Himachal Pradesh High Court
Vikas Bansal vs Directorate Of Enforcement Through Its ... on 30 May, 2025
Author: Ajay Mohan Goel
Bench: Ajay Mohan Goel
( 2025:HHC:16769 )
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
CWP No. 3600 of 2025
Reserved on: 22.04.2025
Decided on: 30.05.2025
Vikas Bansal ....Petitioner.
Versus
Directorate of Enforcement through its Deputy
Director, Shimla ...Respondent.
Coram:
The Hon'ble Mr. Justice Ajay Mohan Goel, Judge.
Whether approved for reporting?1 Yes.
For the petitioner: Mr. Randeep S. Rai, Senior Advocate, with M/s
Vikrant Thakur, Anurag Arora, Rubina Virmani and
Shubham Guleria, Advocates.
For the respondent: Mr. Zoheb Hussain, Special Counsel for
Enforcement Directorate (through Video
Conferencing), with Mr. Ajit Singh Saklani, Retainer
Counsel and M/s Suradhish Vats, Pranjal Tripathi &
Ilma Khan, Advocates.
Mr. Rajeev Kumar, Assistant Director, in person.
Ajay Mohan Goel, Judge:
By way of this writ petition, the petitioner has prayed for the following reliefs:-
"1. Issuance of a writ in the nature of Certiorari or any other appropriate writ/ direction/ order, to:-
I. Set aside the arrest of the present petitioner u/s 19 of PMLA Act (Annexure P-7), which is in blatant and flagrant violation of the statutory 1 Whether reporters of the local papers may be allowed to see the judgment?
2 ( 2025:HHC:16769 ) provisions enshrined in BNSS & PMLA.
II. Further to set aside the remand order dated 30.01.2025(Annexure P-14) and all other subsequent orders passed by the Ld. Special court, Shimla for extending the custody of the petitioner.
2. Issue any other order, writ or direction as this Hon'ble Court may deem fit in accordance with the peculiar and circumstances of the case.
3. Exempt the Petitioner from filing the Certified/true typed/photocopies / more legible copies of the annexures.
4. Summon the entire record pertaining to the case, if this Hon'ble Court deems fit and proper.
5. Service of advance notices upon the Respondent Department be also be dispensed with;
6. Award cost of thee petition in favour of the petitioner and against the respondents."
2. The case of the petitioner is that an FIR bearing No. RC0962019A0002 was registered by the Central Bureau of Investigation (CBI) on 07.05.2019, for commission of offences punishable under Sections 409, 419, 465, 466 and 471 of the Indian Penal Code against unknown persons.
3. After the lodging of FIR, CBI conducted searches and seizure at 22 educational institutions, including the Himalayan Group of Professional Educational Institutions and Apex Group of Educational Institutions, which had applied for and received financial assistance under the Post-Matric Scholarship Scheme for Scheduled Caste (SC), Scheduled 3 ( 2025:HHC:16769 ) Tribe (ST) and Other Backward Classes (OBC) students in State of Himachal Pradesh. The petitioner was serving as Vice Chairman of the Himalayan Group of Professional Educational Institutions at Kala Amb, District Sirmaur. In the course of investigation, the petitioner was arrested by the CBI on 8th of April 2022. He was enlarged on bail by this High Court in Cr.MP(M) No. 856 of 2022, dated 09.05.2022 (Annexure P1). After conclusion of the investigation, multiple Charge Sheets were filed by CBI before learned Special Judge (CBI), Shimla. The petitioner was arrayed as an accused along with eight other individuals and challan was presented before the Court of learned Special Judge (CBI), Shimla, on 18.04.2022.
Charges have been framed against the petitioner under Section 120-B read with Sections 409 and 471 of the Indian Penal Code along with Section 13(2) read with Section 13 (1)(c) and (d) of the Prevention of the Corruption Act, 1988.
4. Zonal Office of the Directorate of Enforcement recorded an Enforcement Case Information Report (ECIR) bearing No. ECIR/SHSZO/04-2019 on 19.07.2019, pursuant of the lodging of the FIR referred hereinabove. The ECIR was based on predicate offence, allegedly committed by the accused. Thereafter, the respondent filed a prosecution complaint, dated 21.10.2023, before learned Special Court, under the Prevention of Money Laundering Act, at Shimla. The Court has taken cognizance of the said complaint against the accused persons named therein on 23.04.2024. Further as per the petitioner, the respondent 4 ( 2025:HHC:16769 ) conducted searches under Section 17 of the PMLA on 29.08.2023 at various premises associated with the petitioner. This included the residential premises of his brother, Rajnish Bansal, who was the Chairman of the Himalayan Group of Profession Educational Institutions and Apex Group of Institutions. Certain documents were seized by the respondents in the course of the search. As per the petitioner, he was summoned only once on 5.11.2019 by the then Investigating Officer, namely, Vishal Arya. Petitioner fully cooperated with the investigation, disclosed all facts within his knowledge and his statement was recorded under Section 50 of the PMLA.
Thereafter, no summons were issued to the petitioner or received by him until 30.01.2024, on which date, he was arrested by the officers of the respondent in an illegal manner.
5. It is further the case of the petitioner that in the year 2024, the investigation was assigned to Vishal Deep, Assistant Director, Enforcement Directorate. Said officer started abusing his official position and unlawfully demanded a bribe of Rs.60.00 Lac from petitioner's brother Rajnish Bansal, under the threat of arresting him. Rajnish Bansal refused to oblige Vishal Deep and reported the matter to the Central Bureau of Investigation. Upon verification of the allegations, CBI registered FIR No. RC0052024A0034, dated 22.12.2024, under Section 7(a) of the Prevention of Corruption Act, 1988 (hereinafter to be referred as the "the PC Act").
Thereafter, a trap was laid following the recording of the incriminating conversations between Rajnish Bansal and Vishal Deep. However, during 5 ( 2025:HHC:16769 ) the trap operation, Vishal Deep managed to evade the arrest and fled from the scene. Subsequent investigation led to the recovery of money from one Yash Deep, a close associate of Vishal Deep, to whom, he had handed over the bribe amount while escaping. Besides this, one more FIR was registered against Vishal Deep on the complaint of one Bhupender Sharma, i.e. FIR No. RC0052024A0033, dated 22.12.2024, under Section 74A of the PC Act at Police Station, CBI, ACB, Chandigarh. Copies of said two FIRs are appended with the writ petition as Annexures P-2 and P-3 respectively.
As per the petitioner, during the course of investigation, CBI arrested Vishal Deep. Investigation revealed the involvement of other individuals, leading to filing of a charge sheet against four accused, namely, Vishal Deep, the investigating Officer of the present ECIR, Balbir Singh, the investigating officer of the CBI in the Scholarship scam case, Vikas Deep, brother of Vishal Deep and one Neeraj. According to the petitioner, Vishal Deep even after his arrest did not cease unlawful activities and he engaged a gangster, namely, Rohit Gujjar, who subsequently demanded an additional amount of Rs.50.00 lac from the petitioner. Petitioner lodged FIR No. 6, dated 09.01.2025, at Police Station Sector 14, Panchkula and Vishal Deep was arrested in the said case. (Copy of the FIR registered in this connection is appended with the petition as Annexure P-4). As per the petitioner, as an act of vengeance, firstly vide Annexure P-6, dated 29.01.2025, he was issued a summon by Rajeev Kumar, Assistant Director, Directorate of Enforcement, Ministry of Finance, Government of India, Shimla, under 6 ( 2025:HHC:16769 ) Sections 15(2) and (3) of the PMLA, directing him to appear before the said officer on 30.01.2025 at 1:00 PM at Shimla, to give evidence in connection with the investigation/proceedings going on against him under the PMLA, but on 30.01.2025, the ED officials entered his house at Panchkula, at about 7:35 a.m., where said summon was handed over to the petitioner for his appearance at Shimla at 1:00 p.m. After the ED officials left the house of the petitioner at around 8:12 am, a search was commenced in the house of the petitioner by the ED at around 8:40 a.m. on 30.01.2025 and he was not allowed to move outside. Thereafter, at around 3:30 p.m, Rajeev Kumar, Assistant Director, entered the house of the petitioner and approximately at 4:00 p.m., the petitioner was unlawfully arrested without any prior recording or documentation of his statement. According to the petitioner, the search and seizure was done with malafide intent and in complete violation of his legal rights. No due process was followed before effecting his arrest. Copy of the arrest order, arrest memo and grounds of arrest alongwith reasons to believe and panchnama are placed on record as Annexures P-7 to P-11.
6. Learned Senior Counsel for the petitioner argued that the arrest of the petitioner on 30.01.2025, besides being an act of vengeance, was in complete derogation of the provisions of Section 19 of the PMLA.
Learned Senior Counsel argued that after the complaint was filed against the petitioner under the PMLA, from the year 2019 up to the date of his arrest, he was called for the purpose of investigation only once. The petitioner not only fully participated in the investigation, but he fully 7 ( 2025:HHC:16769 ) cooperated in the same. He submitted that it is not understood what transpired in between 29.01.2025 and 30.01.2025, that the respondents without allowing the petitioner to respond to the notice dated 29.01.2025, arrested him on 30.10.2025 abruptly. Learned Senior Counsel further submitted that the procedure prescribed in Section 19 of the PMLA is sacrosanct and any violation thereof cannot cure the arrest of an accused.
In the present case, he submitted that as there was flagrant violation of the statutory provisions of Section 19 of the PMLA, therefore, the arrest per se was bad in law. Learned Senior Counsel took the Court through the grounds of arrest and submitted that perusal thereof demonstrates that the emphasis therein also was on the predicate offences and not on the offences alleged to have been committed by the petitioner under the PMLA. Learned Senior Counsel submitted that the arresting officer did not reduce in writing that on the basis of what material in his possession, he had 'reasons to believe' that the petitioner was 'guilty' of the offences punishable under the PMLA.
Learned Senior Counsel further submitted that even the Judicial Magistrate before whom the petitioner was produced, despite recording the shortfall in the mode and manner in which the petitioner was arrested by the respondent erred in not returning the findings that the arrest of the petitioner was in violation of Section 19 of the PMLA and he further erred in remanding the petitioner to custody. Learned Senior Counsel for the petitioner also argued that the remand granted by the learned Chief Judicial Magistrate, Shimla was bad in law, as said Court was not a Special Court under the 8 ( 2025:HHC:16769 ) PML Act and, therefore also, the custody of the petitioner is illegal. As per learned Senior Counsel, learned Judicial Magistrate was not having any jurisdiction to deal with the matter and the grant of remand by the learned Judicial Magistrates is void ab initio.
7. On the other hand learned Counsel for the respondent-
ED argued that neither there was any illegality committed by the Arresting Officer in the course of arrest of the petitioner nor the petition against the order passed by the learned Judicial Magistrate was maintainable as remand order could not be interfered by this Court under Article 226 of the Constitution of India and incidentally, the petitioner had not invoked the provisions of Section 482 of the Criminal Procedure Code in the matter.
