No Acts & Articles mentioned in this case
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 1 of 57
$~J-
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision : 15
th
May, 2025
+ W.P.(CRL) 2241/2024 & CRL.M.A. 21882/2024, CRL.M.A.
30909/2024
MANIDEEP MAGO .....Petitioner
Through: Mr. Vikram Chaudhri, Senior
Advocate with Mr. Raktim Gogoi,
Mr. Arveen Sekhon, Mr. Rishi
Sehgal, Mr. Shivam Pal Sharma, Mr.
Anuj Kr. And Mr. Ishaan Sahai,
Advocates.
versus
UNION OF INDIA & ORS. .....Respondents
Through: Mr. Amol Sinha, ASC (Criminal) for
the State with Mr. Kshitiz Garg, Mr.
Ashvini Kumar and Mr. Nitish
Dhawan, Advocates.
Insp. Pawan Kumar, AGS Crime
Branch.
Dr. B. Ramaswamy, CGSC for Union
of India.
Mr. Zoheb Hossain, Special Counsel
with Mr. Vivek Gurnani, Panel
Counsel, Mr. Pranjal Tripathi and Mr.
Kartik Sabharwal, Advocates for ED.
+ W.P.(CRL) 2391/2024 & CRL.M.A. 23401/2024
SANJAY SETHI .....Petitioner
Through: Mr. Raktim Gogoi, Mr. Arveen
Sekhon, Mr. Rishi Sehgal, Mr.
Shivam Pal Sharma, Mr. Anuj Kr.
And Mr. Ishaan Sahai, Advocates.
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 2 of 57
versus
UNION OF INDIA & ORS. .....Respondents
Through: Mr. Amol Sinha, ASC (Criminal) for
the State with Mr. Kshitiz Garg, Mr.
Ashvini Kumar and Mr. Nitish
Dhawan, Advocates.
Insp. Pawan Kumar, AGS Crime
Branch.
Mr. Amit Tiwari, CGSC with
Mr.Hussain Taqvi, GP, Mr. Ayush
Tanwar and Ms. Ayushi Srivastava,
Advocates for UOI.
Mr. Zoheb Hossain, Special Counsel
with Mr. Vivek Gurnani, Panel
Counsel, Mr. Pranjal Tripathi and Mr.
Kartik Sabharwal, Advocates for ED.
HON’BLE MR. JUSTICE ANUP JAIRAM BHAMBHANI
J U D G M E N T
ANUP JAIRAM BHAMBHANI J.
These petitions evince common questions of law arising from a
similar fact-situation and are therefore being taken-up together for
consideration. It may be noted however, that certain specific factual
aspects relating to the two petitioners may be different; but since
those aspects are not central to the decision of the legal issues
involved, the matters are amenable to disposal by way of this
common judgment.
2. The petitioners are challenging their arrests in case FIR No. 111/2024
dated 30.05.2024 registered under sections 120-B/420/468/467/
471/201 of the Indian Penal Code, 1860 („IPC‟) at P.S. : Crime
Branch, Delhi and ECIR No. ECIR/HIU-II/13/2024 dated 31.05.2024
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 3 of 57
registered by respondents Nos. 2 and 3/Directorate of Enforcement
(„ED‟) under the Prevention of Money Laundering Act, 2002
(„PMLA‟); as well as their consequent remand to judicial custody vide
various orders as detailed in their respective petitions.
3. The court has heard Mr. Vikram Chaudhri, learned senior counsel
appearing for the petitioner in W.P.(CRL) No. 2241/2024; Mr. Amol
Sinha, learned ASC (Criminal) appearing for the State; and Mr. Zoheb
Hossain and Mr. Vivek Gurnani, learned special counsel appearing for
the ED. As recorded in order dated 09.04.2025, Mr. Raktim Gogoi,
learned counsel appearing for the petitioner in W.P.(CRL)
No.2391/2024 has adopted the arguments made by Mr. Chaudhari.
4. The principal contention of the petitioners is that the search and
seizure operation carried-out by the ED at the petitioners‟ residential
premises and at the office premises of their companies under the
powers conferred upon them under section 37 of the Foreign
Exchange Management Act, 1999 („FEMA‟) and under section 132 of
the Income Tax Act, 1961 („IT Act‟) on 28.05.2024 and 29.05.2024,
could not have led to the registration of the subject FIR or the subject
ECIR. It is accordingly the petitioners‟ contention, that all actions
taken by the police pursuant to the subject FIR and by the ED in the
subject ECIR, including the petitioners‟ arrest, are illegal and deserve
to be set-aside.
BRIEF FACTS
5. The brief factual background necessary for deciding the present
petitions is set-out below :
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 4 of 57
5.1. The genesis of the case against the petitioners is a search and
seizure operation that was carried-out by the ED under section
37 of the FEMA at the premises of the petitioners on
28.05.2024, during which the ED also recorded their
statements. It is the ED‟s case that in the statements so
recorded, the petitioners admitted that they had indulged in
international hawala transactions to the tune of Rs.3,500 crore
inter-alia by fabricating documents to send outward
remittances to their companies in Hong Kong and Canada.
5.2. Furthermore, it is the ED‟s allegation that the petitioners have
admitted that cash was handed-over to them, which they
deposited in certain bank accounts, and thereafter made onward
remittances to foreign entities engaged in the trade of textile,
electronics, and opticals, through the petitioners‟ company, one
M/s Birfa IT Services (P) Limited („Birfa IT‟), by preparing
fake invoices for import of software from one M/s. Mozire
Technologies Limited.
5.3. The ED contends that a similar search operation was carried-
out at the office premises of Birfa IT on 28.05.2024, which led
to seizure of certain digital devices and documents. The ED
states that they concluded the search proceedings on
30.05.2024, which culminated in freezing of certain bank
accounts belonging to the petitioners and their companies under
the provisions of section 37 of the FEMA read with section 132
of the IT Act. Thereafter, the ED also proceeded to issue
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 5 of 57
provisional attachment orders on 30.05.2024, attaching 05
vehicles belonging to the petitioners and their companies.
5.4. Pertinently, on the very same day, i.e. 30.05.2024, the ED filed
a police complaint with P.S. : Crime Branch, Delhi, which led
to the registration of FIR No. 111/2024 dated 30.05.2024
against the petitioners, leading to their arrest on 31.05.2024 by
P.S.: Crime Branch; whereafter the petitioners were produced
before the learned Magistrate, who remanded them to police
custody till 02.06.2024.
5.5. Treating the offences alleged in the subject FIR as predicate or
scheduled offences, the ED then proceeded to register an
Economic Crime Information Report bearing No. ECIR/HIU-
II/13/2024 dated 31.05.2024 alleging commission of offences
under the PMLA.
5.6. Since the petitioners were lodged in jail upon their arrest in the
subject FIR, on 10.06.2024 the ED filed an application before
the learned Sessions Court seeking permission to examine the
petitioners in relation to the subject ECIR under section 50(2)
of the PMLA. The said application was allowed vide order
dated 11.06.2024 passed by the learned ASJ, Dwarka Courts,
New Delhi, whereupon the ED recorded the statements of
Manideep Mago and Sanjay Sethi in jail under section 50 of the
PMLA on 13.06.2024 and 02.07.2024 respectively. Thereupon
the ED proceeded to arrest the petitioners in the subject ECIR
on 14.06.2024 and 03.07.2024 respectively. The relevant
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 6 of 57
extracts of the grounds of arrest recorded by the ED are as
follows:
Grounds of Arrest for Manideep Mago arrested on
14.06.2024
“Statement of Manideep Mago was recorded u/s 50
of PMLA, 2002 on 13/06/24 in Tihar Jail, New Delhi.
However, during, the recording of his statement, he gave
evasive replies contrary to the evidences gathered and
statements of his key employees recorded so far. He has thus
been concealing the material information and non-
cooperating so as to frustrate the proceedings under PMLA.
“Shri Manideep Mago has not cooperated with the
investigation and has failed to provide the true relevant facts
i.e. from whom and how they have collected cash and who
were the ultimate beneficiary of the forex remitted by them
abroad using various illegal processes.”
Grounds of Arrest for Sanjay Sethi arrested on 03.07.2024
“Statement of Sanjay Sethi was recorded u/s 50 of
PMLA, 2002 on 02.07.2024 in Tihar Jail, New Delhi.
However, during, the recording of his statement, he gave
evasive replies contrary to the evidences gathered and
statement of employees of Manideep Mago recorded so far.
He has thus been concealing the material information and
non-cooperating so as to frustrate the proceedings under
PMLA.
“Shri Sanjay Sethi has not cooperated with the
investigation and has failed to provide the true relevant facts
i.e. from whom and how they have collected cash and who
were the ultimate beneficiary of the forex remitted by them
abroad using various illegal processes.”
5.7. The ED then filed an application before the learned Sessions
Court on 15.06.2024 seeking the production and remand of the
petitioner Manideep Mago, which was allowed vide order dated
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 7 of 57
18.06.2024 made by the learned ASJ, Dwarka Courts, New
Delhi, and the said petitioner was remanded to ED custody
from 18.06.2024 till 23.06.2024; which custody was
subsequently extended for another 05 days till 28.06.2024; after
which he was remanded to judicial custody vide order dated
28.06.2024 till 12.07.2024, where he continues to be till date.
5.8. Insofar as the petitioner Sanjay Sethi is concerned, the ED filed
an application before the learned Sessions Court on 04.07.2024
seeking his production and remand, which was allowed vide
order dated 05.07.2024 made by the learned ASJ, Dwarka
Courts, New Delhi; and the said petitioner was remanded to ED
custody till 11.07.2024; after which he was remanded to
judicial custody vide order dated 11.07.2024, where he
continues to be till date.
