Introduction:

The Delhi High Court recently addressed the contentious issue of whether the Supreme Court’s landmark ruling in the Arvind Kejriwal case, mandating that the Enforcement Directorate (ED) must provide “reasons to believe” as a separate document while making arrests under Section 19 of the Prevention of Money Laundering Act (PMLA), applies retrospectively or prospectively. Justice Anish Dayal ruled that this additional requirement should be applied prospectively, dismissing a plea challenging the arrest and remand of an accused in a money laundering case. The court clarified that the ED could not be held accountable for compliance with the condition of the arrest predated the Supreme Court’s judgment.

Arguments by the Accused:

The petitioner, Arvind Dham, challenged the legality of his arrest on grounds of alleged violations of Section 19 of PMLA and constitutional safeguards against arbitrary detention. He argued that:

The ED failed to provide “reasons to believe” as mandated under the PMLA, thereby undermining the basis of his arrest.

Exculpatory material that could potentially exonerate him was ignored in the “grounds of arrest.”

His detention was arbitrary, as the required safeguards under the Supreme Court’s decision in the Arvind Kejriwal case were not followed.

Dham contended that his rights under the PMLA and the Constitution were violated, asserting that the decision in the Arvind Kejriwal case should be applied retrospectively to ensure fairness.

Arguments by the Enforcement Directorate and Union of India:

The ED argued that at the time of the arrest on July 9, 2024, it could not have anticipated the additional condition imposed by the Supreme Court’s judgment in the Arvind Kejriwal case, which was delivered on July 12, 2024. The ED submitted that:

The “grounds of arrest,” a detailed document running into 36 paragraphs, effectively contained the substance of the “reasons to believe,” even though they were not provided as a separate document.

The remand application mirrored the facts and reasoning presented in the “grounds of arrest,” demonstrating compliance with legal requirements at the time of arrest.

The procedural requirements under Section 19(2) of PMLA, including forwarding the arrest order and supporting material to relevant authorities, were complied with the day after the arrest.

Special Counsel for the ED further argued that retrospective application of the Supreme Court’s ruling would be illogical and unfair, as it imposed an additional requirement that did not exist at the time of Dham’s arrest.

Court’s Observations and Judgment:

Justice Anish Dayal dismissed the petition, holding that the additional procedural safeguard introduced by the Supreme Court in the Arvind Kejriwal case was prospective. Key observations by the court included:

1. Prospective Applicability of Supreme Court’s Ruling: The court ruled that the procedural condition of providing “reasons to believe” as a separate document could not be applied retrospectively. At the time of Dham’s arrest, the ED was not legally required to comply with this additional safeguard.
2. Adequacy of Arrest Grounds: The “grounds of arrest” presented by the ED were found to be detailed and comprehensive, sufficiently fulfilling the requirements of Section 19 of the PMLA at the time.
3. The legitimacy of Exculpatory Material: Justice Dayal reiterated that officers making arrests under PMLA cannot disregard material that might exonerate the accused. However, in this case, the court did not find evidence of such non-consideration.
4. Judicial Review and Safeguards: The court emphasized that the review of grounds for arrest was limited to assessing compliance with procedural requirements, not the merits of the case. It noted that Dham retained the right to challenge the arrest at the bail stage, where the court could scrutinize the ED’s reasoning more thoroughly.

Justice Dayal concluded that the ED’s actions during Dham’s arrest did not contravene the provisions of Section 19 of PMLA as interpreted at the time. Accordingly, the petition was dismissed, but the court noted that Dham could still raise his arguments during bail proceedings or at trial.

Conclusion:

The Delhi High Court’s judgment underscores the importance of understanding the temporal scope of judicial pronouncements. By clarifying that the Supreme Court’s ruling in the Arvind Kejriwal case applies prospectively, the court highlighted the principle that agencies cannot be held to unforeseen procedural requirements. At the same time, the judgment reaffirmed that compliance with existing legal safeguards is crucial in ensuring accountability and fairness in arrests under PMLA.