Learned Counsel further argued that the petitioner, in connivance with the officers of the State Government Education Department as well as Bank Officer, had misappropriated scholarship funds to the tune of Rs.200 Crore along with other accused, which were meant for deserving students belonging to Scheduled Caste, Scheduled Tribe and Other Backward Classes communities. The petitioner was the Vice chairman in the Apex Group of Institutions as well as Himalayan Group of Professional Educational Institutions. He had signed the claim letter and forwarded the claim letters and verified the claim details of the students of said two institutions to the Director of Higher Education for the purpose of disbursal of the scholarship in the name of bogus Scheduled Caste/Scheduled Tribe/OBC students. Learned Counsel further submitted that a perusal of the 9 ( 2025:HHC:16769 ) 'reasons to believe' clearly demonstrates that Arresting Officer, who was duly authorized officer under Section 19(1) of the PMLA, elaborately referred to the material available with him, which clearly proved the involvement of the petitioner in the predicate offence as well as offences under PMLA. He argued that there was no violation of the provisions of Section 19 of the PMLA and the same were followed sacrosanctly. He submitted that provisions of Section 19(1) of the PMLA were religiously followed by the Arresting Officer and in light of the law declared by Hon'ble Supreme Court of India, as this is not the fora where the satisfaction of the Arresting Officer is to be tested on merit as the, arrest of the petitioner was strictly as per the statutory provisions, the petition deserves to be dismissed.
Learned Counsel also argued that the 'reasons to believe' elaborately spelled out the involvement of the petitioner in the crime which was self explanatory. He submitted that the reason as to why the petitioner had to be arrested forthwith on 30.01.2025 was that there was information with the Arresting Officer that the petitioner was destroying material evidence which was with him and therefore, to ensure that the evidence was not destroyed, this step was taken by the Arresting Officer. Learned Counsel further submitted that the Arresting Officer also consulted his superior officers as was evident from the record and this also demonstrated the transparency in the arrest of the petitioner. Learned Counsel further submitted that the submission made in the petition with regard to demand of bribe etc. against other officers does not render the arrest of the petitioner bad in law for the 10 ( 2025:HHC:16769 ) reason that the Department had already initiated necessary legal action against the persons who demanded bribe etc. and this otherwise also cannot be a ground to release the petitioner by setting aside the order of arrest. Learned Counsel also argued that as the petitioner presently was in custody on account of a judicial order passed by a Court of law, therefore, in terms of the law declared by Hon'ble Supreme Court of India, as a judicial order was not to be interfered under Article 226 of the Constitution of India, the petition deserves to be dismissed. Responding to the contention of learned Senior Counsel for the petitioner that the remand granted by the learned Chief Judicial Magistrate was without jurisdiction, learned counsel for the respondent submitted that the petitioner was arrested on 30.01.2025.
Vide Notification No. DSJ-E-SML-Vacation-2025-738, dated 15.01.2025, the High Court of Himachal Pradesh notified the winter vacations for the District Judiciary from 20.01.2025 to 16.02.2025. Vide Notification dated 15.01.2025, it was stated that urgent matters pertaining to District & Sessions Judge, Shimla will be handled by the Senior Civil Judge-Cum-
Chief Judicial Magistrate, Shimla, i.e., the Chief Judicial Magistrate, who passed the remand order. Learned counsel further submitted that as the validity of the Notification was not under challenge, therefore, the source of power cannot be questioned. Learned counsel further submitted that otherwise also, in terms of the statutory provision, in the absence of the Special Judge, who was on vacation, the remand could have been taken from the Judicial Magistrate in terms of Sub-section (3) of Section 19 of the 11 ( 2025:HHC:16769 ) PMLA, 2002 and the Judicial Magistrate, who granted the custody, was having jurisdiction in the matter, as the ECIR was registered at Shimla.
Learned counsel also submitted that in terms of the law laid down by the Hon'ble Supreme Court in Rana Ayyub Vs. Directorate of Enforcement, 2023 SCC OnLine SC 109, Enforcement Department has the choice to file the prosecution complaint at every such place where the offence had been committed and the act of the Enforcement Department to produce the petitioner before the concerned Judicial Magistrate was in compliance with the provisions of Article 22 (2) of the Constitution of India, which requires production of an accused within 24 hours of his arrest.
8. I have heard learned Senior Counsel for the petitioner as well as learned Special Counsel for the respondent and have also carefully gone through the pleadings as well as documents appended therewith.
9. Primarily, the issue before the Court is whether the provisions of Section 19(1) of the 2002 Act have been followed in letter and spirit by the Arresting Authority in the course of arrest of the petitioner or not. Section 19 of the Act reads as under:-
"19. Power to arrest.- (1) If the Director, Deputy Director, Assistant Director, or any other officer authorized in this behalf by the Central Government by general or special order, has on the basis of material in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an 12 ( 2025:HHC:16769 ) offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.
(2) The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under Sub-section (1), forward a copy of the order, alongwith the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such order and material for such period, as may be prescribed.
(3) Every person arrested under sub- section (1) shall within twenty-four hours, be taken to a Special Court or Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction:
Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest to the Special Court or Magistrate's Court."
Thus, in terms of Sub-section (1) of Section 19 of the Act, if the Officer mentioned therein or any authorized officer in this behalf by the Central Government, by general or special order, has on the basis of material in his possession, 'reason to believe' (the reason for such belief is to be recorded in writing) that any person has been 'guilty' of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.
13 ( 2025:HHC:16769 )
10. The 'reasons to believe' and 'grounds of arrest' are appended with the counter-affidavit/reply filed on behalf of the Directorate of Enforcement. The 'reasons to believe' are appended as Annexure A-1 and the 'grounds of arrest' are appended as Annexure A-2. The copy of the arrest order is appended with the response as Annexure A-3, perusal whereof demonstrates that the 'Arrest Order' and 'Arrest Memo' were duly supplied to the petitioner. The 'Intimation of Arrest' is also on record and the intimation was given on 30.01.2025 itself to the wife of the petitioner.
11. The 'reasons to believe' mention, inter alia, that an FIR was registered on 07.05.2019 under Sections 409, 419, 465,466 and 471 of the Indian Penal Code against unknown persons. CBI conducted searches and seizures at 22 private institutions, including Himalayan Group of Professional Institutions and Apex Group of Institutions, which had applied and received Post Matric Scholarship Scheme for SC/ST/OBC students of Himachal Pradesh. Vikas Bansal was arrested by the Central Bureau of Investigation on 08.04.2022 during the course of investigation. He was released on bail by this Court on 09.05.2022, subject to fulfilment of certain conditions. Challan No. 4 in the said FIR was filed on 18.04.2022 by the Central Bureau of Investigation under Section 120-B read with Sections 409 and 471 of the Indian Penal Code and under Section 13(2) read with Section 13(1)( c) and (d) of the Prevention of Corruption Act, 1988, in which, Rajnish Bansal, Chairman of Apex Group of Professional Institutions, Indri, Karnal and six others were arrayed as accused. Challan No. 5 in the 14 ( 2025:HHC:16769 ) aforesaid FIR was filed on 18.04.2022 by the CBI under Section 120-B read with Sections 409 and 471 of the Indian Penal Code and under Section 13(2) read with Section 13(1)( c) & (d) of the Prevention of Corruption Act, 1988, in which, Vikas Bansal, being Vice-Chairman of Himalayan Group of Professional Institutions, Kala Amb, Sirmaur, H.P. and eight others, including Rajnish Bansal, Chairman of Himalayan Group of Professional Institutions, Kala Amb, Sirmaur, H.P. were arrayed as accused.
12. Charge-sheet filed by CBI against Himalayan Group of Professional Institutions reads as under:-
"(a) That HGPI is managed by Maa Saraswati Educational Trust registered at Sirmaur, Himachal Pradesh;
(b) That Vikas Bansal, Rajnish Bansal and Panna Lal were the Vice Chairman, Chairman and Registrar of HGPI respectively;
(c ) That verification of 970 B. Tech. students affiliated to Himachal Pradesh Technical University. Hamirpur revealed that fake scholarship amounting to Rs.5.58 Crore were claimed qua 734 students.
(d) That verification of 71 students of five-year Law Course affiliated to Himachal Pradesh University (HPU) revealed that 10 students did not appear in the examination & record of 20 students was not found;
(e ) Verification of three-year Law Course revealed that 03 students did not appear in the 15 ( 2025:HHC:16769 ) examination and record of 05 students was not found;
(f) The CBI examined 26 SC Students who stated that their mobile numbers mentioned in HP- e Pass did not belong to them and they have not opened bank accounts in OBC (now PMB) and also that they did not authorize anybody to transfer/withdraw the scholarship amount from their accounts;
(g) Also out of the aforesaid 26 SC Students, 16 students were shown as student during the academic Session 2016-17;
(h) That at the time of admission in different streams, the signatures of students belonging to SC/ST/OBC category who were also eligible to take benefit of scholarship were appended on blank account opening forms and some blank debit vouchers/cheques in the campus of Himalayan Group;
(i) That the Institute claimed a total 4523 scholarship claims for 2455 students amounting to Rs.36,66,48,733/-."
13. Charge-sheet filed by CBI against Apex Group of Professional Institutions reads as under:-
"(a) That AGPI is managed by People Welfare Education Trust registered at Karnal, Haryana.
16 ( 2025:HHC:16769 )
(b) That Rajnish Bansal was the
Chairman and Vikas Bansal was the Vice
Chairman of AGPI.
(c) That CBI selected 46 random
students belonging to SC/ST/OBC in respect of whom scholarship was claimed under PMS Scheme by AGPI.
(d) These 46 random students were examined and their statements were recorded by CBI. It was found that none of them was aware about AGPI and they never took nor applied for any scholarship.
(e) That bank accounts in the name of students were opened at OBC Bank at
Naraingarh, Ambala and Union Bank of India at Indri, Karnal without the knowledge of students;
(f) That AGPI was affiliated to Kurukshetra University and Haryana State Board of Technical Education. The details of students enrolled at AGPI received from Kurukshetra University and Haryana State Board of Technical Education revealed that none of the students was registered with the respective board/university.
(g) That Apex Group had fraudulently claimed an amount of Rs.3,79,95,870/- as
scholarship during the year 2013-14 to 2016-17 under PMS Scheme for SC/ST/OBC students.
This entire amount of Rs.3,79,95,870/- was found to be fake scholarship based on bogus claims."
17 ( 2025:HHC:16769 )
14. As per 'reasons to believe', on the basis of the above-
mentioned FIR registered by CBI, an ECIR was recorded by Shimla Sub-
Zonal Office, Directorate of Enforcement vide ECIR No. ECIR/SHSZO/04/2019, dated 19.07.2019 and based on material in possession, searches under Section 17 of the PML Act were conducted on 29.08.2023 at various premises, including the residential premises of Rajnish Bansal, Chairman of HGPI and AGPI.