PETITIONERS’ SUBMISSIONS
6. The principal grounds raised by the petitioners in challenge to their
arrest by the ED in the subject ECIR and by the Delhi Police in the
subject FIR, are the following :
6.1. Firstly, the petitioners contend, that at worst, their acts and
omissions called into question by the ED amount to violation of
the provisions of FEMA, which statute contemplates only civil
penalty for those infractions; and since that is so, the
underlying actions of such acts and omissions also cannot be
punished as criminal offences. The essence of the argument is
that FEMA was brought-in to replace Foreign Exchange
Regulation Act, 1973 („FERA‟) with the objective of
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 8 of 57
decriminalizing acts and omissions relating to foreign exchange
transactions; and therefore, an act or omission that violates
FEMA cannot be subject matter of criminal action by way of an
FIR, since that would in effect bring-back the criminal
provisions of FERA through the backdoor.
6.2. Secondly, it is the petitioners‟ submission that registration of
the subject FIR is bad in law, inasmuch as no preliminary
enquiry was carried-out by the police prior to registering the
subject FIR and the allegations in the subject FIR are squarely
covered by the provisions of FEMA. Also, that the subject FIR
proceeds solely on the search and seizure operations conducted
by the ED under FEMA; and the alleged confessions of the
petitioners recorded under section 37 FEMA are inadmissible in
view of the law laid down in K.T.M.S. Mohd. & Anr. vs. Union
of India.
1
6.3. Thirdly, it is argued that the petitioners‟ arrest by the police in
the subject FIR is bad in law since no „grounds of arrest‟ were
served upon the petitioners in writing, which violates the
mandate of the Supreme Court in Prabir Purkayastha vs. State
(NCT of Delhi);
2
and furthermore, the petitioners‟ arrest by the
Delhi Police on 31.05.2024 did not fulfil the test of „necessity
to arrest‟, which is now a pre-requisite for making any arrest as
1
(1992) 3 SCC 178
2
2024 SCC OnLine SC 934
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 9 of 57
held by the Supreme Court in Arvind Kejriwal vs. Directorate
of Enforcement.
3
6.4. Fourthly, the petitioners contend that their arrest under PMLA
is also bad in law, since it was made against the postulates of
section 19(1) of the PMLA and no „reasons to believe‟ were
furnished to the petitioners by the ED. It is contended that the
petitioners were arrested at a nascent stage of the proceedings,
when no conclusive material was available with the ED and the
required satisfaction for making the arrest could not have been
fulfilled. It is also contended that in making the arrest, the ED
did not comply with the requirements of section 19(2) PMLA
read with Arrest Rules, 2005 as mandated by the decision of the
Punjab & Haryana High Court in Dilbag Singh vs. Union of
India & Anr.
4
It is pointed-out that the special leave petition
bearing SLP (Crl.) No. 4044/2024 titled Directorate of
Enforcement & Anr. vs. Dilbag Singh @ Dilbag Sandhu, filed
against the decision of the High Court in Dilbag Singh stands
dismissed as withdrawn vide order dated 01.08.2024 passed by
the Supreme Court. It is further argued that merely the
allegation that the petitioners did not cooperate in response to
summons issued under section 50 PMLA, would not render
them liable to be arrested under section 19 PMLA.
3
(2025) 2 SCC 248
4
2024 SCC OnLine P&H 2705
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 10 of 57
7. In essence, the argument is that FERA which was enacted in 1973,
was repealed by Parliament since at the relevant time the Indian
economy was undergoing liberalization, privatization and
globalization and the Legislature felt the need for relaxing control
over the foreign exchange market. To this end, in its 11
th
Report
presented to the Lok Sabha on 23.12.1998, the Standing Committee
on Finance (1998-99) made the following observations :
“9. … … The liability for contravention of an offence under
FEMA has been made civil as compared to the criminal one under
FERA. The Enforcement Directorate has been entrusted with the
same powers as are conferred on the Income Tax authorities under
Chapter XIII of the Income Tax Act, 1961. Certain onerous
provisions of FERA, 1973 viz. preparation/attempts to contravene
any provisions which were deemed to be contraventions under
Section 64 and provisions relating to burden of proof have been
deleted. A new provision which is an improvement over FERA is
with regard to the powers of compounding the contraventions. …
…”
8. The petitioners contend that the intention of the Legislature in
repealing FERA was clear, namely, that no act or omission relating to
a foreign exchange transaction was to attract any element of
criminality; and that therefore, based on the ED‟s allegations of
violation of the provisions of FEMA, no FIR could at all have been
registered against the petitioners.
9. Dilating on their challenge to the registration of the subject FIR, the
petitioners contend that the subject FIR has come to be registered
solely on the basis of the so-called „investigation‟ conducted by ED
under FEMA. It is their contention that the acts and omissions that
form the basis of the subject FIR are all an intrinsic part of the alleged
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 11 of 57
FEMA violations. In this regard, attention of the court is drawn to
following specific allegations in the subject FIR, to point-out that the
allegations in the subject FIR proceed only on the basis of the search
and seizure operation conducted by the ED :
“… …Credible information was received in ED regarding
highly suspect crypto-currency related transactions and large
payout in the Bank accounts of M/s. Birfa IT Services Private
Limited having office at C1/107, Janakpuri, New Delhi-110058 from
ZEBPAY crypto exchange. On this basis, investigation in terms of
Foreign Exchange Management Act 1999 was initiated by ED.
Analysis of bank accounts of M/s. Birfa IT Services Private Limited
& related entities revealed that mammoth amount of cash of around
Rs 1300/- Crores as detailed below was illegally deposited in the
bank account of Oested Solutions {having office at 301, Top Floor,
Plot No.2 Aggarwal Tower, Sector-5, Dwarka, New Delhi-110058}
on the pretext of fabricated invoices. … … During search, a lot of
incriminating documents regarding forgery & cheating were
recovered including invoices from his house at C-2/116, Janakpuri,
Delhi. ED investigation has revealed his modus operandi which is
explained in brief here :- Mr Manideep Mago was involved in
conducted large ticket international hawala operations for Indian
Importers etc who need to make compensatory payments to
Exporters in China, HongKong etc. In conspiracy with one Mr
Sanjay Sethi, his wife, his employees, few Bank Officials, hatched a
well planned conspiracy. He deposited cash in his Bank accounts
with active connivance of unknown Bank officials. In his firm, in
order to cheat the Indian authorities, he started falsely claiming that
thousands of Indian customers were buying Cloud Mining Hash
value on Hong Kong based Servers (of his WoS in Hong Kong) and
all of them were paying him a sum less than Rs 50000 each. He
claimed that he did not collect their KYC and created bogus receipts
and also generated fabricated entries in his Tally Software. He made
this elaborate arrangement and created fabricated entries so that he
could show that he was doing genuine crypto-mining business.
Further, all the pooled money in his Bank accounts was remitted to
the Bank accounts of his M/s Mozire Technologies Limited Hong
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 12 of 57
Kong on the pretext of import of software services. … … On being
asked the receipt of money from thousands of alleged Indian clients,
Manideep Mago stated that he had sold software testing tools to
different individuals through online mode and received amount in
cash. It was also found that, such invoices were raised in interval of
every 2-3 days and all payments were received in cash only. It
further revealed that, Manideep Mago didn‟t have any details of
persons to whom these Penetration Testing Tool were sold. He
further stated that, the tool kit includes Kali Linux and E-Book
written by him (Manideep) as told by him. As per his version, he
first used to receive cash payment from buyers at his office, then
allowed the buyers to download the tool through WORDPRESS
WEBSITE by enabling download link after receiving payment. He
failed to give any demo or justification as to how he used to send
testing tool to so many individual buyers in a day via this means. …
… Mr Manideep Mago has created bogus receipt entries in the
name of 60000-70000 non-existing individuals, to justify deposit of
cash in his accounts. i. It is further submitted that, during search
operation unused Notary stamps (yellow colour) was found from
house of Mr & Mrs Manideep bearing stamp impression of
“HARPINDER SINGH BOORA NOTARY PUBLIC ONTARIO”. It is
pertinent to mention herein that the said stamp impression was also
found on invoice dated 15.03.2023 of Absax Technologies Private
Limited at C1/107, Basement, Janakpuri, New Delhi-110058 having
GSTIN/UIN: 07AAXCA7004N1Z4.. It shows that, alleged person is
creating fake and fabricated documents in India by using the stamps
of Notary based in Canada. i. (sic) Further, during search at house
of Manideep Mago several bogus commercial invoices issued by
Mozire Technologies to Birfa IT Services Private Limited were found
wherein Cryptocurrency Mining hardware was sold by Mozire
Technologies to Birfa IT Services. … … Further, there is a round
stamp of MOZIRE TECHNOLOGIES LIMITED HONG KONG and
signatures of Jinag Fan (Manager). There are total 18 such Invoices
of different dates different dates and invoice numbers, wherein 683
Whatsminer MicroBT M30s, 997 innosillicon T2+57T 1055
BITMAIN Antminer T17 and 3022 AMD radeon RX580 as well as
other hardware were sold to Birfa IT. Further, Manideep Mago told
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 13 of 57
that these hardwares never came to India. Further, on the said
receipts all the signatures of the Manager are exactly superimposing
on each other which points towards computer generated fake
receipts. Thus, Manideep Mago has indulged in fabricating the
signatures of the Manager. No address of the place of Delivery is
given apart from Shanghai, China. He also failed to provide any
proof of payment transaction with Chinese Entity where shipment
was delivered. The above invoice along with other invoices were
found to be fake and fabricated as the said items were never
delivered to India or to China, they were created just to do money
laundering and hawala operations. The real purpose of this hawala
could be to facilitate under-valued imports OR some other sinister
motive. Outward remittances have been sent illegally to Hong Kong
and Canada. … … Further this invoice bears a stamp having
following description:- NOTARY GOVT OF INDIA G.P. SINGH
South West Delhi Regd. No. 16965, Register Entry number 2-C/2022
Date 28 MAR 2022 Title of Documenting genesis Invoice.
ATTESTED Notary Public, Delhi 28 MAR 2022. This also bears
signatures of above Notary Public. There are several other stamps
of different of different dates in this document. It was found that, the
document itself was generated on 15-03-2023 and the notary entry
mentioned is of 28 march 2022. The anti dated notarization of
documents points towards it being forged and fabricated.
