PRITHVI RAJ SINGH vs DIRECTORATE OF ENFORCEMENT

1
R
Reserved on : 08.06.2026
Pronounced on : 16.06.2026


IN THE HIGH COURT OF KARNATAKA AT BENGALURU

TH
DATED THIS THE 16 DAY OF JUNE, 2026

BEFORE

THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

WRIT PETITION No.15130 OF 2026 (GM - RES)

C/W

WRIT PETITION No.15277 OF 2026 (GM - RES)

WRIT PETITION No.15278 OF 2026 (GM - RES)


IN WRIT PETITION No.15130 OF 2026


BETWEEN:

DEEPAK SINGH
AGED ABOUT 40 YEARS
S/O LATE SHRI GAJENDRA SINGH,
R/O 4201 ICONIC TOWER, PARAS
QUARTIER, GWAL PAHARI,
GURUGRAM, HARYANA, 122001.
... PETITIONER

(BY DR.S.MURALIDHAR
MR.VIKRAM CHAUDHARY
MR.SAJAN POOVAYYA
MR.SANDESH J.CHOUTA, SR.ADVOCATES A/W
SRI SAMPREETH V., SRI SANKALP SHARMA, SRI SUHAAN
MUKHARJEE, SMT.SANYA MALLI, SRI MAHAJAN B.K.,
SRI CHAITANYA, MS. ARSHIYA GHOSE, SRI AADARSH
KUMAR, MS.NINNI SUSAN THOMAS, SRI SIDHARTH











Digitally signed
by SANJEEVINI
J KARISHETTY
Location: High
Court of
Karnataka

2
B.MUCHANDI, SMT.RAKSHA AGARWAL AND
MS.DIYA, ADVOCATES)

AND:

DIRECTORATE OF ENFORCEMENT
REPRESENTED BY
DEPUTY DIRECTOR,
RD
3 FLOOR, B BLOCK, BMTC BUILDING,
SHANTINAGAR, KH ROAD
BENGALURU – 560 027.
... RESPONDENT

(BY SRI S.V.RAJU, ASGI A/W
SRI ZOHEB HUSSAIN, SPL.COUNSEL
SRI ARVIND KAMATH, ASG
SRI MADHU N.RAO, SPL.PP AND
MS.SHRESTHA BHARTI, LEAGAL CONSULTANT FOR ED)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA READ WITH SECTION 528
OF BNSS, 2023, PRAYING TO A. DECLARE THE ARREST OF THE
PETITIONER AS ILLEGAL AND IN VIOLATION OF SECTION 19 OF
PMLA AND FUNDAMENTAL RIGHTS OF THE PETITIONER
GUARANTEED UNDER ARTICLE 14 AND 21 OF THE CONSTITUTION
OF INDIA IN RELATION TO ECIR/BGZO/07/2026 WHICH IS
PENDING ON THE FILE OF THE COURT OF PRINCIPAL DISTRICT
AND SESSIONS JUDGE AT BANGALORE
(CCH-1)REGISTERED BY THE RESPONDENT AGENCY AND QUASH
THE SAME AND DIRECT THE PETITIONER TO BE RELEASED;
ANNEXURE – F; B. QUASH THE ORDER DATED 08.05.2026 PASSED
BY THE INCHARGE COURT AT LXV ADDL. CITY CIVIL AND
SESSIONS JUDGE AT BANGALORE (CCH-66), BENGALURU
GRANTING ED CUSTODY REMAND OF THE PETITIONER FROM
08.05.2026 TILL 13.05.2026 AND ALL SUBSEQUENT REMAND
ORDERS THAT MAY BE PASSED; ANNEXURE- F.

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IN WRIT PETITION No.15277 OF 2026

BETWEEN:

VIKAS TANEJA
AGED ABOUT 49 YEARS
S/O RAJKUMAR TANEJA
R/O FLAT NO. 1121, TOWER 1,
EMBASSY PRISTINE ARRESTEE
APARTMENT, IBLUR VILLAGE,
BELLANDUR, BENGALURU – 560 103.
... PETITIONER
(BY DR.S.MURALIDHAR
MR.VIKRAM CHAUDHARY
MR.SAJAN POOVAYYA
MR.SANDESH J.CHOUTA, SR.ADVOCATES A/W
SRI SAMPREETH V., SRI SANKALP SHARMA, SRI SUHAAN
MUKHARJEE, SMT.SANYA MALLI, SRI MAHAJAN B.K.,
SRI CHAITANYA, MS. ARSHIYA GHOSE, SRI AADARSH
KUMAR, MS.NINNI SUSAN THOMAS, SRI SIDHARTH
B.MUCHANDI, SMT.RAKSHA AGARWAL AND
MS.DIYA, ADVOCATES)

AND:

DIRECTORATE OF ENFORCEMENT
REPRESENTED BY
DEPUTY DIRECTOR,
RD
3 FLOOR, B BLOCK, BMTC BUILDING,
SHANTINAGAR, K.H ROAD
BENGALURU – 560 027.
... RESPONDENT

(BY SRI S.V.RAJU, ASGI A/W
SRI ZOHEB HUSSAIN, SPL.COUNSEL
SRI ARVIND KAMATH, ASG
SRI MADHU N.RAO, SPL.PP AND
MS.SHRESTHA BHARTI, LEGAL CONSULTANT FOR ED)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA READ WITH SECTION 528 OF

4
BNSS, 2023 PRAYING TO A. DECLARE THE ARREST OF THE
PETITIONER AS ILLEGAL AND IN VIOLATION OF SECTION 19 OF
PMLA AND FUNDAMENTAL RIGHTS OF THE PETITIONER
GUARANTEED UNDER ARTICLE 14 AND 21 OF THE CONSTITUTION
OF INDIA IN RELATION TO ECIR/BGZO/07/2026 WHICH IS
PENDING ON THE FILE OF THE COURT OF PRINCIPAL DISTRICT
AND SESSIONS JUDGE AT BANGALORE (CCH-1)REGISTERED BY
THE RESPONDENT AGENCY AND QUASH THE SAME AND DIRECT
THE PETITIONER TO BE RELEASED; ANNEXURE- F; B. QUASH THE
ORDER DATED 08.05.2026 PASSED BY THE COURT OF PRINCIPAL
DISTRICT AND SESSIONS JUDGE AT BANGALORE (CCH-1),
BENGALURU GRANTING ED CUSTODY REMAND OF THE PETITIONER
FROM 08.05.2026 TILL 13.05.2026; ANNEXURE-F.

IN WRIT PETITION No.15278 OF 2026

BETWEEN:

PRITHVI RAJ SINGH
AGED ABOUT 40 YEARS
S/O LATE SHRI DIWAN SINGH,
TH
R/O M-803, 8 FLOOR, SHANTI
VIHAR AWHO, SECTOR 95,
GURUGRAM, HARAYANA
... PETITIONER

(BY DR.S.MURALIDHAR
MR.VIKRAM CHAUDHARY
MR.SAJAN POOVAYYA
MR.SANDESH J.CHOUTA, SR.ADVOCATES A/W
SRI SAMPREETH V`., SRI SANKALP SHARMA, SRI SUHAAN
MUKHARJEE, SMT.SANYA MALLI, SRI MAHAJAN B.K.,
SRI CHAITANYA, MS. ARSHIYA GHOSE, SRI AADARSH
KUMAR, MS.NINNI SUSAN THOMAS,
MS. AISHWARYA, SMT.RAKSHA AGARWAL AND
MS.DIYA, ADVOCATES)

AND:

DIRECTORATE OF ENFORCEMENT
REPRESENTED BY

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DEPUTY DIRECTOR,
RD
3 FLOOR, B BLOCK
BMTC BUILDING, SHANTINAGAR,
K.H ROAD, BENGALURU – 560 027.
... RESPONDENT

(BY SRI S.V.RAJU, ASGI A/W
SRI ZOHEB HUSSAIN, SPL.COUNSEL
SRI ARVIND KAMATH, ASG
SRI MADHU N.RAO, SPL.PP AND
MS.SHRESTHA BHARTI, LEAGAL CONSULTANT FOR ED)


THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO A. DECLARE
THE ARREST OF THE PETITIONER AS ILLEGAL AND IN VIOLATION
OF SECTION 19 OF PMLA AND FUNDAMENTAL RIGHTS OF THE
PETITIONER GUARANTEED UNDER ARTICLE 14 AND 21 OF THE
CONSTITUTION OF INDIA IN RELATION TO ECIR/BGZO/07/2026
WHICH IS PENDING ON THE FILE OF THE COURT OF PRINCIPAL
DISTRICT AND SESSIONS JUDGE AT BANGALORE (CCH-
1)REGISTERED BY THE RESPONDENT AGENCY AND QUASH THE
SAME DIRECT THE PETITIONER TO BE RELEASED ANNEXURE-F;
B. QUASH THE ORDER DATED 08.05.2026 PASSED BY THE
INCHARGE COURT AT LXV ADDL. CITY CIVIL AND SESSIONS JUDGE
AT BANGALORE (CCH-66), BENGALURU GRANTING ED CUSTODY
REMAND OF THE PETITIONER FROM 08.05.2026 TILL 13.05.2026
ANNEXURE – F.

THESE WRIT PETITIONS HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 08.06.2026, COMING ON FOR
PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:-

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CORAM:
THE HON'BLE MR JUSTICE M.NAGAPRASANNA


CAV ORDER


The petitioners, in these three cases, call in question the
legality of their arrest by the respondent/Enforcement Directorate.
Since petitioners are drawn as accused in particular Enforcement
Case Information Report (‘ECIR’) and the issue being similar, they
are taken up together and considered by this common order.


2. Shorn of unnecessary details, facts in brief are as follows: -

2.1. The petitioners are the Directors/Office Bearers of M/s
Games Kraft Technologies Private Limited (hereinafter referred to
as ‘the Company’ for short). The Company is established on
06-06-2017 and is inter alia engaged in the business of operating
technology platforms, which allowed users to play skill-based online
games such as rummy, ludo and poker. It is the averment that the
Company is also engaged in the real estate business earning
income through rental and maintenance of owned properties. The
petitioner in Writ Petition No.15130 of 2026 is the founder and
Chief Executive Officer of the Company.

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2.2. A crime in Crime No.722 of 2024 comes to be registered
before Central CEN Crime Police Station of Bengaluru for offences
punishable under Sections 318(2) of the BNS and Section 66 of the
Information Technology Act, 2000 (‘the Act’ for short) against the
Company alleging that the complainant was in the habit of playing
all these online games for the last 7 years when the Company was
launched and has sustained a financial loss of up to Rs.3/- crores.
The Police conduct investigation and find no substance in the
allegation and file a ‘B’ report on 05-07-2025. Till the month of
August, 2025 online game was not statutorily regulated. On
22-08-2025, a legislation - “the Promotion and Regulation of Online
Gaming Act, 2025” comes into effect. Thereafter, the Company
stopped its operation. Long after the Company stopped its
operation, the respondent/Enforcement Directorate registers an
ECIR and the predicate offence for registration of the said crime
was the FIR in Crime No.722 of 2024 taking the offence under
Section 318(2) of the BNS as the scheduled offence.

2.3. On registration of ECIR, search and seizure proceedings
were initiated against the Company as obtaining under Section 17
of the Prevention of Money Laundering Act, 2002 (‘PMLA’ for short).
The search went on from 18-11-2025 till 22-11-2025. The Company

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and its subsidiary filed Writ Petition No.1668 of 2026 seeking
quashing of ECIR on the score that predicate offence stood closed
on ‘B’ report being filed in Crime No.722 of 2024 and it being
accepted. On the said ground, this Court, on 22-01-2026, granted
an interim order of stay of further proceedings in the ECIR so
registered, which was based upon the said predicate offence.

2.4. The moment interim order is granted in the
aforementioned writ petition, another crime in Crime No.97 of 2026
is registered before the jurisdictional police at Telangana for
offences punishable under Sections 66C and 66D of the Act and
Sections 318(4) and 319(2) of the BNS against unknown accused.
The allegation there is, the complainant received calls and SMS
urging him to play games and earn profits in the game as run by
the Company and that he has suffered loss of ₹53,080/-. A second
crime in Crime No.10 of 2026 comes to be registered again before
another Police Station in Telangana on 10-02-2026 for offences
punishable under Section 318(4) of the BNS and Section 66D of the
Act. Here again unknown persons are the accused. The complainant
is said to have played and lost ₹1,85,00,000/- between 2017 and
06-08-2025. A third crime comes to be registered again in a Police
Station in Telangana for the very same offences, which becomes a

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crime in Crime No.330 of 2026. Here the allegation is that, the
complainant has lost ₹40,00,000/- between 2017 and 2019. The
complaint is registered only on 12-02-2026. On 23-02-2026, the
subject ECIR recorded Crime Nos.97, 10 and 330 of 2026 as
scheduled offences. No summons was issued to these petitioners in
these cases.

2.5. On 07-05-2026, searches were carried out as obtaining
under Section 17 of the PMLA, at the residence of the petitioners in
Bengaluru and Gurugram. Search commenced at 7 a.m. on
07-05-2026 and concluded at 4.30 a.m. on 08-05-2026. In the
interregnum, during the search, the petitioner in Writ Petition
No.15277 of 2026 was taken into custody on 08-05-2026 at
3.30 a.m. and the petitioner in Writ Petition No.15278 of 2026 was
taken into custody on 08-05-2026 at 2.30 a.m. The petitioner in
Writ Petition No.15130 of 2026 was taken into custody on
08-05-2026 at 4.50 a.m. All of them remain in custody even to this
day. The petitioners, in all these cases, call in question the arrest
and seek a declaration that the arrest of the petitioners is illegal
and in violation of Section 19 of the PMLA and fundamental rights

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guaranteed under Articles 14 and 21 of the Constitution of India
and seek a consequential relief of their release from the prison.


3. Heard Dr. S.Muralidhar, Sri Vikram Choudhary, Sri Sajan
Poovayya and Sri Sandesh J Chouta, learned senior counsel
appearing for the petitioners in all the petitions, Sri S.V.Raju,
learned Additional Solicitor General of India, Sri K.Arvind Kamath,
learned Additional Solicitor General of India, Sri Zoheb Hussain,
learned special counsel, Sri Madhu N. Rao, learned Special Public
Prosecutor and Sri B.N. Jagadeesha, learned Additional State Public
Prosecutor appearing for the respondents.

SUBMISSIONS :

PETITIONERS’:

4.1. The learned senior counsel Dr. S. Muralidhar would take
this Court through the provisions of the PMLA to contend that under
Section 19, with particular reference to sub-section (2) of Section
19, arrest of a person can be made only if material is available at
the time of arrest in the form of evidence, that could lead to
prosecution against the said person. He would also take this Court
through the arrest memo, grounds of arrest and reasons to believe

11
served while taking the petitioner in Writ Petition No.15130 of 2026
into custody. He would lay emphasis upon the fact that the entire
finding in the grounds of arrest or reasons to believe are what is
found pursuant to registration of predicate offence in Crime No.722
of 2024, which has been stayed at the hands of this Court.
Therefore, to get over the interim order of stay so granted, a crime
comes to be registered or subsequent ECIR or the impugned ECIR
comes to be registered.

4.2. The learned senior counsel would further contend that
the arrest of a person can happen only in extreme circumstance
and it cannot be a matter of course. In the arrest memo it is only
indicated that the petitioner did not answer a question of the
Enforcement Directorate and therefore, he had to be taken into
custody for custodial interrogation. He would submit that, if on the
materials available during the search between 18-11-2025 and
22-11-2025, after registration of the earlier ECIR, which was based
upon Crime No.722 of 2024, there could not have been a reason to
believe that they should be arrested now without any material. He
would contend that the arrest is on the face of it illegal, contrary to
the mandate of the statute, violative of the fundamental rights of

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the citizen, as procedure is not followed prior to taking of the
petitioners into custody. He would seek to place reliance upon a
plethora of judgments of the Apex Court and various High Courts on
the issue, which would all bear consideration qua their relevance in
the course of the order.