15. HGPI was established and managed under the aegis of Ma Saraswati Educational Trust at Kala Amb, H.P. and AGPI was managed and run under the aegis of People Welfare Education Trust at Indri, Karnal, Haryana. Vikas Bansal became Trustee in the People Welfare Education Trust in the year 2014 and in Maa Saraswati Educational Trust in the year 2012. He controlled the operations of the Bank Accounts of Maa Saraswati Educational Trust and People Welfare Education Trust and Colleges under these Trusts. Financial decisions, general administration, including affiliation of Universities, fund utilization and day-to-day affairs of HGPI were controlled and handled by Rajnish Bansal and Vikas Bansal was handling the financial decisions and general administration of AGPI.
16. In order to target SC/ST/OBC students of Himachal Pradesh to claim bogus scholarships under PMS, marketing teams were formed by these institutions under the supervision of Rajnish Bansal and Vikas Bansal. The teams were sent to various Districts in Himachal Pradesh and other States to advertise about the courses offered by the HGPI and 18 ( 2025:HHC:16769 ) free education for SC/ST/OBC students of Himachal Pradesh. These teams collected documents from the interested students, including, Mark-sheets, Caste Certificates, Bonafide Himachali proof, Income Certificates and Aadhar Cards. Signatures of the students were also obtained on the applications. The details of eligible students under PMS for SC/ST/OBC students alongwith already signed documents were uploaded by the staff of HGPI on HP-ePass Portal and subsequently, the details of such students were verified by HGPI. Thereafter, Vikas Bansal and his Institutes, namely HGPI and AGPI were involved in opening of bank accounts of students through bank representatives of the Banks concerned. The first student of AGPI, whose statement was recorded under Section 50 of the PML Act on 13.01.2025 stated that he never enrolled himself and never studied any course from AGPI. When he was shown scholarship form filed in his name on HP-ePass Portal, he stated that he never filled any scholarship form on HP-ePass Portal and that the mobile number on said form did not belong to him. He further stated that he was not aware of the bank account opened in his name in Oriental Bank of Commerce at Narain Garh, Ambala. Analysis of the bank account statement revealed that scholarship amount of Rs.58,820/- was credited in said bank account on 05.09.2016 from DoHE, Himachal Pradesh and Rs.58,000/- were withdrawn in cash on 07.09.2016.
He further stated that he was not aware of any such withdrawal. Similar statements were recorded by the other students also on 13.01.2025 and thereafter. Investigation under PMLA revealed that Maa Saraswati 19 ( 2025:HHC:16769 ) Education Trust, wherein, Vikas Bansal is Trustee, had received scholarship amounts under PMS from SC/ST/OBC students in Bank Accounts of Punjab National Bank, Kala Amb, Sirmaur, H.P. and in the bank account of Oriental Bank of Commerce, Kala Amb. Vikas Bansal was fully aware of the PMS Scheme and had actively controlled the operations of HGPI and AGPI and knowingly committed fraud by claiming scholarships in the name of bogus SC/ST/OBC students as well as students who were never registered with the concerned University/Board nor had ever studied in the said two Institutions. During investigation under PMLA, Rajnish Bansal in his statement recorded under Section 50 of the PMLA, 2002 on 09.07.2024 had admitted that AGPI and HGPK had claimed and received scholarship under PMS from DoHE. Said scholarship was transferred in bank accounts of the Institutes and/or Trusts from the bank accounts of students through the modus of pre-signed cheques which were signed by students beforehand and of cash withdrawals from bank accounts of students. Investigation under PMLA revealed that all the students of AGPI, for which scholarship was claimed by AGPI, were found to be bogus since AGPI did not have any affiliation with the concerned University/Board. As a result, the entire scholarship amount received in the bank accounts of the students was transferred to the bank account of AGPI illegally. As per the records of DoHE, HGPI had sent claim letters to DOHE for an amount totalling to Rs.39,33,54,428/- for scholarship under PMS Scheme for SC/ST/OBC students from the academic session 2013-14 to 2017-18 and AGPI had sent 20 ( 2025:HHC:16769 ) claim letters to DoHE for an amount totalling to Rs.3,79,97,870/- for scholarship under PMS Scheme for SC/ST/OBC Students from the academic Session 2014-15 to 2016-17.
17. Vikas Bansal through HGPI had generated Proceeds of Crime (PoC) of Rs.14,49,03,665/- by submitting 1729 false and bogus claims and through AGPI had generated PoC of Rs.3,80,28,270/- by submitting 636 false and bogus claims to DoHE Himachal Pradesh of students, who were not officially registered or enrolled in courses with respective Universities/Board for HGPI and AGPI. Through the Trust named Maa Saraswati Educational Trust, Vikas Bansal had acquired two immovable properties separately at Kala Amb, H.P., i.e., 59.09 bighas land for Rs.59.45 lac and 13.06 bighas land for Rs.90 lac in the year 2017 by using the fee collected from students of HGPI and bank loans. The money obtained as a result of bogus claims of scholarship under PMS Scheme was mixed with the legitimate income of Maa Saraswati Educational Trust and People Welfare Education Trust. The scholarships received from students or scholarship amount received directly from the DoHE, Himachal Pradesh for Maa Saraswati Educational Trust and People Welfare Education Trust were utilized for salaries, college expansion, University/Board fees and loan repayments for the construction of buildings for HGPI. As per 'Reasons to Believe', there was sufficient evidence on record which clearly demonstrated that above specified offences were perpetually committed with full disregard to the process of law, with an intention to launder Proceeds of Crime. Vikas 21 ( 2025:HHC:16769 ) Bansal actively involved himself in acquiring Proceeds of Crime. During investigation in ECIR concerned, four persons, namely, Arvind Rajta (Officer of DoHE), Hitesh Gandhi (Vice Chairman KC Group of Institutions), Rajdeep Singh and Krishan Kumar (ASAMS Group of Institutions) were earlier arrested under Section 19 of the PML Act. Vikas Bansal was in possession of Proceeds of Crime from all the above means, which required clear elicitation of facts and confronting the evidences gathered during the course of investigation. Vikas Bansal had evidence in his exclusive possession and could very well tamper with the same by planting forged documents in his favour as evidence. Vikas Bansal was likely to abuse his influence on the other parties including innocent students who made disclosure of his criminal conspiracy. Investigation about other properties generated out of Proceeds of Crimes was going on and if left free, Vikas Bansal could very well tamper with evidence regarding Proceeds of Crime at this crucial juncture. The continuous evasive replies on the part of Vikas Bansal in an ongoing investigation under the provisions of the Prevention of Money Laundering Act, 2002 had made the process of investigation arduous and time consuming. The facts associated with the offence of money laundering involving crucial information which were in his exclusive knowledge were essential for further investigation under PMLA and were essential to bring out the modus operandi and actual role of conspirators in commission of scheduled offence as well as offence of money laundering 22 ( 2025:HHC:16769 ) and accordingly, to complete investigation in these circumstances, his custodial interrogation was necessary.
18. Under the Head 'Involvement in offences and necessity of arrest', the following is mentioned in the 'Reasons to Believe:-
".....XVI. Involvement in offences and
necessity of arrest:
(a) Thus, facts and evidences explained above
and investigation conducted so far has, inter alia, reveal that Vikas Bansal has derived/obtained proceeds of crime directly and/or indirectly as a result of criminal activity related to scheduled offence and he is involved in process or activity connected with proceeds of crime including its concealment, possession, use, projecting or claiming it as untainted. Thus, Vikas Bansal has committed the offence of money laundering as defined under Section 3 and punishable under Section 4 of PMLA, 2002.
(b) On the basis of material collected during investigation and placed on record, I, Rajeev Kumar, Assistant Director have reasons to believe under Section 19(1) of the PMLA, 2002 that Vikas Bansal has committed the offence of money laundering and is connected with the proceeds of crime derived/obtained from the criminal activity related to scheduled offence and in acquisition of the said proceeds of crime. Under these 23 ( 2025:HHC:16769 ) circumstances, I have no other option but to invoke the provisions of Section 19 of PMLA, 2002 to complete investigation and also in order to:
I. Trace out the diverted funds which are
proceeds of crime.
II. Prevent him from influencing the
persons acquainted with crucial
information and witnesses.
III. Confront him during custodial
interrogation with various records,
statements, witnesses and accused
persons involved in the offence of
money laundering.
IV. Identify other persons involved in the
offence of money laundering.
V. Prevent further layering and concealing
of the Proceeds of Crime.
VI. Prevent further tampering and
destruction of evidence."
The grounds of arrest are also on record with the reply as Annexure P-2.
19. As already observed by me hereinabove, the requirement of Section 19(1) of the 2002 Act is that the Arresting Officer may arrest a person under Section 19 supra provided that he, on the basis of material in his possession, has 'reasons to believe', which shall be recorded in writing that any person is 'guilty' of an offence punishable under this Act.
20. At this stage, this Court would like to dwell upon the judgments of the Hon'ble Supreme Court, as were cited before the Court by learned counsel for the parties on the interpretation of Section 19 of the Act.
21. In V. Senthil Balaji vs. State Represented by Deputy Director and Others, (2024) 3 SCC 51, Hon'ble Supreme Court of India 24 ( 2025:HHC:16769 ) has been pleased to hold as under:-
"40. To effect an arrest, an officer authorized has to assess and evaluate the materials in his possession. Through such materials, he is expected to form a reason to believe that a person has been guilty of an offence punishable under the PMLA, 2002. Thereafter, he is at liberty to arrest, while performing his mandatory duty of recording the reasons. The said exercise has to be followed by way of an information being served on the arrestee of the grounds of arrest. Any non-compliance of the mandate of Section 19 (1) of the PMLA, 2002 would vitiate the very arrest itself. Under sub- section (2), the Authorized Officer shall immediately, after the arrest, forward a copy of the order as mandated under sub-section (1) together with the materials in his custody, forming the basis of his belief, to the Adjudicating Authority, in a sealed envelope. Needless to state, compliance of sub-section (2) is also a solemn function of the arresting authority which brooks no exception.
42. The conclusion thus arrived is that the Legislature in its wisdom has consciously created the necessary safeguards for an arrestee, keeping in mind his liberty, and the need for an external approval and supervision. This provision is in compliance with Articles 21 and 22(2) of the Constitution of India.
43. Section 62:
25 ( 2025:HHC:16769 ) "Law can never be enforced unless fear supports them."
- Sophocles "62. Punishment for vexatious search.--
Any authority or officer exercising powers under this Act or any rules made thereunder, who without reasons recorded in writing,--
(a) searches or causes to be searched any building or place; or (b) detains or searches or arrests any
person, shall for every such offence be liable on conviction for imprisonment for a term which may extend to two years or fine which may extend to fifty thousand rupees or both."
44. This provision is a reiteration of the mandatory compliance of Section 19 of the PMLA, 2002. It is in the nature of a warning to an officer concerned to strictly comply with the mandate of Section 19 of the PMLA, 2002 in letter and spirit failing which he would be visited with the consequences. It is his bounden duty to record the reasons for his belief in coming to conclusion that a person has been guilty and therefore, to be arrested. Such a safeguard is meant to facilitate an element of fairness and accountability.
... .... ... ... ... ... ... ....
