Kejriwal Order Stares SC in Face as Its Sits to Decide on Hemant Soren

Can the Supreme Court examine the legality of the arrest of the former chief minister of Jharkhand Hemant Soren under Section 19 of the Prevention of Money Laundering (PMLA) Act, 2002 given that a special court has already taken cognisance of the offence under the PMLA against Soren and thus there is a judicial Order in place?

A Bench comprising Justice Dipankar Datta and Satish Chandra Sharma posed this question to senior advocate Kapil Sibal, who was appearing for Soren, challenging the Jharkhand High Court’s Order upholding the arrest of Soren under the PMLA.

The Bench also noted that Soren’s bail application had been rejected by the special court.

The Bench will hear further arguments tomorrow.

Case against Soren

On January 31, Soren was arrested by the Directorate of Enforcement (ED) in an alleged land scam.

In the grounds of arrest furnished to Soren, the ED stated that the investigation revealed Bhanu Pratap Prasad (revenue sub-inspector, circle office, Baragai, Ranchi) and others were part of a very large syndicate involved in corrupt practices of acquiring properties forcefully as well as based on false deeds, falsification of government records, tampering with original revenue documents, etc.

The ED also stated that Bhanu Pratap Prasad was actively involved in hatching conspiracies with other persons to acquire and conceal various properties illegally, including properties that have been illegally acquired and possessed by Soren.

The ED also stated that Bhanu Pratap Prasad was actively involved in hatching conspiracies with other persons to acquire and conceal various properties illegally, including properties that have been illegally acquired and possessed by Soren.

The ED also stated that the statement of several persons had been recorded under Section 50 of the PMLA, 2002, which also establishes that the said property is under illegal acquisition, possession and use of Soren, and this fact had been kept concealed by Soren.

In addition, the ED claimed that Soren directly indulged in the process connected with acquisition, possession and use of proceeds of crime.

“Shri Hemant Soren is knowingly a party along with Bhanu Pratap Prasad and others in the activities connected with concealment of the original records for projecting the property acquired by him in an illegal manner as an untainted property.

“Further, the process or the activity connected with the acquisition, possession and use of proceeds of crime by projecting it as untainted property is continuing as on day as he is still enjoying the said proceeds of crime by its possession, occupation and use by claiming it as an untainted property,” the ED stated in the grounds of arrest.

On February 2, a special Bench of the Supreme Court comprising Justices Sanjiv Khanna, M.M. Sundresh and Bela M. Trivedi refused to entertain a petition by Soren challenging his arrest by ED. The Bench asked Soren to approach the Jharkhand High Court.

Soren approached the high court challenging his arrest. The court concluded the hearing on February 28. But it did not deliver the judgment for two months.

On April 18, Soren again approached the Supreme Court complaining that the high court was delaying the pronouncement of the judgment. On April 29, a Bench comprising Justice Sanjiv Khanna and Justice Datta issued notice in the matter.

It observed that in the meantime, it will be open for the high court to pronounce the Order. It was only after the Supreme Court’s intervention that the high court delivered the judgment on May 3 upholding the arrest of Soren by the ED.

In its Order, the Jharkhand High Court observed that the case set up by the ED against Soren is not based only on the statements recorded under Section 50 of the PMLA, including of those who claim themselves to be the real owners of the properties in question, there is an abundance of documents that lay a foundation for the arrest and remand of the petitioner to police and judicial custody.

“At this stage, it is not possible to hold that the ED has proceeded against the petitioner for no reasons. The admissibility or otherwise of the materials collected by the ED can be examined by the special court if a prosecution report is filed against the petitioner.

“The learned Additional Solicitor General (ASG) rightly contended that the scheme under the PMLA does not contemplate a mini-trial at this stage,” the high court held.

The high court also held that there was no challenge by the petitioner that the grounds of arrest, memo of arrest and personal search memo were not duly furnished to him in writing and the compliances under Section 19(2) & (3) of the PMLA were not observed.

The ED also stated that the statement of several persons had been recorded under Section 50 of the PMLA, 2002, which also establishes that the said property is under illegal acquisition, possession and use of Soren, and this fact had been kept concealed by Soren.

It also observed that the special court under PMLA gave police remand of the petitioner through Orders dated February 2, 2024, February 7, 2024 and February 12, 2024 and except the remand Order dated February 2, 2024, the other two police remand Orders and the Order of judicial remand dated February 15, 2024 were not put to challenge by the petitioner.

“Every remand Order is a separate Order and without laying a challenge to the subsequent remand Order(s), the accused must fail in his attempt to seek a declaration that his custody is bad in law,” the high court had held.

It is against this Order that the Supreme Court is hearing the petition currently. Soren is seeking interim bail in view of the ongoing Lok Sabha elections.

