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2024 (3) TMI 188 - JHARKHAND HIGH COURT Money Laundering

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PMLA bail requires strict twin-condition compliance, and parity fails when the accused's role is materially distinct.
Bail under the PMLA requires strict compliance with the mandatory twin conditions in Section 45, and the Court must also be satisfied that the statutory basis for arrest under Section 19 is met. Applying those restrictions, the Court found the investigation material and complaint sufficient to show the applicant was the beneficial owner and controlling mind of the company, with an alleged role in forged and undervalued property transactions amounting to laundering activity. The plea of parity was rejected because the applicant's role and involvement were materially different from those of the co-accused. Bail was therefore denied.

Compliance with Section 19(1) of the Prevention of Money Laundering Act, 2002 - reason to believe for arrest under the PMLA - twin conditions for bail under Section 45(1) of the PMLA - presumption under Section 24 of the PMLA - principle of parity in grant of bail - powers to summon and record statements under Section 50 of the PMLACompliance with Section 19(1) of the Prevention of Money Laundering Act, 2002 - Whether the petitioner can successfully contend non compliance with Section 19(1) of the PMLA as a ground for bail - HELD THAT: - The Court recorded that the petitioner did not challenge the remand order and did not assert before the Court that no communication of grounds of arrest was given; the statutory requirement that grounds be communicated "as soon as" is satisfied where the person is informed after arrest as soon as may be and remanded by the competent court. In view of remand not being assailed, the petitioner had no subsisting grievance on alleged non compliance of Section 19(1). The Court therefore did not accept non compliance of Section 19(1) as a basis for bail in this petition. [Paras 37, 38, 39, 40]Petitioner cannot rely on alleged non compliance of Section 19(1); no relief on this ground.Reason to believe for arrest under the PMLA - powers to summon and record statements under Section 50 of the PMLA - presumption under Section 24 of the PMLA - Whether there existed sufficient material amounting to "reason to believe" that the petitioner was involved in money laundering so as to justify continued custody and denial of bail - HELD THAT: - The Court examined the statements recorded under Section 50 and the material in the ECIR and prosecution complaint, including admissions and misleading answers attributed to the petitioner, banking and transfer records linking funds through companies controlled by the petitioner, and facts indicating the petitioner as the beneficial owner of the purchasing company. Applying the legal principles as expounded by the Supreme Court (including the scope of Section 50 and the statutory presumption under Section 24), the Court found that there was prima facie material to constitute "reason to believe" involvement in processes connected with proceeds of crime. On that basis the Court concluded that the conditions underpinning arrest and investigation were satisfied and that the case against the petitioner disclosed involvement beyond mere suspicion. [Paras 47, 48, 49, 50, 51]Sufficient material exists to justify the reason to believe that the petitioner was involved in money laundering; this weighs against bail.Twin conditions for bail under Section 45(1) of the PMLA - Whether the twin conditions in Section 45(1) - that the Public Prosecutor be heard and the court be satisfied there are reasonable grounds to believe the accused is not guilty and is unlikely to commit an offence on bail - are fulfilled so as to entitle the petitioner to bail - HELD THAT: - Applying the binding principles from the Supreme Court authorities cited in the judgment, the Court observed that the twin conditions in Section 45(1) are mandatory and must be complied with even for bail under Section 439 Cr.P.C. After considering the ECIR, statements and other material, and noting the statutory presumption under Section 24, the Court found that the petitioner had not discharged the evidentiary burden necessary to satisfy the twin conditions - the Court was not satisfied there were reasonable grounds to believe the petitioner was not guilty nor that he was unlikely to offend while on bail. [Paras 28, 29, 30, 31, 63]Twin conditions of Section 45(1) not fulfilled; bail cannot be granted on that basis.Principle of parity in grant of bail - Whether parity with a co accused who had been granted bail (Dilip Kumar Ghosh) entitled the petitioner to bail - HELD THAT: - The Court analysed the role and factual matrix of the co accused who obtained bail and compared it with the petitioner's role. Citing settled law that parity is not an absolute rule and requires close factual similarity and positive equality under Article 14, the Court found material distinctions: the petitioner was the beneficial owner and controller of the company that acquired the property, while the co accused was a director and a close associate who acted under the petitioner's directions. Given these differences in role and the totality of facts, the Court held parity inapplicable. [Paras 53, 54, 55, 61, 62]Parity not attracted; the petitioner's factual role differs materially from the co accused who was granted bail.Final Conclusion: On the totality of the material in the ECIR, statements under Section 50 and the authorities on mandatory compliance with Section 45(1), the Court was not satisfied that the petitioner met the twin conditions for bail or that parity applied; the bail application was dismissed.

2024 (3) TMI 133 - JHARKHAND HIGH COURT Money Laundering

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PMLA bail restrictions under Section 45 applied where records indicated routing of proceeds of crime through forged accounts.
Regular bail under the Prevention of Money Laundering Act, 2002 was examined against the statutory restrictions in Section 45. The material was said to show creation of fictitious bank accounts, use of forged documents, and routing of proceeds of crime through shell entities. The Court noted that money-laundering is treated as a continuing activity, that the special law has overriding effect, and that bail requires satisfaction of the twin conditions that the accused is not guilty and is unlikely to reoffend while on bail. On the record before it, including investigation material and inquiry statements, the Court found no basis for such satisfaction and rejected the bail request.

Offence of money-laundering - proceeds of crime - Section 45 twin conditions - statutory presumption under Section 24 - powers of summons and recording under Section 50 - prima facie satisfaction for grant of bailSection 45 twin conditions - prima facie satisfaction for grant of bail - statutory presumption under Section 24 - Whether the petitioner is entitled to regular bail in proceedings under the Prevention of Money Laundering Act, 2002 - HELD THAT: - The Court applied the statutory framework of the PMLA, including the definition of "proceeds of crime" and the penal offence of money laundering, and the twin conditions of Section 45(1)(ii) as mandatory requirements to be satisfied before granting bail. The court noted the statutory presumption under Section 24 and considered material in the supplementary prosecution complaint and statements recorded under the Act (including under Section 50). On the material relied upon by the Enforcement Directorate - including findings that the petitioner impersonated a fictitious person, opened bank accounts with forged documents, provided those accounts for accommodation entries, and participated in routing proceeds to accounts of the predicate offence beneficiaries - the Court concluded that there is no reasonable ground to believe that the petitioner is not guilty of the alleged offence nor that he is not likely to commit an offence while on bail. The Court also emphasized the gravity of the alleged economic and corruption offences in refusing to exercise discretionary jurisdiction to grant bail. [Paras 75, 76, 77, 78, 79]Application for regular bail dismissed; no exceptional grounds found to grant bail.Proceeds of crime - powers of summons and recording under Section 50 - offence of money-laundering - Whether the factual material collected (including statements and search results) prima facie establishes involvement of the petitioner in processes connected with proceeds of crime - HELD THAT: - The Court examined prosecution averments and investigative findings quoted in the supplementary prosecution complaint: admissions attributed to the petitioner about opening accounts in the name of a fictitious proprietor, use of forged documents, operation of accounts through associates, receipt and routing of large credit transactions through those accounts, and role in collecting and transferring cash identified as proceeds of crime. The Court treated statements recorded under Section 50 and corroborative material (searches, admission of impersonation, operation of accounts, and transfers) as sufficient to establish, at the prima facie stage, the petitioner's direct involvement in laundering/ routing proceeds of crime for the predicate offence. On that basis the Court concluded there is a prima facie case against the petitioner. [Paras 57, 58, 60, 61, 62]Material on record prima facie establishes petitioner's involvement in activities connected with proceeds of crime; thus the requirement of absence of reasonable grounds to believe guilt is not met.Final Conclusion: The High Court dismissed the petition for regular bail. Applying the mandatory twin conditions of Section 45 of the PMLA and having regard to the statutory presumption under Section 24 and the investigative material (including statements under Section 50 and search findings), the Court found prima facie involvement of the petitioner in laundering or routing proceeds of crime and no exceptional circumstance to grant bail; the dismissal is confined to the bail application and is expressed as a prima facie view.

2024 (3) TMI 77 - BOMBAY HIGH COURT Money Laundering

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PMLA bail granted where the accused had a lesser role and had only knowingly assisted, not generated or benefited from proceeds of crime.
Bail under the Prevention of Money Laundering Act was granted where the applicant was not alleged to be the generator or beneficiary of the proceeds of crime and the Special Court had found that he only knowingly assisted the process. The Supreme Court had already enlarged the prime accused on bail under Section 45(1)(ii), and the applicant's comparatively lesser role weighed against continued custody. On that basis, the Court found no reason to refuse bail and allowed the application.

