Digital compliance with non-bailable warrants and the “material in possession” threshold for PMLA arrests: Punjab & Haryana High Court in Dharam Singh Chhoker v. Directorate of Enforcement and Others

Introduction

This commentary analyzes the Punjab & Haryana High Court’s decision dismissing a constitutional writ petition by Mr. Dharam Singh Chhoker, who sought to set aside his arrest and consequential remand orders passed under the Prevention of Money Laundering Act, 2002 (PMLA). The case arises from allegations of diversion of homebuyers’ funds collected for an affordable group housing project at Sector 68, Gurugram, developed by M/s Sai Aaina Farms Infratech Pvt. Ltd. (SAFPL), allegedly controlled by the “Mahira Group” of the Chhoker family.

The petitioner challenged: (i) the arrest order dated 05.05.2025 under Section 19 PMLA; and (ii) remand orders dated 05.05.2025, 09.05.2025, 13.05.2025, and 17.05.2025 passed by the Special Judge-cum-Sessions Judge, Gurugram (PMLA Court). He alleged non-compliance with Section 19 PMLA, improper execution of non-bailable warrants (NBWs), assault by ED officers at the time of arrest, and that arrest was unnecessary since a prosecution complaint had already been filed and earlier High Court/Supreme Court orders would shield him.

The Enforcement Directorate (ED) countered that the arrest strictly complied with Section 19 PMLA; the petitioner was a key decision-maker in the “Mahira Group” operations; funds from homebuyers were allegedly siphoned off to related entities and family/personal use; and custodial interrogation was necessary to trace the money trail. ED relied on the Supreme Court’s decisions clarifying the scope of judicial review at the arrest stage under PMLA.

Summary of the Judgment

The High Court dismissed the writ petition, upholding the legality of the arrest and remand orders. Key holdings include:

• Section 19 PMLA compliance satisfied: The arresting officer recorded “reasons to believe” in writing based on “material in possession,” the petitioner was informed of the grounds of arrest “as soon as may be,” and the arrest order with the underlying material was forwarded to the Adjudicating Authority in a sealed cover (Section 19(2) PMLA). The Court noted ED’s production of detailed documentation—reasons, grounds (in Hindi and English), arrest memo, and a 309‑page compilation of material.
• Judicial review is limited: Consistent with Arvind Kejriwal v. Directorate of Enforcement and Vijay Madanlal Choudhary, the Court refrained from a “mini-trial” or merit review. It examined only whether the decision to arrest was rational, based on some material, and not arbitrary.
• Soft-copy showing of NBWs is sufficient when substance is notified: Compliance with Sections 75–76 CrPC was held satisfied when the arresting officer showed a soft copy of the NBWs on a mobile device and notified the “substance” of the warrants; the petitioner did not specifically demand a hard copy at the time. Thus, the execution was not vitiated.
• Assault allegations are disputed questions of fact: Competing versions (including cross-FIRs) regarding manhandling at the hotel could not invalidate the arrest at this stage and remain matters for trial.
• Arrest in aid of investigation is permissible: Reliance on V. Senthil Balaji was accepted to the effect that PMLA arrest can be a legitimate investigative tool to trace proceeds of crime, even where a prosecution complaint has been filed and investigation continues.
• Similarity of reasons across co-accused is not fatal: The Court rejected the contention that reasons/grounds mirroring those of co-accused necessarily render the arrest invalid.

On these findings, the petition—along with pending miscellaneous applications—was dismissed.

