2024 (11) TMI 1446 - HC - Money Laundering

HP HC denies bail in scholarship fund laundering case citing unsatisfied Section 45 PMLA conditions

Hitesh Gandhi Versus Enforcement Directorate Office (ED)

HP HC dismissed bail application in money laundering case involving misappropriation of scholarship funds under Post Matric Scheme for SC/ST/OBC students. ... Money laundering - Seeking grant of bail - misappropriation of scholarship funds - scam involving the allocation of scholarships to SC, ST and OBC students, under the Post Matric Scheme - non-supply of the copy of the ‘reasons to believe’ - HELD THAT:- When, the arrest of the applicant has been challenged and the matter is sub judice before the Court, then, adjudication upon this issue, by this Court, is nothing, but, over-reaching the jurisdiction of the writ Court - Hence, the applicant cannot take advantage of the judgment of the Hon’ble Supreme Court in Arvind Kejriwal versus Directorate of Enforcement [2024 (7) TMI 760 - SUPREME COURT]. The applicant has earlier also sought the similar relief, by filing HITESH GANDHI VERSUS DIRECTORATE OF ENFORCEMENT OFFICE [2024 (1) TMI 1454 - HIMACHAL PRADESH HIGH COURT], which was dismissed, by this Court, vide order, dated 12th January, 2024, whereby, this Court has specifically held that it cannot be said that the mandatory provisions of Section 19 of the PMLA have not been complied with, by the ED, in this case - So far as the plea of the applicant, regarding delay in trial, is concerned, at this stage, it cannot be said that there is any delay in trial. The applicant has also placed on record the zimni orders, passed by the learned Special Judge, Shimla, according to which, the charges have not been framed. However, it cannot be said that there is inordinate delay, as, before, putting the charge, the Special Judge is duty bound to comply with the mandatory provisions of BNSS. Perusal of order, dated 22nd July, 2024, passed by the learned Special Judge, Shimla, shows that the case was adjourned for checking of copies. Thus, it cannot be said that the twin conditions, as enumerated in Section 45 of the PMLA, are existing in favour of the applicant, at this stage. Conclusion - The applicant failed to demonstrate sufficient grounds for bail at this stage. The Court's decision is based on the ongoing investigation, the nature of the allegations, and the unsatisfied twin conditions under Section 45 of the PMLA. In the considered opinion of this Court, the applicant is not able to make out a case for grant of bail, at this stage. Consequently, the bail application is dismissed. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:1. Whether the applicant, Hitesh Gandhi, is entitled to bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023, given the circumstances of his arrest and the nature of the allegations against him.2. Whether the non-supply of the 'reasons to believe' document to the applicant violates Section 19 of the Prevention of Money Laundering Act (PMLA), thus impacting the validity of his arrest and subsequent custody.3. Whether there is undue delay in the trial process that would justify granting bail to the applicant.4. Whether the twin conditions under Section 45 of the PMLA are satisfied, warranting the denial of bail.ISSUE-WISE DETAILED ANALYSIS1. Entitlement to Bail under Section 483 of BNSSThe legal framework under Section 483 of the BNSS is considered in the context of the applicant's prolonged judicial custody and the nature of the allegations against him. The Court examined the applicant's argument that he was arrested based on presumptions and that the charge sheet has already been filed, reducing the risk of tampering with evidence. However, the Enforcement Directorate (ED) opposed the bail, citing the ongoing investigation into a large-scale scholarship scam involving misappropriation of funds meant for SC, ST, and OBC students.The Court noted that the applicant's previous bail applications were dismissed, and interim bail was only granted for specific periods due to personal circumstances, such as visiting a hospitalized relative. The ED's argument emphasized the seriousness of the offenses under the PMLA and the need for a thorough investigation, which could be compromised if bail were granted.2. Non-Supply of 'Reasons to Believe' DocumentThe applicant contended that the failure to provide a copy of the 'reasons to believe' document violated Section 19 of the PMLA. However, the Court highlighted that the applicant had already challenged his arrest and remand orders in a separate writ petition, which was still pending. Consequently, the Court refrained from adjudicating this issue, as it would overreach the jurisdiction of the writ Court. The applicant's reliance on a Supreme Court judgment was deemed inapplicable in this context.3. Alleged Delay in TrialThe applicant argued that the delay in trial proceedings justified bail. The Court examined the procedural history and noted that charges had not yet been framed due to the need to comply with mandatory provisions of the BNSS. The Court found no inordinate delay at this stage, as the case was adjourned for checking copies, and thus, the applicant could not benefit from precedents where bail was granted due to trial delays.4. Satisfaction of Twin Conditions under Section 45 of PMLAThe Court considered whether the twin conditions for bail under Section 45 of the PMLA were met. The ED argued that the offenses under investigation were serious and required a different approach to bail. The Court agreed, noting that the investigation was at a crucial stage, involving the examination of voluminous records and potential witness influence by the applicant. The Court concluded that the twin conditions were not satisfied in favor of the applicant, justifying the denial of bail.SIGNIFICANT HOLDINGSThe Court held that the applicant, Hitesh Gandhi, was not entitled to bail under the current circumstances. The Court emphasized the ongoing nature of the investigation, the seriousness of the allegations, and the potential risk to the prosecution's case if bail were granted. The Court also clarified that its observations were limited to the bail application and did not reflect on the merits of the case.Core Principles EstablishedThe judgment reinforced the principle that bail in cases involving serious offenses under the PMLA requires careful consideration of the investigation's status and potential risks to the prosecution. The Court also underscored the importance of adhering to procedural requirements and refraining from overstepping jurisdictional boundaries in related legal proceedings.Final DeterminationsThe bail application was dismissed, with the Court concluding that the applicant failed to demonstrate sufficient grounds for bail at this stage. The Court's decision was based on the ongoing investigation, the nature of the allegations, and the unsatisfied twin conditions under Section 45 of the PMLA.