INTRODUCTION
This is a case commentary for the case in which the appellant is Mr. Ram Kishor Arora, and the respondent is the Directorate of Enforcement. This case was brought to the Supreme Court of India, and Justice Bela M. Trivedi and Justice Satish Chandra Sharma took the decision. The main legal provisions debated in this case were Section 19 of the PMLA and Article 22(1) of the constitution. This case sparked debates on judicial propriety and seeks to strike the balance between law, enforcement power, and individual rights.
FACTS OF THE CASE
In this case, Mr. Ram Kishor Arora, the appellant, is the founder of M/s Supertech Ltd., a real estate company. This company and the group took various real estate projects in different parts of UP, and 26 FIRs have been registered against the appellant across various jurisdictions. In September 2021, ED registered an Enforcement Case Information Report (ECIR) report against this co. and others. Due to this, they were summoned, and their statements were recorded.
Insolvency proceeding was also initiated against the company before the NCLT in 2022, and as interlocutory orders were passed henceforth, the matter was taken to the NCLAT with a settlement proposal. While these proceedings were pending, ED issued an attachment order in April 2023, which attached certain property of the appellant. In May 2023, the ED filed an original complaint before the PMLA seeking confirmation of provincial attachment. The next month, PMLA issued a cause notice to the appellant and asked him to explain why the properties should not be confirmed as it was involved in a money laundry.
On 27th June 2023, the appellant was arrested without being served the grounds of arrest by ED. First, in the special court, ED sought remand, and the appellant was sent to judicial custody. The bail application was also dismissed by the special court, and judicial custody was extended. The appellant filed a writ petition against the order, which denied bail, but he withdrew it with the liberty to approach the High court. The second writ petition he filed was rejected by the High Court.
ISSUES RAISED
1: Was the arrest as per section 19 of the PMLA?
2: Was this arrest lawful per section 22(1) of the constitution?
3: Whether a judgment should be applied retrospectively or prospectively?
CONTENTION MADE BY THE APPELLANT’S SIDE
The main argument was around section 19 of the PMLA Act, which talks about the power of arrest granted to the authorities under this act and its constitutional validity. The appellant argued that the arrest was illegal and violated his rights under Article 22(1) of the constitution. The judgments V. Senthil Balaji vs. State and Pankaj Bansal vs. Union of India mainly underlined the procedural safeguards to be followed before arrest under PMLA. Citing the Pankaj Bansal judgment, he contends that ED did not provide him with written grounds for arrest at the time of the arrest. Section 19 of PMLA mainly talked about
- The person arrested should have full reason to believe that the person being arrested has committed a money laundering offense.
- The reason for arrest must be told to the arrestee and must be recorded.
- All the materials that relate to the order of arrest must be forwarded to the Adjudicating Authority
- A written copy on which the grounds of arrest are written must be forwarded to the person.
Through this, they wanted to contend that the copy with the grounds of arrest had not been given to the appellant. Thus, the procedure of section 19 of PMLA was not followed.
The appellants also contended that Article 22(1) is violated, which states that a person should be informed of the grounds on which he is arrested and should be allowed to consult a legal practitioner to defend his case. The appellant’s counsel argued that the requirement to furnish written grounds of arrest, as directed in the Pankaj Bansal judgment, should be applied retrospectively. Therefore, the failure to provide written grounds of arrest at the time of arrest rendered the arrest illegal.Therefore, they contended that the act of ED was inconsistent with the legal standards as they did not provide a copy of the grounds for arrest.
CONTENTION MADE BY THE RESPONDENT
The respondent took the example of the Vijay Madan Lal Choudhary case and argued that the arrest complied with section 19 of PMLA as the grounds for arrest were told orally at the time. This case did not throw much light on the method and time on which arrestee needs to be informed. They also discussed the point related to the expression “as soon as may be” of section 19 of PMLA with many judgments, and they drew out a conclusion that, in this case, the arrestee was informed of the grounds of arrest within a reasonable time, which they consider as 24 hours in the situation.
They also said that even though in the case of Pankaj Bansal, the judgment that mandated providing written grounds for arrest “henceforth” could only be applied to cases where after this judgment, it will not be applied to the cases that fall before this judgment. Mr. Arora’s arrest was made before the Pankaj Bansal judgement so the respondents contended that the judgment did not apply retrospectively.
According to the respondent, the appellant had signed the document that informed them about his grounds for arrest and had read it so he knew of the arrest, which is sufficient according to section 19 of PMLA and Article 22(1) of the constitution. They also cited several precedents that said that if the arrestee is informed within a reasonable time, even though orally, it will meet the sufficient legal requirement as it was done all within 24 hrs. Hence, it constitutes a valid ground for arrest.
RATIONALE
The judgment was in favor of the respondent as it brings forward the concept that law is prospective in nature and a judgment will only apply to all the judgments made after it. Therefore, it was still considered valid even if written statements were not given. In this case, the Pankaj Bansal judgment did not apply retrospectively; therefore, not providing written grounds of arrest at the time of arrest before this judgment cannot be considered illegal.
Section 22(1) is also justified as it has been specified in this ruling that the arrested person should be informed in a reasonable time by writing or even orally. In this case, the appellant had signed documents involving his ground of arrest, which is sufficient to constitute a legal requirement for arrest. The time of 24 hours was given to provide the written documents deemed fit.
How this judgment makes it clear that a larger bench’s decision overrules the decision of a smaller bench with the help of the case of Vijay Madan Lal Choudhary and Pankaj Bansal makes a significant impact on the judiciary.
DEFECTS OF LAW
In this judgment of RK Arora, the immediate transparency is somewhat lost as 24 hours are allowed to give written reasons for the grounds of arrest. The case of Vijay Madanlal Chaudhary, which interpreted section 19 of PMLA, did not specify whether the grounds for arrest should be specified orally or in writing. Still, the Pankaj Bansal decision did that, and it provided more transparency about the arrest. Pankaj Bansal’s decision would help the accused know and address the obligations that would turn out after his arrest and help the authorities from both sides to continue any legal work with transparency. Pankaj Bansal aimed to furnish written reasons immediately and contemporaneously to prevent arbitrary arrests.
INFERENCE
This judgment allowed the ED to provide a written statement for arrest within 24 hours, not necessarily at the time of the arrest. Even though criticized, this decision still seems valid if we want to ensure the accused is arrested. He has to be told orally that the written reasons have to be provided within 24 hrs, which gives clarity on the timing and seems practical when we try to strike a balance between the rights of an individual and allowing the law enforcing agencies to carry out their duty in a more effective form. The 24-hour time frame gives the agency to articulate and comply with the grounds of arrest within a reasonable time frame so that any logistical challenges do not hamper fair actions.
In conclusion, while RK Arora’s decision has been debated for its impact on individual rights and judicial consistency, it also offers practical considerations that aim to balance the needs of law enforcement with legal safeguards. These aspects underscore the complexities of interpreting and applying legal principles in the context of enforcement actions under laws such as the Prevention of Money Laundering Act (PMLA).
RATNA MUGDHA MISHRA
SYMBIOSIS LAW SCHOOL, NOIDA