2023 (11) TMI 904 - SC - Money Laundering

Supreme Court dismisses bail appeal in money laundering case citing mandatory twin conditions under Section 45(1) PMLA

The SC dismissed a bail appeal in a money laundering case under PMLA. The court held that twin conditions under Section 45(1) of PMLA are mandatory for ... Non-bailability under Section 45 of the PML Act - Statutory presumption under Section 24 of the PML Act - Admissibility of statements under Section 50 of the PML Act - Principle of parity in grant of bail - Economic offences as a distinct class in bail jurisprudence - Section 436A Cr.P.C. and remedy for prolonged trialNon-bailability under Section 45 of the PML Act - Statutory presumption under Section 24 of the PML Act - Whether the appellant satisfied the twin mandatory conditions of Section 45(1) PMLA for grant of bail. - HELD THAT: - The Court reaffirmed that the conditions in Section 45(1) are mandatory and must be complied with before bail can be granted to an accused under the PML Act. The statutory presumption under Section 24 operates unless the contrary is proved, and the burden to rebut that presumption lies on the accused. On the materials in the fourth supplementary complaint and supporting documents, the Court found sufficient prima facie material indicating the appellant's involvement in processes connected with proceeds of crime. Consequently, the appellant failed to prima facie establish that he was not guilty of the offence and that he was not likely to commit an offence while on bail. The Court therefore held that the Section 45 conditions were not satisfied in the appellant's case. [Paras 16, 17, 20]The appellant has not met the mandatory twin conditions of Section 45(1) and bail cannot be granted on that basis.Admissibility of statements under Section 50 of the PML Act - Whether absence of the appellant's name in the FIR and earlier complaints, and reliance on statements recorded under Section 50, precluded his arrest and prosecution for money laundering. - HELD THAT: - The Court held that statements recorded under Section 50 are admissible and may constitute formidable material indicating involvement in money laundering. Further, money laundering under Section 3 is an independent offence based on involvement in processes connected with proceeds of crime; it is not dependent on the date of the predicate offence. Given the documentary material and recorded statements in the supplementary complaint, the Court found no merit in the submission that non naming in the FIR or earlier complaints barred the present prosecution or arrest. [Paras 14, 15, 16]Reliance on Section 50 statements and subsequent documentary material sufficed to justify the prosecution and arrest; non naming in the FIR/earlier complaints did not preclude action.Principle of parity in grant of bail - Whether the appellant was entitled to bail on the ground of parity with other co accused who were granted bail. - HELD THAT: - The Court reiterated that parity is not an absolute rule; courts must focus on the role played by the applicant. A benefit improperly conferred on others cannot be invoked to perpetuate illegality. The High Court had distinguished the case of a co accused who obtained bail on differing facts and medical grounds; further that order was under challenge. Given the appellant's alleged role as Vice President (Purchases) and the prima facie material of siphoning of funds to entities where he had interests, parity could not be invoked to grant bail. [Paras 18, 19]Parity with co accused who obtained bail was not available to the appellant on the facts before the Court.Economic offences as a distinct class in bail jurisprudence - Section 436A Cr.P.C. and remedy for prolonged trial - Whether delay in trial and the nature of economic offences entitled the appellant to bail or alternative relief under Section 436A Cr.P.C. - HELD THAT: - The Court observed that economic offences constitute a distinct class requiring a serious approach in bail matters due to their impact on the economy; this militates against a liberal grant of bail. However, the Court also noted that statutory safeguards like Section 436A Cr.P.C. remain available to protect against unduly prolonged detention, and such relief must be considered case by case and not mechanically. On the present facts, the appellant could not show entitlement to bail merely on the ground that investigation against others remained pending or that trial might be protracted. [Paras 21, 22, 23]Delay in conclusion of trial did not warrant bail in view of the seriousness and prima facie material in this economic offence; remedies under Section 436A Cr.P.C. remain available but were not made out here.Final Conclusion: The appeal was dismissed. The Court upheld that the mandatory conditions of Section 45 PMLA were not satisfied, found admissible material (including Section 50 statements and documents) prima facie implicating the appellant in money laundering, rejected parity and delay grounds for bail, and observed that safeguards against prolonged detention under Section 436A Cr.P.C. remain available but were not attracted on these facts. Issues Involved:1. Legality of the appellant's bail rejection.2. Applicability of Section 45 of the Prevention of Money Laundering Act (PML Act).3. Principle of parity in granting bail.4. Investigation completeness and trial duration.5. Nature and seriousness of economic offences.Summary:1. Legality of the appellant's bail rejection:The appellant challenged the High Court's decision to deny bail in connection with a money laundering case under the PML Act. The appellant was arrested based on a fourth supplementary complaint, alleging his involvement in financial irregularities and bank fraud through Shakti Bhog Foods Ltd. (SBFL). The court noted that the appellant was actively involved in the fraudulent activities, including procuring fake invoices and siphoning funds.2. Applicability of Section 45 of the PML Act:The court emphasized the mandatory nature of Section 45 of the PML Act, which sets stringent conditions for granting bail. The court must be satisfied that there are reasonable grounds to believe the accused is not guilty and will not commit any offence while on bail. The statutory presumption under Section 24 of the PML Act also places the burden of proof on the accused to show that the proceeds of crime are not involved in money laundering.3. Principle of parity in granting bail:The appellant argued for bail on the ground of parity with co-accused who had been granted bail. The court rejected this argument, stating that parity is not absolute law and must consider the specific role of the accused. The court distinguished the appellant's role from that of other co-accused, noting his significant involvement in the day-to-day operations and fraudulent activities of SBFL.4. Investigation completeness and trial duration:The appellant contended that the investigation against him was complete and that he should not be incarcerated indefinitely. The court disagreed, noting that the appellant failed to meet the threshold conditions of Section 45 of the PML Act. The court also referenced Section 436A of the Code of Criminal Procedure, which provides for the release of an accused if the trial is not concluded within a specified period, but emphasized that this relief is not automatic and must be considered on a case-by-case basis.5. Nature and seriousness of economic offences:The court highlighted the grave nature of economic offences, which have serious repercussions on the country's economy. It emphasized the need for a different approach in handling bail applications for such offences, given their complexity and the potential threat they pose to the financial system. The court cited previous judgments underscoring the seriousness of economic offences and the need for stringent measures to combat them.Conclusion:The Supreme Court dismissed the appeal, upholding the High Court's decision to deny bail. The court reiterated the stringent conditions under the PML Act for granting bail and emphasized the serious nature of economic offences, which require a careful and rigorous approach in judicial proceedings.