Arguments and counter-arguments

ASG S.V. Raju, appearing for the ED, made three-fold preliminary submissions in opposition to the petition by Soren.

Firstly, he contended that Soren was arrested way before the announcement of Lok Sabha elections, hence the decision of the Supreme Court in the case of Arvind Kejriwal versus Directorate of Enforcement is inapplicable to his case.

Secondly, the ED contended that a special court has taken cognisance of the complaint filed by the ED against Soren. Thus, there is a prima facie case against Soren which is reflected in the Order taking cognisance which is a ‘judicial Order’.

Lastly, Raju contended on behalf of ED that Soren had also applied for bail under Section 45 of the PMLA, which was rejected by the special court. Raju informed the court that Soren has not challenged the rejection of bail.

Soren approached the high court challenging his arrest. The court concluded the hearing on February 28. But it did not deliver the judgment for two months.

Raju also cautioned the court that granting Soren interim bail on the grounds of elections would open a “Pandora’s box” as other jailed politicians will also try to take advantage of such an Order.

Responding to the preliminary objections, Sibal sought to make a distinction between proceedings under Section 19 and Section 45 of the PMLA Act. He argued that Section 45 has no connection to Section 19.

Section 19(1) of the PMLA confers power upon the ED to make an arrest provided that the officer, based on material in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under the PMLA.

Section 45, while excluding the applicability of the Code of Criminal Procedure (CrPC), mandates that no person accused of an offence under the PMLA shall be released on bail unless:

(i) The public prosecutor has been given an opportunity to oppose the application for such release.

(ii) Where the public prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that they are not guilty of such offence and that they are not likely to commit any offence while on bail.

Sibal argued that Soren had approached the special court for bail because the high court delayed the pronouncement of the Order on the petition challenging his arrest. He added that Soren had filed the bail petition without prejudice to his right to challenge the arrest.

Sibal referred to a decision of the Supreme Court in Pankaj Bansal versus Union of India, in which it was held that the court, while remanding a person arrested by the ED under Section 19(1), 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 earnest and with the “proper perspective”, the Order of remand would have to fail on that ground and the same cannot, by any stretch of the imagination, validate an unlawful arrest made under Section 19 of the Act of 2002.

Raju also cautioned the court that granting Soren interim bail on the grounds of elections would open a “Pandora’s box” as other jailed politicians will also try to take advantage of such an Order.

Sibal also referred to another observation made in Pankaj Bansal’s judgment while referring to a decision in Madhu Limaye and others in which it was observed that it would be necessary for the State to establish that, at the stage of remand, the magistrate directed detention in jail custody after applying his mind to all relevant matters and if the arrest suffered on the ground of violation of Article 22(1) of the Constitution, the Order of remand would not cure the constitutional infirmities attaching to such arrest.

In support of his contention, Sibal also referred to a recent decision of the Supreme Court in Prabir Purkayastha versus State of NCT of Delhi, in which the Supreme Court had invalidated the arrest of Newsclick founder Purkayasta holding that if the initial arrest is invalid, subsequent remand Orders, even if properly issued, will not validate it.

Justice Datta, however, interjected, saying the decision in Purkayastha is inapplicable in Soren’s case since in Purkayasta’s case grounds of arrest were not furnished to him.

Justice Datta referred to a decision of the Supreme Court in Serious Fraud Investigation Office versus Rahul Modi. In this case, the Supreme Court held that a person remanded to police or judicial custody by a judicial Order could not maintain a habeas corpus.

Sibal sought to argue that the decision in Rahul Modi’s case was in the context of a habeas corpus petition, and that the Soren case is not about a habeas corpus petition. Justice Datta, however, rejoined with the question: Should not the logic in Rahul Modi’s case apply to Soren’s case?

“Here, it is not habeas corpus. But you say you are in illegal custody. There are judicial Orders of cognisance of complaint against you,” Justice Datta observed.

Sibal argued that the court has to decide whether, once a person is arrested under Section 19 of the PMLA, he will never be able to file a bail petition. If he files a bail petition, then his challenge to the arrest under Section 19 will be extinguished.

During the hearing, Justice Datta also observed that if Soren had taken leave of the high court to file a bail petition, while the judgment was reserved, it would have been a different scenario.

Sibal argued that the court has to decide whether, once a person is arrested under Section 19 of the PMLA, he will never be able to file a bail petition. If he files a bail petition, then his challenge to the arrest under Section 19 will be extinguished.

Sibal, though, said a bail petition was filed because the judgment from the high court was not forthcoming, and the bail petition was filed without prejudice to the right of Soren regarding a challenge to his arrest. The Bench, however, seemed unimpressed with the argument.