5. The learned senior counsel Sri Vikram Chaudhary
appearing for the petitioner in the companion petition – Writ
Petition No.15277 of 2026, while adopting the submissions of the
learned senior counsel Dr. S. Muralidhar would seek to amplify by
contending that the second ECIR, in the peculiar facts of this case,
is a misrepresentation and a blatant affront to the order of stay
dated 22-01-2026 passed by this Court. He would submit that the
material in possession as found in sub-section (1) of Section 19 of
the PMLA, which forms the basis for reasons to believe regarding
the guilt of the petitioner, has no life or proximate link or link with
the necessity of arrest on 08-05-2026. Even if the petitioners after
receipt of summons had refused to cooperate, that would not lead
to direct arrest of a person. The search under Section 17 of the
PMLA cannot be a valid ground to arrest any person as arriving at
the satisfaction of guilt is the only pre-requisite of arrest. The

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ground that is communicated for the purpose of arrest is that the
petitioner was evasive in his reply and that is projected as
non-cooperation or misleading. He would submit that, that cannot
be a ground for arrest. He would submit that the arrest of the
petitioners is vitiated on account of taking into consideration
materials which were collected during the first ECIR and would
submit that the arrest is in blatant violation of sub-section (2) of
Section 19 of the PMLA. He would also seek to place reliance on a
plethora of judgments, all of which would bear consideration qua
their relevance in the course of the order.


6. The learned senior counsel Sri Sajan Poovayya appearing
for one of the petitioners would adopt the submissions of both the
learned senior counsel and in amplification, would submit that the
material that has now led to the arrest of the petitioners cannot be
the material that can be used for arrest of the petitioners. He would
again seek to place reliance upon several judgments, all of which
would bear consideration qua their relevance in the course of the
order.

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7. The learned senior counsel Sri Sandesh J Chouta would
also adopt the submissions of aforementioned senior counsel and
make his submissions by contending that the petitioners are
challenging the legality of the arrest, which is a permissible exercise
of judicial review and consequence would be the release of the
petitioners by setting them at liberty.

RESPONDENT:
ADDITIONAL SOLICITOR GENERAL OF INDIA:

8.1. Per contra , the learned Additional Solicitor General
Sri S.V. Raju would vehemently refute the submissions to contend
that judicial review, in such cases, should not be mechanically done
but should be exercised unless any action of the respondent
displays manifest arbitrariness or non-compliance with statutory
safeguards as provided under the PMLA – a special enactment. He
would vehemently contend that sufficiency or adequacy of material
based upon which the officer forms a belief of arrest of a person or
the correctness of facts on which belief is formed is not subject to
judicial review. The learned Additional Solicitor General would
submit that, the alleged lapses by authorized officers should not be
scrutinized by magnifying glass while exercising judicial review, as

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such exercise may grant undue advantage or benefit to individual
accused of serious offences under the PMLA. He would further
contend that a merit-based review should not be conducted in a
challenge to the arrest of a person.

8.2. The learned Additional Solicitor General would elaborate
his submissions to contend that the merit-based review of grounds
of arrest or reasons found in the reasons to believe should not
become the subject matter of judicial review is what the Apex Court
has held. He would submit that the present petition even otherwise
is not entertainable, as the petition prays for release of the
petitioners on the ground of illegality in the arrest and remand. The
only method that the petitioners can seek release from custody is,
filing an application seeking their enlargement on bail, which would
be judicially adjudicated upon by applying rigours of Section 45 of
the PMLA and the petitioners have availed the remedy of filing an
application seeking bail and have simultaneously filed this petition
on the score that the concerned Court answering the bail is not
taking up the matter and the petitioners are continuing in prison.
He would submit that the remand orders have to run through the
course or lapsed by efflux of time. Legality or custody of a person

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cannot be gone into in a petition under Article 226 of the
Constitution of India read with Section 528 of the BNSS. The
learned Additional Solicitor General would submit that a statutory
action performed bona fide as authorized under the PMLA cannot be
questioned by the petitioners without any specific allegation of
procedural infraction or arbitrariness.

8.3. Coming to the merit of the submissions, the learned
Additional Solicitor General would submit that stay of further
proceedings in Crime No.722 of 2024 was by an order dated
22-01-2026. This cannot impact the enquiry or investigation in
relation to three distinct FIRs registered in Telangana at Cyber
Crime Police Station in FIR No.97 of 2026 registered on
24-01-2026, FIR No.10 of 2026 registered on 10-02-2026 and FIR
No.330 of 2026 registered on 12-02-2026. Amplifying the
allegations in those crimes, the learned Additional Solicitor General
would submit that the FIR containing scheduled offence would
become evidence when proceeds of crime arise from those
scheduled offences. The offence of money laundering is predicate
upon the scheduled offence in the three new FIRs registered,
pursuant to which, a new ECIR is registered based upon three new

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scheduled offences, which is separate and distinct from Crime
No.722 of 2024, which is stayed at the hands of this Court. He
would seek to place reliance upon distinct factors of three crimes so
registered to buttress his submission that nothing of the earlier
crime is made the foundation of a new ECIR or the earlier crime is
not the one that predicated in the new ECIR.

8.4. The learned Additional Solicitor General would elaborate
on the rudimentary fact that arrest is a part of investigation. This
Court should not come in the way of legality of the arrest if it is
necessitated in law, particularly when a prima facie case is made
out. The contention of the learned senior counsel representing the
petitioners that there is no tangible material in possession of the
arresting officer to formulate the opinion that the accused is guilty
is misconceived. It is his submission that, whether the accused is
guilty or otherwise would be known only after investigation and in
the course of investigation if arrest is necessitated, the arrest
cannot be interdicted or annulled at the hands of this Court.

8.5. The learned Additional Solicitor General would further
contend that the specious submission that Enforcement Directorate

18
cannot exercise power under the PMLA to investigate the predicate
offence is bereft of understanding of the offence of money
laundering and after a reasoned judicial order of remand there can
be no scope of challenge to the arrest, as grounds of arrest, the
reason for arrest and the reason to believe for taking the petitioners
into custody are all elaborately drawn while taking the petitioners
into custody. On all these scores, the learned Additional Solicitor
General seeks dismissal of the petitions and permitting the law to
take its course.

9. I have given my anxious consideration to the submissions
made by the respective learned counsel and have perused the
material on record.

THE PRECLUDE:

10. The afore-narrated facts, dates and link in the chain of
events are all a matter of record. The petitioners are either
founders, Directors or office bearers of the Company. The Company
is in the business of operating technology platform which allows the
users to play skill based on-line games such as rummy, ludo etc.
using real money with other users. The business which began on

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06-06-2017 continued till it discontinued with the promulgation of
Promotion and Regulation of Online Gaming Act, 2025. On
5-12-2024 one crime in FIR No.722 of 2024 comes to be registered
before the Central CEN Crime Police Station, Bengaluru City for
offences punishable under Section 66 of the Act and 318(2) of the
BNS, out of which Section 66 of the Act is not a scheduled offence
under the PMLA while Section 318(2) of the BNS is. The allegation
was that the complainant therein had suffered loss over ₹3/- crores
on a gaming platform called Pocket-52 operated by the Company.
Pursuant to registration of the said crime in Crime No.722 of 2024,
a ‘B’ report comes to be filed. The ‘B’ report is not contested as the
amount of ₹3/- crores is settled by the Company with the
complainant. Therefore, the ‘B’ report comes to be accepted by the
concerned Court on 05-07-2025. The crime which was registered on
05-12-2024 comes to be closed on 05-07-2025 and as such, there
was no predicate offence subsisting or alive for the Enforcement
Directorate to spring into action.


11. On 11-11-2025 the Enforcement Directorate registers an
ECIR against the Company and one M/s Nirdesa Network Private
Limited, which was clearly based upon a crime in Crime No.722 of

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2024, which by then had stood closed by the concerned Court
accepting the ‘B’ report and closing the proceedings.


12. The Enforcement Directorate in terms of Section 17 of the
PMLA conducted search in the office premises of both the Company
and other residential premises of the Directors/employees. The
search went on from 18-11-2025 to 22-11-2025. The Company or
the Directors then filed Writ Petition No.1668 of 2026 and this Court
in terms of its order dated 22-01-2026 grants interim order of stay
of investigation in the ECIR on the score that the predicate offence
was not alive. The order passed by this Court reads as follows:
“…. …. ….

There shall thus be an interim order of stay of further
proceedings in the subject ECIR, arising out of Crime
No.722/2024, till the next date of hearing.”

The said interim order is continued from time to time and the last of
the listing of the said matter was on 25-04-2026. Therefore, the
ECIR upon which the search was conducted between 18-11-2025
and 22-11-2025 and all further proceedings stood stayed in their
entirety. At the time of grant of interim order, a submission was
made that there was another crime pending in Uttarakhand or in
Uttar Pradesh and the Enforcement Directorate was entitled to

21
update the ECIR as ECIR is not a statutory document like the FIR; it
is only an administrative document. The offence therein was only
under Section 66 of the Act, which was not a scheduled offence.
Therefore, that could not have been submitted for continuance of
the proceedings in the ECIR which arose from a crime in Crime
No.722 of 2024.

13. The respondent/Enforcement Directorate registers a new
ECIR on the basis of three predicate offences – (i) FIR No.97 of
2026 dated 24-01-2026 registered at P.S. Cyber Crimes,
Hyderabad; (ii) FIR No.10 of 2026 dated 10-02-2026 registered at
P.S. Kasipet, Ramagundam, Telangana and (iii) FIR No.330 of 2026
dated 12-02-2026 registered at P.S. Cyber Crimes, Hyderabad –
ECIR bearing No. ECIR/BGZO/07/2026 comes to be recorded on 23-
02-2026. The allegation is that the complainants therein have lost
huge amounts from 2013 till the gaming platform was closed. It is
upon these three FIRs that the aforementioned ECIR bearing No.
ECIR/BGZO/07/2026 is registered, wherein the scheduled offences
are the ones punishable under Sections 318 and 316 of the BNS,
which were admittedly scheduled offences. It is the aftermath of
registration of the aforementioned ECIR bearing No.

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ECIR/BGZO/07/2026 on 23-02-2026 that forms the fulcrum of the
subject lis .

14. Between 23-02-2026 and 07-05-2026, it is an admitted
fact that no summons under Section 50 of the PMLA was served
upon any of these petitioners or the Company. After about 3
months of registration of ECIR bearing No. ECIR/BGZO/07/2026, on
07-05-2026, searches were carried out under Section 17 of the
PMLA at the residences of the petitioners in Bengaluru and
Gurugram. Search commenced at 7 a.m. on 07-05-2026 and
concluded at 4.30 a.m. on 08-05-2026. The petitioners were taken
into custody, the details of which are as under:
i. Prithvi Singh @ 2.30 a.m. (GOA, RTB & AO F @ P2)
ii. Deepak Singh @ 4.50 a.m. (GOA, RTB & AO F@P1)
iii. Vikas Taneja @ 3.30 a.m. (GOA, RTB & AO F@101)


The grounds of arrest and reasons to believe for taking the
petitioners into custody is served upon them. They are germane to
be noticed. The grounds of arrest and reasons to believe in one of
the petitions read as follows:

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(i)
GROUNDS OF ARREST:
“ GROUNDS OF ARREST (Sh. Deepak Singh Ahlawat S/o.
Late Shri Gajendra Singh )

1.1 Multiple FIRs were registered against online Rummy
apps/websites, controlled and developed by M/s.
GamesKraft Technologies Pvt. Ltd and its associated
entities, in the state of Telangana, viz. FIR No.97of 2026
dt. 24/01/2026 at the Cyber Crime PS, Hyderabad,
Telangana, FIR No.10 of 2026 dt. 10/02/2026, with the
Kasipet PS, Ramagundam, and FIR No. 330 of 2026 dt.
12/02/2026 with Cyber Crimes PS, Cyberabad,
Telangana. The particulars are as given below:

1.2 As per the FIR no. 97 of 2026 , registered with the
Cyber Crime PS, Hyderabad for the offence under sections
318(4) & 319(2) of BNS, 2023 (Sections 419 & 420 of
IPC, 1860), the complainant alleged that he received
phone calls and SMS messages from affiliates of online
rummy platforms RummyCulture and RummyCircle. They
promoted their websites, www.RummyCulture.com
and www.RummyCircle.com, as government-licensed,
skill-based gaming platforms and promised substantial
profits. Influenced by these assurances, the complainant
began playing and depositing money on their platforms
but claims that he consistently incurred losses. It was
further alleged that the games appeared one-sided and
that he ultimately lost Rs.53,080/- across multiple
transactions.

Later, upon contacting customer care to seek clarification
and request a refund, he was informed that the games
were skill-based, and operated using a Random Number
Generator (RNG) system. According to the complainant,
the representatives failed to address his concerns and
allegedly avoided providing satisfactory responses. He
claims to possess screen recordings of gameplay, which
he believes demonstrate manipulation and unfair
practices.

The complainant has further raised concerns about the
transparency of the platform, alleging that certain players
appear to be consistently active at all hours, including
late at night, raising suspicion about their authenticity. He
also questioned the integrity of gameplay mechanics,

24
including alleged duplication of cards, recurring score
patterns favoring certain players, and consistent losses in
higher-stake pooled games (Rs.500/- to Rs.10,000/-)
compared to relatively balanced outcomes in low-stake
point-based games.

1.3 As per FIR No. 10/2026 , dated 10/802/2026, registered
at Kasipet PS, Ramagundam, Telangana, for the offence
under sections 318(4) of BNS, 2023 (Section 420 of IPC,
1860), it is alleged that five complainants named therein
were cheated by unknown persons associated with the
platforms ' ' and ' '. The
Rummyculture RummyTime
complainants stated that they were introduced to the said
gaming applications through Facebook and YouTube,
wherein fraudulent representations, misleading
advertisements, and alleged application-related
manipulations were used to induce them to install the
apps. It is further alleged that the accused persons
represented the games as skill-based online games,
legally operated under a valid licence from the
Government of India. Believing such representations, the
victims deposited money through UPI payments, resulting
in an alleged wrongful loss amounting to approximately
Rs. 1.85 Crores.

Further, another FIR in No. 330/2026 dated
12/02/2026 was registered at Cyber Crimes PS,
Cyberabad, Telangana, for the offence under sections
318(4) of BNS, 2023 (Section 420 of IPC, 1860), and the
complainant stated that he came across an online rummy
advertisement on YouTube in 2017 and installed the
‘ Rummy Culture ' application operated by Gameskraft
Technologies India Pvt. Ltd., registering with mobile
number 9000966770. After initially incurring losses, he
reinstalled the application in 2019 and began depositing
money, allegedly suffering losses of about Rs.40,00,000/-
over time. The complainant has alleged several
irregularities during gameplay, including suspected
collusion among players, acceptance of deposits beyond
the stated daily limit, forced logout and connectivity error
messages resulting in loss of deposited amounts, alleged
participation of a person stated to be the company's
director despite terms prohibiting such participation, and
inducement through 'free cash' credits. He further stated
that despite raising complaints with customer support, no
action was taken. According to him, multiple transfers

25
were made from his HDFC Bank Account No.
50100007479313, including Rs.1,43,350/- through 43
transactions, and he claims to have suffered a total
wrongful loss of Rs.41,04,849/-


2. During the investigation conducted by the Directorate of
Enforcement under the provisions of PMLA, 2002, certain
incriminating evidences were seized in the form of
electronic records and documents from the office
premises of M/s. RummyCulture Technologies Pvt. Ltd.
&M/s. Gameskraft Technologies Pvt. Ltd. Analysis of this
evidence revealed that the company (being managed by
you, in the capacity of Director) is indulging in fraudulent
practices to cheat the gamers/users, thereby causing
huge financial loss to the users. The major findings of the
Search are as given below:

2.1. Luring of gullible Users : The company claims to the
public that the Real Money Games (RMGs), online
Rummy, offered through its web/mobile application are
free from any form of BOT's, algorithms, automated
devices or in any other form, and assures users a fair and
transparent gaming environment while participating in
such RMGs. However, evidence gathered during the
search proceedings establishes that the company has,
initially offers various incentives to its users, in the form
of Bonuses, referral bonuses, instant cash, tournament
incentives, and new joining bonuses. Further, the accused
company allows the new users to win small amounts in
initial low-stake games, and these early wins serve a dual
purpose, it helps building trust in the gaming platform
and encourage users to deposit more money, creating a
false impression that earning money through the platform
is very easy. Furthermore, by creating a false impression
that winning big prizes is possible and within reach, the
company encourages users to keep playing repeatedly.
This continuous engagement can lead users to develop a
habit of playing, often affecting them financially and
mentally.

2.2. Usage of unscrupulous practices : Being an
intermediary, the accused company, is supposed to
host/conduct online Rummy games in a fair and secure
environment, and protect the interests of its users.
However, evidence gathered revealed that the accused

26
entities have indulged in dishonest means in conducting
the online Rummy game. Instances were reported where
users encountered duplication of playing cards, recurring
score patterns of a few players favouring certain players,
collusion among a few players, forced logout and rampant
blockage of user IDs, collectively causing heavy financial
losses to the gullible users.

