all. [Para 79] Prevention of Money Laundering Act, 2002 - Fundamental rights - Right to life and liberty - Review - Principle of proportionality test, discussed. Prevention of Money Laundering Act, 2002 - ss. 19, 45 - Distinction between. Prevention of Money Laundering Act, 2002 - s. 45 - Right to bail under, if dependant on the stage of the proceedings: Held: No - The power of the court u/s. 45 is unrestricted with reference to the stage of the proceedings - s.

45 does not stipulate the stage when the accused may move an application for bail and it can be submitted at any stage, either before or after the complaint is filed - It is immaterial whether the charge is framed or evidence is recorded or not recorded - All material and evidence that can be led in the trial and admissible, whether relied on by the prosecution or not, and can be examined - On the question of burden of proof, s. 24 of the PML Act can be relied on by the prosecution. [Para 46] Word and Phrases - "material", "reason to believe", and "guilty of the offence" - Interpretation. Word and Phrases - "reasons to believe" and "suspicion" - Discussed. Case Law Cited Dukhishyam Benupani, Asst. Director, Enforcement Directorate (FERA) v. Arun Kumar Bajoria[1997] Supp. 5 SCR 566 : (1998) 1 SCC 52; State of Bihar and another v. J. A. C. Saldanha and others [1980] 2 SCR 16 : (1980) 1 SCC 554; M. C. Abraham and another v. State of Maharashtra and others [2002] Supp.

5 SCR 677 : (2003) 2 SCC 649 - held inapplicable. Arvind Kejriwal v. Directorate of Enforcement The King Emperor v. Khawaja Nazir Ahmad AIR 1945 PC 18 - held inapplicable. Vijay Madanlal Choudhary and others v. Union of India and others [2022] 6 SCR 382 : (2022) SCC OnLine SC 929; Pankaj Bansal v. Union of India and others [2023] 12 SCR 714 : 2023 SCC Online SC 1244; V. Senthil Balaji v. State and others [2023] 12 SCR 853 : (2024) 3 SCC 51; Prabir Purkayastha v. State (NCT of Delhi) (2024) SCC OnLine SC 934; Union of India v. Padam Narain Aggarwal and others [2008] 14 SCR 179 : (2008) 13 SCC 305; Dr. Partap Singh and Another v. Director of Enforcement, Foreign Exchange Regulation Act and others [1985] 3 SCR 969 : (1985) 3 SCC 72 - relied on. Roy V. D. v. State of Kerala [2000] Supp. 4 SCR 539 : (2000) 8 SCC 590; Ramesh Chandra Mehta v. State of West Bengal [1969] 2 SCR 461; In the matter of Madhu Limaye and others [1969] 3 SCR 154 : (1969) 1 SCC 292; Barium Chemicals Ltd.

and another v. Company Law Board and others[1966] Supp. 1 SCR 311 : AIR 1967 SC 295; Joseph Kuruvilla Vellukunnel v. Reserve Bank of India and others[1962] Supp. 3 SCR 632 : AIR 1962 SC 1371; Joti Parshad v. State of Haryana (1993) Supp 2 SCC 497; A. S. Krishnan and others v. State of Kerala[2004] 3 SCR 44 : (2004) 11 SCC 576; Gurcharan Singh and others v. State (Delhi Administration)[1978] 2 SCR 358 : (1978) 1 SCC 118; Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra and another[2005] 3 SCR 345 : (2005) 5 SCC 294; State of Orissa v. Debendra Nath Padhi[2004] Supp. 6 SCR 460 : (2005) 1 SCC 568; M. Ravindran v. Intelligence Officer, Directorate of Revenue Intelligence[2020] 12 SCR 915 : (2021) 2 SCC 485; Amarendra Kumar Pandey v. Union of India and others[2022] 12 SCR 223 : (2022) SCC Online SC 881; Centre for PIL and another v. Union of India and another [2011] 4 SCR 445 : (2011) 4 SCC 1; Ram Manohar Lohia v.

State of Bihar and another[1966] 1 SCR 709 : AIR 1966 SC 740; Moti Lal Jain v. State of Bihar and others[1968] 3 SCR 587 : AIR 1968 SC 1509; Uttamrao Shivdas Jankhar v. Ranjitsinh Vijaysinh Mohite Patil[2009] 9 SCR 538 : (2009) 13 SCC 131; Manish Sisodia v. Central Bureau of Investigation [2023] 15 SCR 480 : 2023 SCC OnLine SC 1393; Arnesh Kumar v. State of Bihar[2014] 8 SCR 128 : (2014) 8 SCC 273; Mohammed Zubair v. State of NCT of Delhi[2022] 18 SCR 494 : (2022) SCC OnLine SC 897; Joginder Kumar v. State of Uttar Pradesh[1994] 3 SCR 661 : (1994) 4 SCC 260; Siddharth v. State of Uttar Pradesh (2022) 1 SCC 676; 2370 P. Chidambaram v. Directorate of Enforcement[2019] 12 SCR 172 : (2019) 9 SCC 24; Chairman, All India Railway Recruitment Board v. K. Shyam Kumar[2010] 6 SCR 291 : (2010) 6 SCC 614; State of Uttar Pradesh v. Lal[2006] 2 SCR 656 : (2006) 3 SCC 276; Modern Dental College & Research Centre v. State of Madhya Pradesh[2016] 3 SCR 575 : (2016) 4 SCC 346; K. S.

Puttaswamy (Retired) and Anr. (Aadhar) v. Union of India and Anr. [2015] 9 SCR 99 : (2019) 1 SCC 1; Anuradha Bhasin v. Union of India and Others[2020] 1 SCR 812 : (2020) 3 SCC 637; Association for Democratic Reforms v. Union of India[2024] 2 SCR 420 : (2024) 5 SCC 1 - referred to. Gifford v. Kelson (1943) 51 Man. R 120; Nakkuda Ali v. Jayaratne 1951 AC 66; Council of Civil Services Union v. Minister of State for Civil Services (1984) 3 All. ER 935; R v. Secretary of State (1991) 1 All ER 710 - referred to. List of Acts Prevention of Money Laundering Act, 2002; Code of Criminal Procedure, 1973; Penal Code, 1860.

List of Keywords Section 19 of the Prevention of Money Laundering Act, 2002; Validity of arrest; Necessity and need to arrest; Delhi excise policy; Liquor; Excise policy; Excise Policy case; Kickbacks; Bribes; Enforcement Directorate; ECIR; "reasons to believe"; Preconditions to arrest; Proceeds of crime; Aam Aadmi Party; Formal parameters to arrest; Grounds of arrest; Money laundering; Principles of Wednesbury reasonableness; Principle of proportionality; Proportionality test; Judicial review. Case Arising From CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 2493 of 2024 From the Judgment and Order dated 09. 04. 2024 of the High Court of Delhi at New Delhi in WPCRL No. 985 of 2024 Appearances for Parties Dr. Abhishek Manu Singhvi, Amit Desai, Vikram Chaudhari, Sr. Advs. , Vivek Jain, Mohd. Irshad, Rajat Bhardwaj, Karan Sharma, Arvind Kejriwal v.