Twin conditions for grant of bail under Section 45 of the PMLA - assistance in money laundering as distinct from generation of proceeds of crime / beneficiary status - precedential effect of co accused's bail order on grant of bail to a lesser involved accusedTwin conditions for grant of bail under Section 45 of the PMLA - assistance in money laundering as distinct from generation of proceeds of crime / beneficiary status - precedential effect of co accused's bail order on grant of bail to a lesser involved accused - Whether the applicant, accused No.2, is entitled to bail in ECIR/MBZO I/57/2022 under the PMLA. - HELD THAT: - The Special Court observed that the applicant's role was not of generating proceeds of crime nor of laundering them, and that he was not a beneficiary or recipient of the proceeds; his role was limited to 'knowingly assisting' the process (paragraph 45 as noted by the High Court). The Supreme Court had earlier enlarged the prime accused (co accused No.1) on bail under Section 45(1)(ii) of the PMLA by reason of the fair stand of the ASG and without detailed reasons. Applying these concurrent findings, and recognising that Section 45 requires satisfaction of its twin conditions for bail, the High Court concluded that where the prime accused has been enlarged on bail and the present accused's role is materially lesser (assistance rather than generation/benefit), the applicant could be enlarged on bail. The Court therefore exercised its discretion to grant bail subject to conditions designed to secure attendance and preserve the integrity of the trial (furnishing PR bond/surety, deposit/undertakings, passport deposit, non tampering and cooperation obligations, and attendance at trial). [Paras 11, 12, 13]Bail allowed on conditions (PR bond/surety, cash security until surety furnished, passport deposit/leave restriction, non interference and cooperation undertakings, and attendance at trial).Final Conclusion: The application for bail under Section 439 CrPC read with Section 45 of the PMLA is allowed; the applicant Jayram Vinayak Deshpande is released on bail on the conditions set out by the Court.

2024 (5) TMI 938 - JHARKHAND HIGH COURT Money Laundering

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Court Deliberates If Land Seizure Qualifies as Proceeds of Crime Under PMLA; Questions Guilt Without Predicate Offense.
The HC reserved judgment after hearing arguments on the interpretation of section 2(u) of the PMLA Act concerning whether forcible possession of landed property constitutes proceeds of crime. The petitioner argued the absence of a predicate offence and insufficient evidence for guilt under the PMLA Act, challenging the Enforcement Directorate's case.

2024 (3) TMI 357 - MADRAS HIGH COURT Money Laundering

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PMLA bail twin conditions reaffirmed as disputed evidence and witness influence weighed against release.
Bail under the Prevention of Money Laundering Act remains subject to the statutory twin conditions: the court must find reasonable grounds to believe the accused is not guilty and is unlikely to commit any offence while on bail. The Madras HC treated the prosecution material, including electronic records, witness statements and email communications, as prima facie supporting the money-laundering allegations, and held that disputes over the genuineness or value of that evidence could not be tested through a mini-trial at the bail stage. Applying the stricter approach to economic offences, the court also considered the risk of witness influence and interference with the trial, and found bail unwarranted.

Twin conditions under Section 45 of PMLA - prima facie genuineness of electronic evidence - statements recorded under Section 50 of PMLA as admissible material - test under Section 439 Cr.PC (triple test for grant of bail in economic offences) - proceeds of crime and nexus in corruption cases - bail is exception under the PMLA regimeTwin conditions under Section 45 of PMLA - bail is exception under the PMLA regime - Whether the petitioner has satisfied the twin mandatory conditions prescribed under Section 45(1) of the PMLA for grant of bail. - HELD THAT: - Section 45(1) requires the court, on a prima facie view of materials collected during investigation, to be satisfied that there are reasonable grounds for believing that the accused is not guilty of the offence and that he is not likely to commit any offence while on bail. The court applied the statutory standard of 'reasonable grounds for believing' and considered the material relied upon by the respondent including electronic records, statements and documentary material. On that prima facie appraisal the court found a strong case against the petitioner and specifically was not satisfied that there are reasonable grounds to believe the petitioner is not guilty or that he is not likely to commit an offence while on bail. The court further noted the statutory premise that under the PMLA bail is the exception and the obligation to comply with Section 45 is mandatory. Accordingly, the twin conditions were not met. [Paras 4]Twin conditions under Section 45(1) PMLA not satisfied; bail under PMLA refused.Prima facie genuineness of electronic evidence - CF-29/20 and CF-27/21 - Whether the pen drive electronic records identified as CF-29/20 and CF-27/21 have been so tampered with or manipulated that they lack prima facie genuineness for purposes of bail consideration. - HELD THAT: - Petitioner's challenge rested on discrepancies between two analysis reports of the pen drive and an alleged increase in files between two analyses, suggesting manipulation. The court examined the scope and purpose of the two reports (different selections of files at different times) and the certified copies obtained from the Special Court. The court held that selection of relevant files by investigative agencies is permissible, found no convincing evidence of tampering/antedating/overwriting on the materials reviewed, and concluded that it would be impermissible at the bail stage to draw an extreme presumption of manipulation. Consequently CF-29/20 and CF-27/21 are prima facie genuine and admissible material for the limited purpose of assessing bail. [Paras 4]CF-29/20 and CF-27/21 are prima facie genuine; allegations of tampering are not established at the bail stage.CF-116 - prima facie genuineness of electronic evidence - Whether CF-116 (Seagate hard disk) is a material relied upon by the respondent for establishing the case against the petitioner at the bail stage. - HELD THAT: - Although CF-116 was argued at length, the respondent took a categorical stand that CF-116 has no relevance to substantiate the PMLA offence against the petitioner. Given that factual position by the prosecution, the court declined to entertain further submissions on CF-116 for purposes of the bail application. [Paras 4]CF-116 not relied upon by respondent to substantiate the PMLA charge; court need not consider it further for bail.Statements recorded under Section 50 of PMLA as admissible material - Whether statements recorded under Section 50 of the PMLA, including those from persons who were co accused or suspects in the predicate proceedings, constitute material that can be relied upon at the bail stage. - HELD THAT: - The court relied on the Supreme Court's exposition that summons under Section 50 are part of an inquiry into proceeds of crime and statements so recorded can be material for subsequent action; they are not necessarily investigative statements in the police sense but are admissible and can implicate persons once other evidence corroborates involvement. The court observed that many of the statements and inquiry material, as presented and certified from the predicate proceedings, prima facie implicate the petitioner and therefore form significant material in assessing the bail application. [Paras 4]Statements under Section 50 PMLA are important admissible material and, taken with other materials, strengthen the prima facie case against the petitioner.Test under Section 439 Cr.PC (triple test for grant of bail in economic offences) - proceeds of crime and nexus in corruption cases - Whether, applying the triple test under Section 439 Cr.PC and relevant precedents, the petitioner is entitled to bail notwithstanding the PMLA constraints. - HELD THAT: - The court applied the established triple test factors (nature and gravity of accusation and materials, risk of tampering with witnesses, likelihood of absconding, character and public interest). Considering the nature of the alleged 'cash for job' scheme, the materials presented (electronic records, statements, emails), the finding that proceeds of crime have been identified prima facie, the petitioner's continued political influence and past conduct (including prior compromise in predicate proceedings), and the larger public interest, the court found that the balance of these factors does not favour grant of bail under Section 439 Cr.PC. The court specifically held that resignation from ministerial post immediately prior to hearing did not eliminate the real risk of tampering or influence. [Paras 4]On application of the triple test and public interest considerations, petitioner not entitled to bail under Section 439 Cr.PC.Final Conclusion: The bail petition is dismissed. The court held that the mandatory twin conditions under Section 45(1) of the PMLA are not satisfied and, applying the triple test under Section 439 Cr.PC, the petitioner is not entitled to bail. The Special Court, Chennai, is directed to dispose of C.C.No.9 of 2023 within three months from receipt of this order, with the trial to be conducted on a day to day basis as per the cited guidelines.

2024 (3) TMI 356 - MADHYA PRADESH HIGH COURT Money Laundering

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Issues involved:
The issues involved in the judgment are the maintainability of the petition under Article 226 of the Constitution of India and the availability of alternative remedies under Section 26 of the Prevention of Money Laundering Act, 2002.

Maintainability:
The petitioner, a banking company, sought relief under Article 226 of the Constitution of India regarding the attachment of properties by the Enforcement Directorate. The petitioner argued that the attachment was ex-parte and requested the court to set aside the entries in the list of confirmed attached immovable properties. The respondent contended that the petitioner had an alternative remedy under Section 26 of the PMLA, 2002, and since the attachment order was not challenged, the writ petition should be dismissed. The petitioner, in rejoinder, stated that it was not a party to the attachment order and could only seek relief through the court's writ jurisdiction.

Analysis of Maintainability:
The court examined the provisions of Section 26 of the PMLA, 2002 and the Rules of 2005, which allow any person aggrieved by an order to file an appeal before the Appellate Tribunal, even if not a party to the order. Considering these provisions, the court found that the petitioner could avail the alternative remedy provided under Section 26 of the PMLA, 2002. Therefore, the court was not inclined to entertain the petition and dismissed it, granting the petitioner the liberty to pursue the remedy under Section 26.

Conclusion:
The High Court of Madhya Pradesh, after analyzing the provisions of the PMLA, 2002 and the Rules of 2005, dismissed the petition filed under Article 226 of the Constitution of India. The court held that the petitioner could avail the alternative remedy u/s 26 of the PMLA, 2002 and clarified that the time spent on the petition would not affect any future application under the Limitation Act. The petition was disposed of, providing the petitioner with the option to pursue the remedy under Section 26 of the PMLA, 2002.

Petition challenging provisional attachment of properties under PMLA dismissed due to available appellate remedy under Section 26
HC dismissed petition challenging provisional attachment of immovable properties under PMLA. Court held that petitioner had alternative appellate remedy under Section 26 of PMLA before Appellate Tribunal. Court noted that any aggrieved person, even if not party to original order, can file appeal under Section 26 read with Rule 2 of Rules 2005. Given availability of statutory appellate remedy, HC declined to entertain writ petition and dismissed it.

