2025 (2) TMI 183 - HC - Money Laundering

Accused Gets Bail in Money Laundering Case After Year-Long Detention Without Chargesheet

Bombay HC granted bail to applicant in money laundering case involving alleged supply of underweight food packets (100g instead of 300g) to MCGM, ... Money Laundering - seeking grant of bail - Primary allegation is that contractual obligation under the Work orders was to supply 300 gram packet of food (khichdi) but M/s. Force One Multi Services supplied food packet weighing 100 grams and thus unjustly enriched itself - illegal misappropriation of money - no specific mechanism framed by MCGM to check the actual quantity delivered - proceeds of crime - whether the rigours of Section 45 would apply to the facts of the present case as made out by the Applicant? - HELD THAT:- In the predicate offence Chargesheet has not been filed as yet. Applicant is not made accused either in the predicate offence or in the ECIR offence, trial is not likely to start in the predicate offence and hence trial in PMLA offence cannot be commenced and most importantly Applicant is incarcerated for 1 year and 18 days after duly cooperating with the investigation. The existence of the Scheduled Offence is a sine qua non for alleging the existence of proceeds of crime. Property derived or obtained, directly or indirectly, by a person as a result of criminal activity relating to a Scheduled Offence constitutes proceeds of crime. Thus existence of proceeds of crime at the time of trial of the offence under Section 3 of the PMLA can be proved only if the Scheduled Offence is established in prosecution of the Scheduled Offence. This clearly envisages that even if trial of the case under the PMLA proceeds it cannot be officially tested unless the trial of the Scheduled Offence concludes. In the present case before me in the Scheduled Offence, Chargesheet has not been filed and trial is not likely to start in the near foreseeable future. Therefore prima facie, there are no possibility of both trials concluding in the foreseeable future. Applicant is in judicial custody pending trail for more than one year. Attention invited to the decision of the Supreme Court in the case of Manish Sisodia Vs. Directorate of Enforcement [2024 (8) TMI 614 - SUPREME COURT] with respect to application of rigours of Section 45 of the PMLA especially in cases where there is delay in trial. The Supreme Court has held that if there is delay in trial, rigours of Section 45 would be inapplicable. It is seen that Applicant was arrested 17.01.2024. Thus he is in custody for the last more than 1 year, except from taking cognizance there is no other progress of the trial and the charges are yet to be framed and considered by the Special Court. There are 20 prosecution witnesses cited by the ED in their complaint and it would therefore be difficult to comprehend that trial is likely to be completed in the foreseeable future, rather there seems to be no possibility that trial would be concluded in a reasonable time. Applicant has fully cooperated with the prosecution Agency and made all disclosures. Hence his further incarceration shall not serve any useful purpose rather it would amount to punishing him before guilt is proved. Conclusion - The Applicant having been incarcerated for more than one year, in the prima facie facts of the present case, trial of the Scheduled Offence and consequently PMLA offences not likely to be completed in the foreseeable future, if Applicant's detention is further continued, it would amount to infringement of his fundamental right under Article 21 of the Constitution of India of a speedy trial and guarantee of personal liberty. Principal allegation that Applicant being in an influential position in the State at the then time may have been related in the so called alleged situation as put forth by the prosecution but the said situation no longer prevails in the current dispensation. Therefore any apprehension of prosecution regarding tampering with the evidence can be redressed by imposing appropriate conditions. Applicant is granted bail subject to the fulfilment of terms and conditions as imposed - bail application allowed. 1. ISSUES PRESENTED and CONSIDEREDThe primary issues considered in this judgment include:(a) Whether the Applicant should be granted bail under Section 439 of the Cr.P.C. read with Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA).(b) Whether the Applicant's arrest and continued detention comply with the statutory requirements under the PMLA and the Cr.P.C.(c) The sufficiency of evidence against the Applicant regarding the alleged money laundering activities.