74. We have already touched upon the mandatory function that a Magistrate is to undertake while dealing with a case of remand.
26 ( 2025:HHC:16769 ) He is expected to do a balancing act. As a matter of rule, the investigation is to be completed within 24 hours and therefore it is for the investigating agency concerned to satisfy the Magistrate with adequate material on the need for its custody, be it police or otherwise. This important factor is to be kept in mind by him while passing the judicial order. We reiterate that Section 19 of the PMLA, 2002, supplemented by Section 167 of the CrPC,1973 does provide adequate safeguards to an arrested person. If Section 167 of the Cr.PC, 1973 is not applicable, then there is no role for the Magistrate either to remand or otherwise.
75. Such a Magistrate has a distinct role to play when a remand is made of an accused person to an authority under the PMLA, 2002. It is his bounden duty to see to it that Section 19 of the PMLA, 2002 is duly complied with and any failure would entitle the arrestee to get released. The Magistrate shall also peruse the order passed by the authority under Section 19(1) of the PMLA, 2002. Section 167 of the Cr.PC, 1973 is also meant to give effect to Section 19 of the PMLA, 2002 and therefore it is for the Magistrate to satisfy himself of its due compliance. Upon such satisfaction, he can consider the request for custody in favour of an authority, as Section 62 of the PMLA, 2002, does not speak about the authority which is to take action for non-
27 ( 2025:HHC:16769 ) compliance of the mandate of Section 19 of the PMLA, 2002. A remand being made by the Magistrate upon a person being produced before him, being an independent entity, it is well open to him to invoke the said provision in a given case. To put it otherwise, the Magistrate concerned is the appropriate authority who has to be satisfied about the compliance of safeguards as mandated under Section 19 of the PMLA, 2002.
97. SUMMATION OF LAW:
97.1. When an arrestee is forwarded to the jurisdictional Magistrate under Section 19(3) of the PMLA, 2002 no writ of Habeus Corpus would lie.
Any plea of illegal arrest is to be made before such Magistrate since custody becomes judicial. 97.2. Any non-compliance of the mandate of Section 19 of the PMLA, 2002 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, 2002.
97.3. An order of remand has to be challenged only before a higher forum as provided under the Cr.PC, 1973 when it depicts a due application of mind both on merit and compliance of Section 167(2) of the Cr.PC, 1973 read with Section 19 of the PMLA 2002.
28 ( 2025:HHC:16769 ) 97.4. Section 41-A of the Cr.PC, 1973 has got no application to an arrest made under the PMLA 2002.
97.5. The maximum period of 15 days of police custody is meant to be applied to the entire period of investigation - 60 or 90 days, as a whole.
97.6. The words "such custody" occurring in Section 167(2) of the Cr.PC, 1973 would include not only a police custody but also that of other investigating agencies.
97.7. The word "custody" under Section 167(2) of the Cr.PC, 1973 shall mean actual custody.
97.8. Curtailment of 15 days of police custody by any extraneous circumstances, act of God, an order of Court not being the handy work of investigating agency would not act as a restriction.
97.9. Section 167 of the Cr.PC, 1973 is a bridge between liberty and investigation performing a fine balancing act.
97.10. The decision of this Court in Anupam J. Kulkarni6, as followed subsequently requires reconsideration by a reference to a larger Bench."
22. In Pankaj Bansal vs. Union of India and others, (2024) 7 Supreme Court Cases 576, Hon'ble Supreme Court of India has been pleased to hold as under:-
29 ( 2025:HHC:16769 ) "16. Though much was stated and argued by both sides on the merits of the matter in terms of the involvement of the appellants in the alleged offence of money laundering, we make it clear that we are not concerned with that issue at this point.
The only issue for consideration presently is whether the arrest of the appellants under Section 19 of the Act of 2002 was valid and lawful and whether the impugned orders of remand passed by the learned Vacation Judge/Additional Sessions Judge, Panchkula, measure up. In that context, we may also make it clear that the mere passing of an order of remand would not be sufficient in itself to validate the appellants' arrests, if such arrests are not in conformity with the requirements of Section 19 of the Act of 2002. Though judgments were cited by the ED which held to the effect that legality of the arrest would be rendered immaterial once the competent Court passes a remand order, those cases primarily dealt with the issue of a writ of habeas corpus being sought after an order of remand was passed by the jurisdictional Court and that ratio has no role to play here. The understanding of the ED and its misplaced reliance upon that case law begs the question as to whether there was proper compliance with Section 19(1) of the Act of 2002 and as to whether the learned Vacation Judge/Additional Sessions Judge, Panchkula, correctly considered that issue while passing the 30 ( 2025:HHC:16769 ) remand orders. Therefore, as the very validity of the remand orders is under challenge on that ground, the issue as to whether the arrest of the appellants was lawful in its inception may also be open for consideration.
17. At this stage, it would be apposite to consider the case law that does have relevance to these appeals and the issues under consideration. In Vijay Madanlal Choudhary3, a three-Judge Bench of this Court observed that Section 65 of the Act of 2002 predicates that the provisions of the Code of Criminal Procedure, 1973, shall apply insofar as they are not inconsistent with the provisions of the Act of 2002 in respect of arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings thereunder. It was noted that Section 19 of the Act of 2002 prescribes the manner in which the arrest of a person involved in money laundering can be effected. It was observed that such power was vested in high-ranking officials and that apart, Section 19 of the Act of 2002 provided inbuilt safeguards to be adhered to by the authorized officers, such as, of recording reasons for the belief regarding involvement of the person in the offence of money laundering and, further, such reasons have to be recorded in writing and while effecting arrest, the grounds of arrest are to 31 ( 2025:HHC:16769 ) be informed to that person. It was noted that the authorized 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 authorized officer in forming an opinion, as recorded in writing, regarding the necessity to arrest the person involved in the offence of money laundering. The Bench also noted that it is the obligation of the authorized officer to produce the person so arrested before the Special Court or Judicial Magistrate or a Metropolitan Magistrate, as the case may be, within 24 hours and such production is to comply with the requirement of Section 167 Cr.P.C. It was pointed out that there is nothing in Section 19 PMLA which is contrary to the requirement of production under Section 167 Cr.P.C and being an express statutory requirement under Section 19(3) PMLA, it has to be complied by the authorized officer. It was concluded that the safeguards provided in the Act of 2002 and the preconditions to be fulfilled by the authorized officer before effecting arrest, as contained in Section 19 PMLA, are equally stringent and of higher standard when compared to the Customs Act, 1962, and such safeguards ensure that the authorized officers do not act arbitrarily, by making them accountable for their judgment about the necessity to arrest any person involved in the commission of the offence of 32 ( 2025:HHC:16769 ) money laundering, even before filing of the complaint before the Special Court. It was on this basis that the Bench upheld the validity of Section 19 PMLA.
18. The Bench further held that once the person is informed of the grounds of arrest, that would be sufficient compliance with the mandate of Article 22(1) of the Constitution and it is not necessary that a copy of the ECIR be supplied in every case to the person concerned, as such a condition is not mandatory and it is enough if the ED discloses the grounds of arrest to the person concerned at the time of arrest. It was pointed out that when the arrested person is produced before the Court, it would be open to the Court to look into the relevant records presented by the authorized representative of the ED for answering the issue of need for continued detention in connection with the offence of money laundering. It was, in fact, such stringent safeguards provided under Section 19 of the Act of 2002 that prompted this Court to uphold the twin conditions contained in Section 45 thereof, making it difficult to secure bail.
19. This Court had occasion to again consider the provisions of PMLA in V. Senthil Balaji v. State11 and more particularly, Section 19 thereof. It was noted that the authorized officer is at liberty to arrest the person concerned once 33 ( 2025:HHC:16769 ) he finds a reason to believe that he is guilty of an offence punishable under the Act of 2002, but he must also perform the mandatory duty of recording reasons. It was pointed out that this exercise has to be followed by the information of the grounds of his arrest being served on the arrestee. It was affirmed that it is the bounden duty of the authorized officer to record the reasons for his belief that a person is guilty and needs to be arrested and it was observed that this safeguard is meant to facilitate an element of fairness and accountability.
20. Dealing with the interplay between Section 19 of PMLA and Section 167 Cr.P.C, this Court observed in V. Senthil Balaji 11 that the Magistrate is expected to do a balancing act as the investigation is to be completed within 24 hours as a matter of rule and, therefore, it is for the investigating agency to satisfy the Magistrate with adequate material on the need for custody of the accused. It was pointed out that this important factor is to be kept in mind by the Magistrate while passing the judicial order. This Court reiterated that Section 19 PMLA, supplemented by Section 167 Cr.P.C., provided adequate safeguards to an arrested person as the Magistrate has a distinct role to play when a remand is made of an accused person to an authority under the Act of 2002. It was held that the Magistrate is under a bounden 34 ( 2025:HHC:16769 ) duty to see to it that Section 19 of the Act of 2002 is duly complied with and any failure would entitle the arrestee to get released. It was pointed out that Section 167 Cr.P.C is meant to give effect to Section 19 of the Act of 2002 and, therefore, it is for the Magistrate to satisfy himself of its due compliance by perusing the order passed by the authority under Section 19(1) PMLA and only upon such satisfaction, the Magistrate can consider the request for custody in favour of an authority. To put it otherwise, per this Court, the Magistrate is the appropriate authority who has to be satisfied about the compliance with safeguards as mandated under Section 19 PMLA. In conclusion, this Court summed up that any non- compliance with the mandate of Section 19 of the Act of 2002, would enure to the benefit of the person arrested and the Court would have power to initiate action under Section 62 PMLA, for such non-compliance. Significantly, in this case, the grounds of arrest were furnished in writing to the arrested person by the authorized officer.
21. In terms of Section 19(3) PMLA and the law laid down in the above decisions, Section 167 Cr.P.C. would necessarily have to be complied with once an arrest is made under Section 19 PMLA. The Court seized of the exercise under Section 167 Cr.P.C. of remanding the person arrested by the ED under Section 35 ( 2025:HHC:16769 ) 19(1) PMLA has a duty to verify and ensure that the conditions in Section 19 are duly satisfied and that the arrest is valid and lawful. In the event the Court fails to discharge this duty in right earnest and with the proper perspective, as pointed out hereinbefore, the order of remand would have to fail on that ground and the same cannot, by any stretch of imagination, validate an unlawful arrest made under Section 19 PMLA.
22. Madhu Limaye, In re:12 was a 3- Judge Bench decision of this Court wherein 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.
23. Viewed in this context, the remand order dated 15.06.2023 passed by the learned Vacation Judge/Additional Sessions Judge, Panchkula, reflects total failure on his part in discharging his duty as per the expected standard. The learned Judge did not even record a finding that he perused the grounds of arrest to ascertain whether the ED had recorded reasons to believe that the appellants were guilty of an offence under the Act of 2002 and that there was proper 36 ( 2025:HHC:16769 ) compliance with the mandate of Section 19 PMLA of the Act of 2002. He merely stated that, keeping in view the seriousness of the offences and the stage of the investigation, he was convinced that custodial interrogation of the accused persons was required in the present case and remanded them to the custody of the ED! The sentence - 'It is further (sic) that all the necessary mandates of law have been complied with' follows
- 'It is the case of the prosecution....' and appears to be a continuation thereof, as indicated by the word 'further', and is not a recording by the learned Judge of his own satisfaction to that effect.
