PMLA bail and proceeds of crime analysis limits Section 45 rigour where transactions predate the alleged predicate offence.

In PMLA bail matters, the twin conditions in Section 45 operate as a mandatory but reasoned statutory restraint, not an absolute bar. The Court treated the embargo as inapplicable on the facts because the alleged laundering trail largely pre-dated the alleged predicate offence, with only a limited post-offence link. It further held that amounts remitted before the predicate offence date could not, by themselves, be treated as proceeds of crime for the prosecution, and that a co-accused's statement alone was not substantive evidence sufficient to justify continued custody. Regular bail was therefore granted subject to conditions.

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Issues: (i) Whether the rigour of the twin conditions under Section 45 of the Prevention of Money Laundering Act, 2002 was attracted on the facts of the case. (ii) Whether the materials showed reasonable grounds to deny regular bail in view of the alleged proceeds of crime and the alleged laundering activity.

Issue (i): Whether the rigour of the twin conditions under Section 45 of the Prevention of Money Laundering Act, 2002 was attracted on the facts of the case.

Analysis: The bail jurisdiction under the Prevention of Money Laundering Act, 2002 is controlled by Section 45, read with the overriding effect of Sections 65 and 71. The Court noted the settled position that the twin conditions are mandatory in ordinary cases, but they are not an absolute bar and must be applied reasonably. On the facts, the Court found that the alleged money-laundering trail largely related to amounts received before the alleged date of the predicate offence and that only a small amount could be linked to the period after that date. The Court therefore held that the statutory embargo was not attracted in the manner urged by the prosecution.

Conclusion: The twin conditions under Section 45 were held not to stand in the way of bail.

Issue (ii): Whether the materials showed reasonable grounds to deny regular bail in view of the alleged proceeds of crime and the alleged laundering activity.

Analysis: The Court examined the alleged credit entries, property purchases, and statements recorded under Section 50. It held that amounts remitted before the alleged date of the predicate offence could not be treated as proceeds of crime for the present prosecution. The Court also found that the statement of the co-accused was not substantive evidence sufficient, by itself, to establish laundering of the properties standing in benami names. In the result, the Court concluded that further custody was unnecessary after filing of the complaint and that the applicant had made out a case for release.

Conclusion: The materials were held insufficient to deny regular bail, and bail was granted.

Final Conclusion: The application succeeded, and the applicant was ordered to be released on regular bail subject to conditions designed to secure appearance and prevent interference with the prosecution.

Ratio Decidendi: For bail under the Prevention of Money Laundering Act, 2002, alleged tainted transactions occurring before the alleged predicate offence date cannot, without more, be treated as proceeds of crime for attracting the full rigour of Section 45, and a co-accused's statement alone is not substantive evidence to deny bail.

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