2025 (10) TMI 1196 - HC - Money Laundering

prima-facie finding of petitioner's involvement in layering and laundering; Section 45 PMLA conditions unmet; bail under Section 437(3) CrPC

Suresh Singla @ Suresh Kumar Singla Versus The Union of India through the Assistant Director, Zonal Office, Enforcement Directorate, Patna

HC found prima facie involvement of the petitioner in layering and laundering proceeds of crime alongside a main co-accused, with support from a Section ... Money Laundering - seeking grant of bail - proceed of crime is less than one crore - twin conditions of Section 45 of PMLA satisfied or not - support of statement u/s 50 of PMLA - HELD THAT:- It appears that the petitioner was working in close association of co-accused Sanjeev Hans, who is the main co- accused of ECIR No.4 of 2024 and SVU FIR No.5 of 2024. It also appears that the petitioner prima facie found involved in layering and laundering of proceed of crime by purchasing property for co-accused Sanjeev Hans, which also supported by statement of co-accused Pawan Kumar as recorded under Section 50 of the PMLA along with several corroborative materials collected during investigation. Taking note of all facts broadly, it can not be said that this Court is satisfied that there are reasonable grounds for believing that petitioner is not guilty and would not likely to commit any offence on enlarging bail, twin conditions, which must satisfied before granting bail under Section 45 of the PMLA, 2002. But, as petitioner remained in custody for about eleven months against maximum sentence of seven years i.e. since 12.11.2024, where during trial total 79 witness are required to be examined and 149 documents, which running into 26739 pages are required to be exhibited by the trial court, suggesting prima facie that trial is not likely to conclude in near future, violating the fundamental right of petitioner as available under Article 21 of the Constitution of India qua speedy trial, which yet to initiate, therefore, the petitioner, above-named, is directed to be released on bail furnishing bail bond of Rs. 10,000/- (Rupees Ten Thousand) with two sureties of the like amount each to the satisfaction of the learned Sessions Judge-cum-Special Judge (PMLA), Patna in connection with Special Trial (PMLA) Case No.10 of 2024 arising out of ECIR No. PTZO/04/2024, subject to the conditions as laid down under Section 437(3) of the CrPC/under Section 480(3) of the BNSS’. Bail application allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the twin conditions in Section 45 of the Prevention of Money-Laundering Act (PMLA) are satisfied to refuse bail to an accused charged with money-laundering. 2. Whether statements of co-accused recorded under Section 50 of the PMLA (including those recorded while in custody) can be relied upon at the stage of considering bail and to what extent Article 20(3) and Section 25 of the Evidence Act/Section 23 of the Bharatiya Sakshya Adhiniyam protect such statements. 3. Whether the Enforcement Directorate (ED) exceeded its jurisdiction by investigating predicate/scheduled offences (and the legality of invoking Section 66(2) PMLA to forward information to prosecuting authorities), and the consequence of quashing/absence of a predicate scheduled offence on the money-laundering investigation. 4. Whether the material relied upon by the prosecution (bank transactions, WhatsApp chats, Excel file from a pen-drive, property transactions and alleged benami transfers) provides prima facie corroboration of laundering, or is speculative/hearsay insufficient to deny bail. 5. Whether prolonged pre-trial detention (period in custody vis-à-vis number of witnesses/documents and anticipated trial duration) violates the accused's right to speedy trial under Article 21 and thus warrants bail despite the nature of the offence. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Bail under Section 45 PMLA: Legal framework Section 45 PMLA imposes twin conditions for grant of bail: (i) the Court must be satisfied that there are reasonable grounds for believing that the accused is not guilty; and (ii) the Court must be satisfied that the accused is not likely to commit any offence while on bail. The general constitutional principle that 'bail is the rule and jail is the exception' (Article 21) remains applicable, but Section 45 carves out a stricter statutory test for scheduled-offence-linked money-laundering cases. Precedent Treatment The Court applied the Supreme Court's analysis that Section 3 PMLA defines an independent offence tied to 'proceeds of crime' derived from scheduled offences and reiterated that bail under Section 45 requires satisfaction of the twin conditions. The Court relied on the legal report principles regarding the definition of 'proceeds of crime' being contingent on existence/registration of a scheduled offence. Interpretation and reasoning The Court examined whether the material on record furnishes reasonable grounds to believe guilt or risk of reoffending. While prima facie involvement in layering/laundering (property purchases alleged as benami, transfers) was noted, the Court balanced that against the accused's long pre-trial incarceration, the volume of evidence and witnesses to be examined, and the unlikelihood of trial concluding soon. Ratio vs. Obiter Ratio: Section 45's twin conditions must be applied by weighing available prima facie material; prolonged custody and realistic trial duration can tilt the balance in favour of bail even where prima facie material exists. Conclusion The Court concluded that, although prima facie material exists indicating involvement in laundering activities, the twin conditions were not shown to be so strongly satisfied as to deny bail when weighed against prolonged pre-trial detention and trial prospects; accordingly bail was granted subject to conditions. Issue 2 - Reliance on co-accused statements under Section 50 PMLA and protections under Article 20(3)/Evidence law Legal framework Statements recorded under Section 50 PMLA are admissible in the inquiry/investigation process; Article 20(3) of the Constitution and Section 25 of the Evidence Act (and corresponding provisions in the new evidence law) protect against self-incriminatory compelled confessions; statements