26. This chronology of events speaks volumes and reflects rather poorly, if not negatively, on the ED's style of functioning. Being a premier investigating agency, charged with the onerous responsibility of curbing the debilitating economic offence of money laundering in our country, every action of the ED in the course of such exercise is expected to be transparent, above board and conforming to pristine standards of fair play in action. The ED, mantled with far- reaching powers under the stringent Act of 2002, is not expected to be vindictive in its conduct and must be seen to be acting with utmost probity and with the highest degree of dispassion and fairness. In the case on hand, the facts 37 ( 2025:HHC:16769 ) demonstrate that the ED failed to discharge its functions and exercise its powers as per these parameters.
27. In this regard, we may note that, though the appellants did not allege colourable exercise of power or malafides or malice on the part of the ED officials, they did assert in categorical terms that their arrests were a wanton abuse of power, authority and process by the ED, which would tantamount to the same thing. On that subject, we may refer to the observations of this Court in State of Punjab vs. Gurdial Singh 13 :
(SCC p. 475, para 9)
9. The question, then, is what is malafides in the jurisprudence of power? Legal malice is gibberish unless juristic clarity keeps it separate from the popular concept of personal vice. Pithily put, bad faith which invalidates the exercise of power -- sometimes called colourable exercise or fraud on power and oftentimes overlaps motives, passions and satisfactions -- is the attainment of ends beyond the sanctioned purposes of power by simulation or pretension of gaining a legitimate goal. If the use of the power is for the fulfilment of a legitimate object the actuation or catalysation by malice is not legicidal.
The action is bad where the true object is to reach an end different from the one for which the power is entrusted, goaded by extraneous considerations, good or bad, but (1980) 2 SCC 471 irrelevant to the entrustment. When the custodian of power is influenced in its exercise by considerations outside those for promotion of which the power is vested the court calls it a colourable exercise and is undeceived by illusion. In a broad, blurred sense, Benjamin Disraeli was not off the mark even in law when he stated: "I 38 ( 2025:HHC:16769 ) repeat . . . that all power is a trust -- that we are accountable for its exercise -- that, from the people, and for the people, all springs, and all must exist". Fraud on power voids the order if it is not exercised bona fide for the end designed. Fraud in this context is not equal to moral turpitude and embraces all cases in which the action impugned is to effect some object which is beyond the purpose and intent of the power, whether this be malice-laden or even benign. If the purpose is corrupt the resultant act is bad. If considerations, foreign to the scope of the power or extraneous to the statute, enter the verdict or impel the action, mala fides or fraud on power vitiates the acquisition or other official act.
39. We may also note that the language of Section 19 PMLA puts it beyond doubt that the authorized officer has to record in writing the reasons for forming the belief that the person proposed to be arrested is guilty of an offence punishable under the Act of 2002. Section 19(2) requires the authorized officer to forward a copy of the arrest order along with the material in his possession, referred to in Section 19(1), to the Adjudicating Authority in a sealed envelope. Though it is not necessary for the arrested person to be supplied with all the material that is forwarded to the Adjudicating Authority under Section (2), he/she has a constitutional and statutory right to be 'informed' of the grounds of arrest, which are compulsorily recorded in writing by the authorized officer in keeping with the mandate of Section 19(1) PMLA. As already noted hereinbefore, It seems that the mode of informing 39 ( 2025:HHC:16769 ) this to the persons arrested is left to the option of the ED's authorized officers in different parts of the country, i.e., to either furnish such grounds of arrest in writing or to allow such grounds to be read by the arrested person or be read over and explained to such person.
45. On the above analysis, to give true meaning and purpose to the constitutional and the statutory mandate of Section 19 (1) PMLA of informing the arrested person of the grounds of arrest, we hold that it would be necessary, henceforth, that a copy of such written grounds of arrest is furnished to the arrested person as a matter of course and without exception. The decisions of the Delhi High Court in Moin Akthar Quereshi and the Bombay High Court in Chhagan Chandrakant Bhujbal19, which hold to the contrary, do not lay down the correct law. In the case on hand, the admitted position is that the ED's Investigating Officer merely read out or permitted reading of the grounds of arrest of the appellants and left it at that, which is also disputed by the appellants. As this form of communication is not found to be adequate to fulfil compliance with the mandate of Article 22(1) of the Constitution and Section 19(1)PMLA, we have no hesitation in holding that their arrest was not in keeping with the provisions of Section 19(1) PMLA. Further, as already noted supra, the clandestine conduct of the ED in proceeding 40 ( 2025:HHC:16769 ) against the appellants, by recording the second ECIR immediately after they secured interim protection in relation to the first ECIR, does not commend acceptance as it reeks of arbitrary exercise of power. In effect, the arrest of the appellants and, in consequence, their remand to the custody of the ED and, thereafter, to judicial custody, cannot be sustained."
23. In Arvind Kejriwal vs. Directorate of Enforcement, (2025) 2 Supreme Court Cases 248, Hon'ble Supreme court after referring to the earlier adjudications on the issue held as under:-
"11. Arrest under Section 19(1) of the PML Act may occur prior to the filing of the prosecution complaint and before the Special Judge takes cognizance.11 Till the prosecution complaint is filed, there is no requirement to provide the accused with a copy of the ECIR.12 The ECIR is not a public document. Thus, to introduce checks and balances, Section19 (1) imposes safeguards to protect the rights and liberty of the arrestee. This is in compliance with the mandate of Article 22(1) of the Constitution of India.
12. V. Senthil Balaji vs. State8 similarly states that the designated officer can only arrest once they record "reasons to believe" in writing, that the person being arrested is guilty of the offence punishable under the PML Act. It is 41 ( 2025:HHC:16769 ) mandatory to record the "reasons to believe" to arrive at the opinion that the arrestee is guilty of the offence, and to furnish the reasons to the arrestee. This ensures an element of fairness and accountability.
13. The decision in V. Senthil Balaji has also examined the interplay between Section 19 of the PML Act and Section 167 of the Code. The magistrate is expected to do a balancing act as the investigation is to be concluded within 24 hours as a matter of rule. Therefore, the investigating agency has to satisfy the magistrate with adequate material on the need for custody of the arrestee. Magistrates must bear this crucial aspect in mind while examining and passing an order on the DoE's prayer for custodial remand. More significantly, the magistrate is under the bounden duty to ensure due compliance with Section 19(1) of the PML Act. Any failure to comply would entitle the arrestee to be released. Section 167 of the Code, therefore, enjoins upon the magistrate the necessity to satisfy due compliance of the law by perusing the order passed by the authority under Section 19(1) of the PML Act. Upon such satisfaction, the magistrate may consider the request for custodial remand.
14. Pankaj Bansal reiterates V. Senthil Balaji8 to hold that the magistrate/court has the 42 ( 2025:HHC:16769 ) duty to ensure that the conditions in Section 19 (1) of the PML Act are duly satisfied and that the arrest is valid and lawful. This is in lieu of the mandate under Section 167 of the Code. If the court fails to discharge its duty in right earnest and with proper perspective, the remand order would fail on the ground that the court cannot validate an unlawful arrest made under Section 19(1). The Court relied on the matter of Madhu Limaye and others, which held that it is necessary for the State to establish that, at the stage of remand, while directing detention in custody, the magistrate has applied their mind to all relevant matters. If the arrest itself is unconstitutional viz. Article 22(1) of the Constitution, the remand would not cure the constitutional infirmities attached to such arrest.
The principle stands (1969) 1 SCC 292.
expanded, as the violation of Section 19(1) of the PML Act will equally vitiate the arrest.
15. In Pankaj Bansal4, one of the contentions raised by the DoE was that the legality of arrest is rendered immaterial once the competent court passes an order of remand. Reliance was placed on certain judgments. However, these judgments were distinguished on the ground that they primarily addressed writs of habeas corpus following remand orders by the jurisdictional court. Therefore, the ratios therein 43 ( 2025:HHC:16769 ) are not applicable to this scenario. In the context of statutory compliance, the Court observed in clear terms that if the arrest is not in conformity with Section 19(1) of the PML Act, the mere passing of an order of remand, in itself, would not be sufficient to validate the person's arrest. Thus, notwithstanding the order of remand, the issue whether the arrest of the person is lawful at its inception, is open for consideration and must be answered.
16. Recently, in Prabir Purkayastha vs. State (NCT of Delhi)10, this Court reiterated the aforesaid principles expounded in Pankaj Bansal4. The said principles were applied to the pari materia provisions16 of the Unlawful Activities (Prevention) Act, 1967. The Court explained that Section 19(1) of the PML Act is meant to serve a higher purpose, and also to enforce the mandate of Article 22(1) of the Constitution. The right to life and personal liberty is sacrosanct, a fundamental right guaranteed under Article 21 and protected by Articles 20 and 22 of the Constitution. Reference was made to the observations of this Court in Roy V.D. vs. State of Kerala 12 that the right to be informed about the grounds of arrest flows from Article 22(1) of the Constitution and any infringement of this fundamental right vitiates the process of arrest and remand. The fact that the 44 ( 2025:HHC:16769 ) chargesheet has been filed in the matter would not validate the otherwise illegality and unconstitutionality committed at the time of arrest and grant of remand custody of the accused. Reference is also made to the principle behind Article 22(5) of the Constitution. Thus, this Court held that not complying with the constitutional mandate under ? Article 22(1) and the statutory mandate of the UAPA, on the requirement to communicate grounds of arrest or grounds of detention, would lead to the custody or detention being rendered illegal.
17. In Vijay Madanlal Choudhary v.
Union of India13, a three Judge Bench of this Court distinguished between the stringent requirements stipulated in Section 19(1) of the PML Act, and the power of arrest given to the police in cognizable offences under Section 41 of the Code14.Reference was made to Section 104 of the Customs Act, 1962,20 which was elucidated and considered by the Constitution Bench of this Court in Ramesh Chandra Mehta vs. State of W./B.15, and in Union of India vs. Padam Narain Aggarwal16. On the safeguards against the abuse of the power of arrest in case of the Customs Act, Padam Narain Aggarwal (supra) observes that the power to arrest by a Customs Officer is statutory in character. Such 45 ( 2025:HHC:16769 ) power can be exercised only in cases where the customs officer has the "reason to believe" that the person sought to be arrested is guilty of the offence punishable under the prescribed sections."
