2025 (10) TMI 70 - HC - Money Laundering

Reasonable grounds under s.45 PMLA to proceed for alleged illegal sand-mining money-laundering, but bail granted for delay per s.480(3) B.N.S.S.

Punj Kumar Singh Versus The Union of India through the Assistant Director, Enforcement Directorate Patna.

HC held there were reasonable grounds under s.45 PMLA to proceed for alleged money-laundering arising from illegal sand mining, but granted bail to the ... Money Laundering - illegal mining and selling sand without issuance of e-transit challans and causing revenue loss to the government - scheduled offences - proceeds of crime - reasonable grounds for believing as per section 45 of PMLA - HELD THAT:- This Court is only required to place its view based on probability on the basis of reasonable materials collected during the investigation. The words used in Section 45 of the PMLA are “reasonable grounds for believing” which means that the Court has to see only if there is a genuine case against the accused and the prosecution is not required to prove the charges beyond reasonable doubt, but simultaneously as discussed aforesaid certainly the right qua speedy trial is available to the petitioner having an overriding effect to rigors of statutory provisions as available under Section 45 of PMLA Act. As in present case altogether 149 witnesses, 221 exhibits running into 13,283 pages to be examined during the trial, which is yet to start giving a clear cut projection that trial is not likely to conclude in near future, coupled with the fact as petitioner remains in custody since 19.09.2024 i.e., about one year against maximum sentence of 7 years, accordingly, above named petitioner, is directed to be released on bail in connection with Special Trial (PMLA) Case No. 06 of 2024 arising out of ECIR No. PTZO/14/2023 on furnishing bail bond of Rs. 10,000/- with two sureties of the like amount each to the satisfaction of learned Sessions Judge cum Special Judge (PMLA), Patna/concerned court, subject to the conditions as mentioned under Section 480(3) of the B.N.S.S. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether the petitioner is entitled to bail under the Prevention of Money Laundering Act (PMLA) when accused of an offence under Section 3 read with Section 4, given the alleged predicate/scheduled offences and claimed proceeds of crime. 2. Whether the alleged revenue loss and amounts calculated in ECIRs/addenda constitute 'proceeds of crime' within the meaning of Section 2(1)(u) of the PMLA Act. 3. Whether weak or non-existent predicate offences, or the stage and likely duration of trial, justify relaxation of the rigours of Section 45 of the PMLA (the twin-conditions test) for grant of bail in harmony with Article 21 rights. 4. Whether statements recorded during custody or co-accused statements constitute substantive evidence against the petitioner for the purposes of bail consideration. 5. Whether parity with co-accused granted bail and other facts (completion of investigation/prosecution complaint filed, conduct of accused, custody duration) require grant of regular bail subject to conditions. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Entitlement to bail under PMLA having regard to offences under Section 3/4 Legal framework: PMLA creates an independent offence under Section 3 (punishable under Section 4) which is conceptually linked to a scheduled offence and the existence of proceeds of crime. Section 45 prescribes twin conditions for bail - the Court must be satisfied that there are reasonable grounds for believing that the accused is not guilty and that he is not likely to commit any offence while on bail. Precedent treatment: The Court considered jurisprudence recognising that offences under PMLA are independent in nature and that Section 45's conditions are mandatory but may be harmonized with constitutional protections, including Article 21, when appropriate. Interpretation and reasoning: The Court observed that while the prosecution need not prove guilt beyond reasonable doubt at bail stage, the Court must form a prima facie view based on reasonable materials collected during investigation. The Court also noted that a person charged under PMLA need not necessarily be accused in the predicate offence; however, existence of a subsisting predicate offence is foundational to characterising proceeds of crime. Ratio vs. Obiter: Ratio - Court affirms that a prima facie assessment under Section 45 requires reasonable materials; the independent nature of PMLA offence does not dispense with the need for credible linkage to proceeds of crime. Obiter - observations on interplay with constitutional guarantees and balancing of Section 45 rigours. Conclusion: On the facts (volume of evidence, stage of trial, custody period, and material deficiencies in predicate linkage discussed below), the Court found sufficient probability to relax the rigours of Section 45 and grant bail subject to conditions. Issue 2 - Whether the ECIR/addenda amounts constitute 'proceeds of crime' under Section 2(1)(u) Legal framework: 'Proceeds of crime' must be proceeds derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence; admissible and legally relevant material is required to quantify such proceeds. Precedent treatment: The Court relied on established principle that proceeds of crime must be founded on a subsisting predicate offence and admissible evidence; weak or purely speculative calculations cannot sustain characterization as proceeds of crime. Interpretation and reasoning: The Court scrutinised the basis of the contested figures (including an alleged revenue loss of Rs. 77.63 crore and a later figure of approx. Rs. 83.52 crore) and noted reliance on loose sheets