Confession by Mr Manideep Mago: During the recording of the
statements u/s 37 of FEMA r/w Sec 132 IT. Act, Mr Manideep has
admitted that his wife is also a Director in his entities. He finally
admitted that he has indulged in international hawala of Rs 3500
Crore. He admitted to creating fabricated documents to facilitate the
hawala and cheat the system. He is yet to explain the source of
crypto worth Rs 1850 Crore which was credited into his Zebpay
Wallet from Binance Wallets. It is also noticed that he was tipped of
ED enquiries against him by a Canara Bank (Mayapuri Branch)
Official and hence, had burnt many papers and changed his phone
to destroy evidence. He has admitted while doing hawala, he used to
delay the hawala payments for a week or so and use that money for
crypto-mining investment He has admittedly earned substantial
commission of around Rs 40 Crore and has invested in real estate
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 14 of 57
and bought 5 hi-end cars. … … ED is already investigating the
foreign remittances under FEMA 1999 which is a civil offence. But
since it is prima facie clear that Manideep Mago, his wife and Co-
Director of his companies, Mr Sanjay Sethi (who provided the funds
for hawala), unnamed Bank Officials, and his business entities and
their staff are involved in cognizable predicate offences, hence, this
complaint is being filed with a prayer to register a FIR and
investigate this entire conspiracy. … …”
10. In support of the aforesaid grounds challenging their arrest, the
petitioners have referred to the following judicial precedents :
10.1. On the contention that FEMA contemplates only civil action,
and that upon repeal of FERA and enactment of FEMA, no act
or omission falling within the ambit of FEMA can attract any
criminality, the petitioners have placed reliance on the decision
of Supreme Court in Dropti Devi &Anr. vs. Union of India &
Ors.
5
The petitioners also contend that the provisions of FEMA
must be interpreted by applying the „doctrine of mischief‟ or
the „mischief rule‟; and to support this contention the
petitioners have cited the verdicts of the Supreme Court in
Attorney General for India vs Satish &Anr.
6
, Sushila N.
Rungta vs. Tax Recovery Officer-16(2) & Ors.
7
and K.S.
Paripoornan vs. State of Kerala & Ors.
8
10.2. In support of their contention that the subject FIR could never
have been registered, the petitioners have placed reliance on
5
(2012) 7 SCC 499 at paras 66, 67 & 68
6
(2022) 5 SCC 545 at para 63
7
(2019) 11 SCC 795 at paras 7-8
8
AIR 1995 SC 1012 at para 87
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 15 of 57
Lalita Kumari vs. Government of Uttar Pradesh & Ors.
9
to
argue that since the present case concerns what are essentially
civil wrongs being enquired into by the ED under FEMA, it
was mandatory for the police to do a preliminary enquiry,
which they did not do. The petitioners have also relied upon
certain subsequent judgments in Nirmal Singh Kahlon vs.
State of Punjab & Ors.,
10
Yashwant Singh & Ors. vs. Central
Bureau of Investigation & Anr.,
11
Central Bureau of
Investigation & Anr. vs. Thommandru Hannah Vijayalakshmi
& Anr.,
12
Kailash Vijayvargiya vs Rajlakshmi Chaudhuri &
Ors.
13
and Rana Ram vs. State of Rajasthan & Anr.
14
10.3. The petitioners have cited the judgment of the Supreme Court
in K.T.M.S. Mohd.to argue that the alleged confession of the
petitioners recorded by the ED under section 37 of the FEMA is
inadmissible in evidence; and that statements recorded under
one law can only be used for purposes of the law under which
they are recorded and cannot be used to initiate proceedings
under any other law. The petitioners have also drawn attention
to the most recent decision of the Supreme Court in Arvind
9
(2014) 2 SCC 1 at paras 119 & 120
10
(2009) 1 SCC 441 at para 30
11
(2020) 2 SCC 338 at paras 108, 110, 112 & 114
12
(2021) 18 SCC 135 at para 26
13
(2023) 14 SCC 1 at para 60
14
2024:RJ-JD:33404 at paras 24 & 25
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 16 of 57
Kejriwal
15
to stress that guilt can only be established on the
basis of admissible evidence and not on inadmissible evidence.
10.4. In support of their third contention, namely that the petitioners‟
arrest by P.S. : Crime Branch is illegal, the petitioners have
placed reliance on the celebrated judgment of the Supreme
Court in Prabir Purkayastha, to submit that the grounds of
arrest were never served upon the petitioners in writing, which
requirement has been held to be sacrosanct. The petitioners
have highlighted the fact that in the said verdict, the Supreme
Court has held that „reasons for arrest‟ are different and distinct
from „grounds of arrest‟ and communicating the grounds of
arrest in writing to an arrestee is mandatory, failing which the
arrest is rendered illegal.
10.5. To substantiate their contention that their arrest under section
19 of the PMLA is also bad in law, the petitioners have placed
reliance on the decision of the Supreme Court in V. Senthil
Balaji vs. State & Ors.
16
as well as on the decision of a Co-
ordinate Bench of the Punjab & Haryana High Court in Dilbag
Singh,
17
where it has been held that compliance with section 19,
including Section 19(2), is mandatory and brooks no exception.
It has been argued that the law requires that the Magistrate
before whom an arrestee is produced must satisfy himself as
regards compliance with the safeguards mandated in section
15
cf. paras 47, 56-57, & 61-62
16
(2024) 3 SCC 51
17
cf. para 60
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 17 of 57
19(2) of the PMLA, which postulates that immediately after
arresting an accused, the concerned officer must forward a copy
of the order alongwith the material in his possession to the
adjudicating authority in a sealed envelope in the prescribed
manner, which the adjudicating authority is required to retain
for such period as may be prescribed. It is submitted that none
of which was done in the present case. It is pointed-out that a
perusal of remand order dated 18.06.2024 passed by the learned
Vacation Judge, ASJ (FTSC)(POCSO), Dwarka Courts, New
Delhi and arrest order dated 04.06.2024 recorded by the ED
arresting the petitioner/Manideep Mago also carry no reference
to compliance with the requirements of section 19(2) of the
PMLA. It is further submitted that the requirement of
complying with the provisions of section 19(2) of the PMLA
has also been emphasized by the Supreme Court in its decisions
in Ram Kishor Arora vs. Directorate of Enforcement
18
and
Vijay Madanlal Choudhary & Ors. vs. Union of India &
Ors.
19
It has been argued that the petitioners‟ arrest is vitiated
since section 19(2) of the PMLA was not complied-with by the
ED.
10.6. In support of their proposition that mere non-cooperation of a
witness in response to summons issued under section 50 PMLA
does not render a noticee liable for arrest under section 19, the
18
2023 SCC OnLine SC 1682 at para 21
19
2022 SCC OnLine SC 929 at para 322
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 18 of 57
petitioners have drawn attention to the decision of Supreme
Court in Vijay Madanlal Choudhary,
20
Pankaj Bansal vs.
Union of India & Ors.
21
and Prem Prakash vs. Union of
India.
22
ENFORCEMENT DIRECTORATE’S SUBMISSIONS
11. On behalf of the respondents, the ED has defended the arrests made in
the subject ECIR, and the Delhi Police have defended the arrests
made in the subject FIR. It may be noted that there is little
contestation, if any, insofar as the factual scenario is concerned; and
the respondents are essentially contesting the legal propositions
argued on behalf of the petitioners.
12. It is the ED‟s allegation that between 2016 and 2019, a sum of about
Rs. 2,886 crores was deposited in various bank accounts belonging to
the petitioners and/or their business entities. The ED has sought to
clarify, that according to them, on point of fact, this money was part
of the international hawala operations that the petitioners were
conducting for Indian importers and others, to facilitate payments that
were to be made to exporters in China, Hong Kong and other
countries.
13. It is also the ED‟s case that a total of about Rs. 4,817 crores was
remitted to foreign countries against bogus and fabricated invoices
raised by foreign companies. The ED has set-out the names of several
20
cf. paras 431 & 449
21
(2024) 7 SCC 576 at paras 11 & 28
22
(2024) 9 SCC 787 at paras 22, 27, 28, 29, 30, 31, 32, 33 & 34
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 19 of 57
companies and entities, which they claim, acted as escrow and sub-
escrow service providers to foreign entities owned and controlled by
the petitioners and their friends, the allegation being that foreign
companies were fictitiously shown to have provided IT-related
services (such as leasing and sale of software etc.) to fictitious clients
based in India, through various entities owned and controlled by the
petitioners; and payment towards fictitious sales and services were
shown to have been made by the Indian clients in cash, to justify the
collection of cash by the petitioners for onward international hawala
transactions. The allegation is that crypto-payouts were also shown by
fictitious Indian clients for receiving various services from foreign
entities.
14. It is the ED‟s contention that the documents submitted by the
petitioners to various banks for sending outward foreign remittances,
were found to be based on bogus and fabricated invoices, raised upon
fictitious clients in India, using fictitious names and e-mail IDs, etc. It
is the ED‟s case that in the course of their investigation, they have
recorded statements of several witnesses under section 50 PMLA, all
of whom have said that they were directed by the petitioners to collect
huge amounts of cash from various places and that invoices were
drawn-up by them in India to justify the cash so collected, for onward
international hawala transactions.
15. To answer the legal propositions canvassed on behalf of the
petitioners, the ED has contended as follows :
15.1. Insofar as the petitioners‟ contention that any act or omission
covered by FEMA cannot be the basis of registering a criminal
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 20 of 57
case, the ED contends that a bare perusal of the provisions of
FEMA makes it clear that the said statute only penalises
violations pertaining to foreign exchange transactions; and does
not pertain to any criminal offences that may be committed in
the process of making foreign exchange transactions, such as
cheating, forgery, destruction of evidence etc.
15.2. It has been pointed-out that there is no provision in FEMA
which ousts the application of other laws or the jurisdiction of
other law enforcement agencies to initiate action for offences
under those laws, if such offences are made-out in the process
of making foreign exchange transactions. The ED has argued
that if the petitioner‟s contention – viz. that after enactment of
FEMA, any criminal offence committed in the course of
making a foreign exchange stands nullified – is to be accepted,
it would lead to „implied repeal‟ of the IPC; and grant of
immunity from prosecution to a person for any offence under
the IPC merely because the offence is committed while making
a foreign exchange transaction.
