Holding

The Court held that the "need and necessity to arrest" is a distinct ground that must be examined alongside the statutory pre‑conditions of Section 19(1) of the PML Act, and that such arrests are subject to judicial review, leading to the grant of interim bail.

Summary

The Supreme Court examined the arrest of Arvind Kejriwal under Section 19 of the Prevention of Money Laundering Act, 2002, in connection with the Delhi excise policy case alleging kickbacks and money‑laundering. Kejriwal challenged the arrest as illegal, arguing that the "reasons to believe" did not disclose all material and that there was no necessity to arrest him on the date of arrest. The Court held that the power to arrest under Section 19 is subject to strict statutory pre‑conditions and that the "need and necessity to arrest" is a separate ground that courts must scrutinise, not merely a procedural formality. It affirmed that judicial review of such arrests is permissible and that the "reasons to believe" must be furnished to the arrestee, with the onus on the Enforcement Directorate to justify any redactions. Applying these principles, the Court found the arrest questionable, granted Kejriwal interim bail, and referred the complex legal questions to a larger Bench for further consideration.

Issues considered

The validity of arrest under Section 19(1) of the PML Act
Whether "need and necessity to arrest" is a separate ground for challenging the arrest
Scope and ambit of judicial review of arrests under the PML Act
Whether the "reasons to believe" must be disclosed to the arrestee
Whether the arrest can be justified solely on formal parameters without assessing necessity

Legislation cited

Code of Criminal Procedure, 1973s. 167, s. 173(6), s. 41, s. 437, s. 438, s. 439
Indian Penal Code, 1860s. 26
Prevention of Money Laundering Act, 2002s. 19, s. 24, s. 26, s. 45

Subjects

Section 19 of the Prevention of Money Laundering Act, 2002Validity of arrestNecessity and need to arrestDelhi excise policyLiquorExcise policyKickbacksBribesEnforcement DirectorateECIRreasons to believePreconditions to arrestProceeds of crimeAam Aadmi PartyFormal parameters to arrestGrounds of arrestMoney launderingPrinciples of Wednesbury reasonablenessPrinciple of proportionalityProportionality testJudicial review

Judgment

[2024] 7 S.C.R. 2363 : 2024 INSC 512

Arvind Kejriwal
v.
Directorate of Enforcement
(Criminal Appeal No. 2493 of 2024)
12 July 2024
[Sanjiv Khanna* and Dipankar Datta, JJ.]

Issue for Consideration
Validity of arrest of the appellant under Section 19 of the Prevention
of Money Laundering Act, 2002; scope and ambit of the Courts to
examine the legality of the arrest under Section 19; 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; whether interim bail ought to be granted to the
appellant.

Headnotes†
Prevention of Money Laundering Act, 2002 – s.19(1) –
“need and necessity to arrest”, if a separate ground to be
considered beyond the conditions stipulated in s.19(1) –
Appellant challenged his arrest by ED in the Excise Policy
case wherein he was described as the key conspirator in
formulation of the said policy framed for the sale of liquor
in NCT of Delhi, which allegedly favoured certain persons
in exchange for kickbacks from liquor businessmen and
resulted in huge losses to the government exchequer – It
was further inter alia alleged that the appellant was involved
in the use of proceeds of crime generated in the Goa election
campaign of Aam Aadmi Party – Arrest was challenged as
illegal contending that he was arrested in violation of s.19(1),
the “reasons to believe” did not mention and record reasons
for “necessity to arrest” and there was no necessity to arrest
the appellant on 21.03.2024 as the RC (by CBI)/ECIR (by ED)
were registered in August 2022 and also most of the material
relied upon in the “reasons to believe” were prior to July 2023 –
Whether mere satisfaction of the formal parameters to arrest
sufficient or is the satisfaction of necessity and need to arrest,
beyond mere formal parameters required:

* Author
2364 [2024] 7 S.C.R.

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Held: Such review might be conflated with stipulations in s.41 of
the Code of Criminal Procedure, 1973 which lays down certain
conditions for the police to arrest without warrant – However,
s.19(1) does not permit arrest only to conduct investigation –
Conditions of s.19(1) have to be satisfied – Clauses (a), (c), (d)
and (e) to s.41(1)(ii) of the CrPC, apart from other considerations,
may be relevant – Vijay Madanlal Choudhary, a three Judge Bench
decision states that the safeguards provided as pre-conditions in
s.19(1) of the PML Act have to be fulfilled by the designated officer
before affecting arrest – The safeguards are of a higher standard
and ensure that the designated officer does not act arbitrarily, and
is made accountable for their judgment about the ‘necessity to
arrest’ the person alleged to be involved in the offence of money
laundering, at the stage before the complaint is filed – “necessity
to arrest” is not mentioned in s.19(1) however, it has been
judicially recognised in Arnesh Kumar laying down that “necessity
to arrest” must be considered by an officer before arresting
a person – Power to arrest must be exercised cautiously to
prevent severe repercussions on the life and liberty of individuals
and such power must be restricted to necessary instances and
must not be exercised routinely – Right to life and liberty is
sacrosanct, and the appellant has suffered incarceration of over
90 days and as the questions of law inter alia as regards whether the
“need and necessity to arrest” is a separate ground to challenge
the arrest u/s.19(1) of the PML Act is referred to larger Bench,
the appellant is granted interim bail in the ECIR recorded by
respondent-ED, on the conditions as imposed, which may be
extended/recalled by the larger Bench. [Paras 18, 67, 74, 84, 85]
Prevention of Money Laundering Act, 2002 – s.19(1) – Validity
of arrest – “Need and necessity to arrest” – Parameters to
be considered – Questions of law referred to larger Bench:
Held: Questions as regards whether the“need and necessity
to arrest” is a separate ground to be considered beyond the
conditions stipulated in s.19(1); whether it refers to the satisfaction
of formal parameters to arrest and take a person into custody,
or it relates to other personal grounds and reasons regarding
necessity to arrest a person; and if questions (a) and (b) are
affirmatively answered, what are the parameters and facts to be
taken into consideration while examining the question of “need
and necessity to arrest”. [Para 85]
[2024] 7 S.C.R. 2365

Arvind Kejriwal v. Directorate of Enforcement

Prevention of Money Laundering Act, 2002 – s.19(1) –
Preconditions to arrest under – Power to arrest – Judicial
review – Plea of the respondent-Directorate of Enforcement
that there should not be judicial scrutiny of the power to arrest
as it will interfere with the investigation:
Held: Rejected – The exercise of the power to arrest is not exempt
from the scrutiny of courts – A decision-making error u/s.19(1)
can lead to the arrest and deprivation of liberty of the arrestee –
Courts have the power of judicial review and must examine that
the exercise of the power to arrest meets the statutory conditions –
The legislature imposed strict conditions as preconditions to arrest
and was aware that the arrest may be before or prior to initiation
of the criminal proceedings/prosecution complaint and did not
exclude the examination of the said preconditions being satisfied
in a particular case – This flows from the mandate of s.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 power of judicial review
remains both before and after the filing of criminal proceedings/
prosecution complaint. [Paras 21, 61]
Prevention of Money Laundering Act, 2002 – s.19(1) – Penal
Code, 1860 – s.26 – “reasons to believe” – Rights of the
accused – Whether the arrestee is entitled to be supplied with
a copy of the “reasons to believe”:
Held: Yes – 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 ED and not on the arrestee – s.26 defines
the expression “reason to believe” as sufficient cause to believe a
thing and not otherwise – “reasons to believe” are the reasons for
the formation of the belief which must have a rational connection
with or an element bearing on the formation of belief – The reason
should not be extraneous or irrelevant for the purpose of the
provision – 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 available on the date of arrest – On
the reading of the “reasons to believe” the court must form the
2366 [2024] 7 S.C.R.

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‘secondary opinion’ on the validity of the exercise undertaken for
compliance of s.19(1) 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 – Accused is entitled to challenge his arrest
u/s.19(1) – Not furnishing a copy of the “reasons to believe” would
prevent the accused from challenging their arrest, questioning the
“reasons to believe”, violating the personal liberty – The “reasons
to believe” should be furnished to the arrestee to enable him to
exercise his right to challenge the validity of arrest – However, in
a one-off case, ED may claim redaction and exclusion of specific
particulars and details however, the onus to justify redaction would
be on the ED – This requires consideration and decision by the
court and ED is not the sole judge. [Paras 28, 29, 33, 34, 36, 37]
Prevention of Money Laundering Act, 2002 – s.19(1) – Legality
of arrest – Judicial review – Scope and ambit:
Held: Judicial review of arrest u/s.19(1) which is based on the
opinion of the designated/authorised officer who records in
writing, their “reasons to believe” that the arrestee is ‘guilty’ of an
offence under the PML Act, is not merit based review – 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 and to ensure that the
ED acted in accordance with the law – The courts scrutinize
the validity of the arrest in exercise of power of judicial review –
In-depth judicial scrutiny is required when the reasons recorded
by the authority are not clear and lucid – Arrest is to be made on
the basis of the valid “reasons to believe”, meeting the parameters
prescribed by the law. [Paras 39, 44]
Prevention of Money Laundering Act, 2002 – s.19(1) – “reasons
to believe” – Chats retrieved after the arrest of the appellant,
not mentioned in the “reasons to believe” were referred in the
additional note of ED – Examination of validity of the arrest
of the appellant u/s.19(1) on basis thereof:
Held: Chats being retrieved after the arrest of the appellant and not
being mentioned in the “reasons to believe” cannot be examined
to determine the validity of the arrest in terms of s.19(1) – The
legality of the “reasons to believe” have to be examined based
on what is mentioned and recorded therein and the material on
[2024] 7 S.C.R. 2367

Arvind Kejriwal v. Directorate of Enforcement

record – However, the officer acting u/s.19(1) cannot ignore or
not consider the material which exonerates the arrestee – An
officer cannot be allowed to selectively pick and choose material
implicating the person to be arrested – The power to arrest u/s.19(1)
cannot be exercised as per the whims and fancies of the officer –
The opinion of the officer is subjective, but formation of opinion
should be in accordance with the law. [Paras 54-56]
Prevention of Money Laundering Act, 2002 – s.19(1) – Code
of Criminal Procedure, 1973 – s.41 – Distinction:
Held: Arrest u/s.41 can be made on the grounds mentioned in
clauses (a) to (i) of s.41(1) which include a reasonable complaint,
credible information or reasonable suspicion that a person has
committed an offence, or the arrest is necessary for proper
investigation of the offence, etc. – Grounds mentioned in s.41 are
different from the juridical preconditions for exercise of power of
arrest u/s.19(1) of the PML Act – s.19(1) conditions are more rigid
and restrictive and the two provisions cannot be equated. [Para 40]
Prevention of Money Laundering Act, 2002 – s.19(1) –
“reasons to believe” – Power of judicial review to set aside
the “reasons to believe” is limited – Contents of the “reasons
to believe” records the subjective satisfaction that the
appellant is guilty inter alia stating the role of the appellant
as the kingpin in formulation of the policy; his involvement
in the use of proceeds of crime generated in the Goa election
campaign of Aam Aadmi Party; being guilty as an individual
as a part of the conspiracy in the formulation of the excise
policy, and, also vicariously as the in-charge of AAP; and not
cooperating with the investigation despite nine summons being
issued to him – “reasons to believe” also referred to the
“material” to show appellant’s involvement in the offence of
money laundering – However, the appellant contended that
the “reasons to believe” did not mention and evaluate “all”
or “entire” material and selectively referred to “incriminating”
material and ignored the exculpatory material:
Held: Though the arguments raised on behalf of the appellant as
against the “reasons to believe”, are worthy of consideration, but
are in the nature of propositions or deductions – The power of
judicial review to set aside and quash the “reasons to believe” is
limited and accepting the arguments raised would be equivalent
to undertaking a merits review. [Para 65]
2368 [2024] 7 S.C.R.

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Prevention of Money Laundering Act, 2002 – Policy on arrest by
ED – Lack of uniformity, consistency – Data on the website of
ED as regards the number of ECIRs recorded and the arrests
made, raise questions as regards the policy on arrest by ED
as to when a person involved in offences committed under
the PML Act should be arrested:
Held: ED should act uniformly, consistent in conduct, confirming
one rule for all. [Para 79]
Prevention of Money Laundering Act, 2002 – Fundamental
rights – Right to life and liberty – Review – Principle of
proportionality test, discussed.
Prevention of Money Laundering Act, 2002 – ss.19, 45 –
Distinction between.
Prevention of Money Laundering Act, 2002 – s.45 – Right to
bail under, if dependant on the stage of the proceedings:
Held: No – The power of the court u/s.45 is unrestricted with
reference to the stage of the proceedings – s.45 does not stipulate
the stage when the accused may move an application for bail
and it can be submitted at any stage, either before or after the
complaint is filed – It is immaterial whether the charge is framed or
evidence is recorded or not recorded – All material and evidence
that can be led in the trial and admissible, whether relied on by
the prosecution or not, and can be examined – On the question
of burden of proof, s.24 of the PML Act can be relied on by the
prosecution. [Para 46]
Word and Phrases – “material”, “reason to believe”, and
“guilty of the offence” – Interpretation.
Word and Phrases – “reasons to believe” and “suspicion” –
Discussed.

