2025 (2) TMI 16 - HC - Money Laundering

Delhi HC denies bail in money laundering case involving illegal anti-cancer drug procurement under Section 45 PMLA

Akshay Kumar Versus Directorate of Enforcement

Delhi HC rejected bail application in money laundering case involving illegal procurement of anti-cancer drug materials. Court held that Section 50 PMLA ... Money Laundering - seeking grant of bail - illegal procurement of empty vials and raw materials of anti-cancer drugs such as Keytruda and Opdyta - twin conditions prescribed under Section 45 of the PMLA satisfied or not - entire case of the respondent is based on mere conjectures and surmises, and no concrete evidence has been placed on record to substantiate the allegations leveled against the applicant - HELD THAT:- It is a settled position of law that statements recorded under Section 50 of the PMLA hold evidentiary value and are admissible in legal proceedings. The Hon’ble Supreme Court, while emphasizing the legal sanctity of such statements, has time and again observed that they constitute valid material upon which reliance can be placed to sustain allegations under the PMLA. In a recent judgment, the Hon’ble Supreme Court in Abhishek Banerjee v. Enforcement Directorate [2024 (9) TMI 508 - SUPREME COURT], has held that 'It has been specifically laid down in the said decision that the statements recorded by the authorities under Section 50 PMLA are not hit by Article 20 (3) or Article 21 of the Constitution, rather such statements recorded by the authority in the course of inquiry are deemed to be the judicial proceedings in terms of Section 50 (4), and are admissible in evidence, whereas the statements made by any person to a police officer in the course of an investigation under Ch. XII of the Code could not be used for any purpose, except for the purpose stated in the proviso to Section 162 of the Code. In view of such glaring inconsistencies between Section 50 PMLA and Sections 160/161CrPC, the provisions of Section 50 PMLA would prevail in terms of Section 71 read with Section 65 thereof.' In the aforesaid judgment, the Hon’ble Court further underscored that such statements, being recorded in the course of an inquiry rather than an investigation, are not subject to the restrictions under Article 20 (3) and Article 21 of the Constitution. Instead, they are deemed to be judicial proceedings under Section 50 (4) of the PMLA and, therefore, admissible as evidence in proceedings under the PMLA. It is well settled, as reiterated by the Hon’ble Supreme Court in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)]] and Manish Sisodia v. Enforcement Directorate [2024 (8) TMI 614 - SUPREME COURT], that while the stringent twin conditions under Section 45 of the PMLA restrict the right to bail, they do not impose an absolute bar. The discretion of the court in granting bail remains judicial and must be exercised in accordance with the settled legal principles. The governing principle that “bail is the rule, and jail is the exception” must be harmonized with the legislative mandate that requires satisfaction of the conditions laid down under Section 45 of the PMLA before bail can be granted. In the present case, the respondent has placed on record material indicating the applicant’s active involvement in the procurement and sale of spurious anti-cancer medicines, the proceeds of which were funneled through various channels, including formal banking and hawala transactions. The applicant’s role in the laundering of illicit proceeds through his firms namely, M/s Delhi Medicine Hub and M/s Cancer Medicine Agency, stands corroborated by the investigative findings, including statements under Section 50 of the PMLA and independent documentary evidence. The twin conditions prescribed under Section 45 of the PMLA have not been satisfied. The evidence on record, the ongoing nature of the investigation, and the applicant’s alleged role in the broader financial syndicate indicate that the rigors of Section 45 of the PMLA continue to apply. Conclusion - This Court is of the view that considering the filing of the supplementary prosecution complaint and the ongoing nature of the investigation, this Court is not satisfied that the applicant has fulfilled the twin conditions under Section 45 of the PMLA. The respondent has presented sufficient material to warrant further judicial scrutiny, including financial records, electronic evidence, and statements of co-accused implicating the applicant. These materials suggest an active involvement in laundering proceeds of crime and a pattern of financial transactions that need further evaluation at trial. In view of the seriousness of the allegations and the need to ensure the integrity of the investigation, this Court is not inclined to enlarge the applicant on bail - bail application rejected. ISSUES PRESENTED and CONSIDEREDThe Court considered the following core legal issues:Whether the applicant is entitled to bail under Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA), given