2025 (4) TMI 1690 - HC - Money Laundering

Bail refused under PMLA: mandatory Section 45 conditions and Section 24 presumption require accused to rebut proceeds link

HC dismissed the regular bail application in a money-laundering prosecution. The court held PMLA's stringent framework and the mandatory Section 45 ... Seeking grant of Regular bail - money laundering - proceeds of crime - existence of reasonable grounds for believing that the accused is not guilty of the offence or not - principles of parity - HELD THAT:- The objective of the PMLA is to prevent money laundering which has posed a serious threat not only to the financial systems of the country but also to its integrity and sovereignty. The offence of money laundering is a very serious offence which is committed by an individual with a deliberate desire and the motive to enhance his gains, disregarding the interest of the nation and the society as a whole, and such offence by no stretch of imagination can be regarded as an offence of trivial nature. The stringent provisions have been made in the Act to combat the menace of money laundering. The reason for giving explanation under Section 2(1)(u) is by way of clarification to the effect that whether as per the substantive provision of Section 2(1)(u), the property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country but by way of explanation the proceeds of crime has been given broader implication by including property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. The Hon’ble Apex Court in the case of Tarun Kumar vs. Assistant Director Directorate of Enforcement, [2023 (11) TMI 904 - SUPREME COURT] by taking into consideration the law laid down by the Larger Bench of the Hon’ble Apex Court in Vijay MadanlalChoudhary and Ors. Vs. Union of India and Ors. [2022 (7) TMI 1316 - SUPREME COURT (LB)], has laid down that since the conditions specified under Section 45 are mandatory, they need to be complied with. The Court is required to be satisfied that there are reasonable grounds for believing that the accused is not guilty of such offence and he is not likely to commit any offence while on bail. It has further been observed that as per the statutory presumption permitted under Section 24 of the Act, the Court or the Authority is entitled to presume unless the contrary is proved, that in any proceedings relating to proceeds of crime under the Act, in the case of a person charged with the offence of money laundering under Section 3, such proceeds of crime are involved in money laundering. Such conditions enumerated in Section 45 of PML Act will have to be complied with even in respect of an application for bail made under Section 439 Cr. P.C. in view of the overriding effect given to the PML Act over the other law for the time being in force, under Section 71 of the PML Act. The conditions enumerated in Section 45 of PMLA will have to be complied with even in respect of an application for bail made under Section 439 CrPC. that coupled with the provisions of Section 24 provides that unless the contrary is proved, the authority or the Court shall presume that proceeds of crime are involved in money-laundering and the burden to prove that the proceeds of crime are not involved, lies on the appellant. This Court, based upon the imputation as has been discovered in course of investigation, is of the view that what has been argued on behalf of the petitioner that proceeds cannot be said to be proceeds of crime but as would appear from the preceding paragraphs, money has been transferred into the account of the present petitioner by the co-accused - there is no reason to believe by this Court that the petitioner is not involved in managing the money said to be proceeds of crime. Principles of parity - HELD THAT:- The law is well settled that the principle of parity is to be applied if the case of the fact is exactly to be similar then only the principle of parity in the matter of passing order is to be passed but if there is difference in between the facts then the principle of parity is not to be applied - It is further settled connotation of law that Court cannot exercise its powers in a capricious manner and has to consider the totality of circumstances before granting bail and by only simple saying that another accused has been granted bail is not sufficient to determine whether a case for grant of bail on the basis of parity has been established. This Court, on the basis of the discussion of the involvement of the petitioner, vis-à-vis, the other co-accused person, is of the view that the case of the petitioner is quite distinguishable to that of case of the co- accused/petitioner of B.A No.4892 of 2024, therefore, it is considered view of this Court that it is not a fit case for applying the principle of parity herein. This Court, in view of the aforesaid material available against the petitioner, is of the view that in such a grave nature of offence as available on the face of record applying the principle of grant of bail, wherein, prima facie case is to be followed, hence, it