Introduction:

In a compelling judgment underscoring the constitutional right to life and liberty, the Bombay High Court granted bail to an individual arrested by the Enforcement Directorate (ED) under alleged misuse of its arrest powers. A division bench comprising Justices Revati Mohite-Dere and Prithviraj Chavan harshly criticized the ED for acting on “whims and fancies,” and for breaching established legal standards. The case involved petitioner Deepak Deshmukh, who was implicated in a predicate offense lodged in 2016 in which he was neither named nor charge-sheeted. This arrest, which followed the petitioner’s complaints against a political figure, raised significant questions about the lawful application of power and the ED’s adherence to procedural norms.

Case Background:

The petitioner, Deepak Deshmukh, had allegedly cooperated fully with the ED’s investigation into his involvement in a money-laundering case. The agency alleged that he received approximately Rs. 49.50 lakhs as part of a larger scheme involving Rs. 69 crores in illicit funds. Despite Deshmukh’s prior cooperation, the ED conducted a raid on his residence in September 2024, leading to his arrest and subsequent remand in judicial custody. Notably, this arrest occurred after Deshmukh had filed a complaint against a prominent BJP MLA, seeking an investigation into an alleged Covid-19 scam. The circumstances surrounding Deshmukh’s arrest prompted the High Court to question the ED’s motives, suggesting a potential link between Deshmukh’s complaint and the timing of his arrest.

Arguments:

Petitioner’s Argument:

Represented by Senior Advocate Sudeep Pasbola, the petitioner argued that his arrest was procedurally unsound and unconstitutional. Deshmukh’s counsel contended that his client had shown consistent willingness to cooperate with the ED’s investigation, attending three summonses issued by the agency. According to the defense, Deshmukh’s arrest—occurring without any new evidence or any indication that he might tamper with existing evidence—was an abuse of power. Furthermore, the defense argued that the ED’s grounds for arrest and “reasons to believe” documents were nearly identical, suggesting a lack of due process and an arbitrary decision-making process by the agency. The petitioner’s counsel highlighted that this action contravened legal standards outlined in the Supreme Court’s rulings in Vijay Mandanlal Choudhary and Arvind Kejriwal’s cases, which mandate a measured and reasonable approach in exercising arrest powers.

The defense also implied that Deshmukh’s arrest might have been retaliatory, as it followed his complaint against a BJP legislator. By arresting Deshmukh shortly after the High Court’s order to investigate the COVID-19 scam complaint, the ED may have attempted to influence the petitioner’s standing or deter similar whistleblowing efforts.

Respondent’s Argument:

The Enforcement Directorate, represented by Special Public Prosecutor Sandesh Patil, contended that Deshmukh’s arrest was justified based on evidence implicating him in the laundering of crime proceeds. According to the ED, Deshmukh was implicated in the financial misconduct, having allegedly received a significant portion of the illicit funds. The ED’s counsel argued that the agency acted within its mandate to ensure compliance and accountability in cases of suspected money laundering, where immediate custodial interrogation is sometimes necessary to prevent the concealment or destruction of critical evidence.

Additionally, the ED argued that its power to arrest was exercised based on credible grounds, as required by law, and defended the procedural steps it had taken in remanding the petitioner to custody. The agency held that arresting Deshmukh was in line with its operational protocols for financial investigations, even if the arrest came at a time when a related complaint by Deshmukh was under review by the judiciary.

Court’s Judgement and Reasoning:

The Bombay High Court granted bail to Deepak Deshmukh, finding that the ED’s actions had failed to satisfy the legal standards governing arrest procedures. The court observed several issues in the ED’s handling of the case, beginning with the absence of due process and application of mind when issuing both the grounds of arrest and reasons to believe. These documents were, according to the bench, strikingly similar and did not reflect an individualized assessment of the case, suggesting procedural negligence.

The bench expressed that the ED appeared to have exercised its arrest powers not on objective grounds but rather “based on whims, caprice, or fancy of the investigating officer.” This was, as the court noted, directly contrary to Supreme Court guidelines laid down in the cases of Vijay Mandanlal Choudhary and Arvind Kejriwal, where the Court emphasized that arrest powers must be executed with restraint, particularly in cases where suspects have shown cooperative intent. Furthermore, the judges pointed out that Deshmukh’s arrest and subsequent remand orders were “illegal” and executed with “sheer ignorance” of these Supreme Court guidelines, which require well-defined grounds and a balanced approach to ensure the protection of an individual’s fundamental rights.

The High Court also noted that the ED’s timing—initiating the arrest following Deshmukh’s court-ordered probe into a Covid-19 scam—suggested possible misuse of agency powers in a retaliatory manner. The court remarked that there was no apparent need to place Deshmukh in custody, as he had consistently complied with the investigation by attending three separate summonses. Given that the ED already possessed key documents and that there was no realistic chance of Deshmukh tampering with evidence, his arrest seemed not only unnecessary but also possibly punitive.

Ultimately, the bench reiterated the “sacrosanct” nature of an individual’s right to life and liberty as protected under Article 21 of the Constitution. This right, the judges noted, should not be overridden by an investigating agency’s discretionary powers, especially when those powers are exercised without justifiable cause. In view of these findings, the court granted Deshmukh interim bail, offering him relief and reinforcing the principle that enforcement agencies must not infringe upon personal liberty withoutrigorous legal scrutiny