19. Vijay Madanlal Choudhary 13 affirms the aforesaid ratio, and states that the safeguards provided as preconditions in Section 19(1) of the PML Act have to be fulfilled by the designated officer before affecting arrest. The safeguards are of a higher standard. They ensure that the designated officer does not act arbitrarily, and is made accountable for their judgment about the 'necessity to arrest' the person23 alleged to be involved in the offence of money laundering, at the stage before the complaint is filed. Paras 215 and 216 read as under: (SCC pp. 221-22, para 215-16) "215. The safeguards provided in the 2002 Act and the preconditions to be fulfilled by the authorised officer before effecting arrest, as contained in Section 19 of the 2002 Act, are equally stringent and of higher standard. Those safeguards ensure that the authorised officers do not act arbitrarily, but make them accountable for their judgment about the necessity to arrest any person as being involved in the commission of offence of money-laundering even before filing of the 46 ( 2025:HHC:16769 ) complaint before the Special Court under Section 44(1)(b) of the 2002 Act in that regard. If the action of the authorised officer is found to be vexatious, he can be proceeded with and inflicted with punishment specified under section 62 of the 2002 Act. The safeguards to be adhered to by the jurisdictional police officer before effecting arrest as stipulated in the 1973 Code, are certainly not comparable. Suffice it to observe that this power has been given to the high-
ranking officials with further conditions to ensure that there is objectivity and their own accountability in resorting to arrest of a person even before a formal complaint is filed under section 44(1)(b) of the 2002 Act.
216. Investing of power in the high-
ranking officials in this regard has stood the test of reasonableness in Premium Granites19, wherein the court restated the position that requirement of giving reasons for exercise of power by itself excludes chances of arbitrariness. Further, in Sukhwinder Pal Bipan Kumar 20, the court restated the position that where the discretion to apply the provisions of a particular statute is left with the Government or one of the highest officers, it will be presumed that the discretion vested in such highest authority will not be abused. Additionally, the Central Government has 47 ( 2025:HHC:16769 ) framed Rules under Section 73 in 2005, regarding the forms and the manner of forwarding a copy of order of arrest of a person along with the material to the Adjudicating Authority and the period of its retention. In yet another decision in Ahmed Noormohmed Bhatti 21, this court opined that the provision cannot be held to be unreasonable or arbitrary and, therefore, unconstitutional merely because the authority vested with the power may abuse his authority. (Also see Manzoor Ali Khan 22."
20. We respectfully agree with the ratio of the decisions in Pankaj Bansal4) and Prabir Purkayastha 10, which enrich and strengthen the view taken in Vijay Madanlal Choudhary), on the interpretation of Section 19 of the PML Act. Power to arrest a person without a warrant from the court and without instituting a criminal case is a drastic and extreme power. Therefore, the legislature has prescribed safeguards in the form of exacting conditions as to how and when the power is exercisable. The conditions are salutary and serve as a check against the exercise of an otherwise harsh and pernicious power.
21. Given that the legislature has prescribed preconditions to prevent abuse and unauthorised use of statutory power, the wielding of such power by an authorized person or authority cannot be conclusive. The exercise 48 ( 2025:HHC:16769 ) of the power and satisfaction of the conditions must and should be put to judicial scrutiny and examination, if the arrestee specifically challenges their arrest. If we do not hold so, then the restraint prescribed by the legislature would, in fact and in practice, be reduced to a mere formal exercise. Given the conditions imposed, the nature of the power and the effect on the rights of the individuals, it is nobody's case, and not even argued by the DoE, that the authorised officer is entitled to arrest a person without following the statutory requirements.
22. However, it has been argued by the DoE that the power to arrest is neither an administrative nor a quasi-judicial power as the arrest is made during investigation. Judicial scrutiny is not permissible as it will interfere with investigation, or at best should be limited to subversive abuse of law. Discretion and right to arrest vests with the competent officer, whose subjective opinion should prevail.
23. We do not agree and must reject this argument. We hold that the power of judicial review shall prevail, and the court/magistrate is required to examine that the exercise of the power to arrest meets the statutory conditions. The legislature, while imposing strict conditions as preconditions to arrest, was aware that the arrest may be before or prior to initiation of the 49 ( 2025:HHC:16769 ) criminal proceedings/prosecution complaint. The legislature, neither explicitly nor impliedly, excludes the court surveillance and examination of the preconditions of Section 19(1) of the PML Act being satisfied in a particular case. This flows from the mandate of Section 19(3) which requires that the arrestee must be produced within 24 hours and taken to the Special Court, or court of judicial/metropolitan magistrate having jurisdiction. The exercise of the power to arrest is not exempt from the scrutiny of courts. The power of judicial review remains both before and after the filing of criminal proceedings/prosecution complaint. It cannot be said that the courts would exceed their power, when they examine the validity of arrest under Section 19(1) of the PML Act, once the accused is produced in court in terms of Section 19(3) of the PML Act."
27. In the present case, we are examining Section 19(1) of the PML Act and the rights of the accused. We are not concerned with the ECIR. The relevant question arising is - whether the arrestee is entitled to be supplied with a copy of the "reasons to believe"?
Paragraph 89 in Vijay Madanlal Choudhary (supra) refers to the importance of recording the "reasons to believe" in writing, and states this is mandatory. Further, both Pankaj 50 ( 2025:HHC:16769 ) Bansal (supra) and Prabir Purkayastha (supra) hold that the failure to record "reasons to believe" in writing will result in the arrest being rendered illegal and invalid. Paragraph 131 of Vijay Madanlal Choudhary (supra), which has been quoted subsequently, states that Section 19(1) requires in-depth scrutiny by the designated officer. A higher threshold is required for making an arrest, necessitating a review of the material available to demonstrate the person's guilt. Production of the "reasons to believe" before the Special Court/magistrate, cannot be construed and is not the same as furnishing or providing the "reasons to believe"
to the arrestee who has a right to challenge his arrest in violation of Section 19(1) of the PML Act.
31. Providing the written "grounds of arrest", though a must, does not in itself satisfy the compliance requirement. The authorized officer's genuine belief and reasoning based on the evidence that establishes the arrestee's guilt is also the legal necessity. As the "reasons to believe" are accorded by the authorised officer, the onus to establish satisfaction of the said condition will be on the DoE and not on the arrestee.
32. On the necessity to satisfy the preconditions mentioned in Section 19(1) of the
51 ( 2025:HHC:16769 ) PML Act, we have quoted from the judgment of this Court in Padam Narain Aggarwal (supra) and also referred to and quoted from the Canadian judgment in Gifford (supra). Existence and validity of the "reasons to believe" goes to the root of the power to arrest. The subjective opinion of the arresting officer must be founded and based upon fair and objective consideration of the material, as available with them on the date of arrest. On the reading of the "reasons to believe" the court must form the 'secondary opinion' on the validity of the exercise undertaken for compliance of Section 19(1) of the PML Act when the arrest was made. The "reasons to believe" that the person is guilty of an offence under the PML Act should be founded on the material in the form of documents and oral statements.
41. Once we hold that the accused is entitled to challenge his arrest under Section 19(1) of the PML Act, the court to examine the validity of arrest must catechise both the existence and soundness of the "reasons to believe", based upon the material available with the authorised officer. It is difficult to accept that the "reasons to believe", as recorded in writing, are not to be furnished. As observed above, the requirements in Section 19(1) are the jurisdictional conditions to be satisfied for arrest, 52 ( 2025:HHC:16769 ) the validity of which can be challenged by the accused and examined by the court.
Consequently, it would be incongruous, if not wrong, to hold that the accused can be denied and not furnished a copy of the "reasons to believe". In reality, this would effectively prevent the accused from challenging their arrest, questioning the "reasons to believe". We are concerned with violation of personal liberty, and the exercise of the power to arrest in accordance with law. Scrutiny of the action to arrest, whether in accordance with law, is amenable to judicial review. It follows that the "reasons to believe"
should be furnished to the arrestee to enable him to exercise his right to challenge the validity of arrest.
42. We would accept that in a one-off case, it may not be feasible to reveal all material, including names of witnesses and details of documents, when the investigation is in progress. This will not be the position in most cases. DoE may claim redaction and exclusion of specific particulars and details. However, the onus to justify redaction would be on the DoE. The officers of the DoE are the authors of the "reasons to believe" and can use appropriate wordings, with details of the material, as are necessary in a particular case. As there may only be a small number of cases where
53 ( 2025:HHC:16769 ) redaction is justified for good cause, this reason is not a good ground to deny the accused's access to a copy of the "reasons to believe" in most cases. Where the non-disclosure of the "reasons to believe" with redaction is justified and claimed, the court must be informed. The file, including the documents, must be produced before the court. Thereupon, the court should examine the request and if they find justification, a portion of the "reasons to believe" and the document may be withheld. This requires consideration and decision by the court. DoE is not the sole judge.
43. Section 173(6) of the Code, permits the police officer not to furnish statements or make disclosures to the accused when it is inexpedient in public interest. In such an event, the police officer is to indicate the specific part of the statement and append a note requesting the magistrate to exclude that part from the copy given to the accused. He has to state the reasons for making such request. The same principle will apply.
44. We now turn to the scope and ambit of judicial review to be exercised by the court. Judicial review does not amount to a mini- trial or a merit review. The exercise is confined to ascertain whether the "reasons to believe" are based upon material which 'establish' that the 54 ( 2025:HHC:16769 ) arrestee is guilty of an offence under the PML Act. The exercise is to ensure that the DoE has acted in accordance with the law. The courts scrutinize the validity of the arrest in exercise of power of judicial review. If adequate and due care is taken by the DoE to ensure that the "reasons to believe" justify the arrest in terms of Section 19(1) of the PML Act, the exercise of power of judicial review would not be a cause of concern. Doubts will only arise when the reasons recorded by the authority are not clear and lucid, and therefore a deeper and in-depth scrutiny is required. Arrest, after all, cannot be made arbitrarily and on the whims and fancies of the authorities. It is to be made on the basis of the valid "reasons to believe", meeting the parameters prescribed by the law. In fact, not to undertake judicial scrutiny when justified and necessary, would be an abdication and failure of constitutional and statutory duty placed on the court to ensure that the fundamental right to life and liberty is not violated.
50. In our opinion, the key distinction between Section 19(1) and Section 45 is the authority undertaking the exercise, in each case.
Under Section 19(1), it is the designated/authorised officer who records in writing, their "reasons to believe" that the arrestee is 'guilty' of an offence under the PML 55 ( 2025:HHC:16769 ) Act. Thus, the arrest is based on the opinion of such officer, which opinion is open to judicial review, however not merits review, in terms of the well-settled principles of law. Contrastingly, under Section 45, it is the Special Court which undertakes the exercise. The Special Court independently examines pleas and contentions of both the accused and the DoE, and arrives at an objective opinion. The Special Court is not bound by the opinion of the designated/authorised officer recorded in the "reasons to believe". A court's opinion is different and cannot be equated to an officer's opinion.
While the Special Court's opinion is determinative, and is only subject to appeal before the higher courts, the DoE's opinion is not in the same category as it is open to judicial review.
79. In Vijay Mandanlal Choudhary (supra), a substantive threshold test is not laid down on the 'necessity to arrest'. However, in paragraph 88 of the judgment, the Court has observed that the safeguard provided in Section 19(1) of the PML Act is to ensure fairness, objectivity and accountability of the authorised officer in forming opinion, as recorded in writing, regarding necessity to arrest a person involved in the offence of money laundering. Similar 56 ( 2025:HHC:16769 ) observations are made in paragraphs 17 and 24 of Pankaj Bansal.
