Nikhil Aggarwal And Another Vs Union of India And Another (Allahabad High Court)
Summary: The Allahabad High Court, comprising Justice Atul Sreedharan and Justice Achal Sachdev, allowed a habeas corpus challenge to the arrest of the petitioners under Section 26 of the Health Security se National Security Cess Act, 2025. The principal issue was whether the reasons to believe recorded by the proper officer authorising an arrest had to be communicated to the accused. The petitioners relied on the Supreme Court’s decision in Union of India v. Sunil Biyani, 2026 INSC 849, which held that communicating the reasons to believe enables an accused to challenge the arrest decision and seek anticipatory bail. The respondents argued that the judgment should not apply retrospectively and relied on the Allahabad High Court’s earlier coordinate-bench decision in Jai Kumar Aggarwal v. Directorate General of GST Intelligence, 2026:AHC:32796-DB.
The Court rejected the argument against retrospective application, explaining that constitutional court judgments ordinarily declare and interpret existing law unless their operation is expressly limited to the future. It held that Section 26 of the HSNS Cess Act was pari materia with the relevant provisions considered in the earlier Supreme Court decisions, and that Sunil Biyani had changed the legal position concerning disclosure of reasons to believe. The Court distinguished the role of the proper officer, who records the reasons to believe, from that of the officer who executes the arrest.
It found that the reasons to believe had not been served on the petitioners, although the respondents stated that they had been placed before the Magistrate at remand. The Court held that production before the Magistrate did not satisfy the requirement of communicating the reasons to the accused personally. The failure violated the petitioners’ fundamental rights under Articles 21 and 22 of the Constitution. Accordingly, the Court quashed and set aside the arrest and directed that the petitioners be released forthwith, unless wanted in another case.
Cases Discussed
1. Union of India v. Sunil Biyani, 2026 INSC 849 — The principal authority. The Supreme Court held that the order authorising arrest under Section 69 of the CGST Act must be communicated to the person concerned, enabling the person to pursue anticipatory bail. The Allahabad High Court applied this principle to the arrest under Section 26 of the HSNS Cess Act, 2025.
2. Radhika Agrawal v. Union of India, (2025) 6 SCC 545 — Cited for the requirement that the Commissioner record reasons to believe with reference to the underlying material and evidence, demonstrating application of mind.
3. Sushila Aggarwal v. State (NCT of Delhi), (2020) 5 SCC 1 — Referred to in connection with the right to seek anticipatory bail and the significance of communicating the order authorising arrest.
4. Jai Kumar Aggarwal v. Directorate General of GST Intelligence, 2026:AHC:32796-DB — The coordinate Bench had rejected the argument that reasons to believe were required to be supplied to the accused. The present Court held that the subsequent Supreme Court judgment in Sunil Biyani had changed the legal position.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Sri Swetashwa Agarwal, learned Senior Advocate, assisted by Sri Nishant Mishra and Sri Nikhil Pandey, learned counsel for the petitioners, Sri Atul Kumar Shahi, learned Senior Standing Counsel assisted by Sri Dhananjay Awasthi, learned counsel for the DGGI and Sri Kuldeep Kumar, learned counsel for the Union of India.
2. The present petition has been filed by the petitioners who are challenging their arrest on several grounds, but the most important one is a legal ground relating to Section 26 of the Health Security se National Security Cess Act 2025 (hereinafter referred to as “the Act”).
3. As per the requirement of Section 26 of the Act, the proper officer who is not below the rank of Commissioner must have, “reasons to believe”, that the person who is sought to be arrested has committed any offence specified in clause (a), or clause (b), or clause (c), or clause (d) of sub-section (1) of Section 18 which is punishable under the said sub-section or [sub-section (2)] of the said section.
4. Upon being so satisfied and having the said reason to believe, he may thereafter authorize any other proper officer below him to arrest such a person.
5. In simple words, Section 26 (1) firstly provides for the proper officer who feels the necessity to arrest, and thereafter, the arresting officer who only executes the arrest, and gives the accused the grounds of arrest.
6. The brief facts of the case are as follows:
On 16.07.2026, the office of Directorate General of GST Intelligence (DGGI), Zonal Unit, Meerut, (hereinafter referred to as the “proper officer”) whose power has also been delegated to the present officer who had issued the arrest warrant, as per Order No. 03/2026-HSNS Cess Act, New Delhi, 29/01/2026. The alleged act of the petitioner was that he was indulging in unauthorized manufacture and operation of unregistered packaging machines for pan masala and chewing tobacco, which was being carried out at Khasra Nos. 360, 361 and 375, Garhi Khusro, Village- Hiranki, New Delhi, by M/s DNA Products and M/s Pan Samrat Group, which was in contravention of the provisions of the HSNS Cess Act, 2025. Acting upon the complaint, on 16.07.2026 itself, the respondent authority raided the two firms mentioned hereinabove, whose proprietors were Jitender Kumar and Anil Kumar. They were the registered owners, and they are said to have disclosed that the applicant was the person who was managing the affairs of both the firms. On 16.07.2026 itself, the residence of the petitioner’s father was raided from 7:00 PM to 2:20 AM by the respondent authority, but nothing was recovered. Thereafter, on the same day, raid was also conducted on the premises of the petitioner from 8:20 PM of 16.07.2026 to 8:30 AM the next morning and as per the arguments put forth by the learned counsel for the petitioners, the only thing seized from the premises was a document pertaining to a loan of Rs.3,00,000/- purportedly given by the petitioner to Jitendra Kumar.
