PMLA bail principles: inconsistent statements and weak hearsay cannot by themselves defeat release on the available material.

In bail proceedings under the PMLA, the HC found that the prosecution material did not establish, on a prima facie basis, a sufficient link between the alleged collections and the alleged proceeds of crime, because the key co-accused statement was inconsistent and other statements were diluted by contrary versions. Allegations of undue influence over police transfers and postings were also treated as largely hearsay and too uncertain to support denial of bail. Applying Section 45 and its first proviso, the court held that the restrictive twin conditions were satisfied on the available material, with the applicant's medical condition and age reinforcing the discretionary case for release. Bail was granted subject to conditions.

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Issues: (i) Whether the material disclosed, at the stage of bail, reasonable grounds for believing that the applicant was not guilty of money-laundering in respect of the alleged collections from bar owners and the alleged transfer of funds to Shri Sai Shikshan Sanstha. (ii) Whether the allegations regarding influence over transfers and postings of police officials established a prima facie money-laundering case against the applicant. (iii) Whether the statutory restriction in Section 45 of the Prevention of Money Laundering Act, 2002, including the first proviso, warranted release on bail.

Issue (i): Whether the material disclosed, at the stage of bail, reasonable grounds for believing that the applicant was not guilty of money-laundering in respect of the alleged collections from bar owners and the alleged transfer of funds to Shri Sai Shikshan Sanstha.

Analysis: The allegation relating to Rs. 1.71 crores was treated as the only component that could prima facie be connected with the alleged extortion from bar owners, but even that connection depended substantially on the statement of a co-accused whose version was found inconsistent on material particulars. The court found that the versions of other witnesses, including statements suggesting that the collection was for the then Commissioner of Police, diluted the prosecution case. The remaining two components of alleged transfer to Shri Sai Shikshan Sanstha were not shown, on the material then available, to have been derived or obtained as a result of criminal activity relating to a scheduled offence, and therefore did not clearly answer the definition of proceeds of crime.

Conclusion: The applicant was held to have made out a prima facie case that the prosecution material was insufficient to show guilt in respect of money-laundering at the bail stage.

Issue (ii): Whether the allegations regarding influence over transfers and postings of police officials established a prima facie money-laundering case against the applicant.

Analysis: The statements relied upon by the prosecution were found to be largely hearsay and lacking certainty as to source, time and place. The evidence did not clearly establish that any identified property had been derived from criminal activity relating to a scheduled offence on account of the transfer and posting exercise. The court therefore treated this allegation as inadequate, at least for the purpose of denying bail under the money-laundering framework.

Conclusion: The allegation of undue influence in transfers and postings was not held sufficient, on the available material, to defeat the applicant's claim for bail.

Issue (iii): Whether the statutory restriction in Section 45 of the Prevention of Money Laundering Act, 2002, including the first proviso, warranted release on bail.

Analysis: The court applied the settled principle that the twin conditions under Section 45 are restrictive but not an absolute bar, and that the court may assess whether there are reasonable grounds for believing that the accused is not guilty and is not likely to commit an offence while on bail. The medical record showing multiple ailments and the applicant's age were also treated as relevant to the exercise of discretion under the first proviso. In the totality of circumstances, the court concluded that the statutory threshold for bail stood satisfied.

Conclusion: Bail was granted in exercise of the court's discretion under Section 45, read with the applicant's medical condition and the overall assessment of the prosecution material.

Final Conclusion: The applicant was entitled to be enlarged on bail, subject to conditions designed to secure attendance, prevent interference with the trial, and preserve the integrity of the proceedings.

Ratio Decidendi: For bail under the Prevention of Money Laundering Act, 2002, the court must assess, on broad probabilities and the available material, whether the prosecution has shown a prima facie link between the alleged property and a scheduled offence, and whether the statutory conditions in Section 45 are overcome; uncorroborated or inconsistent co-accused statements and undefined hearsay do not by themselves suffice to negate bail.

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