Directorate of Enforcement Amit Bhandari, Shadan Farasat, Rajat Jain, Sadiq Noor, Mohit Siwach, Kaustubh Khanna, Gopal Shenoy, Shailesh Chauhan, Advs. for the Appellant. Tushar Mehta, Solicitor General, Suryaprakash V Raju, A. S. G. , Mukesh Kumar Maroria, Kanu Agarwal, Annam Venkatesh, Zoheb Hussain, Vivek Gurnani, Hitarth Raja, Ms. Shweta Desai, Ms. Nidhi Saini, Ms. Abhipriya, Ms. Agrimaa Singh, Kartik Sabarwal, Vivek Gaurav, Samrat Goswami, Advs. for the Respondent. Judgment / Order of the Supreme Court Judgment Sanjiv Khanna, J. This appeal filed by the appellant - Arvind Kejriwal assails the judgment and order dated 09. 04. 2024 passed by the single Judge of the High Court of Delhi whereby the Criminal Writ Petition filed by Arvind Kejriwal under Articles 226 and 227 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, 1973,1 challenging his arrest by the Directorate of Enforcement,2 vide the arrest order dated 21. 03.

2024, on the ground of violation of Section 19 of the Prevention of Money Laundering Act, 2002,3 and the proceedings pursuant thereto including the order of remand dated 22. 03. 2024 to the custody of DoE passed by the Special Judge, has been rejected. 2. At the outset, we must clarify that this is not an appeal against refusal or grant of bail. Instead, this appeal impugns the validity of arrest under Section 19 of the PML Act. It raises a pivotal question regarding the scope and ambit of the trial court/courts to examine the legality of the arrest under Section 19. The issue is legal in nature, and with the ratio being propounded in detail, the decision becomes complex and legalistic. 4 1 For short, the "Code". 2 For short, "DoE". 3 For short, the "PML Act". 4 While introducing the Prevention of Money Laundering (Amendment) Bill, 2012 in the Rajya Sabha on 17. 12. 2012, the then Finance Minister, Mr.

P Chidambaram, stated, "Firstly, we must remember that money-laundering is a very technically-defined offence. It is not the way we understand 'money- laundering in a colloquial sense. " This has been quoted with approval in Vijay Madanlal Choudhary and others v. Union of India and others, (2022) SCC OnLine SC 929, at paragraph 35. 2372 3. On 17. 08. 2022, the Central Bureau of Investigation5 registered RC No. 0032022A0053 for the offences punishable under Section 120B read with Section 477A of the Indian Penal Code, 18606 and Section 7 of the Prevention of Corruption Act, 1988. The registration was based on a complaint dated 20. 07. 2022, made by the Lieutenant Governor of the Government of National Capital Territory7 of Delhi, and on the directions of the competent authority conveyed by the Director, Ministry of Home Affairs, Government of India. 4. Later, on 25. 11. 2022, the CBI filed a chargesheet. Thereafter, on 25. 04. 2023 and 08. 07.

2023, two supplementary chargesheets were filed. On 15. 12. 2022, the Special Court took cognisance of the offences. The chargesheets inter alia allege that the excise policy, framed for the sale of liquor in NCT of Delhi, was a product of criminal conspiracy. It was hatched by a cartel of liquor manufacturers, wholesalers and retailers and it provided undue pecuniary gain to public servants and other accused in the conspiracy. It resulted in huge losses to the government exchequer and ultimately to the public. Arvind Kejriwal is not an accused in the said chargesheets. 5. On 22. 08. 2022, the DoE recorded ECIR No. HIU-II/14/2022 based on offences detailed under the RC registered by CBI. The offences under the RC are the predicate offence for investigation/inquiry into the scheduled offences under the PML Act. On 26. 11. 2022, the DoE filed the first prosecution complaint. On 20. 12. 2022, the Special Court took cognisance.

Since then, the DoE has filed seven supplementary prosecution complaints. In the last complaint, that is, theSeventh Supplementary Prosecution Complaint dated 17. 05. 2024, Arvind Kejriwal has been named as an accused. 6. On 30. 10. 2023, Arvind Kejriwal was issued notice under Section 50 of the PML Act for his appearance and recording of statement. Thereafter, eight summons were issued till his arrest on 21. 03. 2024. DoE states that Arvind Kejriwal failed to appear and join the investigation. Arvind Kejriwal claims that the summons and notices under Section 50 were illegal, bad in law and invalid. 8 5 For short, "CBI". 6 For short, "IPC". 7 For short, "NCT". 8 We are not directly examining the question of validity of the summons and notices, though the effect and failure to appear is one of the aspects which will be noticed subsequently. Arvind Kejriwal v. Directorate of Enforcement 7.

The cardinal ground taken in the present appeal is that Arvind Kejriwal was arrested in violation of Section 19(1) of the PML Act. It is contended that the arrest was illegal, which makes the order of remand to custody of the DoE passed by the Special Court dated 01. 04. 2024 also illegal. Therefore, it would be apt to begin by referring to Section 19 and elucidating how the Courts have interpreted and applied the section. 8. Section 19 of the PML Act reads: "19. Power to arrest. --(1) If the Director, Deputy Director, Assistant Director or any other officer authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession, reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.

(2) The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under sub-section (1), forward a copy of the order along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period, as may be prescribed. (3) Every person arrested under sub-section (1) shall, within twenty-four hours, be taken to a Special Court or Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest to the Special Court or Magistrate's Court. " 9.

A bare reading of the section reflects, that while the legislature has given power to the Director, Deputy Director, Assistant Director, or an authorised officer to arrest a person, it is fenced with preconditions and requirements, which must be satisfied prior to the arrest of a person. The conditions are - 2374 The officer must have material in his possession. On the basis of such material, the authorised officer should form and record in writing, "reasons to believe" that the person to be arrested, is guilty of an offence punishable under the PML Act. The person arrested, as soon as may be, must be informed of the grounds of arrest. These preconditions act as stringent safeguards to protect life and liberty of individuals. We shall subsequently interpret the words "material", "reason to believe", and "guilty of the offence".

Before that, we will refer to some judgments of this Court on the importance of Section 19(1) and the effect on the legality of the arrest upon failure to comply with the statutory requirements. 10. In Pankaj Bansal v. Union of India and others,9 interpreting Section 19 of the PML Act with reference to Article 22(1) of the Constitution of India,10 this Court has observed: "32. In this regard, we may note that Article 22(1) of the Constitution provides, inter alia, that no person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest. This being the fundamental right guaranteed to the arrested person, the mode of conveying information of the grounds of arrest must necessarily be meaningful so as to serve the intended purpose.

It may be noted that Section 45 of the Act of 2002 enables the person arrested under Section 19 thereof to seek release on bail but it postulates that unless the twin conditions prescribed thereunder are satisfied, such a person would not be entitled to grant of bail. The twin conditions set out in the provision are that, firstly, the Court must be satisfied, after giving an opportunity to the public prosecutor to oppose the application for release, that there are reasonable grounds 9 [2023] 12 SCR 714 : 2023 SCC Online SC 1244 10 "22. Protection against arrest and detention in certain cases. --(1) No person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest nor shall he be denied the right to consult, and to be defended by, a legal practitioner of his choice. " Arvind Kejriwal v.

