Court holds that Enforcement Directorate's arrest without fresh incriminating material violated statutory provisions and constitutional rights, quashing remand orders
In a significant judgment delivered on October 27, 2026, the Bombay High Court, presided by Justice Milind N. Jadhav, quashed the arrest and remand orders against Jitendra Pandey, who was arrested by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act, 2002 (PMLA). The court ruled that the arrest was illegal as it was made without any fresh incriminating material or supervening circumstances, thereby violating Section 19(1) of the PMLA and Articles 14 and 21 of the Constitution of India.
The case arose from a complex investigation into alleged money laundering involving fraudulent foreign remittances totaling over Rs. 7,569 crore. Jitendra Pandey was implicated in a conspiracy involving the creation of shell companies and forged documents to evade customs duty and launder money through dummy bank accounts. Despite the gravity of the charges, the petitioner had cooperated extensively with the investigation, appearing for recording of statements on 38 occasions over 18 months.
The Enforcement Directorate arrested Pandey on March 31, 2024, and subsequently sought custody remands multiple times. However, the arrest came after the ED had invoked Section 50(2) and (3) of the PMLA to summon and record further statements from the petitioner on the basis of material already in their possession. The petitioner challenged the arrest and remand orders on the ground that no new evidence or material had emerged between May 15, 2026, and June 23, 2026, to justify his arrest.
Justice Jadhav's detailed judgment emphasized the discretionary and drastic nature of the power to arrest under Section 19(1) of the PMLA. The court underscored that the power to arrest cannot be exercised merely to facilitate investigation but must be based on the presence of fresh incriminating material that justifies such action. The court observed that the ED's invocation of Section 50(2) and (3) to summon the petitioner and record his statements constituted a statutory process that could not be bypassed by effecting an arrest on the same material.
Relying on precedents from the Supreme Court, including the landmark Arvind Kejriwal case, and other High Court decisions, the court noted that the "reasons to believe" for arrest must be grounded in fresh material and recorded in writing. Further, the court held that the absence of any new material between the last recorded statement and the arrest rendered the detention unlawful and violative of fundamental rights.
The court also highlighted the judicial nature of proceedings under Section 50, which are deemed judicial proceedings under the Indian Penal Code. Therefore, arresting a person on the same material while the investigation and recording of statements are ongoing under Section 50 is impermissible.
Rejecting the Enforcement Directorate's argument that the gravity of the offence justified the arrest, the court maintained that seriousness of the offence does not override statutory safeguards and constitutional protections. The judgment also clarified that non-cooperation was not established since the petitioner had cooperated repeatedly.
Consequently, the Bombay High Court quashed all remand orders dated June 23, June 29, and July 4, 2026, and directed the immediate release of Jitendra Pandey from judicial custody. The court declined the ED's request for a stay of the order, emphasizing the primacy of legal safeguards against arbitrary arrests.
This judgment reiterates the principle that even in cases involving serious economic offences, the power of arrest under special statutes like the PMLA must be exercised with caution, strictly adhering to statutory requirements and constitutional mandates to prevent misuse.
Bottom Line:
Prevention of Money Laundering Act, 2002 - Section 19 - Power of arrest is drastic and cannot be used merely to facilitate investigation - Where ED had already invoked Section 50(2) and (3) to summon, confront and record further statement of petitioner on the basis of material already in its possession, and there was no fresh incriminating material or supervening circumstance before arrest, subsequent arrest under Section 19 on same material was illegal - Remand orders quashed and release directed.
Statutory provision(s): Prevention of Money Laundering Act, 2002 Sections 19, 50(2), 50(3), 50(4); Indian Penal Code Sections 193, 228; Constitution of India Articles 14, 21, 227; Bharatiya Nagarik Suraksha Sanhita, 2023 Sections 528, 529
Jitendra Pandey v. Directorate of Enforcement, (Bombay) : Law Finder Doc Id # 3003823
