The Punjab & Haryana High Court dismissed the plea challenging ED arrest, observing that the arrest was made in well documented reason to believe under section 19 of Prevention of Money Laundering Act, 2002 ( PMLA ) .It was found that the Arresting Officer had conveyed his intention, reasons, grounds and belief to arrest the petitioner.
Neeraj Saluja was accused of illegally diverting over Rs.1,500 crores from the loan amount for a purpose other than it was sanctioned.The case pertains to alleged illegal diversion Rs.1530.99 crores of the loan amount. An FIR was filed against the industrialist Neeraj Saluja and his family members under Sections 120-B, 403, 420, 467, 468, 471 IPC and 13(2) read with 13(1) (d) of PC Act. On the basis of FIR, ECIR was lodged under 3 & 4 of the Prevention of Money Laundering Act, 2002.
Senior counsel appearing for Saluja argued that the account of the Petitioner’s Company was declared as Fraud without adhering to the principles of natural justice and Saluja was suddenly arrested in January, four years after registering of the ECIR.
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He further contended that the arrest is illegal as the same violates the mandate of Section 19 of PMLA and Constitutional safeguards under Art. 21 and 22 of the Constitution because the reasons to believe as mandated under the Act were admittedly not provided and the grounds of arrest were a mere reproduction of the CBI Challan.
Senior Counsel appearing for ED argued that there is no consequence, even in Arvind Kejriwal’s case for non-supply of Reason to Believe, unlike in Pankaj Bansal where non-compliance about supply written Grounds of Arrest has been held to lead to the release of the person straight away.
After examining the submissions and material available on record, the Court noted that, “In compliance with the statutory mandate of S. 19 of PMLA, the arresting officer at the arrest stage had apprised the petitioner of his reasons of belief and the grounds that necessitated such an arrest.”
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Justice Anoop Chitkara held that “Any arrest shall be illegal when it directly contradicts the legal requirements mandated by the PMLA, especially under Section 19. This section requires material evidence and a well-documented ‘reason to believe’ that the individual is involved in money laundering activities. A breach of these requirements signifies a profound legal violation, rendering the arrest void ab initio.”
The Court ruled that “The concept of ‘reason to believe’ is not merely procedural but a substantive safeguard that underpins the legality of an arrest under the PMLA. It requires a qualitative assessment of evidence before depriving an individual of liberty.”
It highlighted that the lack of a valid ‘reason to believe’ documented at the time of arrest, as required by Section 19, directly leads to an arrest being classified as illegal rather than a mere irregularity.
The Court opined that, the arrest conformed with the requirements of section 19 of the PMLA Act, 2002.
Perusing the arrest memo, the Court said that the safeguards under Section 19 were adhered to, validating the arrest, and there is no failure to entitle the petitioner to be released by exercising the extraordinary powers of the High Court under S. 482 CrPC, 1973.
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The court Viewed that the satisfaction of the concerned Officer is also duly reflected in the wordings and the necessity of arrest and has also clearly revealed. Thus, there is no fault in the grounds of arrest and consequent arrest,.
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