Maintainability of writ petition against orders under PMLA where alternate remedy under Section 26 exists - right of a person aggrieved to prefer an appeal under Section 26 of the PMLA - interpretation of 'order' in the Prevention of Money Laundering (Appeals) Rules, 2005Maintainability of writ petition against orders under PMLA where alternate remedy under Section 26 exists - Writ petition under Article 226 seeking to set aside entries of attached properties is not maintainable in view of the alternate appellate remedy under Section 26 of the PMLA. - HELD THAT: - The Court examined Section 26 of the PMLA and the definition of 'order' in the Prevention of Money Laundering (Appeals) Rules, 2005, and concluded that appeals lie against an 'order' of the Adjudicating Authority or the Director. Having regard to those statutory provisions and the availability of a specific and efficacious remedy before the Appellate Tribunal, the High Court declined to entertain the petition under Article 226. The Court therefore dismissed the writ petition while permitting the petitioner to pursue the alternative remedy provided under Section 26; the time spent in prosecuting the petition was not to prejudice any application under Section 5 of the Limitation Act. [Paras 8, 9, 10, 11, 12]Petition dismissed for want of maintainability; petitioner granted liberty to file appeal under Section 26 of the PMLA and time spent in this petition will not be counted against limitation.Right of a person aggrieved to prefer an appeal under Section 26 of the PMLA - interpretation of 'order' in the Prevention of Money Laundering (Appeals) Rules, 2005 - A 'person aggrieved' by an order under the PMLA may prefer an appeal under Section 26 even if not a party to the original order. - HELD THAT: - On a careful reading of Section 26 and Rule 2(g) of the Appeals Rules, the Court held that the statutory scheme contemplates that any person aggrieved by an order of the Adjudicating Authority or the Director may file an appeal before the Appellate Tribunal. Consequently, the petitioner, though not party to the attachment order, has an alternative statutory remedy by way of appeal under Section 26 which ought to be availed instead of extraordinary writ relief. [Paras 8, 9, 10, 11]Person aggrieved, whether party to the original proceeding or not, can prefer appeal under Section 26; petitioner should avail that remedy.Final Conclusion: The writ petition is dismissed as not maintainable in view of the alternative statutory remedy under Section 26 of the PMLA; petitioner is granted liberty to prefer an appeal before the Appellate Tribunal and the time spent in this petition shall not prejudice any limitation claim.

2024 (3) TMI 132 - PUNJAB AND HARYANA HIGH COURT Money Laundering

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Issues: (i) Whether the Enforcement Case Information Report could be sustained notwithstanding stay of the order passed under Section 156(3) of the Code of Criminal Procedure and later setting aside of that order with the matter remanded for fresh consideration; (ii) whether non-bailable warrants issued during investigation were illegal; (iii) whether proceedings under the Prevention of Money-Laundering Act, 2002 could continue against a person not shown as an accused in the predicate FIR and where other scheduled offences were also in existence.

Issue (i): Whether the Enforcement Case Information Report could be sustained notwithstanding stay of the order passed under Section 156(3) of the Code of Criminal Procedure and later setting aside of that order with the matter remanded for fresh consideration.

Analysis: The order passed under Section 156(3) of the Code of Criminal Procedure was only remitted for fresh consideration and was not treated as resulting in automatic quashing of the registered FIRs. The Enforcement Case Information Report was an internal document and the offence of money-laundering is distinct and independent from the predicate offence. The interim stay of further proceedings in the FIRs did not operate as a restraint on the Enforcement Directorate, which was not a party to the earlier proceedings. The existence of other FIRs containing scheduled offences also supported continuation of the inquiry.

Conclusion: The Enforcement Case Information Report was held to be valid and its continuation was upheld.

Issue (ii): Whether non-bailable warrants issued during investigation were illegal.

Analysis: A Magistrate may issue warrants during investigation, but such warrants are to secure presence before the Court and not to place the accused before the investigating agency. The record showed non-cooperation and non-appearance despite summons. The impugned warrants were reasoned and did not direct production before the Enforcement Directorate. In these circumstances, issuance of warrants could not be termed illegal.

Conclusion: The challenge to the non-bailable warrants was rejected.

Issue (iii): Whether proceedings under the Prevention of Money-Laundering Act, 2002 could continue against a person not shown as an accused in the predicate FIR and where other scheduled offences were also in existence.

Analysis: A person need not necessarily be an accused in the scheduled offence to face proceedings under the Prevention of Money-Laundering Act, 2002, so long as the scheduled offence and proceeds of crime exist. The existence of additional FIRs involving scheduled offences meant that proceeds of crime could not be ruled out. At the investigation stage, no conclusive finding could be returned that the money-laundering case lacked foundation.

Conclusion: The objection to continuation of proceedings on this ground failed.

Final Conclusion: The petitions were found to lack merit and the enforcement proceedings were allowed to continue.

Ratio Decidendi: Stay or remand of proceedings in the predicate case does not, by itself, bar an independent money-laundering inquiry, and proceedings under the 2002 Act may continue where a scheduled offence and possible proceeds of crime exist.

Independent money-laundering inquiry may continue despite remand in the predicate case and absence from the FIR accused list.
The Punjab and Haryana HC noted that a stay or later remand of the predicate order under Section 156(3) CrPC did not automatically nullify the registered FIRs or bar an independent money-laundering inquiry. It treated the Enforcement Case Information Report as an internal step and held that proceedings under the Prevention of Money-Laundering Act could continue where scheduled offences and possible proceeds of crime existed, even if the person concerned was not shown as an accused in the predicate FIR. It also held that non-bailable warrants issued during investigation were not illegal where the accused had not cooperated and the warrants were meant to secure appearance before the Court. The petitions were found to lack merit.

ECIR is an internal departmental document and need not be formally registered like an FIR - Offence under the PMLA is an independent offence but contingent on existence of proceeds of crime and a scheduled offence - Stay of proceedings under Section 156(3) Cr.P.C. does not preclude Enforcement Directorate from recording an ECIR - Non-bailable warrants can be issued during investigation under Section 73 Cr.P.C. for production before the Court - Remand to Magistrate to pass a fresh speaking order under Section 156(3) Cr.P.C. does not ipso facto quash consequential FIRs - Judicial interference with ongoing investigation is to be avoidedECIR is an internal departmental document and need not be formally registered like an FIR - Stay of proceedings under Section 156(3) Cr.P.C. does not preclude Enforcement Directorate from recording an ECIR - Validity of recording ECIR GNZO/20/2021 notwithstanding interim orders staying proceedings under Section 156(3) Cr.P.C. - HELD THAT: - The Court held that an ECIR is an internal document created by the department and there is no requirement to formally register it or furnish a copy to the accused. The earlier interim order staying the operation of the Magistrate's order and further proceedings in the consequential FIRs did not operate as a bar on the Enforcement Directorate recording an ECIR that was made later. The stay of investigation in the specified FIRs only prevented further police investigation during the interim; it did not preclude ED from initiating an independent inquiry, particularly as ED was not a party to the proceedings that produced the stay. [Paras 12]Recording of the ECIR was not impermissible and the challenge to its registration fails.Remand to Magistrate to pass a fresh speaking order under Section 156(3) Cr.P.C. does not ipso facto quash consequential FIRs - Whether the Single Bench's direction to the Chief Judicial Magistrate to pass a fresh order on the complaint under Section 156(3) Cr.P.C. rendered the consequential FIRs nullities. - HELD THAT: - The Single Bench had directed the Magistrate to reconsider and pass a speaking order without adjudicating merits and expressly left all other grounds open. That limited direction did not grant the full relief of quashing the complaints or FIRs, and thus could not be read as having quashed the FIRs. The Court noted the police records indicate cognizable offences were disclosed and that subsequent developments and other FIRs also formed part of ED's inquiry; accordingly, the remand for a fresh order did not automatically extinguish the FIRs. [Paras 13]The remand to the Magistrate did not operate to quash the consequential FIRs; the contention that the FIRs became nullities was rejected.Non-bailable warrants can be issued during investigation under Section 73 Cr.P.C. for production before the Court - Legality of issuance of non-bailable warrants (impugned order dated 29.09.2023) in aid of investigation - HELD THAT: - Relying on binding precedent, the Court held that Section 73 empowers a Magistrate to issue warrants during investigation to apprehend persons accused of non-bailable offences who are evading arrest. While such warrants are for production before the Court (not for automatic production before police for custody), the Court may then consider custody or bail in accordance with law. Given the petitioners' non-cooperation and repeated non-appearance, issuance of non-bailable warrants by the Special Judge was lawful and the order impugned was a speaking order within jurisdiction. [Paras 14]Issuance of non-bailable warrants was lawful and not liable to be quashed on the grounds urged.Offence under the PMLA is an independent offence but contingent on existence of proceeds of crime and a scheduled offence - Judicial interference with ongoing investigation is to be avoided - Whether absence of an accused from the original FIRs, or alleged lack of proceeds of crime, precludes initiation or continuation of PMLA proceedings against the petitioners at the investigation stage - HELD THAT: - The Court accepted that Section 3 of the PMLA requires existence of 'proceeds of crime' derived from a scheduled offence; however, it reiterated that PMLA is an independent offence and persons not named in the predicate FIR may still be proceeded against if there is a prima facie case of involvement in processes connected with proceeds of crime. Multiple FIRs and ancillary inquiries showed allegations of diversion and inter-mingling of funds; at the investigation stage, conclusive findings cannot be drawn and interference with the investigation was unwarranted. The Court therefore rejected the submission that PMLA proceedings were unsustainable merely because a petitioner was not arraigned in a particular FIR or because certain orders had been remanded. [Paras 16, 17]Proceedings under the PMLA may continue at the investigation stage; absence from particular FIRs or remand of a Magistrate's order does not, by itself, preclude PMLA action.Final Conclusion: The petitions challenging registration of the ECIR, issuance of summons and non bailable warrants, and related reliefs were found to be without merit and are dismissed; the Court declined to interfere with the ongoing investigation and enforcement actions for the reasons stated.

