Punjab & Haryana High Court Upholds ED Arrests Under PMLA in Ramprastha Group Case; Holds Compliance with Section 19 Established and Scope of Judicial Review Limited
Case Name: Arvind Walia v. Directorate of Enforcement and Another
Date of Judgment: 29 January 2026
Citation: CRWP-8667-2025 and CRWP-8750-2025
Bench: Hon’ble Mr. Justice Tribhuvan Dahiya
Held: The Punjab and Haryana High Court held that the arrests of the petitioners under Section 19 of the Prevention of Money Laundering Act, 2002 were lawful, having been preceded by recording of “reasons to believe” on the basis of material in possession and due compliance with statutory safeguards, including forwarding of requisite documents to the Adjudicating Authority. The Court held that subsequent addition of FIRs to the ECIR by way of addendum does not vitiate an arrest already effected, and that judicial review at this stage does not extend to a merits re-appraisal of the material relied upon by the Enforcement Directorate.
Summary: The petitions were filed under Articles 226/227 of the Constitution read with Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, seeking quashing of the petitioners’ arrests dated 21.07.2025, arrest memos, grounds of arrest, remand orders passed on 21.07.2025, 25.07.2025 and 28.07.2025, and the order dated 31.07.2025 passed by the Special Judge, Gurugram, rejecting the plea to review remand and direct release.
The petitioners are promoters and Directors of M/s Ramprastha Promoters & Developers Pvt. Ltd., accused of collecting substantial funds from homebuyers over several years without delivering possession, and of diverting those funds to group and non-group entities, thereby generating proceeds of crime. Based on multiple FIRs registered by the Economic Offences Wing and Haryana Police for scheduled offences of cheating and conspiracy, the Enforcement Directorate registered an ECIR on 09.08.2021 and conducted investigation under the PMLA.
The petitioners contended that on the date of arrest there was no subsisting scheduled offence, as certain FIRs had either been stayed or were later closed pursuant to settlements; that the “reasons to believe” and “grounds of arrest” were mechanical and identical; that relevant exculpatory material was ignored; that subsequent addendum to the ECIR could not retrospectively validate the arrests; and that mandatory compliance under Section 19(2) PMLA had not been followed.
The Enforcement Directorate opposed the petitions, asserting that sufficient material existed demonstrating diversion of homebuyers’ funds and the petitioners’ active role; that settlements or later acceptance of cancellation reports do not automatically nullify PMLA proceedings; that the ECIR is an internal, non-statutory document; and that all documents, including reasons to believe and material in possession, were duly forwarded to the Adjudicating Authority on the date of arrest.
The Court analysed the statutory scheme and precedent, including Vijay Madanlal Choudhary and Arvind Kejriwal. It held that stay of a Magistrate’s order under Section 156(3) CrPC does not, by itself, negate the existence of an FIR; that cancellation or settlement in predicate offences does not automatically terminate PMLA proceedings; and that the ED is not barred from investigating or relying on additional FIRs discovered during investigation even if formally added to the ECIR later. The Court further held that similarity between “reasons to believe” and “grounds of arrest” does not per se establish non-application of mind, and that Section 19(2) compliance was demonstrated by contemporaneous forwarding and acknowledgment by the Adjudicating Authority.
Emphasising the limited scope of judicial review, the Court declined to undertake a merits scrutiny of the material relied upon for arrest, holding that the arrests were based on relevant material with a rational nexus to the alleged offence of money laundering.
Decision: Both writ petitions were dismissed. The Court upheld the arrests and remand orders, finding no violation of Section 19 of the PMLA or constitutional safeguards.