15.3. It has also been argued that the petitioners have failed to show
how the allegations made in the subject FIR, which constitute
cognizable offences under the IPC, are covered within the
ambit of FEMA, to say that neither forgery nor cheating can be
prosecuted under FEMA.
15.4. It has been submitted that it is settled law, that the same set of
acts may give a rise to an offence under different statutes,
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 21 of 57
which is the case here.
23
It has been argued that it is also well-
settled that „money laundering‟ is an independent offence, as
has been held in several cases including Vijay Madanlal
Choudhary. It has been further submitted that the petitioners‟
argument that since FEMA is a special statute, it would prevail
over the IPC, also deserves to be rejected, since in a
comparable situation a violation of the provisions of the IT Act,
which is a special law, commonly leads to offences under the
IPC e.g., cheating under section 420 of the IPC.
24
It has also
been argued, that in a case under section 105 of the Insurance
Act, 1938, the Supreme Court has held that a prosecution under
section 409 IPC can be initiated simultaneously based on the
same set of facts.
25
15.5. The ED has also argued, that assuming for sake of argument
that the enquiry under FEMA is closed at some later stage, that
would have no bearing on the criminal proceedings initiated
against the petitioners in the subject FIR, since the proceedings
under FEMA are of a civil nature, though arising from the same
transaction. Parallel in this behalf is drawn from a well-settled
principle that exoneration in a disciplinary enquiry, which is
civil in nature, will not preclude or affect any criminal
proceedings arising from the same set of allegations.
26
23
Monica Bedi vs. State of Andhra Pradesh, (2011) 1 SCC 284
24
Ishwarlal Girdharilal Parekh vs. State of Maharashtra & Ors., AIR 1969 SC 40
25
State of Bombay vs. S.L. Apte & Anr., AIR 1961 SC 578 at paras 14 & 17
26
State (NCT of Delhi) vs. Ajay Kumar Tyagi, (2012) 9 SCC 685
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 22 of 57
15.6. The ED has also submitted that the principal argument, viz. that
once FEMA was enacted no criminal prosecution would lie in
relation to foreign exchange transactions, has been rejected by
the Supreme Court in Union of India & Anr. vs. Venkateshan
S. & Anr.
27
on a comparable set of facts relating to detention
under the Conservation of Foreign Exchange and Prevention of
Smuggling Activities Act, 1974 („COFEPOSA‟). Reliance in
support of this principle has also been placed on the decision of
the Supreme Court in M. Karunanidhi vs. Union of India &
Anr.
28
15.7. As regards the argument of non-compliance with section 19(1)
PMLA, it is the ED‟s contention that the mandate of the
Supreme Court in Arvind Kejriwal, viz. the requirement to
supply „reasons to believe‟ to an arrestee under section 19, only
came into effect from the date of pronouncement of the said
verdict i.e., on 12.07.2024; whereas in the present case the
petitioners were arrested by the ED on 14.06.2024 and
03.07.2024. Pertinently, it is pointed-out that though in Arvind
Kejriwal
29
reasons to believe were not supplied to the arrestee,
yet the Supreme Court upheld his arrest.
15.8. It has been submitted that the petitioners were arrested in
compliance with the prevailing law of the land as of their dates
of arrest; and a Co-ordinate Bench of this court in Arvind
27
(2002) 5 SCC 285 at para 12
28
(1979) 3 SCC 431 at para 35
29
cf. paras 49 and 65
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 23 of 57
Dham vs. Union of India
30
has held that for arrests made prior
to 12.07.2024, there was no requirement for the ED to supply
the reasons to believe to an arrestee; and special leave petition
bearing SLP(Crl.) No.17357/2024 filed against Arvind Dham
stands dismissed by the Supreme Court vide order dated
13.12.2024.
15.9. The ED has further contended that section 19 of the PMLA has
been duly complied-with in the present case, since copies of the
arrest orders alongwith the material in their possession was
immediately sent to the adjudicating authority via e-mail on the
very same day the petitioner Manideep Mago was arrested i.e.,
on 14.06.2024; but since the next 03 days were non-working
days and the office of the adjudicating authority was closed, a
hard-copy of the same was forwarded to the adjudicating
authority on 18.06.2024 against due acknowledgement. Insofar
as petitioner Sanjay Sethi is concerned, the ED has said in their
reply that consequent upon his arrest on 03.07.2024, they
immediately informed the adjudicating authority and sent
copies of the arrest orders and other material on the very next
day i.e., on 04.07.2024. Furthermore, the ED has argued that
vide orders dated 18.06.2024 and 05.07.2024, the learned
Sessions Court has also recorded its satisfaction as to
compliance with section 19(2). If any doubt was to remain as to
the forwarding of the arrest orders and other material to the
30
2024 SCC OnLine Del 8490
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 24 of 57
adjudicating authority within the timeframe prescribed in law,
the ED has cited section 10 of the General Clauses Act 1897
(„GC Act‟), to submit that if the law requires any statutory
obligation to be fulfilled within a certain timeframe but an
office is closed on certain days, those days can be excluded, if
such act is done on the very next day following thereafter on
which day the office is open.
31
It has been argued that no law
requires a person to do what is impossible.
32
It has been
pointed-out that in Dilbag Singh @ Dilbag Sandhu vs. Union
of India & Ors. and connected matters,
33
where a provisional
attachment order was issued under section 5(2) of the PMLA on
a Friday and the order alongwith material in possession of the
concerned officer was submitted to the adjudicating authority
on the following Monday, the Punjab & Haryana High Court
has rejected the argument that the arrest made in that context
was in breach of section 19(2) of the PMLA.
15.10. Insofar as the contention raised that the petitioners‟ confession
recorded under section 37 FEMA is inadmissible in evidence
and could not have been the basis of registration of the subject
FIR, the ED has responded to say that a perusal of the subject
FIR would show that it is based on several documents and
material and not merely on the confessional statements of the
petitioners. It has been pointed-out that in the course of their
31
H.H. Raja Harinder Singh vs. S. Karnail Singh & Ors., AIR 1957 SC 271
32
State of Rajasthan & Anr. vs. Shamsher Singh, 1985 SCC (Cri) 421 at para 10
33
2024 SCC OnLine P&H 15453
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 25 of 57
search and seizure operations, the ED recovered bogus
invoices, unused notary stamps, and such other material and
evidence from the petitioners‟ premises, all of which have
formed the basis of the subject FIR.
15.11. The ED has also argued that in Lalita Kumari, the Supreme
Court has held that considerations such as whether information
given is genuine or credible, or whether it has been given
falsely, are not relevant at the stage of registration of an FIR.
Furthermore, it has been contended that there is no absolute bar
on statements recorded in certain proceedings being used in
another proceedings under another statute;
34
and that in any
case, impropriety in obtaining evidence will not affect its
admissibility, if it is otherwise relevant.
35
Reliance in support of
this submission has also been placed on the decision of the
Supreme Court in R.M. Malkani vs. State of Maharashtra.
36
15.12. It has also been pointed-out that those parts of the petitioners‟
statements which amount to „admissions‟ but are not
„confessions‟ can in any case be used in terms of the law laid
down in Pakala Narayana Swami vs. King-Emperor.
37
Additionally, it has been argued that in Vijay Madanlal
Choudhary
38
the Supreme Court has held that ED officers are
34
Vinod M. Chitalia vs. Union of India, 2012 SCC OnLine Bom 476 at para 21
35
Pooran Mal vs. Director of Inspection (Investigation) & Ors., (1974) 1 SCC 345 at paras 23-24
36
(1973) 1 SCC 471
37
(1938-39) 43 CWN 473 at page 481
38
cf. para 449
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 26 of 57
not police officers and that therefore a confessional statement
made to them is admissible in evidence.
15.13. Responding to the allegation that non-cooperation in an
investigation is no ground to arrest an accused, and in the
present case there was no necessity to arrest, the ED has
submitted that it was necessary to arrest the petitioners for
proper investigation of the offence. It has been argued that in
Pankaj Bansal
39
the Supreme Court has only said that mere
non-cooperation would not be enough to arrest a person under
section 19 PMLA; but non-cooperation can certainly form part
of the necessity to arrest.
40
It has been pointed-out that arrest is
part of the process of investigation and that it has been so held
inter-alia in Vijay Madanlal Choudhary
41
and in V. Senthil
Balaji.
42
15.14. The ED has also submitted, that all other things apart, in Vijay
Madanlal Choudhary
43
the Supreme Court has held that an
ECIR is not a statutory document but merely an internal
document and cannot therefore be quashed. The submission is
that, in law, there is no need to formally register an ECIR and
even the absence of an ECIR does not come in the way of the
ED commencing an enquiry for any violation of PMLA. It is
39
cf. para 33
40
P. Chidambaram vs. Directorate of Enforcement, (2019) 9 SCC 24.
41
cf. para 324
42
cf. paras 48 & 49
43
cf. paras 290, 431, 457 & 461
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 27 of 57
therefore the submission, that the prayer seeking quashing of
the ECIR is of no consequence and is therefore not
maintainable.
15.15. As regards the contention that no preliminary enquiry was
conducted prior to registration of the subject FIR, the ED has
submitted that a preliminary enquiry is required to be
conducted before registering an FIR only for the limited
purpose of ascertaining whether a cognizable offence is
disclosed; and in Lalita Kumari
44
it has been held that if
information discloses commission of a cognizable offence, then
the registration of an FIR is mandatory.
15.16. It has also been submitted, that in fact, vide letter dated
12.10.2015 issued by the Ministry of Home Affairs regarding
“Advisory on no discrimination in compulsory registration of
FIRs”, the Ministry has issued clear instructions for
compulsory registration of an FIR on receipt of information
disclosing a cognizable offence. It has accordingly been argued
that a preliminary enquiry is not necessary in relation to the
offences of forgery and cheating; and in any case, it has been
held that an FIR does not stand vitiated merely because a
preliminary enquiry was not conducted.
