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DIRECTORATE OF ENFORCEMENT v. SUBHASH SHARMA

Supreme Court Of India

Jan 21, 2025

Judgment

CaseIQ

Smart Summary (Beta)

Factual and Procedural Background

The Directorate of Enforcement (ED) issued a Look-Out Circular (LOC) against the respondent, Subhash Sharma, in connection with an investigation under the Prevention of Money Laundering Act, 2002 (PMLA). Pursuant to the LOC, Bureau of Immigration officials detained the respondent at Indira Gandhi International Airport, New Delhi, at 18:00 hours on 4 March 2022 and handed him over to ED officers at 11:00 hours on 5 March 2022. An arrest memo was subsequently prepared at Raipur at 01:15 hours on 6 March 2022, and the respondent was produced before the remand court at 15:00 hours the same day.

The High Court of Chhattisgarh concluded that the respondent had not been produced before the nearest Magistrate within 24 hours of the ED taking physical custody and therefore held the arrest illegal, granting him bail. The ED challenged that order through a Special Leave Petition. The present judgment disposes of the criminal appeal arising from that petition.

Legal Issues Presented

Whether the respondent’s arrest was rendered illegal for non-compliance with Article 22(2) of the Constitution of India and Section 57 of the Code of Criminal Procedure, 1973, because he was not produced before the nearest Magistrate within 24 hours of being taken into ED custody.
Consequently, whether the High Court was justified in granting bail without applying the twin conditions contained in Section 45(1)(ii) of the PMLA.

Arguments of the Parties

Appellant’s Arguments (Directorate of Enforcement)

The respondent was detained at 11:00 hours on 5 March 2022 and formally arrested at 01:15 hours on 6 March 2022; his production before the Magistrate at 15:00 hours on 6 March 2022 was therefore within the constitutionally mandated 24-hour period.
Because the arrest was lawful, the High Court should have applied the twin tests under Section 45(1)(ii) of the PMLA before granting bail.

Respondent’s Arguments

The opinion does not contain a detailed account of the respondent’s legal arguments.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Supreme Court affirmed the factual findings of the High Court that the respondent came into ED’s physical custody at 11:00 hours on 5 March 2022. From that moment, the 24-hour period under Article 22(2) began to run. Because the respondent was produced before a court only at 15:00 hours on 6 March 2022, the constitutional mandate was violated.

The Court emphasized that:

Article 22(2) and its statutory reflection in Section 57 CrPC apply to arrests under the PMLA by virtue of Section 65 of that Act.
A violation of Articles 21 and 22 vitiates the arrest itself, and courts must uphold these fundamental rights whenever they consider bail.
Where an arrest is illegal, bail cannot be refused on the ground that the twin conditions in Section 45(1)(ii) PMLA are not met, because those conditions presuppose a lawful arrest.

Holding and Implications

APPEAL DISMISSED — BAIL ORDER AFFIRMED.

As a result, the respondent remains on bail, and the Enforcement Directorate must respect the constitutional requirement to produce an arrestee before the nearest Magistrate within 24 hours. The judgment reinforces that any breach of Article 22(2) or Section 57 CrPC will vitiate the arrest and entitle the accused to immediate release, though it does not announce a new legal doctrine beyond reiterating constitutional protections.

Show all summary ...

2025 INSC 141 REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO._______/2025 [@ SPECIAL LEAVE PETITION (CRIMINAL) NO.1136/2023]

DIRECTORATE OF ENFORCEMENT APPELLANT(S)

VERSUS

SUBHASH SHARMA RESPONDENT(S)

J U D G M E N T

ABHAY S OKA J.

1. Leave granted.

2. Heard learned counsel appearing for the appellant.

3. The appellant is the Directorate of Enforcement. By the impugned order, the High Court has granted bail to the respondent in connection with an offence punishable under Section 4 of the Prevention of Money Laundering Act, 2002 (for short, 'the PMLA'). The High Court found that the respondent's arrest was illegal, and on that ground, he was granted bail.

4. In paragraph 10 of the impugned judgment, the High Court has recorded factual findings which read thus:

"From the documents available in the case diary and the aforesaid order, it is crystal clear that the applicant was detained and taken into custody at 18.00 hours (6 pm) on 04.03.2022 at IGI Airport, New Delhi when the Bureau of Immigration executed the LOC issued against the applicant and held him in custody on behalf of ED. It is also not in dispute that ED took physical custody of the applicant from the Bureau of Immigration at 11.00 hours (11 am) at IGI Airport on 05.03.2022 and brought him to Raipur where the ED in the afternoon on 06.03.2022 before the remand Court."