Case Law Cited
Dukhishyam Benupani, Asst. Director, Enforcement Directorate
(FERA) v. Arun Kumar Bajoria [1997] Supp. 5 SCR 566 : (1998) 1
SCC 52; State of Bihar and another v. J.A.C. Saldanha and others
[1980] 2 SCR 16 : (1980) 1 SCC 554; M.C. Abraham and another
v. State of Maharashtra and others [2002] Supp. 5 SCR 677 :
(2003) 2 SCC 649 – held inapplicable.
[2024] 7 S.C.R. 2369

Arvind Kejriwal v. Directorate of Enforcement

The King Emperor v. Khawaja Nazir Ahmad AIR 1945 PC 18 –
held inapplicable.
Vijay Madanlal Choudhary and others v. Union of India and others
[2022] 6 SCR 382 : (2022) SCC OnLine SC 929; Pankaj Bansal
v. Union of India and others [2023] 12 SCR 714 : 2023 SCC
Online SC 1244; V. Senthil Balaji v. State and others [2023] 12
SCR 853 : (2024) 3 SCC 51; Prabir Purkayastha v. State (NCT
of Delhi) (2024) SCC OnLine SC 934; Union of India v. Padam
Narain Aggarwal and others [2008] 14 SCR 179 : (2008) 13 SCC
305; Dr. Partap Singh and Another v. Director of Enforcement,
Foreign Exchange Regulation Act and others [1985] 3 SCR 969 :
(1985) 3 SCC 72 – relied on.
Roy V.D. v. State of Kerala [2000] Supp. 4 SCR 539 : (2000) 8
SCC 590; Ramesh Chandra Mehta v. State of West Bengal [1969]
2 SCR 461; In the matter of Madhu Limaye and others [1969]
3 SCR 154 : (1969) 1 SCC 292; Barium Chemicals Ltd. and
another v. Company Law Board and others [1966] Supp. 1 SCR
311 : AIR 1967 SC 295; Joseph Kuruvilla Vellukunnel v. Reserve
Bank of India and others [1962] Supp. 3 SCR 632 : AIR 1962 SC
1371; Joti Parshad v. State of Haryana (1993) Supp 2 SCC 497;
A.S. Krishnan and others v. State of Kerala [2004] 3 SCR 44 :
(2004) 11 SCC 576; Gurcharan Singh and others v. State (Delhi
Administration) [1978] 2 SCR 358 : (1978) 1 SCC 118; Ranjitsing
Brahmajeetsing Sharma v. State of Maharashtra and another [2005]
3 SCR 345 : (2005) 5 SCC 294; State of Orissa v. Debendra Nath
Padhi [2004] Supp. 6 SCR 460 : (2005) 1 SCC 568; M. Ravindran
v. Intelligence Officer, Directorate of Revenue Intelligence [2020]
12 SCR 915 : (2021) 2 SCC 485; Amarendra Kumar Pandey v.
Union of India and others [2022] 12 SCR 223 : (2022) SCC Online
SC 881; Centre for PIL and another v. Union of India and another
[2011] 4 SCR 445 : (2011) 4 SCC 1; Ram Manohar Lohia v. State
of Bihar and another [1966] 1 SCR 709 : AIR 1966 SC 740; Moti
Lal Jain v. State of Bihar and others [1968] 3 SCR 587 : AIR 1968
SC 1509; Uttamrao Shivdas Jankhar v. Ranjitsinh Vijaysinh Mohite
Patil [2009] 9 SCR 538 : (2009) 13 SCC 131; Manish Sisodia
v. Central Bureau of Investigation [2023] 15 SCR 480 : 2023
SCC OnLine SC 1393; Arnesh Kumar v. State of Bihar [2014] 8
SCR 128 : (2014) 8 SCC 273; Mohammed Zubair v. State of NCT of
Delhi [2022] 18 SCR 494 : (2022) SCC OnLine SC 897; Joginder
Kumar v. State of Uttar Pradesh [1994] 3 SCR 661 : (1994) 4
SCC 260; Siddharth v. State of Uttar Pradesh (2022) 1 SCC 676;
2370 [2024] 7 S.C.R.

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P. Chidambaram v. Directorate of Enforcement [2019] 12 SCR 172 :
(2019) 9 SCC 24; Chairman, All India Railway Recruitment Board
v. K. Shyam Kumar [2010] 6 SCR 291 : (2010) 6 SCC 614; State
of Uttar Pradesh v. Lal [2006] 2 SCR 656 : (2006) 3 SCC 276;
Modern Dental College & Research Centre v. State of Madhya
Pradesh [2016] 3 SCR 575 : (2016) 4 SCC 346; K.S. Puttaswamy
(Retired) and Anr. (Aadhar) v. Union of India and Anr. [2015] 9
SCR 99 : (2019) 1 SCC 1; Anuradha Bhasin v. Union of India and
Others [2020] 1 SCR 812 : (2020) 3 SCC 637; Association for
Democratic Reforms v. Union of India [2024] 2 SCR 420 : (2024)
5 SCC 1 – referred to.
Gifford v. Kelson (1943) 51 Man. R 120; Nakkuda Ali v. Jayaratne
1951 AC 66; Council of Civil Services Union v. Minister of State
for Civil Services (1984) 3 All. ER 935; R v. Secretary of State
(1991) 1 All ER 710 – referred to.

List of Acts
Prevention of Money Laundering Act, 2002; Code of Criminal
Procedure, 1973; Penal Code, 1860.

List of Keywords
Section 19 of the Prevention of Money Laundering Act, 2002;
Validity of arrest; Necessity and need to arrest; Delhi excise policy;
Liquor; Excise policy; Excise Policy case; Kickbacks; Bribes;
Enforcement Directorate; ECIR; “reasons to believe”; Preconditions
to arrest; Proceeds of crime; Aam Aadmi Party; Formal parameters
to arrest; Grounds of arrest; Money laundering; Principles
of Wednesbury reasonableness; Principle of proportionality;
Proportionality test; Judicial review.

Case Arising From

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 2493
of 2024
From the Judgment and Order dated 09.04.2024 of the High Court
of Delhi at New Delhi in WPCRL No. 985 of 2024

Appearances for Parties

Dr. Abhishek Manu Singhvi, Amit Desai, Vikram Chaudhari,
Sr. Advs., Vivek Jain, Mohd. Irshad, Rajat Bhardwaj, Karan Sharma,
[2024] 7 S.C.R. 2371

Arvind Kejriwal v. Directorate of Enforcement

Amit Bhandari, Shadan Farasat, Rajat Jain, Sadiq Noor, Mohit
Siwach, Kaustubh Khanna, Gopal Shenoy, Shailesh Chauhan, Advs.
for the Appellant.
Tushar Mehta, Solicitor General, Suryaprakash V Raju, A.S.G.,
Mukesh Kumar Maroria, Kanu Agarwal, Annam Venkatesh, Zoheb
Hussain, Vivek Gurnani, Hitarth Raja, Ms. Shweta Desai, Ms. Nidhi
Saini, Ms. Abhipriya, Ms. Agrimaa Singh, Kartik Sabarwal, Vivek
Gaurav, Samrat Goswami, Advs. for the Respondent.
Judgment / Order of the Supreme Court

Judgment
Sanjiv Khanna, J.
This appeal filed by the appellant – Arvind Kejriwal assails the
judgment and order dated 09.04.2024 passed by the single Judge
of the High Court of Delhi whereby the Criminal Writ Petition filed
by Arvind Kejriwal under Articles 226 and 227 of the Constitution
of India read with Section 482 of the Code of Criminal Procedure,
1973,1 challenging his arrest by the Directorate of Enforcement,2
vide the arrest order dated 21.03.2024, on the ground of violation
of Section 19 of the Prevention of Money Laundering Act, 2002,3
and the proceedings pursuant thereto including the order of remand
dated 22.03.2024 to the custody of DoE passed by the Special
Judge, has been rejected.
2. At the outset, we must clarify that this is not an appeal against
refusal or grant of bail. Instead, this appeal impugns the validity of
arrest under Section 19 of the PML Act. It raises a pivotal question
regarding the scope and ambit of the trial court/courts to examine the
legality of the arrest under Section 19. The issue is legal in nature,
and with the ratio being propounded in detail, the decision becomes
complex and legalistic.4

1 For short, the “Code”.
2 For short, “DoE”.
3 For short, the “PML Act”.
4 While introducing the Prevention of Money Laundering (Amendment) Bill, 2012 in the Rajya Sabha
on 17.12.2012, the then Finance Minister, Mr. P Chidambaram, stated, “Firstly, we must remember
that money-laundering is a very technically-defined offence. It is not the way we understand ‘money-
laundering in a colloquial sense.” This has been quoted with approval in Vijay Madanlal Choudhary and
others v. Union of India and others, (2022) SCC OnLine SC 929, at paragraph 35.
2372 [2024] 7 S.C.R.

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3. On 17.08.2022, the Central Bureau of Investigation5 registered
RC No. 0032022A0053 for the offences punishable under
Section 120B read with Section 477A of the Indian Penal Code,
18606 and Section 7 of the Prevention of Corruption Act, 1988. The
registration was based on a complaint dated 20.07.2022, made by the
Lieutenant Governor of the Government of National Capital Territory7
of Delhi, and on the directions of the competent authority conveyed
by the Director, Ministry of Home Affairs, Government of India.
4. Later, on 25.11.2022, the CBI filed a chargesheet. Thereafter, on
25.04.2023 and 08.07.2023, two supplementary chargesheets were
filed. On 15.12.2022, the Special Court took cognisance of the
offences. The chargesheets inter alia allege that the excise policy,
framed for the sale of liquor in NCT of Delhi, was a product of criminal
conspiracy. It was hatched by a cartel of liquor manufacturers,
wholesalers and retailers and it provided undue pecuniary gain to
public servants and other accused in the conspiracy. It resulted in
huge losses to the government exchequer and ultimately to the
public. Arvind Kejriwal is not an accused in the said chargesheets.
5. On 22.08.2022, the DoE recorded ECIR No. HIU-II/14/2022 based
on offences detailed under the RC registered by CBI. The offences
under the RC are the predicate offence for investigation/inquiry into
the scheduled offences under the PML Act. On 26.11.2022, the DoE
filed the first prosecution complaint. On 20.12.2022, the Special Court
took cognisance. Since then, the DoE has filed seven supplementary
prosecution complaints. In the last complaint, that is, the Seventh
Supplementary Prosecution Complaint dated 17.05.2024, Arvind
Kejriwal has been named as an accused.
6. On 30.10.2023, Arvind Kejriwal was issued notice under Section 50
of the PML Act for his appearance and recording of statement.
Thereafter, eight summons were issued till his arrest on 21.03.2024.
DoE states that Arvind Kejriwal failed to appear and join the
investigation. Arvind Kejriwal claims that the summons and notices
under Section 50 were illegal, bad in law and invalid.8

5 For short, “CBI”.
6 For short, “IPC”.
7 For short, “NCT”.
8 We are not directly examining the question of validity of the summons and notices, though the effect and
failure to appear is one of the aspects which will be noticed subsequently.
[2024] 7 S.C.R. 2373

Arvind Kejriwal v. Directorate of Enforcement

7. The cardinal ground taken in the present appeal is that Arvind
Kejriwal was arrested in violation of Section 19(1) of the PML Act.
It is contended that the arrest was illegal, which makes the order of
remand to custody of the DoE passed by the Special Court dated
01.04.2024 also illegal. Therefore, it would be apt to begin by referring
to Section 19 and elucidating how the Courts have interpreted and
applied the section.
8. Section 19 of the PML Act reads:
“19. Power to arrest.—(1) If the Director, Deputy Director,
Assistant Director or any other officer authorised 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 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
along with 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.”
9. A bare reading of the section reflects, that while the legislature has
given power to the Director, Deputy Director, Assistant Director, or an
authorised officer to arrest a person, it is fenced with preconditions
and requirements, which must be satisfied prior to the arrest of a
person. The conditions are –
2374 [2024] 7 S.C.R.

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⇒ The officer must have material in his possession.
⇒ On the basis of such material, the authorised officer should
form and record in writing, “reasons to believe” that the
person to be arrested, is guilty of an offence punishable
under the PML Act.
⇒ The person arrested, as soon as may be, must be informed
of the grounds of arrest.
These preconditions act as stringent safeguards to protect life and
liberty of individuals. We shall subsequently interpret the words
“material”, “reason to believe”, and “guilty of the offence”. Before that,
we will refer to some judgments of this Court on the importance of
Section 19(1) and the effect on the legality of the arrest upon failure
to comply with the statutory requirements.
10. In Pankaj Bansal v. Union of India and others,9 interpreting Section
19 of the PML Act with reference to Article 22(1) of the Constitution
of India,10 this Court has observed:
“32. In this regard, we may note that Article 22(1) of
the Constitution provides, inter alia, that no person who
is arrested shall be detained in custody without being
informed, as soon as may be, of the grounds for such
arrest. This being the fundamental right guaranteed to
the arrested person, the mode of conveying information
of the grounds of arrest must necessarily be meaningful
so as to serve the intended purpose. It may be noted
that Section 45 of the Act of 2002 enables the person
arrested under Section 19 thereof to seek release on bail
but it postulates that unless the twin conditions prescribed
thereunder are satisfied, such a person would not be
entitled to grant of bail. The twin conditions set out in the
provision are that, firstly, the Court must be satisfied, after
giving an opportunity to the public prosecutor to oppose the
application for release, that there are reasonable grounds

9 [2023] 12 SCR 714 : 2023 SCC Online SC 1244
10 “22. Protection against arrest and detention in certain cases.—(1) No person who is arrested shall be
detained in custody without being informed, as soon as may be, of the grounds for such arrest nor shall
he be denied the right to consult, and to be defended by, a legal practitioner of his choice.”
[2024] 7 S.C.R. 2375

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to believe that the arrested person is not guilty of the
offence and, secondly, that he is not likely to commit any
offence while on bail. To meet this requirement, it would
be essential for the arrested person to be aware of the
grounds on which the authorized officer arrested him/her
under Section 19 and the basis for the officer’s ‘reason
to believe’ that he/she is guilty of an offence punishable
under the Act of 2002. It is only if the arrested person
has knowledge of these facts that he/she would be in a
position to plead and prove before the Special Court that
there are grounds to believe that he/she is not guilty of
such offence, so as to avail the relief of bail. Therefore,
communication of the grounds of arrest, as mandated by
Article 22(1) of the Constitution and Section 19 of the Act
of 2002, is meant to serve this higher purpose and must
be given due importance.”
In the Court’s view, Section 19 includes inbuilt checks that designated
officers must adhere to. First, the “reasons to believe” of the
alleged involvement of the arrestee have to be recorded in writing.
Secondly, while affecting the arrest, the reasons shall be furnished
to the arrestee. Lastly, a copy of the order of arrest along with the
material in possession have to be forwarded to the safe custody
of the adjudicating authority. This ensures fairness, objectivity and
accountability of the designated officer while forming their opinion,
regarding the involvement of the arrestee in the offence of money
laundering.
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, Section 19(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.

