ED Cannot Arrest Accused Without Fresh Material After Seeking Further Questioning On Existing Evidence: Bombay HC

The Bombay High Court has held that the Enforcement Directorate could not arrest a person on the same material it had relied upon to seek further questioning in the absence of any fresh incriminating material or supervening circumstances.

Justice Milind N Jadhav quashed the remand orders passed by the Special Court on June 23, June 29 and July 4, 2026 against Jitendra Pandey, along with subsequent remand orders, and directed his immediate release from prison.

The Court also refused the ED's request to stay the order for two weeks to enable it to approach the Supreme Court.

The case arose from an investigation into alleged fraudulent foreign remittances through shell entities. Following an FIR registered in October 2023, the ED registered an ECIR in December 2023, with the alleged proceeds of crime estimated at ₹1,618 crore.

According to the ED, Pandey and others allegedly formed 97 partnership firms and 18 private companies using the KYC documents of gullible individuals and opened 269 mule bank accounts. They allegedly used forged invoices, bills of lading and other documents to remit approximately ₹7,569 crore abroad to evade customs duty through under-invoicing.

Pandey was named as an accused in a supplementary chargesheet filed in May 2024. After searches and multiple rounds of questioning, the ED arrested him on June 23, 2026, and obtained further remand orders from the Special Court.

Challenging his arrest, Pandey argued that he had cooperated with the investigation and that no fresh incriminating material had emerged to justify his arrest.

The ED opposed the plea, alleging that Pandey controlled shell-entity bank accounts used for fraudulent foreign remittances worth ₹7,358 crore. It claimed that he and his associates induced individuals to act as dummy directors and forged their signatures. The agency further alleged that Pandey layered the proceeds of crime through Sahakari Bank accounts held by him, his family members and associates, and was giving evasive replies while withholding details of the persons involved, intermediaries, and ultimate beneficiaries of the remittances.

The Court noted that Pandey had appeared before the ED on several occasions over an extended period and that his statements had been recorded multiple times.

The Court observed that the ED had approached the Special Court under Sections 50 of the Prevention of Money Laundering Act to obtain permission to question Pandey further on the material already available with it. After the Special Court allowed the application, the agency proceeded to arrest him.

It observed that arrest is a drastic measure and that Section 19(1) of the PMLA uses the discretionary term “may arrest”. It held that the ED could not disregard the statutory process under Sections 50(2) and 50(3), which it had invoked to question and confront the accused with the material already in its possession.

“.once a very valuable statutory power having been invoked by Respondent No.1 under Section 50 and more specifically under Section 50(2) and (3), then it cannot be open to Respondent No.1 to forego the same and notwithstanding completion of that action invoke Section 19 to arrest the Petitioner, unless a very strong and fresh circumstance and material incriminating the Petitioner is placed on the record before the Court and the Court feels that arrest is absolutely imminent on the basis of such material and records its reasons to believe on the basis of such new found material.” it held

The Bench held that since the ED had sought and obtained the Special Court's permission to question Pandey on the basis of the material already in its possession, it could not abandon that process and arrest him on the same material. The Court observed that such an arrest could be justified only if fresh incriminating material or supervening circumstances emerged subsequently.

Finding the arrest to be a colourable exercise of power, the Court held that judicial review was warranted to prevent the misuse of Section 19.

Accordingly, the Court allowed the petition and directed to release Pandey from prison.

For Petitioner: Senior Advocate Ravindra Kadam, Advocates Shrey S Lodha, Dulraj Jain, Aryan Kotwal, Anjali Joshi, Hrutik Chavan and Aarti Nishad

For Respondents: Advocates C.R Pendse, Atharva S, Jagtap, Amit Mane and Amit Munde, APP