The Delhi High Court has granted bail to the alleged international hawala operator while drawing a line between grounds of arrest and reasons for arrest mentioned in the arrest memo.
The bench of Justice Anup Jairam Bhambhani has observed that the court noted that the petitioners’ arrest by the Enforcement Directorate (ED) in the subject Enforcement Case Information Report (ECIR) for violations of the provisions of PMLA is valid and legal and in compliance of the requirements of the law, including the requirements of the Supreme Court verdict in Prabir Purkayastha and section 19 of the PMLA; however the petitioners’ arrest by the Delhi Police in the subject FIR is not valid, since those are in violation of the mandate of the Supreme Court in Prabir Purkayastha.
The bench sated that what have been set-out in the Delhi Police arrest memos are not “grounds of arrest” but only “reasons for arrest” in the arrest memos. A perusal of the arrest memo shows that the investigating officer has only mentioned general reasons for which any person may be sought to be arrested viz., that the person‟s custodial interrogation is required. The person is likely to destroy evidence; that the person is likely to influence witnesses and that the person’s presence cannot be ensured unless he is arrested, namely that he is a flight-risk.
The bench has pointed out that what has been recorded in the arrest memos are not grounds of arrest since these do not spell-out the specific roles alleged against the petitioners; nor do they refer to the specific incriminating circumstances that can be attributed to a particular petitioner in relation to the offences alleged.
The bench observed that the enactment of Foreign Exchange Management Act, 1999 (FEMA) does not grant to a person immunity from prosecution for offences under the Indian Penal Code (IPC) even if the offences alleged arise from the same underlying actions or omissions that led to infractions of FEMA.
The court stated that the registration of the subject FIR by the Delhi Police, based on the complaint filed by the Enforcement Directorate (ED), arising from the search and seizure operation conducted by the (latter) agency, is not invalid or illegal merely because the FIR is based on the ED’s complaint. It may be observed however, that this court has not examined the legal tenability of the subject FIR on the touchstone of the grounds for quashing enunciated by the Supreme Court in Bhajan Lal.
Background
The genesis of the case against the petitioners/accused is a search and seizure operation that was carried-out by the ED under section 37 of the FEMA at the premises of the petitioners on 28.05.2024, during which the ED also recorded their statements. It is the ED‟s case that in the statements so recorded, the petitioners admitted that they had indulged in international hawala transactions to the tune of Rs.3,500 crore inter-alia by fabricating documents to send outward remittances to their companies in Hong Kong and Canada.
The petitioners contended that the search and seizure operation carried-out by the ED at the petitioners’ residential premises and at the office premises of their companies under the powers conferred upon them under section 37 of the Foreign Exchange Management Act, 1999 (FEMA) and under section 132 of the Income Tax Act, 1961 (IT Act), could not have led to the registration of the subject FIR or the subject ECIR. It is accordingly the petitioners‟ contention, that all actions taken by the police pursuant to the subject FIR and by the ED in the subject ECIR, including the petitioners’ arrest, are illegal and deserve to be set-aside.
Conclusion
The court disposed of the petition and clarified that nothing in the judgment would stand in the way of the petitioners’ applying for bail, as may be permissible, in accordance with law.
Case Details
Case Title: Manideep Mago Versus Union Of India & Ors.
Case No.: W.P.(CRL) 2241/2024 & CRL.M.A. 21882/2024, CRL.M.A. 30909/2024
Date: 15th May, 2025
Counsel For Petitioner: Vikram Chaudhri, Senior Advocate
Counsel For Respondent: Amol Sinha, ASC (Criminal)
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