is not a fit case of grant of bail - Having regard to the entirety of the facts and circumstances of the case, this Court, is of the view that the petitioner has miserably failed to satisfy this Court that there are reasonable grounds for believing that he is not guilty of the alleged offences. On the contrary, there is sufficient material collected by the respondent-ED to show that he is prima facie guilty of the alleged offences. Since, the petitioner has failed to make out a case to exercise the power to grant bail and considering the facts and parameters, necessary to be considered for adjudication of bail, this Court does not find any exceptional ground to exercise its discretionary jurisdiction to grant bail - this Court is of the view that it is not a case where the prayer for bail is to be granted, as such, the instant application stands dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether the petitioner is entitled to regular bail under the twin conditions of Section 45(1)(i)-(ii) of the Prevention of Money-Laundering Act (PMLA): (a) whether there are reasonable grounds for believing that the accused is not guilty of the offence of money-laundering; and (b) whether the accused is not likely to commit any offence while on bail. 2. Whether an accused in a money-laundering prosecution must independently be an accused in the predicate/scheduled offence to be prosecuted under Section 3 of the PMLA. 3. The legal effect and admissibility of statements recorded under Section 50 of the PMLA and the weight they carry for prima facie satisfaction on bail applications. 4. Whether the filing of a charge-sheet or completion of investigation is a ground that tilts the balance in favour of bail in money-laundering/economic offence prosecutions. 5. Whether the principle of parity entitles the petitioner to bail because a co-accused was granted bail, and the scope/limits of parity in economic offences. 6. The application of general bail principles (including the triple test for economic offences) and statutory presumptions (Section 24 PMLA) when assessing bail under Section 439 Cr.P.C. read with Section 45 PMLA. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Entitlement to bail under Section 45(1)(i)-(ii) PMLA Legal framework: Section 45(1)(i)-(ii) imposes mandatory twin conditions for release on bail in PMLA cases: opportunity to the Public Prosecutor to oppose and, if opposed, satisfaction of the court on reasonable grounds that the accused is not guilty and is not likely to commit an offence while on bail. Section 45(2) limits bail further; Section 71 gives PMLA overriding effect; Section 65 preserves CrPC only to the extent consistent with PMLA. Precedent treatment: The Court follows the larger-bench jurisprudence treating Section 45 conditions as mandatory and requiring a prima facie satisfaction (reasonable grounds) before granting bail; the statutory presumption under Section 24 was recognized and applied by higher courts. Interpretation and reasoning: The Court took a prima facie view of materials collected during investigation (complaint, seized documents, bank account scrutiny, statements) to test whether reasonable grounds exist to believe the petitioner is not guilty and would not reoffend. The Court emphasized that the expression 'reasonable grounds for believing' requires scrutiny of materials to form a prima facie conclusion, not a full trial-level adjudication. Ratio vs. Obiter: Ratio - Section 45 requires prima facie satisfaction based on investigation materials; Obiter - explanatory observations on object and gravity of PMLA. Conclusions: On the materials (interconnected bank transactions, cash deposits, statements implicating the petitioner in sourcing original volumes/blank pages, admissions by co-accused), the Court found no reasonable grounds to believe the petitioner is not guilty or unlikely to offend while on bail; bail was therefore refused. Issue 2 - Necessity of being accused in scheduled/predicate offence for PMLA prosecution Legal framework: Section 3 PMLA defines the offence of money-laundering by reference to processes/activities connected with 'proceeds of crime' and does not stipulate that the accused must be an accused in the scheduled offence; Section 2(1)(u) defines 'proceeds of crime'. Precedent treatment: Court adhered to precedents establishing that money-laundering is an independent offence and one need not be an accused in the scheduled offence to attract liability under Section 3; statutory presumption under Section 24 shifts burden. Interpretation and reasoning: The Court applied the statutory language and authority to hold that assisting concealment/possession/acquisition/use/projecting/claiming constitutes money-laundering even if the accused is not formally arraigned in the predicate offence; the decisive factor is involvement in processes connected with proceeds of crime. Ratio vs. Obiter: Ratio - liability under Section 3 is independent of accused being charged in the scheduled offence; Obiter - illustrative discussion of the continuing nature of