made in custody may attract protection if they amount to confession. Precedent Treatment The Court relied on authoritative holdings that statements under Section 50 are to be considered in the trial for their probative value but are generally weak and require corroboration. It noted precedents that permit reliance on co-accused statements where corroborated by independent material; conversely, retracted or custody-made statements attract scrutiny (authoritative precedents cited in reasoning). Interpretation and reasoning The Court observed that much of the prosecution case against the accused rests on statements of an arrested co-accused which were recorded both before and after his custodial arrest, with subsequent improvements/retractions. The Court emphasized that custodial statements may be protected and that enhanced scrutiny is required; however, where co-accused statements are corroborated by independent evidence (bank records, chat extracts, property documents), they gain probative weight. Ratio vs. Obiter Ratio: Co-accused statements under Section 50 cannot be the sole basis to deny bail; their reliability depends on corroboration and whether they were recorded under conditions attracting Article 20(3)/Section 25 protections. Conclusion The Court treated the co-accused statements as part of the prima facie material but not conclusive; given retractions and the need for trial-grade assessment, such statements alone could not sustain denial of bail absent compelling corroboration. Issue 3 - ED's jurisdiction to investigate predicate offences and consequences of absence/quashing of scheduled offence Legal framework PMLA's machinery treats money-laundering as derivative of scheduled offences; the ED's authority is tethered to proceeds of crime; Section 66(2) permits forwarding information to jurisdictional police where a scheduled offence is indicated. Precedent Treatment The Court followed established precedent that ED cannot usurp prosecuting jurisdiction for scheduled offences; upon uncovering indications of separate scheduled offences, ED must forward information under Section 66(2). The definition of 'proceeds of crime' requires linkage to an existing registered scheduled offence. Interpretation and reasoning The Court noted contention that ED continued investigation on a written complaint without jurisdiction and only later forwarded it to the State Vigilance Unit; it acknowledged precedent that discovery of undisclosed property must lead to reporting to jurisdictional authorities for a scheduled offence to be treated as proven 'proceeds of crime'. The Court considered these jurisdictional points but did not finally rule the ED's investigation illegal; rather, it weighed the effect on the bail question. Ratio vs. Obiter Ratio: ED's investigatory steps relating to predicate offences must respect Section 66(2); absence or quashing of a scheduled offence undermines the characterization of property as 'proceeds of crime' for PMLA action. Conclusion The Court recognized legitimate concerns about ED's jurisdictional approach and the importance of registered scheduled offences for qualifying proceeds of crime, but treated the issue as relevant to the strength of prima facie case rather than dispositive of bail; it granted bail while noting these legal constraints on ED powers. Issue 4 - Sufficiency and character of corroborative material (bank records, chats, electronic files, property transfers) Legal framework Electronic records and documents must be properly proved (maker/forensic provenance) to be admissible and not mere hearsay; circumstantial and documentary corroboration may strengthen co-accused statements but require reliable chain of custody and forensic verification. Precedent Treatment The Court applied principles that electronic files (e.g., Excel on pen-drive) require forensic examination to establish authorship, creation date and version history; bank transactions and property transfers can constitute corroboration if directly linked to the accused. Interpretation and reasoning The Court noted prosecution reliance on bank statements, WhatsApp chats, and an Excel file recovered from a pen-drive; it observed gaps (lack of forensic examination of the file, absence of direct evidence tying some transactions to the accused, reliance on intermediaries). These gaps undermine conclusiveness at bail stage though they may be explored at trial. Ratio vs. Obiter Ratio: Documentary/electronic materials must be examined for provenance and direct linkage before they can substitute for admissible corroboration sufficient to deny bail. Conclusion The Court treated the documentary material as raising prima facie suspicion but found deficiencies that prevented it from being conclusive to refuse bail; such material warrants trial-level testing. Issue 5 - Speedy trial, duration of custody and interplay with bail Legal framework Article 21 guarantees liberty and a right to a speedy trial; prolonged pre-trial detention disproportionate to realistic trial progress may tilt discretionary decisions in favour of bail despite serious charges. Precedent Treatment The Court relied on authority holding that custodial duration, the number of witnesses/documents and likelihood of protracted trial are relevant considerations when applying statutory bail tests that otherwise apply a stricter standard. Interpretation and reasoning The Court recorded that the accused had been in custody for around eleven months against a maximum sentence of seven years; the trial required examination of 79 witnesses and 149 documents (over 26,000 pages), making it unlikely to conclude soon. Balancing liberty interest and statutory requirements, the Court found non-compliance with speedy trial expectations. Ratio vs. Obiter Ratio: Where lengthy custody and an inevitable protracted trial are shown, Article 21 considerations can justify bail even in PMLA matters subject to Section 45, provided conditions are imposed to allay risk of reoffending. Conclusion The Court concluded that prolonged custody and the near-certain delay in trial vindicated release on bail subject to conditions, notwithstanding prima facie material; it granted bail on specified bond and surety conditions and ancillary statutory conditions.