2025 (9) TMI 874 - HC - Money Laundering

Regular bail denied under Section 45 PMLA read with Sections 24, 65 and 71 for alleged money-laundering

Shri Rony Mondal Versus Directorate of Enforcement, represented through its Assistant Director, Ranchi Zonal.

HC dismissed the regular bail application under PMLA. The court found prima facie material showing fraudulent acquisition of Indian documents, ... Seeking grant of regular bail - Money Laundering - proceeds of crime - scheduled/predicate offence - twin conditions enumerated in Section 45 of PMLA complied with or not - illegal activities pertaining to facilitating illegal infiltration of Bangladeshi nationals in India and use, acquisition, and possession of proceeds of crime generated therefrom - HELD THAT:- The Hon’ble Apex Court in the case of Gautam Kundu vs. Directorate of Enforcement (Prevention of Money-Laundering Act), Government of India through Manoj Kumar, Assistant Director, Eastern Region, [2015 (12) TMI 1133 - SUPREME COURT] has been pleased to hold at paragraph - 30 that the conditions specified under Section 45 of PMLA are mandatory and need to be complied with, which is further strengthened by the provisions of Section 65 and also Section 71 of PMLA. Section 65 requires that the provisions of Cr.P.C shall apply insofar as they are not inconsistent with the provisions of this Act and Section 71 provides that the provisions of PMLA shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. PMLA has an overriding effect and the provisions of CrPC would apply only if they are not inconsistent with the provisions of this Act. Therefore, the conditions enumerated in Section 45 of PMLA will have to be complied with even in respect of an application for bail made under Section 439 CrPC. 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 accused. Hon'ble Apex Court recently in the case of Gurwinder Singh vs. State of Punjab and Anr. [2024 (3) TMI 175 - SUPREME COURT], in the matter of UAP Act 1967 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. This Court is of the view that various paragraphs of prosecution complaint upon which the reliance has been placed on behalf of both the parties, needs to be referred herein so as to come to the conclusion as to whether the parameter as fixed under Section 45(ii) of the Act 2002, is being fulfilled in order to reach to the conclusion that it is a fit case where regular bail is to be granted or not. From the record it is established that the said Rony Mondal is a Bangladeshi national, who acquired Indian citizenship fraudulently on the basis of false documentation and indulged in illegal activities pertaining to illegally acquiring Indian citizenship as well as aiding several other Bangladeshi in illegal infiltration in India. Further in his statement dated 20.11.2024, the petitioner had confirmed that the documents-PAN cards, voter cards, Aadhaar cards, and ration cards-recovered during the search on 12.11.2024 belonged to his family members. He acknowledged that, while opening bank accounts in India, he declared himself an Indian citizen, using his PAN card as proof of identity. Furthermore, he stated that he had an Indian passport, while his family members held Bangladeshi passports - Further from perusal of the material available on record it is revealed that the total cash deposits in the accounts held and used by the present petitioner is Rs. 7,21,19,030/- in the bank accounts identified as on the day of investigation. Hon'ble Apex Court in Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors. [2022 (7) TMI 1316 - SUPREME COURT (LB)] that the condition precedent for the existence of proceeds of crime is the existence of a scheduled offence. At paragraph-15 the finding has been given therein that on plain reading of Section 3 of the Act, 2002, an offence under Section 3 can be committed after a scheduled offence is committed. By giving an example, it has been clarified that if a person who is unconnected with the scheduled offence, knowingly assists the concealment of the proceeds of crime or knowingly assists the use of proceeds of crime, in that case, he can be held guilty of committing an offence under Section 3 of the PMLA. Therefore, it is not necessary that a person against whom the offence under Section 3 of the PMLA is alleged must have been shown as the accused in the scheduled offence. The power of the Court to grant bail is further conditioned upon the satisfaction of the twin conditions prescribed under Section 45(1) (i) and (ii) PMLA. While undertaking this exercise, the Court is required to take a prima facie view on the basis of materials collected during investigation. The expression used in Section 45 of PMLA are “reasonable grounds for believing” which means that the Court has to find, from a prima facie view of the materials collected during investigation that there are reasonable grounds to believe that the accused has not committed the offence and that there is no likelihood of him committing an offence while on bail - there