11 See Tarsem Lal v. Directorate of Enforcement, Jalandhar Zonal Office (2024) SCC Online SC 971.
12 It appears that in several cases multiple complaints in same ECIR are filed. Whether a copy of the
ECIR must be supplied to an accused has been examined in Vijay Madanlal Choudhary (supra) which
has been referred to subsequently.
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12. V. Senthil Balaji v. State and others13 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 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 (supra) 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 (supra) reiterates V. Senthil Balaji (supra) to hold
that the magistrate/court has the 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 In the matter of Madhu Limaye
and others,14 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

13 [2023] 12 SCR 853 : (2024) 3 SCC 51
14 [1969] 3 SCR 154 : (1969) 1 SCC 292
[2024] 7 S.C.R. 2377

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to such arrest. The principle stands expanded, as the violation of
Section 19(1) of the PML Act will equally vitiate the arrest.
15. In Pankaj Bansal (supra), 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 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 v. State (NCT of Delhi),15 this
Court reiterated the aforesaid principles expounded in Pankaj
Bansal (supra). 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. v. State of Kerala17 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 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

15 2024 SCC OnLine SC 934
16 Sections 43A, 43B and 43C of the UAPA.
17 [2000] Supp. 4 SCR 539 : (2000) 8 SCC 590
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communicate grounds of arrest or grounds of detention, would lead
to the custody or detention being rendered illegal.
17. In Vijay Madanlal Choudhary and others v. Union of India and
others,18 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 cognisable offences
under Section 41 of the Code.19 Reference was made to Section 104
of the Customs Act, 1962,20 which was elucidated and considered

18 [2022] 6 SCR 382 : (2022) SCC Online SC 929
19 “41. When police may arrest without warrant. — (1) Any police officer may without an order from a
Magistrate and without a warrant, arrest any person—
(a) who commits, in the presence of a police officer, a cognizable offence;
(b) against whom a reasonable complaint has been made, or credible information has been received, or
a reasonable suspicion exists that he has committed a cognizable offence punishable with imprisonment
for a term which may be less than seven years or which may extend to seven years whether with or
without fine, if the following conditions are satisfied, namely:—
(i) the police officer has reason to believe on the basis of such complaint, information, or suspicion that
such person has committed the said offence;
(ii) the police office is satisfied that such arrest is necessary—
(a) to prevent such person from committing any further offence; or
(b) for proper investigation of the offence; or
(c) to prevent such person from causing the evidence of the offence to disappear or tampering with such
evidence in any manner; or
(d) to prevent such person from making any inducement, 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 to the police
officer; or
(e) as unless such person is arrested, his presence in the Court whenever required cannot be ensured,
and the police officer shall record while making such arrest, his reasons in writing.
Provided that a police officer shall, in all cases where the arrest of a person is not required under the
provisions of this sub-section, record the reasons in writing for not making the arrest.
(ba) against whom credible information has been received that he has committed a cognizable offence
punishable with imprisonment for a term which may extend to more than seven years whether with or
without fine or with death sentence and the police officer has reason to believe on the basis of that
information that such person has committed the said offence;
(c) who has been proclaimed as an offender either under this Code or by order of the State Government;
or
(d) in whose possession anything is found which may reasonably be suspected to be stolen property
and who may reasonably be suspected of having committed an offence with reference to such thing; or
(e) who obstructs a police officer while in the execution of his duty, or who has escaped, or attempts to
escape, from lawful custody; or
(f) who is reasonably suspected of being a deserter from any of the Armed Forces of the Union; or
(g) who has been concerned in, or against whom a reasonable complaint has been made, or credible
information has been received, or a reasonable suspicion exists, of his having been concerned in, any
act committed at any place out of India which, if committed in India, would have been punishable as an
offence, and for which he is, under any law relating to extradition, or otherwise, liable to be apprehended
or detained in custody in India; or
(h) who, being a released convict, commits a breach of any rule made under sub-section (5) of Section
356; or
(i) for whose arrest any requisition, whether written or oral, has been received from another police officer,
provided that the requisition specifies the person to be arrested and the offence or other cause for which
the arrest is to be made and it appears therefrom that the person might lawfully be arrested without a
warrant by the officer who issued the requisition.”
20 For short, “Customs Act”.
[2024] 7 S.C.R. 2379

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by the Constitution Bench of this Court in Ramesh Chandra Mehta
v. State of West Bengal,21 and in Union of India v. Padam Narain
Aggarwal and others.22 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 os anfficer
is statutory in character. Such 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. Padam Narain Aggarwal (supra) observes:
“36. From the above discussion, it is amply clear that
power to arrest a person by a Customs Officer is statutory
in character and cannot be interfered with. Such power
of arrest can be exercised only in those cases where the
Customs Officer has “reason to believe” that a person
has been guilty of an offence punishable under Sections
132, 133, 135, 135-A or 136 of the Act. Thus, the power
must be exercised on objective facts of commission of an
offence enumerated and the Customs Officer has reason to
believe that a person sought to be arrested has been guilty
of commission of such offence. The power to arrest thus
is circumscribed by objective considerations and cannot
be exercised on whims, caprice or fancy of the officer.
37. The section also obliges the Customs Officer to inform
the person arrested of the grounds of arrest as soon as
may be. The law requires such person to be produced
before a Magistrate without unnecessary delay.
38. The law thus, on the one hand, allows a Customs
Officer to exercise power to arrest a person who has
committed certain offences, and on the other hand, takes
due care to ensure individual freedom and liberty by laying
down norms and providing safeguards so that the power
of arrest is not abused or misused by the authorities. It
is keeping in view these considerations that we have to
decide correctness or otherwise of the directions issued
by a Single Judge of the High Court. “Blanket” order of

21 [1969] 2 SCR 461
22 [2008] 14 SCR 179 : (2008) 13 SCC 305
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bail may amount to or result in an invitation to commit
an offence or a passport to carry on criminal activities
or to afford a shield against any and all types of illegal
operations, which, in our judgment, can never be allowed
in a society governed by the rule of law.”
18. Vijay Madanlal Choudhary (supra) 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. Paragraph 89
reads as under:
“89…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 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. Investing of
power in the high-ranking officials in this regard has stood

23 The aspect of necessity to arrest, has been independently examined later.
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the test of reasonableness in Premium Granites (supra),
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 (supra), 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 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 (supra), 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 (supra).”
We respectfully agree with the ratio of the decisions in Pankaj
Bansal (supra) and Prabir Purkayastha (supra), which enrich and
strengthen the view taken in Vijay Madanlal Choudhary (supra),
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.
19. 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 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
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authorised officer is entitled to arrest a person without following the
statutory requirements.
20. 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.
21. 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 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.
22. Before we examine the scope and width of the jurisdiction of the court
when it examines validity of arrest under Section 19(1) of the PML
Act, we must take on record and deal with the argument of the DoE
relying on the paragraphs 176 to 179 in Vijay Madanlal Choudhary
(supra) under the heading ‘ECIR vis-a-vis FIR’. The submission is
that there is difference between the “reasons to believe”, and the
“grounds of arrest”, the latter is mandated to be furnished to the
arrestee, but the former is an internal and confidential document, the
furnishing of which may be detrimental to investigation. Therefore, it is
urged that “reasons to believe” need not be supplied to the arrestee.
Paragraphs 178 and 179 of Vijay Madanlal Choudhary (supra) read:
[2024] 7 S.C.R. 2383

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“178. The next issue is: whether it is necessary to furnish
copy of ECIR to the person concerned apprehending arrest
or at least after his arrest? section 19(1) of the 2002 Act
postulates that after arrest, as soon as may be, the person
should be informed about the grounds for such arrest. This
stipulation is compliant with the mandate of article 22(1) of
the Constitution. Being a special legislation and considering
the complexity of the inquiry/ investigation both for the
purposes of initiating civil action as well as prosecution,
non-supply of ECIR in a given case cannot be faulted. The
ECIR may contain details of the material in possession of
the Authority and recording satisfaction of reason to believe
that the person is guilty of money-laundering offence,
if revealed before the inquiry/ investigation required to
proceed against the property being proceeds of crime
including to the person involved in the process or activity
connected therewith, may have deleterious impact on the
final outcome of the inquiry/investigation. So long as the
person has been informed about grounds of his arrest that
is sufficient compliance of mandate of article 22(1) of the
Constitution. Moreover, the arrested person before being
produced before the Special Court within twenty-four hours
or for that purposes of remand on each occasion, the court
is free to look into the relevant records made available
by the Authority about the involvement of the arrested
person in the offence of money-laundering. In any case,
upon filing of the complaint before the statutory period
provided in 1973 Code, after arrest, the person would get
all relevant materials forming part of the complaint filed
by the Authority under section 44(1)(b) of the 2002 Act
before the Special Court.
179. Viewed thus, supply of ECIR in every case to person
concerned is not mandatory. From the submissions made
across the Bar, it is noticed that in some cases ED has
furnished copy of ECIR to the person before filing of the
complaint. That does not mean that in every case same
procedure must be followed. It is enough, if ED at the
time of arrest, contemporaneously discloses the grounds
of such arrest to such person. Suffice it to observe that
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ECIR cannot be equated with an FIR which is mandatorily
required to be recorded and supplied to the accused as
per the provisions of 1973 Code. Revealing a copy of an
ECIR, if made mandatory, may defeat the purpose sought
to be achieved by the 2002 Act including frustrating the
attachment of property (proceeds of crime). Non-supply
of ECIR, which is essentially an internal document of
ED, cannot be cited as violation of constitutional right.
Concededly, the person arrested, in terms of section 19
of the 2002 Act, is contemporaneously made aware
about the grounds of his arrest. This is compliant with
the mandate of article 22(1) of the Constitution. It is not
unknown that at times FIR does not reveal all aspects of
the offence in question. In several cases, even the names
of persons actually involved in the commission of offence
are not mentioned in the FIR and described as unknown
accused. Even, the particulars as unfolded are not fully
recorded in the FIR. Despite that, the accused named in
any ordinary offence is able to apply for anticipatory bail
or regular bail, in which proceeding, the police papers are
normally perused by the concerned court. On the same
analogy, the argument of prejudice pressed into service
by the petitioners for non-supply of ECIR deserves to be
answered against the petitioners. For, the arrested person
for offence of money-laundering is contemporaneously
informed about the grounds of his arrest and when
produced before the Special Court, it is open to the Special
Court to call upon the representative of ED to produce
relevant record concerning the case of the accused before
him and look into the same for answering the need for
his continued detention. Taking any view of the matter,
therefore, the argument under consideration does not
take the matter any further.”
23. The paragraphs in Vijay Madanlal Choudhary (supra), while
recording that there is a difference between ECIR and FIR, hold that
the ECIR need not to be furnished to the accused, unlike an FIR
recorded under Section 154 of the Code. The PML Act, a special
legislation for the offence of money laundering, creates a unique
mechanism for inquiry/investigation into the offence. An analogy
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cannot be drawn with the provisions of the Code. ECIR is an internal
document for initiating penal action or prosecution. Having held so
in paragraphs 178 and 179, it is observed that Section 19(1) of the
PML Act postulates that after arrest, as soon as may be, the arrestee
should be contemporaneously informed of the grounds of arrest to
ensure compliance with Article 22(1) of the Constitution. Non-supply
of ECIR is not to be faulted. ECIR may contain details of material
in possession of the authority, which if revealed before the inquiry/
investigation, may have a deleterious impact on the final outcome
of the inquiry/investigation. The judgment states that the accused,
upon filing of the prosecution complaint, will get all relevant materials
forming part of the complaint. For the same reason, it is argued by
the DoE that the accused is entitled to the “grounds of arrest” and
not the “reasons to believe”. Grounds of arrest may only summarily
refer to the reasons given for arrest.
24. 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 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.24
25. On the aspect of the checks on the power to arrest under the PML
Act, we would like to quote from the submission made on behalf

24 The arrestee may also challenge his arrest under Section 19(1) of the PML Act on the basis of the
“grounds of arrest.”
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of the DoE, as recorded in Vijay Madanlal Choudhary (supra).
Specific reliance was placed on a Canadian judgment in the case
of Gifford v. Kelson.25 The relevant paragraphs in Vijay Madanlal
Choudhary (supra) read:
“16(liii). …Secondly, there must be material in possession
with the Authority before the power of arrest can be
exercised as opposed to the Cr. P. C. which gives the
power of arrest to any police officer and the officer can
arrest any person merely on the basis of a complaint,
credible information or reasonable suspicion against such
person. Thirdly, there should be reason to believe that the
person being arrested is guilty of the offence punishable
under the PMLA in contrast to the provision in Cr. P. C.,
which mainly requires reasonable apprehension/suspicion
of commission of offence. Also, such “reasons to believe”
must be reduced in writing. Fifthly, as per the constitutional
mandate of article 22(1), the person arrested is required
to be informed of the grounds of his arrest. It is submitted
that the argument of the other side that the accused
or arrested persons are not even informed of the case
against them, is contrary to the plain language of the Act,
as the Act itself mandates that the person arrested is to
be informed of the ground of his arrest…
xx xx xx
16(lix). Reliance is then placed on the decision of this court in
Union of India v. Padam Narain Aggarwal, wherein the court
examined the power to arrest under section 104 of the 1962
Act. Relying on the decision, it was stated that the power
to arrest is statutory in character and cannot be interfered
with and can only be exercised on objective considerations
free from whims, caprice or fancy of the officer. The law
takes due care to ensure individual freedom and liberty by
laying down norms and providing safeguards so that the
authorities may not misuse such power. It is submitted that
the requirement of “reason to believe” and “recording of
such reasons in writing” prevent arbitrariness and makes

