2024 (10) TMI 1724 - HC - Money Laundering

Regular bail denied in major money-laundering case; detention continued under second proviso to Section 479 Sanhita

The HC refused regular bail to the petitioners in a large-scale money-laundering and fraud matter, holding that the court may, in its discretion under the ... Money Laundering - seeking grant of regular bail - Srijan Scam - thousands of crores of government money were siphoned off from the government accounts - HELD THAT:- Even it is assumed to be true that the intent of the Hon’ble Supreme Court is to provide the benefit of Section 479 of ‘the Sanhita’ to those under-trial prisoners whose case was brought before coming into force of this ‘Sanhita’, even then second proviso to Section 479 of ‘the Sanhita’ provides a discretion to the Court to continue the detention of such person for a longer period than one-half of the said period by recording reasons in writing and after giving opportunity of hearing to the public prosecutor. This proviso shows that merely because a person has suffered one-half or one-third, as the case may be of the maximum enacted punishment, he cannot claim his release as a matter of right. It is the discretion of the Court that if there are reasons for continuation of his incarceration for more than one-half, the Court can reject the bail application. The reason for rejection of the bail application has already been discussed in the above-noted rejection orders of the co-ordinate Bench of this Court. The Hon’ble Supreme Court has also dismissed the special leave petition. The money laundering offence, which creates a serious threat to the national economy and national interest adversely affects the economic interests of the society. The economic offences having deep-rooted conspiracies and involving huge loss of public funds needs to be viewed seriously. I am of the considered view that, in such cases, the petitioners should not be given the benefit of Section 479 of ‘the Sanhita’ or Section 436A of the CrPC. It is not inclined to grant bail to the petitioners. Accordingly, their prayer for bail is rejected. Money Landering - grant of bail - proceeds of crime - illegal transfer and misuse of huge public fund from the bank accounts of the State Government in fraudulent manner for personal gains - offence punishable under Sections 420/437/471/120B of the Indian Penal Code, Section 13 of the Prevention of Corruption Act as well as Section 4 of the PMLA - HELD THAT:- The petitioner failed to explain the source of these properties, so the presumption under Section 24 of ‘the MPLA’ could not be rebutted by the petitioner. The learned counsel has also submitted that the petitioner is not entitled for benefit of the first proviso to Section 45(1) (ii) of the PMLA, since the money involved in the scam is more than thousands of crores of rupees, whereas the first proviso to Section 45(1) (ii) of ‘the PMLA’ gives special relaxation to the accused who is below the age of 16 years or is a woman, or is sick or inform, but condition is that the money involved should be less than one crore rupees. Considering the facts and circumstances, and keeping in view the magnitude of allegation, the petitioner does not deserve the privilege of bail, which is hereby rejected. ISSUES PRESENTED AND CONSIDERED 1. Whether under-trial petitioners alleged to have committed offences under Sections 120B, 409, 420, 467, 468, 471 IPC, Sections 13/13(1)(d)/13(2) Prevention of Corruption Act and Section 4 PMLA are entitled to regular bail in view of prolonged pre-trial incarceration and the operation of Section 479 of the Bharatiya Nagarik Suraksha Sanhita, 2023 ('the Sanhita') and Section 436A CrPC. 2. Whether suffering incarceration exceeding one-third of maximum punishment prescribed under Section 4 PMLA engages entitlement to release under Section 479 of the Sanhita or otherwise requires grant of bail. 3. Whether delay in trial and prolonged custody alone (without any substantive change in facts) constitute sufficient ground for grant of bail where offences are economic, involve deep-rooted conspiracy and large public loss. 4. Whether a first-time applicant accused of acquiring immovable properties alleged to be proceeds of crime under Section 4 PMLA can rebut the presumption under Section 24 PMLA and thereby secure bail; and whether the first proviso to Section 45(1)(ii) PMLA (relaxation for certain classes) applies where the alleged money involved exceeds the specified threshold. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Applicability of Section 479 Sanhita and Section 436A CrPC to applicants in large-scale money-laundering/economic offences Legal framework: Section 479 Sanhita provides for consideration of pre-trial custody and release when an under-trial has undergone a specified fraction of the maximum sentence; Section 436A CrPC provides for interim bail on account of prolonged detention. Section 4 PMLA prescribes maximum punishment applicable to money-laundering offences. Precedent Treatment: The Court referenced directions in the Hon'ble Supreme Court matter concerning inhuman prison conditions which called for implementation of Section 479 Sanhita procedures. Decisions permitting consideration of prolonged incarceration were cited (including Modh Enamul Haque and related SLPs), while Kalyan Chandra Sarkar and State of Maharashtra v. Captain Buddikota Subha Rao were invoked to emphasize that bail applications based on custody duration require a change in circumstance and must be substantial. Interpretation and reasoning: The Court accepted that Section 479 Sanhita may be more beneficial (one-third threshold) than Section 436A CrPC (one-half threshold in some readings). However, the Court held the second proviso to Section 479 confers judicial discretion to continue detention beyond the threshold upon recorded reasons and after hearing the public prosecutor. The presence of that proviso negates any absolute right to release merely on having served one-third or one-half of maximum sentence. In cases of serious economic offences with deep-rooted conspiracies and huge loss to