Through this undisclosed and deceptive means, the
company has misrepresented the nature of the gameplay
and thereby cheated bona fide participants, causing huge
financial loss.

2.3. : As per
Unethical and restrictive business practices
the Terms of Service of the company, users are restricted
to creating a single 'user account' only, and users are
prohibited from creating or using multiple user IDs.
However, evidence gathered revealed that the company
has allowed the creation of multiple User IDs, rather,
thousands of User IDs, mapped with a single bank
account. Further, the company states that users are not
allowed from the states that have banned online real
money games, as mentioned its ‘Terms of Use'. However,
on verification of the gaming data of Rummy users of the
company, it is seen that a large number of users are
playing from Andhra Pradesh, Telangana, Tamil Nadu,
etc., and even the complaints of all the above-mentioned
03 FIRs are from the state of Telangana only. Further, it
is stated that the company captures the geo-location of
its users while enrolling them on its platform. Thus, it is
clear that the company is knowingly violating the
prevailing laws to derive profits through illegal means.

2.4. Laundering of proceeds – for payment towards
illegal activities : The accused company, having
generated profits through unscrupulous means in
hosting/conducting online real-money Rummy games,
has laundered a portion of these proceeds by falsely
recording them as business expenditures in its regular
books of accounts. However, these expenditures were
actually incurred for making payments to third parties
who engaged in illegal activities. The evidence indicates
that the company recorded approximately Rs. 100 Crores
as expenses during the financial years 2020-21 & 2021-
22 under the heads of software maintenance, and
software development & consultancy. However, the

27
vendors subsequently returned these amounts in cash
after deducting their commission, GST, and TDS amounts.
The cash thus received was utilized for illegal purposes,
including cash payments to various individuals across
multiple states and, surprisingly, for raising questions in
the Lok Sabha also.

3
. Kind attention is invited to Section 3 and Section 19 of
PMLA, 2002
Section 3: Whosoever directly or indirectly attempt to
indulge or knowingly assists or is actually involved
in any process or activity connected with the
proceeds of crime including its concealment,
possession, acquisition or use and projecting or
claiming it as untainted property shall be guilty of
offence of money laundering.


Explanation-For removal of doubts, it is hereby clarified
that -

(i) A person shall be guilty of offence of money-
laundering if such person is found to have directly
or indirectly attempted to indulge or knowingly
assisted or knowingly is a party or is actually
involved in one or more of the following processes
or activities connected with proceeds of crime,
namely: -

(a) Concealment; or
(b) Possession; or
(c) Acquisition; or
(d) Use; or
(e) Projecting as untainted property; or
(f) Claiming as untainted property,
In any manner whatsoever;

(ii) The process or activity connected with proceeds of
crime is a continuing activity and continues till such
time a person is directly or indirectly enjoying the
proceeds of crime by its concealment or possession
or acquisition or use or projecting it as untainted
property or claiming it as untainted property in any
manner whatsoever

28
Section 19: 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 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 Magistrate's
Court.

4. Further, on analysis of the seized material and evidence
gathered during the Search, revealed the following facts:

a. You had indulged in the capacity of Director of M/s. Gameskraft
Technologies Pvt. Ltd., which was offering Real Money Games to
the public, was cheating the genuine game players by
manipulating the outcome of the game.

b. By using the discretionary powers, under the guise
of ‘Terms of Service', you have illegally blocked the
accounts/wallets of various genuine players,
causing financial loss to them.

c. Part of the proceeds of crime so derived have been
laundered in guise of investment and have
furthered taken the funds out of the company
under the garb of Dividend payment, which you
have further laundered by gifting to the family

29
members/buying movable & immovable properties
in the name of family members and entities like
Trust, Firms and Companies, controlled and
managed by your family members.

d. In order to trace the proceeds of crime and its end
utilization, Search operation u/s. 17 of PMLA, 2002
was conducted at your residential premises and
other accused persons premises. The evidence
gathered during the course of the search operation
confirms the offence of cheating the genuine
players of online Rummy game and involvement in
Money Laundering offence.

e. You alongwith other Directors/founders mentioned
were hand in glove with Sh. Ramesh Prabhu,
former CFO, who has diverted and laundered Rs.
250 Crores under the garb of investing in Futures &
Options and Mutual Funds.

f. That on the basis of the investigation carried out
and evidences collected so far and material in
possession of this Directorate, it is revealed that
you are one of the key conspirators in this case and
I have reasons to believe that you are guilty of the
offence of money laundering as defined under
section 3 r.w.s. 70, and punishable under section 4
of the PMLA, 2002. It is revealed during the course
of investigation conducted under the PMLA, 2002
that you, along with others, have directly
attempted to indulge, knowingly a party and are
involved in the process or activity connected with
the proceeds of crime.

5. Hence, considering your involvement in the commission
of Money Laundering on the basis of the above grounds,
you are arrested in accordance with the provisions of
Section 19 of the Prevention of Money Laundering Act,
2002.
Sd/-
08/05/2026
(Vikas)
सहायक नदेशक / ASSISTANT DIRECTOR
वतननदेशालय / DIRECTORATE OF ENFORCEMENT
भारतसरकार / GOVERNMENT OF INDIA

30
ब / BENGALURU
गलू

Sd/-
08/05/2026
(Signature of Arrestee)
Sh.Deepak Singh Ahlawat

I have been intimated about my rights, as laid down by the
Hon'ble Supreme Court of India in the case of D.K. Basu V.s.
State of West Bengal with regard to the rights of arrestee
person.

Smt.Poonam Chaudhary has been informed about my arrest
verbally at ------ AM/PM on 08/05/2026.

Sd/-
Signature of Arrestee

Witness:

1. Sd/-
2. Sd/-
Sd/-
08/05/2026
(Vikas)

सहायक नदेशक / ASSISTANT DIRECTOR
वतननदेशालय / DIRECTORATE OF ENFORCEMENT
भारतसरकार / GOVERNMENT OF INDIA
ब / BENGALURU”
गलू

(ii) REASONS TO BELIEVE:

“Reasons to Believe for arrest of Sh. Deepak Singh
Ahlawat, S/o. Sh. Late Gajendra Singh, Director of M/s.
Gameskraft Technology Pvt. Ltd., u/s. 19 of PMLA, 2002
on 08/05//2026

*

That, the following FIRs have been registered against online
Rummy apps/websites, controlled and developed by M/s.

31
GamesKraf Technologies Pvt. Ltd and its associated entities. Sh.
Deepak Singh Ahlawat is one of the Directors of M/s.
Gameskraft Technologies Pvt. Ltd. The gist of the FIRs are as
submitted below:

1.1 : As per FIR No. 97/2026 dated
FIR No.97/2026
24/01/2026 registered at the Cyber Crime Police Station,
Hyderabad, the complainant alleged that he received
phone calls and SMS messages from affiliates of online
rummy platforms RummyCulture and RummyCircle. They
promoted their websites, www.RummyCulture.com
and www.RummyCircle.com, as government-licensed,
skill-based gaming platforms and promised substantial
profits. Influenced by these assurances, the complainant
began playing and depositing money on their platforms
but claims that he consistently incurred losses. It was
further alleged that the games appeared one-sided and
that he ultimately lost Rs.53,080/- across multiple
transactions.

Later, upon contacting customer care to seek clarification
and request a refund, he was informed that the games
were skill-based, and operated using a Random Number
Generator (RNG) system. According to the complainant,
the representatives failed to address his concerns and
allegedly avoided providing satisfactory responses. He
claims to possess screen recordings of gameplay, which
he believes demonstrate manipulation and unfair
practices .

The complainant has further raised concerns about the
transparency of the platform, alleging that certain players
appear to be consistently active at all hours,
including late at night, raising suspicion about their
authenticity. He also questioned the integrity of gameplay
mechanics, including alleged duplication of cards,
recurring score patterns favoring certain players, and
consistent losses in higher-stake pooled games (Rs.500/-
to Rs. 10,000/-) compared to relatively balanced
outcomes in low-stake point-based games.

1.2. FIR No.10/2026 : As per FIR No. 10/2026 dated
10/02/2026 registered at Kasipet PS, Ramagundam,
Telangana, it is alleged that five complainants named
therein were cheated by unknown persons associated
with the platforms 'Rummyculture' and 'RummyTime'. The

32
complainants stated that they were introduced to the said
gaming applications through Facebook and YouTube,
wherein fraudulent representations, misleading
advertisements, and alleged application-related
manipulations were used to induce them to install
. It is further alleged that the accused persons
the apps
represented the games as skill-based online games,
legally operated under a valid licence from the
Government of India. Believing such representations, the
victims deposited money through UPI payments, resulting
in an alleged wrongful loss amounting to approximately
Rs. 1.85 Crores.

1.3 As per FIR No. 330/2026 dated
FIR No.330/2026:
12.02.2026 registered at Cyber Crimes PS, Cyberabad,
Telangana, and the complainant stated that he came
across an online rummy advertisement on YouTube in
2017 and installed the 'Rummy Culture' application
operated by Gameskraft Technologies India Pvt. Ltd.,
registering with mobile number 9000966770. After
initially incurring losses, he reinstalled the application in
2019 and began depositing money, allegedly suffering
losses of about Rs.40,00,000/- over time. The
complainant has alleged several irregularities during
gameplay, including suspected collusion among
players, acceptance of deposits beyond the
stated daily limit, forced logout and connectivity
error messages resulting in loss of deposited
amounts, alleged participation of a person stated to
be the company's director despite terms prohibiting
such participation , and inducement through 'free cash'
credits. He further stated that despite raising complaints
with customer support, no action was taken. According to
him, multiple transfers were made from his HDFC Bank
Account No. 50100007479313, including Rs.1,43,350/-
through 43 transactions, and he claims to have suffered a
total wrongful loss of Rs.41,04,849/-.


1.4. Complaints filed with the National Crime Report
Bureau (NCRB) by the Victims of RummyCulture
app. :

Apart from the FIRs, there are huge number of
complaints were reported in NCRB, and many of these
complaints are under investigation. On examination of

33
these complaints, it is seen that certain victims of the
accused company were expressing suicidal thoughts due
to the financial losses incurred by them on the accused
company's online rummy platform. Also, allegations of
fraud, cheating and usage of BOTs in the online Rummy
platform of the accused company. For ready reference, a
few complaints are reproduced hereunder (the list of the
complaints filed by the victims are submitted as
Annexure-1 )


Requested Both
The Apps Vision
11 And Rummy
Culture Fantasy
Apps To Delete My
Account And Pan
Personal
information Bank
derais But They Are
Saying It Was Not
Possible Even
Asking From Many
Years No Action
Was Taken To
Remove My Data,
Now I Am Leaving
Of My Number Due
To Some Unlucky
Reasons Of My
Mobile Number, It
May Assign To
Somebody Else, So
Please Kindly Help
Me To Delete My
Data From The
Apps And Delete My
Account
Permanently From
The Apps They May
Use My Pan For
Fraud
Transactions.
Please Kindly Help
Me Regarding This
Sir

2024 September Rummy ANDHRA Guntur
culture PRADESH
Hi
I would like to
raise a serious
concern against
Rummy Culture
androind
application
related to online
Rummy BANGALORE
2021 March culture KARNATAKA CITY

34
gambling

After losing huge
amount of money
RummyCulture
blocks the
account and
make the account
temporarily
closed

RummyCulture
also deploys
Robots to play
against Human
players and
make sure the
Robot wins
always and takes
huge amount of
winning money

They give a
reason as fair
play violation for
blocking the
account but they
never give exact
reason why it is
fair play violation
They just block
the account

They will not
allow you to call
or email once the
account is
blocked and they
seize the whole
amount in the
account.

I want to file a
case against
Rummy Culture
for this and would
like to ask the
thefine of 10
Lakhs for seizing
my money and
blocking the
account without
any reason Also
court needs to
question the apps
integrity for

35
playing robots
against human
players and doing
these kind of
fraud

Regards
Raveendra
I have been
cheated by
Rummy culture
which is online
app for playing
Rummy. Wherein
lost almost
Rs.250000 and
they have
accepted that
cheating happens
sometimes not
every time For
which I asked for
the refund
because cheating
happens
everytime and I
have proof of it,
so kindly help me
get my money
back as soon as
possible. I am so
depressed I feel
committing
suicide. I am
helpless . I cant
even work
properly or
think of
anything else

Mira
BhayandarVasi
Virar
Police
Commissioner
2021 August Rummyculture MAHARASHTRA
I am playing
game on rummy
culture first I lost
42000 rs after
that when I am
wining 33451 rs
and going for
withdraw that
time shown
your acount
was suspended
due to vilotaion
they are not
replaying which
2023 December Rummyculture GUJARAT AHMEDABAD
RURAL

36
vilonce I am
done and than I
am not able to
withdraw my
money. my
33451 rs stuck in
acount. and
acount block by
rummy culture.


From the above table, it is also seen that the
complainants are from the state of Andhra Pradesh,
wherein online real money games are banned, yet the
company was conducting its business activities,
disregarding the prevailing laws of the land .



1.5. Complaints filed by the victims through e-mail to
the accused company :


Apart from the complaints received by the NCRB and FIR
registered against the company, the accused company
itself had received lakhs of grievances/complaints
from its users , who were victims of the of fraudulent
activities carried out by the company, and also Notices
u/s. 91 of CrPC, from LEA of various states . These
data was seized during the Search conducted u/s. 17 of
the PMLA, 2002 at the premises of M/s. Gameskraft
Technologies Pvt.Ltd., in the month of Nov’2025. Similar
to the above tabulated complaints, these
grievances/complaints are very serious in nature, and no
less than equivalent to heinous crimes. For ready
reference, a few complaints are reproduced hereunder
(the list of the complaints filed by the victims are
submitted as )
Annexure-2

37

38

39

40

41

42

43

Furthermore, 06 number of FIRs were registered against
at various police stations, in Tamil Nadu, as people
committed suicide and the allegation is that the cause of
death for suicide is addiction to online gaming. The details
of FIRs registered are as given below;

i. FIR No.1 of 2022 dt. 30/07/2022 by CBCID-South,
Coimbatore PS

ii. FIR No.2 of 2022 dt. 01/08/2022 by CBCID-South,
Coimbatore PS

iii. FIR No.6 of 2022 dt. 13/07/2022 by CBCID-South,
Coimbatore PS

iv. FIR No.3 of 2022 dt. 05/08/2022 by CBCID-North, Vellore
PS

v. FIR No.7 of 2022 dt. 17/08/2022 by CBCID-Hqrs, Metro
Chennai PS V.

vi. FIR No.2 of 2022 dt. 26/07/2022 by CBCID-OCU,
Coimbatore

Based on the above, the complaints are categorized under the
following categories broadly,

i. Suicidal Distress and Psychological Harassment:

Certain complaints disclose allegations that the
victims were subjected to severe psychological
pressure, emotional trauma, coercive conduct,
financial distress, and continuous harassment

44
arising from the losses incurred in the online
Rummy game. Due to these losses, the victims
suffering from extreme mental agony, social
humiliation, financial ruin, and emotional
instability, thereby driving certain victims into
conditions of suicidal ideation or severe psychiatric
distress.

In certain cases, the victims pleaded with the
accused company, rather threatening them to block
their accounts, or they may commit suicide. These
complaints demonstrate the severe mental agony,
emotional trauma, financial desperation, and
psychological pressure experienced by the victims
as a consequence of the unscrupulous activities of
the accused company.

ii. Fraud: A substantial number of complaints
received from the victims contain allegations of
fraudulent conduct of the online Rummy game by
the accused company.

iii. Usage of BOTs : Several complaints contain
allegations regarding the deployment and use of
automated software systems, bots, algorithmic
tools or scripted programs used to manipulate the
outcome of the online Rummy game by the
accused company. The complainants allege that
such BOTs were used against them, and due to
these dishonest practices of the accused company,
some of the victims reported suicide or suicidal
tendencies.

iv. Cheating: A large number of victims alleged that
rampant cheating has taken place on the Rummy
online platform, which caused them huge financial
losses.

v. Restrictions on Withdrawal of Monies by
Victims: A significant category of complaints
pertains to allegations that victims were restricted,
delayed, or unlawfully obstructed from withdrawing
their own monies, from the online gaming platform
of RummyCulture, without any prior intimation, and
also not releasing their legitimate money.

45
vi. Rampant blockage of accounts/wallets : Many
users had complained about the blockage of their
wallets on the online gaming platform of Rummy.

