Similarity Between "Reasons To Believe" & "Grounds Of Arrest" Does Not By Itself Show Non-Application Of Mind Under PMLA: Telangana High Court

The Court further held that the plea that “no material was collected” before arrest could not be accepted at the stage of writ jurisdiction where the Enforcement Directorate asserted that the investigation had already yielded predicate FIRs, searches and seizures, statements under Section 50 of the PMLA, financial trails and other investigative material.

The Court was hearing a writ petition challenging an arrest made by the Enforcement Directorate under the Prevention of Money Laundering Act, 2002. The petitioner also sought quashing of the remand orders passed by the Special Court under the PMLA and sought immediate release from custody.

A Division Bench of Justice P. Sam Koshy and Justice Narsing Rao Nandikonda observed: “We reject the contention that mere similarity between the ‘reasons to believe’ and the ‘grounds of arrest’ by itself establishes non-application of mind because narration of material facts in both documents does not by itself negate independent satisfaction.”

The Bench further observed: “The plea that ‘no material was collected’ cannot be accepted. The respondent asserts that, prior to the arrest, the investigation had already resulted in collection of material, including predicate FIRs, searches and seizures, statements and the financial trail.”

The Court added: “Whether that material is adequate, or what exact weight it carries, cannot be examined by this Court in writ jurisdiction by undertaking a roving enquiry into the case file.”

Senior Advocate Naga Muthu, appearing on behalf of Advocate Y. Soma Srinath Reddy, appeared for the petitioner. Senior Standing Counsel Dominic Fernandes appeared for the Enforcement Directorate.

Background

According to the petition, the petitioner is a fertility specialist presently lodged in Chanchalguda Central Jail. The case originated from FIR No.147 of 2025 registered at Gopalapuram Police Station under various provisions of the Bharatiya Nyaya Sanhita, 2023. Subsequently, multiple FIRs came to be registered and were later transferred to CCS Police Station with inclusion of provisions under the Surrogacy (Regulation) Act, 2021 and the Juvenile Justice (Care and Protection of Children) Act, 2015.

Based on the predicate FIRs, the Enforcement Directorate recorded ECIR/HYZO/46/2025 on 08.09.2025 and conducted search and seizure operations at the petitioner’s clinic and residential premises.

The petitioner contended that the arrest under Section 19 of the PMLA was illegal and unconstitutional on the ground that the “reasons to believe” and “grounds of arrest” were mechanically reproduced and unsupported by admissible material establishing proceeds of crime.

It was argued that the Enforcement Directorate lacked jurisdiction in the absence of a valid scheduled offence and that the arrest amounted to a colourable exercise of power in violation of Articles 14, 21 and 22 of the Constitution. Reliance was placed on judgments including Arvind Kejriwal v. Directorate of Enforcement (2025), Pankaj Bansal v. Union of India (2024), Vijay Madanlal Choudhary v. Union of India (2023) and Prabir Purkayastha v. State (NCT of Delhi) (2024).

The Enforcement Directorate opposed the petition, contending that substantial material had already been collected during the investigation, including FIRs, search and seizure records, Section 50 statements, bank account details, financial transactions and material evidencing proceeds of crime.

Court’s Observation

The High Court examined the scope of judicial review over arrests made under Section 19 of the Prevention of Money Laundering Act, 2002 and reiterated that while constitutional courts can examine whether statutory safeguards have been complied with, they cannot undertake a detailed evidentiary assessment of the investigation at the stage of arrest and remand.

The Bench noted the petitioner’s contention that the “reasons to believe” and “grounds of arrest” were virtually identical and therefore reflected non-application of mind. Rejecting the submission, the Court held that mere similarity in narration of facts in the two documents does not by itself invalidate the arrest or establish absence of independent satisfaction.

The Court observed: “We reject the contention that mere similarity between the ‘reasons to believe’ and the ‘grounds of arrest’ by itself establishes non-application of mind because narration of material facts in both documents does not by itself negate independent satisfaction.”

The Bench relied upon the decision in Arvind Kejriwal v. Directorate of Enforcement (2025), where the Supreme Court had itself noted that the “reasons to believe” and “grounds of arrest” in that case were identical.

The Court further rejected the petitioner’s contention that no material existed to justify the arrest. The Bench recorded that the Enforcement Directorate had asserted collection of extensive material prior to arrest, including predicate FIRs, search and seizure operations, Section 50 statements, bank account details, financial transactions and other material tracing the alleged proceeds of crime.

The Court observed: “The plea that ‘no material was collected’ cannot be accepted. The respondent asserts that, prior to the arrest, the investigation had already resulted in collection of material, including predicate FIRs, searches and seizures, statements and the financial trail.”

The Bench clarified that adequacy or sufficiency of such material could not be examined in writ jurisdiction by conducting a “roving enquiry” into the case file.

While dealing with the challenge to the remand order, the Court held that the Special Court is not required at the remand stage to conduct a mini-trial or detailed appreciation of evidence. The Bench observed that the remand order indicated that the Special Court had considered the ED file, the rival submissions and the statutory requirements under Section 19 of the PMLA before authorising custody.

The Court also rejected the petitioner’s argument that the Enforcement Directorate lacked jurisdiction in the absence of a valid predicate offence. The Bench noted the ED’s case that multiple FIRs involving offences under the Bharatiya Nyaya Sanhita, 2023 and allegations relating to fraudulent surrogacy practices, fabricated medical records, and financial transactions formed the basis of the ECIR and investigation.

The High Court further observed that the petitioner’s allegations regarding non-supply of documents, non-intimation of arrest and procedural irregularities involved disputed questions of fact which could not appropriately be adjudicated in the exercise of writ jurisdiction under Article 226 of the Constitution.

Relying upon Radhika Agarwal v. Union of India (2025), the Court reiterated that judicial review in cases involving arrest under special statutes such as the PMLA must remain limited to examining compliance with statutory safeguards and should not extend to testing the sufficiency or probative value of the material collected during investigation.

The Bench observed: “The power of judicial review in cases of arrest under such Special Acts should be exercised very cautiously and in rare circumstances to balance individual liberty with the interest of justice and of the society at large.”

Conclusion

The High Court held that mere similarity between the “reasons to believe” and “grounds of arrest” does not by itself establish non-application of mind under Section 19 of the Prevention of Money Laundering Act, 2002.

The Court further held that the adequacy or evidentiary value of the material collected by the Enforcement Directorate cannot be examined through a roving enquiry in writ jurisdiction at the investigation stage.

Accordingly, the writ petition challenging the arrest and remand under the PMLA came to be dismissed.

Cause Title: Dr Pachipala Namratha @ Athaluri Namratha v. Union of India

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