activities in Section 3. Conclusions: The petitioner's argument that he cannot be guilty for not being an accused in the predicate offence was rejected; prima facie material indicated his participation in activities covered by Section 3. Issue 3 - Admissibility and weight of statements recorded under Section 50 PMLA Legal framework: Section 50 proceedings are summons/inquiry-like and statements recorded have statutory status; Section 50(4) accords these statements the character of judicial proceedings for admissibility. Precedent treatment: The Court relied on binding authority holding Section 50 statements admissible and weighty for forming a prima facie case in money-laundering prosecutions. Interpretation and reasoning: The Court observed that statements recorded under Section 50, when relied upon in the prosecution complaint, constitute strong prima facie material; numerous Section 50 statements and associated documentary/seizure material implicated the petitioner. Ratio vs. Obiter: Ratio - Section 50 statements are admissible and may constitute strong prima facie evidence on bail applications; Obiter - comments on the investigatory vs. inquiry nature of Section 50. Conclusions: Section 50 statements formed important material corroborating the petitioner's prima facie involvement and weighed against granting bail. Issue 4 - Effect of charge-sheet/complete investigation on bail entitlement Legal framework: General criminal jurisprudence recognizes that filing of a charge-sheet does not automatically entitle an accused to bail; PMLA statutory regime and Section 45 conditions remain applicable. Precedent treatment: The Court followed authority that filing of charge-sheet is not a material change tilting scales in favour of bail and may reinforce prosecution material. Interpretation and reasoning: The Court noted that mere completion of investigation and filing of prosecution complaint does not lessen the allegations; charge-sheet often evidences that material exists warranting trial, not that accused is entitled to bail. Ratio vs. Obiter: Ratio - charge-sheet is not determinative of bail entitlement; Obiter - reiteration of trial vs. bail standards. Conclusions: The petitioner's reliance on completion of investigation/charge-sheet did not advance his claim for bail. Issue 5 - Application and limits of parity for bail Legal framework: Parity permits similar treatment for co-accused only where the facts, role and involvement are substantially identical; Article 14 principles require positive, not negative, equality. Precedent treatment: The Court applied established principles limiting parity where roles differ; parity cannot perpetuate an initial irregular/bad order. Interpretation and reasoning: The Court compared the factual role of the petitioner (deed searcher, alleged direct assistance in supplying blank pages/original volumes and receipt of proceeds) with the co-accused who obtained bail on different factual grounds (allegations of misuse of state machinery). The Court concluded roles and factual matrices were distinguishable. Ratio vs. Obiter: Ratio - parity requires near-identical facts/role; Obiter - discussion on negative equality and non-perpetuation of illegality. Conclusions: Parity was not available as the petitioner's factual involvement was materially different and more directly implicated; parity claim failed. Issue 6 - Application of economic-offence bail principles and statutory presumptions (Section 24) Legal framework: Economic offences are treated as grave; courts must consider nature/severity of accusation, evidence, danger of tampering/absconding, public interest and statutory presumption under Section 24 that proceeds of crime are involved unless contrary proved. Precedent treatment: The Court applied higher-court guidance requiring a rigorous approach to bail in economic/PMLA cases and placed burden on accused to rebut statutory presumption. Interpretation and reasoning: Given the alleged deep-rooted syndicate, volume of proceeds, documentary forgery, bank linkages and admissions by co-accused, the Court found the triple/test factors militated against bail; statutory presumption stood unrebutted. Ratio vs. Obiter: Ratio - economic offences attract stricter bail scrutiny; statutory presumption places onus on accused to negate involvement of proceeds of crime for bail; Obiter - policy observations about PMLA's objects. Conclusions: The petitioner failed to discharge the burden to rebut Section 24 presumption or to demonstrate the triple/test factors favouring bail; this informed denial of bail. Overall Conclusion On a prima facie assessment of investigation materials (statements under Section 50, seized documents, bank transactions and inter-connections), statutory framework and binding precedent on mandatory Section 45 conditions, parity limits and weight of Section 50 statements, the Court concluded the petitioner failed to satisfy the requisite reasonable-grounds tests and refused regular bail. The Court clarified its findings were prima facie for bail adjudication only.