Arvind Kejriwal v. Directorate of Enforcement: the 'need and necessity to arrest' under Section 19 PMLA

The facts in brief

Arvind Kejriwal, the Chief Minister of Delhi, was arrested by the Directorate of Enforcement on 21 March 2024 in a Prevention of Money Laundering Act, 2002 matter arising out of ECIR dated 22 August 2022. The predicate allegations concerned the framing and implementation of the Delhi Excise Policy for 2021–22 — the same regime the agencies say was structured to generate kickbacks that were then laundered, and which underlies the connected proceedings against other Delhi leaders. This appeal concerned only the money-laundering matter before the ED; the separate CBI proceedings arising out of the same excise policy were dealt with in a later, distinct decision and are not the subject of this judgment.

Kejriwal challenged the legality of his arrest, contending that it did not satisfy Section 19 of the PMLA. His challenge had been rejected by the Delhi High Court. The appeal — Criminal Appeal No. 2493 of 2024 — came before a bench of Justices Sanjiv Khanna and Dipankar Datta, who delivered judgment on 12 July 2024. Justice Khanna authored the opinion.

The question before the Court

Section 19(1) of the PMLA permits a designated officer to arrest a person only where, on the basis of material in the officer's possession, the officer has "reason to believe" — recorded in writing — that the person is guilty of an offence under the Act. The provision carries in-built safeguards: the reasons must be recorded, the grounds of arrest must be furnished to the arrestee, and the order together with the material must be forwarded to the adjudicating authority.

Kejriwal argued that these safeguards had not been met, and — going further — that even where the formal conditions are satisfied, an arrest must additionally answer a question of "need and necessity": whether taking the person into custody was actually required in the facts of the case. The Court had therefore to decide two things: whether the Section 19 conditions were met on the record, and whether "need and necessity to arrest" is a separate, freestanding ground on which a Section 19 arrest can be assailed.

What the Court held on Section 19

The bench treated the "reasons to believe" limb as the core of the Section 19 inquiry and held that it is not a formality that the ED may satisfy at its discretion. The power to arrest, the Court said, cannot be exercised on the "whims and fancies" of the officer; the satisfaction must rest on material that is genuinely and fairly considered. Critically, the officer is not free to build the record selectively.

Ignoring absolving material without explanation, the Court reasoned, is not shielded by the subjective character of the officer's opinion. Where the officer disregards relevant exculpatory material, the error "goes to the root of the decision making process" and amounts, in the Court's phrase, to legal malice. The judgment thus locates a genuine reviewability in the Section 19 standard: the "reason to believe" is subjective in form but is anchored to an objective duty to weigh all the material in possession, and a court may examine whether that duty was discharged.

On the record before it, the bench found that the "reasons to believe" criterion had been satisfied. That finding disposed of the narrow legality challenge on the first limb — but it did not dispose of the second question Kejriwal had raised.

The 'need and necessity to arrest'

The distinctive contribution of the judgment is its engagement with a possible additional ground. Beyond the "reasons to believe" that Section 19 expressly requires, the Court considered whether an arrest must also satisfy a "need and necessity" — a requirement familiar from the ordinary law of arrest, where Arnesh Kumar v. State of Bihar had insisted that officers weigh whether custody is actually required before arresting under the general criminal-procedure architecture.

The Court found the point substantial enough to warrant authoritative resolution but not one it could settle on its own. It framed three questions and referred them to a larger bench:

• Whether the "need and necessity to arrest" is a separate ground to challenge an order of arrest passed under Section 19(1) of the PMLA;
• Whether the "need and necessity to arrest" refers to the satisfaction of the formal parameters for taking a person into custody, or instead relates to other personal grounds and reasons regarding the necessity of arresting a person in the facts and circumstances of the case; and
• If those questions are answered in the affirmative, what parameters and facts a court must take into consideration while examining the "need and necessity to arrest".