2024 (2) TMI 1256 - DELHI HIGH COURT Money Laundering

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Gag orders on media reporting are justified only when publication causes real prejudice to investigation, privacy, or trial.
A gag order restraining media reporting on an ongoing investigation is justified only on a showing of real prejudice to investigation, privacy, or trial. The HC noted that the Advisory on Media Policy required authentic, appropriate information and cautioned against disclosures that could hamper investigation or violate legal and privacy rights, but found no material showing invasion of privacy, impairment of the investigation, or prejudice to any future trial. It also recognised press freedom and held that reporting concerning a public figure on matters of public interest would not ordinarily be restrained absent such prejudice. The requested restraint was therefore declined.

Balancing freedom of the press and the right to privacy - right to fair investigation - gag orders against media permissible only where publication may prejudice investigation or trial - Advisory on Media Policy (Office Memorandum dated 01.04.2010) and compliance by investigating agencies - public figure doctrine - heightened public gaze and accountabilityAdvisory on Media Policy (Office Memorandum dated 01.04.2010) and compliance by investigating agencies - gag orders against media permissible only where publication may prejudice investigation or trial - Whether interim relief restraining Respondent No.1/ED and media from publishing or leaking information relating to the ongoing investigation should be granted. - HELD THAT: - The Court recorded the statement of Respondent No.1/ED and the Union of India that the Advisory on Media Policy dated 01.04.2010 is being scrupulously followed and took that statement on record. The Advisory prescribes that designated officers should disseminate only essential, authenticated information at limited stages of a case and cautions against piecemeal or speculative disclosures likely to compromise investigations. The Court examined the annexed news reports and found they related to the public act of an investigation into a public figure and did not invade the petitioner's private life or appear to prejudice the investigation or any prospective trial. Given the assurance of compliance with the Advisory and the nature of the publications, the foundation for issuing a prior restraint was absent. The Court emphasised that gag orders are exceptional and permissible only where publications have the potential to prejudice an investigation or trial; absent such potential, restraining the press is impermissible in light of the constitutional protection for free speech and press. [Paras 10, 15, 16]The petition seeking injunctions against the ED and media was refused and no interim restraint was issued.Balancing freedom of the press and the right to privacy - public figure doctrine - heightened public gaze and accountability - Whether the impugned media publications invaded the petitioner's privacy or warranted protection on account of her status as a public figure. - HELD THAT: - The Court recognised that while freedom of the press is fundamental, it does not override the right to privacy; however, publications concerning the public acts of a public figure attract a different standard. The petitioner, being a former Member of Parliament, is subject to a higher degree of public scrutiny. The Court reviewed the newspaper cuttings and concluded they reported on the investigation and did not disclose matters of the petitioner's private life, nor did they amount to harassment or impermissible invasion of privacy. Reliance on precedents was noted for the proposition that publications about public life of public figures cannot be restrained unless they amount to harassment or invade private life. [Paras 12, 13, 14, 15]The publications were held not to constitute an invasion of privacy warranting restraint; they fell within permissible reporting about a public figure.Self-regulation by electronic media and Code of Ethics - Whether additional court directions were necessary to regulate electronic and print media respondents. - HELD THAT: - The Court noted the existence of a self-regulatory mechanism for electronic media embodying a Code of Ethics and Broadcasting Standards that include impartiality, objectivity and protection of privacy. Observing that respondents 3 to 21 are bound by such Code of Ethics, the Court found no need to issue further regulatory orders against them at this stage. [Paras 11]No further directions were issued regulating the media respondents, as the self-regulatory Code was deemed adequate.Final Conclusion: Assurances of compliance with the Advisory on Media Policy were recorded, the news reports were found not to invade the petitioner's private life or to threaten prejudice to investigation/trial, and the writ petition seeking restraints on the ED and the media was dismissed.

2024 (2) TMI 1380 - KERALA HIGH COURT Money Laundering

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PMLA bail is restricted by the twin conditions in Section 45 when investigation material shows prima facie money-laundering involvement.
Bail under the Prevention of Money-Laundering Act depends on the mandatory twin conditions in Section 45, requiring reasonable grounds to believe that the is not guilty and will not commit an offence while on bail. The Court noted that witness statements and documents collected in investigation prima facie indicated diversion and layering of proceeds of crime, and the statutory presumption under Section 24 and overriding effect under Section 71 supported the prosecution's case at the bail stage. The petitioner's medical condition and other submissions were not sufficient to displace the statutory bar, and the bail application was dismissed.

Non-bailable nature of offences under PMLA - Mandatory twin conditions of Section 45(1) of the PMLA for grant of bail - Presumption under Section 24 of the PMLA that proceeds of crime are involved in money laundering - Application for bail under Section 439 CrPC subject to PMLA's overriding scheme - Seriousness of economic offences and their impact on bail consideration - Health and medical condition as a factor in bail applicationsMandatory twin conditions of Section 45(1) of the PMLA for grant of bail - Presumption under Section 24 of the PMLA that proceeds of crime are involved in money laundering - Application for bail under Section 439 CrPC subject to PMLA's overriding scheme - Seriousness of economic offences and their impact on bail consideration - Bail application under Section 439 CrPC by an accused in an ECIR registered under the PMLA dismissed. - HELD THAT: - The court examined the materials collected during the investigation, including admissions recorded under Section 50 of the PMLA and documentary material showing sale proceeds, diversion of receipts, classification of the loan account as NPA and alleged layering of proceeds to third parties and related entities. The court observed that PMLA imposes an overriding, mandatory regime: the Public Prosecutor must be given an opportunity to oppose bail and, if opposed, the court must be satisfied on reasonable grounds that the accused is not guilty and is not likely to commit an offence while on bail. The statutory presumption under Section 24 that proceeds of crime are involved in money laundering operates unless rebutted, and the limitations in Section 45 must be complied with even for bail under Section 439 CrPC. Having regard to the prima facie materials indicating complicity, the nature and seriousness of the economic offences alleged, and the investigative material which the Enforcement Directorate relied upon, the court was not satisfied on reasonable grounds that the petitioner was not guilty or would not commit an offence on bail. The court also noted submissions on the petitioner's age and medical ailments, and accepted that medical care was being provided, but concluded that these factors did not outweigh the statutory embargo and the prima facie case established by the investigation. [Paras 18, 20, 22, 24]Bail petition dismissed.Final Conclusion: The bail application by the petitioner accused under the PMLA was dismissed: the Court applied the mandatory conditions of Section 45(1) PMLA, relied on the presumption in Section 24 and the prima facie material collected by the Enforcement Directorate, and held that the petitioner was not entitled to bail despite his medical condition which was being attended to.

2024 (2) TMI 1425 - MADHYA PRADESH HIGH COURT Money Laundering

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Strict PMLA bail conditions bar anticipatory bail where prima facie money-laundering involvement is shown.
Anticipatory bail under the Prevention of Money Laundering Act, 2002 was treated as subject to the stringent bail framework in Section 45, which makes the offence cognizable and non-bailable and requires satisfaction of the twin conditions before release. The Court noted that anticipatory bail under Section 438 CrPC is an extraordinary remedy, to be used sparingly in economic offences, and that the general rule of bail does not apply in such cases. On the material alleging participation in the purchase and sale of fake Remdesivir injections and generation of proceeds of crime, anticipatory bail was declined because the statutory conditions were not satisfied and prima facie money-laundering involvement was indicated.

Anticipatory bail under section 438 Cr.P.C. - non bailable and cognizable nature of offences under the Prevention of Money Laundering Act (section 45 PMLA) - requirement of satisfaction that there are reasonable grounds to believe accused is not guilty and not likely to commit offence while on bail - exceptional exercise of power for pre arrest bail in economic/PMLA offences - proceeds of crime and money trail as criterion for application of PMLAAnticipatory bail under section 438 Cr.P.C. - non bailable and cognizable nature of offences under the Prevention of Money Laundering Act (section 45 PMLA) - requirement of satisfaction that there are reasonable grounds to believe accused is not guilty and not likely to commit offence while on bail - Whether anticipatory bail under section 438 Cr.P.C. should be granted to an accused facing proceedings under the PMLA in view of section 45 of the Act. - HELD THAT: - Section 45 of the PMLA renders offences cognizable and non bailable and circumscribes the court's power to grant bail by requiring that the Public Prosecutor be given opportunity to oppose and, where opposed, the court be satisfied there are reasonable grounds to believe the accused is not guilty and is not likely to commit an offence while on bail. The Court observed that the general principle of 'bail, not jail' does not generally apply to PMLA matters and that pre arrest bail is an extraordinary power to be exercised sparingly, particularly in economic offences. Applying these legal principles, the court held that anticipatory bail could not be granted unless the stringent twin satisfaction under section 45 is met. The Court referred to precedents establishing that economic offences under PMLA are to be treated as serious and that section 45 imposes a presumption against bail unless the prescribed satisfactions are demonstrated. [Paras 6, 7, 8, 9]Anticipatory bail under section 438 Cr.P.C. is not warranted unless the court is satisfied as required by section 45 PMLA; the stringent conditions of section 45 were not shown to be met.Proceeds of crime and money trail as criterion for application of PMLA - involvement in scheduled offence and concealment/use of proceeds - Whether, on the material and money trail produced, the applicant was shown to be involved in proceeds of crime so as to disentitle him to anticipatory bail. - HELD THAT: - The court examined the factual matrix that the applicant purchased and sold fake Remdesivir injections, was arrested earlier by police in relation to selling fake injections, and allegedly acted with connivance of co accused. The court noted the prosecution produced a money trail indicating proceeds of crime in the present case. On this material, the court found that the applicant's acts fell within activities connected with proceeds of crime as envisaged by the PMLA and that the prosecution material supported involvement in generation and possession/use of proceeds. Given the foregoing factual findings and the rigour of section 45, the court concluded that the applicant had not established the requisite reasonable grounds to believe he was not guilty or not likely to reoffend if released. [Paras 12, 13, 14]The prosecution material and money trail established involvement of the applicant in proceeds of crime; consequently, the applicant is not entitled to anticipatory bail.Final Conclusion: The anticipatory bail application is dismissed: because section 45 PMLA restricts grant of bail unless the court is satisfied of non guilt and low risk of reoffending, and on the material produced (including the money trail and the applicant's alleged role in sale of fake Remdesivir injections) those stringent conditions were not satisfied, the trial court's order stands and the applicant must appear before the trial court which shall proceed according to law.