Directorate of Enforcement to believe that the arrested person is not guilty of the offence and, secondly, that he is not likely to commit any offence while on bail. To meet this requirement, it would be essential for the arrested person to be aware of the grounds on which the authorized officer arrested him/her under Section 19 and the basis for the officer's 'reason to believe' that he/she is guilty of an offence punishable under the Act of 2002. It is only if the arrested person has knowledge of these facts that he/she would be in a position to plead and prove before the Special Court that there are grounds to believe that he/she is not guilty of such offence, so as to avail the relief of bail. Therefore, communication of the grounds of arrest, as mandated by Article 22(1) of the Constitution and Section 19 of the Act of 2002, is meant to serve this higher purpose and must be given due importance.

" In the Court's view, Section 19 includes inbuilt checks that designated officers must adhere to. First, the "reasons to believe" of the alleged involvement of the arrestee have to be recorded in writing. Secondly, while affecting the arrest, the reasons shall be furnished to the arrestee. Lastly, a copy of the order of arrest along with the material in possession have to be forwarded to the safe custody of the adjudicating authority. This ensures fairness, objectivity and accountability of the designated officer while forming their opinion, regarding the involvement of the arrestee in the offence of money laundering. 11. Arrest under Section 19(1) of the PML Act may occur prior to the filing of the prosecution complaint and before the Special Judge takes cognizance. 11 Till the prosecution complaint is filed, there is no requirement to provide the accused with a copy of the ECIR. 12 The ECIR is not a public document.

Thus, to introduce checks and balances, Section 19(1) imposes safeguards to protect the rights and liberty of the arrestee. This is in compliance with the mandate of Article 22(1) of the Constitution of India. 11 See Tarsem Lal v. Directorate of Enforcement, Jalandhar Zonal Office (2024) SCC Online SC 971. 12 It appears that in several cases multiple complaints in same ECIR are filed. Whether a copy of the ECIR must be supplied to an accused has been examined in Vijay Madanlal Choudhary(supra) which has been referred to subsequently. 2376 12. V. Senthil Balaji v. State and others13 similarly states that the designated officer can only arrest once they record "reasons to believe" in writing, that the person being arrested is guilty of the offence punishable under the PML Act. It is mandatory to record the "reasons to believe" to arrive at the opinion that the arrestee is guilty of the offence, and to furnish the reasons to the arrestee.

This ensures an element of fairness and accountability. 13. The decision in V. Senthil Balaji (supra) has also examined the interplay between Section 19 of the PML Act and Section 167 of the Code. The magistrate is expected to do a balancing act as the investigation is to be concluded within 24 hours as a matter of rule. Therefore, the investigating agency has to satisfy the magistrate with adequate material on the need for custody of the arrestee. Magistrates must bear this crucial aspect in mind while examining and passing an order on the DoE's prayer for custodial remand. More significantly, the magistrate is under the bounden duty to ensure due compliance with Section 19(1) of the PML Act. Any failure to comply would entitle the arrestee to be released. Section 167 of the Code, therefore, enjoins upon the magistrate the necessity to satisfy due compliance of the law by perusing the order passed by the authority under Section 19(1) of the PML Act.

Upon such satisfaction, the magistrate may consider the request for custodial remand. 14. Pankaj Bansal (supra) reiterates V. Senthil Balaji (supra) to hold that the magistrate/court has the duty to ensure that the conditions in Section 19(1) of the PML Act are duly satisfied and that the arrest is valid and lawful. This is in lieu of the mandate under Section 167 of the Code. If the court fails to discharge its duty in right earnest and with proper perspective, the remand order would fail on the ground that the court cannot validate an unlawful arrest made under Section 19(1). The Court relied on In the matter of Madhu Limaye and others,14which held that it is necessary for the State to establish that, at the stage of remand, while directing detention in custody, the magistrate has applied their mind to all relevant matters. If the arrest itself is unconstitutional viz.

Article 22(1) of the Constitution, the remand would not cure the constitutional infirmities attached 13 [2023] 12 SCR 853 : (2024) 3 SCC 51 14 [1969] 3 SCR 154 : (1969) 1 SCC 292 Arvind Kejriwal v. Directorate of Enforcement to such arrest. The principle stands expanded, as the violation of Section 19(1) of the PML Act will equally vitiate the arrest. 15. In Pankaj Bansal (supra), one of the contentions raised by the DoE was that the legality of arrest is rendered immaterial once the competent court passes an order of remand. Reliance was placed on certain judgments. However, these judgments were distinguished on the ground that they primarily addressed writs of habeas corpus following remand orders by the jurisdictional court. Therefore, the ratios therein are not applicable to this scenario.

In the context of statutory compliance, the Court observed in clear terms that if the arrest is not in conformity with Section 19(1) of the PML Act, the mere passing of an order of remand, in itself, would not be sufficient to validate the person's arrest. Thus, notwithstanding the order of remand, the issue whether the arrest of the person is lawful at its inception, is open for consideration and must be answered. 16. Recently, in Prabir Purkayastha v. State (NCT of Delhi),15 this Court reiterated the aforesaid principles expounded in Pankaj Bansal(supra). The said principles were applied to the pari materia provisions16 of the Unlawful Activities (Prevention) Act, 1967. The Court explained that Section 19(1) of the PML Act is meant to serve a higher purpose, and also to enforce the mandate of Article 22(1) of the Constitution. The right to life and personal liberty is sacrosanct, a fundamental right guaranteed under Article 21 and protected by Articles 20 and 22 of the Constitution.

Reference was made to the observations of this Court in Roy V. D. v. State of Kerala17 that the right to be informed about the grounds of arrest flows from Article 22(1) of the Constitution and any infringement of this fundamental right vitiates the process of arrest and remand. The fact that the chargesheet has been filed in the matter would not validate the otherwise illegality and unconstitutionality committed at the time of arrest and grant of remand custody of the accused. Reference is also made to the principle behind Article 22(5) of the Constitution. Thus, this Court held that not complying with the constitutional mandate under Article 22(1) and the statutory mandate of the UAPA, on the requirement to 15 2024 SCC OnLine SC 934 16 Sections 43A, 43B and 43C of the UAPA. 17 [2000] Supp. 4 SCR 539 : (2000) 8 SCC 590 2378 communicate grounds of arrest or grounds of detention, would lead to the custody or detention being rendered illegal. 17.

In Vijay Madanlal Choudhary and others v. Union of India and others,18 a three Judge Bench of this Court distinguished between the stringent requirements stipulated in Section 19(1) of the PML Act, and the power of arrest given to the police in cognisable offences under Section 41 of the Code. 19 Reference was made to Section 104 of the Customs Act, 1962,20 which was elucidated and considered 18 [2022] 6 SCR 382 : (2022) SCC Online SC 929 19 "41. When police may arrest without warrant.

