Necessity to arrest and Interpretation of section 19 of PMLA

Introduction 

Section 19 of the Prevention of Money Laundering Act (PMLA) has generated significant controversy, particularly in the wake of the arrest of Mr. Arvind Kejriwal. This provision empowers officers of the Enforcement Directorate (ED) to arrest individuals if, based on material in their possession, they have a “reason to believe”—with the reasons recorded in writing—that the person is guilty of an offense punishable under the PMLA. The central issue in this debate is whether ED officers must also satisfy the condition of “necessity to arrest” or if the safeguards outlined in Section 19 alone are sufficient. This article explores the interpretation of Section 19 through various rules of statutory interpretation to address this question.

Safeguards Against Arbitrary Arrests: A Closer Look at Section 19

Section 19 of the PMLA empowers authorized officers to arrest a person if they believe, based on material in their possession, that such a person is guilty of an offense under the Act. This section mandates that the officer record reasons for the belief in writing and inform the arrested individual of the grounds of the arrest. Additionally, the person must be produced before a judicial magistrate or special court within 24 hours of arrest, as per constitutional safeguards under Article 22 and the CrPC.

The “necessity to arrest” test under the CrPC is a crucial safeguard to prevent arbitrary arrests and ensure they are made only when absolutely necessary. This test, particularly emphasized after the landmark judgment in Arnesh Kumar v. State of Bihar, aims to strike a balance between protecting individual liberty and maintaining law and order. Section 41 of the CrPC (Now, section 35 of BNSS) lays down specific conditions under which the police may arrest a person without a warrant, such as preventing further offenses, proper investigation, or preventing the accused from tampering with evidence or influencing witnesses. In determining the necessity to arrest, several factors are taken into consideration, including the nature and gravity of the offense, the likelihood of the accused absconding, their potential to repeat the offense, and the need for custodial interrogation.

In Arnesh Kumar v. State of Bihar, the Supreme Court emphasized the principle of “necessity to arrest,” holding that officers must deliberate on critical questions before making an arrest: Why arrest? Is it truly necessary? What purpose will it serve? What objective will it achieve? This test reinforces accountability in the exercise of arrest powers, ensuring that arrests serve legitimate purposes and do not amount to harassment or violation of fundamental rights.

Under Section 19 of the PMLA, specific preconditions must be met before an arrest is made. These include:

1. The arrest must be based on material evidence in possession of the ED.
2. There must be a “reason to believe” that the accused is guilty of the offense.
3. The reason must be recorded in writing.
4. The grounds for the arrest must be communicated to the accused.

The conditions under Section 19 of the PMLA are often hailed as safeguards to ensure fairness in the exercise of arrest powers. However, ambiguity arises surrounding the test of “reason to believe.” Specifically, questions emerge about the implications when the “reason to believe” communicated to the accused fails to establish a clear necessity for arrest. This brings to the forefront a critical issue: whether the “necessity to arrest” constitutes a relevant and essential factor under Section 19, or whether its omission undermines the fairness and objectivity intended by the provision.

The Supreme Court, in Arvind Kejriwal v. Directorate of Enforcement, referred the following question – 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? to a larger bench, underscoring its significance. This debate highlights the tension between the general principle of “necessity to arrest” as emphasized in Arnesh Kumar and the specific procedural requirements under Section 19 of the PMLA. Balancing these principles is crucial to ensuring that arrest powers under the PMLA align with constitutional protections of life and liberty.

Articles 13 and 21 of the Indian Constitution are foundational provisions safeguarding the rights of individuals. Article 13 ensures the supremacy of fundamental rights by invalidating laws inconsistent with them, while Article 21 guarantees the right to life and personal liberty, emphasizing due process and fairness. In the context of the PMLA, Section 19 grants authorities the power to arrest individuals involved in money laundering. This power serves as a crucial function in ensuring procedural fairness and upholding the integrity of the investigation process. Arresting an accused under Section 19 of PMLA, after due compliance with statutory safeguards, prevents tampering with evidence, enables effective investigation, and protects the public interest in curbing financial crimes. The necessity to arrest, when exercised judiciously, aligns with constitutional mandates by striking a balance between individual liberty and societal interests, ensuring that procedural fairness under Article 21 is maintained even while combating money laundering.

Necessity to arrest as a relevant factor under section 19 of PMLA 

Section 19 of the PMLA, if read plainly, creates an ambiguity regarding whether the term “reason to believe” incorporates the condition of necessity to arrest. To resolve this, the provisions of the PMLA and CrPC must be harmonized to give effect to both.

