HC refers to larger bench ques on arrest of accused in money laundering case

New Delhi: A division bench of the Delhi High Court referred to a larger bench question pertaining to the arrest of an accused in a money laundering case.

The issue concerns two provisions of the Prevention of Money Laundering Act (PMLA) relating to the power to arrest a person and the need to supply the grounds of arrest to him under section 19 and whether the offense is cognizable or non-cognisable under section 45.

"Consistent with judicial discipline, since this bench is of the view that the decisions of the coordinate bench of this court in Moin Akhtar Qureshi vs Union of India (supra) and Vakamulla Chandrashekhar vs Enforcement Directorate (supra) require reconsideration, it refers to a larger Bench, the following questions for consideration...," the bench of Justice Muralidhar and Mehta said.

Regarding section 45 of the Act, the bench said the other bench had come to an opposite conclusion holding that, notwithstanding the 2005 amendment to the provision, there is no positive indication in it that the offenses under the PMLA had become non-cognisable.

It said the matter be placed before the Acting Chief Justice for being referred to a larger bench to answer the five questions including that after the amendment in section 45 of the PMLA with effect from July 1, 2005, are the offenses under the Act cognizable or non-cognisable.

One of the questions posed by the bench was whether a person arrested under section 19(1) (power of arrest) of PMLA has to be furnished a copy of the grounds of arrest and if so, should they be furnished soon enough to enable the person arrested to apply for bail or to oppose the application for remand and what are the consequences of the failure to do so.

"Notwithstanding that the remand of the person arrested is under the orders of a competent court under the PMLA, will a writ of habeas corpus still be maintainable if the initial arrest is itself shown to be unlawful?

"In the context of the above questions, do the decisions of the division bench of this Court in Vakamulla Chandrashekhar vs Enforcement Directorate (supra) Moin Akhtar Qureshi v. Union of India (supra) require reconsideration," it asked.

A habeas corpus plea is a petition which is filed to ensure that a person under arrest is brought before a court which will determine whether the detention is legal.

However, the bench headed by Justice Muralidhar said it was unable to subscribe to the view of the other bench on the interpretation of section 19 and said it appeared to this court that there can ordinarily be nothing secret, qua the detenu, about his own grounds of arrest.

It was of the view that the interpretation placed on section 19 (1) PMLA by the other division bench in Qureshi's matter does not appear to be consistent with the constitutional requirement as spelled out in Articles 21 and 22 of the Constitution and, therefore requires reconsideration.

The issue cropped up before the bench when it was deciding a habaeus corpus plea and challenge to the arrest by the director of a Gujarat-based pharma firm in a money laundering case related to a Rs 5,000-crore bank fraud case.

Rajbhushan Omprakash Dixit, a director of Sterling Biotech Ltd, was arrested by the Enforcement Directorate on January 25 in the case and was currently in judicial custody.

Read also: Money laundering case: Sterling Biotech’s director arrested sent to ED custody

The high court had termed Dixit's arrest as illegal and granted him bail during the pendency of the writ petition. ED has also arrested a former director of Andhra Bank, Anup Prakash Garg, and a Delhi-based businessman Gagan Dhawan. While Garg is currently in judicial custody, Dhawan was granted bail on January 4. All three were arrested under the PMLA.

Read also: ED arrests former Andhra Bank director in Sterling Biotech loan fraud case

They were named as accused in the cases by the ED and the CBI. The ED had registered a money laundering case after taking cognizance of a CBI FIR.

The CBI had booked Sterling Biotech, its directors Rajbhushan, Chetan Jayantilal Sandesara, Dipti Chetan Sandesara, Nitin Jayantilal Sandesara and Vilas Joshi, chartered accountant Hemant Hathi, Garg and some unidentified persons in connection with the bank fraud case.

Read also: Non-bailable warrants issued against Sterling Biotech directors in Rs 5,000 crore fraud case

It had alleged that the company had taken loans of over Rs 5,000 crore from a consortium led by Andhra Bank which had turned into non-performing assets.

The FIR had also alleged that the total pending dues of the group companies were Rs 5,383 crore as on December 31, 2016.

Read also: CBI FIR against Sterling Biotech for Rs 5,000 cr loan default