is sufficient material to prima-facie show that the petitioner has committed the offence of money laundering as defined u/s 3 of PMLA, 2002 and is liable to be punished u/s 4 of PMLA, 2002. Thus, taking into consideration the grave nature of the allegations, the sophisticated modus operandi and the strict statutory framework governing bail under the PMLA particularly under Section 45 of the Act 2002, no ground exists for the petitioner to claim the benefit of bail on merits and the serious allegations of laundering of proceeds of crime continue to justify the petitioner's custody under the strict rigours of Section 45 of the Act 2002. This Court is of the view that the applicant has failed to make out a case for exercise of power to grant bail and considering the facts and parameters, necessary to be considered for adjudication of bail, without commenting on the merits of the case, this Court does not find any exceptional ground to exercise its discretionary jurisdiction to grant bail. Therefore, this Court is of the view that the bail application is liable to be rejected. The instant application stands dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether the petitioner is entitled to regular bail under the Prevention of Money-Laundering Act (PMLA) having regard to the mandatory twin conditions in Section 45(1) read with Section 45(2) of the Act. 2. Whether the presumption under Section 24 of PMLA (that proceeds of crime are involved in money-laundering) is attracted on the material collected during investigation and, if so, whether the petitioner has rebutted that presumption. 3. Whether the proceeds/assets alleged to be in petitioner's possession are 'proceeds of crime' as defined in Section 2(1)(u) of PMLA and therefore can sustain a prima facie charge under Section 3 of PMLA. 4. Whether non-inclusion of the petitioner's name in the predicate FIR precludes prosecution under PMLA or entitlement to bail under PMLA. 5. Whether the nature of the allegations, evidence seized and the risk of tampering/abscondence justify continued custodial detention pending trial. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Bail under Section 45(1)/(2) PMLA Legal framework: Section 45(1) PMLA (non-obstante provision) makes offences under PMLA non-bailable unless (i) Public Prosecutor had opportunity to oppose and (ii) the court is satisfied on reasonable grounds that the accused is not guilty and not likely to commit an offence while on bail; subsection (2) curtails bail further. Section 65 and Section 71 give PMLA overriding effect over Cr.P.C. Precedent treatment: Supreme Court decisions interpret Section 45 as imposing mandatory twin conditions and requiring a prima facie satisfaction from available materials; conditions must be complied with even where bail is sought under general criminal provisions. Interpretation and reasoning: The Court applied the statutory test by taking a prima facie view of materials collected during investigation (CDR analysis, bank account deposits, recovered documents, search recoveries, MEA show-cause). The phrase 'reasonable grounds for believing' was read to require that the court, on available material, conclude there are not reasonable grounds to believe the accused is not guilty and/or is likely to commit an offence on bail unless satisfied otherwise. Ratio vs. Obiter: Ratio - Section 45's twin conditions are mandatory and require prima facie satisfaction from investigative material before bail may be granted. Observations on analogies with other stringent non-bailable statutes are explanatory. Conclusion: On the prima facie material, the Court was not satisfied that the petitioner met the twin conditions; therefore bail cannot be granted under Section 45. Issue 2 - Applicability of Section 24 presumption and burden of rebuttal Legal framework: Section 24 permits the court/authority to presume, unless contrary proved, that proceeds of crime are involved in money-laundering where a person is charged under Section 3; evidential burden to rebut shifts to accused under Section 106 Evidence Act principles. Precedent treatment: Apex Court authorities hold that once foundational facts (existence of scheduled offence and involvement in processes connected with proceeds) are established prima facie, Section 24 presumption arises and accused must produce evidence within personal knowledge to rebut. Interpretation and reasoning: The Court found foundational facts established prima facie by (i) registration of a predicate FIR alleging scheduled offences, (ii) CDR links showing frequent contact with Bangladeshi numbers, (iii) large unexplained bank deposits, and (iv) incriminating documents and recoveries. Consequently, the statutory presumption under Section 24 operated and the burden lay on the petitioner to rebut; no adequate rebuttal was furnished. Ratio vs. Obiter: Ratio - Where foundational facts are prima facie established, Section 24 creates a rebuttable presumption that supports continued detention unless accused discharges