Court Dismisses Petitions Challenging Arrests Under the Prevention of Money Laundering Act
In a significant judgment, the Punjab and Haryana High Court has upheld the arrests of Arvind Walia and Sandeep Yadav, promoter-directors of Ramprastha Promoters & Developers Pvt. Ltd., in a money laundering case involving the diversion of funds from real estate projects. The court dismissed the petitions filed by the accused challenging their arrest under the Prevention of Money Laundering Act, 2002 (PMLA), asserting that the arrests were made in compliance with statutory provisions.
The petitioners had sought to quash their arrest orders and subsequent remand orders, alleging that their arrests were illegal due to non-compliance with Section 19 of the PMLA, which mandates recording "reasons to believe" based on material evidence for arrest. They argued that on the day of their arrest, there was no material evidence against them, and the FIRs forming the basis of the Enforcement Case Information Report (ECIR) were either stayed or cancelled.
However, the court noted that despite a settlement in certain FIRs, additional FIRs were identified and investigated by the Directorate of Enforcement (ED), which justified the arrests. The High Court emphasized that the ECIR is an internal document, and non-addition of FIRs to it prior to arrest does not invalidate the arrest, especially when subsequent FIRs were investigated and the material was considered before the arrests.
The judgment highlighted that judicial review of arrests under PMLA does not involve a merits review of the material in possession but examines whether the reasons to believe and grounds of arrest are based on the material and comply with statutory requirements. The court further stated that compliance with Section 19(2), which involves forwarding relevant documents to the Adjudicating Authority, was duly followed by the ED.
The accused are alleged to have diverted funds collected from home buyers into various group and non-group companies, generating proceeds of crime as specified under Section 2(1)(u) of PMLA. The court found no merit in the petitions, affirming that the arrests were made on valid grounds and the procedural safeguards under PMLA were adhered to.
This judgment reinforces the stringent requirements for arrests under the PMLA, ensuring that arrests are based on substantial material evidence and comply with procedural mandates to uphold the integrity of the investigation process.
Bottom Line:
Arrests under the Prevention of Money Laundering Act, 2002 (PMLA), must comply with statutory provisions, including recording reasons to believe and forwarding documents to the Adjudicating Authority under Section 19(2) of the PMLA.
Statutory provision(s): Prevention of Money Laundering Act, 2002 Section 19(1) and (2), Section 3, Section 4, Section 50; Bharatiya Nagarik Suraksha Sanhita, 2023 Section 528; Indian Penal Code, 1860 Sections 120B, 420
Arvind Walia v. Directorate of Enforcement, (Punjab And Haryana) : Law Finder Doc id # 2845646