7. In a passing manner, learned counsel for the petitioners has also drawn the attention of this Court to the arrest memo, which according to the petitioner did not bear the document index number on the date it was prepared. He further submits that the digital signature in the arrest memo precedes the actual arrest of the petitioner. The said document has been seen by us, and it appears that the arrest memo is digitally signed on 17.07.2026 and uploaded at 10:30 PM, whereas the arrest memo reflects that the petitioner was arrested at 11:12 PM on 17.07.2026. In other words, the arrest memo was already prepared nearly 45 minutes before the actual arrest took place. The same arrest date and time is also mentioned in the arrest memo, which is at page 52 to the petition.
8. The main thrust of the petitioner’s argument is that the judgment of the Supreme Court in Union of India Vs. Sunil Biyani, 2026 INSC 849, leaves nothing to doubt and has categorically stated that the “reasons to believe” of the officer who feels the necessity to make the arrest must be disclosed and given to the accused even before his arrest in order to enable him to challenge those reasons to believe in his application for anticipatory bail.
9. In this regard, learned counsel for the petitioners has referred to paragraph 15 of the aforesaid judgment, where the Supreme Court has held that the power to authorize another to effect an arrest must be in the prescribed format and preceded by reasons to believe, which in turn must refer to the material and evidence underlying such opinion, which would reflect the application of mind.
10. The Supreme Court has stated that this has already been stipulated in the judgment passed by the Supreme Court in Radhika Agrawal Vs. Union of India, reported in 2025 (6) SCC 545. Thereafter, reference has also been made to paragraph 17 of Biyani’s judgment, where a submission was made on behalf of the respondent that an order which was passed under Section 69 of the CGST Act has to be communicated to the accused, as otherwise he cannot apply for an anticipatory bail. In paragraph 18, the Supreme Court accepted the contention put forth by the learned counsel for the respondent in that case and held that the order under Section 69 of the CGST Act being a sine qua non to seek anticipatory bail, it would be an anomaly to hold that the order need not be communicated at all.
11. It was also a part of the argument before the Supreme Court that though not specifically mandated by the statute that the reasons to believe must be given to the accused before his arrest, but by extension of principles of natural justice and fairness in administrative action, the same has to be communicated to the accused before he is arrested, and that it must be read into the statute as a mandatory provision requiring the reasons to believe be communicated to the person so sought to be arrested, as mandatory. It was also contended that if the same is not read into Section 69 of the CGST Act, it would lead to a situation where the accused can neither apply for anticipatory bail till the order under Section 69 is passed, and neither is he made aware of the order, so that he may challenge the same on available grounds before the appropriate forum. It further held that communication of such an order to the accused, on the contrary, reinforces his right to seek anticipatory bail, as stipulated in Sushila Aggarwal Vs. State of NCT of Delhi, 2020 (5) SCC 1.
12. Attention has also been drawn to the opinion of the Supreme Court, which constitutes the ratio of the aforementioned judgment, wherein in paragraph 20, the Supreme Court held that communicating the reasons to believe to the accused fortifies his right to challenge the order and the reasons to believe recorded by the Commissioner, which prompted the issuance of the said order of arrest. The Supreme Court further held that such an order, being amenable to judicial review by constitutional courts, may be tested on settled principles.
13. By words of caution, the Supreme Court held that if Section 69 of the CGST Act was to be read without there being any requirement of disclosure of the reasons to believe or withholding of reasons, the same would have drastic consequences on the right to liberty of the accused, or in other words, the Supreme Court held it could result in the violation of rights under Article 21 and 22 of the accused.
14. Learned counsel for the DGGI, on the other hand, has vociferously argued that the judgment of Sunil Biyani (supra) would not be applicable in this case as the arrest of the petitioner was made before the judgment was pronounced by the Supreme Court. It is his contention that the judgments of the Supreme Court would have only prospective application, and the petitioner in this case cannot be given the benefit of its retrospective application.
15. At the very outset, this Court politely disagrees with the contention put forth by the learned counsel for the DGGI. Every judgment of a constitutional court is retrospective in its application until and unless the court specifically mentions that the effect of the ratio settled by the judgment passed by the court shall only be applicable prospectively. It must be understood that a judgment passed by a constitutional court does not legislate or lay down a new law. It only enunciates an existing law by interpreting the statute, and therefore, its application would be squarely on such cases which existed even before the judgment elucidating the legal position was passed.
