In a significant decision, Justice Mahabir Singh Sindhu of the Punjab and Haryana High Court quashed the judicial remand of Balwant Singh, a petitioner in a money laundering case initiated by the Enforcement Directorate (ED). The court emphasized that judicial authorities must independently exercise their discretion and not function as “extended arms of investigative agencies,” ensuring that constitutional protections under Article 21 are upheld.
Case Background
The case involves M/s Tara Corporation Limited (TCL), now known as Malaudh Agro Limited, which had availed a credit facility of ₹46 crore from Bank of India, Ludhiana. Allegedly, the company defaulted on repayments, leading to the account being declared a Non-Performing Asset (NPA) in 2014 with an outstanding amount of ₹40.92 crore. Following a series of complaints and investigations, the ED registered a case under the Prevention of Money Laundering Act (PMLA), 2002, accusing the petitioner and others of diverting loan proceeds to shell companies.
Balwant Singh was named alongside six others in the ED’s complaint filed on January 4, 2024. Despite being summoned multiple times, the ED alleged that Singh failed to cooperate with the investigation, necessitating his custodial interrogation.
Legal Issues and Arguments
The petitioner’s counsel, Senior Advocate Vikram Chaudhri, assisted by a team of lawyers, argued that:
- Lack of Grounds for Custodial Interrogation: The ED’s application for custodial interrogation did not present any new evidence or grounds that warranted such action. It relied on previously filed materials, making the request redundant.
- Violation of Legal Precedents: The custodial remand was inconsistent with the Supreme Court’s guidance in Tarsem Lal vs. Directorate of Enforcement (2024), which mandates adequate reasoning for such detention.
- Judicial Overreach: The Special Court acted in a mechanical manner without adequately justifying the remand order.
The respondent’s counsel, Additional Solicitor General of India Satya Pal Jain, contended that Singh’s non-cooperation hindered the investigation and that custodial interrogation was necessary to trace the alleged money trail and proceeds of crime.
Court’s Observations
In a detailed judgment, Justice Sindhu highlighted several issues with the proceedings:
- Lack of Judicial Reasoning: The remand order failed to satisfy the legal requirements under Section 309 of the Code of Criminal Procedure (CrPC) and the provisions of the PMLA. The court noted, “The Special Court authorized custodial interrogation in a routine manner, negating the salutary protections under Article 21 of the Constitution.”
- Improper Application of Precedents: The court observed that the principles laid down in Tarsem Lal were not adhered to, and no convincing reasons were recorded for the drastic measure of custodial detention.
- Violation of Procedural Safeguards: The court criticized the ED for failing to establish why Singh’s physical custody was essential, despite the availability of alternative investigative measures.
Key Judgment Highlights
Justice Sindhu remarked:
- “Judicial officers assigned to Special Courts under PMLA must not act as mere extensions of investigative agencies but must exercise independent and judicious discretion.”
- “Had there been proper application of mind, there was no occasion to remand the petitioner to ED custody or subsequent judicial custody.”
The court quashed the Special Court’s orders dated October 5, 2024, and subsequent remand orders, terming them indefensible in law. It ordered Singh’s immediate release, subject to the bail and surety bonds already furnished.
Aftermath and Directions
While releasing the petitioner, the High Court instructed the Registrar (Vigilance) to investigate procedural lapses in the upload of the Special Court’s order and submit a report within two months. Additionally, it underscored the need for judicial officers to adhere strictly to procedural safeguards in matters involving individual liberty.
