2025 (12) TMI 372 - SC - Money Laundering

SC grants bail in money-laundering case, limits Section 45(1)(ii) PMLA using Article 21, documentary evidence, delayed trial

Mahesh Joshi Versus Directorate of Enforcement.

SC allowed the appeal and granted regular bail to the appellant in a money-laundering case arising from alleged use of forged IRCON certificates in PHED ... Seeking grant of regular bail - Money Laundering - forged IRCON certificates used in PHED tenders in 2022–2023 - serious economic offences or not - belated retraction of statements - HELD THAT:- In V. Senthil Balaji v. Deputy Director, Directorate of Enforcement [2024 (9) TMI 1497 - SUPREME COURT] this Court, particularly held that where a trial cannot be reasonably concluded and incarceration becomes prolonged, constitutional courts must intervene to safeguard the right to personal liberty under Article 21. The Court further emphasised that Section 45(1)(ii) of the PMLA cannot be interpreted to justify indefinite detention in cases involving voluminous, document-heavy material where trial is unlikely to begin promptly. The present case stands on a similar footing. Upon considering the material placed, it is found that several co-accused, whose alleged roles will ultimately be evaluated at trial, have already been granted bail. The Appellant has remained in custody for over seven months. The record is entirely documentary, as of now there are 66 witnesses, 184 documents, and more than 14,600 pages are involved, and the proceedings are still at the stage of supply of copy of the police report and other documents under Section 207, CrPC. In these circumstances indicate that the commencement of trial is not imminent and that the trial itself is not likely to conclude once started in the near future. The continued detention of the Appellant requires closer scrutiny in light of constitutional considerations. The Appellant deserves to be released on bail - Appeal allowed. 1. ISSUES PRESENTED AND CONSIDERED (1) Whether, in a prosecution under the Prevention of Money-Laundering Act, 2002, the Appellant was entitled to regular bail in light of the twin conditions under Section 45(1)(ii) and the proviso to Section 45(1). (2) Whether prolonged and indeterminate incarceration, in a document-heavy PMLA case where trial has not commenced and is unlikely to conclude within a reasonable time, justified grant of bail on constitutional grounds under Article 21. (3) Whether parity with co-accused who had already been granted bail, together with the Appellant's age, prior conduct on interim bail, and the purely documentary nature of the evidence, warranted his release on bail notwithstanding the seriousness of the alleged economic offence and apprehensions of influencing witnesses. 2. ISSUE-WISE DETAILED ANALYSIS Issue (1): Bail under PMLA - Section 45(1), twin conditions and proviso Legal framework (as discussed) The Court adverted to Section 45(1)(ii) of the PMLA and its stringent twin conditions for bail, and to the proviso to Section 45(1) invoked by the Appellant on the basis that the amount directly attributed to him did not exceed Rs. 50 lakh. The Court noted the argument that the High Court, while declining bail, had not given reasons for non-application of the proviso. Interpretation and reasoning The Court did not undertake a detailed examination of the correctness of the allegations or the quantum of proceeds of crime attributed to the Appellant, stating that the order was confined to bail and that it would not comment on the merits of the material. Instead, the Court treated the statutory rigours of Section 45 in light of constitutional considerations, relying on the principle that Section 45(1)(ii) cannot be interpreted to justify indefinite detention where trial is not likely to commence or conclude within a reasonable time. Conclusions The Court proceeded on the footing that, notwithstanding Section 45(1)(ii) and without conclusively deciding the applicability of the proviso to Section 45(1), bail could be granted in exercise of constitutional powers where continued detention was not necessary for investigation or trial and would be inconsistent with Article 21. Issue (2): Prolonged incarceration, voluminous record and Article 21 Legal framework (as discussed) The Court relied on the principles articulated in a prior decision interpreting PMLA, holding that: (i) minimum sentence is three years and maximum seven years (except for specified NDPS-linked offences); (ii) when PMLA trials are likely to be prolonged beyond reasonable limits, constitutional courts must consider bail; (iii) Section 45(1)(ii) does not authorise unreasonably long detention; and (iv) where there is no realistic possibility of trial concluding within a reasonable time, constitutional courts may grant bail under Articles 32 or 226 to prevent violation of Article 21, unless delay is substantially attributable to the accused or there is a real threat to society. Interpretation and reasoning The Court noted that: - The case was entirely documentary, involving 66 witnesses, 184 documents and more than 14,600 pages. - The matter was still at the stage of supply of the police report and documents under Section 207 CrPC; commencement of trial was not imminent and its conclusion, once started, was not likely in the near future. - The Appellant had already been in custody for over seven months. Applying the cited precedent, the Court held that constitutional courts cannot allow Section 45(1)(ii) to become an instrument for continued incarceration when there is no realistic prospect of timely conclusion of the PMLA trial and the related scheduled offences. The overall sentence range under PMLA, the stage of proceedings, and the volume of material cumulatively indicated that continued detention would impinge on the Appellant's right to personal liberty under Article 21. Conclusions The Court held that in the facts of the case, the likelihood of a protracted trial and absence of any necessity for further custodial interrogation justified grant of bail on constitutional grounds under Article 21, notwithstanding the stringent bail conditions prescribed by Section 45. Issue (3): Parity with co-accused, age, conduct, nature of material and apprehension of influencing witnesses Interpretation and reasoning The Court considered the following factors in favour of bail: - Several co-accused, whose alleged roles would be assessed only at trial, had already been granted bail either by the Supreme Court or the High Court, thus raising a claim of parity. - The Appellant was 71 years old, had deep roots in society, and had cooperated with the investigation. - During his tenure as Minister, he had himself initiated departmental action by suspending officials, blacklisting firms and causing registration of FIRs in relation to the forged certificates (relied upon by the Appellant as being inconsistent with a personal gain motive). - The Appellant had previously been granted interim bail on two occasions and had surrendered punctually each time; there was no allegation of misuse of liberty. - The evidence was entirely documentary and already in the possession of the investigating agency; no further recovery was contemplated. The respondent emphasised the seriousness of the alleged economic offence, the purported financial trail and layering involving various entities, and a larger pattern of transactions totalling Rs. 2.01 crore, coupled with the risk that the Appellant, being a senior political figure, might influence departmental officials or contractors as witnesses. The Court found that the respondent's concerns could be effectively addressed by appropriate bail conditions, including surrender of passport, restrictions on travel, and obligations to regularly appear and cooperate before the Special Court. In view of the documentary nature of the case and completion of investigation, continued custody was not required either for investigation or for ensuring the conduct of the trial. Conclusions The Court concluded that, having regard to parity with co-accused who were on bail, the Appellant's age and prior conduct on interim bail, the entirely documentary nature of the evidence, and the advanced stage of investigation, the apprehension of influencing witnesses did not justify further incarceration. The Appellant was therefore directed to be released on bail on terms and conditions to be fixed by the Special Court, including surrender of passport, restriction on travel outside India without permission, and regular attendance and cooperation for early disposal of the case.