2026 (1) TMI 52 - HC - Money Laundering

Money laundering bail during prolonged pre-trial custody and stalled case progress, despite PMLA s.45 twin conditions; bail granted.

In a bail application under the PMLA, the HC considered whether the statutory 'twin conditions' under s.45 barred release despite prolonged custody and an ... Seeking garnt of bail - Money Laundering - case of the prosecution is based on the alleged documents, which are already in the possession of the ED - main trust of the arguments of the learned counsel appearing for the ED is about the fact that the earlier bail applications of the applicant have been dismissed on merit - twin conditions, as per Section 45 of the PMLA satisfied or not - HELD THAT:- Admittedly, charges have not been framed and considering the total number of witnesses to be examined by the prosecution and the voluminous record, relied upon, this Court can foresee the fact that in near future, chances of conclusion of the trial, against the applicant, are not so bright. The Hon’ble Supreme Court, in a case, titled as Bachhu Yadav versus Directorate of Enforcement [2023 (9) TMI 360 - SUPREME COURT], has released the applicant, before it, after considering the fact that out of 42 witnesses, five had been examined and the custody period of the said applicant was little over one year. The Hon’ble Supreme Court in Manish Sisodia versus Directorate of Enforcement [2024 (8) TMI 614 - SUPREME COURT], has elaborately discussed the provisions of PMLA, viz-a-viz, offences, which are punishable for death, imprisonment for life, ten years or more like offences under the Narcotic Drugs and Psychotropic Substances Act, murder, cases of rape, dacoity, kidnapping for ransom, mass violence, etc. Whether the twin conditions, as per Section 45 of the PMLA, are existing in favour of the applicant, on account of his long custody? - HELD THAT:- In view of the ratio of law, laid down by the Hon’ble Supreme Court, in K.A. Najeeb [2021 (2) TMI 1212 - SUPREME COURT], this Court is of the view that the twin conditions, as enumerated in Section 45 of the PMLA can be said to be existing in favour of the applicant, on account of his long incarceration, by holding that, at this stage, it can be said that he is not guilty of such offence and while, on bail, he will not commit any offence. Moreover, for the second condition, that he will not commit any offence, reasonable conditions can be imposed on him. In this case, the earlier bail applications of the applicant were dismissed by this Court, on the basis of the non-fulfilment of the conditions, as enumerated under Section 45 of the PMLA, however, considering the fact that there is no possibility regarding the commencement and conclusion of the trial, against the applicant, in near future and considering the fact that the trial, arising out of the RC, registered by CBI, has also not yet been commenced, this Court is of the view that the embargo, as created by Section 45 of the PMLA, does not come in the way of releasing the applicant, on bail, as the applicant is in custody for about two years and four months, since, the Hon’ble Supreme Court in Athar Parwez versus Union of India [2024 (12) TMI 1682 - SUPREME COURT], has held that the constitutional jurisdiction, viz-a-viz, the restrictions, under the statute need to be harmonized. It has rightly been pointed out by the learned counsel for the applicant that the applicant is permanent resident of Punjab and for securing his presence, during the trial, stringent conditions can be imposed. Even otherwise, the applicant has not misused the liberty, which was granted to him, by way of interim bail, on various occasions. Considering all these facts, this Court is of the view that the bail application is liable to be allowed and is accordingly allowed. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether continued pre-trial incarceration in a prosecution for offence under the Prevention of Money Laundering Act, 2002, where trial has not reached framing of charge and is unlikely to conclude within a reasonable time, justifies grant of bail on constitutional considerations despite the statutory rigours of Section 45. (ii) Whether delay in the trial could be attributed to the applicant so as to disentitle him from bail on the ground of prolonged custody. (iii) Whether prior rejection of bail on merits and dismissal of further challenge bars grant of bail at a later stage when circumstances show prolonged incarceration and no realistic prospect of early trial. (iv) Whether, on the facts of the case, the Court could record satisfaction of the twin conditions under Section 45 of the Prevention of Money Laundering Act, 2002, by treating long incarceration and improbability of early trial as justifying relaxation, with safeguarding conditions. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i) & (iv): Effect of prolonged custody and delayed trial on Section 45 PMLA 'twin conditions' Legal framework: The Court noted that for bail in an offence under the Prevention of Money Laundering Act, 2002, it is incumbent to record findings on the 'twin conditions' under Section 45. The Court also noted the offence alleged is under Section 3 with punishment under Section 4, with maximum sentence ordinarily up to seven years. Interpretation and reasoning: The Court assessed that the prosecution case is heavily documentary, with 71 witnesses cited and documentary material running into 31,608 pages, and that charges had not been framed. Given the stage of proceedings and volume of evidence, the Court foresaw that conclusion of the trial in the near future was unlikely. The Court further considered that the predicate-offence trials had also not commenced and were at the stage of consideration on charge; therefore, there was no realistic prospect of both the scheduled-offence and money-laundering prosecutions concluding within a reasonable time. On this basis, the Court held that continued detention would attract scrutiny on the touchstone of personal liberty and the right to a trial within a reasonable time. The Court treated prolonged incarceration (about two years and four months in the present custody) coupled with the unlikelihood of early trial as circumstances warranting relaxation of Section 45 rigours through constitutional balancing, while protecting the prosecution's interests by imposing stringent conditions. Conclusions: The Court concluded that, in the circumstances, the statutory embargo under Section 45 would not prevent bail. It held that the twin conditions under Section 45 could be said to exist in the applicant's favour at this stage on account of long incarceration and the improbability of early trial, and that the second condition (likelihood of not committing an offence while on bail) could be secured through reasonable and strict conditions. Issue (ii): Attribution of trial delay to the applicant Legal framework: The Court evaluated the objection that bail should be denied because delay was caused by accused persons and not by the prosecution, particularly where the case remained at the stage of framing of charge. Interpretation and reasoning: On examining the trial-court orders placed on record, the Court found no basis to attribute delay to the applicant. It held that adjournments/exemptions leading to delay were attributable to other accused persons, and that the applicant could not be faulted for exemption applications moved by co-accused. The Court rejected the proposition that the applicant should be denied bail on the premise that the accused side was delaying, when the material did not show any role by the applicant in causing such delay. Conclusions: The Court conclusively held that delay in trial could not be attributed to the applicant and, therefore, prolonged custody could not be justified by blaming the applicant for non-progression of the trial. Issue (iii): Effect of earlier bail rejection and subsequent liberty to renew bail Legal framework: The Court considered the submission that successive bail applications without change in circumstances should not be entertained, and also considered the effect of liberty granted to renew bail if the trial did not proceed. Interpretation and reasoning: The Court acknowledged that earlier bail applications had been dismissed on merits due to non-fulfilment of Section 45 conditions. However, it treated the subsequent circumstances-continued incarceration for a substantial period, the trial still not reaching framing of charge, the large number of witnesses and voluminous record, and the absence of progress in the predicate-offence trials-as material developments demonstrating no likelihood of early commencement or conclusion of trial. The Court further noted that liberty to renew bail did not create an automatic right to bail but allowed fresh consideration on merits when trial did not proceed; on the present facts, the situation justified reconsideration notwithstanding earlier rejection. Conclusions: The Court held that earlier dismissal did not bar grant of bail at this later stage because circumstances demonstrating prolonged incarceration and lack of trial progress warranted fresh evaluation and supported release on conditions. Final disposition and operative conditions (material to the decision) The Court allowed bail and directed release on furnishing a personal bond with two sureties to the satisfaction of the trial court. The grant was conditioned on regular attendance; non-tampering with evidence and non-hampering of investigation; no inducement/threat to witnesses; restriction on leaving India without prior permission; and filing a monthly affidavit before the trial court stating that the applicant has not been named as an accused in any other case during that period. The Court also clarified that breach would permit the agency to seek appropriate orders.