Factual Background and Procedural History

• Project and alleged diversion: SAFPL (linked to the “Mahira Group,” controlled by the Chhoker family) obtained license no. 106/2017 to develop ~10 acres at Sector 68, Gurugram, with ~1500 flats. The construction lagged; homebuyers alleged delays and misuse of funds (~₹363 crores).
• Predicate proceedings: FIR No. 11 dated 14.01.2021 (PS Sushant Lok) under IPC sections 120-B, 406, 420, 467, 468, 471; plus subsequent FIRs including:
  • FIR 175 dated 18.05.2022 under the Haryana Development and Regulation of Urban Areas Act, 1975 (PS Rajendra Park),
  • FIR 151 dated 31.05.2023 (PS Rajendra Park) under IPC 420, 467, 468, 471,
  • FIR 152 dated 01.06.2023 (PS Rajendra Park) under IPC 420, 467, 468, 471,
  • and another FIR dated 05.07.2023 under IPC 120-B, 420, 467, 468, 471 (PS Sushant Lok).
• ECIR and PMLA proceedings: ED registered ECIR/GNZO/20/2021 on 16.11.2021 on the basis of the above predicate offences. ED alleged diversion of homebuyer funds to related companies and personal/family expenses and acquisition of properties, necessitating custodial interrogation to map the money trail.
• NBWs and non-cooperation: ED sought and obtained NBWs on multiple occasions (including 04.10.2023 to 19.03.2025). Several warrants could not be executed; proclamation proceedings were triggered; fresh open-ended NBWs were issued on 09.01.2025 and 24.01.2025, with the Court noting a Division Bench’s observations in CWP‑25140‑2024 (23.10.2024).
• The arrest event: On 04.05.2025 around 9:30 pm, ED officers confronted the petitioner at Shangri-La Hotel, New Delhi. The petitioner alleged he was assaulted, suffered a fractured elbow, and was dragged into a vehicle; ED alleged he tried to flee and resisted. He was taken to ED’s Gurugram office and formally arrested at 02:37 am on 05.05.2025 under Section 19 PMLA. He was produced before the Special Judge at 11:00 am and remanded to ED custody until 09.05.2025; custody was extended to 13.05.2025 and then to 17.05.2025; thereafter he was remanded to judicial custody.
• Parallel litigation: Earlier High Court orders had dismissed challenges to the ECIR/proceedings (26.02.2024), and a Single Judge rejected anticipatory bail (28.05.2024). A Division Bench in CWP‑25140‑2024 (23.10.2024) made observations facilitating ED’s arrest efforts. The Supreme Court later clarified that the High Court’s observations would not impede the petitioner’s liberty to seek bail; however, the arrest was by then effected.

Analysis

1. Precedents Cited and Their Influence

Arvind Kejriwal v. Directorate of Enforcement, 2025 2 SCC 248. The High Court substantially relied on this decision to delineate the proper scope of judicial review of arrests under Section 19 PMLA. The Supreme Court clarified that:

• Courts should not undertake a mini-trial or evaluate the sufficiency/admissibility of evidence at the arrest stage.
• The statutory phrase is “material in possession,” not “evidence in possession.” Therefore, admissibility is not the touchstone; what matters is whether there exists some material that rationally informs the arresting officer’s “reasons to believe.”
• Judicial review is confined to whether the decision to arrest is rational, fair, and not arbitrary, and whether the officer recorded reasons in writing based on material.

Applying this, the High Court accepted ED’s documentation (reasons, grounds, 309‑page material, forwarding to Adjudicating Authority) as meeting the Kejriwal standard. The Court expressly rejected an “admissibility” objection at the arrest stage and declined to scrutinize sufficiency on merits.

Vijay Madanlal Choudhary v. Union Of India, 2022 SCC Online SC 929. This landmark upheld the PMLA framework, with contours relevant to arrest and investigation. The High Court read Vijay Madanlal together with Kejriwal to emphasize restraint at the stage of arrest review and to validate reliance on materials that may later be proved at trial.

V. Senthil Balaji v. State (2023). Cited to affirm that arrest under PMLA can be in aid of investigation. The High Court accepted ED’s submission that custodial interrogation was needed to trace the money trail and unravel complex fund flows, even after filing of a prosecution complaint. Thus, the existence of a complaint did not preclude further investigation or negate the need for custody.

M.C. Abraham v. State of Maharashtra, (2003) 2 SCC 649. This decision underscores that arrest is a matter of executive discretion when justified by law; courts should not direct the police/agency to act mechanically. The High Court used this to resist the petitioner’s contention that past judicial observations either mandated or prohibited arrest; instead, it focused on the legality of the present arrest on its own record.

