Enforcement Directorate's Section 19 PMLA non-compliance leads to bail grant in money laundering case

The Jharkhand HC granted bail to a petitioner in a money laundering case, finding that the Enforcement Directorate failed to comply with Section 19 of PMLA. The court held that "reason to suspect" differs from "reason to believe," requiring tangible material and justification. Even accepting prosecution allegations at face value, the case did not establish essential ingredients for money laundering under Section 3 of PMLA. The petitioner, a company director who was allegedly victimized by cheating and forgery, had no criminal antecedents. Considering the custody period since June 2023, trial stage, and evidence volume, the court granted bail with conditions.

---

---

Issues Involved:
1. Non-compliance of Section 19 of PMLA by the Enforcement Directorate.
2. Satisfaction of conditions under Section 45(1)(ii) of PMLA by the petitioner.
3. Knowledge of the petitioner regarding the forgery committed by accused Pradeep Bagchi.
4. Victim status of the petitioner's company in the alleged cheating.
5. Applicability of Section 3 and Section 4 of PMLA to the petitioner's case.

Summary:

Issue 1: Non-compliance of Section 19 of PMLA by the Enforcement Directorate
The petitioner argued that the Enforcement Directorate (ED) failed to comply with Section 19 of PMLA, which mandates that the grounds of arrest must be furnished to the accused in writing. The court referred to the Supreme Court's judgment in Pankaj Bansal Vs. Union of India, which clarified that henceforth, a copy of the written grounds of arrest must be provided to the arrested person. The court concluded that the non-compliance of Section 19(1) by the ED warranted the petitioner being granted bail.

Issue 2: Satisfaction of conditions under Section 45(1)(ii) of PMLA by the petitioner
The petitioner contended that he satisfied both conditions under Section 45(1)(ii) of PMLA, which require the court to be satisfied that there are reasonable grounds for believing that the accused is not guilty and that he is not likely to commit any offence while on bail. The court referred to the Supreme Court's judgment in Vijay Madanlal Choudhary & Ors versus Union of India, which clarified that only prima facie satisfaction of the court is required. The court found that the allegations against the petitioner were more of suspicion rather than belief, and thus, the conditions under Section 45(1)(ii) were satisfied.

Issue 3: Knowledge of the petitioner regarding the forgery committed by accused Pradeep Bagchi
The petitioner argued that there was no material on record to show that he had knowledge of the forgery committed by Pradeep Bagchi. The court noted that there was no document or material implicating the petitioner in the forgery or manipulation of the title deeds. The court also observed that the petitioner was not named as an accused in the FIR related to the forgery.

Issue 4: Victim status of the petitioner's company in the alleged cheating
The petitioner claimed that his company, M/s. Jagatbandhu Tea Estate Pvt. Ltd., was a victim of cheating by Pradeep Bagchi. The court found that the company had issued cheques for Rs. 7 crore to Pradeep Bagchi, out of which only Rs. 25 lakh was encashed. The remaining amount was to be paid upon handing over possession of the property. The court noted that the company had lodged complaints against Pradeep Bagchi for cheating, supporting the claim that the company was a victim.

Issue 5: Applicability of Section 3 and Section 4 of PMLA to the petitioner's case
The petitioner argued that even if the allegations were accepted at face value, no case under Section 3, punishable under Section 4 of PMLA, was made out. The court observed that there was no material on record to show that any proceeds of crime were generated by the petitioner. The amount paid by the company was out of the sale of tea leaves, and the account was duly audited. The court concluded that the allegations fell short of the essential ingredients for the offence of money laundering under Section 3 of PMLA.

Conclusion:
The court granted bail to the petitioner, directing him to furnish a bail bond of Rs. 100,000 with two sureties of the like amount. The petitioner was required to surrender his passport, not tamper with evidence, and appear before the trial court on each date unless exempted. The findings were deemed tentative and not to influence the trial's merits.

---