25 (1943) 51 Man. R 120
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the provision compliant with article 14. This is reinforced
from the fact that only 313 arrests have been made under
the PMLA in 17 years of operations of the PMLA.
16(lx). Canadian judgment in Gifford v. Kelson was also
relied on to state that “reason to believe” conveys conviction
of the mind founded on evidence regarding the existence
of a fact or the doing of an act, therefore, is of a higher
standard than mere suspicion. Reliance has been further
placed on Premium Granites v. State of T. N. to urge that
the requirement of giving reasons for exercise of the power
by itself excludes chances of arbitrariness…”
26. We will reproduce what has been held in Gifford (supra):
“A suspicion or belief may be entertained, but suspicion
and belief cannot exist together. Suspicion is much less
than belief; belief includes or absorbs suspicion.
xx xx xx
When, we speak of “reason to believe” we mean a
conclusion arrived at as to the existence of a fact. Of course
“reason to believe” does not amount to positive knowledge
nor does it mean absolute certainty but it does convey
conviction of the mind founded on evidence regarding the
existence of a fact or the doing of an act. Suspicion, on
the other hand, rings uncertainty. It lives in imagination. It
is inkling. It is mistrust. It is chalk. ‘Reason to believe’ is
not. It is cheese.”
27. Gifford (supra) accurately explains the difference between the
“reasons to believe” and “suspicion”. “Suspicion” requires lower
degree of satisfaction, and does not amount to belief. Belief is beyond
speculation or doubt, and the threshold of belief “conveys conviction
founded on evidence regarding existence of a fact or doing of an
act”. Given that the power of arrest is drastic and violates Article 21
of the Constitution, we must give meaningful, true and full play to
the legislative intent.26

26 We would subsequently examine the expressions “reason to believe ”, “guilty of an offence punishable
under this Act” and “material” in some detail.
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28. 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.
29. On the necessity to satisfy the preconditions mentioned in
Section 19(1) of the 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.
30. Referring to the legal position, this Court in Dr. Partap Singh
and Another v. Director of Enforcement, Foreign Exchange
Regulation Act and others27 has observed:
“9. When an officer of the Enforcement Department
proposes to act under Section 37 undoubtedly, he must
have reason to believe that the documents useful for
investigation or proceeding under the Act are secreted. The
material on which the belief is grounded may be secret,
may be obtained through Intelligence or occasionally may
be conveyed orally by informants. It is not obligatory upon
the officer to disclose his material on the mere allegation
that there was no material before him on which his reason
to believe can be grounded. The expression “reason to
believe” is to be found in various statutes. We may take note
of one such. Section 34 of Income Tax Act, 1922 inter alia

27 [1985] 3 SCR 969 : (1985) 3 SCC 72
[2024] 7 S.C.R. 2389

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provides that the Income Tax Officer must have “reason
to believe” that the incomes, profits or gains chargeable
to income tax have been underassessed, then alone he
can take action under Section 34. In S. Narayanappa
v. CIT the assessee challenged the action taken under
Section 34 and amongst others it was contended on his
behalf that the reasons which induced the Income Tax
Officer to initiate proceedings under Section 34 were
justiciable, and therefore, these reasons should have
been communicated by the Income Tax Officer to the
assessee before the assessment can be reopened. It was
also submitted that the reasons must be sufficient for a
prudent man to come to the conclusion that the income
escaped assessment and that the Court can examine
the sufficiency or adequacy of the reasons on which the
Income Tax Officer has acted. Negativing all the limbs of
the contention, this Court held that
“if there are in fact some reasonable grounds
for the Income Tax Officer to believe that there
had been any non-disclosure as regards any
fact, which could have a material bearing on
the question of under-assessment, that would
be sufficient to give jurisdiction to the Income
Tax Officer to issue notice under Section 34.”
The Court in terms held that whether these grounds are
adequate or not is not a matter for the court to investigate.
10. The expression “reason to believe” is not synonymous
with subjective satisfaction of the Officer. The belief must
be held in good faith; it cannot merely be a pretence. In
the same case, it was held that it is open to the court to
examine the question whether the reasons for the belief
have a rational connection or a relevant bearing to the
formation of the belief and are not extraneous or irrelevant
to the purpose of the section. To this limited extent the
action of the Income Tax Officer in starting proceedings
under Section 34 is open to challenge in a court of law.
(See Calcutta Discount Co. Ltd. v. ITO). In R.S. Seth
Gopikrishan Agarwal v. R.N. Sen, Assistant Collector of
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Customs this Court repelled the challenge to the validity
of the search of the premises of the appellant and the
seizure of the documents found therein. The search was
carried out under the authority of an authorisation issued
under Rule 126(L)(2) of the Defence of India (Amendment)
Rules, 1963 (Gold Control Rules) for search of the premises
of the appellant. The validity of the authorisation was
challenged on the ground of mala fides as also on the
ground that the authorisation did not expressly employ
the phrase ‘reason to believe’ occurring in Section 105 of
the Customs Act. Negativing both the contentions, Subba
Rao, C.J. speaking for the Court observed that the subject
underlying Section 105 of the Customs Act which confers
power for issuing authorisation for search of the premises
and seizure of incriminating articles was to search for
goods liable to be confiscated or documents secreted in
any place, which are relevant to any proceeding under
the Act. The legislative policy reflected in the section is
that the search must be in regard to the two categories
mentioned in the section. The Court further observed that
though under the section, the officer concerned need not
give reasons if the existence of belief is questioned in any
collateral proceedings he has to produce relevant evidence
to sustain his belief. A shield against the abuse of power
was found in the provision that the officer authorised to
search has to send forthwith to the Collector of Customs
a copy of any record made by him. Sub-section (2) of
Section 37 of the Act takes care for this position inasmuch
as that where an officer below the rank of the Director
of Enforcement carried out the search, he must send a
report to the Director of Enforcement. The last part of the
submission does not commend to us because the file
was produced before us and as stated earlier, the Officer
issuing the search warrant had material which he rightly
claimed to be adequate for forming the reasonable belief
to issue the search warrant.”
This decision relates to the power of authorised officers to conduct
search and seizure operations under Section 37 of the Foreign
Exchange Regulation Act, 1973. The aforesaid observations would
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be equally relevant, though in the context of the power to arrest, a
power which is more drastic and intrusive. Thus, the nature of inquiry
to be undertaken by the courts has to be in-depth and detailed.
31. In Barium Chemicals Ltd. and another v. Company Law Board
and others,28 the Constitution Bench of this Court had referred to
and quoted from the decision of the Privy Council in Nakkuda Ali
v. Jayaratne,29 wherein Lord Radcliffe had observed:
“After all words such as these are commonly found when
a legislature or law making authority confers powers on a
minister or official. However read, they must be intended to
serve in some sense as a condition limiting the exercise of
an otherwise arbitrary power. But if the question whether
the condition has been satisfied is to be conclusively
decided by the man who wields the power the value of the
intended restraint is in effect nothing. No doubt he must
not exercise the power in bad faith; but the field in which
this kind of question arises is such that the reservation
for the case of bad faith is hardly more than a formality.”
While agreeing with the first part of the aforesaid quotation, the
Constitution Bench went on to refer to Joseph Kuruvilla Vellukunnel
v. Reserve Bank of India and others,30 wherein Hidayatullah, J.,
speaking for the majority, had observed:
“It is enough to say that the Reserve Bank in its dealings
with banking companies does not act on suspicion but
on proved facts.”
Thereafter, it was further observed:
“But this seems certain that the action (winding up) would
not be taken up without scrutinising all the evidence and
checking and re-checking all the findings.”
32. Accordingly, in Barium Chemicals Ltd. (supra), it was held that the
expression “reason to believe” is not a subjective process altogether,
not lending itself even to a limited scrutiny of the court that such
“reason to believe” or opinion is not formed on relevant facts or
within the limits.

28 [1966] Supp. 1 SCR 311 : AIR 1967 SC 295
29 1951 A C 66
30 [1962] Supp. 3 SCR 632 : AIR 1962 SC 1371
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33. Section 26 of the IPC, defines the expression “reason to believe” as
sufficient cause to believe a thing and not otherwise. Joti Parshad v.
State of Haryana,31 referring to Section 26 of the IPC, has observed:
“5… “Reason to believe” is not the same thing as
“suspicion” or “doubt” and mere seeing also cannot be
equated to believing. “Reason to believe” is a higher level
of state of mind. Likewise “knowledge” will be slightly on
a higher plane than “reason to believe”. A person can be
supposed to know where there is a direct appeal to his
senses and a person is presumed to have a reason to
believe if he has sufficient cause to believe the same.
Section 26 IPC explains the meaning of the words “reason
to believe” thus:
“26. ‘Reason to believe’.— A person is said
to have ‘reason to believe’ a thing, if he has
sufficient cause to believe that thing but not
otherwise.”
In substance what it means is that a person must have
reason to believe if the circumstances are such that a
reasonable man would, by probable reasoning, conclude
or infer regarding the nature of the thing concerned.
Such circumstances need not necessarily be capable of
absolute conviction or inference; but it is sufficient if the
circumstances are such creating a cause to believe by
chain of probable reasoning leading to the conclusion or
inference about the nature of the thing…”
34. Use of the expression ‘not otherwise’, in Section 26 of the IPC,
refers to contrary evidence or material which would not support the
“reason to believe”. The definition extends and puts a more stringent
condition in the context of penal enactment as compared to the
civil law. Clearly, “reason to believe” has to be distinguished and
is not the same as grave suspicion. It refers to the reasons for the
formation of the belief which must have a rational connection with
or an element bearing on the formation of belief. The reason should
not be extraneous or irrelevant for the purpose of the provision.

31 1993 Supp (2) SCC 497
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35. As explained in A.S. Krishnan and others v. State of Kerala,32
Section 26 of the IPC in substance means that the person must have
“reason to believe” if the circumstances are such that a reasonable
man would, by probable reasoning, conclude or infer regarding the
nature of things concerned. Such circumstances need not necessarily
be capable of absolute conviction or inference; but it is sufficient if the
circumstances are such that it creates a chain of probable reasoning
leading to the conclusion or inference about the nature of the thing.33
36. 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, 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.
37. 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.

32 [2004] 3 SCR 44 : (2004) 11 SCC 576
33 Wednesbury unreasonableness strikes at irrationality when a decision is so outrageous in its defiance
of logic or of accepted standards that no sensible person who had applied his mind to the question to
be decided would have arrived at it. See Council of Civil Services Union v. Minister of State for Civil
Services, (1984) 3 All. ER 935.
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As there may only be a small number of cases where 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.
38. 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.
39. 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 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.
40. At this stage, we must consider the arguments presented by the DoE,
which rely on judgments regarding the scope of judicial interference
in investigations, including the power of arrest. Reference in this
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regard was made to The King Emperor v. Khawaja Nazir Ahmad,34
Dukhishyam Benupani, Asst. Director, Enforcement Directorate
(FERA) v. Arun Kumar Bajoria,35 State of Bihar and another v.
J.A.C. Saldanha and others,36 and M.C. Abraham and another v.
State of Maharashtra and others.37 In our opinion, these decisions
do not apply to the present controversy, as the power of arrest in this
case is governed by Section 19(1) of the PML Act. These decisions
restrict the courts from interfering with the statutory right of the
police to investigate, provided that no legal provisions are violated.
Investigation and crime detection vests in the authorities by statute,
albeit, these powers differ from the Court’s authority to adjudicate and
determine whether an arrest complies with constitutional and statutory
provisions. As indicated above, the power to arrest without a warrant
for cognizable offences is exercised by the police officer in terms of
Section 41 of the Code.38 Arrest under Section 41 can be made on
the grounds mentioned in clauses (a) to (i) of Section 41(1) of the
Code, which include a reasonable complaint, credible information
or reasonable suspicion that a person has committed an offence, or
the arrest is necessary for proper investigation of the offence, etc.
The grounds mentioned in Section 41 are different from the juridical
preconditions for exercise of power of arrest under Section 19(1) of
the PML Act. Section 19(1) conditions are more rigid and restrictive.
As such, the two provisions cannot be equated. The legislature
has deliberately avoided reference to the grounds mentioned in
Section 41 and considered it appropriate to impose strict and stringent
conditions that act as a safeguard. The same reasoning will apply
to the contention raised by the DoE relying upon the provisions of
Section 437 of the Code and the judgment of this Court in Gurcharan
Singh and others v. State (Delhi Administration).39 Section 437
of the Code applies when an accused suspected of committing a
non-bailable offence is arrested or detained without warrant by
a police officer in charge of a police station or is brought before
a court, other than the High Court or the Court of Sessions. It is