-- (1) Any police officer may without an order from a Magistrate and without a warrant, arrest any person-- (a) who commits, in the presence of a police officer, a cognizable offence; (b) against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists that he has committed a cognizable offence punishable with imprisonment for a term which may be less than seven years or which may extend to seven years whether with or without fine, if the following conditions are satisfied, namely:-- (i) the police officer has reason to believe on the basis of such complaint, information, or suspicion that such person has committed the said offence; (ii) the police office is satisfied that such arrest is necessary-- (a) to prevent such person from committing any further offence; or (b) for proper investigation of the offence; or (c) to prevent such person from causing the evidence of the offence to disappear or tampering with such evidence in any manner; or (d) to prevent such person from making any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the Court or to the police officer; or (e) as unless such person is arrested, his presence in the Court whenever required cannot be ensured, and the police officer shall record while making such arrest, his reasons in writing.

Provided that a police officer shall, in all cases where the arrest of a person is not required under the provisions of this sub-section, record the reasons in writing for not making the arrest.

(ba) against whom credible information has been received that he has committed a cognizable offence punishable with imprisonment for a term which may extend to more than seven years whether with or without fine or with death sentence and the police officer has reason to believe on the basis of that information that such person has committed the said offence; (c) who has been proclaimed as an offender either under this Code or by order of the State Government; or (d) in whose possession anything is found which may reasonably be suspected to be stolen property and who may reasonably be suspected of having committed an offence with reference to such thing; or (e) who obstructs a police officer while in the execution of his duty, or who has escaped, or attempts to escape, from lawful custody; or (f) who is reasonably suspected of being a deserter from any of the Armed Forces of the Union; or (g) who has been concerned in, or against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists, of his having been concerned in, any act committed at any place out of India which, if committed in India, would have been punishable as an offence, and for which he is, under any law relating to extradition, or otherwise, liable to be apprehended or detained in custody in India; or (h) who, being a released convict, commits a breach of any rule made under sub-section (5) of Section 356; or (i) for whose arrest any requisition, whether written or oral, has been received from another police officer, provided that the requisition specifies the person to be arrested and the offence or other cause for which the arrest is to be made and it appears therefrom that the person might lawfully be arrested without a warrant by the officer who issued the requisition.

" 20 For short, "Customs Act". Arvind Kejriwal v. Directorate of Enforcement by the Constitution Bench of this Court in Ramesh Chandra Mehta v. State of West Bengal,21 and in Union of India v. Padam Narain Aggarwal and others. 22 On the safeguards against the abuse of the power of arrest in case of the Customs Act, Padam Narain Aggarwal (supra) observes that the power to arrest by a customs os anfficer is statutory in character. Such power can be exercised only in cases where the customs officer has the "reason to believe" that the person sought to be arrested is guilty of the offence punishable under the prescribed sections. Padam Narain Aggarwal (supra) observes: "36. From the above discussion, it is amply clear that power to arrest a person by a Customs Officer is statutory in character and cannot be interfered with.

Such power of arrest can be exercised only in those cases where the Customs Officer has "reason to believe" that a person has been guilty of an offence punishable under Sections 132, 133, 135, 135-A or 136 of the Act. Thus, the power must be exercised on objective facts of commission of an offence enumerated and the Customs Officer has reason to believe that a person sought to be arrested has been guilty of commission of such offence. The power to arrest thus is circumscribed by objective considerations and cannot be exercised on whims, caprice or fancy of the officer. 37. The section also obliges the Customs Officer to inform the person arrested of the grounds of arrest as soon as may be. The law requires such person to be produced before a Magistrate without unnecessary delay. 38.

The law thus, on the one hand, allows a Customs Officer to exercise power to arrest a person who has committed certain offences, and on the other hand, takes due care to ensure individual freedom and liberty by laying down norms and providing safeguards so that the power of arrest is not abused or misused by the authorities. It is keeping in view these considerations that we have to decide correctness or otherwise of the directions issued by a Single Judge of the High Court. "Blanket" order of 21 [1969] 2 SCR 461 22 [2008] 14 SCR 179 : (2008) 13 SCC 305 2380 bail may amount to or result in an invitation to commit an offence or a passport to carry on criminal activities or to afford a shield against any and all types of illegal operations, which, in our judgment, can never be allowed in a society governed by the rule of law. " 18.

Vijay Madanlal Choudhary (supra) affirms the aforesaid ratio, and states that the safeguards provided as preconditions in Section 19(1) of the PML Act have to be fulfilled by the designated officer before affecting arrest. The safeguards are of a higher standard. They ensure that the designated officer does not act arbitrarily, and is made accountable for their judgment about the 'necessity to arrest' the person23 alleged to be involved in the offence of money laundering, at the stage before the complaint is filed. Paragraph 89 reads as under: "89... The safeguards provided in the 2002 Act and the preconditions to be fulfilled by the authorised officer before effecting arrest, as contained in section 19 of the 2002 Act, are equally stringent and of higher standard.

Those safeguards ensure that the authorised officers do not act arbitrarily, but make them accountable for their judgment about the necessity to arrest any person as being involved in the commission of offence of moneylaundering even before filing of the complaint before the Special Court under section 44(1)(b) of the 2002 Act in that regard. If the action of the authorised officer is found to be vexatious, he can be proceeded with and inflicted with punishment specified under section 62 of the 2002 Act. The safeguards to be adhered to by the jurisdictional police officer before effecting arrest as stipulated in the 1973 Code, are certainly not comparable. Suffice it to observe that this power has been given to the high-ranking officials with further conditions to ensure that there is objectivity and their own accountability in resorting to arrest of a person even before a formal complaint is filed under section 44(1)(b) of the 2002 Act.

Investing of power in the high-ranking officials in this regard has stood 23 The aspect of necessity to arrest, has been independently examined later. Arvind Kejriwal v. Directorate of Enforcement the test of reasonableness in Premium Granites (supra), wherein the court restated the position that requirement of giving reasons for exercise of power by itself excludes chances of arbitrariness. Further, in Sukhwinder Pal Bipan Kumar (supra), the court restated the position that where the discretion to apply the provisions of a particular statute is left with the Government or one of the highest officers, it will be presumed that the discretion vested in such highest authority will not be abused. Additionally, the Central Government has framed Rules under section 73 in 2005, regarding the forms and the manner of forwarding a copy of order of arrest of a person along with the material to the Adjudicating Authority and the period of its retention.

In yet another decision in Ahmed Noormohmed Bhatti (supra), this court opined that the provision cannot be held to be unreasonable or arbitrary and, therefore, unconstitutional merely because the authority vested with the power may abuse his authority. (Also see Manzoor Ali Khan (supra). " We respectfully agree with the ratio of the decisions in Pankaj Bansal(supra) and Prabir Purkayastha (supra), which enrich and strengthen the view taken in Vijay Madanlal Choudhary(supra), on the interpretation of Section 19 of the PML Act. Power to arrest a person without a warrant from the court and without instituting a criminal case is a drastic and extreme power. Therefore, the legislature has prescribed safeguards in the form of exacting conditions as to how and when the power is exercisable. The conditions are salutary and serve as a check against the exercise of an otherwise harsh and pernicious power. 19.