45
15.17. It has further been argued that the petitioners‟ contention that
the subject FIR was registered only so that a scheduled offence
44
cf. paras 119-120
45
State of Telangana vs. Managipet, (2019) 19 SCC 87 at paras 32 & 34 and Thommandru Hannah
Vijayalakshmi at para 2
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 28 of 57
became available for the ED to invoke its powers under PMLA,
is also misplaced and deserves to be rejected, since the search
and seizure operations conducted under FEMA led to recovery
of material that disclosed the commission of cognizable
offences in addition to FEMA violations.
15.18. The ED has contended, that as per inputs received from their
intelligence department, the petitioners and their companies
have sold very large amounts of crypto assets worth about
Rs.1,858 crores on an Indian crypto exchange; that Rs. 1,300
crores were deposited in the bank account of one of the
proprietorship concerns of one of the petitioners; and that initial
investigation has revealed that though money was deposited
into the bank account, no corresponding payments were made
for purchasing those crypto currencies in India. In this context,
the ED has argued that sharing of information between two
government departments – in this case the ED and the Delhi
Police – is an established and well-recognized norm within the
framework of the law, and that therefore, the ED has operated
within the law in sharing with the Delhi Police information they
received during the search and seizure operations conducted on
the petitioners‟ premises.
DELHI POLICE’S SUBMISSIONS
16. In addition to adopting the arguments made on behalf of the ED, the
Crime Branch of the Delhi Police have supplemented those
submissions in the following manner :
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 29 of 57
16.1. It has been argued that it is settled law that an act or omission
can be treated as a penal offence under two or more
enactments; and the only proscription in law is that a person
cannot be punished twice for the same offence. In this behalf
reference has been made to the provisions of section 26 of the
GC Act, to argue that where an act or omission constitutes an
offence under the provisions of more than one enactment, the
offender is liable to be prosecuted and punished under either, or
any, of those enactments; but an offender cannot be punished
twice for the same offence. In support to this submission the
Delhi Police have drawn attention to the verdicts of the
Supreme Court in State of Bihar vs. Murad Ali Khan & Ors.
46
and T.S. Baliah vs. T.S. Rangachari
47
in support of this
submission. It has been argued that section 26 of the GC Act
has been interpreted to mean that there is no bar to trying and
even convicting an offender under one or more enactments; and
the only prohibition is against punishing an offender twice for
the same offence.
16.2. It has accordingly been argued that merely because one statute
(in this case, FEMA) treats an act as a civil wrong does not
preclude another statute (in this case, IPC) treating the same act
as a criminal offence. By way of an example, it has been
submitted that in case of dishonour of a cheque, both civil and
46
(1988) 4 SCC 655 at para 30
47
1968 SCC OnLine SC 68
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 30 of 57
criminal liability arises – and the civil liability can be invoked
by filing a civil suit for recovery of money; while the criminal
liability can be raised by way of a criminal complaint seeking
punishment under section 138 of the Negotiable Instruments
Act, 1881.
16.3. The Delhi Police have also placed reliance on the decision of
the Supreme court in State of Maharashtra & Anr. vs. Sayyed
Hassan Sayyed Subhan & Ors.,
48
to submit that while dealing
with the same question under the Food Safety and Standards
Act 2006 („FSS Act‟), the Supreme Court has held that non-
compliance with the provisions of section 55 of the FSS Act
can also be subject matter of prosecution under the IPC; and
that action can be initiated against defaulters both under section
55 of the FSS Act as well as under section 188 of the IPC. It
has been argued that the law is that such action would not
amount to double jeopardy.
49
16.4. It has also been argued on behalf of the Delhi Police that in the
present case there are specific allegations of criminal
conspiracy, which can by no stretch of imagination be covered
within the ambit of FEMA. In fact, it has been argued, that even
if FERA had not been repealed, the petitioners would yet have
been liable to be prosecuted under IPC in addition to being
prosecuted under FERA, since prosecution under multiple
48
(2019) 18 SCC 145 at paras 6 & 7
49
State of Rajasthan vs. Hat Singh, (2003) 2 SCC 152 at paras 11 & 14
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 31 of 57
statutes is permissible provided a person is not punished twice
for the same offence. It has been argued that merely because the
final act relating to a foreign exchange transaction has been
decriminalised by repealing FERA, that does not mean that all
acts that comprised the final act would also stand
decriminalised, automatically or impliedly.
16.5. The Delhi Police have further drawn attention of this court to
the decision of the Supreme Court in State of West Bengal vs.
Narayan K. Patodia,
50
to argue, that in the said case, in the
context of an offence committed under section 88 of the West
Bengal Sales Tax Act, 1994 („W.B. Sales Tax Act‟), the
Supreme Court has held that it would be a far-fetched legal
proposition and would lead to startling consequences, to
assume that if a person who commits an offence under section
88 of the Sales Tax Act also commits other serious offences
falling under the IPC as part of the same transaction, the police
would not be authorised to investigate such penal offences. The
Supreme Court has observed that that would be a serious
casualty to criminal justice.
16.6. It has been stressed on behalf of Delhi Police that the doctrine
of „implied repeal‟ cannot be attracted in the case of FEMA,
since, if the Legislature had intended to exclude the application
of the IPC entirely once FERA was repealed, it would have
explicitly stated so; but that is not the case. It has also been
50
State of West Bengal vs. Narayan K. Patodia, (2000) 4 SCC 447 at paras 8, 17 & 18
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 32 of 57
argued that judicial precedents emphasise that „implied repeal‟
should only be inferred in cases where there is clear and
irreconcilable conflict and where compliance with two statutes
is impossible.
16.7. It has been argued that FEMA and IPC address different aspects
of an action or omission, with FEMA dealing with regulatory
infractions and the IPC addressing the broader criminal
liability. Dealing with the concept of implied repeal, the Delhi
Police have cited the decision of the Supreme Court in
Municipal Council Palai vs. T.J. Joseph & Ors.,
51
which holds
that there is a presumption against implied repeal, since the
assumption is that the Legislature enacts laws with complete
knowledge of existing laws pertaining to the same subject; and
the failure to add a repealing clause indicates that the intent was
not to repeal existing legislation. The submission is that for
invoking the doctrine of implied repeal, there must be
repugnancy between two statutes, as has been held by a
Constitution Bench of the Supreme Court in Deep Chand &
Ors. vs. State of Uttar Pradesh & Ors.
52
It has been argued that
on a conjoint reading of IPC and FEMA, no such repugnancy
arises or exists, since the two statutes do not occupy the same
field and work within their separate and distinct domains.
Attention in this behalf has been drawn to the objects of FERA
51
1963 SCC OnLine SC 55 at para 9
52
AIR 1959 SC 648
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 33 of 57
and FEMA, to point-out that those laws were enacted with the
purpose of regulating foreign exchange transactions, and to
conserve foreign exchange reserves and ensure compliance
with economic policies, the focus of the laws being on
procedural and technical compliance within a narrow
regulatory framework; and for penalising violations through
administrative measures of civil penalties. On the other hand, it
has been submitted that the IPC is the general criminal law of
the land, designed for a different purpose.
16.8. Insofar as the petitioner‟s contention that ED officials had no
locus standi to get the subject FIR registered, the Delhi Police
have argued that the concept of locus standi does not apply
stricto sensu to invocation of criminal law; and any person can
initiate the criminal process by filing a complaint or by
reporting a crime, since a criminal offence is against the society
as a whole, and not only against an individual. It has further
been pointed-out that section 154 of the Code of Criminal
Procedure, 1973 („Cr.P.C.‟) does not prescribe any qualification
for a person to register an FIR in respect of a cognizable
offence; and under section 190 Cr.P.C. cognizance can be taken
on a complaint which reveals facts which constitute such
offences regardless of who has filed such complaint. Reference
in this behalf is made to the decision of the Supreme Court in
A.R. Antulay vs. Ramdas Sriniwas Nayak & Anr.,
53
which
53
(1984) 2 SCC 500 at para 6
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 34 of 57
holds that anyone can set or put the criminal law into motion
except where the statute enacting or creating an offence
indicates to the contrary.
16.9. It has been pointed-out that in the complaint filed by the ED,
the following incriminating information is revealed : (i) that
during the search conducted by the ED, incriminating
documentary evidence in the form of bogus invoices, notary
certificates and such other documents have been recovered; (ii)
that 02 out of 06 unused notary stamps recovered, were found
bearing the impression “HARPINDER SINGH BOORA
NOTARY PUBLIC ONTARIO”, which the petitioners were
using to create fake invoices and notarising them using the
stamps; (iii) that 23 invoices recovered from the petitioners‟
premises show that payments were collected against sale of
penetration testing tools packaged by Mozire Technologies
Limited, Hong Kong, but on questioning petitioner/Manideep
Mago, he was unable to disclose any details of the persons to
whom those tools were sold. Though the invoices were raised
regularly every 02-03 days, petitioner/Manideep Mago was also
unable to show or justify as to how he used to send the
packages to so many individual buyers in a day; nor was he
able to furnish the names or details of any particular tools
package; (iv) that 18 invoices were recovered from
petitioner/Manideep Mago which were found to be bogus and
which had been created by the petitioners, since no actual
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 35 of 57
purchase of crypto-currency mining tools as indicated in those
invoices was found.
16.10. It has also been argued that pursuant to registration of the
subject FIR, other substantial evidence has been gathered in the
course of investigation and a chargesheet has been filed against
the petitioners before the concerned court; and cognizance of
the offences has also been taken by that court.
