ED Can Arrest Even If FIRs Are Added To ECIR Later: Punjab & Haryana High Court

The Punjab and Haryana High Court has dismissed two pleas filed by promoters-directors of Ramprastha Promoters & Developers Pvt. Ltd., challenging their arrest, remand, and proceedings initiated by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act, 2002 (PMLA).Justice Tribhuvan Dahiya said merely because two FIRs were made part of the ECIR later, by way of addendum, it would not vitiate the petitioners' arrest prior thereto. "There is no restrain on the ED to investigate other FIRs noticed by it after registering the ECIR without making the same a part of the ECIR, nor is there any statutory provision creating such a fetter," said the Court. The Court also added that no procedure has been prescribed for taking on record new FIRs pertaining to scheduled offences that are discovered by the ED after registering the ECIR. Further, the ECIR itself is an internal, non-statutory document created before initiating a penal action, as held in Vijay Madanlal Choudhary case.It further held that the arrests carried out on 21 July 2025 were in compliance with Section 19 of the PMLA and that no illegality or procedural violation was made out to warrant interference under Articles 226/227 of the Constitution.The petitions were filed by co-accused promoters/directors of the Ramprastha Group, challenging their arrest on 21 July 2025, the arrest memo, subsequent remand orders, and an order passed by the Special Court under the Prevention of Money Laundering Act, 2002 (PMLA), refusing to review the remand and grant release from custody.The ED's case was that the company collected over ₹1,100 crores from homebuyers across multiple real estate projects in Gurugram over the past 15–17 years, failed to deliver possession of approximately 2,600 flats/plots, and diverted substantial funds to group and non-group entities, including advances to directors, thereby generating “proceeds of crime” under Section 2(1)(u) of the PMLA.Senior counsels appearing for the petitioners argued that their arrest violated Section 19(1) PMLA, as there was no “material in possession” establishing guilt on the date of arrest. The three FIRs originally forming the basis of the ECIR were either stayed or later cancelled following settlements.The ED could not retrospectively legitimise the arrest by adding eight more FIRs to the ECIR through an addendum dated 11 September 2025 and the “reasons to believe” and “grounds of arrest” were mechanical, identical, and failed to consider exculpatory material, he added.On the other hand, ED argued that the FIRs were alive and chargesheets had been filed at the time of ECIR registration and investigation and settlement between private parties or subsequent cancellation of FIRs does not automatically nullify PMLA proceedings.Additional FIRs were already under investigation and formed part of the “material in possession” even before the arrest, irrespective of their later formal inclusion in the ECIR and ECIR is an internal administrative document, and no statutory procedure exists for adding FIRs to it, it was submitted.The High Court held that the stay of proceedings or later cancellation of FIRs pursuant to settlement does not erase the existence of scheduled offences at the time the ECIR was registered and investigated. The Court noted that chargesheets had been filed in FIRs No. 430 and 431 of 2019 and that the fact of settlement was expressly considered by the arresting officer.Significantly, the Court pointed that non-addition of FIRs to the ECIR prior to arrest does not vitiate the arrest, reiterating that the ECIR is “an internal, non-statutory document”, relying on the Supreme Court's decision in Vijay Madanlal Choudhary v. Union of India.“Once the ECIR itself has been termed a document created by the ED for internal administrative purposes, non-addition of any FIR prior to arrest cannot have a bearing on the legality of arrest,” the Court observed.The Court also rejected the argument that similarity between the “grounds of arrest” and “reasons to believe” showed non-application of mind, holding that judicial review of arrest under Section 19 PMLA does not permit a merits review of the material relied upon, in line with Arvind Kejriwal v. Directorate of Enforcement.On compliance with Section 19(2) PMLA, the Court accepted the ED's record showing that all arrest-related documents and material were forwarded to the Adjudicating Authority on the same day and noted that the Special Court had recorded due compliance in its order.Finding no violation of statutory safeguards or constitutional rights, the Court dismissed both petitions and upheld the arrest and remand orders passed against the petitioners.Mr. Vikram Chaudhri, Senior Advocate, with Mr. Sajal Bansal, Advocate, Ms. Hargun Sandhu, Advocate, and Mr. Deepanshu Bansal, Advocate, for the petitioner in CWP-8667-2025.Mr. Randeep Singh Rai, Senior Advocate, with Mr. Sumer Singh Boparai, Advocate, Mr. Mukesh Mehra, Advocate, Mr. Rehat...

ED Can Arrest Even If FIRs Are Added To ECIR Later: Punjab & Haryana High Court

Aiman J. Chishti

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