Because the second question was left open, the Court did not finally decide the validity of Kejriwal's arrest. The doctrine is therefore, at the time of this decision, framed but unsettled: the Court has identified "need and necessity" as a candidate ground of challenge and handed the question of its existence and contours to a larger bench.

The interim bail

Having referred the arrest question rather than deciding it, the bench turned to relief. It directed Kejriwal's release on interim bail in the ED matter, on the same terms it had earlier imposed in its order of 10 May 2024: bail bonds of Rs. 50,000 with one surety of the like amount, together with restrictions — including that he not visit the Chief Minister's office or the Delhi Secretariat, not comment on his role in the case, and not interact with witnesses or access official case files. The interim character of the relief matters: it flows from the Court's decision to defer, not resolve, the legality question, and it left the substantive challenge alive for the larger bench.

Why it matters

The judgment sits at the intersection of two lines the Court has been developing. On the arrest side, it extends the reviewability logic of decisions such as Prabir Purkayastha v. State (NCT of Delhi), which insisted that the grounds of arrest be furnished in writing, by demanding that the material underlying a PMLA arrest be fairly and fully weighed rather than selectively assembled. On the money-laundering side, it operates within the architecture upheld in Vijay Madanlal Choudhary v. Union of India, which validated Section 19 and the twin bail conditions of Section 45, while opening a distinct question — the need-and-necessity ground — that Vijay Madanlal did not resolve.

The reference is the decision's most consequential feature. It signals that the Court is not treating a Section 19 arrest as beyond meaningful scrutiny simply because the statutory formalities are recorded; the possibility that the ED must also justify why custody was necessary is now a live constitutional question, informed by Article 14's demand for consistent application and Article 21's protection of liberty. Until the larger bench answers, practitioners should treat "need and necessity" as an argument that has been formally recognised as arguable — not as settled law.

For the excise-policy cluster specifically, this decision is the ED-side counterpart to the bail relief that Kejriwal, Manish Sisodia and others obtained on speedy-trial grounds. The two routes are analytically separate: one attacks the legality of the arrest at its inception under Section 19; the other rests on prolonged incarceration without trial engaging Article 21. The Kejriwal ED judgment belongs to the first.

Related on Valkya

• Vijay Madanlal Choudhary v. Union of India: the PMLA architectural ruling
• Prabir Purkayastha v. State (NCT of Delhi): grounds of arrest
• Manish Sisodia v. Directorate of Enforcement: speedy trial and the rule of bail
• Prem Prakash v. Directorate of Enforcement: 'bail is the rule' under the PMLA
• Arnesh Kumar v. State of Bihar: arrest discipline

Sources

1. Supreme Court of India — Judgment, Arvind Kejriwal v. Directorate of Enforcement, 2024 INSC 512 (Criminal Appeal No. 2493 of 2024): https://www.sci.gov.in/
2. Supreme Court Observer — "SC grants interim bail to Kejriwal in ED case; refers question of legality of arrest to a larger bench": https://www.scobserver.in/journal/sc-grants-interim-bail-to-kejriwal-in-ed-case-refers-question-of-legality-of-arrest-to-a-larger-bench/
3. LiveLaw — "ED Officer Must Also Consider Materials Exonerating Accused Before Deciding To Arrest, Can't Pick & Choose: Supreme Court": https://www.livelaw.in/top-stories/supreme-court-arvind-kejriwal-judgment-ed-cannot-ignore-exculpatory-material-263218
4. SCC OnLine Blog — "Supreme Court grants interim bail to Arvind Kejriwal in PMLA case; refers question of arrest by ED to larger bench": https://www.scconline.com/blog/post/2024/07/12/supreme-court-grants-interim-bail-arvind-kejriwal-in-pmla-case/
5. Verdictum — "Applicability Of Doctrine Of Need & Necessity To Arrest In PMLA Cases: SC Refers 3 Questions Before Larger Bench" (2024 INSC 512): https://www.verdictum.in/court-updates/supreme-court/2024-insc-512-arvind-kejriwal-vs-directorate-of-enforcement-pmla-larger-bench-1543807