2025 (4) TMI 1747 - SC - Money Laundering

PMLA money-laundering case: delayed cognizance and year-long custody; bail granted, Sessions Court to be designated u/s43(1)

In a PMLA prosecution where cognizance had not yet been taken against the appellant and the case involved multiple accused requiring hearing on charge, ... Money Laundering - cognizance of the offence under the PMLA has not been taken as far as the appellant is concerned - appellant has undergone incarceration for about 1 year - there are 20 accused who will have to be heard on charge - HELD THAT:- It is directed that the respondent to produce the appellant before the Court of learned Principal District and Sessions Judge of the concerned district for completing bail formalities. Under Section 43(1) of the PMLA, the Central Government in consultation with the Chief Justice of the High Court, has a power to designate one or more courts of Sessions as Special Court for a particular area - the Central Government is directed to immediately exercise powers under sub-Section 1 of Section 43 and designate a Sessions Judge to preside over the Special Court so that the complaint can be taken up for considering the prayer of the respondent for taking cognizance. All issues concerning the said prayer are kept open. Appeal allowed. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether the appellant was entitled to bail in proceedings under the PMLA where, as against him, cognizance had been set aside and not presently taken, he had undergone about one year of incarceration, and the trial was not likely to commence in the near future. (ii) Whether, and in what manner, the Court should address the prosecution's apprehension of influence/tampering by imposing stringent bail conditions, including provision for cancellation on breach. (iii) Whether directions were warranted to ensure an operational Special Court under Section 43(1) of the PMLA where the designated Special Court was vacant, so that the complaint could be taken up for consideration of cognizance (while keeping all issues on cognizance open). 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Entitlement to bail in the absence of cognizance and with delayed trial prospects Legal framework (as discussed): The Court proceeded on the basis of the appellant's arrest for an offence under Section 3 of the PMLA and the filing of a complaint under Section 44(1)(b) of the PMLA. The Court also relied on the principles laid down in a prior decision (as applied by the Court) regarding grant of bail where trial is unlikely to commence soon, and noted the maximum sentence of seven years. Interpretation and reasoning: The Court treated as determinative the factual position that, as on the date of decision, cognizance of the PMLA offence had not been taken against the appellant because the earlier cognizance order had been set aside for want of prior sanction, and that order had not been challenged. The Court further relied on the length of incarceration (about one year), the expected complexity and duration of pre-trial proceedings (multiple accused to be heard on charge and more than thirty cited prosecution witnesses), and the assessment that there was 'no possibility of commencement of trial in near future.' The maximum punishment being seven years was considered relevant to the proportionality of continued custody in the circumstances. The Court also considered parity by noting that bail had been granted to a co-accused in a similar factual situation. Conclusion: On these facts, applying the stated principles and parity considerations, the Court concluded that the appellant was entitled to be enlarged on bail pending the complaint. Issue (ii): Addressing risk of tampering/influence through stringent conditions and cancellation mechanism Legal framework (as discussed): The Court addressed the prosecution's submission that the appellant was influential and could tamper with evidence by directing that 'appropriate stringent conditions' be imposed and by expressly allowing the respondent to seek cancellation upon breach or non-cooperation. Interpretation and reasoning: The Court accepted that the prosecution's stated apprehension could be met by tailoring stringent bail conditions rather than by continued incarceration, especially in light of the factors supporting bail. It therefore directed that the Sessions Court fix stringent terms after hearing the respondent, and specified minimum conditions to be included: surrender of passport (if any) and an undertaking on oath that, if cognizance is taken, the appellant will regularly and punctually attend the trial court and cooperate for early disposal. The Court further provided a clear enforcement pathway by permitting the respondent to apply for cancellation of bail before the Special Court if the appellant breaches conditions or fails to cooperate. Conclusion: Bail was granted subject to stringent conditions aimed at mitigating risks of non-cooperation or tampering, coupled with an express liberty to seek cancellation on breach. Issue (iii): Ensuring availability of a Special Court under Section 43(1) PMLA; directions while keeping cognizance issues open Legal framework (as discussed): The Court noted Section 43(1) of the PMLA, under which the Central Government, in consultation with the Chief Justice of the High Court, has power to designate one or more Courts of Sessions as a Special Court for a particular area. Interpretation and reasoning: As the designated Special Court was stated to be lying vacant due to absence of an appointed judicial officer, the Court directed that the appellant be produced before the Principal District and Sessions Judge of the concerned district for completing bail formalities. Additionally, to prevent stalling of the complaint, the Court directed the Central Government to 'immediately' exercise power under Section 43(1) to designate a Sessions Judge to preside over the Special Court so that the complaint could be taken up for considering the respondent's prayer for cognizance. The Court expressly clarified that all issues concerning the cognizance prayer were kept open, thereby limiting the direction to administrative/functional enablement rather than adjudication on cognizance. Conclusion: The Court issued operational directions to ensure a functioning Special Court and facilitate consideration of cognizance, while keeping all issues on cognizance expressly open.