Given that the legislature has prescribed preconditions to prevent abuse and unauthorised use of statutory power, the wielding of such power by an authorized person or authority cannot be conclusive. The exercise of the power and satisfaction of the conditions must and should be put to judicial scrutiny and examination, if the arrestee specifically challenges their arrest. If we do not hold so, then the restraint prescribed by the legislature would, in fact and in practice, be reduced to a mere formal exercise. Given the conditions imposed, the nature of the power and the effect on the rights of the individuals, it is nobody's case, and not even argued by the DoE, that the 2382 authorised officer is entitled to arrest a person without following the statutory requirements. 20. However, it has been argued by the DoE that the power to arrest is neither an administrative nor a quasi-judicial power as the arrest is made during investigation.

Judicial scrutiny is not permissible as it will interfere with investigation, or at best should be limited to subversive abuse of law. Discretion and right to arrest vests with the competent officer, whose subjective opinion should prevail. 21. We do not agree and must reject this argument. We hold that the power of judicial review shall prevail, and the court/magistrate is required to examine that the exercise of the power to arrest meets the statutory conditions. The legislature, while imposing strict conditions as preconditions to arrest, was aware that the arrest may be before or prior to initiation of the criminal proceedings/prosecution complaint. The legislature, neither explicitly nor impliedly, excludes the court surveillance and examination of the preconditions of Section 19(1) of the PML Act being satisfied in a particular case.

This flows from the mandate of Section 19(3) which requires that the arrestee must be produced within 24 hours and taken to the Special Court, or court of judicial/metropolitan magistrate having jurisdiction. The exercise of the power to arrest is not exempt from the scrutiny of courts. The power of judicial review remains both before and after the filing of criminal proceedings/prosecution complaint. It cannot be said that the courts would exceed their power, when they examine the validity of arrest under Section 19(1) of the PML Act, once the accused is produced in court in terms of Section 19(3) of the PML Act. 22. Before we examine the scope and width of the jurisdiction of the court when it examines validity of arrest under Section 19(1) of the PML Act, we must take on record and deal with the argument of the DoE relying on the paragraphs 176 to 179 in Vijay Madanlal Choudhary (supra) under the heading 'ECIR vis-a-vis FIR'.

The submission is that there is difference between the "reasons to believe", and the "grounds of arrest", the latter is mandated to be furnished to the arrestee, but the former is an internal and confidential document, the furnishing of which may be detrimental to investigation. Therefore, it is urged that "reasons to believe" need not be supplied to the arrestee. Paragraphs 178 and 179 of Vijay Madanlal Choudhary (supra) read: Arvind Kejriwal v. Directorate of Enforcement "178. The next issue is: whether it is necessary to furnish copy of ECIR to the person concerned apprehending arrest or at least after his arrest? section 19(1) of the 2002 Act postulates that after arrest, as soon as may be, the person should be informed about the grounds for such arrest. This stipulation is compliant with the mandate of article 22(1) of the Constitution.

Being a special legislation and considering the complexity of the inquiry/ investigation both for the purposes of initiating civil action as well as prosecution, non-supply of ECIR in a given case cannot be faulted. The ECIR may contain details of the material in possession of the Authority and recording satisfaction of reason to believe that the person is guilty of money-laundering offence, if revealed before the inquiry/ investigation required to proceed against the property being proceeds of crime including to the person involved in the process or activity connected therewith, may have deleterious impact on the final outcome of the inquiry/investigation. So long as the person has been informed about grounds of his arrest that is sufficient compliance of mandate of article 22(1) of the Constitution.

Moreover, the arrested person before being produced before the Special Court within twenty-four hours or for that purposes of remand on each occasion, the court is free to look into the relevant records made available by the Authority about the involvement of the arrested person in the offence of money-laundering. In any case, upon filing of the complaint before the statutory period provided in 1973 Code, after arrest, the person would get all relevant materials forming part of the complaint filed by the Authority under section 44(1)(b) of the 2002 Act before the Special Court. 179. Viewed thus, supply of ECIR in every case to person concerned is not mandatory. From the submissions made across the Bar, it is noticed that in some cases ED has furnished copy of ECIR to the person before filing of the complaint. That does not mean that in every case same procedure must be followed.

It is enough, if ED at the time of arrest, contemporaneously discloses the grounds of such arrest to such person. Suffice it to observe that 2384 ECIR cannot be equated with an FIR which is mandatorily required to be recorded and supplied to the accused as per the provisions of 1973 Code. Revealing a copy of an ECIR, if made mandatory, may defeat the purpose sought to be achieved by the 2002 Act including frustrating the attachment of property (proceeds of crime). Non-supply of ECIR, which is essentially an internal document of ED, cannot be cited as violation of constitutional right. Concededly, the person arrested, in terms of section 19 of the 2002 Act, is contemporaneously made aware about the grounds of his arrest. This is compliant with the mandate of article 22(1) of the Constitution. It is not unknown that at times FIR does not reveal all aspects of the offence in question.

In several cases, even the names of persons actually involved in the commission of offence are not mentioned in the FIR and described as unknown accused. Even, the particulars as unfolded are not fully recorded in the FIR. Despite that, the accused named in any ordinary offence is able to apply for anticipatory bail or regular bail, in which proceeding, the police papers are normally perused by the concerned court. On the same analogy, the argument of prejudice pressed into service by the petitioners for non-supply of ECIR deserves to be answered against the petitioners. For, the arrested person for offence of money-laundering is contemporaneously informed about the grounds of his arrest and when produced before the Special Court, it is open to the Special Court to call upon the representative of ED to produce relevant record concerning the case of the accused before him and look into the same for answering the need for his continued detention.

Taking any view of the matter, therefore, the argument under consideration does not take the matter any further. " 23. The paragraphs in Vijay Madanlal Choudhary (supra), while recording that there is a difference between ECIR and FIR, hold that the ECIR need not to be furnished to the accused, unlike an FIR recorded under Section 154 of the Code. The PML Act, a special legislation for the offence of money laundering, creates a unique mechanism for inquiry/investigation into the offence. An analogy Arvind Kejriwal v. Directorate of Enforcement cannot be drawn with the provisions of the Code. ECIR is an internal document for initiating penal action or prosecution. Having held so in paragraphs 178 and 179, it is observed that Section 19(1) of the PML Act postulates that after arrest, as soon as may be, the arrestee should be contemporaneously informed of the grounds of arrest to ensure compliance with Article 22(1) of the Constitution. Non-supply of ECIR is not to be faulted.

ECIR may contain details of material in possession of the authority, which if revealed before the inquiry/ investigation, may have a deleterious impact on the final outcome of the inquiry/investigation. The judgment states that the accused, upon filing of the prosecution complaint, will get all relevant materials forming part of the complaint. For the same reason, it is argued by the DoE that the accused is entitled to the "grounds of arrest" and not the "reasons to believe". Grounds of arrest may only summarily refer to the reasons given for arrest. 24. In the present case, we are examining Section 19(1) of the PML Act and the rights of the accused. We are not concerned with the ECIR. The relevant question arising is whether the arrestee is entitled to be supplied with a copy of the "reasons to believe"? Paragraph 89 in Vijay Madanlal Choudhary(supra) refers to the importance of recording the "reasons to believe" in writing, and states this is mandatory.

