<h1>Foreign predicate offence under PMLA requires proof of foreign law and nexus before bail restrictions apply.</h1> Where PMLA prosecution rests on a foreign predicate offence, the prosecution must prima facie prove the foreign law, the scheduled offence link, the ... Corresponding law - offence of cross border implications - PMLA Section 45 twin conditions for bail - MLA and powers of Enforcement Directorate - judicial notice of foreign law - admissibility of statements under Section 50 PMLA and Section 25 Evidence Act - Central Government discretion under Chapter IX of PMLACorresponding law - judicial notice of foreign law - Whether an offence under foreign law can be treated as a scheduled offence under PMLA and whether Indian courts can take judicial notice of the foreign statute relied upon by ED. - HELD THAT: - A foreign offence can be read into the Schedule of the PMLA through the concept of a corresponding law and, when such foreign conduct has cross border implications and the proceeds travel to India, it may constitute a predicate offence under Part C. However, Indian courts cannot take judicial notice of foreign statutes; the foreign law (United States Code or provisions relied upon) must be pleaded and proved as a question of fact, ordinarily by production of the statute and expert opinion. Consequently, at the bail stage the prosecution must adduce prima facie material to show that the foreign offence corresponds to scheduled offences; a certified MLA alone does not substitute for proof of the foreign statutory ingredients. Until the foundational facts (commission of criminal activity, derivation of property as proceeds, and involvement of the person in processes connected with such property) are established prima facie, the onus does not shift to the accused under Section 24/Section 45. [Paras 82, 84, 85, 86, 88]Foreign offences may be treated as scheduled offences via the concept of corresponding law, but the foreign law must be pleaded and proved; judicial notice of foreign statute cannot be taken and the prosecution must establish foundational facts prima facie.MLA and powers of Enforcement Directorate - offence of cross border implications - Whether ED could register an ECIR and conduct investigation/arrests in India on the basis of an MLA requesting evidence in relation to an offence committed abroad. - HELD THAT: - Chapter IX of the PMLA and the Treaty envisage wide mutual assistance. Section 60(2) and related provisions contemplate that a letter of request for attachment/seizure may lead to steps including inquiry and investigation. Where ED, on the basis of an MLA and other material, is satisfied that the foreign offences correspond to scheduled offences and proceeds have reached India, it is within ED's powers to register a case under Sections 3 and 4 and take steps necessary for investigation, including arrest, as arrest may be an incident of investigation. The content or limited scope of the MLA (e.g., request to freeze accounts) does not preclude ED from registering and investigating an independent money laundering offence in India if foundational material exists. [Paras 71, 72, 73, 74, 75]ED was competent to register the ECIR and carry out investigation, including arrest, on the basis of the MLA and other material if satisfied that the foreign offence corresponds to scheduled offences and proceeds have entered India.Central Government discretion under Chapter IX of PMLA - Section 188 CrPC - Whether the Central Government's forwarding of the MLA to ED (rather than to the Special Court) and whether prior sanction under Section 188 CrPC was required for investigation/trial in India. - HELD THAT: - A conjoint reading of the relevant Chapter IX provisions shows that the Central Government has discretion to forward a letter of request to any authority under the Act or to the Special Court as it thinks fit; forwarding the MLA to ED therefore did not breach Chapter IX. Further, the proviso to Section 188 CrPC requiring previous sanction applies where the entirety of the substantive offence committed outside India is to be inquired into or tried in India; here the predicate offence is being prosecuted abroad, while PMLA (a standalone offence) arises in India because proceeds reached India. Accordingly, prior sanction under Section 188 CrPC is not required for proceeding under PMLA in India. [Paras 62, 76, 77, 78, 79]The Central Government acted within its discretion in forwarding the MLA to ED; sanction under Section 188 CrPC was not required for investigation under PMLA in India.Admissibility of statements under Section 50 PMLA and Section 25 Evidence Act - Whether statements recorded under Section 50 of PMLA after the accused's arrest are admissible and can be relied upon at the bail stage. - HELD THAT: - Statements recorded under Section 50 of PMLA which amount to incriminating statements made while the accused was in custody are susceptible to the bar in Section 25 of the Evidence Act and thereby inadmissible, as held in Prem Prakash. In the present case many statements of the main accused were recorded post arrest and thus are hit by Section 25. The evidentiary value of Section 50 statements generally must be weighed at trial; retracted statements and statements recorded in custody are of doubtful reliability and cannot form the sole basis for convicting or for denying bail absent corroboration. [Paras 101, 102, 103, 108, 