(d) The applicability of the rigors of Section 45 of the PMLA in the context of the Applicant's prolonged detention and the likelihood of the trial being delayed.2. ISSUE-WISE DETAILED ANALYSISIssue (a): Grant of Bail under Section 439 of Cr.P.C. and Section 45 of PMLARelevant legal framework and precedents: The Court examined the provisions of the Cr.P.C. and the PMLA, particularly Section 45, which imposes stringent conditions for granting bail in money laundering cases. The Court also considered precedents that emphasize the right to liberty and the principle that bail is the rule and jail is the exception.Court's interpretation and reasoning: The Court noted that the Applicant had been in custody for more than a year, and the trial was unlikely to conclude soon. The Court emphasized the need to balance the stringent conditions of Section 45 with the Applicant's right to a speedy trial and liberty.Key evidence and findings: The Court found that the investigation was complete, and the Applicant had cooperated fully. The Applicant was not named in the predicate offense or the ECIR, and the prosecution's case primarily relied on statements from co-accused, which were inadmissible under the Indian Evidence Act.Application of law to facts: The Court applied the principles of bail jurisprudence, considering the Applicant's cooperation, the completion of the investigation, and the lack of evidence directly implicating the Applicant in money laundering activities.Treatment of competing arguments: The Court considered the prosecution's argument that the Applicant received proceeds of crime and influenced the procurement of work orders. However, the Court found these allegations insufficient to justify continued detention without trial.Conclusions: The Court concluded that the Applicant's continued detention was unwarranted, given the lack of direct evidence and the delay in trial proceedings.Issue (b): Compliance with Statutory Requirements for Arrest and DetentionRelevant legal framework and precedents: The Court examined Article 22 of the Constitution and Section 50 of the Cr.P.C., which mandate informing the accused of the grounds of arrest and ensuring their right to legal counsel.Court's interpretation and reasoning: The Court found that the Applicant was informed of the grounds of arrest, and the statutory requirements were met. However, the Court noted that the arrest and detention should not be used as a tool for punishment without trial.Key evidence and findings: The Court noted that the Applicant had been informed of the grounds of arrest and had cooperated with the investigation.Application of law to facts: The Court applied the constitutional and statutory safeguards to ensure that the Applicant's rights were protected during arrest and detention.Treatment of competing arguments: The Court acknowledged the prosecution's compliance with procedural requirements but emphasized the need for a fair trial and timely justice.Conclusions: The Court concluded that while procedural compliance was met, the prolonged detention without trial was unjustified.Issue (c): Sufficiency of Evidence against the ApplicantRelevant legal framework and precedents: The Court considered the provisions of the Indian Evidence Act concerning the admissibility of co-accused statements and the burden of proof in criminal cases.Court's interpretation and reasoning: The Court found that the prosecution's case relied heavily on statements from co-accused, which were inadmissible without corroboration. The Court emphasized the need for concrete evidence to justify detention.Key evidence and findings: The Court noted the lack of direct evidence implicating the Applicant in money laundering activities. The allegations were primarily based on statements from co-accused and circumstantial evidence.Application of law to facts: The Court applied the principles of evidence law, finding the prosecution's case insufficient to warrant continued detention.Treatment of competing arguments: The Court considered the prosecution's reliance on co-accused statements but found them inadequate to establish guilt beyond a reasonable doubt.Conclusions: The Court concluded that the evidence against the Applicant was insufficient to justify continued detention.Issue (d): Applicability of Section 45 of PMLA in Context of DelayRelevant legal framework and precedents: The Court considered the provisions of Section 45 of the PMLA and relevant Supreme Court decisions emphasizing the right to a speedy trial.Court's interpretation and reasoning: The Court found that the delay in trial proceedings justified relaxing the rigors of Section 45. The Court emphasized the need to balance the stringent conditions of the PMLA with the Applicant's right to liberty and a fair trial.Key evidence and findings: The Court noted the delay in filing the chargesheet for the predicate offense and the likelihood of prolonged trial proceedings.Application of law to facts: The Court applied the principles of constitutional law, emphasizing the need for a fair and timely trial.Treatment of competing arguments: The Court considered the prosecution's argument for continued detention but found it outweighed by the Applicant's right to a speedy trial.Conclusions: The Court concluded that the delay in trial proceedings justified granting bail to the Applicant.3. SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: The Court emphasized that 'bail is the rule, and jail is the exception,' and prolonged detention without trial violates the Applicant's fundamental rights under Article 21 of the Constitution.Core principles established: The Court reaffirmed the principles of bail jurisprudence, emphasizing the right to a speedy trial and the need for concrete evidence to justify detention.Final determinations on each issue: The Court granted bail to the Applicant, subject to conditions, emphasizing the need for a fair trial and timely justice. The Court noted that the Applicant's continued detention would amount to punishment without trial, violating his fundamental rights.