2024 (3) TMI 355 - MADRAS HIGH COURT Money Laundering

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Provisional attachment and revenue entry became infructuous after quashing of predicate and money laundering proceedings; deletion ordered.
Where the predicate criminal case and the consequential money laundering proceedings had already been quashed, the writ challenge to the provisional attachment of the petitioner's property became infructuous and no merits determination was required. However, because the petitioner's property had been wrongly reflected in the attachment-related revenue record, the Sub Registrar was directed to delete the entry concerning the relevant survey number. The decision thus treats the challenge to attachment as spent by the quashing of the underlying proceedings, while ensuring that the mistaken registration entry is removed from the record.

Provisional attachment under PMLA - quashing of predicate offence and consequent release of attachment - infructuousness of relief - rectification of public records by the Sub-RegistrarProvisional attachment under PMLA - rectification of public records by the Sub-Registrar - Whether the entry made by the Sub-Registrar in respect of Resurvey No.47/6B2 pursuant to the Enforcement Directorate's attachment proceedings should be deleted. - HELD THAT: - The Court noted that the petitioner alleged wrongful inclusion of her property (Resurvey No.47/6B2) in the list of properties provisionally attached under proceedings initiated under the PMLA Act against M/s. Oakdale Properties Private Limited. While the principal proceedings under the predicate offence and under the PMLA Act have been quashed, the Court found it necessary to remedy any residual official record that records attachment of the petitioner's property. For that reason the Court directed the Sub-Registrar to delete any entry made in respect of Resurvey No.47/6B2 pursuant to the Enforcement Directorate's proceedings, thereby restoring the public record and removing the effect of the attachment entry on the petitioner's title record. [Paras 8]Sub-Registrar is directed to delete any entry in respect of Resurvey No.47/6B2 made pursuant to the Enforcement Directorate's proceedings.Quashing of predicate offence and consequent release of attachment - infructuousness of relief - Whether the writ petition seeking quashing of the provisional attachment order and correction of the survey number remains maintainable after quashing of the predicate and PMLA proceedings. - HELD THAT: - The Court recorded that the predicate criminal case (C.C.No.7 of 2018) and the consequent proceedings under the PMLA Act have been quashed by this Court and that order was affirmed by the Supreme Court; the appellate tribunal also reiterated quashing of the PMLA proceedings. Given that the attachment proceedings have been quashed and interim attachments released, the substantive relief sought by the petitioner to quash the provisional attachment order and to correct the survey number was rendered moot. The Court therefore held that the main relief prayed in the writ petition had become infructuous. [Paras 3, 4, 7, 9]Writ petition dismissed as infructuous; main proceedings having been quashed, the petitioner's substantive relief is moot.Final Conclusion: The Court dismissed the writ petition as infructuous because the predicate offence and PMLA proceedings (and interim attachments) have been quashed, and directed the Sub-Registrar to delete any entry recording attachment of Resurvey No.47/6B2 made pursuant to the Enforcement Directorate's proceedings.

2024 (2) TMI 1089 - MADHYA PRADESH HIGH COURT Money Laundering

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Anticipatory bail in PMLA prosecutions remains exceptional where material links the accused to proceeds of crime.
Anticipatory bail under section 438 CrPC is not readily available in a PMLA prosecution because section 45 imposes a stringent bail regime requiring hearing of the Public Prosecutor and satisfaction that there are reasonable grounds to believe the accused is not guilty and will not commit any offence on bail. The Court treated money-laundering and other economic offences as serious matters where pre-arrest bail is an extraordinary remedy to be granted sparingly. On the facts, material linked the applicant to the alleged fake Remdesivir sale and showed a money trail indicating proceeds of crime, so the application was dismissed.

Anticipatory bail - section 45 of the Prevention of Money Laundering Act (offences cognizable and non bailable; conditions for grant of bail) - reasonable grounds to believe not guilty and not likely to commit offence while on bail - proceeds of crime - extraordinary power under section 438 Cr.P.C. - privilege of pre arrest bail to be granted sparingly - economic offences as heinous offencesAnticipatory bail - section 45 of the Prevention of Money Laundering Act (offences cognizable and non bailable; conditions for grant of bail) - reasonable grounds to believe not guilty and not likely to commit offence while on bail - proceeds of crime - Anticipatory bail application under section 438 Cr.P.C. in a PMLA prosecution was not maintainable in the facts of this case and must be rejected. - HELD THAT: - The court held that offences under the PMLA are cognizable and non bailable under section 45 and that bail can be granted only if the court is satisfied, upon opportunity to the Public Prosecutor, that there are reasonable grounds to believe the accused is not guilty and is not likely to commit an offence while on bail. The jurisdictional presumption attendant on section 45 displaces the ordinary 'bail, not jail' norm; accordingly, the extraordinary power under section 438 Cr.P.C. must be exercised sparingly in PMLA matters. Applying these principles, the court accepted the prosecution case that the applicant participated in sale of fake Remdesivir injections and that the money trail shows the alleged proceeds of crime amounting to Rs. 2,89,00,000/-. In view of the rigor of section 45 and the material produced by the prosecution demonstrating the applicant's involvement and the claimed proceeds, the court was not satisfied that there were reasonable grounds to believe the applicant was not guilty or would not reoffend if released; hence anticipatory bail was refused. [Paras 7, 8, 11, 12, 13]Application for anticipatory bail dismissed; applicant not entitled to anticipatory bail under the PMLA on the material on record.Final Conclusion: Anticipatory bail under section 438 Cr.P.C. refused in view of section 45 PMLA and the prosecution material; trial court to proceed in accordance with law if the applicant appears.

2024 (2) TMI 1088 - RAJASTHAN HIGH COURT Money Laundering

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PMLA bail scrutiny turns on scheduled offence linkage, prima facie proceeds of crime, and the strict Section 45 twin conditions.
In a PMLA bail context, the court's analysis turned on whether the alleged scheduled offences, prima facie recovery material, and the tracing of proceeds of crime satisfied the stringent conditions for bail. It treated the IPC offences as scheduled offences, considered the allegations of stealing and selling REET question papers, and held that disputed claims over the nature of recoveries were matters for trial. Applying the reverse burden under Section 24 and the twin requirements under Section 45(1), it found no reasonable grounds to believe the accused was not guilty, and held the proviso for cases below one crore rupees inapplicable because the alleged proceeds exceeded that threshold.

Offence under the Prevention of Money Laundering Act, 2002 - proceeds of crime - predicate offence - prima facie satisfaction for bail under Section 45(1) of the PMLA - reverse burden under Section 24 of the PMLA - bail under Section 439 Cr.P.C.Offence under the Prevention of Money Laundering Act, 2002 - proceeds of crime - predicate offence - reverse burden under Section 24 of the PMLA - Prima facie case under Section 3 of the PMLA is made out against the accused and bail under Section 439 Cr.P.C. is not warranted. - HELD THAT: - The court examined whether there is prima facie evidence that the accused procured and laundered proceeds derived from predicate offences listed in the schedule. The accused was charge-sheeted under Sections 420 and 120-B of the IPC and under provisions of the Rajasthan Public Examination (Prevention of Unfair Means) Act; while the latter is not a scheduled offence, Sections 420 and 120-B fall within the schedule. Investigations and recoveries indicate that Rs. 1.06 Crores alleged to be proceeds of crime were traced to eight persons on information linked to the accused, which the court regarded as sufficient at the bail stage to infer use/concealment of proceeds by the accused. The Court noted the statutory scheme including the reverse burden under Section 24 and the requirement in Section 45(1) that the court be satisfied there are reasonable grounds to believe the accused is not guilty before granting bail. Given the material on record, the court concluded it cannot be said at this stage that the accused is not guilty and therefore bail cannot be granted. [Paras 12, 14, 15, 16, 17]Bail dismissed as prima facie case under the PMLA is made out and the accused has not discharged the reverse burden such as would justify bail.Prima facie satisfaction for bail under Section 45(1) of the PMLA - proceeds of crime - Proviso to Section 45(1) of the PMLA (bail where laundering amount is less than one crore) is not attracted. - HELD THAT: - The proviso to Section 45(1) permits bail where the alleged laundering amount is below Rs. 1 crore. The court considered the amounts recovered and held that the recoveries attributable to the accused total Rs. 1.06 Crores, i.e., in excess of the threshold in the proviso. Accordingly, the proviso does not apply to afford bail to the petitioner. [Paras 3, 18]Proviso to Section 45(1) not attracted as alleged proceeds exceed Rs. 1 crore; bail not permissible on that ground.Final Conclusion: The criminal miscellaneous bail application under Section 439 Cr.P.C. is dismissed: the Court finds prima facie material that the accused procured and laundered proceeds of scheduled predicate offences and that the proviso to Section 45(1) of the PMLA is inapplicable because the alleged proceeds exceed Rs. 1 crore.

