2024 (10) TMI 506 - HC - Money Laundering

Bail granted in money laundering case as predicate disproportionate assets investigation remains incomplete under Section 45 PMLA

The Bombay HC granted bail to an applicant charged under PMLA for money laundering related to disproportionate assets. The court found that the twin test ... Seeking grant of bail - Money Laundering - predicate offences - amass of assets disproportionate to known sources of income - twin test contemplated u/s 45 of the PMLA satisfied or not - HELD THAT:- Since the check period extends from 12.01.2011 to 31.08.2020, offences have been registered against the applicant under the PC Act, as it stood prior to the amendment of the year 2018 as also post-amendment - the offences have been registered in the predicate offence under the FIR as per Section 13 (2) read with Section 13 (1) (e) of the PC Act (prior to amendment in the year 2018) and Section 13 (2) red with Section 13 (1) (b) of the PC Act (post its amendment in the year 2018). In the present case, admittedly, till date, the chargesheet has not been filed by the CBI in connection with the FIR registered against the applicant in the predicate offence. In other words, the investigation into the said matter is still pending and it is yet to culminate into filing of a final report. In the present case, there is substance in the contention raised on behalf of the applicant that the offence which is treated as the predicate offence, is a peculiar offence, the principal ingredient of which is failure of the accused to satisfactorily account for the assets in question and thereafter, it can be said that specific assets could be categorized as disproportionate assets or assets disproportionate to the known sources of income of the accused. In the present case, the CBI has not even filed a chargesheet and if the applicant is able to satisfactorily account for the assets alleged to be disproportionate to his known sources of income, the CBI may not have any occasion to file the chargesheet against the applicant - The investigation still remaining pending in the predicate offence, in the facts of this case and the nature of offence alleged against the applicant, shows that what could be termed as proceeds of crime is yet in a flux and indeterminate, due to which this Court finds substance in the aforesaid contention raised on behalf of the applicant. This Court is of the opinion that the applicant has indeed satisfied the stringent twin test contemplated under Section 45 of the PMLA, as he has made out a prima facie case on merits to satisfy the first limb of the test and the second limb is also satisfied in the facts and circumstances of the present case. Even otherwise, in the context of period of incarceration suffered by the applicant and remote possibility of the trial being completed within a reasonable period of time, inures to the benefit of the applicant and the present application deserves to be allowed. The applicant shall be released on bail subject to fulfilment of conditions imposed - bail application allowed. Issues Involved:1. Legality of the FIR and ECIR.2. Premature investigation by the Enforcement Directorate (ED) under PMLA.3. Validity of the arrest and remand process.4. Reliance on statements recorded under Section 50 of the PMLA.5. Incarceration period and delay in trial commencement.Issue-wise Detailed Analysis:1. Legality of the FIR and ECIR:The applicant challenged the FIR's validity, claiming it was unsigned and thus fundamentally defective, rendering the ECIR illegal. The FIR, registered by the ACB, Mumbai, alleged that the applicant amassed assets disproportionate to his known sources of income. The applicant argued that since the FIR was unsigned, the subsequent ECIR was vitiated, making the arrest illegal. The court acknowledged the applicant's contention but focused on the investigation's status and the absence of a chargesheet.2. Premature Investigation by the ED under PMLA:The applicant contended that the ED prematurely registered the ECIR without a chargesheet in the predicate offence, arguing that the ED encroached upon the CBI's domain. The applicant cited judgments emphasizing that the ED should not presume the commission of a predicate offence without a chargesheet. The court agreed, noting that the investigation into the predicate offence was incomplete, and the ED's presumption that all assets were proceeds of crime was unsustainable. The court highlighted that the CBI's investigation could reveal satisfactory explanations for the assets, affecting the determination of proceeds of crime.3. Validity of the Arrest and Remand Process:The applicant argued that the arrest was vitiated as the remand application lacked material to justify the arrest, and statements under Section 50 of the PMLA were recorded post-arrest. The court found merit in this argument, noting that the arrest was based on suspicion rather than credible information. The court emphasized that the ED should not proceed with a preconceived notion of guilt and that the arrest violated the principles laid down by the Supreme Court regarding Section 19 of the PMLA.4. Reliance on Statements Recorded under Section 50 of the PMLA:The applicant contended that statements recorded under Section 50 of the PMLA post-arrest were inadmissible, as they were obtained when the applicant was in custody, violating Section 25 of the Evidence Act. The court agreed, citing the Supreme Court's ruling that such statements could not be considered incriminating. The court ruled that the ED's reliance on these statements to oppose bail was misplaced.5. Incarceration Period and Delay in Trial Commencement:The applicant argued that the prolonged incarceration without trial commencement warranted bail. The court acknowledged that the trial was unlikely to commence soon, given the incomplete investigation and lack of a chargesheet. The court noted the Supreme Court's emphasis on granting bail in cases of extended incarceration and remote trial prospects, finding the applicant's continued detention unjustifiable.Conclusion:The court allowed the bail application, finding that the applicant satisfied the twin test under Section 45 of the PMLA. The court ordered the applicant's release on bail with specific conditions, emphasizing cooperation with the investigation and non-interference with evidence. The court clarified that its observations were limited to the bail application and would not influence the designated court's proceedings.