82. Therefore, the issue which arises for consideration is whether the court while examining the validity of arrest in terms of Section 19(1) of the PML Act will also go into and examine the necessity and need to arrest. In other words, is the mere satisfaction of the formal parameters to arrest sufficient? Or is the satisfaction of necessity and need to arrest, beyond mere formal parameters, required? We would concede that such review might be conflated with stipulations in Section 41 of the Code which lays down certain conditions for the police to arrest without warrant:
(i) Section 41(1)(ii)(a) - preventing a person from committing further offence.
(ii) Section 41(1)(ii)(b) - proper investigation of the offence.
(iii) Section 41(1)(ii)(c) - preventing a person from disappearing or tampering with evidence in any manner.
(iv) Section 41(1)(ii)(d) - preventing the person from making any inducement or threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the court or police.
57 ( 2025:HHC:16769 )
(v) Section 41(1)(ii)(e) - to ensure presence of the person in the Court, whenever required, which without arresting cannot be ensured. However, Section 19(1) of the PML Act does not permit arrest only to conduct investigation. Conditions of Section 19(1) have to be satisfied. Clauses (a), (c), (d) and (e) to Section 41(1)(ii) of the Code, apart from other considerations, may be relevant."
24. In Y. Balaji v. Karthik Desari, 2023 SCC Online 645, Hon'ble Supreme Court has been pleased to hold as under:-
"97. If the main part of Section 3 is dissected with forensic precision, it will be clear that Section 3 addresses itself to three things (we may call them 3 'P's) namely, (i) person; (ii) process or activity; and (iii) product. Insofar as persons covered by Section 3 are concerned, they are, (i) those who directly or indirectly attempt to indulge; or (ii) those who knowingly assists; or (iii) those who are knowingly a party; or (iv) those who are actually involved. Insofar as process is concerned, the Section identifies six different activities, namely (i) concealment; (ii) possession; (iii) acquisition;
(iv) use; (v) projecting; or (vi) claiming as untainted property, any one of which is sufficient to constitute the offence. Insofar as product is concerned, Section 3 identifies 58 ( 2025:HHC:16769 ) "proceeds of crime" or the property representing the proceeds of crime as the product of the process or activity."
25. In Radhika Aggarwal Versus Union of India and others, (2025) 150 GSTR 121: 2025 SCC Online SC 449, which is a three Judge Bench judgment of Hon'ble Supreme Court, while concurring with the judgment delivered by Hon'ble the Chief Justice, Hon'ble Justice Bela M. Trivedi, was pleased to hold as under on the jurisdictionary power of judicial review under Articles 32 and 226 of the Constitution of India, when the arrest of a person is challenged: -
"....79. While completely agreeing with the well-considered opinion expressed by the Hon'ble Chief Justice, on when and how the power of arrest should be exercised by the authorized officers, I have thought it expedient to pen down my views on the jurisdictionary powers of judicial review under Article 32 and Article 226 of the Constitution of India, when the arrest of a person is challenged.
80. At the outset, it may be noted that as well settled, though the powers of judicial review under Article 32 and 226 of the Constitution of India are very wide and untrammeled and are vested in the superior courts to protect the legal and fundamental rights of the citizens and even non-citizens, the 59 ( 2025:HHC:16769 ) courts over the years have evolved certain self- restraints for exercising these powers. They have done so in the interest of the administration of justice and for better and more efficient and informed exercise of the said powers. The self- restraints or limitations are imposed as a matter of prudence, propriety, policy and practice. The extra- ordinary jurisdiction under Article 32 and 226, by its very nature is used sparingly and in the extraordinary circumstances.....
82. Whenever the jurisdiction of the High Court or the Supreme Court is invoked under Article 226 or Article 32 as the case may be, challenging the punitive or preventive detention, the Court is expected to take into consideration the nature of right infringed, the scope and object of the legislation under which such arrest or detention is made, the need to balance the rights and interests of the individual as against those of the society, the circumstances under which and the persons by whom the jurisdiction is invoked etc. In exercise of their discretionary jurisdiction, the High Courts and the Supreme Court do not, as courts of appeal or revision, correct errors of law or of facts. The judicial intervention is warranted only in exceptional circumstances when the arrest is prima facie found to be malafide; or is prompted by extraneous circumstances, or is made in 60 ( 2025:HHC:16769 ) contravention of or in breach of provisions of the concerned statute; or when the authority acting under the concerned statute does not have the requisite authority etc......
87. However, when the legality of such an arrest made under the Special Acts like PMLA, UAPA, Foreign Exchange, Customs Act, GST Acts, etc. is challenged, the Court should be extremely loath in exercising its power of judicial review. In such cases, the exercise of the power should be confined only to see whether the statutory and constitutional safeguards are properly complied with or not, namely to ascertain whether the officer was an authorized officer under the Act, 2022 SCC OnLine SC 929 whether the reason to believe that the person was guilty of the offence under the Act, was based on the "material" in possession of the authorized officer or not, and whether the arrestee was informed about the grounds of arrest as soon as may be after the arrest was made. Sufficiency or adequacy of material on the basis of which the belief is formed by the officer, or the correctness of the facts on the basis of which such belief is formed to arrest the person, could not be a matter of judicial review.
88. It hardly needs to be reiterated that the power of judicial review over the subjective satisfaction or opinion of the statutory authority 61 ( 2025:HHC:16769 ) would have different facets depending on the facts and circumstances of each case. The criteria or parameters of judicial review over the subjective satisfaction applicable in Service related cases, cannot be made applicable to the cases of arrest made under the Special Acts. The scrutiny on the subjective opinion or satisfaction of the authorized officer to arrest the person could not be a matter of judicial review, in as much as when the arrest is made by the authorized officer on he having been satisfied about the alleged commission of the offences under the special Act, the matter would be at a very nascent stage of the investigation or inquiry. The very use of the phrase "reasons to believe" implies that the officer should have formed a prima facie opinion or belief on the basis of the material in his possession that the person is guilty or has committed the offence under the relevant special Act. Sufficiency or adequacy of the material on the basis of which such belief is formed by the authorized officer, would not be a matter of scrutiny by the Courts at such a nascent stage of inquiry or investigation."
26. In Vihan Kumar vs. State of Haryana and another, 2025 SCC Online SC 269, Hon'ble Supreme Court has been pleased to held as under:-
62 ( 2025:HHC:16769 ) "21. Therefore, we conclude:
a) The requirement of informing a person arrested of grounds of arrest is a mandatory requirement of Article 22(1);
b) The information of the grounds of arrest must be provided to the arrested person in such a manner that sufficient knowledge of the basic facts constituting the grounds is imparted and communicated to the arrested person effectively in the language which he understands. The mode and method of communication must be such that the object of the constitutional safeguard is achieved;
c) When arrested accused alleges non-
compliance with the requirements of Article 22(1), the burden will always be on the Investigating Officer/Agency to prove compliance with the requirements of Article 22(1);
d) Non-compliance with Article 22(1) will be a violation of the fundamental rights of the accused guaranteed by the said Article. Moreover, it will amount to a violation of the right to personal liberty guaranteed by Article 21 of the Constitution. Therefore, non-compliance with the requirements of Article 22(1) vitiates the arrest of the accused. Hence, further orders passed by a criminal court of remand are also vitiated. Needless to add that it will not vitiate the investigation, charge sheet and trial. But, at the 63 ( 2025:HHC:16769 ) same time, filing of chargesheet will not validate a breach of constitutional mandate under Article 22(1);
e) When an arrested person is produced before a Judicial Magistrate for remand, it is the duty of the Magistrate to ascertain whether compliance with Article 22(1) and other mandatory safeguards has been made; and
f) When a violation of Article 22(1) is established, it is the duty of the court to forthwith order the release of the accused. That will be a ground to grant bail even if statutory restrictions on the grant of bail exist. The statutory restrictions do not affect the power of the court to grant bail when the violation of Articles 21 and 22 of the Constitution is established."
27. In terms of the law declared by the Hon'ble Supreme Court, the subjective opinion of the Arresting Officer must be founded and based upon fair and objective consideration of the material as is available with him on the date of arrest. The scope of judicial review does not amount to a mini-trial or a merit review. The exercise is confined to ascertain whether the 'reasons to believe' are based upon material which establish that the arrestee is 'guilty' of an offence under the PML Act. The exercise is to ensure that DoE has acted in accordance with the law. The Courts scrutinize the validity of the arrest in exercise of power of judicial review and if adequate and due care is taken by DoE to ensure that the "reasons to 64 ( 2025:HHC:16769 ) believe" justify the arrest in terms of Section 19(1) of the PML Act, the exercise of power of judicial review would not be a cause of concern.
Hon'ble Supreme Court has further held that under Section 19(1) of the PML Act, it is the designated/authorized officer who record in writing, their "reasons to believe" that the arrestee is "guilty" of an offence under the PML Act. Thus, the arrest is based on the opinion of such Officer, which opinion is open to judicial review, however, not merit review. Section 19(1) of the PML Act does not permit arrest only to conduct investigation. Conditions of Section 19(1) have to be satisfied. It is the bounden duty of the authorized officer to record the reasons for his belief that a person is guilty and needs to be arrested and the safeguard is meant to facilitate an element of fairness and accountability. To effect an arrest, an officer authorized has to assess and evaluate the materials in his possess. Through such material, he is expected to form a reason to believe that a person has been guilty of an offence punishable under the PMLA, 2002. Thereafter, he is at liberty to arrest, while performing his mandatory duty of recording the reasons. Said exercise has to be followed by way of information being served on the arrestee of the grounds of arrest. Any non-compliance of the mandate of Section 19(1) of the PMLA, 2002 would vitiate the very arrest itself. When legality of an arrest made under the Special Acts like PMLA, UAPA, Foreign Exchange, Customs Act, GST Acts etc. is challenged, the Court should be extremely loath in exercising its power of judicial review. In such cases, the exercise of the power should be confined only to see whether the statutory 65 ( 2025:HHC:16769 ) and constitutional safeguards ae properly complied with or not, namely, to ascertain whether the officer was an authorized officer under the Act, whether the 'reason to believe' that the person was guilty of the offence under the Act, was based on the "material" in possession of the authorized officer or not, and whether the arrestee was informed about the grounds of arrest as soon as may be after the arrest was made. Sufficiency or adequacy of material on the basis of which the belief is formed by the officer, or the correctness of the facts on the basis of which such belief is formed to arrest the person, could not be a matter of judicial review. It hardly needs to be reiterated that the power of judicial review over the subjective satisfaction or opinion of statutory authority would have different facets depending on the facts and circumstances of each case. The criteria or parameters of judicial review over the subjective satisfaction applicable in service related cases cannot be made applicable to the cases of arrest made under the Special Acts. The scrutiny on the subjective opinion or satisfaction of the authorized officer to arrest the person could not be a matter of judicial review, in as much as when the arrest is made by the authorized officer on he having been satisfied about the alleged commission of the offences under the Special Act, the matter would be at a very nascent stage of the investigation or inquiry. The very use of the phrase "reasons to believe" implies that the officer should have formed a prima facie opinion or belief on the basis of the material in his possession that the person is guilty or has committed the offence under the relevant special Act. Sufficiency or 66 ( 2025:HHC:16769 ) adequacy of the material on the basis of which such belief is formed by the authorized officer, would not be matter of scrutiny by the Courts at such a nascent stage of inquiry or investigation.