2024 (2) TMI 912 - JHARKHAND HIGH COURT Money Laundering

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Issues: (i) Whether the power to oppose and the twin conditions under the Prevention of Money Laundering Act, 2002 ceased to apply because the ECIR had been prepared and the prosecution complaint had been filed; (ii) Whether the petitioner made out a case for anticipatory bail in a money-laundering prosecution on the material collected during investigation.

Issue (i): Whether the power to oppose and the twin conditions under the Prevention of Money Laundering Act, 2002 ceased to apply because the ECIR had been prepared and the prosecution complaint had been filed?

Analysis: The statutory scheme treats money-laundering as an independent and continuing offence. Section 19(1) confers power of arrest on the basis of recorded reasons to believe and does not create any stage-based bar merely because an ECIR has been prepared or a complaint has been filed. Section 45 requires that the Public Prosecutor be given an opportunity to oppose bail and, where opposed, the court must be satisfied that there are reasonable grounds to believe that the accused is not guilty and will not commit an offence while on bail. The filing of an ECIR or complaint does not extinguish these safeguards or the authority's right to oppose bail.

Conclusion: The objection that the Enforcement Directorate had no right to oppose anticipatory bail after filing of the ECIR and complaint was rejected.

Issue (ii): Whether the petitioner made out a case for anticipatory bail in a money-laundering prosecution on the material collected during investigation?

Analysis: The material collected in investigation indicated a prima facie role in routing proceeds of crime through dummy bank accounts, forged documents, and accommodation entries to conceal and layer tainted money. The court applied the settled principles that anticipatory bail is an extraordinary remedy, is to be granted sparingly in serious economic offences, and requires close attention to the gravity of the accusation and the exact role of the accused. On the facts, the court found material suggesting direct involvement in laundering activity and no exceptional circumstance warranting pre-arrest bail.

Conclusion: The petitioner failed to satisfy the statutory and discretionary requirements for anticipatory bail.

Final Conclusion: The application for anticipatory bail did not succeed and the petitioner was denied pre-arrest protection in the money-laundering case.

Ratio Decidendi: In a prosecution under the Prevention of Money Laundering Act, 2002, anticipatory bail cannot be granted unless the court is satisfied on the statutory twin conditions, and the filing of an ECIR or complaint does not dilute the Public Prosecutor's right to oppose bail or the court's duty to test the existence of a prima facie laundering role.

Anticipatory bail in money-laundering cases remains subject to PMLA twin conditions despite filing of ECIR and complaint.
Under the Prevention of Money Laundering Act, 2002, the statutory arrest and bail safeguards continue even after an ECIR is prepared and a prosecution complaint is filed; those steps do not remove the Public Prosecutor's right to oppose bail or the court's duty to apply the twin conditions in section 45. The material discussed indicated a prima facie laundering role involving routing proceeds of crime through dummy bank accounts, forged documents, and accommodation entries, and the court treated anticipatory bail as an exceptional remedy in serious economic offences. On that basis, pre-arrest protection was declined.

Offence of money-laundering and continuing nature of process or activity connected with proceeds of crime - definition and scope of 'proceeds of crime' including Explanation (Act 23 of 2019) - power of arrest under Section 19(1) of PMLA (requirement to record and communicate written grounds) - twin conditions for bail under Section 45 of PMLA - statutory presumption under Section 24 of PMLA - scope of Section 50 of PMLA regarding summons, production and compelled disclosures - anticipatory bail under Section 438 CrPC in economic offences and exceptional nature of relief - impact of ECIR/complaint stage on exercise of PMLA powers and prosecutorial oppositionPower of arrest under Section 19(1) of PMLA (requirement to record and communicate written grounds) - impact of submission of ECIR/conversion into complaint on arrest and prosecution - Whether submission of the ECIR or conversion into a complaint/registration of an FIR ousts the Enforcement Directorate's power to arrest or its right to oppose anticipatory bail - HELD THAT: - The Court held that submission of an ECIR and registration of a complaint do not operate as a bar on exercise of arrest powers under Section 19(1). Section 19(1) confers power to arrest whenever there is a reason to believe, to be recorded in writing, that a person is guilty of an offence under the Act; there is no statutory stage-based limitation which extinguishes the power to arrest upon preparation or submission of ECIR. The Court further explained that Section 45(1)(i) expressly contemplates that the Public Prosecutor (here, for the ED) be given an opportunity to oppose an application for bail even at stages following lodgment of ECIR/complaint; therefore the ED does not lose its right to oppose bail once ECIR is submitted. The Court relied on authorities requiring written communication of grounds of arrest and emphasised that statutory procedures must be followed literally where prescribed. [Paras 45, 53, 55]Submission of the ECIR/registration of complaint does not preclude arrest under Section 19(1) and does not deprive the Enforcement Directorate of the opportunity to oppose anticipatory bail.Twin conditions for bail under Section 45 of PMLA - statutory presumption under Section 24 of PMLA - anticipatory bail under Section 438 CrPC in economic offences and exceptional nature of relief - Whether the twin conditions in Section 45(1) are mandatory for grant of bail and their application to an anticipatory bail application under Section 438 CrPC - HELD THAT: - The Court reiterated the binding precedents that the twin conditions in Section 45(1) - (i) opportunity to the Public Prosecutor to oppose and (ii) satisfaction that there are reasonable grounds to believe the accused is not guilty and will not commit an offence while on bail - are mandatory and apply even to anticipatory bail under Section 438 CrPC because of the overriding effect of the PMLA (Section 71) and related provisions (Sections 24, 65). The statutory presumption under Section 24 that proceeds of crime are involved in money-laundering (unless contrary is proved) was noted as relevant to the court's evaluation. The Court also emphasised the exceptional and sparing exercise of anticipatory bail in economic offences, and that grant of such relief may impede investigation in multi-stage money-laundering matters (placement, layering, integration). [Paras 36, 38, 41, 53]The twin conditions in Section 45(1) are mandatory and must be satisfied before granting anticipatory or regular bail in PMLA cases; the statutory presumption under Section 24 is a material consideration.Offence of money-laundering and continuing nature of process or activity connected with proceeds of crime - definition and scope of 'proceeds of crime' including Explanation (Act 23 of 2019) - impact of ECIR/complaint stage on exercise of PMLA powers and prosecutorial opposition - Whether, on the material collected in the ECIR, a prima facie case for money-laundering and active involvement of the petitioner is made out so as to refuse anticipatory bail - HELD THAT: - The Court examined the ECIR and summarised the investigative material: allegations of routing of proceeds of crime through bank accounts controlled by the petitioner and his associates; statements recorded under Section 50 and Section 17 indicating that dummy entities and forged documents were used; transactional links, admission of cash receipts and commission, involvement of petitioner's employees in account operations, provisional attachment of petitioner's assets, and narrated conduct during search. Considering this material collectively, the Court found prima facie evidence of the petitioner's role in concealment, layering and transfer of proceeds of crime and held that the gravity and nature of the allegations in an economic offence of this character weighed against a grant of anticipatory bail. The Court expressly refrained from adjudicating merits, treating its conclusions as prima facie. [Paras 61, 62, 63, 76, 77]Prima facie material in the ECIR indicates the petitioner's active involvement in alleged money laundering; therefore, no exceptional case is made out for grant of anticipatory bail.Final Conclusion: The High Court dismissed the petition for anticipatory bail under Section 438 CrPC: the court held that ECIR submission does not bar arrest or ED's right to oppose bail, the twin statutory conditions in Section 45 of PMLA are mandatory and apply to anticipatory bail, and on prima facie appraisal of the material the petitioner was not entitled to anticipatory bail; the order is confined to prima facie findings without adjudicating merits.

2024 (2) TMI 1402 - JAMMU & KASHMIR AND LADAKH HIGH COURT Money Laundering

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PMLA bail and twin conditions: limited prima facie review, lack of present influence, and medical factors supported release.
Bail under the Prevention of Money Laundering Act was assessed on the limited prima facie standard at the pre-trial stage, with emphasis on the statutory twin conditions, the petitioner's alleged role in the loan transaction, and the available material. The Court noted that the loan was routed through a cooperative banking structure, the disbursement reached identified landowners, and the banking decision could not, at that stage, be attributed solely to the petitioner. It also treated the petitioner's no longer holding office, and therefore lacking present influence over the investigation or trial, together with his age and heart-related medical condition, as supporting release. Bail was granted.