2. The Court’s Legal Reasoning

a) Section 19 PMLA: “Reasons to believe” and forwarding to Adjudicating Authority

The Court held that ED satisfied the textual requirements of Section 19:

• “Reasons to believe” were recorded in writing by an authorized officer based on “material in possession.” ED produced copies and explained the contents: a detailed “reasons to believe” note (~39 pages), grounds of arrest in Hindi and English (~22 pages), and a 309‑page compilation of supporting material.
• The petitioner was informed of the grounds of arrest “as soon as may be,” and he signed the arrest documentation; his later protest note did not negate compliance.
• Under Section 19(2), ED forwarded the arrest order and underlying material to the Adjudicating Authority in a sealed cover. The Court accepted ED’s typed compilation (Annexure “A”) as proof of compliance.

The Court applied Kejriwal to hold that the “admissibility” of the material is not examinable at this stage; nor is the adequacy of the material. The review is confined to rationality and procedural fidelity, both of which were found satisfied.

b) Execution of NBWs: Compliance with Sections 75–76 CrPC using soft copy

The petitioner alleged non-compliance because he was shown only a soft copy of the NBWs on a mobile device. The Court rejected this contention, reasoning that:

• Section 75 requires notifying the substance of the warrant and, if so required, showing the warrant to the arrestee. The officer did notify the substance and showed a soft copy on the phone.
• The petitioner did not assert that he demanded a hard copy at the time. In the circumstances, showing a soft copy sufficed; the execution was not vitiated.
• The arrestee was thereafter promptly taken to ED’s office and produced before the Special Judge without undue delay, satisfying Section 76.

This is a notable clarification on modernizing procedural compliance for executing warrants.

c) Alleged manhandling at arrest

Competing versions regarding physical altercation at the hotel (including cross-FIRs) raised disputed facts inappropriate for determination in writ proceedings. The Court declined to treat those allegations as vitiating the arrest; they remain matters for trial.

d) Necessity of arrest despite pending complaint and earlier orders

The Court held that arrest “in aid of investigation” is permissible and can be justified by ongoing needs to trace proceeds of crime, even where a prosecution complaint exists. The petitioner’s reliance on earlier High Court/Supreme Court orders did not immunize him from arrest, particularly in light of multiple unexecuted NBWs, findings of non-cooperation, and ED’s demonstration of continuing investigative imperatives.

e) Similarity of reasons/grounds across co-accused

The Court rejected the argument that the petitioner’s “reasons to believe” and “grounds of arrest” were fatally defective because they resembled those recorded for his sons and other co-accused. Overlapping factual matrices can yield overlapping reasons; similarity, without more, does not establish non-application of mind, particularly where the decision is supported by a substantial material compilation specific to the case.

3. Impact and Significance

• Digital execution of warrants: The Court’s acceptance of soft-copy showing of NBWs, where the substance is notified and there is no demand for a hard copy, modernizes compliance expectations under Sections 75–76 CrPC. This may influence future arrests, especially in fast-moving or field contexts.
• Reaffirmation of the Kejriwal standard: The decision strengthens the jurisprudence that arrest under Section 19 PMLA hinges on “material in possession,” not admissible evidence. Accused persons challenging arrest must target the absence of material, irrationality, or procedural non-compliance, not the probative value of material at trial.
• Arrest after filing of complaint: By endorsing arrest as an investigative tool even post-complaint, the Court signals that further investigation (including custodial interrogation) can continue where complex money trails remain to be mapped.
• Template-driven compliance by ED: The Court’s appreciation of detailed compilations (reasons/grounds in both languages, paginated material, sealed forwarding to the Adjudicating Authority) suggests a best-practice “compliance packet” ED may replicate to withstand judicial scrutiny.
• Limited role of earlier protective observations: Prior High Court observations and Supreme Court clarifications not operating on merits did not foreclose a later, independently lawful arrest. Practitioners should be cautious in treating interim/interlocutory observations as arrest-proof shields.

