Written Grounds of Arrest Not Mandatory for Pre-Pankaj Bansal Arrests: Bombay High Court Upholds Validity of Arrest Under Article 22(1)

“In Absence of Demonstrable Prejudice, Oral Communication of Arrest Grounds Is Constitutionally Sufficient” –  On 22nd September 2025, the Bombay High Court delivered a significant ruling on procedural safeguards in criminal arrests, particularly in the context of large-scale financial fraud. Justice Dr. Neela Gokhale dismissed the bail application of the accused, observing that failure to provide written grounds of arrest before the Supreme Court's ruling in Pankaj Bansal (3 October 2023) does not automatically vitiate the arrest if the accused has been otherwise informed of the grounds and suffered no prejudice.

The Court noted, “The arrest in the present case having occurred on 16.03.2023, well before the pronouncement in Pankaj Bansal, cannot be tested by a standard that was laid down subsequently.”

This judgment reinforces the distinction between the procedural standards applicable before and after Pankaj Bansal, and reaffirms that substantial compliance with Article 22(1) and Section 50 CrPC is sufficient if no violation of rights or prejudice is shown.

“This Was Not a Business Dispute, But a Pre-Meditated Conspiracy to Defraud Innocent Investors” – Court Cites Modus Operandi and Repeated Offences to Deny Bail

The allegations against the applicant, a director of A.S. Agri and Aqua LLP, involved a complex and calculated investment fraud, wherein promises of high returns from hydroponic farming were used to lure gullible investors. The complainant was allegedly promised annual returns of ₹2 crore for five years, following a ₹1 crore investment, along with additional expenditure on land and development.

Calling it “a clear case of inducement by deception,” the Court found that the accused and other directors misrepresented facts, collected money without providing proper agreements, and then resigned from the company, effectively absconding from responsibility. The Court noted that over 900 investors were affected, and the estimated fraud ran into ₹377.59 crore.

Justice Gokhale remarked, “The nature of the transaction was not that of a genuine commercial partnership or investment, but a unilateral promise of fixed returns... This is precisely what the legislature intended to prevent under the MPID Act.”

She further clarified that the provisions of the Maharashtra Protection of Interests of Depositors Act, 1999 (MPID), were attracted, as the scheme was “nothing but a calculated fraud under the garb of an investment opportunity.”

“Arrest Procedure Was Lawful – Bail Cannot Be Granted Merely for Want of Written Grounds in a Precedent-Setting Vacuum”

The applicant argued that his arrest was vitiated due to the failure of the investigating officer to provide written grounds of arrest, thereby violating Article 22(1) of the Constitution and Section 50 of the CrPC. In response, the Court firmly rejected the argument by clarifying that the right to be informed of arrest grounds does not necessarily mean they must be given in writing in all cases prior to Pankaj Bansal.

Citing the Supreme Court’s subsequent decision in Ram Kishor Arora vs. Directorate of Enforcement, the Court noted:

“The use of the word ‘henceforth’ in Pankaj Bansal signifies that the judgment has prospective applicability, and arrests made prior thereto cannot be tested by that yardstick.”

Justice Gokhale emphasized that the applicant was verbally informed of the grounds, had received prior notice under Section 41A CrPC, and signed the Remand Application, thereby showing his awareness of the reasons for arrest.

“There is no demonstrable prejudice caused to the Applicant for not having received the grounds of arrest in writing, the same having been intimated to him promptly, in any case,” the Court held.

“Gravity, Scale, and Repeat Offences Preclude Grant of Bail – Parity with Co-accused Not Available in Absence of Clean Record”

The applicant had also sought bail on grounds of parity with other co-accused who had been granted relief by the Trial Court. However, the High Court rejected this plea, observing that bail granted to others does not create an automatic right, particularly where the applicant is alleged to be a repeat offender.

The Court observed, “There are five prior criminal cases involving similar allegations of fraud against the applicant. His repeated involvement shows a consistent pattern of deceit.”

Importantly, the State had already filed appeals challenging the bail granted to co-accused, and the Court refused to extend benefit of parity, given the applicant’s deeper role in the fraud.

“This Court finds that the allegations are not only grave but are supported by documentary evidence including bank transactions and witness testimonies. The applicant’s conduct shows complete disregard for the law,” the judgment concluded.

Date of Decision: 22nd September 2025