2025 (8) TMI 1300 - HC - Money Laundering

Bail under Section 439 CrPC denied in PMLA case; petitioner failed to meet Section 45 twin conditions

Pramod Kumar Singh Versus Union of India through its Directorate of Enforcement., The Director, Rajendra Institute of Medical Sciences, Ranchi.

The HC dismissed the petitioner's bail application under Section 439 CrPC in a PMLA prosecution, finding the petitioner failed to satisfy the statutory ... Money Laundering - schdeduled offences/predicate offences - large-scale conspiracy involving the criminal misappropriation of public funds under the National Rural Health Mission (NRHM) - petitioner has failed to present any material or credible ground that would dismantle the case of the prosecution at this prima facie stage - condition of Section 45 of PMLA not met - HELD THAT:- The objective of the PMLA is to prevent money laundering which has posed a serious threat not only to the financial systems of the country but also to its integrity and sovereignty. The offence of money laundering is a very serious offence which is committed by an individual with a deliberate desire and the motive to enhance his gains, disregarding the interest of the nation and the society as a whole, and such offence by no stretch of imagination can be regarded as an offence of trivial nature. The stringent provisions have been made in the Act to combat the menace of money laundering. The reason for giving explanation under Section 2(1)(u) is by way of clarification to the effect that whether as per the substantive provision of Section 2(1)(u), the property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country but by way of explanation the proceeds of crime has been given broader implication by including property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence - the conditions enumerated in Section 45 of PMLA will have to be complied with even in respect of an application for bail made under CrPC/BNSS, coupled with the provisions of Section 24 provides that unless the contrary is proved, the authority or the Court shall presume that proceeds of crime are involved in money- laundering and the burden to prove that the proceeds of crime are not involved, lies on the petitioner. It needs to refer herein that while dealing with bail applications under UAP Act 1967, the Hon'ble Apex Court recently in the case of Gurwinder Singh Vs. State of Punjab and Anr. [2024 (3) TMI 175 - SUPREME COURT] has observed that the conventional idea in bail jurisprudence vis-à-vis ordinary penal offences that the discretion of Courts must tilt in favour of the oft-quoted phrase - ‘bail is the rule, jail is the exception’ - unless circumstances justify otherwise - does not find any place while dealing with bail applications under UAP Act and the ‘exercise’ of the general power to grant bail under the UAP Act is severely restrictive in scope. The material collected during investigation including detailed bank analysis, audit reports, and voluntary statements recorded under Section 50 of the PMLA collectively indicates that the Petitioner/accused, in criminal conspiracy with others, knowingly indulged in the concealment, possession, acquisition and projection of proceeds of crime, thereby committing the offence of money laundering - It is evident from the prosecution complaint that during searches conducted under Section 17 of PMLA on 04.07.2024, cash amounting to 22.17 lakhs was seized from the premises of the Petitioner/accused, along with loose sheets indicating benami ownership structures, handwritten ledgers, diaries, cheque books, and bank statements. The conditions enumerated in Section 45 of P.M.L.A. will have to be complied with even in respect of an application for bail made under Section 439 Cr.P.C. That coupled with the provisions of Section 24 provides that unless the contrary is proved, the authority or the Court shall presume that proceeds of crime are involved in money laundering and the burden to prove that the proceeds of crime are not involved, lies on the petitioner - on the basis of the discussion made hereinabove the contention of the learned counsel for the petitioner that even if the entire ECIR will be taken into consideration, no offence will be said to be committed so as to attract the ingredients of Sections 3 & 4 of the P.M.L. Act, 2002, is totally misplaced in the light of accusation as mentioned in prosecution complaint. Admittedly, the petitioner has been in judicial custody since 19.02.2025 but delay, under the aforesaid circumstances, does not entitle the petitioner to bail. The Hon'ble Supreme Court in Tarun Kumar v. Directorate of Enforcement [2023 (11) TMI 904 - SUPREME COURT], has authoritatively held that while the period of custody may be a relevant factor, it cannot by itself override the gravity of the offence, the seriousness of allegations or the