2025 (6) TMI 771 - HC - Money Laundering

Bail denied for alleged kingpin in illegal mining case under Section 45 PMLA twin conditions

Delhi HC dismissed bail applications under PMLA for accused allegedly involved in illegal mining operations. Court found twin conditions under Section 45 ... Money Laundering - proceeds of crime - reasonable grounds - accused/applicant contended that the accused/applicant is innocent and cannot be charged with offence under Section 3/4 of the PML Act - twin mandatory conditions laid down in section 45 of PMLA satisfied or not - HELD THAT:- There is plethora of judicial pronouncement, not being repeated herein for brevity that existence of the twin conditions stipulated under Section 45 of the PML Act is mandatory before the court exercises discretion to release on bail a person accused of the offence of money laundering; and that the belief qua the accused being guilty of money laundering has to be tested on “reasonable grounds”, which means something more than “prima facie” grounds. Equally well settled is the scope of Section 24 of the PML Act that unless contrary is proved, the Court shall presume involvement of proceeds of crime in money laundering; and that burden to prove that the proceeds of crime are not involved is on the accused. Further, it is trite that economic offences constitute an altogether distinct class of offences. That being so, in spite of the salutary doctrine of “bail is the rule and jail is an exception”, matters of bail in cases involving socio-economic offences have to be visited with a different approach. The role of the accused/applicant in the offences, according to the investigation is that he is the kingpin and the biggest beneficiary of the illegal mining. Large number of willing partners, benamis and facilitators connived with the accused/applicant in various activities associated with the proceeds of crime, generated through illegal mining and fudging of shareholding records in the books, as analyzed elaborately in the complaint - The accused/applicant was actually involved in generation of proceeds of crime by undertaking rampant illegal and unscientific mining through GMM and transferring the proceeds to his personal and/or family accounts, followed by utilizing the same as untainted property, as detailed in the Complaint. It is not just the said Complaint filed by the HSPCB, but also the FIR No.449/2023 registered by PS Tosham, which describes in detail the offences of cheating, forgery and conspiracy committed by the accused persons, including the accused/applicant to carry out illegal mining in order to earn unlawful gain for the accused persons and the consequent unlawful loss to the exchequer, quantified to be Rs. 78,14,75,324/- as described above. The investigation carried out by recovering and seizing volumes of documentary material, as elaborately described in the Complaint shows complicity of the accused/applicant in the offences alleged and expanse thereof. And the investigation continues further. That being so, the apprehension of the DoE that if released on bail, the accused/applicant would flee the country and/or hamper further investigation and/or trial cannot be brushed aside as baseless. There is no reasonable ground for believing that the accused/applicant is not guilty of the offences alleged. That being so, the rigors of Section 45 of the PML Act dissuade this court from admitting the accused/applicant to bail on merits. Coming to the plea of the accused/applicant for grant of bail on medical grounds, as mentioned above, in compliance with the directions of this court, the accused/applicant was examined by different departments of AIIMS, Delhi; and each department sent its separate report. Those reports were compiled and tabulated by the Senior Medical Officer of the Dispensary in the Central Jail No.7, Tihar, New Delhi and submitted as consolidated Medical Status Report dated 02.05.2025. According to the said Medical Status Report, the accused applicant is stable and regularly reviewed by the doctor on duty; and all medicines prescribed by AIIMS are being provided to him from jail dispensary itself. So, on that count also the accused/applicant has failed to establish a ground for grant of bail. Conclusion - The elaborate Complaint, supported by voluminous documentary record reflecting the unlawful gain to the accused persons, including the accused/applicant and the consequent unlawful loss to the exchequer quantified to be Rs.78,14,75,324/-, coupled with failure on the twin tests laid down under Section 45 of the PML Act; and no serious health issue decipherable from the Medical Status Report received from the jail, this is not a fit case to release the accused/applicant on bail. The applications (for regular as well as for interim bail) are dismissed. The core legal questions considered by the Court in this matter include:1. Whether the accused/applicant is entitled to bail under Section 45 of the Prevention of Money Laundering Act, 2002 (PML Act), considering the twin mandatory conditions laid down therein.2. Whether the offences alleged, including illegal and unscientific mining and consequent money laundering, fall within the ambit of scheduled offences under the PML Act, particularly in light of legislative changes removing certain provisions of the Environment (Protection) Act (EP Act) from the schedule.3. Whether the accused/applicant's medical condition justifies grant of bail on medical grounds.4. The applicability and effect of the principle of parity in bail applications where co-accused remain in custody.5. The scope and interpretation of the procedural and substantive safeguards under the PML Act, including the burden of proof and the standard of 'reasonable grounds for believing' guilt in bail proceedings.6. The relevance and impact of ongoing investigations and pending cognizance on the bail application.Issue-wise Detailed Analysis1. Bail under Section 45 of the PML Act and the Twin ConditionsThe legal framework governing bail under the PML Act is encapsulated in Section 45, which mandates two preconditions for bail: (i) reasonable grounds to believe the accused is not guilty of money laundering, and (ii) the accused is not likely to commit any offence while on bail. The Court relied heavily on the Supreme Court precedent in Vijay Madanlal Chaudhary, which emphasized the special and stringent nature of offences under the PML Act, recognizing money laundering as an aggravated crime with transnational impact requiring robust enforcement mechanisms.The Court interpreted 'reasonable grounds for believing' as a standard higher than prima facie but not requiring proof beyond reasonable doubt, focusing on the probability based on available material. The Court underscored that bail considerations in economic offences require a different approach due to their gravity, potential for large-scale public harm, and complexity of conspiracies involved.In applying this framework, the Court examined the voluminous incriminating material, including documentary evidence and quantified proceeds of crime amounting to over Rs. 78 crores, with the accused/applicant's share quantified at over Rs. 22 crores. The accused/applicant was found to be the kingpin and principal beneficiary of the illegal mining operation, orchestrating activities through a facade company to circumvent legal restrictions. The Court found no reasonable grounds to believe the accused was not guilty and noted the ongoing investigation and the risk of flight or interference with the trial if bail were granted.Competing arguments from the accused/applicant's counsel, asserting innocence and challenging the predicate offence, were considered but rejected on the basis that the Court need not delve into trial merits but only assess the probability of guilt based on reasonable material.2. Status of Predicate Offence and Scheduled Offences under the PML ActThe accused/applicant contended that the predicate offence under the EP Act was no longer a scheduled offence following parliamentary amendments, and therefore the Directorate of Enforcement (DoE) lacked jurisdiction. The Court rejected this contention, noting that the offences were committed when the EP Act provisions were still scheduled offences, and that the complaint and FIR had been registered accordingly. The Court also observed that the same acts could constitute offences under multiple statutes, including the Indian Penal Code, and that the removal of the EP Act from the schedule did not negate the ongoing investigation or prosecution under the PML Act.The Court relied on the National Green Tribunal's findings and the FIR registered by local police detailing cheating, forgery, and conspiracy, which formed the predicate offences for money laundering. The Court held that the DoE's investigation was valid and that the accused/applicant's arguments on jurisdiction and predicate offences were untenable.3. Medical Grounds for BailThe accused/applicant sought bail on medical grounds, supported by reports from AIIMS and consolidated medical status reports from the jail dispensary. The Court examined these reports in detail and found the accused/applicant's condition to be stable, with regular medical review and provision of necessary medicines. The Court noted that the accused had actively engaged in legal proceedings during the period of interim bail, indicating that the medical condition was not life-threatening or debilitating to warrant bail.Thus, the Court concluded that the medical condition did not constitute sufficient grounds for bail under the PML Act's proviso or otherwise.4. Principle of ParityThe accused/applicant argued for bail on the principle of parity, noting that other accused persons had not been arrested. The Court distinguished the accused/applicant as the kingpin and principal beneficiary of the criminal enterprise, thereby not entitled to parity with other accused. The Court emphasized that the investigation was ongoing and that the DoE would take appropriate decisions regarding other accused at the appropriate stage.5. Burden of Proof and Presumption under the PML ActThe Court reiterated the settled legal position that under Section 24 of the PML Act, there is a presumption of involvement of proceeds of crime in money laundering unless the contrary is proved. The burden lies on the accused to rebut this presumption. The Court found that the accused/applicant had not discharged this burden, given the extensive documentary and investigative material.6. Effect of Pending Cognizance and InvestigationThe Court acknowledged that cognizance of the prosecution complaint was pending, but held that this did not bar consideration of bail under the PML Act. The Court noted that the complaint had been filed and summons issued in the related EP Act case, and that the FIR was registered and under investigation. The Court observed that the ongoing investigation and the risk of interference justified denial of bail.Significant HoldingsThe Court held:'The offence of money-laundering has been regarded as an aggravated form of crime 'world over'. It is, therefore, a separate class of offence requiring effective and stringent measures to combat the menace of money laundering.''The Court while dealing with the application for grant of bail need not delve deep into the merits of the case and only a view of the Court based on available material on record is required. The Court will not weigh the evidence to find the guilt of the accused which is, of course, the work of Trial Court.''There are no reasonable grounds for believing that the accused/applicant is not guilty of the offences alleged. That being so, the rigors of Section 45 of the PML Act dissuade this court from admitting the accused/applicant to bail on merits.''The accused/applicant's medical condition is stable and does not warrant bail on medical grounds.''The accused/applicant being kingpin of the entire gamut of offences cannot be treated at par with the remaining accused persons.'Accordingly, the Court dismissed the applications for regular and interim bail, directing the jail authorities to continue providing medical treatment and to communicate the order to the accused/applicant.