Grant of bail under section 439 CrPC - Bail in offences under the Prevention of Money Laundering Act - Prima facie satisfaction requirement under section 45 PMLA - Continuing activity in money laundering - Individual criminal liability vis a vis Board decision - Health grounds as a factor in bail adjudication - Risk of tampering with evidence and influenceGrant of bail under section 439 CrPC - Bail in offences under the Prevention of Money Laundering Act - Prima facie satisfaction requirement under section 45 PMLA - Individual criminal liability vis a vis Board decision - Health grounds as a factor in bail adjudication - Risk of tampering with evidence and influence - Whether the petitioner, arrested by the ED under the Prevention of Money Laundering Act, 2002, is entitled to bail - HELD THAT: - The court applied the limited prima facie test appropriate on a bail application and recalled that section 45 PMLA overlays the usual discretion under section 439 CrPC by requiring opportunity to the ED and satisfaction that reasonable grounds exist to believe the arrestee is not guilty and is not likely to offend while on bail; the ED had availed the opportunity to oppose the petition (para 42). The court refrained from prejudging the merits of the money laundering charge and confined itself to prima facie appraisal (para 45). Material considered included that the loan proposal and sanction process anteceded and encompassed collective action by the Bank and its statutory regulator, that the loan decision was of the Board and not solely the petitioner's unilateral act, and that the disbursements were made to identified landowners who received consideration and whose entitlement the Supreme Court treated as having been prima facie actual (paras 46-48, 30-31). The court found this reduces the immediacy of a prima facie case of diversion of proceeds into the petitioner's personal possession and supported the view that liability could not be individualized to the petitioner alone at this stage (paras 47-49). Further, the petitioner had ceased to be chairman since 2020, diminishing present ability to influence investigation or tamper with evidence, and the petitioner's age and documented heart related illness weighed in favour of release for medical treatment (paras 50-50). Applying these factors together, the court concluded that a prima facie case for continued custodial detention under the PMLA was not established so as to deny bail, while reserving the ED's right to pursue trial and investigation (paras 45, 49-51). The court emphasised that its observations were confined to the bail petition and to the petitioner alone (para 53). [Paras 49, 50, 51, 52, 53]Bail granted to the petitioner subject to furnishing specified personal and surety bonds, restrictions on travel outside the court's territorial jurisdiction without permission, prohibition on interfering with investigation or trial, and requirement to appear when summoned.Final Conclusion: The petition for bail is allowed: the petitioner arrested in an ED investigation under the PMLA is admitted to bail on conditions specified by the High Court, the court having applied a prima facie test under section 45 PMLA and section 439 CrPC and having regard to collective Board action, intervening Supreme Court orders concerning the landowners, the petitioner's cessation as chairman, and his medical condition; observations are confined to this petition and to the petitioner.

2024 (2) TMI 733 - ALLAHABAD HIGH COURT Money Laundering

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Anticipatory bail in money-laundering cases remains exceptional where serious allegations and Section 45 restrictions are attracted.
Anticipatory bail in a PMLA prosecution was refused because the allegations disclosed a serious economic offence involving receipt and alleged diversion of funds, attachment of properties said to represent proceeds of crime, and transfer of funds into the applicant's personal account. The applicant had also not appeared before the trial court despite summons, indicating evasion of process. Applying the rigours of Section 45 of the Prevention of Money-Laundering Act, 2002, the Court held that pre-arrest bail is an extraordinary relief in money-laundering matters and should be granted sparingly only in exceptional circumstances. On the facts, no such exceptional circumstance was shown, so bail was declined.

Anticipatory bail under Section 438 Cr.P.C. - rigours of Section 45 of the Prevention of Money Laundering Act, 2002 - economic offences constitute a class apart - interference with investigation by grant of pre arrest bail - absconding and risk of fleeing from justiceAnticipatory bail under Section 438 Cr.P.C. - rigours of Section 45 of the Prevention of Money Laundering Act, 2002 - economic offences constitute a class apart - absconding and risk of fleeing from justice - interference with investigation by grant of pre arrest bail - Grant of anticipatory bail to the applicant in proceedings under the Prevention of Money Laundering Act, 2002. - HELD THAT: - The Court examined the application for pre arrest relief under Section 438 Cr.P.C. in the context of allegations of money laundering arising from a large scale economic fraud ('Bike Bot' scheme). It applied the well established principle that anticipatory bail is an extraordinary remedy to be sparingly exercised, particularly in economic offences which impact the public interest and require thorough investigation. The Court held that where an application for anticipatory bail is made in connection with PMLA offences, the substantive rigours of Section 45 of the PMLA must be borne in mind even if relief is sought under Section 438 Cr.P.C. The material before the Court showed receipt and onward transfer of large sums from the accused companies to the applicant, provisional attachment of the property alleged to be proceeds of crime, filing of complaint and cognizance under Sections 3 and 4 PMLA, ongoing investigation including overseas inquiries, and that the applicant had not complied with summons and was absconding. In view of the nature and gravity of the accusations, the stage and complexity of investigation, the risk of frustrating investigation by pre arrest protection, the applicant's criminal antecedents and the attachment of assets as alleged proceeds of crime, the Court concluded that the twin conditions and policy concerns underlying Section 45 weigh against grant of anticipatory bail. The Court therefore found it not a fit case for exercise of discretion to grant anticipatory bail. [Paras 11, 16, 26, 27]Anticipatory bail application is rejected.Final Conclusion: Application for anticipatory bail in respect of charges under the Prevention of Money Laundering Act, 2002 is refused after applying the standards for economic offences, the rigours of Section 45 PMLA and having regard to abscondence, risk to investigation and the materials on record.

2024 (2) TMI 732 - TELANGANA HIGH COURT Money Laundering

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Single member can validly pass provisional attachment orders under PMLA Section 6, legal qualification not mandatory
The Telangana HC upheld the validity of provisional attachment orders under PMLA, rejecting challenges to the Adjudicating Authority's composition and jurisdiction. The court held that a single member can validly pass attachment orders, as Section 6 of PMLA permits single-member functioning. The court ruled that the Adjudicating Authority need not comprise only legally qualified members, distinguishing it from traditional courts whose jurisdiction has been transferred to tribunals. The authority performs quasi-judicial functions within statutory bounds without deciding criminality or imposing punishment, making legal qualification unnecessary for all members.

Quasi-judicial function - administrative adjudication - composition of adjudicating authority - bench constitution - single-member and two-member benches - reading statutory provisions as a whole - checks and balances by appellate remediesQuasi-judicial function - composition of adjudicating authority - bench constitution - single-member and two-member benches - reading statutory provisions as a whole - Power under Section 8 of PMLA need not be exercised only by a member having experience in the field of law; a Bench constituted under Section 6 may consist of a single member who need not necessarily be the member from the field of law. - HELD THAT: - The Adjudicating Authority under Section 6 read with Section 8 performs functions that are quasi judicial since it determines questions affecting persons' rights and is required by Section 8(2) to consider replies, hear parties and record findings. However, the statutory scheme must be read as a whole. Section 6(2) prescribes that the Adjudicating Authority shall consist of a Chairperson and two Members with the proviso regarding fields of experience, while Section 6(5)(b) expressly empowers the Chairperson to constitute Benches with one or two Members and Section 6(7) permits transfer to a two Member Bench where necessary. There is no provision in the statute requiring that every Bench must include the Member having experience in law. To read Section 6 as mandating that only a legal member may exercise powers under Section 8 would render subsections authorising single member Benches and the transfer provisions nugatory. The presence of appellate fora - an Appellate Authority presided by a retired Chief Justice under Section 25 and further appeal to the High Court under Section 42 - provide institutional checks. Decisions of other High Courts upholding single member Benches in this context are noted and persuasive. Applying established principles of statutory interpretation, the Court concluded that the adjudicatory powers under Section 8 can validly be exercised by a Bench comprising a single Member whether or not that Member is the one specified as having experience in law. [Paras 11, 15, 23, 26]The contention that Section 8 powers can be exercised only by a Member experienced in law is rejected; the Adjudicating Authority may validly exercise Section 8 powers through Benches constituted under Section 6(5) including single member Benches.Final Conclusion: The Single Judge's order quashing the provisional order of attachment and show cause notice is set aside; the intra court appeal is allowed and there shall be no order as to costs.

2024 (2) TMI 731 - CALCUTTA HIGH COURT Money Laundering

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Issues: (i) Whether the accused, having been made an approver in the scheduled offence case, was liable to be discharged from the complaint under the Prevention of Money Laundering Act, 2002. (ii) Whether the proceedings under the Prevention of Money Laundering Act, 2002, in the facts of the case, could continue independently against a person who had turned approver in the scheduled offence and was entitled to the protection of the law relating to tender of pardon and self-incrimination.

Issue (i): Whether the accused, having been made an approver in the scheduled offence case, was liable to be discharged from the complaint under the Prevention of Money Laundering Act, 2002.

Analysis: The complaint under the Prevention of Money Laundering Act, 2002 arose out of the scheduled offence investigation. The accused had already been treated as an approver in the underlying case and had been examined as a witness under the procedure relating to tender of pardon. The Court held that, on the materials before it, the same factual foundation which supported the scheduled offence case also underlay the money-laundering complaint, and the prosecution could not, in the circumstances, proceed against the approver as an accused on the basis of the same testimony and disclosure already utilised by the prosecution in the scheduled offence case.

Conclusion: The discharge was upheld and the accused was not required to be proceeded against as an accused in the money-laundering complaint.

Issue (ii): Whether the proceedings under the Prevention of Money Laundering Act, 2002, in the facts of the case, could continue independently against a person who had turned approver in the scheduled offence and was entitled to the protection of the law relating to tender of pardon and self-incrimination.

Analysis: The Court applied the principle that money-laundering is an offence connected with the proceeds of crime arising from a scheduled offence, and in the present facts the complaint was founded on the same chain of events and evidence that had already culminated in the accused becoming an approver. The Court further relied on the statutory protection available to a witness who gives incriminating answers while under compulsion, and on the procedural position that a person to whom pardon has been tendered may be examined as a witness rather than prosecuted afresh on the same basis. The Court therefore found no reason to interfere with the trial court's view that the accused should be cited as a witness and not as an accused.

