Mumbai Court Rules Businessman's Arrest Illegal Due to ED's Failure to Provide Key Document

A special PMLA court in Mumbai declared the arrest of a 70-year-old businessman in a money laundering case as illegal. The Enforcement Directorate (ED) failed to provide him with a copy of the document listing reasons to believe he was guilty. Special judge AC Dagga noted that while the accused, Purushottam Mandhana, had seen the reasons, he was not given a copy before or after his arrest.

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Businessman Mandhana, promoter and chairman of a Palghar-based textile firm, was arrested on July 19 in connection with a Rs 975-crore bank fraud case. He had been remanded to ED custody until July 25 by the special court. On Thursday, he was produced before the court at the end of his initial remand.

Supreme Court Ruling

The special judge referred to a recent Supreme Court ruling in the Arvind Kejriwal case. The SC observed that if certain parts of the reasons to believe are not required to be shown to the accused, it is for the court to decide whether those parts should be withheld. In this matter, no such application was moved by the prosecution.

The ED argued that the reasons to believe had been submitted before the court in a sealed envelope during Mandhana's first remand. They claimed that the document did not need to be given to the accused due to the nature of certain information contained within it.

Legal Implications

The special judge noted that there was no force in the prosecutor's arguments. "Therefore, the arrest of the accused itself is illegal. It follows that the remand itself is not tenable and the accused is entitled to be set at liberty," observed Judge Dagga.

Mandhana's lawyer pointed out that his client's arrest was illegal as he was not provided with a copy of reasons to believe he was involved in money laundering. This argument led to Mandhana being produced before the court at the end of his initial remand.

In its July 12 ruling, the Supreme Court held that "reason to believe" for arresting a person under PMLA must be furnished to enable them to challenge their detention. A bench of justices Sanjiv Khanna and Dipankar Datta granted interim bail to Delhi Chief Minister Arvind Kejriwal in a similar money laundering case linked to an alleged excise policy scam.

The SC stated that section 19 of PMLA, which gives power to arrest, includes stringent safeguards to protect individuals' life and liberty. This ruling played a significant role in determining Mandhana's case outcome.

The PMLA court's decision highlights the importance of procedural fairness and adherence to legal safeguards in arrests under money laundering laws. The ruling underscores that authorities must provide necessary documents to accused individuals, ensuring their rights are protected.

This case serves as a reminder for law enforcement agencies about following due process and respecting legal requirements when making arrests under PMLA. It also emphasises judicial oversight in maintaining checks and balances within legal proceedings.