On the allegations against Soren, Sibal argued that the illegal possession of the subject property is not ‘proceeds of crime’ generated from the predicate offence and the summons issued to the petitioner is without jurisdiction and, therefore, the entire proceeding taken thereunder stand vitiated.

Is Kejriwal’s case a precedent for Soren?

Recently, a Bench comprising Justice Khanna and Justice Datta ordered interim release of the chief minister of Delhi Arvind Kejriwal, till June 1 in the alleged ‘liquor scam’ case.

The Bench recognised the ongoing Lok Sabha elections as a crucial factor in releasing Kejriwal on interim bail.

In its short Order, the Bench noted that while examining the question of interim bail, the courts always take into consideration “peculiarities associated with the person in question and the surrounding circumstances”.

Though the Bench did not expressly spell out the peculiarities associated with Kejriwal and the surrounding circumstances, a holistic reading of the Order would indicate that they are: That Kejriwal is the chief minister of Delhi, founder of the Aam Aadmi Party (AAP) and that Delhi is slated to go for Lok Sabha voting on May 25.

The Bench felt constrained to pass the interim Order because the hearing on a petition filed by Kejriwal challenging the Delhi High Court’s Order upholding his arrest under the PMLA was not concluded. In the words of the Bench, the final decision would take time.

The Bench felt prompted by the ongoing Lok Sabha elections. It noted: “It is no gain saying (sic) that the general elections to Lok Sabha are the most significant and an important event this year, as it should be in a national election year. Between 650-700 million voters out of an electorate of about 970 million will cast their votes to elect the government of this country for the next five years. General elections supply the vis viva to a democracy.”

The Bench emphatically rejected the argument of the ED that granting interim bail to Kejriwal would be placing the politicians in a beneficial position compared to ordinary citizens of this country.

“While examining the question of grant of interim bail or release, the courts always take into consideration the peculiarities associated with the person in question and the surrounding circumstances. In fact, to ignore the same would be iniquitous and wrong,” the Bench held.

Justice Datta also observed that if Soren had taken leave of the high court to file a bail petition, while the judgment was reserved, it would have been a different scenario.

Kejriwal was arrested by the ED in the ‘liquor scam’ case on March 21, 2024, that is, after the announcement of Lok Sabha elections by the Election Commission of India (ECI). Kejriwal has been attributing mala fide on the part of the ED in arresting him days before the elections.

The Bench cited numerous precedents to reject the vehement plea of the ED not to grant interim bail. The Bench said that the power to grant interim bail is commonly exercised in several cases.

“Interim bail is granted in the facts of each case. This case is not an exception,” the Bench said.

The ED sought to argue that Kejriwal failed to appear before it despite the issuance of nine summons to him and that he only invited his arrest. Kejriwal was issued a summons for the first time in October 2023.

Interestingly, the Bench noted that Kejriwal not appearing before ED despite summons is a negative factor, it said there are several other facets such as Kejriwal being the chief minister of Delhi and a leader of one of the national parties. He does not have any criminal antecedents and he is not a threat to society.

The Bench ruled the pendency of the investigation since August 2022 as a negative factor against ED and a positive factor for the release of Kejriwal.

“Interim bail is granted in the facts of each case. This case is not an exception,” the Bench said.

The other factor that the Bench noted is that the legality and validity of the arrest is itself under challenge before it and that it has yet to finally pronounce on the same.

“The situation cannot be compared with the harvesting of crops or plea to look after business affairs. In this background, once the matter is subjudice and the questions relating to the legality of arrest are under consideration, a more holistic and libertarian view is justified, in the background that the 18th Lok Sabha general elections are being held,” the Bench ruled.

Soren was arrested on January 31. On this, ASG Raju has been arguing that he was arrested much before the announcement of Lok Sabha elections. Soren resigned as chief minister of Jharkhand moments before his arrest. He is nonetheless a senior leader of his party— Jharkhand Mukti Morcha— which is in power in Jharkhand.

Unlike Kejriwal, Soren did attend to ED’s summons. The special court took cognisance of the offence against Soren on April 4.

Unlike Kejriwal, Soren did attend to ED’s summons. The special court took cognisance of the offence against Soren on April 4.

In the alleged liquor scam, the special court took cognisance of the ED’s complaint in November 2022. Kejriwal was arrested only on March 21, 2024, that is, after the announcement of Lok Sabha elections by the ECI. On May 18, the ED filed a supplementary complaint naming Kejriwal in the liquor scam case.

While reserving the judgment on Kejriwal’s petition challenging his arrest under PMLA, the Supreme Court granted him liberty to the effect that notwithstanding the fact that the judgment is reserved and without prejudice to the rights and contentions of Kejriwal, he may, if advised, file an application for grant of bail.

It will be interesting to see whether the Supreme Court will distinguish Soren’s case from Kejriwal’s, with regard to interim relief, and for what reasons.