2. Recording of ECIR:

As offenses under sections 420 (Cheating and dishonestly
inducing delivery of property), and 419 (Cheating by
personation punishment) of the IPC, 1860, invoked in the
aforesaid FIRs are scheduled offenses under sections
2(1)(x) and 2(1)(y) of PMLA, 2002, an ECIR vide number
ECIR/BGZO/07/2026 dt.23/02/2026, has been recorded
by this Office.

3. Outcome of PMLA investigation:

M/s. Gameskraft Technologies Pvt. Ltd., was incorporated
in the year 2017, and its registered office is in Bangalore.
Its operations are carried out from Bangalore & Gurugram
offices. The company, including its associated companies,
is in the business of hosting online 'Real Money Games
(RMGs)', and one of the major sources of revenue is from
'Rummyculture' (Rummy game), in the form of
'Commission'. M/s. Gameskraft Technologies Pvt. Ltd. is
the holding company for the following entities:

i. M/s. RummyCulture Technologies Pvt. Ltd.

ii. M/s.K Works Technologies Pvt. Ltd.

iii. M/s K N Support Services Pvt. Ltd.

iv. M/s. Nirdesa Networks Pvt. Ltd.

v. M/s. Skill Online Games Institute

vi. M/s Multicap Real Estate Pvt. Ltd.

vii. M/s. Wimo Technologies Pvt. Ltd.

viii. M/s. Plego Technologies Pvt. Ltd.

The company was running the following applications
related to Poker, Rummy games etc. on Android/IOS
Platforms:

46
Sr. App Launch
No. Name Year/Month
Shutdown
Year/Month
Game Developed By
Type
1 Rummy culture 2017/Sep 2025/Aug

Rummy Gameskraft
Technologies Pvt Ltd
2 Rummy prime 2024/Jan 2025/Aug Rummy Gameskraft
Technologies Pvt Ltd
3 Playship 2021/Oct 2021/Oct Rummy Gameskraft
Technologies Pvt Ltd
4 GamezyFantasy 2019/Mar 2023/Aug Fantasy Gameskraft
Cricket Technologies Pvt Ltd
5 Gamezy
Poker
2020/Νον 2023/Aug Poker Gameskraft
Technologies Pvt Ltd
6 Gamezy Ludo 2021/Feb 2023/Aug Ludo Gameskraft
Technologies Pvt Ltd
7 Gamezy
Rummy
2020/Νον 2023/Aug Rummy Gameskraft
Technologies Pvt Ltd
8 GamezyPlayship 2020/Apr

2021/Mar Rummy Gameskraft
Technologies Pvt Ltd
9 Pocket 52* 2020/Feb 2025/May Poker

Nirdesa Networks
Pvt Ltd

The shareholding pattern of M/s. Gameskraft Technologies Pvt.
Ltd., over the past 05 years, are as given below:

47

From the above, it is clear that M/s. Gameskraft Technologies
Pvt. Ltd., and other group entities, which were owning these
online real money gaming apps, were controlled and managed
by Sh. Deepak Singh Ahlawat, Sh. Prithvi Raj Singh, Sh. Deepak
Kumar Jha and Sh. Vikas Taneja. Further, it is seen from the
above table that these key persons of the company have
systematically shifted their shareholding from individual capacity
to their respective family Trusts.

Further, it is submitted that an FIR was registered in No.33 of
2019 by Mumbai PS, against Sh. Vikas Taneja and Sh. Deepak
Kumar Jha by Playgames 24X7 company (which runs RMG under
the name of 'Rummy Circle), alleging that these persons had
stolen their Rummy game's source code (while they were
employed with them) and started the company, M/s.
Gameskraft Technologies Pvt. Ltd., by using their source code.
Thus, it is reasonably suspected that these
Directors/shareholders have strategically transferred their
shareholding to their family trusts, to avoid any future litigation.

The total turnover and profits derived by M/s. Gameskraft
Technologies are as tabulated below:

48


The following persons are the Directors and key persons of the
group companies:





The Search & Seizure conducted at the office premises of the
accused company and at the residential premises of its Directors
revealed the following:

Luring of gullible users : The company offers various
incentives to its users, including bonuses, referral bonuses,
instant cash, tournament incentives, and new joining bonuses.
These incentives are widely promoted through digital platforms,

49
push notifications, SMS of campaigns, and endorsements by
brand ambassadors. However, such bonuses are not directly
withdrawable by users; they can only be utilized gameplay and
may be converted into withdrawable amounts only if the user
participates and wins. Additionally, each incentive is subject to a
specified validity period, and any unutilized bonus within the
prescribed time frame is forfeited. Further, as alleged by the
complainants, the company allows new users to win small
amounts in initial low-stake games. These early winnings serve
a dual purpose, it helps building trust in the gaming platform
and encourage users to deposit more money, creating the
impression that earning money through the platform is very
easy. These unscrupulous practices of the accused company
also make the users addicted to the game. Further, by creating
a false impression that winning big prizes is possible and within
reach, the company encourages users to keep playing
repeatedly. This continuous engagement can lead users to
develop a habit of playing, often affecting them financially and
mentally. In this manner, the company creates a false
impression among users that they can earn money easily
through its platform . In other words, these practices of the
accused company create a continuous gameplay, where users
are encouraged to keep playing under the belief that they are
close to winning, thereby increasing repeated gameplay and
addiction to the game.

Multiple users with the same bank account : As per the
“Terms of Service” of the Company, the users are restricted to
create a single 'user account' only, and the users are prohibited
from creating or using multiple user IDs. However, analysis of
the seized data “Rummy withdrawal without PAN” (the total
payments aggregating Rs.231.32 Crores, made without PAN), it
is seen that the company has allowed the creation of multiple
User IDs, rather thousands of User IDs, mapped with a single
bank account. Such bank accounts, which are mapped with
multiple User IDs are as given below:

Examples:

i. Account '32661983036 - used by 1736 users

ii. Account '919912726138 - used by 1324 users

iii. Account '056110100317280 - used by 1300 users

iv. Account '31250112855 used by 1282 users

50

v. 80310011002259 - 110 User IDs


For ready reference, one of the bank accounts linked with
multiple User IDs, are tabulated below:

51


Based on the above, it is reasonably believed that the
company may be using thousands of user IDs linked to a
single bank account as BOTS or in any other form, to
deceive users.

Further, during the financial year 2022-23, an IIT-Delhi
team has analyzed the software architecture and the data
of the company, revealing that there is a high possibility
that a system can be implemented with that information
(regarding users) that can be flagged automatically, once
the user with that particular ID is logged in to the
platform. Accordingly, there is a high chance of
manipulating/providing the intended table to play
for their advantage.

Players from banned states : Though the company
states that users are not allowed from the states that
have banned online real money games, as mentioned in
its ‘Terms of Use'. However, on verification of the gaming
data of Rummy users of the company, it is seen that a
large number of users are playing from Andhra Pradesh,
Telangana, Tamil Nadu, etc., and even the complaints of
all the above-mentioned 03 FIRs are from the state of
Telangana only. Further, it is stated that the company
captures the geo-location of its users while enrolling them
on its platform. Thus, it is clear that the company is
knowingly violating the prevailing laws to earn money.

Availability of players on 24X7 basis : In the Rummy
platform, there are two types of tables available: 2-player

52
games and 6-player games. It is observed that at any
given time, whenever a user chooses to play an online
Rummy game, an opponent (or a full table of players) is
readily available. This raises suspicion as to how players
are consistently available 24x7, especially for 6-player
tables, unless the system is supported by BOT profiles or
automated participants.

Tournaments : Apart from the different kinds of online
Rummy games, the accused company also conducts
Tournaments, wherein a huge number of online gamers
participate. Usually, in these tournaments, the prize
money runs into huge amounts, at times, in crores of
rupees. In the year 2021, the company has conducted
IRL (Indian Rummy League), from 09/04/2021 to
30/05/2021, wherein, the prize pool money is of Rs.6
Crores. Further, the company has conducted various
Tournaments, one such big event was between
16/10/2021 to 14/11/2021 under the name ‘Indian
Rummy Utsav', wherein, the prize pool money
declared was Rs.200 Crores. Under these
tournaments, the company has announced
disproportionate incentives to its users such as 500%
Bonus amount on Add-cash & game-play, rewards worth
Rs.1 Lakh in every hour, reward of Rs.1 Crore under the
'Points Leader Board'. Furthermore, it is seen that the
accused company has created a Guinness World Record
by conducting online Rummy Tournament, consisting 2.15
Lakh users/participants on 16/03/2023.

From the above it is clear that the total Proceeds of
Crime is not restricted to the amounts mentioned in
the above FIRs (Rs.2.30 Crores), but also the
proceeds generated by cheating a huge number of
other gamers/victims, in fraudulent manners, as
explained above, which needs to be further
investigated and quantified.

3.2 As seen from the above findings, the company and its
Directors have indulged in cheating the genuine real time
human players by using unscrupulous activities. Further,
the proceeds of crime so generated by the company and
its Directors have been systematically laundered to
make payments to various illegal activities and
investment in movable/immovable properties . The
total such funds transferred to the illegal payments is

53
around Rs. 100 Crores. The relevant portion of such
illegal payments is reproduced hereunder, for ready
reference (the data is extracted from the Excel sheet
found in the seized mobile phone of Sh.Deepak Singh
Ahlawat, the Excel sheet has been submitted as
):
Annexure-3





Laundering the proceeds under the guise of
Investment:

Further, an FIR in 501/2025 dt. 09/09/2025 was
registered against Sh. Ramesh Prabhu, former CFO of the
company, is alleging embezzlement of Rs.250 Crores.
However, Sh. Ramesh Prabhu was issued a Summons
u/s. 50 of the PMLA, 2002 and in response to which he
has replied vide e-mail dated 18/11/2025, wherein he has
responded by stating that he had diverted the above

54
funds, under the instructions of Sh. Vikas Taneja,
Sh.Deepak Singh, Sh. Prithvi Raj Singh and Sh. Deepak
Kumar Jha. The relevant submission made by him is
reproduced hereunder, for ready reference:

“Respected Sir.

This is with regards the events that has occurred over the
last 5 years while I was working at Gamekraft
Technologies

st
I joined the company on the 1 August 2018 as CFO

The company was managed by 4 founders Vikas Taneja.
Prithvi Raj Singh, Deepak Singh Ahlawat and Deepak Jha.
The shares of the company was held by Deepak Singh
and Prithvi Singh in their personal names while the other
two held the shares in the name of their parents.

In early 2019 a Mumbai based company Games24/7 who
is the owner of Rummycircle a rummy based gaming app
filed a case of theft against the four founders. The theft
was regarding source code and customer data base of
Rummycircle. Vikas Taneja and Deepak Jha were working
with that company prior to starting Gameskraft
Technologies and launching "RunmyCulture" an online
rummy gaming app similar to Rummycircle. During this
time the founders got scared

This situation scared the founders and in order to protect
the money that was being generated in the company they
asked me to start taking funds out of the company spread
over a period into my account and start making
investments in Stock market. They told me once we make
profits we will bring the money back in the company and
it will not create and problem

In 2020 there was a raid conducted by Bangalore CCB on
the company and filed a case of running a gambling
setup. During the raid all the founders ran away from the
office and asked me to handle the situation with the
police. At the end of the raid I was arrested and I had to
spend 2 days in prison. This case was later closed after a
B report was filed.

55
With these two events the founders started putting more
pressure on me to increase the investments through my
account, in return they gave me more ESOPS of the
company and promoted me as Co founder of the
company. As of March2025 the value of my ESOPS in the
company was close to Rs. 100 crores.

The investments made through my account were all
invested in trading in Futures & Options through my
account with Zerodha. I used my personal zerodha
account and created another account in my wife's name
without her knowledge. The money that was transferred
from company to my bank account were all lost in F&O
trading. I did not receive any direct benefit for doing this
transaction and I have not made any personal benefit
from such investments.

The company bank account from which the funds were
transferred was a RBL bank account. There were 2
authorized signatories to that bank account - Prithvi Raj
Singh and Myself. Whenever the transactions were made
both received email notification and sms alert.

All the money withdrawn in my account was shown as
Mutual funds Investments in the balance sheet of the
company. I was again asked buy all the founders during a
Monday morning founders meeting to create fake mutual
funds statements for audit purposes. in 2023-24 I
refused to create such statements and did not provide it
and again for 2024-25 I refused.

The company was planning to do an IPO in the next 2
years and preparing for it. They had to bring the money
back into the company while all of it was lost in trading.
They blamed me for losing the money and pressurized
me, and assured that they will handle the situation. In
February 2025 during the Monday morning founders
meeting in office I was asked to leave the country without
informing anyone and send a email to family and
company. They told me what the contents of the mails
needs to be and told me that they will handle the
situation and make sure no harm will come to me.

Throughout all these years the founders always gave me
oral instructions without creating any records. Since the
Mumbai company case in 2019 the founders stopped

56
communicating business matters through WhatsApp or
other messenger apps.

I am making this statement to the Enforcement
Directorate voluntarily and without any threat and force. I
have till date not given any statements to any other
government authorities.

Regards,

Ramesh Prabhu”


15. The controversy in the case at hand lies at the
confluence of individual liberty and the Government's
resolve to combat the menace of money-laundering. The
statutory edifice erected under the PMLA is not merely a
legislative response to economic crime; it is a carefully
crafted mechanism designed to trace, identify, attach,
confiscate and ultimately extinguish the benefits flowing
from criminal activity. The provisions that assume relevance
in the present lis are Sections 3, 19, 45 and 50 of the PMLA.
I deem it appropriate to notice the same.


STATUTORY VISTA:


16. Few of the provisions that become germane to be
considered in the case at hand are as follows:
“ 3. Offence of money-laundering . —Whosoever
directly or indirectly attempts to indulge or knowingly

57
assists or knowingly is a party or is actually involved in
any process or activity connected with the proceeds of
crime including its concealment, possession, acquisition
or use and projecting or claiming it as untainted property
shall be guilty of offence of money-laundering.

Explanation .—For the removal of doubts, it is
hereby clarified that,—

( i ) a person shall be guilty of offence of money-
laundering if such person is found to have directly or
indirectly attempted to indulge or knowingly assisted
or knowingly is a party or is actually involved in one or
more of the following processes or activities connected
with proceeds of crime, namely—

( a ) concealment; or
( b ) possession; or
( c ) acquisition; or
( d ) use; or
( e ) projecting as untainted property; or
( f ) claiming as untainted property,
in any manner whatsoever;

( ii ) the process or activity connected with proceeds of
crime is a continuing activity and continues till such
time a person is directly or indirectly enjoying the
proceeds of crime by its concealment or possession or
acquisition or use or projecting it as untainted
property or claiming it as untainted property in any
manner whatsoever.
… … …
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

58
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.
… … …
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:

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

59
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.
… … …
50. Powers of authorities regarding summons,
production of documents and to give evidence, etc .—(1)
The Director shall, for the purposes of Section 13, have the
same powers as are vested in a civil court under the Code of
Civil Procedure, 1908 (5 of 1908) while trying a suit in respect
of the following matters, namely:—

( a ) discovery and inspection;
( b ) enforcing the attendance of any person, including
any officer of a reporting entity, and examining him
on oath;

( c ) compelling the production of records;
( d ) receiving evidence on affidavits;
( e ) issuing commissions for examination of witnesses
and documents; and
( f ) any other matter which may be prescribed.

60
(2) The Director, Additional Director, Joint Director,
Deputy Director or Assistant Director shall have power to
summon any person whose attendance he considers
necessary whether to give evidence or to produce any
records during the course of any investigation or
proceeding under this Act.

(3) All the persons so summoned shall be bound to
attend in person or through authorised agents, as such
officer may direct, and shall be bound to state the truth
upon any subject respecting which they are examined or
make statements, and produce such documents as may
be required.

(4) Every proceeding under sub-sections (2) and (3) shall
be deemed to be a judicial proceeding within the meaning of
Section 193 and Section 228 of the Indian Penal Code (45 of
1860).

(5) Subject to any rules made in this behalf by the
Central Government, any officer referred to in sub-section (2)
may impound and retain in his custody for such period, as he
thinks fit, any records produced before him in any proceedings
under this Act:

Provided that an Assistant Director or a Deputy Director
shall not—

( a ) impound any records without recording his reasons for so
doing; or

( b ) retain in his custody any such records for a period
exceeding three months, without obtaining the previous
approval of the Joint Director.”


17.1. Section 3, which defines the offence of money-
laundering, forms the very soul of the enactment. The provision is
couched in terms of remarkable amplitude. It does not criminalise
merely the generation of illicit wealth; it criminalises every
conscious participation in the lifecycle of the "proceeds of crime".