Further, both Pankaj Bansal(supra) and Prabir Purkayastha (supra) hold that the failure to record "reasons to believe" in writing will result in the arrest being rendered illegal and invalid. Paragraph 131 of Vijay Madanlal Choudhary(supra), which has been quoted subsequently, states that Section 19(1) requires in-depth scrutiny by the designated officer. A higher threshold is required for making an arrest, necessitating a review of the material available to demonstrate the person's guilt. Production of the "reasons to believe" before the Special Court/magistrate, cannot be construed and is not the same as furnishing or providing the "reasons to believe" to the arrestee who has a right to challenge his arrest in violation of Section 19(1) of the PML Act. 24 25.

On the aspect of the checks on the power to arrest under the PML Act, we would like to quote from the submission made on behalf 24 The arrestee may also challenge his arrest under Section 19(1) of the PML Act on the basis of the "grounds of arrest. " 2386 of the DoE, as recorded in Vijay Madanlal Choudhary (supra). Specific reliance was placed on a Canadian judgment in the case of Gifford v. Kelson. 25 The relevant paragraphs in Vijay Madanlal Choudhary(supra) read: "16(liii). ... Secondly, there must be material in possession with the Authority before the power of arrest can be exercised as opposed to the Cr. P. C. which gives the power of arrest to any police officer and the officer can arrest any person merely on the basis of a complaint, credible information or reasonable suspicion against such person. Thirdly, there should be reason to believe that the person being arrested is guilty of the offence punishable under the PMLA in contrast to the provision in Cr. P. C.

, which mainly requires reasonable apprehension/suspicion of commission of offence. Also, such "reasons to believe" must be reduced in writing. Fifthly, as per the constitutional mandate of article 22(1), the person arrested is required to be informed of the grounds of his arrest. It is submitted that the argument of the other side that the accused or arrested persons are not even informed of the case against them, is contrary to the plain language of the Act, as the Act itself mandates that the person arrested is to be informed of the ground of his arrest... xx xx xx 16(lix). Reliance is then placed on the decision of this court in Union of India v. Padam Narain Aggarwal, wherein the court examined the power to arrest under section 104 of the 1962 Act. Relying on the decision, it was stated that the power to arrest is statutory in character and cannot be interfered with and can only be exercised on objective considerations free from whims, caprice or fancy of the officer.

The law takes due care to ensure individual freedom and liberty by laying down norms and providing safeguards so that the authorities may not misuse such power. It is submitted that the requirement of "reason to believe" and "recording of such reasons in writing" prevent arbitrariness and makes 25 (1943) 51 Man. R 120 Arvind Kejriwal v. Directorate of Enforcement the provision compliant with article 14. This is reinforced from the fact that only 313 arrests have been made under the PMLA in 17 years of operations of the PMLA. 16(lx). Canadian judgment in Gifford v. Kelson was also relied on to state that "reason to believe" conveys conviction of the mind founded on evidence regarding the existence of a fact or the doing of an act, therefore, is of a higher standard than mere suspicion. Reliance has been further placed on Premium Granites v. State of T. N. to urge that the requirement of giving reasons for exercise of the power by itself excludes chances of arbitrariness... " 26.

We will reproduce what has been held in Gifford (supra): "A suspicion or belief may be entertained, but suspicion and belief cannot exist together. Suspicion is much less than belief; belief includes or absorbs suspicion. xx xx xx When, we speak of "reason to believe" we mean a conclusion arrived at as to the existence of a fact. Of course "reason to believe" does not amount to positive knowledge nor does it mean absolute certainty but it does convey conviction of the mind founded on evidence regarding the existence of a fact or the doing of an act. Suspicion, on the other hand, rings uncertainty. It lives in imagination. It is inkling. It is mistrust. It is chalk. 'Reason to believe' is not. It is cheese. " 27. Gifford (supra) accurately explains the difference between the "reasons to believe" and "suspicion". "Suspicion" requires lower degree of satisfaction, and does not amount to belief.

Belief is beyond speculation or doubt, and the threshold of belief "conveys conviction founded on evidence regarding existence of a fact or doing of an act". Given that the power of arrest is drastic and violates Article 21 of the Constitution, we must give meaningful, true and full play to the legislative intent. 26 26 We would subsequently examine the expressions "reason to believe ", "guilty of an offence punishable under this Act" and "material" in some detail. 2388 28. Providing the written "grounds of arrest", though a must, does not in itself satisfy the compliance requirement. The authorized officer's genuine belief and reasoning based on the evidence that establishes the arrestee's guilt is also the legal necessity. As the "reasons to believe" are accorded by the authorised officer, the onus to establish satisfaction of the said condition will be on the DoE and not on the arrestee. 29.

On the necessity to satisfy the preconditions mentioned in Section 19(1) of the PML Act, we have quoted from the judgment of this Court in Padam Narain Aggarwal (supra) and also referred to and quoted from the Canadian judgment in Gifford (supra). Existence and validity of the "reasons to believe" goes to the root of the power to arrest. The subjective opinion of the arresting officer must be founded and based upon fair and objective consideration of the material, as available with them on the date of arrest. On the reading of the "reasons to believe" the court must form the 'secondary opinion' on the validity of the exercise undertaken for compliance of Section 19(1) of the PML Act when the arrest was made. The "reasons to believe" that the person is guilty of an offence under the PML Act should be founded on the material in the form of documents and oral statements. 30. Referring to the legal position, this Court in Dr. Partap Singh and Another v.

Director of Enforcement, Foreign Exchange Regulation Act and others27 has observed: "9. When an officer of the Enforcement Department proposes to act under Section 37 undoubtedly, he must have reason to believe that the documents useful for investigation or proceeding under the Act are secreted. The material on which the belief is grounded may be secret, may be obtained through Intelligence or occasionally may be conveyed orally by informants. It is not obligatory upon the officer to disclose his material on the mere allegation that there was no material before him on which his reason to believe can be grounded. The expression "reason to believe" is to be found in various statutes. We may take note of one such. Section 34 of Income Tax Act, 1922 inter alia 27 [1985] 3 SCR 969 : (1985) 3 SCC 72 Arvind Kejriwal v.

Directorate of Enforcement provides that the Income Tax Officer must have "reason to believe" that the incomes, profits or gains chargeable to income tax have been underassessed, then alone he can take action under Section 34. In S. Narayanappa v. CIT the assessee challenged the action taken under Section 34 and amongst others it was contended on his behalf that the reasons which induced the Income Tax Officer to initiate proceedings under Section 34 were justiciable, and therefore, these reasons should have been communicated by the Income Tax Officer to the assessee before the assessment can be reopened. It was also submitted that the reasons must be sufficient for a prudent man to come to the conclusion that the income escaped assessment and that the Court can examine the sufficiency or adequacy of the reasons on which the Income Tax Officer has acted.

