HC Upholds Arrest of an MD by ED for Money Laundering Through a Complex Web of Cos. Having Common Control

Case Details: Neeraj Singal v. Directorate of Enforcement - [2024] 161 taxmann.com 82 (HC - Delhi)

Judiciary and Counsel Details

• Vikas Mahajan, J.
• Kapil Sibal, Dr Abhishek Menu, Vikas Pahwa, Sr. Advs. Ms Ranjana Roy Gawai, Ujjwal Jain, Ms Shambhavi Kashyap, Adit Pujari, Aavishkar Singhvi, Garnil Singh & V. Wadhwa, Advs. for the Appellant. 
• Zoheb Hossain, Vivek Gurnani, Baibhav, Ms Manisha Dubey, Pranjal Tripathi, Anuj Kumar & Sanket Sinha for the Respondent.

Facts of the Case

In the instant case, an investigation was ordered by the Serious Fraud Investigation Office (SFIO) into the affairs of company ‘B’. SFIO filed a complaint case alleging ‘B’ of fraud. The Enforcement Directorate (ED) registered the ECIR, alleging that the petitioner/managing director of ‘B’ knowingly indulged in the laundering of proceeds of crime through a complex web of more than 150 companies having a common core i.e. ownership and control of the petitioner.

The petitioner was arrested and produced before the Special Judge (CBI). ED filed a remand application before the Special Judge, seeking custody remand of the petitioner and the same was allowed.

Subsequently, the petitioner filed an instant bail application praying to declare the arrest in violation of provisions of the Code of Criminal Procedure, 1973. He contended that his arrest was in violation of section 19(1) of the PMLA as he was not provided with a copy of the grounds of arrest in writing at the time of his arrest.

It was noted that at the time of the petitioner’s arrest, the oral communication of the grounds of arrest was in proper compliance with the provisions of section 19 of the Act. The petitioner was shown the grounds of his arrest and the arrest order was duly signed by him and countersigned by two independent witnesses.

High Court Held

The High Court observed that a copy of the remand application was served upon counsel for the petitioner before the Special Judge, and the remand application contained grounds of arrest. Hence, the petitioner stood informed of the grounds of arrest in terms of section 19(1) of the Act.

The High Court held that although the petitioner sought correction of the remand order seeking to replace some words, he neither sought rectification of the findings of the Special Judge nor challenged the said findings in the instant application. Hence, the petitioner was not aggrieved with the said findings. Therefore, the arrest of the petitioner was not illegal and the instant bail application was to be dismissed.