61
The legislative design is conspicuously broad. Concealment,
possession, acquisition, use, projection or claiming of proceeds of
crime as untainted property are all brought within the sweep of the
offence. The Explanation appended to the provision leaves little
room for ambiguity. By employing the expression "one or more of
the following processes or activities" , the Parliament has made it
abundantly clear that the offence is not confined to the final act of
projecting tainted wealth as legitimate wealth. Participation in any
link of the chain is sufficient to attract the rigour of the provision.


17.2. The second limb of the Explanation carries the
legislative intent even further. It declares money-laundering to be a
continuing offence. The offence does not stand exhausted upon a
solitary act of concealment or acquisition. So long as the accused
continues to enjoy the fruits of crime, directly or indirectly, through
possession, use, concealment or projection as untainted property,
the criminality persists.

17.3. It is upon this substantive foundation that Section 19
erects the power of arrest. If Section 3 defines the mischief sought
to be curbed, Section 19 provides the weapon for its enforcement.

62
Yet, conscious of the grave consequences that flow from an arrest,
the Parliament has not left the power at large. It has circumscribed
the authority with safeguards that stand as sentinels protecting
personal liberty. Section 19 is not a provision conferring a mere
administrative power. It is a statutory recognition of the
constitutional balance between the interest of the State in
investigating serious economic offences and the equally compelling
right of the citizen to be protected from arbitrary deprivation of
liberty. The provision, therefore, incorporates conditions precedent
that must exist before the power can be validly exercised.

17.4. The first and foremost requirement is, the
existence of ‘ material in possession’ of the authorised
officer. The statute does not permit arrest on suspicion,
intuition or perception. The material must precede the
formation of opinion. The opinion cannot precede the
material. The sequence ordained by the statute is deliberate
and significant. Material must exist; from such material must
arise a reason to believe; such reason must be recorded in
writing; and only thereafter can the power of arrest be
exercised.

63
17.5.
The expression "reason/s to believe" is itself a
phrase of profound legal significance. It occupies a middle
ground between mere suspicion and conclusive proof. It is
stronger than conjecture, yet short of adjudicatory certainty.
The belief must be founded upon tangible material. The
expression imports objectivity into the decision-making
process and excludes arbitrary exercise of power. What the
law demands is not the subjective satisfaction of the officer
but the existence of objective material capable of sustaining
such satisfaction.


17.6. The second safeguard embedded in Section 19(1) is the
obligation to communicate the grounds of arrest to the arrestee.
This requirement is not a ritualistic formality. It is the statutory
embodiment of the constitutional guarantee contained in Article
22(1) of the Constitution of India. Knowledge of the grounds of
arrest equips the arrestee with the ability to challenge the arrest,
seek legal remedies and effectively defend his liberty. An arrest
without communication of meaningful grounds would reduce the
safeguard to a hollow incantation and render the protection illusory.

64
17.7. Sub-sections (2) and (3) of Section 19 fortify these
protections. The requirement that the arrest order and the material
relied upon be immediately forwarded to the Adjudicating Authority
introduces an element of institutional oversight. The production of
the arrested person before the jurisdictional Court within
twenty-four hours injects judicial scrutiny into the process at the
earliest possible stage. The provision thus reflects a legislative
determination that the extraordinary power of arrest must never
remain insulated from review.


17.8. Section 50 occupies a different, though equally
significant, field. The provision furnishes the investigative
architecture of the PMLA. It empowers the authorities to summon
persons, compel attendance, secure production of records, record
statements on oath and gather evidence necessary for unravelling
the complex web of financial transactions that ordinarily
characterise money-laundering operations.


17.9. However, the significance of Section 50 lies not
merely in the powers it confers but in its relationship with
Section 19. The former is an investigative provision; the

65
latter is a coercive provision. Section 50 enables the
collection of material. Section 19 permits curtailment of
liberty. The transition from one stage to the other cannot be
automatic. The material gathered under Section 50 must
attain a degree of credibility and cogency sufficient to
generate the statutory "reason to believe" contemplated
under Section 19. The power to summon cannot become a
prelude to an inevitable arrest. Nor can the power to arrest
be exercised merely because summons have been issued or
statements have been recorded. The statute contemplates a
conscious and legally sustainable nexus between the
material collected and the belief formed.




17.10. Section 45 completes the statutory architecture
necessary for the lis . The provision declares offences under the
PMLA to be cognizable and non-bailable and imposes the well-
known twin conditions for grant of bail. The rigour of Section 45 is
reflective of the Parliament's perception that money-laundering is
not an ordinary crime. It is an offence that strikes at the economic
foundation of the State, corrodes financial systems and facilitates

66
the perpetuation of criminal enterprises. The stringent conditions
imposed for release on bail are therefore intended to ensure that
the investigation and prosecution of such offences are not
frustrated by easy enlargement on bail.


17.11. Yet, the severity of Section 45 also underscores the
necessity for strict adherence to Section 19. The more stringent the
consequences that flow from arrest, the greater the obligation upon
the authorities to scrupulously observe the statutory safeguards
preceding such arrest. Liberty once curtailed under the PMLA is not
easily regained. Therefore, the statutory conditions governing
arrest acquire heightened significance demand strict compliance.


17.12. The statutory scheme, when viewed holistically,
reveals a carefully calibrated balance. Section 3 defines the
offence; Section 50 empowers investigation; Section 19
authorises arrest; and Section 45 regulates release. Each
provision is a component of a larger legislative design. The
power under Section 19 is thus neither isolated nor absolute.
It operates within a structured framework where objective
material, recorded reasons, communication of grounds,

67
institutional oversight and judicial scrutiny collectively act
as safeguards against arbitrary exercise of authority.


17.13. It is in the backdrop of this statutory
architecture that the expression "material in possession"
occurring in Section 19 assumes critical importance. What
constitutes such material, the degree of satisfaction
required, the contours of the expression "reason/s to
believe" , and the extent to which Courts may examine the
validity of the formation of such belief have all been the
subject matter of extensive judicial exposition by the Apex
Court. The jurisprudence that has emerged from those
pronouncements illuminates the true scope of the power of
arrest under the PMLA and, therefore, merits detailed
consideration.


JUDICIAL PRISM:

APEX COURT:

18.1. The 3 Judge bench of the Apex Court in VIJAY
1
MADANLAL CHOUDHARY v. UNION OF INDIA holds as follows:
“…. …. ….

1
2022 SCC OnLine SC 929

68
Arrest

208. Section 19 of the 2002 Act postulates the
manner in which arrest of person involved in money
laundering can be effected. Sub-section (1) of Section 19
envisages that the Director, Deputy Director, Assistant
Director, or any other officer authorised in this behalf by
the Central Government, if has material in his possession
giving rise to reason to believe that any person has been
guilty of an offence punishable under the 2002 Act, he
may arrest such person.Besides the power being invested
in high-ranking officials, Section 19 provides for inbuilt
safeguards to be adhered to by the authorised officers,
such as of recording reasons for the belief regarding the
involvement of person in the offence of money
laundering. That has to be recorded in writing and while
effecting arrest of the person, the grounds for such arrest
are informed to that person. Further, the authorised
officer has to forward a copy of the order, along with the
material in his possession, in a sealed cover to the
adjudicating authority, who in turn is obliged to preserve
the same for the prescribed period as per the Rules. This
safeguard is to ensure fairness, objectivity and
accountability of the authorised officer in forming opinion
as recorded in writing regarding the necessity to arrest
the person being involved in offence of money
laundering. Not only that, it is also the obligation of the
authorised officer to produce the person so arrested before the
Special Court or Judicial Magistrate or a Metropolitan Magistrate,
as the case may be, within twenty-four hours. This production is
also to comply with the requirement of Section 167 of the 1973
Code. There is nothing in Section 19, which is contrary to the
requirement of production under Section 167 of the 1973 Code,
but being an express statutory requirement under the 2002 Act
in terms of Section 19(3), it has to be complied with by the
authorised officer.

209. Section 19, as amended from time to time, reads
thus:

“ 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

69
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 [ Ins . by
Act 13 of 2018, Section 208( d )( i ) [w.e.f. 19-4-2018,
vide G.S.R. 383(E), dated 19-4-2018].] [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 [ Ins . by Act 13 of 2018,
Section 208( d )( ii ) [w.e.f. 19-4-2018, vide G.S.R.
383(E), dated 19-4-2018].] [Special Court or]
Magistrate's Court.”

210. In the context of this provision, the challenge is that
in the absence of any formal complaint being filed, arrest under
Section 19 is being made by the authorised officers. Whereas,
the purport of Section 167 of the 1973 Code would suggest that
the person can be arrested by the jurisdictional police without
warrant under Section 41 of the 1973 Code only upon
registration of a complaint under Section 154 of the 1973 Code
in connection with cognizable offence or pursuant to the order of
the court. Even, in case of arrest pursuant to the order of the
court, a formal complaint against such person accusing him of
being involved in commission of an offence is essential.
Moreover, the person produced before the court would be at a
loss to know the grounds for arrest unless a formal FIR or
complaint is filed accusing him about his involvement in the
commission of an offence. The provision if interpreted to permit
the authorised officer to arrest someone being involved in the
commission of offence of money laundering without a formal
complaint against him, would be ex facie manifestly arbitrary
and unconstitutional.

70
211. This argument clearly overlooks the overall scheme
of the 2002 Act. As noticed earlier, it is a comprehensive
legislation, not limited to provide for prosecution of
person involved in the offence of money laundering, but
mainly intended to prevent money laundering activity and
confiscate the proceeds of crime involved in money
laundering. It also provides for prosecuting the person
involved in such activity constituting offence of money
laundering. In other words, this legislation is an amalgam
of different facets including setting up of agencies and
mechanisms for coordinating measures for combating
Chapter III is a provision to effectuate
money laundering.
these purposes and objectives by attachment, adjudication and
confiscation. The adjudication is done by the adjudicating
authority to confirm the order of provisional attachment in
respect of proceeds of crime involved in money laundering. For
accomplishing that objective, the authorities appointed under
Chapter VIII have been authorised to make inquiry into all
matters by way of survey, searches and seizures of records and
property. These provisions in no way invest power in the
authorities referred to in Chapter VIII of the 2002 Act to
maintain law and order or for that matter, purely investigating
into a criminal offence.

212. The inquiry preceding filing of the complaint by the
authorities under the 2002 Act, may have the semblance of an
investigation conducted by them. However, it is essentially an
inquiry to collect evidence to facilitate the adjudicating authority
to decide on the confirmation of provisional attachment order,
including to pass order of confiscation, as a result of which, the
proceeds of crime would vest in the Central Government in
terms of Section 9 of the 2002 Act. In other words, the role of
the authorities appointed under Chapter VIII of the 2002 Act is
such that they are tasked with dual role of conducting inquiry
and collect evidence to facilitate adjudication proceedings before
the adjudicating authority in exercise of powers conferred upon
them under Chapters III and V of the 2002 Act and also to use
the same materials to bolster the allegation against the person
concerned by way of a formal complaint to be filed for offence of
money laundering under the 2002 Act before the Special Court,
if the fact situation so warrant. It is not as if after every inquiry
prosecution is launched against all persons found to be involved
in the commission of offence of money laundering. It is also not
unusual to provide for arrest of a person during such inquiry
before filing of a complaint for indulging in alleged criminal
activity.

71
213. The respondent has rightly adverted to somewhat
similar provisions in other legislations, such as Section 35 of
FERA and Section 102 of the Customs Act including the
decisions of this Court upholding such power of arrest at the
inquiry stage bestowed in the authorities in the respective
legislations. In Ramesh Chandra Mehta [ Ramesh Chandra
Mehta v. State of W.B. , 1968 SCC OnLine SC 62 : (1969) 2 SCR
461 : AIR 1970 SC 940] , the Constitution Bench of this Court
enunciated that Section 104 of the Customs Act confers power
to arrest upon the Customs Officer if he has reason to believe
that any person in India or within the Indian Customs waters
has been guilty of an offence punishable under Section 135 of
that Act. Again, in Padam Narain Aggarwal [ Union of
India v. Padam Narain Aggarwal , (2008) 13 SCC 305 : (2009) 1
SCC (Cri) 1] , while dealing with the provisions of the Customs
Act, it noted that the term “arrest” has neither been defined in
the 1973 Code nor in the Penal Code, 1860 nor in any other
enactment dealing with offences. This word has been derived
from the French word “ arrater ” meaning “to stop or stay”. It
signifies a restraint of a person. It is, thus, obliging the person
to be obedient to law. Further, arrest may be defined as “the
execution of the command of a court of law or of a duly
authorised officer”. Even, this decision recognises the power of
the authorised officer to cause arrest during the inquiry to be
conducted under the legislations concerned.

214. While adverting to the safeguards provided
under that legislation before effecting such arrest, the
Court noted as follows : ( Padam Narain Aggarwal
case [ Union of India v. Padam Narain Aggarwal , (2008)
13 SCC 305 : (2009) 1 SCC (Cri) 1] , SCC p. 320, paras 36-
38)
“ Safeguards against abuse of power

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

72
and cannot be exercised on whims, caprice or
fancy of the officer .

37 . The section [ Ed. : Section 104 of the
Customs Act, 1962.] 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 . ”
(emphasis in original and supplied)

215. 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.

216. Investing of power in the high-ranking officials
in this regard has stood the test of reasonableness
in Premium Granites [ Premium Granites v. State of T.N. ,
(1994) 2 SCC 691] , wherein the Court restated the
position that requirement of giving reasons for exercise

73
of power by itself excludes chances of arbitrariness.
Further, in Sukhwinder Pal Bipan Kumar [ Sukhwinder Pal
Bipan Kumar v. State of Punjab , (1982) 1 SCC 31] , 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
Additionally, the Central
authority will not be abused.
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 [ Ahmed
Noormohmed Bhatti v. State of Gujarat , (2005) 3 SCC 647
: 2005 SCC (Cri) 794] , 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 [ Manzoor Ali Khan v. Union of
India , (2015) 2 SCC 33 : (2015) 1 SCC (Cri) 802] .)

217. Considering the above, we have no hesitation in
upholding the validity of Section 19 of the 2002 Act. We reject
the grounds pressed into service to declare Section 19 of the
2002 Act as unconstitutional. On the other hand, we hold that
such a provision has reasonable nexus with the purposes
and objects sought to be achieved by the 2002 Act of
prevention of money laundering and confiscation of
proceeds of crime involved in money laundering,
including to prosecute persons involved in the process or
activity connected with the proceeds of crime so as to
ensure that the proceeds of crime are not dealt with in
any manner which may result in frustrating any
proceedings relating to confiscation thereof .”


In VIJAY MADANLAL CHOUDHARY supra , the Apex Court, while
upholding the constitutional validity of the provisions of the PMLA,
underscored the centrality of personal liberty. The Apex Court
observed that Section 19 of the PMLA is not an unbridled
repository of power. On the contrary, it is hedged with

74
safeguards of a far higher order than those ordinarily
obtaining under the Cr.P.C. or even analogous fiscal
legislations. The provision embodies a legislative design
intended to secure fairness, objectivity, accountability and,
above all, a demonstrable necessity to arrest.

2
18.2. The Apex Court later in V. SENTHIL BALAJI v. STATE
holds as follows:
“…. …. ….

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. Needless to state,
compliance of sub-section (2) is also a solemn function of
the arresting authority which brooks no exception.

41. Thereafter, the arrestee has to be taken to the
Special Court, or the Judicial Magistrate or the
Metropolitan Magistrate, as the case may be, having the
jurisdiction within 24 hours of such arrest. While
complying with this mandate the time spent on the
journey to the Court shall stand excluded. Vijay Madanlal

2
(2024) 3 SCC 51

75
Choudhary [ Vijay Madanlal Choudhary v. Union of India ,
(2023) 12 SCC 1 : 2022 SCC OnLine SC 929] : (SCC paras
215-16)

“ 215 . 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 .

216 . Investing of power in the high-ranking
officials in this regard has stood the test of
reasonableness in Premium Granites [ Premium
Granites v. State of T.N. , (1994) 2 SCC 691] , 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 [ Sukhwinder Pal Bipan Kumar v. State of
Punjab , (1982) 1 SCC 31], 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 [ Ahmed NoormohmedBhatti v. State of Gujarat ,
(2005) 3 SCC 647: 2005 SCC (Cri) 794], this Court

76
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 [ Manzoor Ali Khan v. Union of
India , (2015) 2 SCC 33: (2015) 1 SCC (Cri) 802]).”

(emphasis supplied)

42. The conclusion thus arrived is that the
legislature in its wisdom has consciously created the
necessary safeguards for an arrestee, keeping in mind his
liberty, and the need for an external approval and
supervision. This provision is in compliance with Articles
21 and 22(2) of the Constitution of India.”