the allegations of involvement in money laundering activities related to the sale of spurious anti-cancer medicines.Whether the applicant has satisfied the twin conditions under Section 45 of the PMLA, which require demonstrating that the accused is not guilty of the alleged offence and is not likely to commit any offence while on bail.Whether the applicant's continued detention is justified based on the evidence presented and the ongoing nature of the investigation.ISSUE-WISE DETAILED ANALYSIS1. Legal Framework and PrecedentsThe legal framework primarily involves Section 45 of the PMLA, which imposes stringent conditions for granting bail in money laundering cases. The provision requires that the Public Prosecutor be given an opportunity to oppose the bail application and that the court be satisfied that the accused is not guilty of the offence and is unlikely to commit any offence while on bail. The Court referenced the Supreme Court's interpretation of these conditions in cases such as Vijay Madanlal Choudhary v. Union of India and Prem Prakash v. Directorate of Enforcement, which emphasize the stringent nature of these conditions while acknowledging that they do not impose an absolute bar on granting bail.2. Court's Interpretation and ReasoningThe Court interpreted Section 45 of the PMLA as requiring a high threshold for granting bail, given the serious nature of money laundering offences. The Court emphasized that the twin conditions under Section 45 are in addition to the general principles of bail under the Code of Criminal Procedure (CrPC), thereby reinforcing the stringent approach towards money laundering offences. The Court also noted that the principle that 'bail is the rule and jail is the exception' must be harmonized with the legislative mandate of Section 45.3. Key Evidence and FindingsThe evidence against the applicant included statements recorded under Section 50 of the PMLA, which are admissible as evidence, as well as financial records and bank transactions indicating the applicant's involvement in laundering proceeds from the sale of spurious medicines. The applicant's statements and those of co-accused persons, along with bank records, revealed significant cash deposits and fund transfers aligned with the proceeds of crime. The Court found that the applicant's business dealings through his firms, M/s Delhi Medicine Hub and M/s Cancer Medicine Agency, were integral to the laundering operations.4. Application of Law to FactsThe Court applied the stringent conditions of Section 45 of the PMLA to the facts of the case, finding that the applicant had not demonstrated that he was not guilty of the alleged offence or that he would not commit any offence while on bail. The evidence suggested a well-orchestrated scheme involving substantial financial transactions and the use of hawala channels, indicating a high risk of continued engagement in similar activities if released on bail.5. Treatment of Competing ArgumentsThe applicant argued that he had been wrongfully implicated and that his business dealings were conducted in good faith. He contended that there was no direct evidence linking him to the proceeds of crime and that his continued detention amounted to pre-trial punishment. The respondent, however, argued that the applicant was an integral part of a grave economic offence with significant public interest ramifications. The Court sided with the respondent, finding that the evidence presented supported the allegations of money laundering and that the applicant had not satisfied the conditions for bail under Section 45 of the PMLA.6. ConclusionsThe Court concluded that the applicant had not satisfied the twin conditions under Section 45 of the PMLA and that his continued detention was warranted to ensure the integrity of the investigation and prevent any potential misuse of the judicial process.SIGNIFICANT HOLDINGSCore Principles EstablishedThe stringent conditions under Section 45 of the PMLA impose a high threshold for granting bail in money laundering cases, requiring the accused to demonstrate that they are not guilty of the alleged offence and are unlikely to commit any offence while on bail.Statements recorded under Section 50 of the PMLA hold evidentiary value and are admissible in legal proceedings, constituting valid material to sustain allegations under the PMLA.The principle that 'bail is the rule and jail is the exception' must be harmonized with the legislative mandate of Section 45 of the PMLA, which requires satisfaction of the twin conditions before bail can be granted.Final Determinations on Each IssueThe Court determined that the applicant had not satisfied the twin conditions under Section 45 of the PMLA and that his continued detention was justified based on the evidence presented and the ongoing nature of the investigation.The Court dismissed the applicant's bail application, emphasizing the seriousness of the allegations and the need to ensure the integrity of the investigation.