2025 (3) TMI 1486 - HC - Money Laundering

Money laundering accused denied bail under Section 45 PMLA in question paper leak case

Suresh Kumar S/o Jagdish Versus Directorate Of Enforcement, Through Its Assistant Director, Directorate Of Enforcement, (The Prevention Of Money Laundering Act, 2002) Government Of India, Ministry Of Finance, Department Of Revenue Jaipur Zonal Office, Jaipur, Rajasthan And Peera Ram S/o Shri Raghunatharam Vishnoi Versus Directorate Of Enforcement, (Through Assistant Director Mr Mukesh) Enforcement Directorate, Govt. Of India

The Rajasthan HC denied bail to one accused in a money laundering case involving question paper leaking, emphasizing Section 45 of PMLA's mandatory ... Money Laundering - seeking grant of bail - leaking of question paper - generation of funds through illicit offences or not/proceeds of crime - predicate/scheduled offence - applicability of Section 45 of the PMLA - HELD THAT:- It is clear that stipulation of Section 45 of the PMLA are mandatory and the Court must deny the bail until it determines that there is insufficient evidence against the petitioners for the alleged offence. The Hon’ble Apex Court in the case of Vijay Madan Lal [2022 (7) TMI 1316 - SUPREME COURT (LB)] has categorically held that the conditions provided under Section 45 are mandatory. In the case of Tarun Vs. Assistant Directorate Enforcement [2023 (11) TMI 904 - SUPREME COURT] once again the Hon’ble Apex Court emphasized that the provisions of Section 45 of the PMLA are mandatory in nature. In the present case, the involvement of the accused petitioner Suresh Kumar is apparent and the petitioner was arrested in the present case on 11.01.2024. The Court has taken cognizance against the petitioner and the trial is yet to be commenced. The very foundational principle of criminal laws underscores essential balance between justice and individual rights. The authority granting power to arrest and the bail is critical component of punitive laws, emphasizing the necessity for fair judicial process. The procedure outline in BNSS and special statuses concerning the bail and non-bailable cases are fundamentally discretionary. These process hinged on key factors including the particulars of the case, essential implication of accused conduct, potential of evidence tempering, and that of the deliberate nature of economic crime must be given it’s due consideration - the first time offender may be detained lawfully up to the period of 1/3rd of imprisonment provided under the offence committed. These procedures are intended to be inserted by the legislature and they fundamentally flow from Article 21 of the Indian Constitution and this established procedure, firmly reinforces the principle that the right to bail is contingent upon the just discretion of the Court. Though it is correct that the trial of the case may take considerable time, but that cannot be a ground to enlarge the petitioner-Suresh Kumar on bail as his role in the crime is evident from the facts of the case - Whereas, the instant bail application of the petitioner - Peera Ram is concerned, this Court finds it appropriate to allow his bail application, considering the limited role of the petitioner in the alleged crime, hence, bail application of the petitioner-Peera Ram is hereby allowed. Application disposed off. Issues Presented and ConsideredThe core legal questions considered by the Court include:Whether the petitioners have made out a substantial case under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 (PMLA), based on the facts and evidence presented.The applicability of the predicate offence under the Rajasthan Public Examination (Measures of Prevention of Unfair Means in Recruitment) Act, 2022, and whether it qualifies as a scheduled offence under the PMLA.The sufficiency and nature of evidence to establish the petitioners' involvement in money laundering activities, including whether indirect assistance or involvement suffices for liability under PMLA.The interpretation and mandatory nature of Section 45 of the PMLA concerning bail conditions in economic offence cases.The impact of prolonged pretrial detention on the petitioners' personal liberty under Article 21 of the Indian Constitution and the balancing of this right against the need for stringent measures in economic offences.The relevance of judicial precedents, including recent Supreme Court judgments, on bail considerations under the PMLA.The extent of each petitioner's involvement in the alleged offence and whether bail should be granted to either or both petitioners.Issue-wise Detailed Analysis1. Substantial Case under Sections 3 and 4 of the PMLA and Predicate Offence ApplicabilityThe petitioners contended that no substantial case under the PMLA was made out against them. It was argued that the predicate offence under the Rajasthan Public Examination Act does not qualify as a scheduled offence under the PMLA, and further, the petitioners neither generated nor laundered any illicit money. The petitioners had already been granted bail under the predicate offence, and no recovery of money was made from them. The defence emphasized that the predicate offence under Section 420 IPC was also not established, as there was no inducement or willful loss caused by the petitioners.The Court noted that the PMLA's scope under Sections 3 and 4 is broad and includes not only direct involvement but also indirect assistance in money laundering activities. The learned Additional Solicitor General (ASG) relied on the Apex Court's ruling in Vijay