34 AIR 1945 PC 18
35 [1997] Supp. 5 SCR 566 : (1998) 1 SCC 52
36 [1980] 2 SCR 16 : (1980) 1 SCC 554
37 [2002] Supp. 5 SCR 677 : (2003) 2 SCC 649
38 Refer footnote 18 above.
39 [1978] 2 SCR 358 : (1978) 1 SCC 118
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observed that the accused would be released on bail, except for in
cases specified in clauses (i) and (ii) of Section 437(1) of the Code.
Section 437(1)(i) applies at the stage of initial investigation where
a person has been arrested for an offence punishable with death
or imprisonment for life. Section 437(1)(ii) imposes certain fetters
on the power of granting bail in specified cases when the offence
is cognizable and the accused has been previously convicted with
death, imprisonment for life, or 7 years or more, or has previously
been convicted on two or more occasions for non-bailable and
cognizable offences. The power under Section 437(1) of the Code
is exercised by the court, other than the High Court or the Sessions
Court. In other cases, Section 437(3) of the Code will apply.
Gurcharan Singh (supra) distinguishes between the language of
two sub-sections of Section 437 – Section 437(1) and 437(7). It is
observed that 437(7) does not apply at the investigation stage, but
rather after the conclusion of trial and before the court delivers its
judgment. Thus, the use of the expression ‘not guilty’ pertains to
releasing the accused who is in custody, on a bond without surety, for
appearance to hear the judgment delivered. Notably, Section 437(6)
states that if the trial of a person accused of a non-bailable offence
is not completed within sixty days from the first date fixed for taking
evidence, the magistrate to their satisfaction shall release such
person on bail, provided they have been in custody throughout
this period. The magistrate may direct otherwise only for reasons
recorded in writing. Section 439 of the Code, which relates to the
power of the High Court or the Sessions Court to grant bail, remains
free from the legislative constraints applicable in cases covered by
Section 437(1) of the Code. However, Section 437(3) of the Code
when applicable applies.
41. DoE has drawn our attention to the use of the expression ‘material in
possession’ in Section 19(1) of the PML Act instead of ‘evidence in
possession’. Though etymologically correct, this argument overlooks
the requirement that the designated officer should and must, based
on the material, reach and form an opinion that the arrestee is guilty
of the offence under the PML Act. Guilt can only be established on
admissible evidence to be led before the court, and cannot be based
on inadmissible evidence. While there is an element of hypothesis, as
oral evidence has not been led and the documents are to be proven,
the decision to arrest should be rational, fair and as per law. Power
to arrest under Section 19(1) is not for the purpose of investigation.
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Arrest can and should wait, and the power in terms of Section 19(1)
of the PML Act can be exercised only when the material with the
designated officer enables them to form an opinion, by recording
reasons in writing that the arrestee is guilty.
42. DoE relies upon the language of Sections 227 and 228 of the
Code, pertaining to discharge and framing of charge, respectively.
Section 227 uses the words – ‘sufficient grounds for proceeding
against the accused’. Section 228 uses – ‘grounds of presuming that
the accused has committed an offence’. Thus, DoE contends that
grave suspicion is sufficient to frame a charge and put the accused
to trial. This contention should not be accepted, since we are not
dealing with the trial, framing of charge or recording the evidence.
The issue before us, which has to be examined and answered, is
whether the arrest of the person during the course of investigation
complies with the law. The language of Section 19(1) is clear,
and should not be disregarded to defeat the legislative intent – to
provide stringent safeguards against pre-trial arrest during pending
investigations. Framing of the charge and putting the accused on
trial cannot be equated with the power to arrest. A person may face
the charge and trial even when he is on bail. Notably, Section 439
of the Code does not impose statutory restrictions, except under
Section 437(3) when applicable, on the court’s power to grant bail.
However, Section 45 of the PML Act prescribes specific fetters in
addition to the stipulations under the Code.
43. At this stage, it is important to distinguish between Section 19(1) and
Section 45 of the PML Act. We have already quoted Section 19, but
would like to quote Section 45 which reads as under:
“45. Offences to be cognizable and non-bailable.—
(1) Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), no person accused
of an offence under this Act shall be released on bail or
on his own bond unless—
(i) the Public Prosecutor has been given an opportunity to
oppose the application for such release; and
(ii) where the Public Prosecutor opposes the application,
the court is satisfied that there are reasonable grounds for
believing that he is not guilty of such offence and that he
is not likely to commit any offence while on bail:
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Provided that a person, who, is under the age of sixteen
years, or is a woman or is sick or infirm or is accused
either on his own or along with other co-accused of money-
laundering a sum of less than one crore rupees, may be
released on bail, if the Special Court so directs:
Provided further that the Special Court shall not take
cognizance of any offence punishable under Section 4
except upon a complaint in writing made by—
(i) the Director; or
(ii) any officer of the Central Government or a State
Government authorised in writing in this behalf by the
Central Government by a general or special order made
in this behalf by that Government.
(1-A) Notwithstanding anything contained in the Code
of Criminal Procedure, 1973 (2 of 1974), or any other
provision of this Act, no police officer shall investigate into
an offence under this Act unless specifically authorised,
by the Central Government by a general or special order,
and, subject to such conditions as may be prescribed.
(2) The limitation on granting of bail specified in sub-
section (1) is in addition to the limitations under the Code
of Criminal Procedure, 1973 (2 of 1974) or any other law
for the time being in force on granting of bail.
Explanation.—For the removal of doubts, it is clarified
that the expression “Offences to be cognizable and non-
bailable” shall mean and shall be deemed to have always
meant that all offences under this Act shall be cognizable
offences and non-bailable offences notwithstanding
anything to the contrary contained in the Code of Criminal
Procedure, 1973 (2 of 1974), and accordingly the officers
authorised under this Act are empowered to arrest an
accused without warrant, subject to the fulfilment of
conditions under section 19 and subject to the conditions
enshrined under this section.”
44. In our opinion, the key distinction between Section 19(1) and
Section 45 is the authority undertaking the exercise, in each case.
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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 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.
45. In Vijay Madanlal Choudhary (supra), the three Judge Bench
has in paragraph 131 referred to the decision in Ranjitsing
Brahmajeetsing Sharma v. State of Maharashtra and another,40 a
case of Maharashtra Control of Organised Crime Act, 1999,41 which
observes as under:
“44. The wording of Section 21(4), in our opinion, does
not lead to the conclusion that the court must arrive at a
positive finding that the applicant for bail has not committed
an offence under the Act. If such a construction is placed,
the court intending to grant bail must arrive at a finding
that the applicant has not committed such an offence. In
such an event, it will be impossible for the prosecution
to obtain a judgment of conviction of the applicant. Such
cannot be the intention of the legislature. Section 21(4) of
MCOCA, therefore, must be construed reasonably. It must
be so construed that the court is able to maintain a delicate
balance between a judgment of acquittal and conviction
and an order granting bail much before commencement
of trial. Similarly, the Court will be required to record a
finding as to the possibility of his committing a crime after
grant of bail. However, such an offence in futuro must be

40 [2005] 3 SCR 345 : (2005) 5 SCC 294
41 For short, “MCOCA”.
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an offence under the Act and not any other offence. Since
it is difficult to predict the future conduct of an accused,
the court must necessarily consider this aspect of the
matter having regard to the antecedents of the accused,
his propensities and the nature and manner in which he
is alleged to have committed the offence.
45. It is, furthermore, trite that for the purpose of considering
an application for grant of bail, although detailed reasons
are not necessary to be assigned, the order granting bail
must demonstrate application of mind at least in serious
cases as to why the applicant has been granted or denied
the privilege of bail.
46. The duty of the court at this stage is not to weigh
the evidence meticulously but to arrive at a finding on
the basis of broad probabilities. However, while dealing
with a special statute like MCOCA having regard to the
provisions contained in sub-section (4) of Section 21 of the
Act, the court may have to probe into the matter deeper
so as to enable it to arrive at a finding that the materials
collected against the accused during the investigation
may not justify a judgment of conviction. The findings
recorded by the court while granting or refusing bail
undoubtedly would be tentative in nature, which may not
have any bearing on the merit of the case and the trial
court would, thus, be free to decide the case on the basis
of evidence adduced at the trial, without in any manner
being prejudiced thereby”
This Court in Vijay Madanlal Choudhary (supra) had agreed with
the aforesaid observations.
46. Two more legal aspects need to be addressed. Section 45 of the PML
Act does not stipulate the stage when the accused may move an
application for bail. A bail application can be submitted at any stage,
either before or after the complaint is filed. Whether the charge is
framed or evidence is recorded or not recorded, is immaterial. Clearly,
the fact that the prosecution complaint has not been filed, the charge
has not been framed, or evidence is either not recorded or partly
recorded, will not prevent the court from examining the application
for bail within the parameters of Section 45 of the PML Act. As the
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issue would relate to grant or denial of bail, the parameters or the
stipulation in State of Orissa v. Debendra Nath Padhi,42 which states
that evidence or material not relied by the prosecution cannot be
examined at the stage of charge, will not apply. The reason is simple
and straightforward. Right to bail under Section 45 of the PML Act
is not dependant on the stage of the proceedings. The power of the
court under Section 45 is unrestricted with reference to the stage
of the proceedings. All material and evidence that can be led in the
trial and admissible, whether relied on by the prosecution or not, and
can be examined.43 On the question of burden of proof, Section 24
of the PML Act can be relied on by the prosecution. However, at
the same time, the observations of this Court in Vijay Madanlal
Choudhary (supra) with reference to clauses (a) and (b) of Section 24,
as well as the burden of proof placed on the prosecution to the
extent indicated in paragraph 57 refer to at least three foundational
facts. These foundational facts are – criminal activity relating to the
scheduled offence has been committed; property in question has
been derived or obtained directly or indirectly by any person as a
result of that criminal activity; and the person concerned is directly
or indirectly involved in any process or activity connected with the
said property being proceeds of crime, have to be established. It
is only on establishing the three facts that the offence of money
laundering is committed. When the foundational facts of Section 24
are met, a legal presumption would arise that the proceeds of crime
are involved in money laundering. The person concerned who has
no causal connection with such proceeds of crime can disprove
their involvement in the process or activity connected therewith by
producing evidence or material in that regard. In that event, the legal
presumption would be rebutted.
47. We now turn to the facts of the present case. At the outset we must
record that the DoE has produced the “reasons to believe” to invoke
Section 19(1) of the PML Act. We have examined the contents thereof
and the contents of the “grounds of arrest” furnished to Arvind Kejriwal
upon his arrest. They are identical.44

42 [2004] Supp. 6 SCR 460 : (2005) 1 SCC 568
43 It goes without saying that the oral evidence when recorded in the Court can be taken into consideration.
44 The reasons to believe are enclosed at pages 19 to 34 of Volume I of the convenience compilation filed
by the DoE. The grounds of arrest are to be found at pages 35 to 62 of the same compilation.
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48. We would briefly refer to the contents of the “reasons to believe”:
• CBI has registered an RC regarding framing and implementation
of the excise policy by the Govt. of NCT of Delhi for the year
2021- 22 with the intent to procure undue favours from the licensee
post the tender. Contents of the FIR have been elaborated.
• DoE has registered an ECIR on the basis of the aforesaid predicate
offence. Upon investigation by the DoE, several searches
have been conducted and statements have been recorded.
• Salient features of the excise policy that establish criminality are:
ο The wholesale entity should not be a manufacturer/winery/
brewery/bottler of liquor in India or abroad either directly
or through any sister entities;
ο The manufacturer/winery/brewery/bottler of liquor has to
choose a distributor holding wholesale license for supply
of Indian and foreign liquor as an exclusive distributor;
ο The wholesale licensee shall not directly or indirectly
have any retail wings. The retail license holder shall not
be a manufacturer/winery/brewery/bottler of liquor in India
or abroad either directly or through any sister concerns/
related entities;
ο The final price to the retailer shall be fixed by the excise
commissioner as per the formula prescribed which will
include the profit margin of 12% for the wholesale license
holders.
• A cartel was formed wherein one group/person effectively would
be controlling manufacturing, wholesale and retail entitles of
liquor business in return for bribes/kickbacks.
• The excise policy 2021 was implemented on 17.11.2021,
which continued till 31.08.2022, after which the government
discontinued the policy and went back to the old regime.
• The role of Arvind Kejriwal is elaborated. He has been described
as the kingpin/key conspirator in formulation of the policy, which
favoured certain persons in exchange for kickbacks from liquor
businessmen. Further, Arvind Kejriwal was involved in the use
of proceeds of crime generated in the Goa election campaign
[2024] 7 S.C.R. 2403

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of Aam Aadmi Party,45 in which he is the convenor and the
ultimate decision maker.
• C. Arvind, the then Secretary of Manish Sisodia, in his statement
dated 07.12.2022, has stated that the policy was given to him in
the form of a draft report of the Group of Ministers46 by Manish
Sisodia at the residence of Arvind Kejriwal. Satyender Jain was
also present at that time. The details mentioned in the draft
document on wholesale profit margin of 12%, etc., had not been
discussed earlier in the meetings of the GoM. He had prepared
the policy on the basis of the draft which was submitted to the
cabinet on 22.03.2021.
• Statement of Butchi Babu dated 23.03.2023, the then Chartered
Accountant of K. Kavitha, is referred. Butchi Babu had revealed
that Vijay Nair who was working for Arvind Kejriwal and
Manish Sisodia was in touch with Arun Pillai. Vijay Nair was
involved in policy formulation, for ensuring that the policy favours
K. Kavitha. This is corroborated by WhatsApp chats which were
retrieved from the mobile phone of Butchi Babu, wherein certain
terms of the excise policy, two days before it was finalised by
the GoM, were found.
• Association of Arvind Kejriwal with Vijay Nair is elaborated.
Vijay Nair has been described as a broker/liaison/middleman on
behalf of top leaders of AA Party, who wanted bribes/kickbacks
from the stakeholders. Vijay Nair had threatened those opposing
and not agreeing to his demands. Vijay Nair was staying in the
official residence allotted to Kailash Gehlot, a cabinet minister
and a close associate of Arvind Kejriwal.
• Vijay Nair on behalf of Arvind Kejriwal and AA Party had received
kickbacks to the tune of Rs.100 crores from the group/cartel
who had been favoured.
• The permanent members of the liquor group/cartel were
Magunta Srinivasulu Reddy, Raghav Magunta, and K. Kavitha.
The group/cartel was also represented by Abhishek Boinpally,
Arun Pillai and Butchi Babu.

