2026 (3) TMI 597 - HC - Money Laundering

Mandatory Bail Conditions under PMLA require proof that proceeds are not involved before bail; application denied.

The document addresses entitlement to regular bail under the Prevention of Money Laundering Act focusing on the mandatory twin conditions for bail and the ... Entitlement to grant of regular bail - Multi-layered syndicate involving government officials, private individuals, and intermediaries - Mandatory twin conditions for bail under Section 45 of the PMLA - statutory presumption - offence of money laundering - definition and scope of proceeds of crime - tampering with evidence - principle of parity in grant of bail - delay or prolonged custody - commission of Scheduled offence under Sections 420, 467, and 476 of the IPC - Misused of official position as a Revenue Sub-Inspector and custodian of sensitive government records to facilitate a massive land scam and he provided the syndicate with illegal access to original land records and personally carried out or facilitated their forgery and manipulation, thereby enabling the fraudulent acquisition of high-value properties. Mandatory twin conditions for bail under Section 45 of the PMLA - HELD THAT:- The Court applied the jurisprudence of the Supreme Court (including Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] and Tarun Kumar [2023 (11) TMI 904 - SUPREME COURT]) and held that the mandatory twin conditions in Section 45 - that the court must be satisfied there are reasonable grounds for believing the accused is not guilty and is not likely to commit an offence while on bail - must be met before granting bail. Having considered the material seized (tampered government registers, trunks of documents), statements and digital evidence, and the statutory presumption under Section 24, the Court concluded that the petitioner failed to satisfy those twin conditions and that the stringent rigours of Section 45 preclude bail in the present case. [Paras 76, 77, 102, 103, 104] Bail under Section 45 of the PMLA is refused because the petitioner has not satisfied the statutory twin conditions. Proceeds of crime within Section 2(1)(u) of the PMLA - Whether the seized registers, documents and other material prima facie constitute proceeds of crime or link the petitioner to money laundering activities - HELD THAT: - The Court examined the definition of 'proceeds of crime' in Section 2(1)(u) and the evidence on record (seizure of 17 original tampered registers, 11 trunks of documents, forged sale deeds, handwritten diaries and WhatsApp entries indicating cash payments). Relying on the prosecution complaint and investigative material, the Court held that these materials satisfy, at the prima facie stage, the description of property involved in criminal activity relatable to scheduled offences and corroborate the petitioner's alleged role in processes connected with proceeds of crime; therefore the petitioner's contention that no prima facie case under Sections 3 and 4 of the PMLA is made out was rejected. [Paras 62, 66, 69, 71, 79] On the prima facie material, the seized records and corroborative entries are treated as linked to proceeds of crime and indicative of the petitioner's involvement in money laundering processes. Principle of parity in grant of bail - HELD THAT:- The Court applied settled law that parity is available only where facts and role are substantially similar. After comparing the petitioner's alleged role as a public servant and custodian of records with those co accused who received bail, the Court found distinguishable and more serious conduct by the petitioner (active misuse of official position, centrality to the forgery scheme). Accordingly, parity was held inapplicable. [Paras 93, 95, 97, 98, 99] Parity with co accused granted bail is not available to the petitioner because his role is materially different and more serious. Delay or prolonged custody - ground for bail in scheduled offences - HELD THAT:- The Hon’ble Apex Court while dealing with the offences under UAP Act 1967, in the case of Gurwinder Singh v. State of Punjab [2024 (3) TMI 175 - SUPREME COURT] and taking in to consideration the ratio of judgment of Union of India vs. K.A. Najeeb [2021 (2) TMI 1212 - SUPREME COURT] has observed that mere delay in trial pertaining to grave offences as one involved in the instant case cannot be used as a ground to grant bail. Applying precedent, the Court held that while custodial period is a relevant factor, prolonged incarceration alone cannot override the gravity of scheduled offences and the statutory requirements of Section 45. Given the seriousness of the allegations, the strength of prima facie material, and the risk of interference with the investigation/trial, the period of custody did not justify bail. [Paras 81, 85, 86, 103] Length of custody is not a sufficient ground for bail in this case. Final Conclusion: The petition for regular bail is dismissed: the Court found prima facie material linking the petitioner to proceeds of crime and money laundering, determined that the mandatory twin conditions of Section 45 PMLA are not met, rejected the parity and delay grounds, and accordingly refused bail. Issues: Whether the petitioner is entitled to grant of regular bail in ECIR No. 06 of 2023 under the Prevention of Money Laundering Act, 2002 having regard to the mandatory conditions for bail under Section 45 of the Act and the material on record.Analysis: The legal framework comprises the definition and scope of proceeds of crime, the offence of money-laundering, the statutory presumption regarding proceeds of crime and the mandatory twin conditions for bail under Section 45 of the Prevention of Money Laundering Act, 2002 as construed by the Supreme Court in Vijay Madanlal Choudhary and subsequent authorities. The material relied upon by the prosecuting agency includes seizure of 17 original government registers and 11 trunks of documents from the petitioner's custody, examination under the relevant evidentiary provision, alleged tampering and forgery of revenue records, corroborative entries in co-accused diaries and recovered communications showing cash payments to the petitioner, and investigative surveys confirming possession of disputed land. The petitioner's defences - that the records were kept for security, that seized cash and jewellery are explainable by familial needs and legitimate income, and that some co-accused have obtained bail - were considered in light of the evidentiary materials and settled principles on parity. The statutory presumption places on the petitioner the burden to show that proceeds of crime are not involved; the Court must be satisfied on reasonable grounds that the accused is not guilty and not likely to reoffend or interfere with the process of justice. The record prima facie shows the petitioner, a public servant and custodian of land records, allegedly provided illegal access to and tampered with official records, received illicit payments and occupied a central role in the syndicate, distinguishing his position from co-accused who were granted bail. The period of incarceration alone was held not to supplant the statutory bail conditions for grave economic offences.Conclusion: The petitioner has not discharged the burden required to satisfy the mandatory twin conditions for bail under Section 45 of the Prevention of Money Laundering Act, 2002; the bail application is rejected and the relief sought is refused. Decision in favour of the respondent.