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of <h1>Bail refused under PMLA: mandatory Section 45 conditions and Section 24 presumption require accused to rebut proceeds link</h1> <h3>Tapas Ghosh Versus The Directorate of Enforcement</h3> Tapas Ghosh Versus The Directorate of Enforcement - TMI 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.
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