Petitioner-Accused Granted Bail on Medical Grounds in Money Laundering Cases

The Court granted bail to the petitioner-accused No.1 in both cases involving offenses under the Prevention of Money Laundering Act, Indian Penal Code, and Karnataka Protection of Interest of Depositors in Financial Establishment Act. Bail was granted on medical grounds due to the petitioner's severe health issues, not based on the case's merits. Conditions for bail included executing a bond, regular court appearances, surrendering the passport, and cooperating with authorities. The petitioner was directed to be released on bail with specified conditions to prevent tampering with evidence and ensure cooperation with ongoing investigations.

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Issues Involved:
1. Bail application under Section 439 of Cr.P.C. for offences under Section 4 of the Prevention of Money Laundering Act, 2002 (PML Act).
2. Bail application under Section 439 of Cr.P.C. for offences under Sections 409 and 420 of the Indian Penal Code, 1860 (IPC) and Section 9 of the Karnataka Protection of Interest of Depositors in Financial Establishment Act, 2004 (KPID Act).

Detailed Analysis:

Issue 1: Bail Application under Section 439 of Cr.P.C. for Offences under PML Act
The petitioner, accused No.1, sought bail in Special Criminal Case No.846/2020 registered by the Directorate of Enforcement (ED) for offences under Section 4 of the PML Act. The prosecution alleged that the petitioner, as the Founder/Director of Kanva Souhardha Co-operative Credit Limited, collected Rs. 650 crores from members and the public, promising high interest rates without maintaining required liquidity and issued prepaid instruments without RBI's permission. The petitioner allegedly advanced Rs. 702 crores to 13 associated companies without security, resulting in significant defaults. Multiple FIRs were registered against him for cheating (Section 420 IPC), which is a scheduled offence under the PML Act. The ED arrested the petitioner and he was remanded to judicial custody.

Issue 2: Bail Application under Section 439 of Cr.P.C. for Offences under IPC and KPID Act
The petitioner also sought bail in Crime No.304/2020 registered by Hosakote Police Station for offences under Sections 409 and 420 IPC and Section 9 of the KPID Act. The complaint was filed by an investor who alleged that the petitioner’s Society had collected deposits and shares, promising double returns but failed to repay, resulting in cheating. The investigation revealed that the Society cheated over 600 people, involving Rs. 39.08 crores, and 111 properties worth Rs. 426 crores were seized. The Sessions Court rejected the bail application, leading the petitioner to approach the High Court.

Arguments by Petitioner’s Counsel:
The petitioner’s counsel argued that the petitioner was innocent, merely acting as the Founder/Director, and had no intention to cheat. The funds collected were reinvested in businesses, and losses led to complaints. The petitioner was willing to sell properties to repay investors and assist in a forensic audit. Additionally, the petitioner was suffering from serious health issues, including first-stage cancer, diabetes, hypertension, and depression, requiring proper medical treatment.

Arguments by Respondent’s Counsel:
The ED’s counsel opposed the bail, highlighting that the petitioner cheated over 13,000 investors, misused funds, and reinvested in other businesses. A public interest litigation was pending, and an Administrator was appointed by the High Court. If released on bail, the petitioner might tamper with evidence, sell properties, and not cooperate with the administrators. The High Court Government Pleader and assisting counsel also objected, emphasizing ongoing investigations and potential witness tampering.

Court’s Observations:
The Court noted the petitioner’s role as Founder/Director and the significant financial irregularities and defaults. The petitioner’s reinvestment of funds in other businesses constituted money laundering under the PML Act. However, the Court acknowledged the petitioner’s severe health issues, requiring proper medical treatment not feasible in jail.

Judgment:
The Court granted bail on medical grounds, not on the merits of the case, recognizing the need for proper treatment. Conditions for bail included executing a personal bond of Rs. 10 lakhs with two sureties, regular court appearances, no tampering with evidence, surrendering the passport, not leaving jurisdiction without permission, and cooperating with the appointed Administrator and Competent Authority. The petitions were allowed, and the petitioner was directed to be released on bail with specified conditions.

Order:
The petitioner-accused No.1 was granted bail in both Special Criminal Case No.846/2020 and Crime No.304/2020, subject to conditions ensuring his cooperation with ongoing investigations and preventing tampering with evidence or alienation of properties. The main petitions were disposed of, and pending applications were also disposed of accordingly.

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