While some argue that the PMLA, being a special legislation, overrides the CrPC, which is general legislation, exceptions to this principle exist. Justice Griffith in R v. Greenwood, explained the maxim generalia specialibus non derogant (general laws do not override special laws) by emphasizing that courts assume legislatures enact laws with societal welfare in mind. Repealing general laws in favor of special laws is not automatic but occurs only under exceptional circumstances.

In General Manager, Telecom v. M. Krishnan and Another, the court highlighted that the maxim should not be applied mechanically. Instead:

1. Special and general laws should be assigned based on the case in question.
2. The legislative intent behind enacting the specific law must be considered.
3. Courts should first apply the doctrine of harmonious construction and the principle of election before resorting to the maxim.

The legislature, while enacting the PMLA, added Section 65, which states that the provisions of the CrPC apply to arrest, search, seizure, and other proceedings under the PMLA, provided they are not inconsistent with its provisions. This demonstrates the legislative intent to allow the general principles of the CrPC to apply unless expressly excluded by the PMLA.

Moreover, the Constitution of India safeguards against arbitrary arrests. Article 22(1) mandates that detainees be promptly informed of the reasons for their arrest and allowed to consult a legal practitioner. Article 22(2) requires production before a magistrate within 24 hours and prohibits detention beyond this period without magistrate approval. These provisions highlight the necessity of ensuring arrests are justified, protecting individual liberty, and preventing misuse of power.

In Vijay Madanlal Choudhary v. Union of India, the Supreme Court held that when a person applies for bail or anticipatory bail under the PMLA, the conditions under Sections 437, 438, and 439 of the CrPC apply alongside Section 45 of the PMLA. This reflects the harmonization of general and special laws.

The necessity to arrest is a general condition governing the exercise of arrest powers. While Section 19 of the PMLA prescribes specific preconditions for arrest, these are not inconsistent with the principle of necessity to arrest. Section 65 of the PMLA indicates legislative intent for general conditions of arrest under the CrPC to apply to PMLA offences, provided they align with its provisions. Thus, the principle of necessity to arrest can be inferred as an additional requirement under Section 19 of the PMLA, complementing its conditions without creating conflict.

Moreover, the principle of proportionality further supports this interpretation. The principle of proportionality ensures that State action does not excessively infringe individual rights and involves the following tests:

1. The measure must serve a legitimate aim.
2. It must have a rational connection to the aim.
3. There should be no less restrictive alternative measure that achieves the same objective (minimal impairment).
4. A balance must be struck between individual rights and public interest.

In State of Uttar Pradesh v. Lal, the court emphasized that proportionality requires assessing whether the action was necessary and fell within the range of reasonable alternatives. When applied to Section 19 of the PMLA, this principle implies that arrests must pursue legitimate aims, be rationally connected to those aims, and strike a proportional balance between individual rights and public interest.

Conclusion 

The interpretation of Section 19 of the PMLA must strike a delicate balance between the legislature’s intent to empower the Enforcement Directorate to combat money laundering and the constitutional mandate to safeguard individual liberty. While the section prescribes specific preconditions for arrest, these cannot operate in isolation from the general principle of “necessity to arrest,” which ensures arrests are justified and proportionate.

The harmonization of the PMLA with the CrPC through Section 65 reflects a legislative intent to incorporate broader procedural safeguards, provided they are not inconsistent with the PMLA’s objectives. This alignment is essential to prevent misuse of arrest powers and uphold constitutional guarantees under Article 21 and Article 22. The principle of proportionality further reinforces this interpretation, ensuring that arrests under the PMLA meet legitimate aims without disproportionately infringing individual rights.

Ultimately, the debate surrounding the necessity to arrest and the interpretation of Section 19 underscores the need for judicial clarity. The referral of this issue to a larger bench by the Supreme Court in Arvind Kejriwal v. Directorate of Enforcement highlights its importance, with the matter as of January 2025 pending consideration. This reference has significant implications for numerous ongoing arrests and proceedings under the PMLA, and it is hoped that the question attains finality at the earliest to provide much-needed guidance. A judicious interpretation that respects both the legislative intent and constitutional principles will ensure that the PMLA’s objectives are met without compromising the fundamental rights of individuals.

(This post has been co-authored by Devansh Raghuwanshi and Samyak Jain, fourth year law students at National Law Institute University, Bhopal.)

CITE AS: Devansh Raghuwanshi and Samyak Jain, ‘Necessity to arrest and Interpretation of section 19 of PMLA’ (The Contemporary Law Forum, 14 February 2025) <https://tclf.in/2025/02/14/necessity-to-arrest-and-interpretation-of-section-19-of-pmla/>date of access