public funds, the Court must exercise its discretion to refuse release despite passage of threshold custody period. Ratio vs. Obiter: Ratio - A beneficial custody threshold (one-third/one-half) does not create an absolute entitlement; judicial discretion under proviso must consider gravity of offences and reasons for continued detention. Obiter - Observations on comparative benefit of Sanhita versus CrPC are illustrative of policy but not determinative beyond context. Conclusion: Section 479 Sanhita or Section 436A CrPC will not automatically entitle accused to bail in large-scale economic offences; the Court may refuse bail after recording reasons and hearing prosecution. Accordingly, the petitioners seeking release on this ground were refused. Issue 2 - Whether prolonged custody alone suffices as 'change in circumstances' to entertain a subsequent bail application Legal framework: Established principle that subsequent bail applications require a change in factual matrix or substantial change in circumstances to be entertained; the Court relied on the doctrine as enunciated by the Supreme Court. Precedent Treatment: The Court relied on Kalyan Chandra Sarkar for the proposition that change in facts is necessary, and State of Maharashtra v. Captain Buddikota Subha Rao for the requirement that the change be substantial. Decisions addressing prolonged incarceration and prison conditions were acknowledged but not deemed to displace the principle. Interpretation and reasoning: The Court reasoned that mere incarceration, without any material change in the facts of the case or other compelling circumstances, does not by itself mandate grant of bail. Where earlier detailed orders rejected bail and higher forums dismissed challenges, the factual matrix remained unchanged; therefore, renewed bail prayers were not maintainable absent substantial new facts. Ratio vs. Obiter: Ratio - Renewed bail applications require demonstrable and substantial change in circumstance; mere passage of time in custody is insufficient where gravity of allegations, evidence and prior rejections remain. Conclusion: Renewed bail applications on grounds of prolonged custody were not entertained where no substantial change in factual position was shown; such applications were rejected. Issue 3 - Gravity of economic offences, threat to national economy and weight to be accorded in bail analysis Legal framework: Bail is discretionary and must account for nature and gravity of offences, threat to national economy and public interest. Money-laundering offences under Section 4 PMLA implicate serious threat and large public monetary loss. Precedent Treatment: The Court referred generally to jurisprudence treating economic offences involving large public funds as requiring strict judicial scrutiny in bail considerations; specific decisions upholding stringent approach were cited by analogy. Interpretation and reasoning: The Court observed that money-laundering with deep-rooted conspiracies and siphoning of huge public funds impacts national economic interest and therefore merits denial of bail as a matter of discretion. The history of prior detailed bail rejections and dismissal by the apex court reinforced the view that petitioners did not merit interim liberty. Ratio vs. Obiter: Ratio - Serious economic offences involving large public loss and conspiracies weigh decisively against grant of bail; judicial discretion favors continued detention in such cases unless countervailing substantial change is demonstrated. Conclusion: The Court refused bail on the ground that the magnitude and nature of alleged economic offences warranted continued custody. Issue 4 - Rebuttal of statutory presumptions under Section 24 PMLA and applicability of first proviso to Section 45(1)(ii) PMLA Legal framework: Section 24 PMLA creates a presumption that property is proceeds of crime unless contrary is proved by the accused. Section 45(1)(ii) PMLA contains a first proviso giving special relaxation to persons who are below sixteen years, women, sick or infirm, subject to the money involved being below a statutory threshold. Precedent Treatment: The Court applied statutory presumptions as mandated by PMLA and treated the burden of rebuttal as on the accused. No specific precedent was overruled; statutory scheme followed. Interpretation and reasoning: In the facts, the petitioner alleged to have succeeded a predecessor and to have signed documents in haste, claimed ignorance and housewife status. The Enforcement Directorate produced detailed particulars of multiple immovable properties allegedly acquired using proceeds of crime. The Court held that the petitioner failed to satisfactorily explain sources to rebut the presumption under Section 24. Further, the first proviso to Section 45(1)(ii) does not assist where the amount involved exceeds the statutory monetary threshold (here, allegations involved thousands of crores), so the special relaxation for women or infirm does not apply. Ratio vs. Obiter: Ratio - Where the accused cannot rebut the statutory presumption under Section 24 PMLA as to proceeds of crime, and when monetary thresholds for proviso relief are exceeded, bail under those provisions is not warranted. Obiter - Factual observations on the petitioner's asserted innocence and signature under haste are recorded but not sufficient to displace statutory presumptions. Conclusion: The petitioner failed to rebut presumption under Section 24 PMLA; proviso to Section 45(1)(ii) is inapplicable due to scale of alleged proceeds; bail was refused. Overall Disposition The Court exercised its discretion to refuse bail in all considered applications: (a) renewed applications based on custody period and alleged delay were denied for lack of substantial change and in view of statutory discretion under Section 479 Sanhita; (b) first-time application involving alleged proceeds of crime and numerous immovable properties failed to rebut Section 24 PMLA presumption and did not qualify for proviso relief under Section 45(1)(ii); and (c) the gravity and scale of alleged economic offences militated against grant of bail.