The contours of these safeguards were further illuminated in
V. SENTHIL BALAJI supra . The Apex Court held that before
an authorised officer can curtail the liberty of a citizen, he
must undertake a careful and objective evaluation of the
material available on record and arrive at a genuine "reason
to believe" that the person is guilty of an offence punishable
under the PMLA. Such belief cannot be a matter of
conjecture, suspicion or administrative convenience; it must
be founded upon tangible material and recorded in writing.
The Apex Court declared in unequivocal terms that
compliance with Section 19(1) is mandatory and not
directory. Any infraction of its mandate would not merely
taint the arrest but render it void in law.

77
18.3. The Apex Court further in
PANKAJ BANSAL v. UNION
3
OF INDIA , has held as follows:
“…. …. ….

17. At this stage, it would be apposite to consider the
case law that does have relevance to these appeals and the
issues under consideration. In Vijay Madanlal Choudhary [ Vijay
Madanlal Choudhary v. Union of India , (2023) 12 SCC 1 : 2022
SCC OnLine SC 929 : (2022) 10 Scale 577] , a three-Judge
Bench of this Court observed that Section 65 PMLA predicates
that the provisions of the Code of Criminal Procedure, 1973,
shall apply insofar as they are not inconsistent with the
provisions of PMLA in respect of arrest, search and seizure,
attachment, confiscation, investigation, prosecution and all
other proceedings thereunder. It was noted that Section 19
PMLA prescribes the manner in which the arrest of a
person involved in money laundering can be effected. It
was observed that such power was vested in high-
ranking officials and that apart, Section 19 PMLA
provided inbuilt safeguards to be adhered to by the
authorised officers, such as, of recording reasons for the
belief regarding involvement of the person in the offence
of money laundering and, further, such reasons have to
be recorded in writing and while effecting arrest, the
grounds of arrest are to be informed to that person. It
was noted that the authorised officer has to forward a
copy of the order, along with the material in his
possession, to the adjudicating authority and this
safeguard is to ensure fairness, objectivity and
accountability of the authorised officer in forming an
opinion, as recorded in writing, regarding the necessity to
arrest the person involved in the offence of money
laundering. The Bench also noted that it is the obligation of the
authorised officer to produce the person so arrested before the
Special Court or Judicial Magistrate or a Metropolitan Magistrate,
as the case may be, within 24 hours and such production is to
comply with the requirement of Section 167CrPC. It was pointed
out that there is nothing in Section 19 PMLA which is contrary to
the requirement of production under Section 167CrPC and being
an express statutory requirement under Section 19(3) PMLA, it
has to be complied by the authorised officer. It was concluded
that the safeguards provided in the 2002 Act and the

3
(2024) 7 SCC 576

78
preconditions to be fulfilled by the authorised officer
before effecting arrest, as contained in Section 19 PMLA,
are equally stringent and of higher standard when
compared to the Customs Act, 1962, and such safeguards
ensure that the authorised officers do not act arbitrarily,
by making them accountable for their judgment about the
necessity to arrest any person involved in the commission
of the offence of money laundering, even before filing of
the complaint before the Special Court. It was on this
basis that the Bench upheld the validity of Section 19
PMLA.

18. The Bench in Vijay Madanlal Choudhary [ Vijay
Madanlal Choudhary v. Union of India , (2023) 12 SCC 1 : 2022
SCC OnLine SC 929 : (2022) 10 Scale 577] further held that
once the person is informed of the grounds of arrest, that would
be sufficient compliance with the mandate of Article 22(1) of the
Constitution and it is not necessary that a copy of the ECIR be
supplied in every case to the person concerned, as such a
condition is not mandatory and it is enough if ED discloses the
grounds of arrest to the person concerned at the time of arrest.
It was pointed out that when the arrested person is produced
before the court, it would be open to the court to look into the
relevant records presented by the authorised representative of
ED for answering the issue of need for continued detention in
connection with the offence of money laundering. It was, in fact,
such stringent safeguards provided under Section 19 PMLA that
prompted this Court to uphold the twin conditions contained in
Section 45 thereof, making it difficult to secure bail.

19. This Court had occasion to again consider the
provisions of PMLA in V. Senthil Balaji v. State [ V. Senthil
Balaji v. State , (2024) 3 SCC 51 : (2024) 2 SCC (Cri) 1] ,
and more particularly, Section 19 thereof. It was noted
that the authorised officer is at liberty to arrest the
person concerned once he finds a reason to believe that
he is guilty of an offence punishable under the 2002 Act,
but he must also perform the mandatory duty of
recording reasons. It was pointed out that this exercise
has to be followed by the information of the grounds of
his arrest being served on the arrestee. It was affirmed
that it is the bounden duty of the authorised officer to
record the reasons for his belief that a person is guilty
and needs to be arrested and it was observed that this
safeguard is meant to facilitate an element of fairness
and accountability .

79
20. Dealing with the interplay between Section 19 PMLA
and Section 167CrPC, this Court observed in V. Senthil Balaji [ V.
Senthil Balaji v. State , (2024) 3 SCC 51 : (2024) 2 SCC (Cri) 1]
that the Magistrate is expected to do a balancing act as the
investigation is to be completed within 24 hours as a matter of
rule and, therefore, it is for the investigating agency to satisfy
the Magistrate with adequate material on the need for custody
of the accused. It was pointed out that this important factor is
to be kept in mind by the Magistrate while passing the judicial
order. This Court reiterated that Section 19 PMLA, supplemented
by Section 167CrPC, provided adequate safeguards to an
arrested person as the Magistrate has a distinct role to play
when a remand is made of an accused person to an authority
under the 2002 Act. It was held that the Magistrate is under a
bounden duty to see to it that Section 19 PMLA is duly complied
with and any failure would entitle the arrestee to get released.
It was pointed out that Section 167CrPC is meant to give effect
to Section 19 PMLA and, therefore, it is for the Magistrate to
satisfy himself of its due compliance by perusing the order
passed by the authority under Section 19(1) PMLA and only
upon such satisfaction, the Magistrate can consider the request
for custody in favour of an authority. To put it otherwise, per
this Court, the Magistrate is the appropriate authority who has
to be satisfied about the compliance with safeguards as
mandated under Section 19 PMLA. In conclusion, this Court
summed up that any non-compliance with the mandate of
Section 19 PMLA, would enure to the benefit of the
person arrested and the court would have power to
initiate action under Section 62 PMLA, for such non-
compliance. Significantly, in this case, the grounds of
arrest were furnished in writing to the arrested person by
the authorised officer.

21. In terms of Section 19(3) PMLA and the law laid
down in the above decisions, Section 167CrPC would
necessarily have to be complied with once an arrest is
made under Section 19 PMLA. The court seized of the
exercise under Section 167CrPC of remanding the person
arrested by ED under Section 19(1) PMLA has a duty to
verify and ensure that the conditions in Section 19 are
duly satisfied and that the arrest is valid and lawful. In
the event the court fails to discharge this duty in right
earnest and with the proper perspective, as pointed out
hereinbefore, the order of remand would have to fail on
that ground and the same cannot, by any stretch of

80
imagination, validate an unlawful arrest made under
Section 19 PMLA.
…. …. ….

23. Viewed in this context, the remand order dated 15-6-
2023 passed by the learned Vacation Judge/Additional Sessions
Judge, Panchkula, reflects total failure on his part in discharging
his duty as per the expected standard.
The learned Judge did
not even record a finding that he perused the grounds of
arrest to ascertain whether ED had recorded reasons to
believe that the appellants were guilty of an offence
under the 2002 Act and that there was proper compliance
with the mandate of Section 19 PMLA. He merely stated
that, keeping in view the seriousness of the offences and
the stage of the investigation, he was convinced that
custodial interrogation of the accused persons was
required in the present case and remanded them to the
custody of ED! The sentence — “It is further (sic) that all
the necessary mandates of law have been complied with”
follows — “It is the case of the prosecution….” and
appears to be a continuation thereof, as indicated by the
word “further”, and is not a recording by the learned
Judge of his own satisfaction to that effect.

24. In consequence, it would be necessary for us to
examine how the appellants were arrested and verify whether it
was in keeping with the safeguards in Section 19 PMLA. In this
context, the sequence of events makes for an interesting
reading.

25. The first ECIR was registered by ED on 15-6-2021
and Roop Bansal was arrested in connection therewith on 8-6-
2023. Neither of the appellants was shown as an accused
therein. However, it is the case of ED that investigation in
relation to the first ECIR is still ongoing. In any event, after the
arrest of Roop Bansal, both the appellants secured interim
protection by way of anticipatory bail on 9-6-2023 [ Basant
Bansal v. State (NCT of Delhi) , (2023) 2 HCC (Del) 700] , albeit
till the next day of hearing viz. 5-7-2023, from the Delhi High
Court. However, both the appellants were summoned on 14-6-
2023 for interrogation in connection with the first ECIR, in which
they had interim protection. Summons in that regard were
served upon them on 13-6-2023 at 6.15 p.m. Significantly, the
second ECIR was recorded only on that day i.e. on 13-6-2023,
in connection with FIR No. 0006 which was registered on 17-4-
2023. Therein also, neither of the appellants was shown as an

81
accused and it was only Roop Bansal who stood named as an
accused. In compliance with the summons received by them vis-
à-vis the first ECIR, both the appellants presented themselves at
ED's office at Rajokri, New Delhi, at 11.00 a.m. on 14-6-2023.
While they were there, Pankaj Bansal was served with summons
at 4.52 p.m., requiring him to appear before another
investigating officer at 5.00 p.m. in relation to the second ECIR.
As already noted, there is ambiguity as to when Basant Bansal
was served with such summons. It is the case of ED that he
refused to receive the summons in relation to the second ECIR
and he was arrested at 6.00 p.m. on 14-6-2023. Pankaj Bansal
received the summons and appeared but as he did not divulge
relevant information, the investigating officer arrested him at
10.30 p.m. on 14-6-2023.

26. This chronology of events speaks volumes and
reflects rather poorly, if not negatively, on ED's style of
functioning. Being a premier investigating agency, charged
with the onerous responsibility of curbing the debilitating
economic offence of money laundering in our country,
every action of ED in the course of such exercise is
expected to be transparent, above board and conforming
to pristine standards of fair play in action. ED, mantled
with far-reaching powers under the stringent Act of 2002,
is not expected to be vindictive in its conduct and must
be seen to be acting with utmost probity and with the
highest degree of dispassion and fairness. In the case on
hand, the facts demonstrate that ED failed to discharge its
functions and exercise its powers as per these parameters.

…. …. ….

30. The way in which ED recorded the second ECIR
immediately after the appellants secured anticipatory bail
in relation to the first ECIR, though the foundational FIR
dated back to 17-4-2023, and then went about
summoning them on one pretext and arresting them on
another, within a short span of 24 hours or so, manifests
complete and utter lack of bona fides. Significantly, when
the appellants were before the Delhi High Court seeking
anticipatory bail in connection with the first ECIR, ED did
not even bring it to the notice of the High Court that there
was another FIR in relation to which there was an
ongoing investigation, wherein the appellants stood
implicated. The second ECIR was recorded 4 days after
the grant of bail and it is not possible that ED would have

82
been unaware of the existence of FIR No. 0006 dated 17-
4-2023 at that time.

31. Surprisingly, in its “written submissions”, ED
stated that it started its inquiries in respect of this FIR in
May 2023, itself, but strangely, the replies filed by ED do
not state so! It is in this background that this suppression
before the Delhi High Court demonstrates complete lack
of probity on the part of ED. Its prompt retaliatory move,
upon grant of interim protection to the appellants, by
recording the second ECIR and acting upon it, all within
the span of a day, so as to arrest the appellants, speaks
for itself and we need to elaborate no more on that
aspect.

32. Further, when the second ECIR was recorded on
13-6-2023 “after preliminary investigations”, as stated in
ED's replies, it is not clear as to when ED's investigating
officer had the time to properly inquire into the matter so
as to form a clear opinion about the appellants'
involvement in an offence under the 2002 Act, warranting
their arrest within 24 hours. This is a sine qua non in
terms of Section 19(1) PMLA. Needless to state,
authorities must act within the four corners of the
statute, as pointed out by this Court in Devinder
Singh v. State of Punjab [ Devinder Singh v. State of
Punjab , (2008) 1 SCC 728 : (2008) 1 SCC (Civ) 401] , and
a statutory authority is bound by the procedure laid down
in the statute and must act within the four corners
thereof.

33. We may also note that the failure of the
appellants to respond to the questions put to them by ED
would not be sufficient in itself for the investigating
officer to opine that they were liable to be arrested under
Section 19, as that provision specifically requires him to
find reason to believe that they were guilty of an offence
under the 2002 Act. Mere non-cooperation of a witness in
response to the summons issued under Section 50 PMLA
would not be enough to render him/her liable to be
arrested under Section 19. As per its replies, it is the
claim of ED that Pankaj Bansal was evasive in providing
relevant information. It was however not brought out as
to why Pankaj Bansal's replies were categorised as
“evasive” and that record is not placed before us for
verification. In any event, it is not open to ED to expect

83
an admission of guilt from the person summoned for
interrogation and assert that anything short of such
admission would be an “evasive reply”.
In Santosh v. State of Maharashtra [ Santosh v. State of
Maharashtra , (2017) 9 SCC 714 : (2018) 1 SCC (Cri) 87] ,
this Court noted that custodial interrogation is not for the
purpose of “confession” as the right against self-
incrimination is provided by Article 20(3) of the
Constitution. It was held that merely because an accused
did not confess, it cannot be said that he was not
cooperating with the investigation. Similarly, the absence
of either or both of the appellants during the search
operations, when their presence was not insisted upon,
cannot be held against them.

…. …. ….

45. On the above analysis, to give true meaning and
purpose to the constitutional and the statutory mandate of
Section 19(1) PMLA of informing the arrested person of the
grounds of arrest, we hold that it would be necessary,
henceforth, that a copy of such written grounds of arrest is
furnished to the arrested person as a matter of course and
without exception. The decisions of the Delhi High Court in Moin
Akhtar Qureshi [ Moin Akhtar Qureshi v. Union of India , 2017
SCC OnLine Del 12108] and the Bombay High Court in Chhagan
Chandrakant Bhujbal [ Chhagan Chandrakant Bhujbal v. Union of
India , 2016 SCC OnLine Bom 9938 : (2017) 1 AIR Bom R (Cri)
929] , which hold to the contrary, do not lay down the correct
law. In the case on hand, the admitted position is that ED's
investigating officer merely read out or permitted reading of the
grounds of arrest of the appellants and left it at that, which is
also disputed by the appellants. As this form of communication
is not found to be adequate to fulfil compliance with the
mandate of Article 22(1) of the Constitution and Section 19(1)
PMLA, we have no hesitation in holding that their arrest was not
in keeping with the provisions of Section 19(1) PMLA. Further,
as already noted supra, the clandestine conduct of ED in
proceeding against the appellants, by recording the
second ECIR immediately after they secured interim
protection in relation to the first ECIR, does not commend
acceptance as it reeks of arbitrary exercise of power. In
effect, the arrest of the appellants and, in consequence,
their remand to the custody of ED and, thereafter, to
judicial custody, cannot be sustained. ”

84
The jurisprudence on necessity of arrest under Section 19 of the
PMLA received further refinement in PANKAJ BANSAL supra . The
Apex Court, while setting aside the arrest and consequential
remand orders, delivered a stern reminder that the Enforcement
Directorate, notwithstanding its pivotal role in combating economic
offences, remains subject to the discipline of constitutional
governance. The Apex Court holds that mere allegations of
non-cooperation or purported evasiveness during
interrogation cannot furnish a lawful basis for arrest. The
right against self-incrimination under Article 20(3) of the
Constitution of India stands as an impregnable shield
against any expectation of compelled confession. Refusal to
furnish answers satisfactory to the investigating agency
cannot metamorphose into a ground for deprivation of
liberty.

18.4. In another judgment, the Apex Court in ARVIND
4
KEJRIWAL v. DIRECTORATE OF ENFORCEMENT , has held as
follows:
“…. …. ….


4
2024 SCC OnLine SC 1703

85
20. We respectfully agree with the ratio of the
decisions in Pankaj Bansal [ Pankaj Bansal v. Union of
India , (2024) 7 SCC 576 : (2024) 3 SCC (Cri) 450]
and Prabir Purkayastha [ Prabir Purkayastha v. State (NCT
of Delhi) , (2024) 8 SCC 254 : (2024) 3 SCC (Cri) 573] ,
which enrich and strengthen the view taken in Vijay
Madanlal Choudhary [ Vijay Madanlal Choudhary v. Union
of India , (2023) 12 SCC 1 : (2023) 21 ITR-OL 1 (SC)] , 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.

