SC grants interim bail to CM Kejriwal, refers questions on PMLA arrests to larger Bench

While granting him interim relief in the ED case, the Supreme Court Bench of Justices Sanjiv Khanna and Dipankar Datta said it was up to Kejriwal to decide if he should continue as Chief Minister. It noted that “right to life and liberty is sacrosanct”, and Kejriwal has “suffered incarceration of over 90 days”.

In bail conditions similar to its May 10 order, when the SC granted him interim bail to campaign in the Lok Sabha elections, the Bench said he “shall not visit the office of the Chief Minister and the Delhi Secretariat” or sign official files “unless it is required and necessary for obtaining clearance/ approval of the Lieutenant Governor of Delhi”.

The interim bail may be extended, or recalled, by the larger Bench, the two Judges said.

Referring to data on ED cases, the Bench asked if the agency has a policy on when it should arrest a person in PMLA cases. “As we are referring the matter to a larger Bench, we have to, despite our findings on ‘reasons to believe’, consider whether interim bail should be granted to Arvind Kejriwal. Given the fact that right to life and liberty is sacrosanct, and Arvind Kejriwal has suffered incarceration of over 90 days, and that the questions referred to above require in-depth consideration by a larger Bench, we direct that Arvind Kejriwal may be released on interim bail,” it said.

“We are conscious that Arvind Kejriwal is an elected leader and the Chief Minister of Delhi, a post holding importance and influence. We have also referred to the allegations. While we do not give any direction, since we are doubtful whether the court can direct an elected leader to step down or not function as the Chief Minister or as a minister, we leave it to Arvind Kejriwal to take a call. The larger Bench, if deemed appropriate, can frame question(s) and decide the conditions that can be imposed by the court in such cases,” it said.

Kejriwal had questioned his arrest on the ground that it did not fulfil the requirements of Section 19(1) of the PMLA, which states that if the investigating officer “has, on the basis of material in his possession, reason to believe (that reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest”.

Appearing for the Delhi CM, Senior Advocate A M Singhvi had argued that the “reasons to believe” recorded by the ED to arrest Kejriwal “selectively refer to the implicating material, and ignore the exculpatory material. Thus, there is no attempt to evaluate the entire material and evidence on record”.

In response, the ED submitted that the investigation was complicated and as it was a case of political corruption, independent witnesses were not available, and the co-accused were initially reluctant to name and blame the top political stakeholders.

The SC said the officer acting under Section 19(1) of PMLA “cannot ignore or not consider the material which exonerates the arrestee. Any such non-consideration would lead to difficult and unacceptable results… An officer cannot be allowed to selectively pick and choose material implicating the person to be arrested. They have to equally apply their mind to other material which absolves and exculpates the arrestee. The power to arrest under Section 19(1) of the PMLA cannot be exercised as per the whims and fancies of the officer.”

It, however, added that “arguments raised on behalf of Arvind Kejriwal, which tend to dent the statements and material relied upon by the DoE (Directorate of Enforcement) in the ‘reasons to believe’, though worthy of consideration, are in the nature of propositions or deductions. They are a matter of discussion as they intend to support or establish a point of view on the basis of inferences drawn from the material. It is contended that the statements relied upon by the DoE have been extracted under coercion, a fact that is contested and has to be examined and decided. This argument does not persuade us, given the limited power of judicial review, to set aside and quash the ‘reasons to believe’. Accepting this argument would be equivalent to undertaking a merits review”.

The SC said Kejriwal “can raise these arguments at the time when his application for bail is taken up for hearing. In bail hearings, the court’s jurisdiction is wider…”

The Delhi CM had also argued that the “reasons to believe” don’t mention or record reasons for “necessity to arrest”.

While the ED submitted that the test of “necessity to arrest” was satisfied as Kejriwal failed to appear before it despite nine summons, the Delhi CM contended that there was no necessity to arrest him on March 21 this year, given that the ECIR (enforcement case information report) was registered in August 2022, and most of the material relied upon in the “reasons to believe” were prior to July 2023.

The court said while the term “necessity to arrest” was not mentioned in Section 19(1) of the PMLA, “this expression has been given judicial recognition in Arnesh Kumar vs State of Bihar which lays down that ‘necessity to arrest’ must be considered by an officer before arresting a person”. The Bench noted that in the 2002 judgment in Vijay Madanlal Choudhary vs Union of India, “a substantive threshold test is not laid down on the ‘necessity to arrest’.”

Deciding to examine the question of the “need and necessity to arrest” in the context of PMLA offences too, it framed three questions and referred them to a larger Bench.

In this context, the court also referred to available official data on cases registered by the ED. “As per the data available on the website of the DoE, as on 31.01.2023, 5,906 ECIRs were recorded. However, search was conducted in 531 ECIRs by issue of 4,954 search warrants. The total number of ECIRs recorded against ex-MPs, MLAs and MLCs was 176. The number of persons arrested is 513. Whereas the number of prosecution complaints filed is 1,142. The data raises a number of questions, including the question on whether the DoE has formulated a policy (on) when they should arrest a person involved in offences committed under the PMLA”.

While a trial court had granted bail to Kejriwal on June 20, the Delhi High Court, on June 25, stayed the order.

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