Chhattisgarh High Court Upholds ED Arrest Of Chaitanya Baghel In Liquor Scam Case, Says Procedural Lapses Do Not Constitute Illegality

While the petitioner pointed out a slew of procedural lapses and irregularities in his arrest, such as— non-issuance of summons, baseless claims of non-cooperation, template grounds of arrest, and unwarranted coercive action, Justice Arvind Kumar Verma, refusing to interfere with the arrest and the proceedings, held,

“… allegations of illegality in further investigation are not substantiated by any cogent material. The scheme of the PMLA permits the Investigating Agency to collect further evidence after filing of a complaint subject to the prior permission of the Special Court. As regards the non-cooperation and mechanical arrest, this Court finds that the issue involves disputed factual questions that cannot be conclusively determined in exercise of writ jurisdiction. The Grounds of Arrest, though brief, refer to the necessity of preventing destruction of evidence, influencing of witnesses and tracing of proceeds of crime. Whether such reasons are adequate or not, is a matter of assessment by the trial court.”

Referring to Section 19 of Prevention of Money Laundering Act, 2002 (PMLA)—which empowers an authorised officer to arrest a person if he, based on material in his possession, has “reason to believe” that such person is guilty of an offence under PMLA, and Section 50— which vests in the Director, Additional Director, Joint Director, Deputy Director or Assistant Director the power to summon any person whose attendance may be necessary from giving evidence or for producing records during the course of investigation, the Single Judge added,

“… Section 19 and Section 50 of the PMLA are distinct provisions and operate in distinct and well defined domains. The power under Section 50 of the PMLA (is not a pre-condition for arrest under Section 19 of the PMLA. These are two separate and distinct conditions under the PMLA itself. Non-issuance of notice under Section 50 of the PMLA cannot be restrained to the Investigating Officer for arrest of accused under Section 19 of the PMLA. Therefore, non-issuance of notice under Section 50 of the PMLA to the petitioner is a procedural lapse which does not amount to illegality.”

Facts and Submissions:

On the basis of a host of complaints and reports from the Income Tax Department, Anti-Corruption Bureau (ACB) and Economic Offences Wing (EOW), relating to illicit financial transactions in the alleged Liquor Scam, the petitioner was apprehended by the Enforcement Directorate on 18.07.2025 for investigation under PMLA.

The petitioner argued that his arrest was manifestly illegal as neither was there any need or necessity for such custodial action, nor was he issued summons at any stage for recording of statements, and he consequently remained unaware of any proceedings initiated against him. Additionally, the ED, after searching the petitioner's residence, recorded a reason to believe that the was guilty of offences under PMLA,. However, after an inordinate delay of over four months, without disclosure of any new material or grounds justifying the delay, the petitioner was arrested. It was argued that since the alleged incriminatory material was already seized by investigating authorities as early as 2022, and in the absence of any new material, the necessity of arrest was nullified. Additionally, in the absence of any summons issued, the allegations of non-cooperation of the petitioner were also contended to be baseless. Instead, it was submitted that the petitioner extended full cooperation during the search and comprehensively answered all questions raised by the Adjudicating Authority. It was also contended that the arrest was premised entirely on alleged coerced statements from a co-accused, Lakshmi Narayan Bansal and that the ED was conducting continuous investigation without prior permission from the competent Court and such conduct, in absence of judicial sanction, is impermissible and renders the entire exercise of investigation and the consequential arrest void ab-initio.

On the contrary, ED argued that supervisory jurisdiction of the High Court cannot be invoked as the scope of interference under Section 528 of BNSS is confined to examination of legality and procedural propriety of arrest and not to re-appreciation or re-evaluation of evidentiary material. It was thus submitted that once mandatory requirements of Section 19 of PMLA are complied with, namely— existence of material in possession of the authorised officer and recording of “reasons to believe” that the person is guilty of an offence under PMLA, the arrest cannot be judicially interfered with. Thus, it was submitted that judicial review of arrest under PMLA is not a merit based inquiry into sufficiency or reliability of material but is limited to testing whether arresting officer acted within the statutory and procedural bounds authority. It was further argued that Section 19, PMLA confers discretionary power on the authorised officer to arrest, and the Court cannot substitute its own opinion for the opinion of the authorised officer. It was lastly argued that issuance of summons under Section 50 of PMLA is not a pre-condition for arrest under Section 19.

Court's Findings:

With respect to the argument of the petitioner that absence of summons render the argument of non-cooperation baseless, the Court held,

“It is pertinent to mention here that the petitioner was neither served with summons under Section 50 of the PMLA nor required to appear in relation to the alleged offence before the ED, therefore, the allegations of non-cooperation are incorrect mentioned in the document of ground of arrest but the arrest in the present case was not founded solely on the ground of non-cooperation but in the ground of arrest there are other grounds which justifies the custodial action, therefore, only on the basis of wrong mention in the ground of arrest i.e. the non-cooperation of the accused in investigation would not by itself amount to illegality because the arrest of the present petitioner was not founded solely on ground of non-cooperation but on the subjective satisfaction of the Investigating Officer based on material which was available with the ED. Therefore, this procedural lapse also does not amount to illegality whereas it amounts to irregularity.”

However, with respect to the issue of further investigation without judicial sanction and the substantial delay in arrest, the Court explained that power of ED to conduct further investigation under PMLA is not immune to judicial oversight and statutory safeguards. The Court referred to Pankaj Bansal v. Union of India (2023), where it was held that further investigation cannot be conducted in a manner that infringes statutory rights of accused including the requirement of prior permission where mandated.

The Court stated,

“… it is pertinent to mention here that the present matter is a complaint case. No doubt Section 44(1)(d) permitting filing of supplementary complaints when fresh materials are available to the ED in relation with money laundering but the procedure prescribed for filing of complaint under Section 44 of the PMLA read with Chapter XV of the Cr.P.C. with Section 200 to 204 of the Cr.P.C. and is distinct from that of a police report under Section 173 of the Cr.P.C.”

Noting that it is the duty of Investigating agency that once a complaint filed before the Magistrate and Magistrate has taken cognizance, further investigation should be made with the permission of the Magistrate, the Court held,

“… if the respondent has conducted the investigation without obtaining prior permission of the competent court, it may not strictly conform to the procedural framework governing complaint cases and the investigation before the adjudicating authority. Illegality means a fundamental breach of law which cannot be fix, whereas an irregularity is a procedural deviation that can often be corrected or regularized. Notwithstanding this, such deviation, while irregular, would not vitiate the proceedings or amount to illegality.”

Accordingly, the Court dismissed the petition.

Case Details:

Case Number: CRMP No. 2506 of 2025

Case Title: Chaitanya Baghel v. Directorate of Enforcement

Advocates for Petitioner: Mr. N.Hariharan, learned Sr. Counsel through VC assisted by Mr. Mayank Jain, Mr. Harshwardhan Parganiha, Mr. Madhur Jain, Mr. Arpit Goel, Mr. Deepak Jain, Mr. Aman Akhtar and Mr. Arjan Mandala, Advocates

Advocates For Respondents: Mr. Zoheb Hossain, Advocate through VC and Dr. Sourabh Pande, Advocate (Special Public Prosecutor)

Click Here To Read/Download Order