2026 (1) TMI 392 - HC - Money Laundering

Prolonged custody in money-laundering case: s.45 PMLA 'twin conditions' treated as met, bail granted with strict terms

The dominant issue was whether the statutory embargo under s.45 PMLA (twin conditions) barred bail despite prolonged custody and lack of trial progress. ... Money Laundering - Bail Application - Applicant submitted that, his fundamental right of speedy trial and he is in custody since 30th August, 2023, i.e. more than two years, without there being any progress in the ECIR, as well as, in the trial of the predicate offence, which is pending adjudication before the CBI Court, Shimla. - Generation, acquisition and concealment of proceeds of crime and also intentionally and dishonestly verified the claims of the PMS Scheme - formation of shell entities - existence of twin conditions as per Section 45 of the PMLA or not HELD THAT:- The Hon’ble Supreme Court in Manish Sisodia versus Directorate of Enforcement, [2023 (11) TMI 63 - 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:- A three Judge Bench of the Hon’ble Supreme Court, in Union of India versus K.A. Najeeb [2021 (2) TMI 1212 - SUPREME COURT], has elaborately discussed the statutory restrictions, provided under Section 43-D(5) of the UAPA - In view of the ratio of law, laid down by the Hon’ble Supreme Court, in the aforesaid dictum, 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 application of the applicant was 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. Moreover, at the time of deciding the bail application, the Court should not dwell deep into the merits and de-merits of a case, to ascertain the guilt/innocence of the accused (applicant), as, it is the sole prerogative of the learned trial Court to decide, on the basis of the evidence, so adduced before it, during the trial. The decision of this Court, affecting the merits of the case would cause prejudice to the case of the prosecution, as well as, to the case of the accused (applicant). However, merely because the applicant falls within the definition of ‘government servant’, responsible for the verification of the claims submitted for scholarship, is too short to decline the relief to him, as, the bail is being granted, mainly, on the ground of undue delay, in the conclusion of trial, as, his application for bail, on merit, has already been rejected by this Court. From the pace of the trial, it cannot be concluded, at this stage, that there are chances of commencement and conclusion of the trial, against the applicant, in near future - Moreover, the applicant is permanent resident of District Shimla and in view of the apprehensions expressed by the ED, 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. This Court is of the view that the bail application is liable to be allowed, subject to fulfilment of conditions imposed - bail application allowed. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether prolonged pre-trial incarceration, with no realistic prospect of early commencement or conclusion of trial in the money-laundering case and the connected scheduled-offence trial, justified grant of bail on constitutional considerations of speedy trial and personal liberty. (ii) Whether the delay in framing of charge/trial progress could be attributed to the applicant so as to disentitle him from bail sought on the ground of delay. (iii) Whether, notwithstanding the statutory 'twin conditions' for bail under Section 45 of the PMLA and prior rejection of bail on merits, the Court could hold the twin conditions satisfied/relaxed and enlarge the applicant on bail with stringent conditions, primarily due to long incarceration and unlikelihood of trial concluding within a reasonable time. 2. ISSUE-WISE DETAILED ANALYSIS (i) Prolonged incarceration, unlikelihood of trial concluding in reasonable time, and constitutional right to speedy trial Legal framework (as discussed by the Court): The Court treated bail under PMLA as governed by Section 45 'twin conditions', but held that constitutional courts may intervene where incarceration becomes unreasonably long and trial is unlikely to conclude within a reasonable time, to protect Article 21 interests. The Court also noted that the PMLA case's final outcome is practically intertwined with the scheduled-offence trial, since establishing the scheduled offence bears upon proof of 'proceeds of crime' for Section 3 PMLA at trial. Interpretation and reasoning: The applicant had remained in custody for about two years and four months in the PMLA case, and charges had not been framed. The Court relied on the record showing a large, document-heavy prosecution (numerous witnesses and voluminous pages), and observed that, at the present pace and stage, the trial's commencement and conclusion were not imminent. The Court also accepted that the connected scheduled-offence matters were themselves still at the stage of consideration on charge, further diminishing the prospect of early final adjudication. On these facts, the Court concluded that continued detention would risk converting pre-trial custody into punishment without trial. Conclusion: The Court held that prolonged incarceration coupled with the stage of proceedings and the scale of evidence made early completion of trial unlikely, thereby justifying grant of bail to safeguard the applicant's right to speedy trial and personal liberty. (ii) Attribution of delay: whether the applicant caused or contributed to trial delay Legal framework (as discussed by the Court): The Court treated attribution of delay as material because bail on the ground of delay would not ordinarily be granted where undue delay is substantially attributable to the accused. Interpretation and reasoning: The Enforcement Directorate opposed bail by arguing that delay in framing of charges was due to accused persons seeking adjournments and non-appearance. After examining the relevant trial-court orders placed before it, the Court found that delay-causing adjournments/exemption requests were attributable to other accused persons, not to the applicant. The Court held the prosecuting agency failed to demonstrate how the applicant could be blamed for adjournments sought by co-accused or their exemption applications. Consequently, the Court treated the applicant as not responsible for the lack of progress. Conclusion: The Court conclusively held that no role could be attributed to the applicant for causing delay in trial progress; therefore, the applicant was not disentitled from bail sought on the ground of delay. (iii) Section 45 PMLA twin conditions, effect of earlier bail rejection, and grant of bail with conditions Legal framework (as discussed by the Court): The Court reiterated that, for PMLA bail, it is incumbent to record satisfaction of the twin conditions under Section 45. The Court further held that, with passage of time and in cases of long incarceration with no likelihood of trial concluding within reasonable time, the statutory rigours can 'melt down' or be 'suitably relaxed' in harmonisation with constitutional jurisdiction, enabling conditional liberty. Interpretation and reasoning: The applicant's earlier bail had been rejected on merits due to non-fulfilment of Section 45 conditions. The Court nevertheless treated the current application as resting on a materially different circumstance-continued custody for a long period and absence of realistic prospects of trial commencement/conclusion, including the non-commencement of the scheduled-offence trial. On this basis, the Court held that the Section 45 embargo would not bar release. It further reasoned that, in light of long incarceration and trial delay not attributable to the applicant, the twin conditions could be treated as satisfied at this stage: (a) it could be said the applicant is not guilty 'at this stage' for bail purposes, and (b) the likelihood of re-offending could be addressed through stringent bail conditions. The Court also declined to refuse bail merely because the applicant was a government servant involved in claim verification, since bail was being granted primarily on undue delay after bail on merits had earlier been rejected. Conclusion: The Court held that, in the circumstances of long incarceration and unlikelihood of timely trial completion, the twin conditions under Section 45 could be regarded as existing in the applicant's favour and/or relaxed through conditions. Bail was granted subject to strict conditions ensuring appearance, non-tampering, non-influence of witnesses, travel restriction, and periodic disclosure by affidavit that the applicant was not arraigned in any other case during the relevant period.