Conclusion: The money-laundering proceedings were not permitted to displace the approver's protected status on the facts of the case.

Final Conclusion: The revision was rejected, and the trial court's order discharging the accused was left undisturbed.

Ratio Decidendi: Where the money-laundering complaint is founded on the same factual and evidentiary basis as the scheduled offence case, and the person concerned has already been accepted as an approver and examined as a witness in the underlying prosecution, the court may decline to treat that person as an accused in the derivative complaint and preserve the statutory protection attached to tender of pardon and compelled testimony.

Approver protection in money-laundering complaints: same factual basis may bar treating the pardoned witness as an accused.
Where a person in the scheduled offence case had already been made an approver and examined as a witness, the commentary notes that the same person may not be proceeded against as an accused in the derivative PMLA complaint if both matters rest on the same factual foundation and evidence. It also highlights the statutory protection associated with tender of pardon and compelled testimony, treating the approver's protected status as continuing on those facts. The stated result is that the discharge was upheld and the money-laundering complaint was not permitted to override the approver's witness status.

Benefit of approver/pardon - protection under proviso to Section 132 of the Evidence Act - tender of pardon under Section 306 Cr.P.C. and grant of pardon under Section 307 Cr.P.C. - offence under Section 3 of the PMLA as grounded on proceeds of crime derived from a scheduled offence - PMLA prosecution contingent on existence of a registered scheduled offenceBenefit of approver/pardon - PMLA prosecution contingent on existence of a registered scheduled offence - Validity of the Special Court's discharge of the accused (Raj Gopal Kankani) on account of his having been made an approver in the CBI proceedings - HELD THAT: - The High Court examined the relationship between the CBI proceedings (scheduled offence) and the complaint under the PMLA. Relying on the material on record and the principle that the ED's case was premised on the evidence and materials generated in the CBI matter, the Court held that the accused, having been made an approver in the CBI case and having furnished the materials on which the PMLA complaint was based, could not be treated as an accused in the PMLA proceedings. The Court accepted that insofar as the PMLA complaint is dependent on the CBI charge-sheet and the approver's disclosures, the approver is entitled to the legal benefit attendant on his status and the discharge was therefore in accordance with law. [Paras 41, 42, 43, 44, 46]Discharge of the accused by the Special Court is affirmed; the accused is not to be implicated as an accused in the PMLA complaint but is to be treated in the light of his status as an approver.Offence under Section 3 of the PMLA as grounded on proceeds of crime derived from a scheduled offence - PMLA prosecution contingent on existence of a registered scheduled offence - Whether the offence under Section 3 of the PMLA is independent of, or can proceed without, a registered scheduled offence on which the proceeds of crime are based - HELD THAT: - The Court analysed the statutory scheme and recent authority relied upon by the petitioner which recognises that while money laundering is an independent offence concerning processes connected with proceeds of crime, the prosecution under Section 3 is necessarily linked to proceeds that are derived from a scheduled offence. The Court concluded that the PMLA prosecution in the present matter rested on materials and evidence generated in the CBI case; consequently, if the foundational scheduled-offence case cannot be sustained (or the person is an approver in that case), the PMLA complaint cannot be maintained merely on a notional basis. [Paras 35, 36, 37, 41, 42]The Court held that the PMLA offence in this matter is directly connected to and contingent upon the scheduled-offence case; the PMLA prosecution cannot proceed independent of the CBI materials on which it is founded.Protection under proviso to Section 132 of the Evidence Act - tender of pardon under Section 306 Cr.P.C. and grant of pardon under Section 307 Cr.P.C. - Whether the approver is entitled to statutory protections (immunity under Section 132 proviso and procedural safeguards under Sections 306/307 Cr.P.C.) in the connected PMLA proceedings - HELD THAT: - The Court considered the doctrine that an accomplice/approver examined as a witness is protected by the proviso to Section 132 of the Evidence Act against prosecution based on answers given as witness, and noted the procedures for tendering pardon under Sections 306 and 307 Cr.P.C. Applying these principles to the facts, the Court found that the opposite party, having become an approver and having given evidence in the CBI matter, attracts the immunity and procedural protections which preclude his being proceeded against in the dependent PMLA complaint on the basis of the same disclosures. [Paras 38, 40, 41, 43]The approver is entitled to the protection of the proviso to Section 132 and the benefit of pardon provisions; those protections support the Special Court's discharge order in the PMLA proceedings.Final Conclusion: The revision is dismissed and the order dated 03.10.2019 of the Special Judge (CBI) / Special Judge PMLA in ML Case No. 02 of 2017 discharging the accused is affirmed; connected applications disposed of and interim reliefs vacated.

2024 (2) TMI 1446 - PUNJAB AND HARYANA HIGH COURT Money Laundering

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Natural justice challenge to fraud declaration led to stay on FIR registration, investigation and arrest pending further hearing.
A challenge to the declaration of a loan account as fraud raised a natural justice objection, with the petitioner apprehending coercive action on that basis. Interim protection was considered appropriate pending further hearing, and stay was granted against all further proceedings, including registration of the FIR, investigation and arrest, until further orders.

Principle of natural justice - declaration of loan account as fraud - stay of registration of FIR - stay of investigation and arrest - apprehension of coercive processPrinciple of natural justice - declaration of loan account as fraud - stay of investigation and arrest - stay of registration of FIR - Interim stay of further criminal proceedings arising from banks' complaints, including registration, investigation and arrest, in light of challenge to declaration of loan account as a "fraud" on grounds of breach of the principle of natural justice. - HELD THAT: - The petitioner contended that the banks declared his loan account a "fraud" without complying with the principle of natural justice, and that consequent complaints to law enforcement may lead to coercive action. The court noted that the question whether natural justice must be observed before declaring a loan account as a fraud is pending consideration before the Supreme Court and observed that similar challenges have earlier attracted interim protection. Having regard to these circumstances and the immediate apprehension of coercive measures, the court considered it appropriate to preserve the status quo by restraining further action until the next hearing. The order is interlocutory and predicated on preventing prejudice while the legal question concerning the validity of the fraud declaration remains under challenge and judicial consideration at the higher forum. [Paras 4]Until the next date of hearing, all further proceedings including registration of FIR No. RC2232020A0004 dated 6.8.2020, investigation and arrest in relation to the complaints/FIRs lodged by the respondent banks are stayed.Final Conclusion: Interim stay granted of registration, investigation and arrest arising from banks' complaints concerning the petitioner's loan account declared a "fraud", until the next date of hearing, in view of an apprehension of coercive action and pending higher court consideration of whether natural justice is required before such a declaration.

2024 (2) TMI 1415 - BOMBAY HIGH COURT Money Laundering

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Section 436-A CrPC does not guarantee bail where active money-laundering role and recorded reasons justify continued detention.
Section 436-A CrPC was applied in a money-laundering bail context, but prolonged undertrial custody did not secure release where the Court recorded reasons based on the applicant's active role in layering and laundering proceeds of crime. The Court held that parity with a co-accused was unavailable because the applicant's role was materially different, and the surrounding material showed knowledge, assistance, and participation in the offence. It further rejected the argument that half the maximum punishment had been served, noting that the facts attracted the higher punishment bracket under the Act. Bail was therefore refused.

Section 436-A Cr.P.C. - right to speedy trial under Article 21 - statutory bail and court's discretion under the proviso to Section 436-A - economic offences as a class apart - nexus between proceeds of crime and Scheduled Offences under PMLA - Section 44(1)(c) of the PMLA - committal for simultaneous trialSection 436-A Cr.P.C. - right to speedy trial under Article 21 - statutory bail and court's discretion under the proviso to Section 436-A - nexus between proceeds of crime and Scheduled Offences under PMLA - economic offences as a class apart - Applicant not entitled to release on personal bond/bail under Section 436-A Cr.P.C. - HELD THAT: - The Court examined the bail claim solely under Section 436-A Cr.P.C., recognising the provision as a statutory bail safeguard reflecting the right to speedy trial under Article 21 but subject to judicial discretion under its proviso. Although the applicant has undergone prolonged pre trial detention, the Court found sufficient material in the prosecution complaint prima facie indicating active participation by the applicant in layering and laundering proceeds of crime linked to offences committed by the principal accused, including offences under the NDPS Act. The Special Judge's detailed findings-that the applicant played a prominent role in arranging meetings, facilitating transfers and creating dummy tenancies, and that the predicate offences invoke harsher punishment-were accepted. Because the genesis of the alleged tainted funds and the predicate offences pointed to parts of the Schedule attracting a higher maximum sentence (Part II of Section 4 as applied by the Court), the period of custody already undergone did not qualify the applicant for mandatory release as a matter of right. The proviso permits continued detention despite passage of half the maximum sentence where reasons are recorded; on the material and the seriousness and alleged role of the applicant, the Court concurred with the Special Judge in refusing to extend parity with a co accused who had different evidentiary circumstances. The question of detailed nexus between particular predicate offences and specific transactions was held to be a matter for trial on merits. [Paras 12, 13, 14]Application for bail under Section 436-A Cr.P.C. is rejected.Final Conclusion: The application for release on bail under Section 436-A Cr.P.C. is dismissed; the High Court concurs with the Special Judge's view that prima facial material and the gravity of the alleged role of the applicant justify continued detention pending trial.

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