Clandestine Conduct Of ED Reeks Of Arbitrary Exercise Of Power: Supreme Court While Granting Bail To M3M Group Owners In PMLA Case

The Supreme Court has set aside the Punjab and Haryana High Court’s orders, along with arrest warrants as well as arrest memos, refusing to grant bail to Pankaj Bansal, and Basant Bansal, Directors M3M group in the PMLA Case. The Court had earlier reserved its judgment on the petitions filed by the directors of the real estate group.

It is also to be noted that in the matter, allegations are also levied against Sudhir Parmar posted as Special Judge for dealing with cases of Enforcement Directorate and CBI cases at Panchkula for showing favoritism to Lalit Goyal, owner of IREO group of companies, Roop Bansal and his brother Basant Bansal which are also being probed. A case under Sections 7, 8, 11 and 13 of the Prevention of Corruption Act, 1988 and Section 120-B of IPC was registered against the Special Judge, Ajay Parmar, Roop Bansal and some unknown persons.

A bench of Justice C.T. Ravikumar and Justice Sanjay Kumar thus observed, “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, 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) of the Act of 2002. We have no hesitating in holding that the arrest was not in keeping with the provisions of Section 19(1). Further as already noted that the clandestine conduct of the ED in proceedings against the appellants by recording the second ECIR immediately after they secured an interim protection in relation to the first ECIR does not commit 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. The appeals are accordingly allowed setting aside the impugned orders passed by the Punjab and Haryana High Court as well as the impugned arrest orders and the arrest memos along with the orders of remand passed by the learned Additional Sessions Judge, Panchkula and all orders consequential thereto. The appellants shall be released forthwith unless their incarceration is validly required in connection with any other case”.

Senior Advocates A.M. Singhvi, Randeep Rai and Vikram Chaudhary appeared for the appellants, and ASG S.V. Raju appeared for the respondent.

In the pertinent matter, before the Division Bench of the High Court, the appellants had challenged the vires of Section 19 (1) of the Prevention of Money Laundering Act, 2002 (PMLA) and had further sought to quash the orders dated 15.06.2023, 20.06.2023 and 26.06.2023 whereby they were ordered to be remanded to the custody of the ED and then to judicial custody.

The appellants had challenged the remand orders on the ground that the orders were in violation of procedure established by law and were in fact passed in a mechanical manner without due application of mind. Therefore, the arrest of the petitioners was illegal and in violation of the safeguards laid down under Section 19 of PMLA. It was further argued that the remand order was passed in routine by the Court and the fact that the petitioners were arrested only on the basis of summons without issuance of any warrant by the police and against their constitutional rights were ignored. Furthermore, it was alleged that the arrest of the petitioners had been effected without due compliance of provisions of Sections 41 and 41-A of the Code of Criminal Procedure and, therefore, the impugned orders as passed by the Additional Sessions Judge, Panchkula thereby remanding to the petitioners to the custody of respondent No.2 (Enforcement Directorate) and then to judicial custody were liable to be set aside.

However, the division bench of the High Court while refusing to grant bail observed, "On perusal of the material placed on record, it has been revealed that the allegations as levelled against Judicial Officer namely, Mr. Sudhir Parmar who is alleged to have taken undue favours from the present petitioners and other key persons of M3M group of companies and Managing Director of IREO company are being investigated by respondent No.2. The same are quite serious in nature. Keeping in view the gravity of the same, the prayer as made by the petitioners for grant of release from custody at this stage does not deserve to be accepted. Hence, the same is rejected. As per the discussion as made above, the writ petitions have become liable to be dismissed. It is ordered accordingly. However, since as per the respondents, further investigation for establishing the exact part played by the petitioners in the subject crime is going on, therefore, a direction is given to the respondents to submit status report qua the steps taken during the course of investigation as on 22.08.2023".

In the present matter 13 FIRs were registered by certain allottees of two separate residential projects, "Skyon‟ and Floors, plots and Villas, undertaken by the IREO Group, i.e., M/s IREO Pvt. Ltd. and M/s IREO Five River Pvt. Ltd., respectively, on the ground of delay in handing over/delivery of possession of apartments/ commercial units. There were no specific allegations against the applicant, his family members, and the M3M Group or any of its entities. Also upon investigation, the Enforcement Directorate in the registered ECIR as well, did not array the applicant or the M3M Group of Companies as accused.

Cause Title: Pankaj Bansal v. Union of India and Ors.