2025 (8) TMI 1073 - HC - Money Laundering

Regular bail refused in alleged Rs.26,000 crore money-laundering and fraud; statutory twin conditions under s.45 PMLA not met.

Arvind Dham Versus Directorate Of Enforcement

HC dismissed the application for regular bail in a large-scale money-laundering and fraud matter involving alleged diversion and laundering of over ... Seeking grant of Regular Bail - large-scale allegations of financial mismanagement, fraud, and money laundering - alleged diversion and laundering of over Rs. 26,000 crores - requirement to satisfy the mandatory twin conditions under Section 45 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- The Supreme Court has consistently held that economic offences constitute a distinct class and must be viewed seriously. In State of Gujarat v. Mohanlal Jitamalji Porwal [1987 (3) TMI 111 - SUPREME COURT], it was observed that economic offences have far-reaching consequences on the community and must be visited with a different approach in matters of bail. Similarly, in Nimmagadda Prasad v. CBI [2013 (5) TMI 920 - SUPREME COURT], the Court held that these offences involve deep-rooted conspiracies and huge loss to the public exchequer, thereby warranting stringent treatment. The present allegations fit squarely within these judicially recognised principles. When public funds are siphoned off on such a scale, the damage is not merely financial but erodes public confidence in banking institutions. This consideration weighs heavily against the grant of bail. The applicant invokes the first proviso to Section 45 of the PMLA on the ground of being a “sick and infirm” person. However, being “sick and infirm” is not an automatic passport to bail in serious economic offences. A perusal of order dated 01.04.2025 reveals that discharge summaries from both hospitals indicated that petitioner was suffering from non-critical CAD, which was a stable condition and did not require any specialised treatment available at jail referral hospitals or AIIMS; the prescribed course of treatment had already been advised by the attending doctors, and therefore the petitioner’s health could be adequately managed in custody, necessitating no special arrangements, leading to the rejection of the request for extension of interim bail - The applicant’s medical condition, though concerning, can be managed in custody, where prison authorities are obligated to provide adequate treatment, including referral to specialised hospitals if required. Illness warrants bail only when custodial treatment is clearly inadequate, which is not established in this case. Therefore, the medical plea cannot override the gravity of the offence, societal interest, and the statutory rigour governing such matters. Law is well settled that detailed examination of evidence and elaborate discussion on merits of the case need not be undertaken for grant of bail. The Court has to indicate in the bail order, reasons for prima facie conclusion why bail was being granted, particularly, when the accused is charged of having committed a serious offence. The Court is conscious of its duty to strike a balance between individual liberty and the larger societal interest. In economic offences of this nature, the latter assumes enhanced significance. Granting bail at this juncture would risk compromising both the trial and public confidence in the justice system. The seriousness of the charge, the weight of the evidence, and the statutory scheme all point in one direction. The applicant has not shown circumstances exceptional enough to justify departure from that path. Continued custody is thus warranted. This Court finds that the allegations against the applicant pertain to an economic offence of exceptional magnitude, involving complex, deliberate, and sustained criminal conduct causing grave loss to public sector banks. Such offences erode the fabric of economic governance and public trust and cannot be taken lightly. While the applicant may be ailing, adequate medical care can be provided in custody under judicial supervision. The trial is at a nascent stage, and the statutory conditions under Section 45 of the PMLA are not satisfied. On a cumulative assessment of all factors, this Court finds no ground to grant bail. The application is accordingly dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether regular bail should be granted to an accused under Section 45 of the PMLA when the accused is alleged to be the promoter and controlling mind of a large-scale alleged money-laundering scheme involving diversion of public funds running into several thousands of crores. 2. Whether the first proviso to Section 45 of the PMLA (sick and infirm exception) applies to negate the mandatory twin conditions and permit bail where the accused is medically unwell. 3. Whether prolonged pre-trial custody and delay in commencement of trial/cognizance in predicate offences justifies grant of bail in a complex economic offence. 4. Whether the statutory 'triple test' (as applied under Section 45(2) PMLA read with Section 439 CrPC) is satisfied so as to warrant bail, having regard to allegations of witness tampering, dissipation of assets and obstruction of investigation. 5. The evidentiary and probative role of investigative material at the bail stage, including statements recorded under the PMLA and forensic/transactional audits, and the effect of the statutory presumption in Section 24 PMLA on bail adjudication. 