109]Statements under Section 50 recorded while the accused was in custody are inadmissible under Section 25 Evidence Act and cannot be treated as decisive at the bail stage.WhatsApp/Telegram chats - retracted statements - Whether WhatsApp/Telegram chats and retracted statements of co-accused furnish sufficient material at the bail stage to deny bail. - HELD THAT: - WhatsApp/Telegram chats recovered from devices require scientific verification and proof of authorship to establish a live link; absent forensic reports they cannot be relied upon at the bail stage to attribute knowledge or mens rea. Retracted statements, while admissible, have questionable reliability; retraction undermines their probative value and they cannot form the sole basis for guilt without independent corroboration. In the present case the chats are under pseudo names and forensic reports are pending; co-accused statements have been retracted, diminishing their reliability. [Paras 112, 113, 114, 115, 116]WhatsApp/Telegram chats without forensic corroboration and retracted statements are insufficient, prima facie, to deny bail; independent corroborative evidence is necessary.PMLA Section 45 twin conditions for bail - Whether the petitioners satisfy the twin conditions of Section 45 of PMLA for grant of bail and whether delay/lengthy trial justifies relaxation of rigours of Section 45. - HELD THAT: - Section 45 imposes twin conditions (reasonable grounds to believe accused is not guilty; accused not likely to commit an offence on bail). The Court must apply the principle that bail is the rule and jail the exception. Considering (i) absence of prima facie proof that the foreign offence corresponds to scheduled offence and that seized amounts are proceeds of crime, (ii) inadmissibility/limited reliability of key statements and chats, (iii) retractions, (iv) seizure/freezing of material and absence of criminal antecedents, and (v) prolonged pre trial incarceration and unlikely early trial commencement, the Court found reasonable grounds to believe the petitioners not guilty and that they were not likely to offend on bail. Accordingly, the Court relaxed the rigours of Section 45 and granted bail on conditions. [Paras 120, 121, 122, 123, 124]Having regard to broad probabilities, delay in trial and lack of prima facie foundational proof, the petitioners satisfy the twin conditions of Section 45 and are enlarged on bail subject to conditions.Final Conclusion: The Court held that foreign offences may be treated as scheduled offences through the concept of corresponding law but foreign statutes cannot be judicially noticed and must be pleaded and proved; ED was competent to register and investigate under PMLA on the basis of the MLA and other material, the Central Government had discretion to forward the MLA to ED and no sanction under Section 188 CrPC was required for the PMLA offence in India; statements under Section 50 recorded while in custody are inadmissible and WhatsApp/Telegram chats and retracted statements lack sufficient probative value at the bail stage. On the totality of broad probabilities, prolonged custody and absence of prima facie foundational proof, the petitioners were granted regular bail subject to conditions. Issues: Whether the petitioners were entitled to regular bail under the Prevention of Money Laundering Act, 2002, including whether the material on record prima facie established a scheduled offence with cross-border implications, the existence of proceeds of crime, and satisfaction of the conditions for bail.Analysis: The Court held that for prosecution under the Prevention of Money Laundering Act, 2002, the prosecution must prima facie establish the foundational facts that a scheduled offence has been committed, that property was derived or obtained from that criminal activity, and that the accused was involved in a process or activity connected with such proceeds. It held that foreign law relied upon as the predicate offence cannot be taken judicial notice of and must be proved as a fact during trial; in the absence of the relevant foreign statute and expert proof, there was no prima facie basis to treat the alleged foreign conduct as a corresponding scheduled offence. The Court further held that the statutory scheme permits investigation and enforcement on receipt of mutual legal assistance material, and that the complaint and recoveries did not by themselves establish the requisite link between the foreign offence and proceeds of crime in India. The Court also noted that several incriminating statements were recorded after arrest, that retracted statements had limited reliability, and that WhatsApp or Telegram chats without corroboration could not, at the bail stage, establish the alleged live link or mens rea. In view of the prolonged custody and the delay in commencement of trial, the Court applied the principle that bail is the rule and jail is the exception while considering the twin conditions under Section 45.Conclusion: The petitioners satisfied the bail threshold and the rigour of Section 45 was relaxed; regular bail was granted.Ratio Decidendi: Where the prosecution relies on a foreign predicate offence to invoke the Prevention of Money Laundering Act, 2002, it must prima facie prove the corresponding foreign law and the foundational link between that offence, the proceeds of crime, and the accused's involvement before the burden under Section 45 can arise.