onus. Observations on manner of rebuttal (Section 313/leading evidence) are explanatory. Conclusion: Section 24 presumption applied on the available material and was not successfully rebutted by the petitioner; this weighed against bail. Issue 3 - Whether seized assets qualify as 'proceeds of crime' under Section 2(1)(u) Legal framework: Section 2(1)(u) defines 'proceeds of crime' as any property derived/obtained, directly or indirectly, by a person as a result of criminal activity relating to a scheduled offence; Explanation expands scope to property directly or indirectly derived as result of criminal activity relatable to scheduled offence. Precedent treatment: Authorities recognize that proceeds may be traced to scheduled offences and that the PMLA targets processes/activities connected with such proceeds; the Court must be satisfied prima facie of the link at bail stage without weighing evidence minutely. Interpretation and reasoning: The Court examined investigative material: cash recoveries (including fresh Rs.500 notes), gold jewellery, multiple bank account deposits totalling several crores, forged/fake identity documents, MEA show-cause confirming foreign nationality, incriminating digital evidence, and admission statements. The Court held these materials furnish prima facie foundation to treat the seized assets and deposits as proceeds of crime for the purposes of invoking Section 3. Ratio vs. Obiter: Ratio - On prima facie view, where incriminating recoveries, disproportionate deposits and documentary/digital materials exist, they can constitute sufficient foundation to treat assets as proceeds of crime for pre-trial purposes under PMLA. Remarks about detailed proof at trial are obiter as qualification. Conclusion: The Court concluded prima facie that the alleged assets and deposits are proceeds of crime in relation to scheduled offences and thus sustain a money-laundering charge. Issue 4 - Effect of non-inclusion in predicate FIR Legal framework: PMLA treats money-laundering as an independent offence; Section 3 can apply to persons not named in predicate FIR if they are involved in processes connected with proceeds of crime derived from a scheduled offence. Precedent treatment: Apex Court rulings confirm that a person need not be an accused in the scheduled offence to be proceeded against under PMLA, provided proceeds of crime and involvement in laundering processes are established. Interpretation and reasoning: The Court relied on settled law that non-inclusion in the FIR does not absolve a person from PMLA liability. Given the investigative material linking the petitioner to the syndicate, documents and financial trail, absence of name in the predicate FIR was not determinative against continued prosecution or bail denial. Ratio vs. Obiter: Ratio - Non-inclusion in predicate FIR is not a bar to prosecution under PMLA nor to refusing bail where prima facie involvement in laundering is established. Conclusion: The petitioner's omission from the predicate FIR did not preclude invocation of PMLA or entitlement to bail relief. Issue 5 - Custodial risk, tampering and societal impact Legal framework: Courts consider risk of abscondence, tampering with evidence, influencing witnesses and gravity of alleged offence in bail decisions; under PMLA statutory scheme, these considerations are heightened. Precedent treatment: Authorities permit denial of bail in serious, organised, cross-border offences where release could hamper investigation or public interest. Interpretation and reasoning: The Court noted cross-border implications, alleged syndicate operation across States, potential for influencing witnesses, and material indicating deliberate concealment (forged documents, layered bank transactions). These factors, combined with statutory presumption and magnitude of unexplained deposits, justified denial of bail to prevent prejudice to investigation and trial. Ratio vs. Obiter: Ratio - Grave allegations of organized cross-border human trafficking, large unexplained financial transactions, and documentary/digital recoveries constitute material risk factors supporting continued custody under PMLA. Observations on delay in trial and custody length are explanatory. Conclusion: Custodial detention was justified on grounds of risk to investigation, gravity of allegations and statutory framework; bail was refused. OVERALL CONCLUSION On a prima facie assessment of investigative materials (seizures, bank deposits, forged documents, CDR/digital links, MEA show-cause and confessional statements), the foundational facts for invoking Section 24 presumption and for attracting Section 3 PMLA were satisfied. The mandatory twin conditions in Section 45(1) were not met on the material available and the petitioner failed to rebut the presumption. Considering the statutory scheme, precedent and the risk of tampering/abscondence, the Court declined to exercise discretion to grant bail; application dismissed. (Findings limited to bail stage and without prejudice to trial merits.)