21. Given that the legislature has prescribed
preconditions to prevent abuse and unauthorised use of
statutory power, the wielding of such power by an
authorised 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 DoE, that the authorised officer is entitled to
arrest a person without following the statutory
requirements.

22. However, it has been argued by 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.

23. 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

86
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.

…. …. ….

27. 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”? Paras 215 and 216 in Vijay Madanlal
Choudhary [ Vijay Madanlal Choudhary v. Union of India , (2023)
12 SCC 1 : (2023) 21 ITR-OL 1 (SC)] refers to the importance
of recording the “reasons to believe” in writing, and states this
is mandatory. Further, both Pankaj Bansal [ Pankaj
Bansal v. Union of India , (2024) 7 SCC 576 : (2024) 3 SCC (Cri)
450] and Prabir Purkayastha [ Prabir Purkayastha v. State (NCT
of Delhi) , (2024) 8 SCC 254 : (2024) 3 SCC (Cri) 573] hold that
the failure to record “reasons to believe” in writing will result in
the arrest being rendered illegal and invalid. Paras 302 and
303 of Vijay Madanlal Choudhary [ Vijay Madanlal
Choudhary v. Union of India , (2023) 12 SCC 1 : (2023) 21
ITR-OL 1 (SC)] , 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”

87
to the arrestee who has a right to challenge his arrest in
violation of Section 19(1) of the PML Act. [ The arrestee
may also challenge his arrest under Section 19(1) of the
PML Act on the basis of the “grounds of arrest”.]

…. …. ….

32. 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 [ Union of India v. Padam Narain Aggarwal ,
(2008) 13 SCC 305 : (2009) 1 SCC (Cri) 1] and also
referred to and quoted from the Canadian judgment
in Gifford [ Gifford v. Kelson , (1943) 51 Man. R 120] .
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.

…. …. ….

41. 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,

88
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.

…. …. ….


44. 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 DoE has acted in accordance
with the law. The courts scrutinise the validity of the
arrest in exercise of power of judicial review. If adequate
and due care is taken by 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.

…. …. ….

47. 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

89
as per law. Power to arrest under Section 19(1) is not for
the purpose of investigation. 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.

…. …. ….

74. 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 [ Arnesh
Kumar v. State of Bihar , (2014) 8 SCC 273 : (2014) 3 SCC
(Cri) 449] , 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?

75. This Court in Mohd. Zubair v. State (NCT of
Delhi) [ Mohd. Zubair v. State (NCT of Delhi) , (2023) 16
SCC 764 : 2022 SCC OnLine SC 897] , 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.

76. In Joginder Kumar v. State of U.P. [ Joginder
Kumar v. State of U.P. , (1994) 4 SCC 260 : 1994 SCC (Cri)
1172] , the distinction between the power to arrest and
the necessity and need to arrest [ 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.]
, is explained in the following terms : (SCC pp. 267-68,
para 20)

“ 20 . … No arrest can be made because it is
lawful for the police officer to do so. The existence

90
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 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.”

77. Recently, Siddharth v. State of
U.P. [ Siddharth v. State of U.P. , (2022) 1 SCC 676 :
(2022) 1 SCC (Cri) 423] , relied on Joginder
Kumar [ Joginder Kumar v. State of U.P. , (1994) 4 SCC
260 : 1994 SCC (Cri) 1172] , to observe : ( Siddharth
case [ Siddharth v. State of U.P. , (2022) 1 SCC 676 :
(2022) 1 SCC (Cri) 423] , SCC p. 682, para 10)
“ 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. ,

91
(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 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.”

78. 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.

79. In Vijay Madanlal Choudhary [ Vijay Madanlal
Choudhary v. Union of India , (2023) 12 SCC 1 : (2023) 21
ITR-OL 1 (SC)] , a substantive threshold test is not laid
down on the “necessity to arrest”. However, in para 208
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 paras 17 and 24 of Pankaj Bansal [ Pankaj
Bansal v. Union of India , (2024) 7 SCC 576 : (2024) 3 SCC
(Cri) 450] .

80. However, we must observe that in para 32 of V.
Senthil Balaji [ V. Senthil Balaji v. State , (2024) 3 SCC 51 :
(2024) 2 SCC (Cri) 1] , it is held that an authorised officer
is not bound to follow the rigours of Section 41-A 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 para
40 of V. Senthil Balaji [ V. Senthil Balaji v. State , (2024) 3
SCC 51 : (2024) 2 SCC (Cri) 1] , it is observed : (SCC p.
82)

“ 40 . To effect an arrest, an officer
authorisedhas 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

92
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. Needless to state,
compliance of sub-section (2) is also a solemn
function of the arresting authority which brooks
no exception.”

81. In Prabir Purkayastha [ Prabir Purkayastha v. State
(NCT of Delhi) , (2024) 8 SCC 254 : (2024) 3 SCC (Cri) 573] ,
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.

82. 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:

( i ) Section 41(1)( b )( ii )( a ) — preventing a person
from committing further offence.

( ii ) Section 41(1)( b )( ii )( b ) — proper investigation
of the offence.

93
( iii ) Section 41(1)( b )( ii )( c ) — preventing a person
from disappearing or tampering with evidence in any
manner.

( iv ) Section 41(1)( b )( 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.

( v ) Section 41(1)( b )( 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)( b )( ii ) of the Code, apart from
other considerations, may be relevant.

83. In Vijay Madanlal Choudhary [ Vijay Madanlal
Choudhary v. Union of India , (2023) 12 SCC 1 : (2023) 21
ITR-OL 1 (SC)] , this Court has held that when a person
applies for bail or anticipatory bail under the PML Act, the
conditions stipulated in Sections 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.

84. 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, 12-1-2024, 31-1-2024, 14-2-2024, 21-2-2024, 26-2-
2024, and 16-3-2024. 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. Enforcement Directorate [ P.
Chidambaram v. Enforcement Directorate , (2019) 9 SCC 24 :
(2019) 3 SCC (Cri) 509] .

85. On behalf of Arvind Kejriwal, it is submitted
that there was no necessity to arrest on 21-3-2024. The
RC/ECIR were registered in the month of August 2022.

94
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 21-3-2024 based on the said
material. Lastly, in Pankaj Bansal [ Pankaj Bansal v. Union
of India , (2024) 7 SCC 576 : (2024) 3 SCC (Cri) 450] ,
this Court observed : (SCC p. 594, para 33)

“ 33 . … Mere non-cooperation of a witness in
response to the summons issued under Section 50
PMLA would not be enough to render him/her
liable to be arrested under Section 19.”

86. As per the data available on the website of DoE, as
on 31-1-2023 [ The data post 31-1-2023 has not been
updated.] , 5906 ECIRs were recorded. However, search was
conducted in 531 ECIRs by issue of 4954 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 1142. The data raises
a number of questions, including the question whether DoE has
formulated a policy, when they should arrest a person involved
in offences committed under the PML Act.

87. 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 DoE when it comes to grant of
bail. DoE should act uniformly, consistent in conduct,
confirming one rule for all.

88. 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 All India Railways Recruitment
Board v. K. Shyam Kumar [ All India Railways Recruitment

95
Board v. K. Shyam Kumar , (2010) 6 SCC 614 : (2010) 2
SCC (L&S) 293] referred to a decision of the House of
Lords in R. v. Secy. of State for the Home Deptt., ex p
Brind [ R. v. Secy. of State for the Home Deptt., ex p
Brind , (1991) 1 AC 696 : (1991) 2 WLR 588 : (1991) 1 All
ER 720 (HL)] , wherein the House of Lords had stressed
that when human rights issues are concerned,
proportionality is an appropriate standard of review.

89. The proportionality test [ 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).] 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 U.P. v. Sheo Shanker Lal
Srivastava [ State of U.P. v. Sheo Shanker Lal Srivastava ,
(2006) 3 SCC 276 : 2006 SCC (L&S) 521] , 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 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.

90. The principle of proportionality has been followed by
this Court in several decisions such as Modern Dental College &
Research Centre v. State of M.P. [ Modern Dental College &
Research Centre v. State of M.P. , (2016) 4 SCC 346 : 7 SCEC

96
570] , K.S. Puttaswamy v. Union of India [ K.S.
Puttaswamy v. Union of India , (2019) 1 SCC 1] , and Anuradha
Bhasin v. Union of India [ Anuradha Bhasin v. Union of India ,
(2020) 3 SCC 637] .

Recently, the Constitution Bench applied the doctrine
91.
of proportionality to strike down the Electoral Bond Scheme
in Assn. for Democratic Reforms (Electoral Bond
Scheme) v. Union of India [ Assn. for Democratic Reforms
(Electoral Bond Scheme) v. Union of India , (2024) 5 SCC 1
:(2024) 243 Comp Cas 115] . In a way, the present case also
relates to funding of elections, an issue which was examined in
some depth in Assn. for Democratic Reforms [ Assn. for
Democratic Reforms (Electoral Bond Scheme) v. Union of India ,
(2024) 5 SCC 1 : (2024) 243 Comp Cas 115] .

92. In view of the aforesaid discussion, and as Vijay
Madanlal Choudhary [ Vijay Madanlal Choudhary v. Union
of India , (2023) 12 SCC 1 : (2023) 21 ITR-OL 1 (SC)] 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:


92.1. ( 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?


92.2. ( 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?


92.3. ( 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”?. ”

97
18.4.1. The jurisprudence reached a more nuanced and
expansive articulation in ARVIND KEJRIWAL supra . The Apex
Court described the power under Section 19 as a "drastic" and
"extreme" power, capable of inflicting serious consequences upon
the liberty, reputation and dignity of an individual. Such power,
therefore, remains perpetually amenable to judicial scrutiny.


18.4.2. The Apex Court observed that the existence of valid
"reasons to believe" constitutes the very foundation upon which the
edifice of arrest under Section 19 rests. The authorized officer must
possess material, which objectively demonstrates guilt and must
undertake a rigorous scrutiny of such material before arriving at the
requisite satisfaction. The Apex Court emphasised that the
expression "material in possession" does not dilute the requirement
that such material must reasonably support a conclusion of guilt.
The Apex Court drew a clear and constitutionally significant
distinction between the power to investigate and the power
to arrest. The latter cannot be invoked merely because the
former is ongoing.

98
18.4.3. The Apex Court then elucidated the doctrine of
"necessity to arrest". Drawing sustenance from the principles laid
down in JOGINDER KUMAR v. STATE OF U.P. reported in (1994)
4 SCC 260; ARNESH KUMAR v. STATE OF BIHAR reported in
(2014) 8 SCC 273; MOHD. ZUBAIR v. STATE (NCT OF DELHI)
reported in (2023) 16 SCC 764 and SIDDHARTH v. STATE OF
UTTAR PRADESH reported in (2022) 1 SCC 676 , the Apex Court
reiterated that the existence of power and the justification for its
exercise are distinct concepts. The authorized officer must ask
himself not merely whether arrest is lawful, but whether it is
necessary.

18.4.4. Though the precise contours of the doctrine of
"necessity to arrest" have been referred to a larger Bench, the
observations in ARVIND KEJRIWAL unmistakably signal a judicial
shift towards incorporating the principles of proportionality and
minimal intrusion into the exercise of powers under Section 19.
Liberty is no longer viewed as a competing consideration; it is the
starting point of the inquiry. Arrest is the exception and not the
norm.

99
THE HIGH COURTS:
THE HIGH COURT OF BOMBAY:
19.1. The High Court of Bombay in PRIYAVRAT MANDHANA
5
v. DIRECTORATE OF ENFORCEMENT has held as follows:
“…. …. ….
16. Such information relating to the aforesaid three
companies from which funds were received was always within
the knowledge of the respondents, however, till the conduction
of second search, they did not find it necessary to arrest the
petitioner. It is only after petitioner's father was released by
holding his arrest illegal, did the respondent Nos. 1 and 2, under
the garb of second search at the same residence, interrogated
the petitioner on the material that was already available with
them only to create a spacious “ reason to believe ”. Mr. Kadam
would lastly argue that the “ reason to believe ” was entirely
premised on the petitioner exercising his rights against self-
incrimination under Article 20 (3) of the Constitution.

17. From the statements made by the respective
Counsel at bar, prima facie , it seems that respondent Nos.
1 and 2 already had sufficient material qua alleged
proceeds of crime as enumerated in the grounds of
arrest. If that being so, we find no reason to accept the
argument of Mr. Venegavkar that in order to prevent the
destruction or tampering of the evidence, petitioner's
arrest was necessary. The tracing out of diverted
funds qua the proceeds of crime or to identify other
persons alleged to be involved in the activities etc, prima
facie , appears to be well within the knowledge of
respondent No. 1 and 2. The Supreme Court in case
of Arvind Kejriwal (supra), elaborately discussed the
scope of Section 19 (1) of the P.M.L Act in light of the
ratio laid down by the Supreme Court in various
pronouncements right from the ratio laid down way back
in 1969 in the case of Madhu Limaye v. Unknown , Pankaj
Bansal (supra), V. Senthil Balaji (supra) and Vijay
Madanlal Choudhary (supra).
… … …

5
2024 SCC OnLine Bom.4233

100
19. It has been observed that 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.

20. In Vijay Madanlal Choudhary (supra), the
Supreme Court on the aspect of the checks on the power
to arrest stated that there must be material in possession
with the Authority before the powers 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.

21. In case of Arvind Kejriwal (supra), the Supreme
Court has further elaborated the expression “ reasons to
believe ” by stating that it 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. It would be
apposite to extract paragraphs 72 to 74 in the case
of Arvind Kejriwal (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

101
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 noncompliance 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 subsection (1)
together with the materials in his custody, forming
the basis of his belief, to the adjudicating
authority, in a sealed envelope. Needless to state,
compliance of sub-section (2) is also a solemn
function of the arresting authority which brooks
no exception.”

73. In PrabirPurkayastha (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:

• Section 41(1)(ii)(a) - preventing a person
from committing further offence.
• Section 41(1)(ii)(b) - proper investigation of
the offence.
• Section 41(1)(ii)(c) - preventing a person
from disappearing or tampering with
evidence in any manner.

102
• 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.
• 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”.

22. No doubt, the Supreme Court referred the
question of law for consideration by a larger Bench in
respect of “ need and necessity to arrest ” by contending
as to whether it can be a separate ground to challenge
the order of arrest passed in terms of section 19 (1) of
the PML Act along with another question as to 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 another personal
grounds and reasons regarding necessity to arrest a
person in the facts and circumstances of the said case?

23. As already stated hereinabove, respondent Nos.
1 and 2 seem to have already in possession of sufficient
material qua the petitioner and his companies as well as
alleged transactions during the arrest and interrogation
of the petitioner's father, after whose release by the
Special Court, the petitioner came to be arrested on
th
29 July, 2024 during alleged second search within four
days of release of petitioner's father. The material in
possession of respondent Nos. 1 and 2 prior to the arrest
of the petitioner as demonstrated by the respondents
appears to be with it and, therefore, respondent Nos. 1
and 2 could have arrested the petitioner at the time of
th
alleged first search which was conducted on 26 June,
2024 itself. ”

The High Court of Bombay, in PRIYAVRAT MANDHANA supra ,
carried these principles into practical application. The High Court

103
of Bombay observed that where the Enforcement Directorate
was already in possession of the material forming the basis
of the allegations, the invocation of arrest at a later stage
under the guise of further investigation raised serious
concerns regarding the legitimacy of the exercise.
Reiterating the ratio of ARVIND KEJRIWAL AND VIJAY
MADANLAL CHOUDHARY, the High Court of Bombay held that
Section 19 cannot be transformed into an investigative
weapon. The requisite material must exist before arrest, not
emerge because of it. The High Court of Bombay emphasized
that the threshold under Section 19 is considerably higher
than that prevailing under the ordinary criminal law. The
authorized officer must possess material which rationally
connects the accused to the offence of money-laundering
and demonstrates guilt rather than mere suspicion. The High
Court of Bombay accordingly held that the power of arrest cannot
be exercised routinely or mechanically and granted interim
protection to the accused.

104
19.2. Again, the High Court of Bombay in
ANILKUMAR
6
KHANDERAO PAWAR v. DIRECTORATE OF ENFORCEMENT has
held as follows:
“…. …. ….