45 For short, “AA Party”.
46 For short, “GoM”.
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• P. Sarath Reddy in his statement dated 25.04.2023 under
Section 50 of the PML Act had revealed having expressed
his desire to meet top political leaders in Delhi, that is, Arvind
Kejriwal and Manish Sisodia, through Arun Pillai. Arun Pillai had
assured him and had coordinated with Vijay Nair. Later on he met
Arvind Kejriwal in a brief meeting of 10 minutes or so in which
Vijay Nair was also present. He was told by Arvind Kejriwal to
trust Vijay Nair who was very smart and could handle big and
small issues. Arvind Kejriwal spoke about the new liquor policy
which would be a win-win for all.
• On Arvind Kejriwal’s role of demanding kickbacks, reference
is made to the statement of Magunta Srinivasulu Reddy
dated 16.07.2023 recorded under Section 50 of the PML Act;
and his statement dated 17.07.2023 recorded under Section 164
of the Code. K. Kavitha had offered to pay Rs. 100 crore to AA
Party for the excise policy. She had spoken and interacted with
Arvind Kejriwal. She had asked Magunta Srinivasulu Reddy
to arrange Rs. 50 crores. He had his son Raghav Magunta to
further deal with K. Kavitha. Raghav Magunta had agreed to
pay Rs.30 Crores. Raghav Magunta had paid Rs. 25 crores in
cash to Butchi Babu and Abhishek Boinpally.
• Raghav Magunta in his statement dated 26.07.2023 recorded
under Section 50 of the PML Act, and statement dated
27.07.2023 recorded under Section 164 of the Code, has
accepted that he had paid Rs.25 crores in cash to Abhishek
Boinpally and Butchi Babu in view of the agreement between
him, his father – Magunta Srinivasulu Reddy and K. Kavitha.
Raghav Magunta’s father – Magunta Srinivasulu Reddy had
met Arvind Kejriwal in mid-March 2021. Arvind Kejriwal had
invited him to do business under the new excise policy, and in
turn Arvind Kejriwal wanted funding for the upcoming elections
in Punjab and Goa.
• Proceeds of crime of about Rs.45 Crores, a part of the bribes
received, were used in the election campaign at Goa in 2021- 22.
AA Party is the real beneficiary of the proceeds of crime.
• The hawala transfer of approximately Rs. 45 crores is
substantiated by the CBI in its second supplementary
chargesheet.
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• Dinesh Arora in his statement dated 01.10.2022 has stated that
he had, on instructions of Vijay Nair coordinated the hawala
transfer of Rs.31 Crores with Abhishek Boinpally, Rajesh Joshi
and Sudhir. Dinesh Arora is a close associate of Manish Sisodia.
Sudhir is a close associate of Vijay Nair. Rajesh Joshi is the
proprietor of M/s Chariot Productions Media Pvt. Ltd.,47 who
were engaged by AA Party for its election campaign in Goa.
• The details of transfer of money from Mumbai to Goa by hawala
transfers are stated with names and particulars including the
amounts. Angadiyas based out of Mumbai made such transfers
to the entities including Chariot, Islam Qazi etc. engaged by AA
Party in Goa are elaborated with names and figures. Payments
for the activities/work was partly in cash.
• Chariot had itself received such hawala payments and had also
engaged several vendors for campaign of AA Party to whom part
cash payments were paid. These are proven through various
statements by employees of vendors, CDR records and data
seized by the Income Tax department.
• Use of cash in Goa elections is also corroborated by one of
the candidates of AA Party.
• Arvind Kejriwal is guilty as an individual, being a part of the
conspiracy in the formulation of the excise policy, and, also
vicariously as the person in-charge and responsible for AA Party.
Reference is made to Section 70 of the PML Act relating to
offences by ‘companies’. Arvind Kejriwal, as National Convenor
of AA Party and member of the Political Affairs Committee and
National Executive, is ultimately responsible for the funds being
used in the election expenses, including its generation. Thus,
he is both individually and vicariously liable for generation and
utilisation of the proceeds of crime.
• Lastly, Arvind Kejriwal was afforded multiple opportunities to
cooperate with the investigation. In spite of summons being
issued to him on nine occasions, he wilfully disobeyed them
by not appearing.

47 For short, “Chariot”
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49. If we go by the narration of facts and assertions made in the “reasons
to believe”, the subjective satisfaction that Arvind Kejriwal is guilty,
on the basis of the material relied is clearly recorded. The “reasons
to believe” refer to the “material” to show involvement of Arvind
Kejriwal in the offence of money laundering.
50. However, the assertion on behalf of Arvind Kejriwal is that the “reasons
to believe” do not mention and evaluate “all” or “entire” material. It
selectively refers to “incriminating” material by giving it a semblance
of good faith exercise. In reality, the reasons are a sham, and the
exercise is undertaken in a pre-determined and biased manner.
The expression “material” in Section 19(1) of the PML Act refers to
the “all” or “entire” material in possession of the DoE. Thus, “all” or
“entire” material must be examined and considered by the designated/
authorised officer to determine the guilt or innocence of the person.
The following aspects are highlighted:
• P. Sarath Chandra Reddy was arrested on 10.11.2022. In his
statements before the DoE on 16.09.2022 and 09.11.2022,
which were recorded before his arrest, he did not make any
allegation or comment against Arvind Kejriwal. On the contrary,
in his statement dated 09.11.2022, on being questioned whether
Rs.100 crores in cash was transferred from Hyderabad to Delhi
(Vijay Nair), through Abhishek Boinpally and Dinesh Arora, he has
denied having transferred any amount to Vijay Nair, Dinesh Arora
or Abhishek Boinpally. After his arrest, in his statements recorded
on 9 occasions, from 11.11.2022 to 25.12.2022, he did not make
any allegation against Arvind Kejriwal.
• P. Sarath Chandra Reddy’s application for regular bail was
dismissed by the Special Judge on 16.02.2023. However, on
01.04.2023, in spite of opposition from the DoE, he was granted
interim bail as his wife was indisposed. On 19.04.2023, he
moved an application before the Delhi High Court for regular
bail. After a few days, on 25.04.2023, P. Sarath Chandra Reddy
made a statement under Section 50 of the PML Act implicating
Arvind Kejriwal. Thereafter, interim bail granted to him was
extended in view of the request made by DoE seeking
time to file reply and verify documents. On 29.04.2023,
P. Sarath Chandra Reddy made a statement under Section 164
of the Code to the Magistrate, in which he implicated Arvind
[2024] 7 S.C.R. 2407

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Kejriwal. On 08.05.2023, he filed an affidavit before the
High Court wherein he cited health issues and claimed that
he is sick and infirm. The High Court granted him regular
bail as it was not objected to by the DoE. On 29.05.2024,
P. Sarath Chandra Reddy was granted pardon.
• Magunta Srinivasulu Reddy in his statement recorded on
16.09.2022 did not implicate Arvind Kejriwal. In his statement
recorded on 24.03.2023, on being asked whether he had
met Arvind Kejriwal in the context of Delhi liquor business,
Magunta Srinivasulu Reddy had stated that he had met
Arvind Kejriwal in his office in 2021 to discuss whether the
trust of Magunta family could be given land in Delhi for their
charitable trust. The meeting had lasted for 5-6 minutes. Thus,
he had not spoken about the Delhi liquor business.
• Raghav Magunta, son of Magunta Srinivasuly Reddy, was
arrested on 11.02.2023. Raghav Magunta in his first statement
recorded before his arrest on 16.09.2022 and 5 statements
recorded between 10.02.2023 and 17.02.2023 did not implicate
or make any assertion against Arvind Kejriwal. Regular bail
application filed by Raghav Magunta was dismissed by the
Special Judge on 20.04.2023. Raghav Magunta’s wife attempted
suicide on 01.05.2023, and on this ground he sought interim
bail. The interim bail application was dismissed by the Special
Judge on 08.05.2023. Thereupon, Raghav Magunta had moved
the High Court on 11.05.2023 for grant of interim bail, which
application was withdrawn on 29.05.2023. While doing so,
certain observations made by the Special Judge in the order
dated 08.05.2023 were expunged. On 07.06.2023, the maternal
grandmother of Raghav Magunta suffered injuries and was
admitted to an Intensive Care Unit. The High Court granted an
interim bail to Raghav Magunta for a period of 15 days on this
ground. This order was challenged by the DoE before this Court.
This Court vide order dated 09.06.2023 reduced the interim bail
period from 15 days to 6 days. On 16.07.2023 and 17.07.2023,
Magunta Srinivasulu Reddy gave statements under Section 50
of the PML Act and Section 164 of the Code respectively,
implicating and naming Arvind Kejriwal. On 18.07.2023, the High
Court extended the interim bail granted to Raghav Magunta
recording that the DoE had no objection. On 26.07.2023 and
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27.07.2023, Raghav Magunta gave statements under Section 50
of the PML Act and Section 164 of the Code respectively,
implicating and naming Arvind Kejriwal. On 10.08.2023, the
interim bail granted to Raghav Magunta was made absolute,
recording that the DoE had no objection to the grant of
bail. On 03.10.2023, Raghav Magunta was granted pardon.
Magunta Srinivasulu Reddy was never arrested. He is a Member
of Parliament from Andhra Pradesh.
• Statement of Butchi Babu is hearsay and it is not evidence.
Besides the statement was made by Butchi Babu while he was
in the custody of CBI, and to escape his arrest by the DoE. He
was not arrested by the DoE, despite being an accused in the
CBI case. Butchi Babu had contradicted as well as corrected
his earlier statements dated 28.02.2023, wherein he had stated
that he does not know when K. Kavitha and Vijay Nair met.
Hearsay evidence is inadmissible as per the Indian Evidence
Act, 1872.48
• C. Arvind has not made any allegation against Arvind Kejriwal or
linked and referred to the role of Arvind Kejriwal in the proceeds of
crime. Mere presence of Arvind Kejriwal, the Chief Minister, when
files were handed over to him would not implicate Arvind Kejriwal.
The “reasons to believe” do not take into account the fact that
the statements of the co-accused relied upon, cannot in terms
of Section 30 of the Evidence Act, be the starting point for
ascertainment of the guilt of the accused. The statements made
earlier in point of time which do not implicate Arvind Kejriwal
have been ignored. The statements are also contradictory.
Factually, no incriminating document involving Arvind Kejriwal
has been recovered during the course of investigation, which
commenced in August 2022. The statements also do not establish
involvement of Arvind Kejriwal in activities related to commission
of a predicate offence as well as act of concealment, possession,
acquisition or utilisation of proceeds of crime, which are penal
offences under Section 3 of the PML Act.
• The statements of persons stated to be engaged with Angadiyas
in Mumbai do not in any way implicate and link Arvind Kejriwal

48 For short, “Evidence Act”.
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to the crime. The statements are not of such sterling quality as
to justify arrest of the Chief Minister, who is a prominent leader
of a national political party and an opposition leader. There is no
documentary proof to show that AA Party has received kickback
from the funds received from the cartel, let alone utilising them in
the Goa election campaign. Rajesh Joshi of Chariot was granted
bail by the Special Judge vide order dated 06.05.2023 as huge
amount of Rs.20-30 crores alleged to have been transferred
was not established. The payment alleged to have been made
for election related to jobs of meagre amount in lakhs.
• Contention of the DoE that P. Sarath Reddy, Magunta Srinivasulu
Reddy, Raghav Magunta, and Butchi Babu in their earlier
statements were quiet and did not link Arvind Kejriwal is
contested on the ground that the statements were recorded
by the officers of DoE who had the discretion to put questions
and also in recording the contents.
51. Arvind Kejriwal submits that the “reasons to believe” selectively refer
to the implicating material, and ignore the exculpatory material. Thus,
there is no attempt to evaluate the entire material and evidence
on record. The co-accused, in view of prolonged incarceration,
strong-arm tactics and threats have been coerced to accept the DoE’s
version of facts. In support, it is highlighted that the DoE changed
their position, viz. the co-accused conspirators, who were granted
bail post the statements implicating Arvind Kejriwal. This establishes
and shows prejudice and malicious intent.
52. In response, the DoE submits that the investigation in the present
case is complicated. As it is a case of political corruption, independent
witnesses are not available, and the co-accused were initially reluctant
to name and blame the top political stakeholders. Admissibility or
veracity of the approver/witness statements cannot be dealt with in
the present proceedings, as credibility of the witnesses is to be tested
during trial. Statements under Section 164 of the Code were recorded
before the Magistrate. That apart, the statements are corroborated
by material evidence or by statement of other witnesses. Reliance
is placed upon Section 145 of the Evidence Act which permits
cross- examination of witnesses on previous statements made by them.
53. At this juncture, we would like to reiterate and clarify that we are not
deciding an appeal against an order rejecting the prayer/application
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for grant of bail under Section 45 of the PML Act. We are examining
the question of the legality of arrest of Arvind Kejriwal on 21.03.2024.
While doing so, we would be exercising the power of judicial review
and not merit based review.
54. We must also state that the DoE in their additional note filed before
us has referred to certain retrieved WhatsApp chats which, as per
the allegation made, show that Arvind Kejriwal was known to Vinod
Chauhan, who was involved in the hawala transfer of money through
Angadiyas from Mumbai to Goa. These chats were retrieved after
the arrest of Arvind Kejriwal and is not mentioned in the “reasons to
believe”. Thus, it cannot be examined by us to determine the validity
of the arrest in terms of Section 19(1) of the PML Act.
55. The legality of the “reasons to believe” have to be examined based
on what is mentioned and recorded therein and the material on
record. However, the officer acting under Section 19(1) of the PML
Act cannot ignore or not consider the material which exonerates
the arrestee. Any such non-consideration would lead to difficult and
unacceptable results. First, it would negate the legislative intent which
imposes stringent conditions. As a general rule of interpretation,
penal provisions must be interpreted strictly. 49 Secondly, any
undue indulgence and latitude to the DoE will be deleterious to the
constitutional values of rule of law and life and liberty of persons.
An officer cannot be allowed to selectively pick and choose material
implicating the person to be arrested. They have to equally apply their
mind to other material which absolves and exculpates the arrestee.
The power to arrest under Section 19(1) of the PML Act cannot be
exercised as per the whims and fancies of the officer.