6. Whether medical exigencies identified by the accused amount to exceptional circumstances justifying bail where custodial medical management is claimed to be adequate. 7. The proper approach in balancing individual liberty (including rights under Article 21) against societal interest and the gravity/complexity of economic offences in bail adjudication. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Bail under Section 45 PMLA in large-scale alleged money-laundering involving promoters/controlling minds Legal framework: Section 45 PMLA prescribes mandatory twin conditions for grant of bail in PMLA offences; courts must assess guilt on broad probabilities while applying these conditions and consider the nature and gravity of economic offences. Precedent treatment: The Court relied on principles from higher court jurisprudence treating economic offences as a distinct class requiring stringent consideration at bail stage and endorsing assessment on broad probabilities rather than detailed trial-level findings. Interpretation and reasoning: The Court examined the scale, systemic character, and alleged role of the accused as 'promoter and controlling mind' orchestrating diversion of vast bank loans via layered entities and falsified accounts. The nature of allegations (deep-rooted conspiracy, diversion exceeding tens of thousands of crores, complex layering through 500+ entities, fabricated financials) weighed heavily against bail. The Court held that such allegations, supported by transactional audits, forensic reports and seized material, satisfy prima facie gravity to deny bail under Section 45. Ratio vs. Obiter: Ratio - In matters of pervasive and high-magnitude economic offences, the statutory twin conditions under Section 45 must be stringently applied and, where not satisfied, bail must be refused. Obiter - General observations on the societal impact of economic offences and need for robust law enforcement response. Conclusion: Bail refused on account of magnitude, complexity and cogent materials indicating active orchestration by the accused; Section 45 conditions not met. Issue 2 - Applicability of the 'sick and infirm' proviso to Section 45 Legal framework: First proviso to Section 45 carves out 'sick and infirm' persons from twin-condition rigour; such status may alter bail analysis but is not absolute. Precedent treatment: The Court acknowledged precedent recognizing the proviso but emphasized it is not an automatic passport to bail in serious economic offences. Interpretation and reasoning: The Court scrutinised contemporaneous medical records, institutional medical board findings and custodial treatment capability. The AIIMS medical board classified the cardiovascular condition as non-obstructive requiring elective day-care angiography; hospital discharge summaries indicated stable, non-critical status manageable in custody. The Court held that 'sick and infirm' exception requires demonstration that custodial medical care is inadequate or that continued custody would be life-threatening - which was not shown. Ratio vs. Obiter: Ratio - Medical infirmity does not automatically satisfy proviso where custodial medical facilities can adequately manage the condition; specific evidence that custody cannot cater to the medical need is required. Obiter - Observations on prior interim bail grants and their limited weight without fresh medical exigency. Conclusion: The sick and infirm proviso not attracted on material; medical plea insufficient to displace statutory regime and deny continued custody. Issue 3 - Delay in trial/cognizance and right to speedy trial as ground for bail Legal framework: Right to speedy trial and protection from unduly prolonged pre-trial incarceration are constitutional concerns; courts have granted bail where delay is attributable to prosecutorial inaction and trial progress is unlikely. Precedent treatment: The Court considered precedents where prolonged custody led to bail but distinguished those on facts, particularly magnitude, complexity and stage of investigation/trial. Interpretation and reasoning: The Court found that delay here is largely attributable to the complexity and scale of transactions and the necessity for protracted investigation and trial; only about one year had elapsed in custody. Given complexity (transactional layering, multiple entities, voluminous material), delay did not justify bail. The Court emphasized that delay alone does not confer entitlement where the nature of offences makes trial protraction inevitable and where release may prejudice the process. Ratio vs. Obiter: Ratio - Mere passage of time is insufficient to grant bail in large, complex economic offences; the court must assess whether delay is undue and prejudicial in the specific factual matrix. Obiter - Comparative references to other bail decisions not controlling where facts differ materially. Conclusion: Delay did not warrant bail in the factual matrix; right to speedy trial outweighed by gravity and complexity of offences. Issue 4 - Triple test (risk of tampering/obstruction/dissipation) and specific allegations of misconduct Legal framework: Under the relevant bail jurisprudence, courts apply the 'triple test' (risk of absconding, tampering with evidence/witnesses, or threat to society) and evaluate concrete instances of obstruction or dissipation when considering bail. Precedent treatment: The Court treated investigative findings of post-search undervalued property sales, instructions to witnesses not to