Punjab and Haryana High Court | Arrest Under PMLA Upheld | Ex-MLA Dharam Singh Chhoker’s Plea Dismissed Over ₹363 Crore Housing Project Diversion
Safiya Malik
The High Court of Punjab and Haryana Single Bench of Justice Tribhuvan Dahiya has dismissed the petition of former Haryana MLA Dharam Singh Chhoker, who had challenged his arrest by the Enforcement Directorate under the Prevention of Money Laundering Act, 2002. The case involved allegations that Mahira Infratech Pvt. Ltd., a company controlled by Chhoker and his family, collected about ₹363 crore from homebuyers for 1,500 flats due in 2021–22 but diverted the funds as advances to other firms, for personal expenditure, and for acquiring properties, constituting proceeds of crime under the statute.
The matter arose from proceedings initiated under the Prevention of Money Laundering Act, 2002 (PMLA), following allegations of siphoning of homebuyers’ funds in a large affordable group housing project at Gurugram. The company, Sai Aaina Farms Private Limited (SAFPL), later known as Mahira Infratech Private Limited, was at the centre of the allegations. The company, controlled by the petitioner and his family members, was accused of diverting funds collected from homebuyers for personal gains, property acquisitions, and inter-company transactions.
The company obtained a licence in 2017 from the Department of Town and Country Planning, Haryana, to build approximately 1500 flats across 10 acres. Construction was to be completed by 2021-22. SAFPL collected about ₹363 crores from buyers but allegedly failed to deliver on the promised timelines. Complaints were filed, leading to registration of FIRs under various provisions of the Indian Penal Code, including cheating, forgery, and criminal conspiracy.
Following directions from a Magistrate under Section 156(3) Cr.P.C., an FIR was registered in 2021 at Police Station Sushant Lok, Gurugram. Subsequent complaints and investigations led to further FIRs being registered at Rajendra Park and Sushant Lok Police Stations, covering offences under Sections 420, 467, 468, 471, and 120-B IPC. The Enforcement Directorate registered ECIR/GNZO/20/2021 on the basis of these predicate offences and initiated money laundering proceedings.
The petitioner challenged the initiation of proceedings and various consequential orders, including the issuance of non-bailable warrants and subsequent remand orders. Multiple rounds of litigation followed, including petitions before the High Court and Special Leave Petitions before the Supreme Court. Interim protection orders were passed on several occasions, but non-bailable warrants continued to be issued against the petitioner and his family members.
On 4 May 2025, ED officials apprehended the petitioner from a hotel in New Delhi. Allegations were raised by the petitioner regarding manhandling and assault during the arrest. It was claimed that the petitioner suffered injuries, including a fractured elbow, and that the arrest was carried out without compliance with mandatory provisions of Section 19 PMLA. The ED, however, stated that the petitioner attempted to evade arrest despite being shown a copy of the warrants and was apprehended after resistance.
On 5 May 2025, at 2:37 am, the petitioner was formally arrested under Section 19(1) PMLA. He was produced before the Special Judge, Gurugram, and remanded to ED custody until 9 May 2025. Subsequent extensions of custody were granted up to 17 May 2025. Thereafter, the petitioner was remanded to judicial custody, where he continued to remain.
The petitioner’s counsel contended that the arrest was illegal, citing violation of Section 19 PMLA, non-compliance with procedure under Sections 75 and 76 Cr.P.C., and reliance on inadmissible materials. It was argued that the ED had earlier acknowledged that the petitioner had joined the investigation in April 2024, and that there was no material change thereafter to justify arrest. It was also submitted that six earlier non-bailable warrants could not be executed, indicating lack of necessity for custodial interrogation.
The Enforcement Directorate opposed the petition, submitting that the petitioner and his family controlled the group companies involved in diversion of large sums of money. It was argued that custodial interrogation was essential to trace the money trail and proceeds of crime. The ED maintained that all mandatory requirements under Section 19 PMLA were complied with, and that copies of reasons to believe, grounds of arrest, and supporting material were furnished to the petitioner and placed before the Special Judge.
The Court observed: “The petitioner was arrested by an authorised officer. He was also informed about the ‘grounds of arrest’ by furnishing a copy of the same, as recorded in the arrest order. The ‘reasons to believe’ have also been recorded on the basis of material with the authorised officer that the petitioner is guilty of offences punishable under the PMLA.”
The Court further stated: “It is apparent from the intimation of arrest letter dated 05.05.2025, that a copy of arrest order of the same date along with copies of arrest memo, intimation of arrest, personal search memo, ‘grounds of arrest’ and material in possession, based upon which the ‘reasons to believe’ have been recorded, were forwarded to the Special Judge.”
Addressing the scope of judicial review, the Court quoted the Supreme Court’s decision in Arvind Kejriwal v. Directorate of Enforcement: “Judicial review does not amount to a mini-trial or a merit review. The exercise is confined to ascertain whether ‘reasons to believe’ are based upon material which establish, in the opinion of the designated officer, that the arrestee is guilty of an offence under the PML Act.” The Court added, “The adequacy or sufficiency of material is not to be reviewed, nor the officer’s subjective satisfaction. Also, the Court is only to examine whether the decision to arrest is rational, fair and as per law.”
Rejecting the petitioner’s plea, the Court recorded: “The allegations regarding the petitioner’s manhandling and assault cannot be believed at this stage, nor can the arrest be termed illegal on that account. There are counter allegations by the ED to the effect that the petitioner tried to flee from the spot and was apprehended with the help of officers and staff. This episode is a matter of trial.”
On the petitioner’s contention that earlier non-bailable warrants were not executed, the Court stated: “Merely because six NBWs could not be executed earlier or that the petitioner had joined investigation in April 2024, it cannot be contended that there was no requirement of arrest ever after. Evidently, on ED’s record, the petitioner, and three of his sons, are accused of concealing the true nature of the proceeds of crime and using the same for personal and family expenses, apart from siphoning off the proceeds in the form of loans and acquiring properties.”
The Court also referred to earlier orders of Division Benches and the Supreme Court: “Judgments passed by this Court and orders of the Supreme Court cannot be read against the petitioner in the present case, as none of them recorded any finding that his arrest was illegal.”
Concluding on legality of the arrest, the Court held: “The valid ‘reasons to believe’ have been recorded by the authorised officer. The arrest cannot be said to be arbitrary or illegal.”
“In view of the discussion, there is no merit in the petition and it stands dismissed. Pending miscellaneous application(s), if any, shall also stand disposed of.”
Advocates Representing the Parties
For the Petitioner: Mr. Vikram Chaudhri, Senior Advocate with Ms. Hargun Sandhu, Advocate
For the Respondents: Mr. Zoheb Hossain, Special Counsel (Through Video Conferencing) with Mr. Lokesh Narang, Senior Panel Counsel
Case Title: Dharam Singh Chhoker v. Directorate of Enforcement and Others
Neutral Citation: 2025: PHHC:124587
Case Number: CRWP-5261-2025 (O&M)
Bench: Justice Tribhuvan Dahiya