statutory twin conditions under Section 45 of the Act 2002 - Similarly, in Satyendar Kumar Jain v. Enforcement Directorate, [2024 (3) TMI 862 - SUPREME COURT], the Hon’ble Apex Court refused bail despite protracted proceedings, noting that the complexity inherent in economic offences. Having regard to the totality of the facts and circumstances of the case, this Court is of the opinion that the petitioner has miserably failed to satisfy this Court that there are reasonable grounds for believing that he is not guilty of the alleged offences. On the contrary, there is sufficient material collected by the respondent ED to show that he is prima facie guilty of the alleged offences - The material on record, prima facie, indicates that the petitioner knowingly and intentionally participated in the processes and activities connected with the concealment, possession, acquisition, and use of proceeds of crime, thereby satisfying all ingredients of the offence of money laundering under Section 3 of the PMLA. This Court is of the view that the instant application is fit to be dismissed and as such, stands dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether the petitioner is entitled to grant of regular bail in proceedings under the Prevention of Money-Laundering Act, 2002 (PMLA), having regard to the mandatory twin conditions in Section 45(1)(i)-(ii). 2. Whether the material in the ECIR/prosecution complaint discloses prima facie involvement of the petitioner in 'processes or activities' connected with proceeds of crime within the meaning of Section 3 and Section 2(1)(u) of PMLA. 3. Whether the pendency or non-completion of proceedings in the predicate offences (scheduled offences) affects the maintainability or merits of a money-laundering prosecution and the entitlement to bail under PMLA. 4. Whether statements recorded under Section 50 of PMLA and the other investigation material (bank analyses, audit reports, seized documents) can be relied upon at the bail stage to satisfy the twin conditions of Section 45. 5. Whether the period of incarceration or delay in trial (approx. six months) constitutes an independent ground for bail in a PMLA prosecution alleging large-scale embezzlement of public funds. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Entitlement to bail under Section 45 of PMLA Legal framework: Section 45(1) of PMLA imposes a statutory bar on release unless (i) Public Prosecutor permitted to oppose; and (ii) court is satisfied on reasonable grounds that accused is not guilty and is not likely to commit an offence while on bail. Sub-section (2) clarifies non-bailable, cognizable nature. Section 71 gives PMLA overriding effect over other laws; Section 65 makes CrPC applicable only insofar as not inconsistent. Precedent treatment: The judgment follows and applies the law laid down by the Supreme Court in Vijay Madanlal Choudhary and subsequent decisions (e.g., Tarun Kumar) that the twin conditions are mandatory and must be satisfied even when bail is sought under general CrPC provisions; the rigours of Section 45 apply irrespective of the procedural form of the plea. The Court also relies on authorities treating economic offences as grave for bail considerations (e.g., Y.S. Jagan Mohan Reddy; Nimmagadda Prasad) and recent pronouncements on restrictive bail jurisprudence for special statutes. Interpretation and reasoning: The Court emphasizes the mandatory character of Section 45 and holds that the twin conditions require satisfaction on reasonable grounds at the bail stage. The statutory presumption under Section 24 (that proceeds of crime are involved unless contrary proved) shifts the burden on the accused. Given the prosecution material, the Court finds that the petitioner has not discharged any burden to create reasonable grounds to believe he is not guilty or that he will not reoffend. Ratio vs. Obiter: Ratio - Section 45's twin conditions are mandatory and apply to bail applications in PMLA prosecutions; the accused bears burden in face of statutory presumptions. Obiter - comparative references to UAPA and other special statutes illustrating restrictive bail policy. Conclusion: The Court concludes the twin conditions of Section 45 are not met; bail application is to be dismissed. Issue 2 - Prima facie involvement in money-laundering (Sections 2(1)(u) and 3) Legal framework: 'Proceeds of crime' defined in Section 2(1)(u) (as broadened by explanation), and the offence under Section 3 covers concealment, possession, acquisition, use, projecting/claiming as untainted property. Section 4 prescribes punishment. Precedent treatment: Reliance on Vijay Madanlal Choudhary for broad reach of 'proceeds of crime' and the independent and standalone nature of the offence under Section 3 vis-à-vis predicate offences. Interpretation and reasoning: The Court examines ECIR/prosecution complaint