HC's Findings Against ED Arrest Insignificant In View Of 'RK Arora' Judgment, Says Supreme Court While Upholding Bail Of PMLA Accused

The Supreme Court on September 6 dismissed a special leave petition filed by the Enforcement Directorate (ED) against the order of the Jharkhand High Court granting bail to one Dilip Kumar Ghosh@Dilip Ghosh in an alleged money laundering case. As per the brief allegations, a property was purchased from one Pradeep Bagchi by Dilip Ghosh on behalf of Jagatbandhu Tea Estate Pvt. Ltd., of which he is the Director. The property in question is alleged to be the subject matter in ongoing litigation with the Indian Army in terms of its possession. It was brought at a negotiated price of Rs.7.00 crore as against the prevailing value of over Rs.20 crores. The ED has alleged that the title of the sale deed is forged and that the accused Dilip Ghosh has played an active role as the Company's Director in laundering money. Charges under Section 3 and Section 4 read with 70 of the Prevention of Money Laundering Act, 2002 have been framed against him.Arguments before Jharkhand High CourtThe accused had approached the Jharkhand High Court seeking bail on the grounds that the mandate of Section 19 PMLA is not fulfilled because grounds of arrest were not furnished in writing as contemplated in Pankaj Bansal's judgment. First, it was submitted that the Pankaj Bansal judgment applies retrospectively, as clarified by the judgment of the Punjab and Haryana High Court in Roop Bansal v. Union of India and another. The accused's counsel stated that although the judgment uses the expression 'henceforth', that does not mean that the directions given in the judgment are prospective in nature. Therefore, he argued that since the mandate of Section 19 is not complied with, it would vitiate the arrest. A reliance was placed on judgment of V. Senthil Balaji Vs. State Represented By The Deputy Director in this regard.Second, the accused submitted that the twin conditions for bail under Section 45(1)(ii) are fulfilled. What did the Jharkhand High Court observe?The High Court first looked at the non-compliance of Section 19 PMLA. It stated that Section 19 contemplates two things: first, it speaks with respect to 'reason to believe' to be recorded in writing and second, grounds of arrest to be informed to the accused. Relying on Pankaj Bansal, the High Court reiterated that a copy of the grounds of arrest is to be furnished to the arrested person as a matter of course and without exception.On whether the expression 'henceforth' indicates that the Pankaj Bansal judgment is prospective or retrospective, the Court stated that the normal rule is that the judgment is always retrospective in nature unless it is declared prospective. The Court stated that the expression 'henceforth' is used as a direction for future cases but it "cannot be construed by any imagination that the said judgment will not affect the cases in which the arrest has been done without service of grounds of arrest. The intention of the Hon'ble Apex Court was not to condone the illegalities committed by the Enforcement Directorate prior to passing of the judgment."It therefore held: "At this stage it is also profitable to observe that like in any judgment there is a ratio, obiter and direction; by perusing the said paragraph of the Judgment of Pankaj Bansal (Supra) it is evident that ratio has been laid down by the Hon'ble Apex Court that "no arrest can be made without serving of copy of grounds of arrest to the accused" and the direction is given to the ED that "henceforth the ED should not commit that mistake and without fail in every case it must serve the copy of grounds of arrest". Thus, this court is of the considered view that the ratio laid down in the case of Pankaj Bansal (supra) will be squarely applicable in the instant case also. This Court also respectfully accepts the reasoning given in the case of Roop Bansal (supra) passed by the Division Bench of Punjab and Haryana High court which has been referred to herein above."Based on this, the Court observed that the grounds of arrest were read over to the accused and the accused signed it. However, it was not furnished to him in writing. Therefore, Section 19(1) has not complied with.Further, the Court pointed out that the prima facie evidence suggests that the ED has 'reason to suspect' whereas, Section 19(2) contemplates 'reason to believe'.Making a distinction between the two, the Court said: "Reason to suspect is subordinate to reason to believe and cannot be equated with reason to believe. The expression reason to believe is made by two words i.e. reason and believe the word reason means cause or justification and the word believe means to accept as true or to have faith; thus, the officer has to have faith or accept a fact to exist and further there must be justification for such faith or acceptance."The Court stated that "it is well settled that expression "reasons to believe" must be conditioned on the existence of tangible material and that reasons must have a live link with the formation of the belief"...

HC's Findings Against ED Arrest Insignificant In View Of 'RK Arora' Judgment, Says Supreme Court While Upholding Bail Of PMLA Accused

Gursimran Kaur Bakshi

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