16.11. Apropos the requirement for furnishing to the petitioners the
„grounds of arrest‟ as distinct from the „reasons of arrest‟, the
Delhi Police have argued that they have fully complied with the
requirements of the law laid-down by the Supreme Court in
Prabir Purkayastha, inasmuch as the grounds of arrest, viz. the
specific bases for arresting each of the petitioners were set-out
by the Investigating Officer in their respective arrest memos. It
has further been argued that though there is a mandate to serve
the grounds of arrest in writing to an arrestee, the Cr.P.C. does
not prescribe any specific format in which grounds of arrest are
to be served and there is no bar in law against incorporating
grounds of arrest within the arrest memo, which is what was
done in the present case. To make good this point, attention has
been drawn to the contents of the arrest memos to point-out that
specific grounds relating to forgery and fabrication of
documents; destruction of evidence; and reference to
statements of employees of the accused and other independent
witnesses disclosing the petitioners‟ illegal activities were duly
set-out in the arrest memos issued to the petitioners. These, it is
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 36 of 57
argued, amount to sufficient compliance with the requirement
of serving grounds of arrest in writing to the petitioners. The
argument is that the arrest memos admittedly served upon the
petitioners, are not pro-forma arrest memos only reciting
formal reasons for arresting the petitioners; but the arrest
memos narrate the grounds of arrest, supplementing and
explaining the specific allegations against the petitioners.
16.12. In fact, it is pointed-out that in a decision recently rendered by
this Bench in Marfing Tamang vs. State,
54
the court has
referred to a decision of Co-ordinate Bench in Pranav
Kuckreja vs. State (NCT of Delhi),
55
to suggest that a column
be incorporated in the format of an arrest memo itself, requiring
the Investigating Officer/Arresting Officer to pen-down the
grounds of arrest, in order to streamline and ensure that such
grounds are communicated to an arrestee forthwith at the time
of issuing the arrest memo. It is submitted that this was in fact
done in the present case.
16.13. Lastly, the Delhi Police have argued that there is no basis to
seeking quashing of the subject FIR since the grounds for
quashing of an FIR as laid down by the Supreme Court in State
of Haryana & Ors. vs. Bhajan Lal & Ors.
56
are not made-out
in the present case. The argument is that based on the facts and
circumstances obtaining in the matter, incriminating evidence
54
2025 SCC OnLine Del 548
55
2024 SCC OnLine Del 9549
56
1992 Supp (1) SCC 335 at para 102
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 37 of 57
has come on record, which precludes the quashing of the
subject FIR.
DISCUSSION
17. After hearing extensive arguments on behalf of the parties, this court
is of the view that the following 04 questions need to be addressed for
deciding the present petitions :
17.1. Question I : Does the enactment of FEMA grant to a person
immunity from prosecution for offences which arise under the
IPC from the underlying acts or omissions that led to infraction
of the provisions of FEMA ?
17.2. Question II: Was the registration of the subject FIR by the
Delhi Police valid and legal ?
17.3. Question III: Was the petitioners‟ arrest by the ED in the
subject ECIR valid and legal ?
17.4. Question IV : Was the petitioners‟ arrest by the Delhi Police in
the subject FIR valid and legal ?
18. It must be noted that the petitioners have only challenged their arrest;
and the present petitions have not been filed under section 439
Cr.P.C., seeking release on bail.
Re : Question I
19. Though much stress has been laid by learned senior counsel appearing
for the petitioners on the argument that this court must appreciate the
„mischief‟ that the Legislature had sought to remedy by enacting
FEMA, in the opinion of this court, that proposition is not contested,
since there is no doubt even in the minds of the ED, that FEMA was
enacted to decriminalise infractions relating to foreign exchange
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 38 of 57
transaction. There is no contest with the proposition that once FEMA
was enacted, the criminality that used to attach to infractions relating
to foreign exchange transactions under FERA, got converted into civil
penalty, with no penal consequences.
20. However, the relevant question is whether an infraction under FEMA
also implies that any and all underlying acts and omissions leading to
that infraction also stands decriminalised; and whether such actions
and omissions are immune from prosecution under the IPC.
21. This question is squarely answered by the Supreme Court in
Venkateshan S., where the Supreme Court was dealing with a
detention order passed under the COFEPOSA, which detention order
was quashed by the Karnataka High Court on the ground that what
was considered a criminal violation under FERA, had ceased to be so
once FERA was repealed and FEMA was enacted. In this context the
Supreme Court observed as follows :
“8. Hence, the limited question would be — whether a
person who violates the provisions of FEMA to a large extent can be
detained under the preventive detention Act, namely, the
COFEPOSA Act. As stated above, the object of FEMA is also
promotion of orderly development and maintenance of foreign
exchange market in India. Dealing in foreign exchange is regulated
by the Act. For violation of foreign exchange regulations, penalty
can be levied and such activity is certainly an illegal activity, which
is prejudicial to conservation or augmentation of foreign exchange.
From the objects and reasons of the COFEPOSA Act, it is apparent
that the purpose of the Act is to prevent violation of foreign
exchange regulations or smuggling activities which are having
increasingly deleterious effect on the national economy and thereby
serious effect on the security of the State. Section 3 of the
COFEPOSA Act, which is not amended or repealed, empowers the
authority to exercise its power of detention with a view to preventing
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 39 of 57
any person inter alia from acting in any manner prejudicial to the
conservation or augmentation of foreign exchange. If the activity of
any person is prejudicial to the conservation or augmentation of
foreign exchange, the authority is empowered to make a detention
order against such person and the Act does not contemplate that
such activity should be an offence.
* * * * *
“10. The other important aspect is that the COFEPOSA
Act and FEMA occupy different fields. The COFEPOSA Act deals
with preventive detention for violation of foreign exchange
regulations and FEMA is for regulation and management of foreign
exchange through authorised person and provides for penalty for
contravention of the said provisions. The object as stated above is
for promoting orderly development and maintenance of foreign
exchange market in India. Preventive detention law is for effectively
keeping out of circulation the detenu during a prescribed period by
means of preventive detention (Poonam Lata v. M.L. Wadhawan
[(1987) 3 SCC 347 : 1987 SCC (Cri) 506] ). … …
“11. Hence, in our view, the order passed by the High Court
holding that what was considered to be the criminal violation of
FERA has ceased to be criminal offence under FEMA, the detention
order cannot be continued after 1-6-2000, cannot be justified.
“12. Further, if the view taken by the High Court and the
contentions raised by learned counsel for the respondent are
accepted, it would result in implied repeal of substantial part of
Section 3 of the COFEPOSA Act. One of the established principles
of interpretation of the statutory provisions is that courts as a rule
lean against implied repeal unless the provisions are plainly
repugnant to each other. There is also a presumption against
repeal by implication; and the reason of this rule is based on the
theory that the legislature while enacting a law has complete
knowledge of the existing laws on the same subject-matter and,
therefore, when it does not provide a repealing provision it gives out
an intention not to repeal the existing legislation. In Municipal
Council, Palai v. T.J. Joseph [AIR 1963 SC 1561] the Court
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 40 of 57
discussed the principles with regard to the “implied repeal” and
held thus: (AIR p. 1564, para 10)
“10. It must be remembered that at the basis of the doctrine of
implied repeal is the presumption that the legislature which must
be deemed to know the existing law did not intend to create any
confusion in the law by retaining conflicting provisions on the
statute-book and, therefore, when the court applies this doctrine it
does no more than give effect to the intention of the legislature
ascertained by it in the usual way, i.e., by examining the scope
and the object of the two enactments, the earlier and the later.”
“13. Similarly, in Municipal Corpn. of Delhi v. Shiv Shanker
[(1971) 1 SCC 442 : 1971 SCC (Cri) 195] (SCC relevant at p. 446,
para 5) this Court observed—
“The courts, therefore, as a rule, lean against implying a repeal
unless the two provisions are so plainly repugnant to each other
that they cannot stand together and it is not possible on any
reasonable hypothesis to give effect to both at the same time. The
repeal must, if not express, flow from necessary implication as the
only intendment.” ”
(emphasis supplied)
What is noteworthy, is that even though both COFEPOSA and
FEMA deal essentially with the same subject matter, namely foreign
exchange transactions, even so in the above case the Supreme Court
held that though FEMA had decriminalised foreign exchange
transactions, yet a person could be detained under COFEPOSA based
on his conduct relating to the same foreign exchange transactions.
22. The concept of „implied repeal‟ has also been dealt with
authoritatively by a Constitution Bench of the Supreme Court in M.
Karunanidhi, in which the Supreme Court has enunciated the
following tests for deciding whether there is repeal by implication :
“35. On a careful consideration, therefore, of the authorities
referred to above, the following propositions emerge:
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 41 of 57
1. That in order to decide the question of repugnancy it must
be shown that the two enactments contain inconsistent and
irreconcilable provisions, so that they cannot stand together
or operate in the same field.
2. That there can be no repeal by implication unless the
inconsistency appears on the face of the two statutes.
3. That where the two statutes occupy a particular field, but
there is room or possibility of both the statutes operating in
the same field without coming into collision with each other,
no repugnancy results.
4. That where there is no inconsistency but a statute
occupying the same field seeks to create distinct and
separate offences, no question of repugnancy arises and
both the statutes continue to operate in the same field.”
(emphasis supplied)
23. The same proposition was answered by the Supreme Court in an
earlier decision, Narayan K. Patodia, which arose from an order of
the Calcutta High Court quashing an FIR registered for offences under
the IPC and the W.B. Sales Tax Act, where the High Court had taken
the view that a case of suspected evasion of tax can only be
investigated by the Bureau of Investigation under the W.B. Sales Tax
Act and no police officer can investigate any such offence under the
IPC. The Supreme Court set-aside this view, with the following
observations :
“8. It is apparent that learned Single Judge has not been
apprised of the danger involved in adopting such a far-fetched legal
proposition. Assume that a person who committed any offence under
Section 88 of the Sales Tax Act has also committed some other
serious offence in connection with perpetration of the former
offence; what would be the position of the police if the view adopted
by the learned Single Judge is to be followed? Is it that the police
force has merely to look askance at such persons helplessly on the
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 42 of 57
mere ground that an offence under Sales Tax Act is also involved
and hence the powers of the police are unenforceable in that
condition?
* * * * *
“17. Section 7(1) of the Sales Tax Act empowers the State
Government to constitute a Bureau of Investigation for discharging
the functions referred to in sub-section (3) thereof. It empowers the
Bureau to carry on the investigation or hold inquiry into any case or
alleged or suspected case of evasion of tax or malpractice created
thereof and send a report of it to the Commissioner. A reading of
Section 7 makes it clear that creation of a Bureau of Investigation is
for the purpose of discharging the function envisaged in sub-section
(3) which, of course, includes investigation also. But there is
nothing in Section 7 that such investigation can be carried on
“only” by the Bureau and not any other investigating agency. It is
open to the Bureau to get the assistance of any other legally-
constituted investigating agency for effectively inquiring into all the
ramifications of the offence. As in this case if offences falling
under the Penal Code, 1860 or any other enactment are also
detected during the course of investigation conducted by the
Bureau there is no inhibition to pass over the investigation to the
regular police.
