A) ABSTRACT / HEADNOTE

The Supreme Court, in Directorate of Enforcement v. Subhash Sharma ([2025] 1 S.C.R. 1409; 2025 INSC 141), examined whether an arrest in proceedings under the Prevention of Money Laundering Act, 2002 could be treated as illegal where the accused was not produced before a Magistrate within twenty-four hours, thereby violating Article 22(2) and Article 21 of the Constitution. The Court accepted the High Court’s factual finding that physical custody had been taken by the Enforcement Directorate at 11:00 a.m. on 5 March 2022, while the formal arrest memo recorded a later time and the accused was produced before the Magistrate well beyond the 24-hour window.

Holding that the requirement of Article 22(2) is embodied in Section 57, Cr.P.C., and applies to PMLA proceedings by virtue of Section 65, PMLA, the Court held that continuation in custody after the 24-hour period vitiated the arrest and infringed the accused’s fundamental right to liberty under Article 21. Once an arrest is declared illegal on this ground, the judicial approach is to grant bail rather than insist on satisfying the PMLA “twin tests” under Section 45(1)(ii). The appeal by the Directorate was dismissed. The judgment reinforces procedural safeguards against prolonged executive detention, confirms the applicability of Section 57, Cr.P.C. to special statutes via Section 65, PMLA, and underscores that violation of Article 22(2) requires remedial judicial relief, including bail where appropriate.

Keywords: Article 22(2); Article 21; Section 57, Cr.P.C.; Section 45, PMLA; Section 65, PMLA; illegal arrest; bail; Enforcement Directorate.

B) CASE DETAILS 

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The appeal concerned the legality of arrest and the appropriate remedy where procedural guarantees enshrined in Article 22(2) production before a Magistrate within twenty-four hours are not observed in PMLA enforcement actions. The Enforcement Directorate (ED) challenged the High Court’s grant of bail to the respondent on the ground that arrest was illegal. ED’s contention rested on an asserted formal arrest time that, if accepted, complied with the 24-hour rule. The High Court, however, relied on the case diary and LOC execution record to hold that physical custody passed to ED much earlier and that the accused remained in custody beyond the statutory constitutional window without judicial production.

The Supreme Court was asked to re-examine these fact findings and the legal consequence of an arrest found vitiated for non-production within twenty-four hours. The Court’s reasoning addressed three core matters:

(i) whether Article 22(2) and Section 57, Cr.P.C. apply in PMLA proceedings;

(ii) whether the factual matrix demonstrated custody beyond 24 hours; and

(iii) what relief follows where a custodial detention violates fundamental rights particularly whether bail must follow notwithstanding the stringent “twin tests” in Section 45(1)(ii), PMLA. The decision situates procedural safeguards as paramount and clarifies that statutory specialness in PMLA does not displace Constitutionally mandated time limits for judicial production.

D) FACTS OF THE CASE

The respondent was the subject of a Look Out Circular (LOC) issued at the instance of the Enforcement Directorate, which led the Bureau of Immigration at IGI Airport to detain him. The record shows the Bureau detained the respondent from 18:00 hours on 4 March 2022 and that physical custody passed to the ED at 11:00 hours on 5 March 2022. An arrest memo prepared by ED bears a typed form with the date/time filled in by hand as 01:15 hours on 6 March 2022, and the respondent was produced before the remand Court only at 15:00 hours on 6 March 2022.

The appellant-ED argued that the formal arrest time (01:15 on 6 March) triggered the 24-hour window and that production within 24 hours from that point satisfied constitutional requirements. The High Court rejected that position on the documentary record, holding that custody in substance was in ED from 11:00 a.m. on 5 March and that no production before a Magistrate occurred within 24 hours of that custody. The High Court therefore held the arrest illegal and granted bail; ED appealed. These factual findings about actual physical custody and timing of production are central to the legal outcome.

E) LEGAL ISSUES RAISED

i. Whether non-production of the accused before a Magistrate within twenty-four hours of taking physical custody infringes Article 22(2) and consequently Article 21?
ii. Whether Section 57, Cr.P.C. applies to PMLA proceedings by virtue of Section 65, PMLA, and if there is any inconsistency between the PMLA and Section 57?
iii. What is the legal consequence — and appropriate judicial remedy — where an arrest is found to be vitiated for breach of Article 22(2) in PMLA matters, particularly in relation to bail under Section 45(1)(ii), PMLA?

F) PETITIONER/ APPELLANT’S ARGUMENTS

The counsels for Petitioner / Appellant submitted that:
i. The ED’s formal arrest record timestamp (01:15 hrs on 6 March 2022) is the operative moment from which the 24-hour rule must be computed, and the accused was produced within 24 hours from that recorded arrest time.
ii. Execution of an LOC and interim detention by immigration authorities does not equate to ED custody unless and until ED formally takes over; therefore, technical discrepancies in earlier detention should not automatically render the arrest illegal.
iii. The stringent anti-money-laundering framework and the “twin tests” under Section 45(1)(ii), PMLA justify denial of bail unless the statutory tests are satisfied.