recovered by the Income Tax Department and addenda to the ECIR. The Court pointed to temporal disconnects (resignation from directorship prior to alleged generation period), the nature and timing of FIR registrations, legal disputes including arbitration and pending civil/collection proceedings, and discrepancies between alleged sales and GST deposits. The Court accepted submissions that several FIRs included offences not scheduled under PMLA and that some predicate FIRs were quashed, stayed, or not yet proceeded to chargesheet, undermining the foundation for treating the impugned amounts as proceeds of crime. Ratio vs. Obiter: Ratio - proceeds of crime must have a legally sustainable nexus with scheduled offences and be supported by admissible evidence; speculative or contradictory computations are insufficient. Obiter - detailed critique of specific investigative steps (mass inspections in short span, reliance on loose sheets) as indicia of weak prosecution material. Conclusion: The Court found the linkage between the alleged amounts and proceeds of crime to be prima facie weak and not supported by reliable admissible materials, diminishing the prosecutorial case on the PMLA charge for bail-stage purposes. Issue 3 - Effect of weak predicate offences, stage of trial and prolonged incarceration on Section 45 rigours Legal framework: Section 45 sets a high threshold but courts must balance statutory rigour with constitutional rights, considering factors such as the stage of trial, number of witnesses, volume of material, and custody duration. Precedent treatment: The Court considered authoritative rulings recognizing that prolonged pre-trial incarceration, the stage of proceedings, and the probability that trial will not conclude soon can warrant relaxation of statutory rigour and grant of bail subject to safeguards. Interpretation and reasoning: The Court emphasised that trial preparation in the present matter involves 149 witnesses, 221 exhibits and voluminous records exceeding 13,283 pages, with trial yet to start - creating a realistic projection that conclusion is not near. The Court also weighed that several predicate FIRs lack live proceedings (chargesheets not filed, FIRs quashed or stayed) and noted the petitioner's custody period (about a year) relative to maximum sentence exposure (7 years). The petitioner's conduct (compliance with prior bail conditions, surrender in obedience to earlier orders) and absence of tampering or flight risk were factored into the balancing exercise. Ratio vs. Obiter: Ratio - where the prosecution's case is prima facie weak on the predicate link and trial is likely protracted, the Court may relax the twin conditions of Section 45 and grant bail consistent with Article 21. Obiter - references to particular judicial dicta and nuanced balancing considerations. Conclusion: The Court concluded that the rigours of Section 45 can be relaxed on these facts and that continued custody was not justified, meriting grant of bail with conditions. Issue 4 - Use of custodial statements and co-accused statements at bail stage Legal framework: Statements recorded during custody and statements of co-accused have limited probative value unless corroborated; their use must comply with evidentiary rules governing admissibility. Precedent treatment: The Court acknowledged precedents limiting reliance on custodial confessions and co-accused assertions as substantive proof without independent corroboration, especially in bail determinations. Interpretation and reasoning: The Court accepted the submission that such statements do not constitute conclusive evidence against the petitioner for the purposes of assessing bail and that they require cautious appraisal in the prima facie exercise under Section 45. Ratio vs. Obiter: Ratio - custodial and co-accused statements cannot, by themselves, displace the need for reasonable materials showing guilt; they are of limited weight at bail stage. Obiter - procedural references as to specific paragraphs relied upon by parties. Conclusion: The Court accorded limited weight to custodial/co-accused statements in the bail assessment and did not treat them as determinative. Issue 5 - Parity, completion of investigation, and appropriate bail conditions Legal framework: Grant of bail can be influenced by parity with co-accused, completion of investigation, conduct of accused, and imposition of conditional safeguards under relevant procedural provisions. Precedent treatment: Courts have granted bail on parity and where prosecution delays or voluminous material make speedy trial improbable, subject to appropriate bail conditions. Interpretation and reasoning: The Court noted that a co-accused had been released on bail by a co-ordinate bench, investigation vis-à-vis the petitioner was complete and a prosecution complaint had been filed, and the petitioner satisfied the 'tripod' considerations (not a flight risk, not likely to tamper with evidence, not likely to influence witnesses). Taking parity, conduct, and the realistic timeline for trial into account, the Court found bail appropriate with modest surety and conditions consistent with statutory provisions (including conditions under the relevant local procedural provision referenced in the record). Ratio vs. Obiter: Ratio - parity and completion of investigation, coupled with custody duration and conduct, can legitimize grant of regular bail under PMLA with conditions. Obiter - specifics of local procedural provision cited for conditional release. Conclusion: The Court directed release on bail on furnishing bond and sureties, subject to conditions, thereby relaxing Section 45 rigours consistent with constitutional guarantees and the facts of the case.