49 See Vijay Madanlal Choudhary (supra) at paragraph 31 – “The ‘proceeds of crime’ being the core of the
ingredients constituting the offence of money-laundering, that expression needs to be construed strictly.
In that, all properties recovered or attached by the investigating agency in connection with the criminal
activity relating to a scheduled offence under the general law cannot be regarded as proceeds of crime.
There may be cases where the property involved in the commission of scheduled offence attached by
the investigating agency dealing with that offence, cannot be wholly or partly regarded as proceeds of
crime within the meaning of section 2(1)(u) of the 2002 Act—so long as the whole or some portion of the
property has been derived or obtained by any person ‘as a result of’ criminal activity relating to the stated
scheduled offence…”
Also see M. Ravindran v. Intelligence Officer, Directorate of Revenue Intelligence, (2021) 2 SCC 485
at paragraph 17.9. – “Additionally, it is well-settled that in case of any ambiguity in the construction of a
penal statute, the courts must favour the interpretation which leans towards protecting the rights of the
accused, given the ubiquitous power disparity between the individual accused and the State machinery.
This is applicable not only in the case of substantive penal statutes but also in the case of procedures
providing for the curtailment of the liberty of the accused.”
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56. Undoubtedly, the opinion of the officer is subjective, but formation
of opinion should be in accordance with the law. Subjectivity of the
opinion is not a carte blanche to ignore relevant absolving material
without an explanation. In such a situation, the officer commits an
error in law which goes to the root of the decision making process,
and amounts to legal malice.
57. A contention raised by the DoE, and accepted in Vijay Madanlal
Choudhary (supra), was that the order of arrest under Section 19(1)
of the PML Act is a decision taken by a high ranking officer. Thus, it
is expected that the high ranking officer is conscious of the obligation
imposed by Section 19(1) of the PML Act before passing an order
of arrest. We are of the opinion that it would be incongruous to
argue that the high ranking officer should not objectively consider
all material, including exculpatory material.
58. A wrong application of law or arbitrary exercise of duty leads to
illegality in the process. The court can exercise their judicial review
to strike down such a decision. This would not amount to judicial
overreach or interference with the investigation, as has been argued
by the DoE. The court only ensures that the enforcement of law is in
accordance with the statute and the Constitution. An adverse decision
would only help in ensuring better compliance with the statute and
the principles of the Constitution.
59. Having said so, we accept that a question would arise – does judicial
review mean a detailed merits review? We have already referred to
the contours of judicial review expounded in Padam Narain Aggarwal
(supra), and Dr. Pratap Singh (supra). We have also referred to the
principles of Wednesbury reasonableness.50
60. In Amarendra Kumar Pandey v. Union of India and others,51 this
Court elaborated on the different facets of judicial review regarding
subjective opinion or satisfaction. It was held that the courts should
not inquire into correctness or otherwise of the facts found except
where the facts found existing are not supported by any evidence at
all or the finding is so perverse that no reasonable man would say
that the facts and circumstances exist. Secondly, it is permissible to

50 See supra note 33.
51 [2022] 12 SCR 223 : (2022) SCC Online SC 881
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inquire whether the facts and circumstances so found to exist have
a reasonable nexus with the purpose for which the power is to be
exercised. In simple words, the conclusion has to logically flow from
the facts. If it does not, then the courts can interfere, treating the lack
of reasonable nexus as an error of law. Thirdly, jurisdictional review
permits review of errors of law when constitutional or statutory terms,
essential for the exercise of power, are misapplied or misconstrued.
Fourthly, judicial review is permissible to check improper exercise of
power. For instance, it is an improper exercise of power when the
power is not exercised genuinely, but rather to avoid embarrassment
or for wreaking personal vengeance. Lastly, judicial review can be
exercised when the authorities have not considered grounds which
are relevant or has accounted for grounds which are not relevant.
61. Error in decision making process can vitiate a judgment/decision
of a statutory authority. In terms of Section 19(1) of the PML Act, a
decision-making error can lead to the arrest and deprivation of liberty
of the arrestee. Though not akin to preventive detention cases, but
given the nature of the order entailing arrest – it requires careful
scrutiny and consideration. Yet, at the same time, the courts should
not go into the correctness of the opinion formed or sufficiency of
the material on which it is based, albeit if a vital ground or fact is
not considered or the ground or reason is found to be non-existent,
the order of detention may fail.52
62. In Centre for PIL and another v. Union of India and another,53 this
Court observed that in judicial review, it is permissible to examine
the question of illegality in the decision-making process. A decision
which is vitiated by extraneous considerations can be set aside.
Similarly, in Uttamrao Shivdas Jankhar v. Ranjitsinh Vijaysinh
Mohite Patil,54 elaborating on the expression “decision making
process”, this Court held that judicial interference is warranted when
there is no proper application of mind on the requirements of law. An
error in the decision making process crops up where the authority
fails to consider a relevant factor and considers irrelevant factors
to decide the issue.

52 Ram Manohar Lohia v. State of Bihar and another, AIR 1966 SC 740 and Moti Lal Jain v. State of Bihar
and others, AIR 1968 SC 1509
53 [2011] 4 SCR 445 : (2011) 4 SCC 1
54 [2009] 9 SCR 538 : (2009) 13 SCC 131
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63. In the present case, as noticed above, the “reasons to believe” have
recorded several facts and grounds. One of the grounds for arrest
relates to the formulation of the excise policy with the intent to obtain
kickbacks/bribes. What has been discussed above in the arguments
raised by Arvind Kejriwal relates to corruption amounting Rs. 45 crores
to facilitate Goa elections for the AA Party. However, the “reasons
to believe” also refer to the policy itself and that it was vitiated on
the ground of criminality, viz. to promote cartelization and benefit
from those providing bribes or kickbacks. We have briefly referred
to the terms of the excise policy, albeit for clarity we would like to
reproduce the findings recorded in the case of Manish Sisodia v.
Central Bureau of Investigation,55 a judgment authored by one of
us (Sanjiv Khanna, J.), the relevant portion of which reads as under:
“22. However, there is one clear ground or charge in the
complaint filed under the PML Act, which is free from
perceptible legal challenge and the facts as alleged are
tentatively supported by material and evidence. This
discussion is equally relevant for the charge-sheet filed
by the CBI under the PoC Act and IPC. We would like to
recapitulate the facts as alleged, which it is stated establish
an offence under Section 3 of the PML Act and the PoC
Act. These are:
• In a period of about ten months, during which the
new excise policy was in operation, the wholesale
distributors had earned Rs. 581,00,00,000 (rupees
five hundred eighty one crores only) as the fixed fee.
• The one time licence fee collected from 14 wholesale
distributors was about Rs. 70,00,00,000 (rupees
seventy crores only).
• Under the old policy 5% commission was payable to
the wholesale distributors/licensees.
The difference between the 12%; minus 5% of the
wholesale profit margin plus Rs. 70,00,00,000/-; it
is submitted, would constitute proceeds of crime, an
offence punishable under the PML Act. The proceeds

55 [2023] 15 SCR 480 : 2023 SCC OnLine SC 1393
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of crime were acquired, used and were in possession
of the wholesale distributors who have unlawfully
benefitted from illegal gain at the expense of the
government exchequer and the consumers/ buyers.
Relevant portion of the criminal complaint filed by
the DoE dated 04.05.2023, reads:
“One of the reasons given by Sh Manish Sisodia
is to compensate the wholesaler for increased
license fee from Rs. 5 lacs to Rs. 5 Cr. During this
policy period, 14 LI licences were given by Excise
Department, by raising the license fee for LI to
Rs. 5 Cr in the entire period of operation of the Delhi
Excise Policy 2021-2022, the Govt. has earned
Rs. 75.16 Cr from the license fee of LI (as per
Excise department communication dated 11.04.2023)
(RUD 34). On the other hand the excess profit earned
by the wholesalers during this period is to the tune of
Rs. 338 Cr. (7% additional profit earned due to
increase from 5% to 12%, Rs. 581 Cr being the
total profit of LI as informed by Excise department).
Therefore there is no logical correlation between the
license fee increase and the profit margin increase.
Whereas this excess profit margin benefit could
have been passed on to the consumers in form of
lower MRP. Contrary to the claim that the policy was
meant to benefit the public or the exchequer, it was
rather a conspiracy to ensure massive illegal gains
to a select few private players/individuals/entities.”
23. The charge-sheet under the PoC Act includes offences
for unlawful gains to a private person at the expense of
the public exchequer. Reference in this regard is made to
the provisions of Sections 7, 7A, 8 and 12 of the PoC Act.
24. Clauses (a) and (b) to Section 7 of the PoC Act apply :
(a) when a public servant obtains, accepts or intends to
obtain from another person undue advantage with the
intent to perform or fail to improperly or to forbear or cause
forbearance to cause by himself or by another person;
(b) obtains or accepts or attempts to obtain undue advantage
[2024] 7 S.C.R. 2415

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from a person as a reward or dishonest performance of
a public duty or forbearance to perform such duty, either
by himself or by another public servant. Explanation (2)
construes the words and expression, “obtains, accepts
or attempts to obtain”, as to cover cases where a public
servant obtains, accepts or intends to obtain any undue
advantage by abusing his position as a public servant or by
using his personal interest over another public servant by
any other corrupt or illegal means. It is immaterial whether
such person being a public servant accepts or attempts to
obtain the undue advantage directly or through a third party.
25. On this aspect of the offences under the PoC Act, the
CBI has submitted that conspiracy and involvement of the
appellant - Manish Sisodia is well established. For the
sake of clarity, without making any additions, subtractions,
or a detailed analysis, we would like to recapitulate what
is stated in the chargesheet filed by the CBI against the
appellant - Manish Sisodia:
• The existing excise policy was changed to facilitate
and get kickbacks and bribes from the wholesale
distributors by enhancing their commission/fee from
5% under the old policy to 12% under the new policy.
Accordingly, a conspiracy was hatched to carefully
draft the new policy, deviating from the expert
opinion/views to create an eco-system to assure
unjust enrichment of the wholesale distributors at the
expense of government exchequer or the consumer.
The illegal income (proceeds of crime, as per the
DoE) would partly be recycled and returned in the
form of bribes.
• Vijay Nair, who was the middleman, a go-between, a
member of AAP, and a co-confident of the appellant -
Manish Sisodia, had interacted with Butchi Babu, Arun
Pillai, Abhishek Boinpally and Sarath Reddy, to frame
the excise policy on conditions and terms put forth
and to the satisfaction and desire of the liquor group.
• Vijay Nair and the members of the liquor group had
meetings on different dates, including 16.03.2021,
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and had prepared the new excise policy, which
was handed over to Vijay Nair. Thereupon, the
commission/fee, which was earlier fixed at minimum
of 5%, was enhanced to fixed fee of 12% payable to
wholesale distributor.
• The appellant - Manish Sisodia was aware that three
liquor manufacturers have 85% share in the liquor
market in Delhi. Out of them two manufacturers had
65% liquor share, while 14 small manufacturers had
20% market share. As per the term in the new excise
policy - each manufacturer could appoint only one
wholesale distributor, through whom alone the liquor
would be sold. At the same time, the wholesale
distributors could enter into distribution agreements
with multiple manufacturers. This facilitated getting
kickbacks or bribes from the wholesale distributors
having substantial market share and turnover.
• The licence fee payable by the wholesale distributor
was a fixed amount of Rs. 5,00,00,000/- (rupees five
crores only). It was not dependant on the turnover.
The new policy facilitated big wholesale distributors,
whose outpour towards the licence fee was fixed.
• The policy favoured and promoted cartelisation.
Large wholesale distributors with high market share
because of extraneous reasons and kickbacks, were
ensured to earn exorbitant profits.
• Mahadev Liquor, who was a wholesale distributor for
14 small manufacturers, having 20% market share,
was forced to surrender the wholesale distributorship
licence.
• Indo Spirit, the firm in which the liquor group had
interest, was granted whole distributor licence, in
spite of complaints of cartelisation etc. which were
overlooked. The complainant was forced to take back
his complaint.
• The excess amount of 7% commission/fee earned
by the wholesale distributors of Rs. 338,00,00,000/-
[2024] 7 S.C.R. 2417

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(rupees three hundred thirty eight crores only)
constitute an offence as defined under Section 7 of
the PoC Act, relating to a public servant being bribed.
(As per the DoE, these are proceeds of crime). This
amount was earned by the wholesale distributors in a
span of ten months. This figure cannot be disputed or
challenged. Thus, the new excise policy was meant to
give windfall gains to select few wholesale distributors,
who in turn had agreed to give kickbacks and bribes.
• No doubt, VAT and excise duty was payable
separately. However, under the new policy the VAT
was reduced to mere 1%.
• Vijay Nair had assured the liquor group that they
would be made distributor of Pernod Ricard, one of
the biggest players in the market. This did happen.”
64. During the course of arguments, we had specifically asked the learned
counsel appearing for Arvind Kejriwal to address arguments on facts.
He did not, however, address arguments on the said aspect.56 As
noticed above, the arrest of Arvind Kejriwal is on several counts,
which are independent and separate from each other.
65. Arguments raised on behalf of Arvind Kejriwal, which tend to dent
the statements and material relied upon by the DoE in the “reasons
to believe”, though worthy of consideration, are in the nature of
propositions or deductions. They are a matter of discussion as they
intend to support or establish a point of view on the basis of inferences
drawn from the material. It is contended that the statements relied
upon by the DoE have been extracted under coercion, a fact that is
contested and has to be examined and decided. This argument does
not persuade us, given the limited power of judicial review, to set
aside and quash the “reasons to believe”. Accepting this argument
would be equivalent to undertaking a merits review.
66. Arvind Kejriwal can raise these arguments at the time when his
application for bail is taken up for hearing. In bail hearings, the court’s