Negativing all the limbs of the contention, this Court held that "if there are in fact some reasonable grounds for the Income Tax Officer to believe that there had been any non-disclosure as regards any fact, which could have a material bearing on the question of under-assessment, that would be sufficient to give jurisdiction to the Income Tax Officer to issue notice under Section 34. " The Court in terms held that whether these grounds are adequate or not is not a matter for the court to investigate. 10. The expression "reason to believe" is not synonymous with subjective satisfaction of the Officer. The belief must be held in good faith; it cannot merely be a pretence. In the same case, it was held that it is open to the court to examine the question whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section.

To this limited extent the action of the Income Tax Officer in starting proceedings under Section 34 is open to challenge in a court of law. (See Calcutta Discount Co. Ltd. v. ITO). In R. S. Seth Gopikrishan Agarwal v. R. N. Sen, Assistant Collector of 2390 Customs this Court repelled the challenge to the validity of the search of the premises of the appellant and the seizure of the documents found therein. The search was carried out under the authority of an authorisation issued under Rule 126(L)(2) of the Defence of India (Amendment) Rules, 1963 (Gold Control Rules) for search of the premises of the appellant. The validity of the authorisation was challenged on the ground of mala fides as also on the ground that the authorisation did not expressly employ the phrase 'reason to believe' occurring in Section 105 of the Customs Act. Negativing both the contentions, Subba Rao, C. J.

speaking for the Court observed that the subject underlying Section 105 of the Customs Act which confers power for issuing authorisation for search of the premises and seizure of incriminating articles was to search for goods liable to be confiscated or documents secreted in any place, which are relevant to any proceeding under the Act. The legislative policy reflected in the section is that the search must be in regard to the two categories mentioned in the section. The Court further observed that though under the section, the officer concerned need not give reasons if the existence of belief is questioned in any collateral proceedings he has to produce relevant evidence to sustain his belief. A shield against the abuse of power was found in the provision that the officer authorised to search has to send forthwith to the Collector of Customs a copy of any record made by him.

Sub-section (2) of Section 37 of the Act takes care for this position inasmuch as that where an officer below the rank of the Director of Enforcement carried out the search, he must send a report to the Director of Enforcement. The last part of the submission does not commend to us because the file was produced before us and as stated earlier, the Officer issuing the search warrant had material which he rightly claimed to be adequate for forming the reasonable belief to issue the search warrant. " This decision relates to the power of authorised officers to conduct search and seizure operations under Section 37 of the Foreign Exchange Regulation Act, 1973. The aforesaid observations would Arvind Kejriwal v. Directorate of Enforcement be equally relevant, though in the context of the power to arrest, a power which is more drastic and intrusive. Thus, the nature of inquiry to be undertaken by the courts has to be in-depth and detailed. 31. In Barium Chemicals Ltd. and another v.

Company Law Board and others,28 the Constitution Bench of this Court had referred to and quoted from the decision of the Privy Council in Nakkuda Ali v. Jayaratne,29 wherein Lord Radcliffe had observed: "After all words such as these are commonly found when a legislature or law making authority confers powers on a minister or official. However read, they must be intended to serve in some sense as a condition limiting the exercise of an otherwise arbitrary power. But if the question whether the condition has been satisfied is to be conclusively decided by the man who wields the power the value of the intended restraint is in effect nothing. No doubt he must not exercise the power in bad faith; but the field in which this kind of question arises is such that the reservation for the case of bad faith is hardly more than a formality. " While agreeing with the first part of the aforesaid quotation, the Constitution Bench went on to refer to Joseph Kuruvilla Vellukunnel v.

Reserve Bank of India and others,30 wherein Hidayatullah, J. , speaking for the majority, had observed: "It is enough to say that the Reserve Bank in its dealings with banking companies does not act on suspicion but on proved facts. " Thereafter, it was further observed: "But this seems certain that the action (winding up) would not be taken up without scrutinising all the evidence and checking and re-checking all the findings. " 32. Accordingly, in Barium Chemicals Ltd. (supra), it was held that the expression "reason to believe" is not a subjective process altogether, not lending itself even to a limited scrutiny of the court that such "reason to believe" or opinion is not formed on relevant facts or within the limits. 28 [1966] Supp. 1 SCR 311 : AIR 1967 SC 295 29 1951 A C 66 30 [1962] Supp. 3 SCR 632 : AIR 1962 SC 1371 2392 33. Section 26 of the IPC, defines the expression "reason to believe" as sufficient cause to believe a thing and not otherwise. Joti Parshad v.

State of Haryana,31 referring to Section 26 of the IPC, has observed: "5... "Reason to believe" is not the same thing as "suspicion" or "doubt" and mere seeing also cannot be equated to believing. "Reason to believe" is a higher level of state of mind. Likewise "knowledge" will be slightly on a higher plane than "reason to believe". A person can be supposed to know where there is a direct appeal to his senses and a person is presumed to have a reason to believe if he has sufficient cause to believe the same. Section 26 IPC explains the meaning of the words "reason to believe" thus: "26. 'Reason to believe'. -- A person is said to have 'reason to believe' a thing, if he has sufficient cause to believe that thing but not otherwise. " In substance what it means is that a person must have reason to believe if the circumstances are such that a reasonable man would, by probable reasoning, conclude or infer regarding the nature of the thing concerned.

Such circumstances need not necessarily be capable of absolute conviction or inference; but it is sufficient if the circumstances are such creating a cause to believe by chain of probable reasoning leading to the conclusion or inference about the nature of the thing... " 34. Use of the expression 'not otherwise', in Section 26 of the IPC, refers to contrary evidence or material which would not support the "reason to believe". The definition extends and puts a more stringent condition in the context of penal enactment as compared to the civil law. Clearly, "reason to believe" has to be distinguished and is not the same as grave suspicion. It refers to the reasons for the formation of the belief which must have a rational connection with or an element bearing on the formation of belief. The reason should not be extraneous or irrelevant for the purpose of the provision. 31 1993 Supp (2) SCC 497 Arvind Kejriwal v. Directorate of Enforcement 35. As explained in A. S. Krishnan and others v.

State of Kerala,32 Section 26 of the IPC in substance means that the person must have "reason to believe" if the circumstances are such that a reasonable man would, by probable reasoning, conclude or infer regarding the nature of things concerned. Such circumstances need not necessarily be capable of absolute conviction or inference; but it is sufficient if the circumstances are such that it creates a chain of probable reasoning leading to the conclusion or inference about the nature of the thing. 33 36. Once we hold that the accused is entitled to challenge his arrest under Section 19(1) of the PML Act, the court to examine the validity of arrest must catechise both the existence and soundness of the "reasons to believe", based upon the material available with the authorised officer. It is difficult to accept that the "reasons to believe", as recorded in writing, are not to be furnished.

As observed above, the requirements in Section 19(1) are the jurisdictional conditions to be satisfied for arrest, the validity of which can be challenged by the accused and examined by the court. Consequently, it would be incongruous, if not wrong, to hold that the accused can be denied and not furnished a copy of the "reasons to believe". In reality, this would effectively prevent the accused from challenging their arrest, questioning the "reasons to believe". We are concerned with violation of personal liberty, and the exercise of the power to arrest in accordance with law. Scrutiny of the action to arrest, whether in accordance with law, is amenable to judicial review. It follows that the "reasons to believe" should be furnished to the arrestee to enable him to exercise his right to challenge the validity of arrest. 37.