cooperate, and alleged alienations as material indicating real risk; referenced authorities warning of witness influence by powerful economic offenders. Interpretation and reasoning: The ED produced specific instances (sale of land at steep undervaluation, alleged routing of sale proceeds through shell companies, instructions to dummy directors/witnesses) amounting to tangible risk of evidence tampering and dissipation. The Court held such specific investigative findings militated against bail, and that potential supervisory conditions would be inadequate to allay risks posed by an accused with alleged continuing control and influence over multiple entities and persons. Ratio vs. Obiter: Ratio - Where concrete investigative material demonstrates attempts to obstruct investigation or dissipate proceeds, the risk of tampering furnishes substantive ground to deny bail. Obiter - Remarks on possible conditions to mitigate speculative risks. Conclusion: Triple test not satisfied in favour of accused; concrete allegations of obstruction and dissipation warrant continued custody. Issue 5 - Evidentiary value at bail stage: statements under PMLA, forensic audits and statutory presumption (Section 24) Legal framework: At bail stage courts consider 'broad probabilities' from available material; Section 24 PMLA raises an inference regarding proceeds of crime that the accused may have to rebut. Precedent treatment: The Court applied established approach that it need not resolve credibility finally but must consider documentary and testimonial material that prima facie implicates the accused; statutory presumption influences burden shifting. Interpretation and reasoning: Transaction audits, forensic reports, seized documents, and recorded statements under the PMLA collectively constituted substantive material that, at the prima facie level, implicated the accused in large-scale laundering and diversion. The shift under Section 24 to require rebuttal was noted; in the absence of adequate rebuttal, prima facie satisfaction that accused's guilt is probable was held to be lacking in favour of bail. Ratio vs. Obiter: Ratio - For bail purposes in PMLA cases, cogent documentary and statement evidence, combined with statutory presumptions, can constitute sufficient basis to deny bail on broad probability. Obiter - Comments on admissibility issues reserved for trial. Conclusion: Materials on record, coupled with statutory presumption, weigh against bail; accused failed to rebut prima facie inference. Issue 6 - Adequacy of custodial medical care versus exceptional medical exigency Legal framework: Medical bail requires demonstration that custodial medical facilities are inadequate or that the accused's condition poses immediate risk if kept in custody. Precedent treatment: The Court adhered to the proposition that custodial management suffices unless exceptional medical need is established by contemporaneous expert opinion necessitating non-custodial care. Interpretation and reasoning: Expert medical reports indicated elective day-care intervention and stable non-critical coronary disease manageable in custody with appropriate referrals; no new medical exigency post earlier interim bail orders was produced. The Court held that custodial medical arrangements were adequate and that medical grounds did not justify bail absent evidence of custodial inability to provide required care. Ratio vs. Obiter: Ratio - Absence of demonstrable custodial inadequacy or imminent life-threatening condition negates medical ground for bail. Obiter - Observations on prior emergency admissions without current supporting evidence. Conclusion: Medical plea insufficient to attract proviso or exceptional relief; custody appropriate with medical supervision. Issue 7 - Balancing individual liberty against societal interest in large-scale economic offences Legal framework: Constitutional right to liberty must be balanced with public interest; serious economic offences causing massive loss to public exchequer warrant stringent approach in bail matters. Precedent treatment: The Court relied on established principles that economic offences are a class apart and that societal interest and integrity of financial institutions weigh heavily in bail decision-making. Interpretation and reasoning: Given alleged massive diversion/laundering, potential erosion of public confidence in banking, and the accused's central position in alleged scheme, the Court concluded societal interest and integrity of process outweigh presumption in favour of bail. The Court reiterated that cooperation or compliance with interim conditions does not neutralise the gravity of allegations. Ratio vs. Obiter: Ratio - In exceptional economic offences of massive scale, societal interest can outweigh individual liberty at bail stage absent compelling countervailing facts. Obiter - Emphasis on judicial duty to balance rights and societal interests case by case. Conclusion: Balance favours continued custody; bail denied. OVERALL CONCLUSION On cumulative assessment of statutory scheme (Section 45 PMLA and Section 24 presumption), cogent investigative material (forensic/transactional audits, seized documents, recorded statements), concrete allegations of obstruction/dissipation, absence of demonstrable custodial medical inadequacy, and the exceptional gravity and complexity of the alleged economic offences, the Court concluded that the mandatory conditions for grant of bail are not satisfied and refused regular bail.