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Synopsis

The Supreme Court has said when the arrest of a man itself is illegal or is vitiated, bail cannot be denied to him on the grounds of non-fulfillment of twin tests under clause (ii) of sub-section 1 of Section 45 of Prevention of Money Laundering Act.

A bench of Justices Abhay S Oka and Ujjal Bhuyan dismissed an appeal filed by the Enforcement Directorate (ED) against the Chhattisgarh High Court's judgment of September 21, 2022, which granted bail to Subhash Sharma for an offence under Section 4 of the PMLA in a bank fraud case.

The court said, once a court, while dealing with a bail application, finds that the fundamental rights of the accused under Articles 21 and 22 of the Constitution have been violated while arresting the accused or after arresting him, it is the duty of the court dealing with the bail application to release the accused on bail.

"The reason is that the arrest in such cases stands vitiated. It is the duty of every court to uphold the fundamental rights guaranteed under Articles 21 and 22 of the Constitution. Therefore, when arrest is illegal or is vitiated, bail cannot be denied on the grounds of non-fulfillment of twin tests under clause (ii) of sub-section 1 of Section 45 of PMLA," the bench said.

The high court had found the arrest of respondent Sharma as illegal.

It had said from the documents available in the case diary, it was crystal clear that the applicant was detained and taken into custody at 18.00 hours on March 04, 2022 at IGI Airport, New Delhi when the Bureau of Immigration executed the LOC issued against the applicant and held him in custody on behalf of ED. It was also not in dispute that ED took physical custody of the applicant from the Bureau of Immigration at 11.00 hours (11 am) at IGI Airport on March 05, 2022 and brought him to Raipur.

Going by the case record, the apex court said, "The continuation of the respondent in custody without producing him before the nearest Magistrate within the stipulated time of 24 hours is completely illegal and it infringes fundamental rights under clause 2 of Article 22 of the Constitution of India. Therefore, his arrest gets vitiated on completion of 24 hours in custody. Since there is a violation of Article 22(2) of the Constitution, even his fundamental right to liberty guaranteed under Article 21 has been violated".

Additional Solicitor General S V Raju, appearing for the ED, submitted that pursuant to the Look Out Circular, issued against the respondent, he was detained at IGI Airport from 11.00 hours, on March 5, 2022. But he was shown as arrested at 01.15 hours on March 6, 2022 by the appellant ED and was produced before the Court of the Magistrate within 24 hours from 1.15 hours on March 6, 2022.

"This argument cannot be accepted", the court said.

The bench pointed out, admittedly the LOC was issued at the instance of the appellant, ED. By executing the LOC, the Bureau of Immigration detained the respondent at IGI Airport from March 4, 2022 on behalf of the appellant.

The finding of fact recorded by the high court was that undisputedly, the physical custody of the respondent was taken over by the appellant from the Bureau of Immigration at 11.00 hours on March 5, 2022. Thereafter, at 1.15 hours on March 6, 2022, an arrest memo was prepared by ED at Raipur. He was produced before the Court at 3 p.m. on March 6, 2024, the court noted.

It pointed out, the perusal of the arrest order showed that the typed order was kept ready. The date and time of arrest were kept blank which appeared to have been filled in by hand. Admittedly, the respondent was not produced before the nearest Magistrate within 24 hours from 11.00 a.m. on March 5, 2022.

"Therefore, the arrest of the respondent is rendered completely illegal as a result of the violation of clause 2 of Article 22 of the Constitution of India," the bench said.

Court pointed out the requirement of clause 2 of Article 22 (production of accused before the court within 24 hours) has been incorporated in Section 57 (person can't be detained for more than 24 hours without judicial scrutiny) of the Code of Criminal Procedure.

"There is no inconsistency between the provisions of the PMLA and Section 57 of CrPC. Hence, by virtue of Section 65 of the PMLA, Section 57 of the CrPC applies to the proceedings under the PMLA," the bench said.

As the arrest was found as illegal and illegal, the apex court held there was no error in the impugned order and dismissed the appeal.

The respondent was accused of obtaining loan from various banks illegally and fraudulently diverting those to unintended businesses or buying real estate in the name of shell companies.

Case Title: Directorate of Enforcement Vs Subhash Sharma