G) RESPONDENT’S ARGUMENTS

The counsels for Respondent submitted that:
i. The ED initiated the LOC and the Bureau of Immigration detained the respondent on behalf of the ED, meaning physical custody effectively lay with ED from the time of detention; therefore the 24-hour period began before the formal arrest memo.
ii. Documentary material (case diary; LOC execution record) supports the High Court’s factual conclusions about custody and delay in production.
iii. Where Article 22(2) is breached, the arrest is vitiated and the accused’s right to liberty under Article 21 is infringed, so bail should follow irrespective of the PMLA twin tests.

H) RELATED LEGAL PROVISIONS 

i. Article 22(2), Constitution of India — requirement of production before Magistrate within 24 hours.
ii. Article 21, Constitution of India — protection of life and personal liberty.
iii. Section 57, Code of Criminal Procedure, 1973 — arrest and production before Magistrate within 24 hours.
iv. Section 45(1)(ii), Prevention of Money Laundering Act, 2002 — bail conditions and twin tests for offences under PMLA.
v. Section 65, Prevention of Money Laundering Act, 2002 — application of Cr.P.C. provisions to PMLA proceedings.

H) JUDGEMENT

The Court refused ED’s attempt to recharacterize the operative arrest moment as the typed/hand-filled time on the arrest memo. Accepting the High Court’s factual matrix, the Supreme Court held that the respondent was effectively in ED custody from 11:00 a.m. on 5 March 2022 and that no production before the Magistrate occurred within twenty-four hours from that time. That omission constituted a breach of Article 22(2) and, by extension, Article 21. The Court emphasized that the protective mandate of Article 22(2) is reflected in the statutory command of Section 57, Cr.P.C., and that there is no inconsistency between PMLA and Section 57 because Section 65, PMLA expressly renders Cr.P.C. provisions applicable.

Consequently, the arrest was vitiated. The Court further held that where fundamental rights are breached in arrest/detention, the proper relief at the bail stage is release on bail; the stringent Section 45(1)(ii) twin tests cannot be used to deny bail in the face of an illegal arrest. Accepting the High Court’s conclusion that the arrest was illegal, the Supreme Court found no error in granting bail and dismissed the appeal. The judgment, therefore, treated procedural compliance with constitutional timelines as non-negotiable even in special statutory regimes.

a. RATIO DECIDENDI

The ratio is twofold: first, Article 22(2)’s protection production before a Magistrate within 24 hours is a constitutional imperative incorporated into Section 57, Cr.P.C., and that requirement applies in PMLA proceedings by operation of Section 65, PMLA; second, if custody continues beyond the constitutionally mandated period without production, the arrest is vitiated and the accused’s Article 21 right to liberty stands violated, obliging the court to grant bail where it is considering a bail application. Thus, substantive statutory aims of PMLA do not displace constitutional safeguards and an illegal arrest cannot be remedied by retrospective formalism in arrest documentation.

b. OBITER DICTA

The Court observed by way of guidance that Courts must uphold constitutional freedoms and may not be complicit in allowing procedural workarounds that evade Article 22(2). It noted the impropriety of retrospective filling of arrest time in paperwork and cautioned authorities to ensure transparent custody records. While these remarks do not add an independent legal rule beyond the ratio, they underscore judicial insistence on procedural fidelity in enforcement of economic crime statutes.

c. GUIDELINES

i. Enforcement agencies should record the actual time of taking physical custody in contemporaneous entries and ensure immediate production before the nearest Magistrate within 24 hours.
ii. Arrest memos and custody documents must be prepared honestly; retrospective or hand-filled entries that obscure custody timelines will be scrutinized and may be rejected as attempts to circumvent constitutional requirements.
iii. Courts hearing bail applications in special statute cases must first examine whether Articles 21/22(2) were complied with; if a violation is found, the focus on statutory bail tests (e.g., PMLA twin tests) yields to the need to remedy the illegality of arrest.
iv. Where an LOC is executed by ancillary agencies (e.g., immigration), recordkeeping must expressly denote whether custody on behalf of the investigating agency has been assumed, and when.

I) CONCLUSION & COMMENTS

The decision reaffirms an orthodox constitutional principle: procedural safeguards in arrest are non-derogable and apply even in special or stringent statutory frameworks aimed at combating serious economic crime. The Court’s refusal to accept a formalistic timestamp over the documentary and factual record reflects a purposive approach that privileges substance over form. Practically, the judgment signals to investigating agencies that reliance on LOCs, ancillary detentions, or delayed paperwork cannot be used to extend custody beyond the Article 22(2) ceiling.

For defence practice, the ruling provides a clear remedy: where production within 24 hours is not established, courts should treat the arrest as vitiated and entertain bail despite the tough bail regime under PMLA. For prosecutors and investigators, the judgment is a caution to adhere to contemporaneous documentation and prompt judicial production if they wish to avoid the legal consequences of illegal detention. The judgment thus balances the State’s interest in effective prosecution with constitutional rights, reinforcing that anti-money-laundering enforcement must conform to foundational liberties.

J) REFERENCES

a. Important Cases Referred

i. Directorate of Enforcement v. Subhash Sharma, Criminal Appeal No. 310 of 2025, [2025] 1 S.C.R. 1409 : 2025 INSC 141.

b. Important Statutes Referred

i. Constitution of India, Articles 21, 22(2).
ii. Code of Criminal Procedure, 1973, Section 57.
iii. Prevention of Money Laundering Act, 2002, Sections 45(1)(ii) and 65.