16. No statute is perfect. Legislative drafting always involves situations which cannot be envisaged entirely when the Parliament or the state legislature is making the law. It is precisely for those gray areas that courts exist. If legislations and statutes were absolutely perfect, taking into consideration all conceivable and perceptible situations, it would have required no more than artificial intelligence and computers to preside over cases and decide them. However, taking human shortcomings into consideration, and that statutes may have gray areas, is what justifies the existence of the courts in order to interpret and fill in the shortcomings of the statute and make them compliant, or in consonance of the constitutional mandate, which saves the court and the legislature the embarrassment of statutes being struck off. It is precisely on this count that the subject of statutory interpretation forms an important facet of judging.
17. Learned counsel for the State has referred to paragraphs 49 to 60 of Radhika Agarwal (supra) judgment, which is from page 237 onwards in the compilation given to the court by the petitioners, which has not been taken into consideration, and the judgment is sub silentio on reasons to believe in the CGST Act, vis-a-vis the GST.
18. Without going into depth into those judgments, the submission of the learned counsel for the respondent is that the said judgment only elucidated the phrase “reasons to believe” in the backdrop of the PMLA, Customs Act and the CGST Act, but has been sub silentio with regard to the interpretation of the phrase “reasons to believe” in the CGST Act.
19. As regards the same, the provision in Section 26 of the Act is in pari materia to the other three acts mentioned hereinabove. Since there has been no categorical negative finding that the principle would not apply to reasons to believe to be supplied to the accused in cases under the GST, it must be understood that the same has to be extended to cases under the Act, as the same is in pari materia with the other three acts mentioned hereinabove.
20. Learned counsel for the State has also placed before this Court the judgment of a coordinate bench of this Court in Jai Kumar Aggarwal Vs. Directorate General of GST Intelligence and three others, 2026:AHC:32796-DB, where, according to the learned counsel for the respondent, this issue has already been decided and judicial discipline would warrant that this Court follow the same, and if not satisfied with the reasoning given therein, refer the same to a larger bench.
21. In this regard, learned counsel for the respondent has drawn the attention of this Court to paragraph 19, wherein the argument was forwarded on behalf of the petitioner that the reasons to believe are required to be furnished to the petitioner along with the grounds of arrest, also needs consideration in view of the judgment of the Supreme Court in Radhika Agrawal’s case, that grounds of arrest and reasons to believe are mandatorily required to be supplied to the arrestee. The finding of the coordinate Bench is at paragraph 21, where the learned coordinate Bench held that the paragraphs referred to in the judgment of the Supreme Court in Radhika Agrawal’s case, it was for the Commissioner to ascertain and record the reasons to believe explicitly and with reference to the material and evidence underlying his opinion. However, there was no provision which mandated that the reasons to believe should be supplied to the accused, and therefore, the argument advanced on behalf of the petitioner was rejected by the learned coordinate bench.
22. However, that position stands changed entirely by the judgment of the Supreme Court in Sunil Biyani (supra) mentioned hereinabove, which came after the judgment of the coordinate bench in Jai Kumar Aggarwal (supra), where the Supreme Court has categorically held that the reasons to believe must be given to the accused in order to enable him to apply for an anticipatory bail. The said judgment has already been extensively dealt with and discussed hereinabove, and therefore reiteration or repetition of the same is not required.
23. The Supreme Court, in Sunil Biyani’s case, has in fact validated the argument of the petitioner in paragraph 19 of Jai Kumar Aggarwal’s case. The reason is very simple. As in the Act in question, as has already been stated hereinabove, Section 26 of the Act provides for involvement of two officers. One is the proper officer, not below the rank of Commissioner, who has reasons to believe that a person must be arrested and upon that proper officer formulating such reasons to believe, he directs another officer to execute the arrest of the person. The person so directed to carry out the arrest does not have to form any reasons to believe with regard to the involvement of the accused. He merely has to carry out the arrest and place the grounds of arrest before the accused. However, as held in Sunil Biyani’s case, it is the reasons to arrest which would enable the accused to apply for anticipatory bail.
24. In the course of the argument, learned counsel for the respondent has also mentioned that the petitioners filed an application for bail which has been rejected by the district court during the pendency of this habeas corpus writ petition. However, the same does not affect one way or the other the right of the petitioners to sustain this petition, as the grounds for bail and grounds for the allowance of a petition under Article 226 for habeas corpus are completely different.
25. In the present case before this Court, the reasons to believe have not been served upon the petitioner till date. This has not been disputed by the learned counsel for the respondent. However, learned counsel for the respondent has stated that the reasons to believe were placed before the Magistrate at the time of remand and they were considered by the Magistrate and remand was granted.
26. However, this procedure does not satisfy the legal requirement of giving the reasons to believe to the accused himself. It is not for the Magistrate to validate the reasons to believe at this stage, inasmuch as it is for the accused to make use of the same while preparing his application for anticipatory bail. In this case, there has been a complete violation of the law laid down by the Supreme Court in Sunil Biyani’s case, which has elucidated the law relating to the arrest of a person under the Act, which requires the reasons to believe to be communicated to the accused in order to enable him to apply for anticipatory bail. Therefore, not doing so has resulted in the violation of the fundamental right of the petitioners under Article 21 and 22 of the Constitution. The arrest is declared violative of the aforesaid provision, therefore quashed and set aside. The petitioners shall be released forthwith, if not wanted in any other case.
27. Accordingly, the present writ petition is disposed of.
