It is the bounden duty of the authorised officer to record the reasons for his belief that a person is guilty and needs to be arrested. This prerequisites for arrest acts as a safeguard which facilitates an element of fairness and accountability of the authorised officer.

The second part of Section 19(1) of PMLA flows from the requirement incorporated in Article 22(1) of the Constitution of India, i.e., “No person can be arrested or detained without being told the reasons for the arrest.”

The words ‘material’, ‘reason to believe’, ‘guilty of the offence’ and ‘grounds of arrest’ in Section 19 are key considerations while evaluating the validity of an arrest under the said section.

While dealing with the interplay between Section 19, PMLA and Section 167, CrPC [Section 187 of BNSS], the apex court has held that the Magistrate is under a bounden duty to see that Section 19 of PMLA is duly complied with, and any failure would entitle the arrestee to get released. Any non-compliance of the mandate of Section 19 of the PMLA would enure to the benefit of the person arrested. For such non-compliance, the competent court shall have the power to initiate action under Section 62 of the PMLA.

In Vijay Madanlal Choudhary v. Union of India, a three-Judge Bench observed that the power to arrest under PMLA is vested in high-ranking officials and provided inbuilt safeguards to be adhered to by the authorised officers, such as, of recording reasons for the belief regarding involvement of the person in the offence of money laundering and the grounds of arrest are to be informed to that person. Further, the authorised officer has to forward a copy of the order, along with the material in his possession, to the adjudicating authority and this safeguard is to ensure fairness, objectivity and accountability of the authorised officer in forming an opinion, as recorded in writing, regarding the necessity to arrest the person involved in the offence of money laundering.

In Madhu Limaye it was observed that it would be necessary for the State to establish that at the stage of remand, the Magistrate directed detention in jail custody after applying his mind to all relevant matters and if the arrest suffered on the ground of violation of Article 22(1) of the Constitution, the order of remand would not cure the constitutional infirmities attaching to such arrest.

Section 71 of PMLA gives an overriding effect to the provisions of PMLA over other laws. Further, Section 65 of PMLA clarifies that the provisions of the CrPC/ BNSS shall apply insofar as they are not inconsistent with the provisions of the PMLA in respect of arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings prosecuted under PMLA.

The Apex Court in its various judgments have interpreted the procedure mandated under law while arresting an individual for the offence of money laundering.

In this regard, the Hon’ble Supreme Court has made the following key observations/ findings in the following judgments-

Pankaj Bansal v. Union of India, (2024) 7 SCC 576

– A copy of written grounds of arrest is to be furnished to the arrested person as a matter of course and without exception. The two primary reasons as to why this is advisable course of action is – firstly, in the event such grounds of arrest are orally communicated or read out to the arrested person, it may boil down to the word of the arrested person against the word of the authorised officer and secondly, such a precarious situation is easily avoided and the consequence thereof can be obviated by furnishing the written grounds of arrest to the arrested person.

– In the event any sensitive material is mentioned in such grounds of arrest, it would be open to the authorized officer to redact such sensitive portions and furnish the edited copy of the grounds of arrest, so as to safeguard the sanctity of the investigation.

Prabir Purkayastha v. State (NCT of Delhi), (2024) 8 SCC 254

• The right to be informed about the grounds of arrest flows from Article 22(1) of the Constitution of India;
• Any infringement of this fundamental right would vitiate the process of arrest and remand; and
• The judgment further clarifies that merely because a chargesheet/ police report is filed in a matter, it would not in itself validate the illegality and unconstitutionality committed at the time of arresting the accused and the grant of initial police custody remand to the accused.

In Vihaan Kumar v. State of Haryana and Another, the Apex Court has reiterated that burden will always be on the Investigating Officer/ Agency to prove compliance with requirements under Article 22(1) and non-compliance vitiates arrest and remand of the accused.

In Ram Kishor Arora v. Enforcement Directorate, it was observed that the arrested person can be informed of the grounds for arrest within 24 (twenty four) hours, which is also the period within which the arrested person must be produced before the special court.

If an accused was not arrested after registration of the Enforcement Case Information Report (ECIR) till the Special Court took cognizance of the offence punishable under Section 4 PMLA; he shall not be treated as if he is in custody and, therefore, it is not necessary for him to apply for bail.

The Hon’ble Supreme Court in Tarsem Lal v. Enforcement Directorate has held that after issuance of summons under Section 204, CrPC and on taking cognizance of the offence punishable under Section 4 of PMLA, if the accused appears before the Special Court pursuant to the summons. he shall not be treated as if he is in custody. Therefore, it is not necessary for him to apply for bail under Section 45 of PMLA.

Further, in cases where the ED requires custody of such accused, it will have to seek remand from the Special Court under Section 346(2) of BNSS/ Section 309(2), CrPC and the question of remand will be decided after providing a fair chance to the accused to contest such remand request.

Once a prosecution complaint is filed before the Special Court, the provisions of Sections 200 to 204, CrPC [Section 223 to 227 of BNSS] will apply to such a complaint. There is no provision in PMLA which overrides the provisions of Section 200 to Section 204, CrPC.

Some of the Special Courts, while exercising their powers under PMLA, were following the practice of taking the accused into custody after they appeared pursuant to the summons. Thus, the accused are compelled to apply for bail/ anticipatory bail upon issuance of summons.

If a person is not arrested before filing the complaint, and after the filing of the complaint, when such accused appears in compliance with the summons, he is taken into custody and forced to apply for bail – if such a practice is followed by the Special Court, it is bad in law.

Conclusion

The preconditions for arrest inbuilt in Section 19 of PMLA act as stringent safeguards to protect the life and liberty of individuals. Till the prosecution complaint is filed, there is no requirement to provide the accused with a copy of the ECIR. Thus, to introduce checks and balances, Section 19(1) imposes safeguards to protect the rights and liberty of the arrestee. The safeguards ensure that the designated officer does not act arbitrarily and is made accountable for their judgment regarding the ‘necessity to arrest’ the person. Thus, if the arrest is illegal, the order of remand to the ED’s custody also becomes illegal.

This article was originally published in Bar & Bench on 08 April 2025 Co-written by: Shantanu Tyagi, Partner; Ahana Deka, Principal Associate. Click here for original article

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