“18. If the view of the learned Single Judge gets approval it
would lead to startling consequences. The consequences of such an
interpretation would be that if the person who commits the offence
under Section 88 of the Act also commits other serious offences
falling under the Penal Code, 1860 as part of the same transaction
neither the regular police nor any special police force nor even the
Central Bureau of Investigation can be authorised to conduct
investigation. The accused in such cases would then be well
ensconced and insulated from the legal consequences of a proper
and effective investigation. Criminal justice would be the serious
casualty then.”
(emphasis supplied)
24. In the present case, neither do the two statutes viz., FEMA and IPC,
occupy or operate in the same field; nor do they contain any
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 43 of 57
inconsistent or repugnant or irreconcilable provisions. FEMA
replaced FERA with the objective of facilitating external trade and
payments and for promoting the orderly development and
maintenance of the foreign exchange market in India;
57
while IPC is
the codified substantive penal law of the country, which deals with
punishing conventional crimes.
25. In the opinion of this court, the civil wrongs alleged to have been
committed by the petitioners relating to foreign exchange transactions
under FEMA cannot be viewed as having been committed in one fell
swoop with all preceding actions and omissions that the petitioners
committed in preparation of the civil wrongs. As per the allegations,
the foreign exchange transactions that are subject matter of
investigation by the ED under the provisions of the FEMA were
preceded by several actions and omissions, such as forging of notarial
stamps and fabrication of fake invoices, which amount to criminal
offences under the IPC; and these offences were committed even
before the petitioners committed the civil wrongs under FEMA that
they have been accused of.
26. In deciding the legal construct that must be placed on the above
sequence of actions, this court must be guided by the observations of
a Constitution Bench of the Supreme Court in Leo Roy Frey vs.
Superintendent, District Jail, Amritsar & Anr.,
58
where the Supreme
57
Dropti Devi at para 63
58
AIR 1958 SC 119
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 44 of 57
Court drew on the views expressed by the United States Supreme
Court in United States vs. Rabinowich,
59
and observed as follows :
“4. … …The offences with which the petitioners are now
charged include an offence under Section 120-B of the Indian Penal
Code. Criminal conspiracy is an offence created and made
punishable by the Indian Penal Code. It is not an offence under the
Sea Customs Act. The offence of a conspiracy to commit a crime is
a different offence from the crime that is the object of the
conspiracy because the conspiracy precedes the commission of the
crime and is complete before the crime is attempted or completed,
equally the crime attempted or completed does not require the
element of conspiracy as one of its ingredients. They are, therefore,
quite separate offences. This is also the view expressed by the
United States Supreme Court in United States v. Rabinowich
[(1915) 238 US 78] . The offence of criminal conspiracy was not the
subject-matter of the proceedings before the Collector of Customs
and therefore it cannot be said that the petitioners have already
been prosecuted and punished for the “same offence”. It is true that
the Collector of Customs has used the words “punishment” and
“conspiracy”, but those words were used in order to bring out that
each of the two petitioners was guilty of the offence under Section
167(8) of the Sea Customs Act. The petitioners were not and could
never be charged with criminal conspiracy before the Collector of
Customs and therefore Article 20(2) cannot be invoked.”
(emphasis supplied)
27. In view of the foregoing position of law as applied to the provisions
of FEMA vis-à-vis the provisions of IPC, this court is of the view
there is no basis to hold that the enactment of FEMA grants to a
person immunity for offences under the IPC, since FEMA does not
repeal the IPC, either expressly or by implication. Moreover, FEMA
and IPC address different and distinct infractions of the law : with
59
(1915) 238 US 78
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 45 of 57
FEMA addressing infractions relating to foreign exchange
transactions and the IPC dealing with conventional crimes.
28. To be absolutely clear, the offences of criminal conspiracy, cheating,
forgery and related offences of which the petitioners are accused
under the IPC, do not get obliterated or subsumed or cease to be penal
offences, merely because they were the underlying actions for the
infractions of foreign exchange regulations. Pertinently, the penal
offences were complete in themselves before the infraction of the
provisions of FEMA took place.
29. In the opinion of this court therefore, the petitioners‟ submission that
they cannot be prosecuted for offences under the IPC cannot be
accepted.
Re : Question II
30. The next question which must be addressed relates to registration of
the subject FIR based on the ED‟s complaint. The petitioners contend
that since the ED‟s complaint was based on the search and seizure
operation conducted by that agency, an FIR could not have been
registered based only on that complaint. Learned senior counsel
appearing for the petitioners has argued that a perusal of the subject
FIR would show that the same has been lodged based on a so-called
confessional statement of petitioner Manideep Mago recorded under
section 37 of the FEMA, which could not have been the basis of
registering an FIR.
31. To support this contention the petitioners have placed reliance on
what has been held by the Supreme Court in K.T.M.S. Mohd., which
decision was rendered in case where a statement recorded under the
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 46 of 57
provisions of FERA was used for launching prosecution under the IT
Act. In that context the Supreme court said this :
“29. Therefore, the significance of a statement recorded
under the provisions of FERA during the investigation or
proceeding under the said Act so as to bring them within the
meaning of judicial proceeding must be examined only qua the
provisions of FERA but not with reference to the provisions of any
other alien Act or Acts such as I.T. Act.
“30. If it is to be approved and held that the authorities
under the I.T. Act can launch a prosecution for perjury on the basis
of a statement recorded by the Enforcement Officer then on the
same analogy the Enforcement authority can also in a given
situation launch a prosecution for perjury on the basis of any
inculpatory statement recorded by the Income Tax authority, if
repudiated subsequently before the Enforcement authority. In our
opinion, such a course cannot be and should not be legally
permitted.”
(emphasis supplied)
32. Upon considering the foregoing submission, this court is of the view,
that for one, a reading of the subject FIR would show that it is not
based solely on Manideep Mago‟s statement recorded under section
37 FEMA but is also founded on the recoveries made by the ED in the
course of its search and seizure operation, including the recovery of
invoices, notarial stamps and other material, which was the basis of
the allegations of forgery and fabrication under the provisions of the
IPC.
33. Besides, as correctly pointed-out by the ED, drawing on the
observations of the Supreme Court in Central Bureau of
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 47 of 57
Investigation vs. V.C. Shukla & Ors.,
60
there is a distinction between
a „confession‟ and an „admission‟. The following enunciation by the
Supreme Court is instructive in this regard :
“44. … … From a combined reading of the above sections it
is manifest that an oral or documentary statement made by a party
or his authorised agent, suggesting any inference as to any fact in
issue or relevant fact may be proved against a party to the
proceeding or his authorised agent as “admission” but, apart from
exceptional cases (as contained in Section 21), such a statement
cannot be proved by or on their behalf. While on this point the
distinction between “admission” and “confession” needs to be
appreciated. In absence of any definition of “confession” in the Act
judicial opinion, as to its exact meaning, was not unanimous until
the Judicial Committee made an authoritative pronouncement about
the same in Pakala Narayana Swami v. Emperor [AIR 1939 PC 47 :
(1939) 40 Cri LJ 364] with these words:
“[A] confession must either admit in terms the offence,
or at any rate substantially all the facts which constitute the
offence. An admission of a gravely incriminating fact, even a
conclusively incriminating fact, is not of itself a confession, e.g.,
an admission that the accused is the owner of and was in recent
possession of the knife or revolver which caused a death with no
explanation of any other man's possession. Some confusion
appears to have been caused by the definition of „confession‟ in
Article 22 of the Stephen's „Digest of the Law of Evidence‟ which
defines a confession as „an admission made at any time by a
person charged with a crime stating or suggesting the inference
that he committed that crime‟. If the surrounding articles are
examined it will be apparent that the learned author, after dealing
with admissions generally, is applying himself to admissions in
criminal cases, and for this purpose defines confessions so as to
cover all such admissions, in order to have a general term for use
in the three following articles, confession secured by inducement,
made upon oath, made under a promise of secrecy. The definition
is not contained in the Evidence Act, 1872, and in that Act it would
60
(1998) 3 SCC 410
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 48 of 57
not be consistent with the natural use of language to construe
confession as a statement by an accused „suggesting the inference
that he committed‟ the crime.”
The above statement of law has been approved and
consistently followed by this Court. (Palvinder Kaur v. State of
Punjab [(1952) 2 SCC 177 : AIR 1952 SC 354 : 1953 SCR 94] , Om
Prakash v. State of U.P. [AIR 1960 SC 409 : 1960 Cri LJ 544] and
Veera Ibrahim v. State of Maharashtra [(1976) 2 SCC 302 : 1976
SCC (Cri) 278 : (1976) 3 SCR 672] .)
“45. It is thus seen that only voluntary and direct
acknowledgement of guilt is a confession but when a confession
falls short of actual admission of guilt it may nevertheless be used
as evidence against the person who made it or his authorised agent
as an “admission” under Section 21. The law in this regard has
been clearly — and in our considered view correctly — explained in
Monir‟s Law of Evidence (New Edn. at pp. 205 and 206), on which
Mr Jethmalani relied to bring home his contention that even if the
entries are treated as “admission” of the Jains still they cannot be
used against Shri Advani. The relevant passage reads as under:
“The distinction between admissions and confessions is
of considerable importance for two reasons. Firstly, a statement
made by an accused person, if it is an admission, is admissible in
evidence under Section 21 of the Evidence Act, unless the
statement amounts to a confession and was made to a person in
authority in consequence of some improper inducement, threat
or promise, or was made to a Police Officer, or was made at a
time when the accused was in custody of a Police Officer. If a
statement was made by the accused in the circumstances just
mentioned its admissibility will depend upon the determination of
the question whether it does not amount to a confession. If it
amounts to a confession, it will be inadmissible, but if it does not
amount to a confession, it will be admissible under Section 21 of
the Act as an admission, provided that it suggests an inference as
to a fact which is in issue in, or relevant to, the case and was not
made to a Police Officer in the course of an investigation under
Chapter XIV of the Code of Criminal Procedure. Secondly, a
statement made by an accused person is admissible against others
who are being jointly tried with him only if the statement amounts
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 49 of 57
to a confession. Where the statement falls short of a confession, it
is admissible only against its maker as an admission and not
against those who are being jointly tried with him. Therefore, from
the point of view of Section 30 of the Evidence Act also the
distinction between an admission and a confession is of
fundamental importance.”