We would accept that in a one-off case, it may not be feasible to reveal all material, including names of witnesses and details of documents, when the investigation is in progress. This will not be the position in most cases. DoE may claim redaction and exclusion of specific particulars and details. However, the onus to justify redaction would be on the DoE. The officers of the DoE are the authors of the "reasons to believe" and can use appropriate wordings, with details of the material, as are necessary in a particular case. 32 [2004] 3 SCR 44 : (2004) 11 SCC 576 33 Wednesbury unreasonableness strikes at irrationality when a decision is so outrageous in its defiance of logic or of accepted standards that no sensible person who had applied his mind to the question to be decided would have arrived at it. See Council of Civil Services Union v. Minister of State for Civil Services, (1984) 3 All. ER 935.

2394 As there may only be a small number of cases where redaction is justified for good cause, this reason is not a good ground to deny the accused's access to a copy of the "reasons to believe" in most cases. Where the non-disclosure of the "reasons to believe" with redaction is justified and claimed, the court must be informed. The file, including the documents, must be produced before the court. Thereupon, the court should examine the request and if they find justification, a portion of the "reasons to believe" and the document may be withheld. This requires consideration and decision by the court. DoE is not the sole judge. 38. Section 173(6) of the Code, permits the police officer not to furnish statements or make disclosures to the accused when it is inexpedient in public interest. In such an event, the police officer is to indicate the specific part of the statement and append a note requesting the magistrate to exclude that part from the copy given to the accused.

He has to state the reasons for making such request. The same principle will apply. 39. We now turn to the scope and ambit of judicial review to be exercised by the court. Judicial review does not amount to a mini-trial or a merit review. The exercise is confined to ascertain whether the "reasons to believe" are based upon material which 'establish' that the arrestee is guilty of an offence under the PML Act. The exercise is to ensure that the DoE has acted in accordance with the law. The courts scrutinize the validity of the arrest in exercise of power of judicial review. If adequate and due care is taken by the DoE to ensure that the "reasons to believe" justify the arrest in terms of Section 19(1) of the PML Act, the exercise of power of judicial review would not be a cause of concern. Doubts will only arise when the reasons recorded by the authority are not clear and lucid, and therefore a deeper and in-depth scrutiny is required.

Arrest, after all, cannot be made arbitrarily and on the whims and fancies of the authorities. It is to be made on the basis of the valid "reasons to believe", meeting the parameters prescribed by the law. In fact, not to undertake judicial scrutiny when justified and necessary, would be an abdication and failure of constitutional and statutory duty placed on the court to ensure that the fundamental right to life and liberty is not violated. 40. At this stage, we must consider the arguments presented by the DoE, which rely on judgments regarding the scope of judicial interference in investigations, including the power of arrest. Reference in this Arvind Kejriwal v. Directorate of Enforcement regard was made to The King Emperor v. Khawaja Nazir Ahmad,34 Dukhishyam Benupani, Asst. Director, Enforcement Directorate (FERA) v. Arun Kumar Bajoria,35State of Bihar and another v. J. A. C. Saldanha and others,36and M. C. Abraham and another v. State of Maharashtra and others.

37 In our opinion, these decisions do not apply to the present controversy, as the power of arrest in this case is governed by Section 19(1) of the PML Act. These decisions restrict the courts from interfering with the statutory right of the police to investigate, provided that no legal provisions are violated. Investigation and crime detection vests in the authorities by statute, albeit,these powers differ from the Court's authority to adjudicate and determine whether an arrest complies with constitutional and statutory provisions. As indicated above, the power to arrest without a warrant for cognizable offences is exercised by the police officer in terms of Section 41 of the Code.

38 Arrest under Section 41 can be made on the grounds mentioned in clauses (a) to (i) of Section 41(1) of the Code, which include a reasonable complaint, credible information or reasonable suspicion that a person has committed an offence, or the arrest is necessary for proper investigation of the offence, etc. The grounds mentioned in Section 41 are different from the juridical preconditions for exercise of power of arrest under Section 19(1) of the PML Act. Section 19(1) conditions are more rigid and restrictive. As such, the two provisions cannot be equated. The legislature has deliberately avoided reference to the grounds mentioned in Section 41 and considered it appropriate to impose strict and stringent conditions that act as a safeguard. The same reasoning will apply to the contention raised by the DoE relying upon the provisions of Section 437 of the Code and the judgment of this Court in Gurcharan Singh and others v. State (Delhi Administration).

39 Section 437 of the Code applies when an accused suspected of committing a non-bailable offence is arrested or detained without warrant by a police officer in charge of a police station or is brought before a court, other than the High Court or the Court of Sessions. It is 34 AIR 1945 PC 18 35 [1997] Supp. 5 SCR 566 : (1998) 1 SCC 52 36 [1980] 2 SCR 16 : (1980) 1 SCC 554 37 [2002] Supp. 5 SCR 677 : (2003) 2 SCC 649 38 Refer footnote 18 above. 39 [1978] 2 SCR 358 : (1978) 1 SCC 118 2396 observed that the accused would be released on bail, except for in cases specified in clauses (i) and (ii) of Section 437(1) of the Code. Section 437(1)(i) applies at the stage of initial investigation where a person has been arrested for an offence punishable with death or imprisonment for life.

Section 437(1)(ii) imposes certain fetters on the power of granting bail in specified cases when the offence is cognizable and the accused has been previously convicted with death, imprisonment for life, or 7 years or more, or has previously been convicted on two or more occasions for non-bailable and cognizable offences. The power under Section 437(1) of the Code is exercised by the court, other than the High Court or the Sessions Court. In other cases, Section 437(3) of the Code will apply. Gurcharan Singh (supra) distinguishes between the language of two sub-sections of Section 437 - Section 437(1) and 437(7). It is observed that 437(7) does not apply at the investigation stage, but rather after the conclusion of trial and before the court delivers its judgment. Thus, the use of the expression 'not guilty' pertains to releasing the accused who is in custody, on a bond without surety, for appearance to hear the judgment delivered.

Notably, Section 437(6) states that if the trial of a person accused of a non-bailable offence is not completed within sixty days from the first date fixed for taking evidence, the magistrate to their satisfaction shall release such person on bail, provided they have been in custody throughout this period. The magistrate may direct otherwise only for reasons recorded in writing. Section 439 of the Code, which relates to the power of the High Court or the Sessions Court to grant bail, remains free from the legislative constraints applicable in cases covered by Section 437(1) of the Code. However, Section 437(3) of the Code when applicable applies. 41. DoE has drawn our attention to the use of the expression 'material in possession' in Section 19(1) of the PML Act instead of 'evidence in possession'.

Though etymologically correct, this argument overlooks the requirement that the designated officer should and must, based on the material, reach and form an opinion that the arrestee is guilty of the offence under the PML Act. Guilt can only be established on admissible evidence to be led before the court, and cannot be based on inadmissible evidence. While there is an element of hypothesis, as oral evidence has not been led and the documents are to be proven, the decision to arrest should be rational, fair and as per law. Power to arrest under Section 19(1) is not for the purpose of investigati