(underline supplied)

5. The submission of the learned counsel appearing for the appellant is that pursuant to the Look Out Circular (for short, 'the LOC') issued against the respondent, he was detained at IGI Airport from 11.00 hours, on 5^th March, 2022. But he was shown as arrested at 01.15 hours on 6^th March, 2022 by the appellant Enforcement Directorate and was produced before the Court of the learned Magistrate within 24 hours from 1.15 hours on 6^th March, 2022.

6. This argument cannot be accepted. Admittedly, the LOC was issued at the instance of the appellant - Directorate of Enforcement. By executing the LOC, the Bureau of Immigration detained the respondent at IGI

Airport from 4^th March 2022 on behalf of the Appellant. The finding of fact recorded in paragraph 10 is that undisputedly, the physical custody of the respondent was taken over by the appellant from the Bureau of Immigration at 11.00 hours on 5^th March, 2022. Thereafter, at 1.15 hours on 6^th March 2022, an arrest memo was prepared by ED at Raipur. He was produced before the Court at 3 p.m. on 6^th March, 2024. The perusal of the arrest order(Annexure p-1) shows that the typed order was kept ready. The date and time of arrest were kept blank which appear to have been filled in by hand. Admittedly, the respondent was not produced before the nearest learned Magistrate within 24 hours from 11.00 a.m. on 5^th March, 2022. Therefore, the arrest of the respondent is rendered completely illegal as a result of the violation of clause 2 of Article 22 of the Constitution of India. Thus, the continuation of the respondent in custody without producing him before the nearest Magistrate within the stipulated time of 24 hours is completely illegal and it infringes fundamental rights under clause 2 of Article 22 of the Constitution of India. Therefore, his arrest gets vitiated on completion of 24 hours in custody. Since there is a violation of Article 22(2) of the Constitution, even his fundamental

right to liberty guaranteed under Article 21 has been violated.

7. The requirement of clause 2 of Article 22 has been incorporated in Section 57 of the Code of Criminal Procedure, 1973 (for short 'the Cr.P.C). There is no inconsistency between the provisions of the PMLA and Section 57 of Cr.P.C. Hence, by virtue of Section 65 of the PMLA, Section 57 of the Cr.P.C applies to the proceedings under the PMLA.

8. Once a Court, while dealing with a bail application, finds that the fundamental rights of the accused under Articles 21 and 22 of the Constitution of India have been violated while arresting the accused or after arresting him, it is the duty of the Court dealing with the bail application to release the accused on bail. The reason is that the arrest in such cases stands vitiated. It is the duty of every Court to uphold the fundamental rights guaranteed under Articles 21 and 22 of the Constitution.

9. Therefore, when arrest is illegal or is vitiated, bail cannot be denied on the grounds of non-fulfillment of twin tests under clause (ii) of sub-section 1 of Section 45 of PMLA.

10. Hence, we find no error in the impugned order, and accordingly, the appeal is dismissed.

11. Pending application(s), if any, shall stand disposed of.

..........................J.

(ABHAY S.OKA)

..........................J.

(UJJAL BHUYAN)

NEW DELHI;

JANUARY 21, 2025.

ITEM NO.14 COURT NO.5 SECTION II-C

S U P R E M E C O U R T O F I N D I A

RECORD OF PROCEEDINGS

Petition for Special Leave to Appeal (Crl.)No.1136/2023 [Arising out of impugned final judgment and order dated 21-09-2022 in MCRC No. 5288/2022 passed by the High Court of Chhatisgarh at Bilaspur]

DIRECTORATE OF ENFORCEMENT Petitioner(s)

VERSUS

SUBHASH SHARMA Respondent(s) (IA No. 16672/2023 - EXEMPTION FROM FILING O.T.) Date : 21-01-2025 This matter was called on for hearing today.

CORAM : HON'BLE MR. JUSTICE ABHAY S. OKA HON'BLE MR. JUSTICE UJJAL BHUYAN For Petitioner(s) :Mr. Suryaprakash V Raju, A.S.G. Mr. Mukesh Kumar Maroria, AOR

Mr. Merusagar Samantaray, Adv.

Mr. Arkaj Kumar, Adv.

Mr. Ashok Panigrahi, Adv.

Mr. B.K. Satija, Adv.

Mr. Annam Venkatesh, Adv.

Mr. Zoheb Hussain, Adv.

Mr. Arvind Kumar Sharma, Aor, Adv. For Respondent(s) : Mr.Shivam Batra, Adv.

UPON hearing the counsel the Court made the following

O R D E R

Leave granted. The appeal is dismissed in terms of the signed Reportable Judgment.

Pending application(s), if any, shall stand disposed of.

(KAVITA PAHUJA) (AVGV RAMU)

ASTT. REGISTRAR-cum-PS COURT MASTER (NSH) [Signed Reportable Judgment is placed on the file]