2025 (4) TMI 1741 - HC - Money Laundering

Defence land acquisition and alleged money-laundering 'proceeds of crime' case; s.45 PMLA twin-conditions not met, bail denied

Regular bail under the PMLA was sought in a case alleging money-laundering through illegal acquisition of defence land constituting 'proceeds of crime.' ... Seeking grant of Regular Bail - Money Laundering - scheduled offences - proceeds of crime - illegal acquisition of a defence land - reasons ro believe that the applicant is guilty of offence or not - grounds 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. In the judgment rendered by the Hon’ble Apex Court in Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors. [2022 (7) TMI 1316 - SUPREME COURT (LB)], it has been held that the Authority under the 2002 Act, is to prosecute a person for offence of money-laundering only if it has reason to believe, which is required to be recorded in writing that the person is in possession of “proceeds of crime”. Only if that belief is further supported by tangible and credible evidence indicative of involvement of the person concerned in any process or activity connected with the proceeds of crime, action under the Act can be taken forward for attachment and confiscation of proceeds of crime and until vesting thereof in the Central Government, such process initiated would be a standalone process. It is evident on the basis of the material collected that prima-facie the involvement of the present petitioner in the alleged offence said to be committed under the provisions of the Act, 2002, cannot be denied. 60. It appears from record that the petitioner is a habitual offender, who is involved in a number of illegal land acquisitions based on fake deeds, thereby causing tremendous loss to the government exchequer. Further, his active role also surfaced during investigation in other land scam cases being investigated by this office, bearing ECIR RNZO/18/2022 and the petitioner was arrested in ECIR/RNZO/18/2022, a case pertaining to illegal acquisition of a defence property on having reasons to believe that he is guilty of the offence of money laundering, after following the compliances under section 19 of PMLA, 2002 - this court has “reason to believe” that prima-facie the involvement of the present petitioner is fully substantiated by the tangible and credible evidences which is indicative of involvement of the present petitioner in activity connected with the proceeds of crime. So far as the issue of grant of bail under Section 45 of the Act, 2002 is concerned, as has been referred hereinabove, at paragraph 412 of the judgment rendered in Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors.[2022 (7) TMI 1316 - SUPREME COURT (LB)], it has been held therein by making observation that whatever form the relief is couched including the nature of proceedings, be it under Section 438 of the 1973 Code or 439 for that matter, by invoking the jurisdiction of the Constitutional Court, the underlying principles and rigors of Section 45 of the 2002 must come into play and without exception ought to be reckoned to uphold the objectives of the 2002 Act, which is a special legislation providing for stringent regulatory measures for combating the menace of money-laundering. Ground of Parity - HELD THAT:- 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 the grant of bail on the basis of parity has been established. So far as the case of the present petitioner is concerned, the twin condition as provided under Section 45(1) the prayer for privilege of bail for the present petitioner cannot be allowed - Even on the ground of parity, the same on the basis of the role/involvement of the present petitioner in the commission of crime in comparison to that of the other coaccused, is quite different. Thus, taking into consideration that the petitioner is a habitual offender, who is involved in a number of illegal land acquisitions based on fake deeds, thereby causing tremendous loss to the government exchequer and further, his active role also surfaced during investigation in other land scam cases being investigated by ED, bearing ECIRRNZO/18/2022 a case pertaining to illegal acquisition of a defence property, the applicant is failed to make out a prima-facie case for exercise of power to grant bail, hence, this Court does not find any exceptional ground to exercise its discretionary jurisdiction to grant bail. This Court is of the view that the instant bail application is liable to be rejected - Bail application dismissed. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether, on the materials placed by the investigating agency, the Court could be satisfied that the applicant was not guilty of the offence of money-laundering and not likely to commit any offence while on bail, so as to satisfy the mandatory 'twin conditions' for bail under Section 45 of the 2002 Act. (ii) Whether the applicant's objection that he was not named as an accused in the scheduled/predicate offence (and was allegedly not a buyer/seller/attorney-holder) negated his prosecutability for money-laundering or materially strengthened his claim for bail. (iii) Whether bail could be granted on the ground of parity with other accused who had been granted bail, when the allegations and role attributed to the applicant were asserted to be different. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Satisfaction of Section 45 'twin conditions' for bail under the 2002 Act Legal framework (as discussed by the Court): The Court examined the statutory scheme of the 2002 Act, including the meaning of 'proceeds of crime' and the scope of 'offence of money-laundering,' and reiterated that Section 45 imposes mandatory conditions for grant of bail. The Court also noted the presumptive burden operating in proceedings relating to proceeds of crime, and the overriding effect of the 2002 Act over general bail principles under ordinary criminal law. Interpretation and reasoning: The Court assessed the prosecution complaint and the material referred therein, including the investigation narrative attributing to the applicant participation in manufacturing forged deeds, tampering with land records, and facilitating the acquisition and disposal of land as 'proceeds of crime.' The Court noted assertions of recovery/verification of multiple fake deeds, reliance on statements recorded during inquiry, and banking transactions said to link the applicant to receipt of funds connected with the alleged fraudulent land transfer. On this material, the Court formed a 'reason to believe' that prima facie the applicant's involvement was substantiated by tangible and credible evidence indicating engagement in activities connected with proceeds of crime (including acquisition/possession and projecting/claiming as untainted). Conclusion: The Court held that the applicant failed to satisfy the mandatory twin conditions under Section 45. Consequently, no exceptional ground was found to exercise discretion to grant bail, and bail was rejected. Issue (ii): Effect of applicant not being an accused in the scheduled offence / claim of no direct transactional role Legal framework (as discussed by the Court): The Court treated money-laundering as an independent offence concerned with processes/activities connected with 'proceeds of crime' derived from criminal activity relating to a scheduled offence. It expressly held that a person proceeded against for money-laundering need not be an accused in the predicate offence. Interpretation and reasoning: The Court rejected the contention that absence of the applicant's name in the predicate case or the assertion that he was not a buyer/seller/attorney-holder automatically negated culpability under the 2002 Act. The Court reasoned that, on the prosecution material, the applicant's alleged role was not merely peripheral but related to preparation of forged deeds and facilitation of record manipulation, which the Court treated as direct involvement in processes connected with proceeds of crime. The Court therefore treated the 'not named in scheduled offence' argument as misplaced at the bail stage, given the specific allegations and material collected in the prosecution complaint. Conclusion: The Court concluded that non-implication in the predicate offence did not, by itself, entitle the applicant to bail, and did not undermine the prima facie case of money-laundering alleged against him on the materials relied upon. Issue (iii): Parity with co-accused granted bail Legal framework (as discussed by the Court): The Court held parity is applicable only where the role and factual position are materially similar; bail cannot be granted by a simplistic comparison. Parity analysis must focus on the role attributed to the applicant vis-à-vis those granted bail. Interpretation and reasoning: On a comparative assessment, the Court found the applicant's alleged role (instrumental in manufacturing multiple fake deeds and being part of a syndicate involved in fraudulent acquisition/transfer of land) to be qualitatively different from the roles of those granted bail (including a purchaser-role allegation in one case, facilitation through official machinery in another, and bail granted to others on considerations not equally applicable). The Court also noted that bail in another case was linked to probable delay in trial, whereas the applicant was alleged to be actively instrumental in document fabrication and repeated similar conduct, and was described as a habitual offender involved in other land-related matters under investigation. Conclusion: The Court held that the applicant could not claim bail on parity because the allegations and role attributed to him were different in nature and gravity from those of the co-accused who had secured bail.