7. Before proceeding further, we may usefully have a
glance through the “grounds of arrest” and the “reasons to
believe”. In the grounds of arrest, the ED gave the following
reasons for the petitioner’s arrest: -

“You, Anil Kumar KhanderaoPawar, are hereby
informed that during the ongoing inquiry and
investigation under PMLA by the Directorate of
Enforcement, various incriminating records (including
the digital devices), Whatsapp Chats and statements of
various persons were taken on record, wherein it has
been revealed that:

1.You have deliberately and intentionally
committed omission to perform your lawful public duty
and thereby actually involved in acquisition, possession
of several crores of the Proceeds of Crime and thereafter
its concealment and utilisation for your personal benefit
and enrichment.

2.You have organized a cartel of VVCMC officers,
Junior Engineers, Architects, CAS and Liasoners after
joining as Commissioner and involved in an organized
action plan to acquire the Proceeds of crime by
committing the illegal omission to perform his public
duty and thereafter granting development permissions
at fixed rate.

3. You, have grossly misused your position as
Commissioner of VVCMC, and was directly responsible
for taking no preventive actions so that illegal
construction occurs over government/private land in
the jurisdiction of VVCMC and has taken the substantial
amount of bribe money for keeping a blind eye and
taking no action over rampant illegal construction on
government/private land.

4. You, as a head of Demolition department of
VVCMC, despite being legally duty bound and

6
Criminal Writ Petition No.4779 of 2025 decided on 15-10-2025

105
responsible for taking action against
illegalconstruction over government/private land in
the jurisdiction of VVCMC has taken no action.

5. You, have flourished the already existing cartel
comprising of senior VVCMC officers, local builders and
Liasoners for keeping a blind eye and taking no action
over rampant illegalconstruction on
government/private land in lieu of fixed the
commission/bribe amount at the total rate of Rs 150 per
sq ft out of which you keep substantialcommission/bribe
amount of Rs 50 per sq ft.

6. You have charged huge commission/bribe for
granting various developmentpermissions required
from VVCMC for starting different
residential/commercial/other projects which was fixed at
the rate of Rs 20-25 per sq ft of the built area of the
project which varies and may increase to Rs 50 per sq ft
depending on the complexity of the project and
wherewithal of the concerned builder.

7. You have established and used an intricate
codewordsystem for collection of commission/bribe
amount from builders, Architects and Local Liasonersin
order to guise the enforcement agencies and to conceal
the movement Proceeds of crime.

8. You have acquired and possessed the proceeds
of crime in cash and the said cash has been collected
and delivered through VVCMC officers, distant relatives
and local liasoners.

9. You have received huge amount of cash from
Sh. Y S Reddy for clearing files giving various
development permissions and same was delivered to
your distant relative and the said cash so collected by
your distant relative was invested in properties situated
at various locations in Maharashtra which clearly
manifest that you have not only acquired or possessed
the Proceeds of crime but also concealed and project the
same as untainted and integrated the crime proceeds in
the financial main-stream of the economy.

10. You have incorporated various firms in order
to channelize and utilize the proceeds of crime and also
to integrate the proceeds of crime in the financial main-
stream of the economy.

11. You in order to conceal the source of
acquisition of the Proceeds of crime have incorporated

106
the firms wherein your wife has been ostensibly shown
as the partner however she denies having knowledge of
basic facts pertaining to all the projects/entities
incorporated in her name.

12. You have infused huge amount of cash in all
your projects/entities/investments in the multiple
entities floated in the name of your Wife, daughters and
distant relatives. These entities were engaged in
construction of residential projects wherein huge amount
of cash has been suspected to be infused by you.

13. You have destructed and tampered with the
crucial evidences and had deleted the call logs and
whatsapp data from mobile phone.

14. You hold the office as Commissioner, VVCMC
till 25.07.2025 and in view of the authority and influence
inherent to such an office you held, there exists a grave
and reasonable apprehension that you may exercise
undue influence, inducement, or threat and coercion
upon Builders, Architects, Liasoners and officials of
VVCMC. There is every likelihood that you by utilising his
official position will influence, induce and threaten the
material witnesses and co-accused persons, thereby
impeding the further course of investigation.

On the basis of aforesaid facts and circumstances
and material in possession, I have reasons to believe
that you have not only acquired, possessed, concealed
and utilized the proceeds of crime of several crores of
rupees, but also actually involved and knowingly
assisted inlayering and laundering of proceeds of crime,
and thus you are guilty of the offence of money
laundering as defined under section 3 of PML. Act, 2002
punishable under section 4 of PML Act, 2002.

Accordingly, there exists sufficient reasons to
believe that your arrest is necessary for various reasons
as already detailed in the reasons to believe' being
served along with this ‘grounds of arrest'.

In view of the above and based on material in
possession, I have reasons to believe that you, Anil
Kumar KhanderaoPawar, are guilty of the offence of the
money laundering under section 3 of PMLA, 2002,
punishable under section 4 of PMLA, 2002 and therefore,
your arrest under Section 19(1) of PMLA is warranted.

Sd/-
(Praduman Sharma)

107
Assistant Director
(Arresting Officer)

I have been intimated about the grounds of
arrest at the time of my arrest in adherence to the
provisions of Article 22(1) of the Constitution and
Section 19(1) of PMLA and have also been made aware
of my rights as laid down by the Hon'ble Supreme Court
of India in the case of DK Basu Vs. West Bengal with
regard to the rights of the arrested person.

(Signature of Anil Kumar KhanderaoPawar)
Arrestee/Arrested person”

8. The aforementioned grounds are reiterated by the ED
in the “reasons to believe” with certain descriptions about the
commission paid to the petitioner and other officials using a
Codeword. The relevant extracts of the “ reasons to believe” are
reproduced herein below: -

“ I. ACTUAL INVOLVEMENT OF SH. ANIL
KUMAR KHANDERAO PAWAR IN THE
ACQUISITION, POSSESSION AND CONCEALMENT
OF PROCEEDS OF CRIME:

1. That Sh. Anil Kumar KhanderaoPawar is an
IAS officer of 2014 batch. He joind Vasai Virar City
Municipal Corporation as Commissioner on 13.01.2022
and remained there till 25.07.2025. He organized a
cartel of VVCMC officers. Junior Engineers. Architects,
CAs and Liasoners after joining as Commissioner. That
Sh. Anil Kumar KhanderaoPawar was involved in an
organized action plan to acquire the Proceeds of crime
by committing the illegal omission to perform his public
duty and thereafter granting development permissions
at fixed rate.

2. That Sh. Anil Kumar KhanderaoPawar, as
Commissioner of VVCMC, was directly responsible for
taking preventive actions so that no illegal construction
occured over government/private land in the jurisdiction
of VVCMC.

3. That Sh. Anil Kumar KhanderaoPawar, as a
head of Demolition department of VVCMC, was legally
duty bound and responsible for taking action against
illegal construction over government/private land in the
jurisdiction of VVCMC.

108
4. That Sh. Anil Kumar KhanderaoPawar
flourished the already existing cartel comprising of
senior VVCMC officers, local builders and Liasoners for
keeping a blind eye and taking no action over rampant
illegal construction on government/private land and
fixed the commission/bribe amount at the total rate of
Rs 150 per sq ft out of which: Rs 50 per sq ft for himself
and rest for others. This has been revealed on the basis
of statement of VVCMC officers. The relevant screenshot
of the statement of Sh. Y S Reddy recorded u/s 50 of
the PMLA, 2002 dated 07.08.2025 is reproduced as
under:

“…….The cash amount is paid at the rate of Rs
150 per sq ft of the area to be constructed. The break
up is as follows:

Sl Level Rate per sqft
No
01 Municipal Commissioner 50
02 Additional Municipal Commissioner 30
03 Deputy Municipal Commissioner 20
04 Assistant Municipal Commissioner 50
and other staff

5. That, it has been revealed by variousbuilders
who constructed the 41 illegal buildings over alleged 60-
acre government/private land that the substantial
amount of bribe money was given to Senior officers of
VVCMC including Commissioner Sh. Anil Kumar
KhanderaoPawar for keeping a blind eye and taking no
action over rampant illegalconstruction on
government/private land.

6. That Sh. Anil Kumar KhanderaoPawar, as a
head of Demolition department of VVCMC, did not take
action against illegalconstruction over
government/private land in the jurisdiction of VVCMC
even after filing of CWP. That only after the order of
Hon'ble Bombay High Court, demolition of
illegalconstruction was done.

7. That Sh. Anil Kumar KhanderaoPawar has
charged huge commission/bribe for granting various
developmentpermissions required from VVCMC for
starting different residential/commercial/other projects
which was fixed at the rate of Rs 20-25 per sq.ft of the
built area of the project. It may increase to Rs 50 per sq
ft depending on the complexity of the project and
wherewithal of the concerned builder. This has been

109
revealed on the basis of statement of various Builders,
Architects, VVCMC officers. Liasoners.

Sh. Y S Reddy in his statement which was
recorded u/s 50 of the PMLA, 2002 dated 07.08.2025
stated that:

“……On being asked I would like to state that Shri
Anil Pawar the Municipal Commissioner, VVCMC use to
take Rs 20-25 per sq ft. DDTP was given Rs10 per sqft
and Rs 4 per sqft is given to ADTP/Town planner and Rs
1 per sq ft is given to JE. If plot area is more the
2000sqmtrs then the file is handled by ADTP and for
proposals with less than 2000sqmtrs, it is handled by
Town Planner...”

That statement of certain builder and Architects
were also recorded wherein they have stated the details
of commission paid. The excerpt of the statement of a
builder/Architect recorded u/s 50 of the PMLA, 2002
dated 09.07.2025 is reproduced under:

Sr. No. Department Name Commission Paid
1 Legal Department Rs 50,000 to Rs 1
Lakh per file
2 Engineering Department Rs 25,000 per file
3 Junior Engineer Rs 1 – Rs 2 per
Square Feet
4 Municipal Engineer Rs 2 per Square
Feet
5 Assistant Director of Town Planning Rs 5 per Square
Feet
6 Deputy Director of Town Planning Rs 10 to Rs 12 per
Square Feet
7 Commissioner Rs 25 per Square
Feet

Commission is mostly paid directly to the
concerned officer. However, sometimes it is also paid
through the architect to the concerned officer..."

8. That Sh. Anil Kumar KhanderaoPawar
established an intricate codewordsystem for collection
of commission/bribe amount from builders, Architects
and Local Liasoners. In depthanalysisofWhatsapp
chats of Sh. Anil Kumar KhanderaoPawar with Sh. Y S
Reddy, of Local Liasoners with Sh. V S Reddy, of
Architects and Builders with Sh. Y S Reddy and others
established that:

110
•
Code Word "C" was used for
commission/bribe amount pertaining to Sh.
Anil Kumar KhanderaoPawar, Commissioner
VVCMC.

•
Code Word "D" was used for
commission/bribe amount pertaining to Sh. Y
S Reddy, Deputy Director Town Planning.
VVCMC.

This fact is substantiated by the statement of the
Architect and Builder recorded u/s 50 of the PMLA, 2002
on 22.07.2025 and 16.07.2025 respectively. The excerpt
of the statement of the Architect recorded u/s 50 of the
PMLA, 2002 dated 22.07.2025 is reproduced under:

“…In reply I said that I had previous 10 cases
and one new case so I meant I had to pay commission
for the new case only. Then MrReddy asked me how
much money do I have to pay him? I gave him the
figure of 1. 95,000 square feet which wasthe total area
of my last case wherein permission was granted by
VVCMC. So the total amount was of Rs 48,75,000 at the
rate of Rs 25 per square foot which is rounded off to Rs
50 lakhs. This was the amount which was to be given to
Shri Reddy as DDTP. "D" in the chat meant DDTP. Then
I asked how much money was to be given to the
commissioner VVCMC, In the chat "C" is meant to be the
Commissioner VVCMC who was Shri Anil Pawar..."

The excerpt of the statement of a builder
recorded u/s 50 of the PMLA. 2002 dated 16.07.2025 is
reproduced under:

"….I would like to state that code names used by
Architect/Developer/Builder who are dealing in VVCMC
area for Commissioner VVCMC and Deputy Director
Town Planning while doing communication on WhatsApp
chats or otherwise are "C" and "D" respectively. So "C"
in the above chat refers to Shri Anil Pawar, the
commissioner of VVCMC. The above chat is also related
to finalisation of bribe amount in some matter...."

9. That during the course of investigation, it is
gathered that Mr. Anil Kumar KhanderaoPawar was
actively involved in keeping a blind eye and taking no
action over rampant illegal construction on
government/private land in lieu of fixed
commission/bribe amount and subsequently involved in
money laundering by way of acquiring, possessing.
concealing and utilizing the proceeds of crime and

111
thereby transferring and channelizing the said proceeds
of crime through distant relatives and local liasoners.

10. That during inquiry and investigation, it is
further gathered that the Proceeds of crime was
acquired and possessed by Sh. Anil Kumar
KhanderaoPawar in cash and the said cash has been
collected and delivered through VVCMC officers, distant
relatives and local liasoners. The in-depth analysis of
Whatsapp chats of Sh. Anil Kumar KhanderaoPawar with
Sh. Y S Reddy, of Local Liasoners with Sh. Y S Reddy
and others established that:

•
Sh. Anil Kumar KhanderaoPawar received more than
Rs. 17.75 crore from Sh. Y S Reddy for clearing files
giving various development permissions and same
was delivered to distant relative.

•
Distant relative collected huge amount of cash for
Sh. Anil Kumar KhanderãoPawar from Sh. Reddy on
other occasions. The cash so collected by distant
relative was invested in properties situated at
various locations in Maharashtra. The excerpt of the
statement of distant relative recorded u/s 50 of the
PMLA, 2002 dated 11.08.2025 is reproduced under:

"...I would like to state that I have perused the
said chat and state that this contact details belong to
me. The said chat is about confirmation of the cash
payment of Rs. 3.375 Crore (37.5 Lakh +3 crore)
received in cash at my office at Dadar from Angadiya
through Mr. Y S Reddy on the instructions of Mr. Anil
Pawar…"

•
Sh. Anil Kumar KhanderaoPawar brought luxury

expensiveSarees, Pearls and Gold & Diamond
studded Jewellery through Sh. Reddy and settlement
happened in cash.
J. ACTUAL INVOLVEMENT OF SH. ANIL KUMAR
KHANDERAO PAWAR IN THE UTILIZATION OF
PROCEEDS OF CRIME AND PROJECTION OF THE
TAINTED PROPERTIES AS UNTAINTED :

1. Sh. Anil Kumar KhanderaoPawar has incorporated
various firms in order to channelize and utilize the
proceeds of crime and also to integrate the proceeds of
crime in the financial main-stream of the economy.
Huge amount of cash has been suspected to be infused
in all the projects/entities/investments by Sh. Anil
Kumar KhanderaoPawar in the multiple entities floated
in the name of Wife, daughters and distant relatives.

112
These entities were engaged in construction of
residential projects wherein huge amount of cash has
been suspected to be infused by Sh. Anil Kumar
KhanderaoPawar.

2. That Sh. Anil Kumar KhanderaoPawar in order to
conceal the source of acquisition of the Proceeds of
crime Sh. Anil Kumar KhanderaoPawar has incorporated
the firms wherein his wife has been ostensibly shown as
the partner however she denies having knowledge of
basic facts pertaining to all the projects/entities
incorporated in her name.

3. That the material in possession as discussed and
detailed in the preceding paras, and the reasons to
believe enumerated in writing in the present document,
clearly substantiated that Sh. Anil Kumar
KhanderaoPawar is guilty of offence of money
laundering. The material in possession on the basis of
which the Investigating Officer has formed the Reasons
to Believe includes the evidences in form of the
statements of various persons recorded u/s 50 of the
PMLA, 2002 and the Whatsapp chats and the other
digital evidences as discussed in detail in the preceding
paras.

4. Thus, Sh. Anil Kumar KhanderaoPawar has
committed and is guilty of offence of Money Laundering
defined u/s 3 of PMLA, 2002, punishable u/s 4 of PMLA,
2002 since he has actually involved in acquisition,
possession and concealment of crime proceeds and also
in utilising the proceeds of crime and projecting the
tainted property as untainted.”



9. After hearing the learned senior counsel for the
petitioner and the learned Additional Solicitor General
and on perusing the materials on record, we have formed
an opinion that as on 13th August 2025 the Arresting
Officer had no such material in his possession which
would establish that the petitioner committed offence
under the PMLA so as to form reasons to believe under
section 19 of the PMLA. When we say that the Arresting
Officer had no such material, we mean that “notangible
material” was available with the Arresting Officer to
establish that the petitioner was guilty of the offence
under the PMLA and, that, we are not weighing such
materials so as to examine the sufficiency of the