Alleged laundering of forged-instrument proceeds and projecting tainted property as clean: regular bail denied under PMLA ss.3-4

Regular bail under s.439 CrPC for an offence under ss.3-4 PMLA was sought on the plea that the material did not disclose money laundering and that bail should follow parity with a co-accused. The HC held that "proceeds of crime" under s.2(1)(u) PMLA, read with its Explanation, has a widened sweep covering property derived directly or indirectly from criminal activity relatable to a scheduled offence; material including witness statements and documents recorded/collected under s.50 prima facie showed knowing involvement in forging instruments and projecting tainted property as untainted, attracting the presumptions and reverse burden under s.24 as affirmed by SC. Bail was refused. On parity, the HC held parity applies only on identical role and facts; the applicant's involvement was distinguishable from the released co-accused, hence parity was denied and the bail application dismissed.

---

---

1. ISSUES PRESENTED AND CONSIDERED

(i) Whether, on the materials placed in the prosecution complaint and statements recorded under Section 50 of the Act, the Court could be satisfied that the petitioner met the twin conditions under Section 45 for grant of regular bail in a case alleging offence under Section 3 punishable under Section 4 of the Act.

(ii) Whether the petitioner's plea that he was not an accused in the predicate/scheduled offence disentitled the enforcement agency from alleging money-laundering against him, and whether this plea supported grant of bail.

(iii) Whether the petitioner was entitled to bail on parity with another co-accused who had been granted bail, despite allegations of a distinct role attributed to the petitioner.

(iv) Whether filing of the prosecution complaint/completion of investigation by itself warranted grant of bail in the facts of the case.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Satisfaction of Section 45 twin conditions for regular bail

Legal framework: The Court treated Section 45 as imposing mandatory "twin conditions" for bail, requiring (a) reasonable grounds for believing the accused is not guilty of the offence under the Act, and (b) the accused is not likely to commit any offence while on bail. The Court also noted that Section 24 places a burden on the accused in proceedings relating to proceeds of crime, and that statements recorded under Section 50 are admissible and form relevant material for considering bail.

Interpretation and reasoning: On a prima facie evaluation of the prosecution complaint materials, the Court found allegations showing the petitioner's direct involvement in preparation of fake deeds, tampering/falsification of records, and participation in processes connected with proceeds of crime, including claiming/projecting property as untainted. The Court relied on the complaint narrative that the petitioner admitted preparation of a fake deed relating to part of the property and that investigation materials (including statements under Section 50 and seized documents) corroborated his role. The Court held that such material could not be "lightly brushed out" at the bail stage, and that the nature of the allegations, being economic offence/money laundering, warranted a stringent approach.

Conclusions: The Court concluded that it could not form "reason to believe" that the petitioner was not involved; hence the petitioner failed to satisfy the first twin condition under Section 45. Consequently, discretionary bail was refused and the application dismissed.

Issue (ii): Effect of petitioner not being an accused in the predicate/scheduled offence

Legal framework: The Court proceeded on the basis that money laundering under Section 3 is an independent offence concerning processes/activities connected with proceeds of crime. The Court treated Section 3 as covering multiple forms of involvement (including knowingly assisting, being a party, concealment/possession/acquisition/use, and projecting/claiming as untainted), and held that a person may be proceeded against even if not arraigned in the scheduled offence, so long as the person knowingly assists or is involved in processes connected with proceeds of crime.

Interpretation and reasoning: The Court rejected the petitioner's submission that absence from the predicate offence insulated him from liability under the Act. It reasoned that the relevant inquiry is whether the person indulged in processes connected with proceeds of crime; the offence is continuing and turns on participation in such processes. On the complaint materials, the Court found prima facie that the petitioner knowingly participated in creating and using fake deeds/records to acquire property and project it as untainted, thus attracting the ingredients of Section 3.

Conclusions: The Court held the petitioner's "not an accused in the predicate offence" argument to be misplaced and not a ground for bail, because money laundering is an independent offence and the complaint disclosed prima facie involvement in Section 3 processes.

Issue (iii): Parity with a co-accused granted bail

Legal framework: The Court held that parity applies only where the factual role and involvement are identical; bail cannot be claimed merely because another accused has been granted bail. The Court emphasized that the role attributed to the applicant must be specifically assessed for parity.

Interpretation and reasoning: Comparing allegations, the Court found the petitioner's role to be distinguishable: the complaint attributed to him direct participation in preparation of fake deeds and involvement with others in acquiring and dealing with proceeds of crime, including further proceeds in cash/bank balances. The Court, after examining the nature of allegations attributed to the co-accused who obtained bail, held that the petitioner's involvement as described in the prosecution complaint was materially different, hence parity could not be invoked.

Conclusions: The Court denied parity, holding it was not a fit case to extend bail on that basis.

Issue (iv): Whether completion of investigation/filing of prosecution complaint warranted bail

Legal framework: The Court held that completion of investigation or filing of the prosecution complaint/charge-sheet does not automatically entitle an accused to bail and does not, by itself, constitute a material change in circumstances for grant of bail.

Interpretation and reasoning: The Court reasoned that filing of the complaint does not dilute the allegations; rather, it reflects that materials were found during investigation. Therefore, continued custody was not rendered purposeless merely because the complaint had been filed.

Conclusions: The Court rejected the "investigation complete" contention as insufficient to grant bail, and maintained refusal of bail in view of failure to satisfy Section 45 conditions and the seriousness of the alleged offence.

---