56 It was also submitted on behalf of Arvind Kejriwal that he would not like to argue on the question of
applicability of Section 70 of the PML Act to political parties or the issue whether he can be prosecuted
being the person in-charge and responsible.
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jurisdiction is wider, though the fetters in terms of Section 45 of the
PML Act have to be met. Special Court would have to independently
apply its mind, without being influenced by the opinion recorded in
the “reasons to believe”. To adjudicate on a bail application, pleas
and arguments of Arvind Kejriwal and the DoE, including the material
that can be relied on and the inferences possible shall be examined.
The court will have to undertake the balancing exercise.
67. It has been strenuously urged on behalf of Arvind Kejriwal that the
arrest would falter on the ground that the “reasons to believe” do
not mention and record reasons for “necessity to arrest”. The term
“necessity to arrest” is not mentioned in Section 19(1) of the PML Act.
However, this expression has been given judicial recognition in
Arnesh Kumar v. State of Bihar,57 which lays down that “necessity
to arrest” must be considered by an officer before arresting a person.
This Court observed that the officer must ask himself the questions –
why arrest?; is it really necessary to arrest?; what purpose would it
serve?; and what object would it achieve?
68. This Court in Mohammed Zubair v. State of NCT of Delhi,58 has
held that power to arrest is not unbridled. The officer must be
satisfied that the arrest is necessary. Where the power is exercised
without application of mind, and by disregarding the law, it amounts
to abuse of the law.
69. In Joginder Kumar v. State of Uttar Pradesh,59 the distinction
between the power to arrest and the necessity and need to arrest,60
is explained in the following terms:
“20…No arrest can be made because it is lawful for the
police officer to do so. The existence of the power to
arrest is one thing. The justification for the exercise of it is
quite another. The police officer must be able to justify the
arrest apart from his power to do so. Arrest and detention
in police lock-up of a person can cause incalculable harm

57 [2014] 8 SCR 128 : (2014) 8 SCC 273
58 [2022] 18 SCR 494 : (2022) SCC OnLine SC 897
59 [1994] 3 SCR 661 : (1994) 4 SCC 260
60 Necessity to arrest is not a precondition and safeguard mentioned in Section 19 of the PML Act, albeit
treated as a part of the general law and exercise of the power to arrest. The legislature being aware of
this interpretation has not excluded the application of this principle in Section 19 of the PML Act.
[2024] 7 S.C.R. 2419

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to the reputation and self-esteem of a person. No arrest
can be made in a routine manner on a mere allegation of
commission of an offence made against a person. It would
be prudent for a police officer in the interest of protection
of the constitutional rights of a citizen and perhaps in
his own interest that no arrest should be made without a
reasonable satisfaction reached after some investigation
as to the genuineness and bona fides of a complaint and
a reasonable belief both as to the person’s complicity and
even so as to the need to effect arrest. Denying a person
of his liberty is a serious matter. The recommendations
of the Police Commission merely reflect the constitutional
concomitants of the fundamental right to personal liberty
and freedom. A person is not liable to arrest merely on
the suspicion of complicity in an offence. There must be
some reasonable justification in the opinion of the officer
effecting the arrest that such arrest is necessary and
justified. Except in heinous offences, an arrest must be
avoided if a police officer issues notice to person to attend
the Station House and not to leave the Station without
permission would do.”
70. Recently, Siddharth v. State of Uttar Pradesh,61 relied on Joginder
Kumar (supra), to observe:
“10. We may note that personal liberty is an important
aspect of our constitutional mandate. The occasion to arrest
an accused during investigation arises when custodial
investigation becomes necessary or it is a heinous crime
or where there is a possibility of influencing the witnesses
or accused may abscond. Merely because an arrest can
be made because it is lawful does not mandate that arrest
must be made. A distinction must be made between the
existence of the power to arrest and the justification
for exercise of it [Joginder Kumar v. State of U.P.,
(1994) 4 SCC 260 : 1994 SCC (Cri) 1172] . If arrest is made
routine, it can cause incalculable harm to the reputation and
self-esteem of a person. If the investigating officer has no

61 (2022) 1 SCC 676
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reason to believe that the accused will abscond or disobey
summons and has, in fact, throughout cooperated with the
investigation we fail to appreciate why there should be a
compulsion on the officer to arrest the accused.”
Thus, time and again, courts have emphasised that the power to
arrest must be exercised cautiously to prevent severe repercussions
on the life and liberty of individuals. Such power must be restricted
to necessary instances and must not be exercised routinely or in a
cavalier fashion.
71. In Vijay Madanlal 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 observations are made
in paragraphs 15 and 22 of Pankaj Bansal (supra).
72. However, we must observe that in paragraph 32 of V. Senthil Balaji
(supra), it is held that an authorised officer is not bound to follow the
rigours of Section 41A of the Code as there is already an exhaustive
procedure contemplated under the PML Act containing sufficient
safeguards in favour of the arrestee. Thereafter, in paragraph 40 of
V. Senthil Balaji (supra), it is observed:
“40. To effect an arrest, an officer authorised 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 authorised
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.
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Needless to state, compliance of sub-section (2) is also
a solemn function of the arresting authority which brooks
no exception.”
73. In Prabir Purkayastha (supra), this Court went beyond the rigours
of the PML Act/UAPA. Drawing a distinction between “reasons to
arrest” and “grounds for arrest”, it held that while the former refers
to the formal parameters, the latter would require all such details in
the hands of the investigating officer necessitating the arrest. Thus,
the grounds of arrest would be personal to the accused.
74. 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:
ᴑ Section 41(1)(ii)(a) – preventing a person from committing
further offence.
ᴑ Section 41(1)(ii)(b) – proper investigation of the offence.
ᴑ Section 41(1)(ii)(c) – preventing a person from disappearing
or tampering with evidence in any manner.
ᴑ 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.
ᴑ 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.
75. In Vijay Madanlal Choudhary (supra), this Court has held that
when a person applies for bail or anticipatory bail under the PML
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Act, the conditions stipulated in Section 437/438/439 of the Code
would equally apply, in addition to Section 45 of the PML Act.
Therefore, it is urged that necessity to arrest, in the case of arrest
under Section 19(1), would be an additional factor required to
be considered beyond the conditions and factors stipulated in
Section 19(1) of the PML Act.
76. DoE submits that the test of “necessity to arrest” is satisfied in view of
Arvind Kejriwal failing to appear despite the issuance of 9 summons
dated 30.10.2023, 18.12.2023, 22.12.2023, 12.01.2024, 31.01.2024,
14.02.2024, 21.02.2024, 26.02.2024, and 16.03.2024. It is also
submitted that arrest is a part and parcel of investigation intended
to secure evidence, leading to discovery of material facts and
relevant information as held in P. Chidambaram v. Directorate of
Enforcement.62
77. On behalf of Arvind Kejriwal, it is submitted that there was no
necessity to arrest on 21.03.2024. The RC/ECIR were registered in
the month of August 2022. Further, most of the material relied upon
in the “reasons to believe” are prior to July 2023. The statements
under Section 50 of the PML Act and under Section 164 of the Code,
or otherwise, of Magunta Srinivasulu Reddy, Raghav Magunta,
Siddharth Reddy, etc., relate to the period prior to July 2023. Thus,
it was not necessary to arrest Arvind Kejriwal on 21.03.2024 based
on the said material. Lastly, in Pankaj Bansal (supra), this Court
observed:
“28. Mere non-cooperation of a witness in response to
the summons issued under Section 50 of the Act of 2002
would not be enough to render him/her liable to be arrested
under Section 19…”
78. As per the data available on the website of the DoE, as on
31.01.2023,63 5,906 ECIRs were recorded. However, search was
conducted in 531 ECIRs by issue of 4,954 search warrants. The
total number of ECIRs recorded against ex-MPs, MLAs and MLCs
was 176. The number of persons arrested is 513. Whereas the
number of prosecution complaints filed is 1,142. The data raises a
number of questions, including the question whether the DoE has

62 [2019] 12 SCR 172 : (2019) 9 SCC 24
63 The data post 31.01.2023 has not been updated
[2024] 7 S.C.R. 2423

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formulated a policy, when they should arrest a person involved in
offences committed under the PML Act.
79. We are conscious that the principle of parity or equality enshrined
under Article 14 of the Constitution cannot be invoked for repeating
or multiplying irregularity or illegality. If any advantage or benefit has
been wrongly given, another person cannot claim the same advantage
as a matter of right on account of the error or mistake. However, this
principle may not apply where two or more courses are available to
the authorities. The doctrine of need and necessity to arrest possibly
accepts the said principle. Section 45 gives primacy to the opinion
of the DoE when it comes to grant of bail. DoE should act uniformly,
consistent in conduct, confirming one rule for all.
80. One of the developments in the last decade is acceptance of the
principle of proportionality, especially when fundamental rights such
as right to life and liberty are involved. This Court in Chairman, All
India Railway Recruitment Board v. K. Shyam Kumar64 referred
to a decision of the House of Lords in R v. Secretary of State,65
wherein the House of Lords had stressed that when human rights
issues are concerned, proportionality is an appropriate standard of
review.
81. The proportionality test66 is more precise and sophisticated than
other traditional grounds of review. The court is required to assess
the balance struck by the decision maker, not merely whether it is
within the range of rational or reasonable decisions. In this manner,
proportionality goes further than the traditional grounds of review
as it requires attention to the relative weight according to interest
and considerations. State of Uttar Pradesh v. Lal,67 which refers to
several other cases, states that the proportionality test safeguards
fundamental rights of citizens to ensure a fair balance between
individual rights and public interest. It requires the court to judge

64 [2010] 6 SCR 291 : (2010) 6 SCC 614
65 (1991) 1 All ER 710
66 The test of proportionality comprises four steps: (i) The first step is to examine whether the act/measure
restricting the fundamental right has a legitimate aim (legitimate aim/purpose). (ii) The second step is to
examine whether the restriction has rational connection with the aim (rational connection). (iii) The third
step is to examine whether there should have been a less restrictive alternate measure that is equally
effective (minimal impairment/necessity test). (iv) The last stage is to strike an appropriate balance
between the fundamental right and the pursued public purpose (balancing act).
67 [2006] 2 SCR 656 : (2006) 3 SCC 276
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whether the action taken was really needed and whether it was within
the range of courses of action which could be reasonably followed.
Proportionality is more concerned with the aims and intentions of
the decision maker and whether the decision maker has achieved
more or less the correct balance or equilibrium.
82. The principle of proportionality has been followed by this Court in
several decisions such as Modern Dental College & Research
Centre v. State of Madhya Pradesh,68 K.S. Puttaswamy (Retired)
and Anr. (Aadhar) v. Union of India and Anr. (5J),69 and Anuradha
Bhasin v. Union of India and Others70
83. Recently, the Constitution Bench applied the doctrine of proportionality
to strike down the Electoral Bond Scheme in Association for
Democratic Reforms v. Union of India.71 In a way, the present case
also relates to funding of elections, an issue which was examined
in some depth in Association for Democratic Reforms (supra).
84. In view of the aforesaid discussion, and as Vijay Madanlal Choudhary
(supra) is a decision rendered by a three Judge Bench, we deem it
appropriate to refer the following questions of law for consideration
by a larger Bench:
(a) Whether the “need and necessity to arrest” is a separate ground
to challenge the order of arrest passed in terms of Section 19(1)
of the PML Act?
(b) Whether the “need and necessity to arrest” refers to the
satisfaction of formal parameters to arrest and take a person
into custody, or it relates to other personal grounds and
reasons regarding necessity to arrest a person in the facts and
circumstances of the said case?
(c) If questions (a) and (b) are answered in the affirmative, what are
the parameters and facts that are to be taken into consideration
by the court while examining the question of “need and necessity
to arrest”?

68 [2016] 3 SCR 575 : (2016) 4 SCC 346
69 [2015] 9 SCR 99 : (2019) 1 SCC 1
70 [2020] 1 SCR 812 : (2020) 3 SCC 637
71 [2024] 2 SCR 420 : (2024) 5 SCC 1
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85. As we are referring the matter to a larger Bench, we have to, despite
our findings on “reasons to believe”, consider whether interim bail
should be granted to Arvind Kejriwal. Given the fact that right to life and
liberty is sacrosanct, and Arvind Kejriwal has suffered incarceration
of over 90 days, and that the questions referred to above require
in-depth consideration by a larger Bench, we direct that Arvind Kejriwal
may be released on interim bail in connection with case ECIR No.
HIU-II/14/2022 dated 22.08.2022, on the same terms as imposed
vide the order dated 10.05.2024 which reads:
(a) he shall furnish bail bonds in the sum of Rs.50,000/- with
one surety of the like amount to the satisfaction of the Jail
Superintendent;
(b) he shall not visit the Office of the Chief Minister and the Delhi
Secretariat;
(c) he shall be bound by the statement made on his behalf that he
shall not sign official files unless it is required and necessary
for obtaining clearance/approval of the Lieutenant Governor
of Delhi;
(d) he will not make any comment with regard to his role in the
present case; and
(e) he will not interact with any of the witnesses and/or have access
to any official files connected with the case.
The interim bail may be extended, or recalled by the larger Bench.
86. We are conscious that Arvind Kejriwal is an elected leader and the
Chief Minister of Delhi, a post holding importance and influence.
We have also referred to the allegations. While we do not give any
direction, since we are doubtful whether the court can direct an
elected leader to step down or not function as the Chief Minister or
as a Minister, we leave it to Arvind Kejriwal to take a call. Larger
Bench, if deemed appropriate, can frame question(s) and decide the
conditions that can be imposed by the court in such cases.
87. Accordingly, the Registry is directed to place the matter before the
Hon’ble Chief Justice of India for constitution of an appropriate
Bench, and if appropriate, a Constitution Bench, for consideration
of the aforesaid questions. The questions framed above, if required,
can be reformulated, substituted and added to.
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88. The observations made in this judgment are for deciding the present
appeal and will not be construed as findings on merits of the case/
allegations. Facts, as alleged, have to be established and proved.
Application for regular bail, if pending consideration or required to
be decided, shall be decided on its own merits.

Result of the case: Interim bail granted to the appellant.
Questions of law referred to a larger Bench.

†
Headnotes prepared by: Divya Pandey