2022 (12) TMI 14 - HC - Money Laundering

Court upholds constitutionality of Prevention of Money Laundering Act, grants anticipatory bail under specific conditions

The court upheld the constitutionality of the Prevention of Money Laundering Act (PMLA), 2002, emphasizing that the procedures followed by the Enforcement ... Anticipatory bail under Section 438 CrPC - applicability of the Code of Criminal Procedure to proceedings under the PMLA - distinction between arrest and custody - default bail under Section 167(2) CrPC - embargo on bail under Section 45 of the PMLA and its reasonable application - Article 21 right to personal liberty and fair and expeditious trial - Ranjitsingh Sharma principle on bail under special statutesAnticipatory bail under Section 438 CrPC - Article 21 right to personal liberty and fair and expeditious trial - Grant of anticipatory bail to the petitioner in respect of Complaint Case (PMLA) No.40 of 2018 on the facts and subject to conditions. - HELD THAT: - On a conspectus of the materials, factual background and applicable law, the High Court exercised its discretionary power under Section 438 CrPC to grant pre-arrest bail. The court applied established bail principles (including those in Gurbaksh Singh Sibbia and Sanjay Chandra), and observed that petitioner had already undergone prolonged custody in related vigilance proceedings, custodial interrogation by the Enforcement Directorate was complete, and no new incriminating material was shown to justify further custodial interrogation. The court further noted the constitutional imperative of Article 21 to protect personal liberty and ensure fair and expeditious trial and held that conditions could be imposed to safeguard prosecution interests. Accordingly the petitioner was directed to be released on bail in the event of his arrest in the PMLA complaint, subject to enumerated conditions and with the trial court left free to proceed on merits. [Paras 48, 50, 51, 52, 53]Anticipatory bail granted subject to conditions including appearance on all dates, non-tampering with evidence or witnesses, cooperation with investigation, surrender/non-possession of travel documents and updating ED of whereabouts; violation to invite cancellation.Applicability of the Code of Criminal Procedure to proceedings under the PMLA - embargo on bail under Section 45 of the PMLA and its reasonable application - Ranjitsingh Sharma principle on bail under special statutes - CrPC procedures apply to PMLA matters insofar as they are not inconsistent with the PMLA and the restrictive bail-embargo in Section 45 must be applied reasonably; the court may grant bail on materials showing prima facie that conviction is unlikely and that accused is not likely to offend while on bail. - HELD THAT: - The court held that Section 65 PMLA and settled precedents (including Ashok Munilal Jain) establish that CrPC provisions apply to PMLA proceedings unless inconsistent. While Section 45 places a statutory restriction, the court must apply the restriction reasonably and can grant bail if satisfied on available materials (on probabilities) that the accused may not be ultimately convicted and is not likely to commit an offence under the Act while on bail. The court relied on the approach in Ranjitsingh Sharma and Vijay Madanlal Choudhary to record only tentative, reasoned satisfaction based on materials without delving into trial evidence. [Paras 35, 36, 37, 48, 401]CrPC applies to PMLA; Section 45's embargo does not preclude reasonable exercise of judicial discretion to grant bail where materials permit a prima facie view that conviction is unlikely and conditions can safeguard prosecution interests.Distinction between arrest and custody - default bail under Section 167(2) CrPC - The petitioner was not 'formally arrested' by the Enforcement Directorate in the enforcement proceedings; he was taken on remand for interrogation and later found not to be required in ED custody, hence Section 167(2) default-bail benefit was not available on the facts pleaded. - HELD THAT: - After scrutinising the remand orders and relevant authorities, the court concluded that ED officials availed remand (orders dated 03.07.2014, 10.07.2014 and 24.07.2014) under the procedure for production/remand and did not effect a formal arrest in the enforcement case. The court reviewed the law distinguishing custody and formal arrest (including Niranjan Singh, Sundeep Bafna, Joginder Kumar and related authorities) and held that Section 167(2) (default bail) applies to situations of formal arrest and detention where investigation continues beyond prescribed periods; those provisions could not be invoked by the petitioner on the present factual matrix because ED had not effected formal arrest and had itself stated custody was no longer required. [Paras 30, 31, 41, 42, 43]Petitioner was not formally arrested by ED; remands were under production/remand procedure and Section 167(2) CrPC default-bail entitlement was not available on these facts.Article 21 right to personal liberty and fair and expeditious trial - anticipatory bail under Section 438 CrPC - Prolonged pre-trial detention and the absence of necessity for further custodial interrogation were material considerations favouring grant of anticipatory bail under Section 438, particularly where investigation is substantially complete and trial may be protracted. - HELD THAT: - The court emphasised the Article 21 requirement of fair and expeditious trial and observed that indefinite or prolonged detention without justification violates this right. Given petitioner's long prior custody in related proceedings, the completion of ED interrogation, the absence of new incriminating materials and the possibility of protracted trial, the court found that safeguarding liberty warranted anticipatory bail subject to conditions designed to protect the prosecution's case. [Paras 4, 44, 45, 50, 51]Article 21 considerations militated in favour of anticipatory bail where custodial interrogation had concluded and prolonged detention would otherwise continue.Final Conclusion: The High Court granted anticipatory bail to the petitioner in respect of the PMLA complaint, holding that CrPC procedures apply to PMLA matters, that the petitioner had not been formally arrested by the Enforcement Directorate (having been remanded for interrogation), that Section 167(2) default-bail was not available on the facts, and that, applying the Ranjitsingh Sharma/Vijay Choudhary approach and Article 21 considerations, the court was prima facie satisfied that bail could be granted subject to specific protective conditions; the trial court remains free to decide the case on merits. Issues Involved:1. Validity of the Prevention of Money Laundering Act (PMLA), 2002.2. Legality of the petitioner's custody and remand process.3. Applicability of Section 167 of the Criminal Procedure Code (CrPC) regarding default bail.4. Consideration of anticipatory bail under Section 438 CrPC.5. Grounds for granting or denying anticipatory bail.6. Compliance with Article 21 and Article 22 of the Constitution of India.Detailed Analysis:1. Validity of the Prevention of Money Laundering Act (PMLA), 2002:The court referenced the constitutionality of the PMLA Act, 2002, which was upheld by the Supreme Court in the case of Bijay Madanlal Choudhury v. Union of India. The judgment emphasized that the procedures followed by the Enforcement Directorate (ED) under the PMLA are not violative of constitutional mandates.2. Legality of the Petitioner's Custody and Remand Process:The petitioner was initially taken into custody in connection with a vigilance case involving illegal mining. The ED filed a petition for the petitioner's remand for interrogation under Section 267 CrPC, not Section 167 CrPC, indicating that the petitioner was never formally arrested by the ED in the PMLA case. The court noted that the orders for remand were in line with Section 267 CrPC and not Section 167 CrPC, which deals with default bail.3. Applicability of Section 167 CrPC Regarding Default Bail:The petitioner argued for default bail under Section 167(2) CrPC, claiming that the ED did not file a complaint within 60 days. The court found this argument inapplicable as the petitioner was never formally arrested by the ED in the PMLA case, and the remand was under Section 267 CrPC.4. Consideration of Anticipatory Bail Under Section 438 CrPC:The court discussed the concept of anticipatory bail, emphasizing that it is meant to protect individuals who apprehend arrest for non-bailable offenses. The court cited various judgments, including Gurbaksh Singh Sibbia v. State of Punjab, to highlight the principles guiding the grant of anticipatory bail, such as the nature and gravity of the accusation, the applicant's antecedents, and the possibility of fleeing from justice.5. Grounds for Granting or Denying Anticipatory Bail:The court examined the grounds presented by the petitioner for anticipatory bail, including:- The petitioner's previous custodial interrogation by the ED.- The completion of the investigation and the lack of new facts requiring further custodial interrogation.- The petitioner's cooperation with the investigation and the surrender of his passport.- The fact that the petitioner had already spent a significant amount of time in custody in connection with the vigilance case.The court also considered the ED's opposition, which emphasized the seriousness of the economic offense and the need for custodial interrogation. However, the court found that the ED had not formally arrested the petitioner and had not demonstrated any new incriminating evidence necessitating further custody.6. Compliance with Article 21 and Article 22 of the Constitution of India:The court highlighted the importance of personal liberty and the right to a fair and speedy trial as guaranteed under Article 21 of the Constitution. It noted that the petitioner had already spent a considerable amount of time in custody and that the trial was unlikely to conclude soon. The court emphasized that the legal process should not infringe upon the petitioner's fundamental rights.Conclusion:The court granted anticipatory bail to the petitioner, subject to specific conditions, including:- Appearance before the trial court on all dates.- No tampering with evidence or influencing witnesses.- Cooperation with the investigation.- Surrender of travel documents and informing the ED of his whereabouts.The court's decision was guided by the principles of personal liberty, the completion of the investigation, and the lack of new evidence requiring further custodial interrogation. The observations made were prima facie for the purpose of the anticipatory bail application, and the trial court was directed to decide the case on its own merits.