2017 (6) TMI 737 - HC - Money Laundering

Court requires stringent proof for bail under Section 45 of PML Act, burden on applicant to refute presumption.

Jignesh Kishorebhai Bhajiawala Versus State of Gujarat & 1

The court held that the stringent provisions of Section 45 of the PML Act apply, requiring the applicant to demonstrate reasonable grounds for innocence ... Bail application - Prevention of Money Laundering Act - Held that:- It may not be out of place to emphasize that even the investigation is not over and even if the investigation is required to be made or is made by the other authority under the other Act like Income Tax Act, by itself would not lead to a conclusion that the investigation under the PML Act is concluded. In fact the authority like Directorate of Enforcement under the PML Act would be justified in proceeding with the investigation on the basis of the revelations and the material found in the inquiry or the investigation under the other statute like Income Tax Act. Therefore, when the investigation by the Enforcement Authority under the PML Act has not yet been over, it may not be possible to arrive at the satisfaction as provided in Section 45(1)(ii) of the PML Act. The submissions which have been made by learned Senior Counsel Shri Vikram Chaudhary that the issue is not settled and therefore when there are divergent views under consideration and where the reference is also made and it has been remanded, it is a case for grant of bail, is thoroughly misconceived. The emphasis made by learned Senior Counsel Shri Vikram Chaudhary that the foundation has to be laid is also misconceived as it is only at the conclusion of the investigation, the picture may emerge with regard to the nature of offence or the class of offence as provided in the schedule. Therefore, in light of the discussion made herein above, the present Criminal Application cannot be entertained and deserve to be dismissed and accordingly stands dismissed Issues Involved:1. Applicability of Section 45 of the PML Act for granting bail.2. Interpretation of 'proceeds of crime' under Section 2(1)(u) of the PML Act.3. The burden of proof and presumption under Section 24 of the PML Act.4. Legislative intent and amendments to the PML Act, particularly the 2013 amendment.5. Doctrine of merger and binding precedents.Issue-wise Detailed Analysis:1. Applicability of Section 45 of the PML Act for granting bail:The court examined whether Section 45 of the PML Act, which imposes stringent conditions for granting bail, applies to the applicant. The applicant argued that the amendment in 2013, which clubbed Part-B offences with Part-A, should not attract the rigors of Section 45. However, the court emphasized that Section 45 starts with a non-obstante clause, indicating that it overrides the general provisions of the Cr.PC. The court referred to the judgment in *Gautam Kundu v. Manoj Kumar*, which held that the conditions in Section 45 must be complied with when considering bail applications under Section 439 of the Cr.PC. The court concluded that the stringent provisions of Section 45 apply, and the applicant must satisfy the court that there are reasonable grounds to believe he is not guilty and is unlikely to commit any offence while on bail.2. Interpretation of 'proceeds of crime' under Section 2(1)(u) of the PML Act:The applicant contended that unless the amount recovered is established as 'proceeds of crime,' the PML Act's provisions would not be attracted. The court rejected this argument, referring to the statutory presumption under Section 24 of the PML Act, which places the burden on the accused to prove that the proceeds are not involved in money laundering. The court highlighted that the Hon'ble Apex Court in *Gautam Kundu* emphasized that the burden of proof lies with the accused, and the authority or court shall presume the involvement of proceeds of crime unless proven otherwise.3. The burden of proof and presumption under Section 24 of the PML Act:The court reiterated that Section 24 of the PML Act shifts the burden of proof to the accused to show that the property or money recovered is not the proceeds of crime. This presumption is mandatory and must be complied with, as emphasized in *Gautam Kundu* and *Union of India v. Hassan Ali Khan*. The applicant must provide material evidence to rebut this presumption to be granted bail.4. Legislative intent and amendments to the PML Act, particularly the 2013 amendment:The applicant argued that the 2013 amendment, which clubbed Part-B offences with Part-A, was intended only to overcome the monetary threshold of Rs. 30 lakhs for invoking the PML Act. The court disagreed, stating that the legislature was conscious of the implications and provided that offences punishable for more than three years under Part-A would attract Section 45's rigors. The court emphasized that it is not within the judiciary's purview to question the legislature's intent or rewrite statutory provisions.5. Doctrine of merger and binding precedents:The applicant contended that the High Court's order merged with the Hon'ble Apex Court's order, creating a binding precedent. The court clarified that the doctrine of merger does not create a binding precedent unless the issue has been directly discussed and decided by the Hon'ble Apex Court. The court referred to *Government of Karnataka v. Gowramma*, emphasizing that only the ratio decidendi of a judgment is binding, not every observation made.Conclusion:The court concluded that the stringent provisions of Section 45 of the PML Act apply, and the applicant failed to satisfy the court that there are reasonable grounds for believing he is not guilty. The burden of proof lies with the applicant to rebut the presumption of 'proceeds of crime,' which he failed to do. The court dismissed the bail application, emphasizing that the investigation under the PML Act is ongoing and the legislative intent must be respected. The court discharged the rule and dismissed the application.