Complex Concepts Simplified

• PMLA offences (Sections 3 and 4): “Money laundering” (Section 3) criminalizes processes connected with proceeds of crime (e.g., concealment, possession, use, projecting as untainted). Section 4 prescribes punishment.
• Scheduled/predicate offence: A crime listed in the PMLA Schedule (e.g., cheating, forgery) that generates “proceeds of crime.” PMLA proceedings rest on such predicate offences.
• ECIR: Enforcement Case Information Report registered by ED to commence PMLA investigation (akin to, but distinct from, a police FIR).
• Section 19 PMLA (“reasons to believe”): An authorized ED officer may arrest a person if he records in writing his “reasons to believe” (based on “material in possession”) that the person is guilty of a PMLA offence. The arrestee must be informed of grounds “as soon as may be,” and the arrest order with material must be forwarded to the Adjudicating Authority under Section 19(2) in a sealed cover.
• “Material in possession” v. “evidence in possession”: At arrest stage, ED relies on material, not necessarily admissible evidence. Admissibility and proof are trial questions.
• NBW and CrPC Sections 75–76: A Non-Bailable Warrant must be executed by notifying its substance and showing the warrant if demanded. The arrested person must be produced before the nearest Court “without unnecessary delay.”
• Proclamation (Section 82 CrPC): A court declaration when an accused evades arrest, often following unexecuted NBWs, inviting further coercive steps.
• Adjudicating Authority (PMLA): A specialized authority that receives sealed forwarding of arrest orders/material and adjudicates separate issues under PMLA (e.g., attachment confirmation), distinct from the PMLA Special Court trying criminal charges.
• “Open-ended” NBW: A warrant not limited by a short return date, often justified for absconding or evasive accused.

Practical Takeaways for Practitioners

• For Enforcement Agencies:
  • Maintain a robust “Section 19 packet”: reasons-to-believe note; bilingual grounds of arrest; arrest memo and search memo; a paginated compilation of material; proof of sealed forwarding to the Adjudicating Authority.
  • At execution of NBWs, notify the substance clearly; display a soft copy and, if requested, arrange a hard copy promptly. Record any refusal to view or disruptive behavior contemporaneously.
  • Document injuries/medical checks immediately to address later allegations of assault.
• For the Defence:
  • At the moment of arrest, expressly demand a physical copy of the NBW and grounds of arrest if not provided; record protest if denied.
  • Frame challenges within Kejriwal’s lane: focus on the absence of material, failure to record reasons in writing, non-forwarding under Section 19(2), or irrational/arbitrary decision-making.
  • Show concrete cooperation to undermine the asserted need for custody; however, be prepared that “post-complaint” arrests are still viable where ED shows investigative need.

Conclusion

The High Court’s decision in Dharam Singh Chhoker marks an important consolidation of the Supreme Court’s PMLA arrest jurisprudence. It confirms that:

• Arrest under Section 19 PMLA is sustainable when the authorized officer records reasons to believe based on material in possession, promptly informs the arrestee of grounds, and forwards the order and material to the Adjudicating Authority.
• Courts will not conduct a merit review at the arrest stage; the inquiry is confined to rationality, fairness, and procedural compliance.
• Modern execution practices—such as showing NBWs in soft copy—can satisfy CrPC requirements where the substance is notified and no hard copy is demanded then and there.
• Allegations of manhandling at arrest, where disputed by both sides and subject to cross-FIRs, do not by themselves vitiate the arrest and must be tried on evidence.
• Arrest can be in aid of ongoing investigation even after a prosecution complaint, especially in complex financial investigations where custodial interrogation may be warranted.

In the broader legal context, the judgment provides practical guidance for both enforcement agencies and defence counsel. It underscores a compliance-focused approach for ED and a precision-focused approach for challenges under PMLA. Most notably, its acceptance of digital methods for warrant execution and its clear adoption of the “material in possession” threshold should influence future PMLA arrest challenges in the region and beyond.