28. It is evident from the judgments of the Hon'ble Supreme Court that the act of Arresting Officer of arresting a person is amenable to judicial review, but the scope of judicial review is limited. The High Court in exercise of its writ jurisdiction can only scrutinize as to whether the provisions of Section 19 of the PML Act, 2002 have been complied with or not. It cannot go into the adequacy or the sufficiency of the material etc. so as to conduct merit test of the satisfaction of the Arresting Officer. However, the High Court, of course, can see as to whether the arrest is legal or not, but, the legality has to be confined to the compliance of provisions of Section 19(1) of the Act. It is also evident from the judgments of the Hon'ble Supreme Court that though the arrest under Section 19(1) of the PML Act cannot be only for the purpose of investigation, but where the arrest is also necessary for that purpose, if the same is after satisfaction of the statutory provisions of Section 19(1) of the Act, then such arrest cannot be interfered with by the High Court.
29. Coming back to the facts of the present case, this Court is of the considered view that the 'reasons to believe', which have been reduced into writing by the Arresting Officer not only point out to the involvement of the petitioner in the predicate offence, but also the involvement of the petitioner while dealing with the Proceeds of Crime. The 67 ( 2025:HHC:16769 ) Arresting Officer, in detail, has dealt in the 'reasons to believe' as to why, according to him, the arrest was necessary. Not only this, a perusal of the 'reasons to believe' demonstrates that after elaborating the reasons, the Arresting Officer also stated in Para-XVI thereof that the petitioner had committed the offence of money laundering and is connected with the Proceeds of Crime derived/obtained from the criminal activity related to scheduled offence and in acquisition of the said Proceeds of Crime. Though the word "guilty" has not been specifically used, but, when it stands mentioned in the reasons to believe that the Arresting Officer has reasons to believe under Section 19(1) of the PML Act that Vikas Bansal has committed the offence of money laundering and is connected with the Proceeds of Crime derived/obtained from the criminal activity related to scheduled offence and in acquisition of the said Proceeds of Crime, this was, indeed, recording down his satisfaction that as per him, the petitioner was guilty of offence punishable under the PML Act.
30. Besides this, it is further apparent from the 'reasons to believe' that said reasons were based on the material with the Arresting Officer, which stood elaborately dealt with in the 'reasons to believe', both relating to the predicate offence as well as the commission of offence under the PML Act.
31. Now, in terms of the law declared by the Hon'ble Supreme Court, in exercise of its power of judicial review, this Court is not going into nor it can go into the correctness of the opinion of the Arresting 68 ( 2025:HHC:16769 ) Officer, because that is beyond the scope of judicial review. Suffice to say that when the mandatory requirements of Section 19(1) of the Act stand complied with by the Arresting Officer and the compliance is not cosmetic, this Court cannot hold the arrest of the petitioner to be bad in law. The contention of learned Senior Counsel for the petitioner that the arrest of the petitioner is for the sake of investigation only and same is not permissible under Section 19(1) of the Act, can also not be accepted, for the reason that though as per the judgments of the Hon'ble Supreme Court, the arrest of a person under Section 19(1) of the PML Act cannot only be for the purpose of investigation, but the same can also be for the purpose of investigation, if the arrest is in strict compliance of the provisions of Section 19(1) of the Act.
In this case, the reasons to believe, indeed, prima facie, do justify the arrest of the petitioner in terms of Section 19(1) of the PML Act. The veracity of the 'reasons to believe' cannot be gone into by the Court in these proceedings, however, it cannot be said that the 'reasons to believe', which have been reduced into writing do not demonstrate that a case was indeed made by the Arresting Officer for exercising his power of arresting the petitioner.
Therefore, this Court is of the considered view that the arrest of the petitioner is not in violation of the provisions of Section 19(1) of the PML Act.
Though learned Senior Counsel for the petitioner vehemently submitted that the chronology which preceded the arrest of the petitioner, shroud the intent of the respondents with suspicion, but this Court is of the considered view that as the requirements of Section 19 of the PMLA were met in course of 69 ( 2025:HHC:16769 ) arrest of the petitioner, then the backdrop in which the person is arrested, cannot persuade the Court to declare the arrest in violation of the provisions of Section 19(1) of the Act. In fact, this Court is refraining from making any observation in this regard, so that it does not prejudice the case of either of the parties.
32. Now, as this Court has held that the arrest of the petitioner was not in violation of Section 19(1) of the Act, the remand of the petitioner by the Court of learned Judicial Magistrate can also not be faulted with, as the satisfaction of learned Judicial Magistrate is also confined to ensuring that the provisions of Section 19(1) of the Act are complied with in letter and spirit. The discrepancies pointed out in the order of learned Judicial Magistrate, which were specifically referred to by learned Senior Counsel for the petitioner, also do not render either arrest or remand of the petitioner to be bad, for the reason that when the foundation of the arrest of the petitioner is being upheld by the Court, the edifice would also survive.
33. As far as the argument raised on behalf of the petitioner that the Judicial Magistrate was not having any jurisdiction to order the remand of the petitioner is concerned, this Court would like to refer to the provisions of Section 19(3) of the Prevention of Money-laundering Act, 2002. Sub-section (3) of Section 19 of the Act provides that every person arrested under Sub-section (1) shall within twenty-four hours, be taken to a Special Court or Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction, provided that the period of twenty-four 70 ( 2025:HHC:16769 ) hours shall exclude the time necessary for the journey from the place of arrest to the Special Court or Magistrate's Court. It is not in dispute that in terms of the Notification issued by the Government of India, Sessions Judge, Shimla is designated as Special Judge under the PMLA, 2002 for certain Districts in the State of Himachal Pradesh, including Shimla, Solan and Sirmaur. It is also not in dispute that the Shimla Zonal Office of Directorate of Enforcement recorded an Enforcement Case Information Report (ECIR) bearing No. ECIR/SHSZO/04-2019 based on the predicate offence on 19.07.2019 and a prosecution complaint was filed on 21.10.2023 before the learned Special Court under the Prevention of Money-laundering Act at Shimla and vide order dated 23.02.2024, said Court has taken cognizance of the said complaint against the accused persons named therein. It is a matter of record that as on the date when the petitioner was arrested, Special Court, PMLA was not available on account of winter vacations. Though the petitioner was produced before the Judicial Magistrate concerned on the basis of a Notification, in terms whereof, the powers of Sessions Judge, Shimla were being exercised by the said Officer, but the fact of the matter still remains that in the absence of the Special Court being available, the petitioner could have been produced before the said Judicial Magistrate at Shimla, as he was having territorial jurisdiction in the matter, as the ECIR was registered on 19.07.2019 in the Shimla Zonal Office of the Directorate of Enforcement. Therefore, this Court is of the 71 ( 2025:HHC:16769 ) considered view that it cannot be said that the learned Judicial Magistrate who granted the remand was not having territorial jurisdiction to do so.
34. Further, in terms of the law laid down by the Hon'ble Supreme Court, the High Court, in exercise of its power of judicial review under Article 226 of the Constitution of India, cannot go into the legality of a judicial order, including that passed by a Judicial Magistrate, except for the exceptions carved out by the Hon'ble Supreme Court in Madhu Limaye, In re, (1969) 1 SCC 292. In fact, in V. Senthil Balaji's case (supra), Hon'ble Supreme Court has been pleased to hold that a Magistrate has a distinct role to play when a remand is made of an accused person to an authority under the PMLA, 2002. It is his bounden duty to see that Section 19 of the PMLA, 2002 is duly complied with and any failure would entitle the arrestee to get released. The Magistrate shall also peruse the order passed by the Authority under Section 19(1) of the PMLA, 2002. Section 167 of the Criminal Procedure Code, 1973 is also meant to give effect to Section 19 of the PMLA, 2002 and, therefore, it is for the Magistrate to satisfy himself of its due compliance. To put it otherwise, the Magistrate concerned is the appropriate authority who has to be satisfied about the compliance of safeguards, as mandated under Section 19 of the PMLA, 2002. An order of remand has to be challenged only before a higher Forum as provided under the Criminal Procedure Code, 1973, when it depicts a due application of mind both on merit and compliance of Section 167(2) Cr. P.C. read with Section 19 of the PML Act, 2002.
72 ( 2025:HHC:16769 )
35. From the response of the respondent-Department and the documents appended with the reply, it is evident that statutory safeguards were properly complied with in the present case. The Arresting Officer was an Authorized Officer under Section 19 (1) of the PML Act and the 'reasons to believe' that the petitioner was 'guilty' of the offence punishable under the PML Act were based on the material in possession of the Authorized Officer. It is also not in dispute that the petitioner was informed about the 'grounds of arrest' soon after his arrest. This Court again reiterates that in this backdrop the sufficiency or adequacy of material, on the basis of which the belief was formed by the Arresting Officer or the correctness of the facts on the basis of which the belief was formed to arrest the petitioner, cannot be gone into by this Court in exercise of its power of judicial review in terms of the law declared by the Hon'ble Supreme Court.
36. The 'reasons to believe' categorically spell out that Vikas Bansal was involved in the predicate offence as well as in the commission of offences under PML Act. In terms of the contents of the 'reasons to believe', Vikas Bansal through HGPI had generated Proceeds of Crime (PoC) of Rs.14,49,03,665/- by submitting 1729 false and bogus claims and had generated Proceeds of Crime to the tune of Rs.3,80,28,270/- by submitting 636 false and bogus claims to the Department of Higher Education, Himachal Pradesh through AGPI of students, who were not officially registered or enrolled in courses with respective Universities/Board for HGPI and AGPI. It is further mentioned in the 'reasons to believe' that through the 73 ( 2025:HHC:16769 ) Trust named Maa Saraswati Educational Trust, Vikas Bansal had acquired two immovable properties separately at Kala Amb, H.P., measuring 59.09 bighas of land for Rs.59.45 lac and 13.06 bighas of land for Rs.90 lac in the year 2017 by using the fee collected from students of HGPI and bank loans and the money obtained as a result of bogus claims of scholarship under PMS Scheme was mixed with the legitimate income of Maa Saraswati Educational Trust and People Welfare Education Trust. The Proceeds of Crime were utilized for payment of salaries and expansion of College etc.
37. Therefore, in the light of above discussion, as this Court finds no merit in the present petition, the same is dismissed. No order as to costs. Pending miscellaneous applications, if any, also stand disposed of.
(Ajay Mohan Goel) Judge May 30, 2025 (bhupender/narender)