After 38 ED Questioning Sessions, Bombay HC Frees Hawala-Remittance Accused, Finding No Fresh Material For Arrest While Court-Approved Questioning Continued

An ECIR was registered against the Petitioner in connection with alleged fraudulent foreign remittances and related predicate offences.

The ED alleged that he controlled shell entities and mule bank accounts, used forged documents to remit funds abroad, and laundered proceeds of crime.

After searches and repeated questioning, the Petitioner was arrested on 23 June 2026 and remanded to ED custody; subsequent remand orders were made on 29 June and 4 July 2026.

He challenged the arrest and remand orders, contending that he had cooperated and that no fresh incriminating material had emerged before his arrest.

The High Court noted that the Petitioner’s statements had been recorded repeatedly and that the ED accepted there was no new material between 22 May and 23 June 2026.

Section 19(1) of the PMLA permits an authorised officer to arrest a person only where, on the basis of material in the officer’s possession, the officer has recorded in writing reasons to believe that the person is guilty of an offence under the Act, and the grounds of arrest must be communicated.

Section 50(2) and (3) empowers authorised officers to summon and examine persons and require production of records; proceedings under those provisions are deemed judicial proceedings under Section 50(4).

Applying *Arvind Kejriwal v. Directorate of Enforcement*, *Radhika Agarwal v. Union of India* and *Deepak Singh v. Directorate of Enforcement*, the Court recognised that arrest under a special statute is subject to judicial review for compliance with statutory and constitutional safeguards, while the sufficiency of the material is generally not for the Court to assess at the investigative stage.

The Court also adopted the principle that old material cannot, without fresh material or supervening circumstances, justify a new arrest where the agency has already elected to pursue further questioning on that material.

The ED had sought permission under Section 50 to confront the Petitioner with material already in its possession and record further statements; the Special Court had allowed that request.

The High Court found that the Petitioner had appeared for questioning on numerous occasions and that no new incriminating material had emerged between his last pre-arrest statement and his arrest.

In those circumstances, the ED could not abandon the questioning process it had sought and rely on the same material to arrest him, absent a fresh incriminating circumstance or supervening exigency.

The Court considered the arrest, on the facts, an improper exercise of the power under Section 19(1), rather than a measure justified by the gravity of the allegations or a general need to facilitate investigation.

It directed the Petitioner’s immediate release and declined the ED’s request to stay the order.