(emphasis supplied)”
34. In the present case, in his statement recorded under section 37 of the
FEMA Manideep Mago does not appear to have confessed to
committing any offence, and therefore, it would appear that at worst,
the statement merely contains some admissions on his part. As a
result, even if some parts of the subject FIR are based on Manideep
Mago‟s statement recorded under section 37 of the FEMA, that cannot
be ground for quashing the subject FIR.
35. Insofar as the contention that the subject FIR could not have been
registered since no preliminary inquiry was conducted by the police
on their own, and instead, they proceeded solely on the basis of the
complaint forwarded to them by the ED, the answer lies squarely in
the judgment of the Constitution Bench of the Supreme Court in
Lalita Kumari, in which the Supreme Court has emphasised the need
for conducting a preliminary verification or inquiry only in cases
where no cognizable offence is made-out on the basis of the
information received; and that too for the limited purpose of
ascertaining whether a cognizable offence is made-out. Attention in
this behalf may be had to the following extract of that judgment :
“119. Therefore, in view of various counterclaims regarding
registration or non-registration, what is necessary is only that the
information given to the police must disclose the commission of a
cognizable offence. In such a situation, registration of an FIR is
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 50 of 57
mandatory. However, if no cognizable offence is made out in the
information given, then the FIR need not be registered
immediately and perhaps the police can conduct a sort of
preliminary verification or inquiry for the limited purpose of
ascertaining as to whether a cognizable offence has been
committed. But, if the information given clearly mentions the
commission of a cognizable offence, there is no other option but to
register an FIR forthwith. Other considerations are not relevant at
the stage of registration of FIR, such as, whether the information is
falsely given, whether the information is genuine, whether the
information is credible, etc. These are the issues that have to be
verified during the investigation of the FIR. At the stage of
registration of FIR, what is to be seen is merely whether the
information given ex facie discloses the commission of a cognizable
offence. If, after investigation, the information given is found to be
false, there is always an option to prosecute the complainant for
filing a false FIR.
Conclusion/Directions
“120. In view of the aforesaid discussion, we hold:
* * * * *
120.2. If the information received does not disclose a
cognizable offence but indicates the necessity for an
inquiry, a preliminary inquiry may be conducted only to
ascertain whether cognizable offence is disclosed or not.”
(emphasis supplied)
36. In the present case, there can be no cavil that the complaint received
by the police from the ED did disclose the commission of cognizable
offences; and therefore the law mandated that the police must register
an FIR; and they cannot be faulted for having done so.
Re : Question III
37. The petitioners have also questioned their arrest by the ED in the
subject ECIR on the ground that their arrest is vitiated since the ED
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 51 of 57
were liable to furnish to them „reasons to believe‟ as required under
section 19(1) of the PMLA.
38. This contention must be rejected based on the view taken by a Co-
ordinate Bench of this court in Arvind Dham,
61
where it has been held
that the requirement for furnishing „reasons to believe‟ to an arrestee
is an additional requirement which arose, for the first time, when the
Supreme Court pronounced its judgement in Arvind Kejriwal on
12.07.2024; and that therefore, that additional requirement is
applicable only for arrests made after that date. This court would
only observe that since what the Supreme Court articulated in Arvind
Kejriwal was an additional requirement, and the Supreme Court was
not interpreting an existing statutory requirement, such additional
requirement could only be prospective in its operation as of the date
that requirement was laid down by the Supreme Court. In the present
case, the petitioners, Manideep Mago and Sandeep Sethi, were
arrested on 14.06.2024 and 03.07.2024 respectively; and the ED could
not possibly have foreseen that it would become mandatory for them
to serve „reasons to believe‟ upon an arrestee by a subsequent
judgment of 12.07.2024.
39. Insofar as the contention raised by the petitioners as to non-
compliance with the provision of section 19(2) of the PMLA, it may
only be observed that this court is satisfied that the said provision was
sufficiently complied with by the ED, since they had sent the requisite
information to the adjudicating authority, alongwith copies of the
61
cf. para 40
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 52 of 57
arrest orders and other material, within the timeframe stipulated for
the purpose, as represented by the ED above.
40. Another argument preferred by the petitioners is that the only basis
for arresting them, as indicated in the „grounds of arrest‟ served upon
them by the ED, was that they had not co-operated with the
investigation; and the petitioners contend that non-cooperation in
investigation could not have been a ground to arrest them, as has been
held in Pankaj Bansal.
41. A perusal of the grounds of arrest in respect of both petitioners would
show however, that certain allegations specific to the petitioners have
been set-out in them, which sufficiently convey the essential case
against them which has made it necessary to arrest them; and non-
cooperation with the investigating agency is only one of those
grounds and not the sole reason for their arrest. It may be noted that
what the Supreme Court has said in Pankaj Bansal
62
is that mere non-
cooperation or failure to respond to a question put by the ED is not in
itself sufficient to arrest a person; but that cannot be construed to
mean that if there are other grounds to arrest a person, those should be
ignored. In view thereof, the argument that the petitioners were
arrested merely for non-cooperation in investigation, is misconceived
and must be rejected.
Re : Question IV
42. That brings us to the last question framed for consideration in these
matters viz., whether the petitioners‟ arrest in the subject FIR is valid
62
cf. para 33
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 53 of 57
and legal. Insofar as this aspect is concerned, the petitioners‟
argument is premised on the settled principle for a valid arrest as laid-
down by the Supreme Court in Prabir Purkayastha, namely that
grounds of arrest were not served upon them in writing by the Delhi
Police, which renders their arrest by the Delhi Police invalid and
illegal.
43. The Delhi Police have answered this contention by submitting that the
Cr.P.C. does not prescribe any specific format in which grounds of
arrest are to be served upon an arrestee in writing; and that in the
present case, the Investigating Officer had incorporated the grounds of
arrest in the arrest memo itself.
44. The Delhi Police are correct in pointing-out that in a recent decision
rendered by this Bench in Marfing Tamang, taking cue from the
observations of a Co-ordinate Bench in Pranav Kuckreja, this Bench
has suggested that a column be incorporated in the format of an arrest
memo itself, where the investigating officer can set-out the grounds of
arrest, to obviate the need for issuing to an arrestee a separate piece of
writing, which would also ensure that the grounds of arrest are
communicated to an arrestee simultaneously with the issuance of the
arrest memo, thereby streamlining the process.
45. That said, a perusal of the arrest memos issued to the petitioners by
the Delhi Police would show that in an effort to communicate grounds
of arrest, the investigating officer has narrated the following :
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 54 of 57
For petitioner Manideep Mago
(extracted from the record)
For petitioner Sanjay Sethi
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 55 of 57
(extracted from the record)
46. In the opinion of this court, what have been set-out in the Delhi Police
arrest memos are not „grounds of arrest‟ but only „reasons for arrest‟
against column No.9 of the arrest memos. A perusal of that column
shows that the investigating officer has only mentioned general
reasons for which any person may be sought to be arrested viz., that
the person‟s custodial interrogation is required; that the person is
likely to destroy evidence; that the person is likely to influence
witnesses; and that the person‟s presence cannot be ensured unless he
is arrested, namely that he is a flight-risk.
47. What has been recorded in the arrest memos are not grounds of arrest
since these do not spell-out the specific roles alleged against the
petitioners; nor do they refer to the specific incriminating
circumstances that can be attributed to a particular petitioner in
relation to the offences alleged.
48. The petitioners‟ arrest by the Delhi Police is therefore clearly not in
compliance with the mandate of the Supreme Court in Prabir
Purkayastha.
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 56 of 57
CONCLUSIONS
49. As a sequitur to the foregoing, this court would summarise the
answers to the questions set-out above in the following manner :
49.1. The enactment of FEMA does not grant to a person immunity
from prosecution for offences under the IPC even if the
offences alleged arise from the same underlying actions or
omissions that led to infractions of FEMA;
49.2. The registration of the subject FIR by the Delhi Police, based
on the complaint filed by the ED, arising from the search and
seizure operation conducted by the (latter) agency, is not
invalid or illegal merely because the FIR is based on the ED‟s
complaint. It may be observed however, that this court has not
examined the legal tenability of the subject FIR on the
touchstone of the grounds for quashing enunciated by the
Supreme Court in Bhajan Lal;
49.3. The petitioners‟ arrest by the ED in the subject ECIR for
violations of the provisions of PMLA is valid and legal and in
compliance of the requirements of the law, including the
requirements of the Supreme Court verdict in Prabir
Purkayastha and section 19 of the PMLA; however
49.4. The petitioners‟ arrest by the Delhi Police in the subject FIR is
not valid, since those are in violation of the mandate of the
Supreme Court in Prabir Purkayastha. The petitioners‟ arrest
in the subject FIR is therefore quashed. Accordingly, the
petitioners – Manideep Mago s/o Neeraj Mago and Sanjay
Sethi s/o late Chuni Lal – are liable to be released from
W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Page 57 of 57
custody in the subject FIR upon furnishing personal bond in the
sum of Rs. 05 lacs each with 02 sureties in the like amount
from family members, to the satisfaction of the learned trial
court.
50. It is clarified that nothing in this judgment would stand in the way of
the petitioners‟ applying for bail, as may be permissible, in
accordance with law.
51. The petitions are disposed-of in the above terms.
52. Pending applications, if any, also stand disposed-of.
ANUP JAIRAM BHAMBHANI, J.
MAY 15, 2025
ak/ds/ss
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