Madanlal Choudhary v. Union of India, which clarified that even assisting in any part of the money laundering process attracts liability under Section 3 of the PMLA. This principle was applied to the facts where the petitioner Suresh Kumar was caught red-handed tutoring leaked examination papers and was in continuous communication with the main accused.The Court found that although no money was recovered directly from the petitioner Suresh Kumar, the evidence indicated his active role in the conspiracy, including arranging transport and distributing leaked papers, which constituted proceeds of crime. The Court rejected the petitioners' argument that lack of direct monetary recovery absolved them, emphasizing the statutory language of the PMLA that encompasses indirect involvement.2. Evidence and Role of PetitionersThe petitioner Suresh Kumar was apprehended while tutoring leaked papers in a moving bus, with evidence including his statements under Section 50 of the PMLA admitting involvement and receipt of instructions from co-accused masterminds. The investigation uncovered properties valued at over Rs. 3 crore linked to the crime, confirmed by the adjudicating authority.Conversely, petitioner Peera Ram's role was limited to providing his vehicle for the tutoring activity without knowledge of the illicit use. The Court distinguished his involvement from that of Suresh Kumar, noting the absence of direct participation in the conspiracy or benefit from proceeds of crime.The Court's application of law to facts underscored that while Suresh Kumar's conduct fell squarely within the ambit of Sections 3 and 4 of the PMLA, Peera Ram's limited and passive role warranted a different treatment.3. Bail under Section 45 of the PMLA and Article 21 ConsiderationsSection 45 of the PMLA mandates that bail shall not be granted unless the Court is satisfied that there is insufficient evidence against the accused. The Court reiterated the mandatory nature of this provision, citing recent Supreme Court decisions including Tarun Kumar v. Assistant Directorate Enforcement and Vijay Madanlal Choudhary, which emphasize a stringent approach in economic offence cases.However, the Court also acknowledged the constitutional imperative under Article 21 safeguarding personal liberty. The judgments in Manish Sisodia v. Directorate of Enforcement and Kalvakuntla Kavitha v. Directorate of Enforcement were considered, where the Apex Court balanced prolonged pretrial detention against the need for strict enforcement, granting bail where trial delays were excessive and incarceration disproportionate.The Court observed that though the trial had not commenced and the charge sheet was voluminous, the nature and gravity of the offence, coupled with the direct involvement of petitioner Suresh Kumar, weighed against bail. The Court recognized the procedural safeguards under BNSS provisions, including Section 480(6) allowing bail if trial is not completed within 60 days, but retained discretion to deny bail in serious cases.For Peera Ram, the Court found that his limited role and absence of direct involvement justified granting bail, balancing the liberty interest and the need for justice.4. Treatment of Competing ArgumentsThe petitioners argued that no money was recovered from them, and the predicate offence was not scheduled under PMLA, thus bail was warranted. The prosecution countered that indirect involvement suffices for PMLA offences and that the evidence, including confessions and recovered properties, established prima facie guilt.The Court carefully weighed these arguments, emphasizing the statutory framework and judicial precedents that broaden the scope of money laundering offences to include indirect facilitation. The Court rejected the petitioners' contention regarding the predicate offence's nature and monetary recovery, holding that the PMLA's provisions and case law support prosecution based on involvement in the process of generating proceeds of crime.Significant Holdings'Section 3 of the PMLA Act in unequivocally states that even the person who is indirectly involved or assisted in generating the proceeds of crime is liable for the commission of offences.''The conditions specified under Section 45 of the PMLA are mandatory, and the Court must deny bail until it determines that there is insufficient evidence against the petitioner regarding the alleged crime.''The very foundational principle of our criminal laws underscores essential balance between justice and individual rights. The authority granting power to arrest and the bail is critical component of punitive laws, emphasizing the necessity for fair judicial process.''Though it is correct that the trial of the case may take considerable time, but that cannot be a ground to enlarge the petitioner-Suresh Kumar on bail as his role in the crime is evident from the facts of the case.''In Rajasthan, the persistent issue of paper leaks has reached alarming levels that demand immediate and decisive action... It is high time to confront these offenders with an iron fist and protect the future of our youth and the integrity of our examination systems.'The Court concluded that the bail application of petitioner Suresh Kumar was devoid of merit and dismissed it, while allowing bail to petitioner Peera Ram due to his limited role. The decision reflects a careful application of the PMLA's strict bail regime, balanced against constitutional protections, and underscores the judiciary's resolve to combat economic offences such as paper leak syndicates effectively.