paragraphs detailing bank transfers, audit findings, diversion of NRHM funds, alleged layering through associates and family accounts, acquisition of assets, search and seizure results and statements recorded under Section 50. The Court treats the combination of (i) bank analysis showing large transfers and misappropriation; (ii) special audit report; (iii) seizure of cash, documents and assets; and (iv) witness statements describing modus operandi, as material that prima facie establishes involvement in processes enumerated in Section 3 (concealment, possession, acquisition, use, projection as untainted property). Ratio vs. Obiter: Ratio - Where the prosecution produces cogent documentary and testimonial material (bank analyses, audit, S.50 statements, seizures), a prima facie case under Section 3 can be made at bail stage; the offence is independent of predicate FIRs. Obiter - detailed factual inferences about specific transactions and asset purchases. Conclusion: The prosecution material, on a prima facie view, indicates involvement of the accused in money-laundering processes; petitioner failed to negate statutory presumption under Section 24. Issue 3 - Effect of pendency of predicate FIRs/charge-sheets on money-laundering prosecution and bail Legal framework: PMLA links to scheduled offences but Section 3 is a distinct offence; explanation to Section 2(1)(u) and judicial precedents clarify independence. Precedent treatment: Cites Vijay Madanlal Choudhary and subsequent authorities holding that money-laundering prosecution and satisfaction of charges under Section 3 do not depend on the completion of proceedings in the predicate case; money-laundering is autonomous for prosecution and bail considerations. Interpretation and reasoning: The Court rejects the contention that non-filing of charge-sheets in predicate offences prevents PMLA prosecution or entitles accused to bail. The statutory scheme and judicial decisions support independent application of Section 3 and applicability of Section 24 presumption at bail stage. Ratio vs. Obiter: Ratio - Pendency of predicate proceedings does not entitle the accused to bail in a PMLA prosecution if the twin conditions of Section 45 are not met. Conclusion: The pendency of predicate proceedings does not assist the petitioner; argument is legally unsustainable. Issue 4 - Reliance on investigative material (Section 50 statements, banks, audit, seizures) at bail stage Legal framework: Section 50 permits summons and recording of statements; admissibility and probative value of such statements have been upheld in precedent (Rohit Tandon). Precedent treatment: Court follows Rohit Tandon on admissibility and Vijay Madanlal Choudhary on scope of material required to meet Section 45 twin conditions. Interpretation and reasoning: The Court treats statements recorded under Section 50, bank analyses, special audit reports and seizure material as cogent evidence that can form the basis for a prima facie conclusion at bail stage. These items collectively demonstrate modus operandi, money trail and asset acquisition inconsistent with known lawful income. Ratio vs. Obiter: Ratio - Investigative material including S.50 statements and audit/bank analyses can be relied upon to assess the twin conditions under Section 45 at bail stage. Conclusion: The investigative material furnishes reasonable grounds that the petitioner is prima facie guilty; reliance on that material to deny bail is justified. Issue 5 - Custodial period/delay as ground for bail Legal framework & precedent: Supreme Court authorities recognise personal liberty but also hold that delay or custody, by itself, cannot override gravity of offence and statutory bail restraints in special laws (Tarun Kumar; decisions on UAPA/UAP Act jurisprudence). Interpretation and reasoning: The Court notes petitioner's custody of around six months but reiterates that for grave economic offences with complex investigations and strict statutory regime, delay alone is not a sufficient ground for bail. Given the prima facie material and potential to influence witnesses/obstruct investigation, incarceration period does not tilt balance in favour of bail. Ratio vs. Obiter: Ratio - Period of custody, without more, does not mandate bail where statutory conditions for PMLA bail are unmet and the offence is grave. Conclusion: Delay/custody does not justify grant of bail in the present circumstances. Overall conclusion On the totality of facts, statutory scheme, and precedents, the Court finds the twin conditions of Section 45(1) PMLA unsatisfied, that prima facie material establishes involvement in money-laundering processes, and that neither pendency of predicate proceedings nor custody period warrants bail; the bail application is dismissed. The findings recorded are confined to bail consideration and without prejudice to trial merits.