TaxTMI 
TaxTMI 
2022 (3) TMI 275
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....'), certain complaints came to be filed assailing his role in grant of various credit facilities to borrowers, in violation of banking norms and against receipt of illegal gratification, which resulted in huge loss to the Bank. One of these complaints was in relation to M/s. Oyster Buildwell Pvt. Ltd. (hereinafter, referred to as 'OBPL'), a real estate company, which was extended credit facilities to the tune of Rs. 514.27 crores, resulting in loss of Rs. 466.51 crores to the Bank. As a result, FIR/RC No.2232021A0005 was registered under Sections 120B/406/420/468/471 by the CBI against OBPL, the applicant and others, including unknown public servants and private persons, for having committed criminal breach of trust, cheating, criminal conspiracy and forgery for diversion/misappropriation of the public money during the period from 2017 to 2019. The investigation in the case is stated to be still pending. The Prosecution Complaint 3. The present ECIR was recorded by the respondent under Sections 3/4 of the PMLA, followed by filing of the prosecution complaint on 01.10.2021. As per the complaint, Avantha Group is led by the present applicant, being its Founder and Chairman. ....
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.... to as 'APIL') and AHL taken from Edelweiss and ABFL. The applicant, who is the ultimate beneficial owner of OBPL, JPL and JPIL, was instrumental in generation of proceeds of crime, as he had the knowledge that Term loan was being taken from the Bank on the basis of sham agreements and that the funds were going to be utilized for purposes other than sanctioned. By the time of filing of the complaint, proceeds of crime to the tune of Rs. 500.11 crores were detected to have been generated by Avantha Group. Proceedings before the Special Court 7. After registration of the ECIR, the applicant was arrested on 03.08.2021, whereafter he approached the Special Court by way of an application filed under Section 439 Cr.P.C. read with Sections 45/46(1)/65 PMLA seeking regular bail. The said application came to be dismissed by the learned Special Judge vide order dated 30.10.2021. Though the twin conditions provided under Section 45(1) PMLA were adverted to, the bail application was eventually decided by the learned Judge in light of Section 439 Cr.P.C. Contentions raised on behalf of the Applicant 8. Mr. Mukul Rohatgi, learned Senior Counsel appearing for the applicant, submitted ....
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....ach business day in terms of facility letter dated 29.12.2017. The rates of the shares on different dates were stated to be as follows:- As on date of pledge Rs. 728 crores As on date of invocation by the Bank Rs. 480 crores As on date of application Rs. 1200 crores (D) The Bank has already approached DRT for recovery of Rs. 469 crores, which case is pending since 2020. Avantha Group has filed its counter-claims therein against the Bank for over Rs. 1500 crores. (E) The validity of the Master Circular dated 01.07.2016 issued by RBI, on the basis of which OBPL was declared 'fraud' and present prosecution was launched, is under challenge in writ petitions pending before this Court, including W.P.(C) Nos. 306/2019 and 7209/2021. The latter has been preferred by OBPL, in which interim directions have been passed to maintain status quo with regard to declaration of accounts of OBPL as 'fraud' and from taking any step pursuant thereto. (F) The use of Term loan for a purpose other than sanctioned, at the instance and with the knowledge of the Bank, cannot be termed as money laundering. Even as per the ED's case, there has not been any misapprop....
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....to revive the twin conditions under Section 45 PMLA, it would and should have brought back the entire section. In this regard, reliance was placed on the objects and reasons of PMLA and the decision in Devi Dass Gopal Krishnan Etc. v. State of Punjab and Others (In all the appeals) reported as (1967) 3 SCR 557. (K) Section 44 PMLA provides the procedure for trying of both the PMLA offence as well as the predicate offence by the Special Court. As the investigation is still pending in the predicate offence, the trial is likely to take a long time. 9. In support of his submissions, reliance was placed by the learned Senior Counsel on the decisions in Sanjay Chandra v. Central Bureau of Investigation reported as (2012) 1 SCC 40, P. Chidambaram v. Directorate of Enforcement reported as (2020) 13 SCC 791, Ashok Dhingra v. N.C.T. of Delhi reported as (2000) 9 SCC 533, Krishna Janardhan Bhat v. Dattatraya G. Hegde reported as (2008) 4 SCC 54, Nikesh Tarachand Shah (Supra), Babu Singh and Others v. State of U.P. reported as (1978) 1 SCC 579, Gudikanti Narasimhulu and Others v. Public Prosecutor, High Court of Andhra Pradesh reported as (1978) 1 SCC 240, Joginder Kumar v. S....
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....bility towards Edelweiss and ABFL. The same amounts to money laundering and further investigation/backtracking in this regard is underway. (C) The Term loan was not only taken by OBPL in violation of RBI Circular dated 01.07.2015, but was also disbursed by the Bank knowing fully well that the funds would be utilized to pay existing lenders, viz. Edelweiss and ABFL. While the actual purpose behind OBPL seeking Term loan from the Bank was repayment of loans taken earlier by Avantha Group from Edelweiss and ABFL, the incentive to the Bank was the acquisition of shares of CG Power, which upon repayment of loans of Edelweiss and ABFL became free and came to be exclusively pledged with the Bank. (D) The applicant, who is the ultimate beneficial owner of the Avantha Group and major beneficiary of the entire money laundering scheme, was aware of the real purpose of the O&M agreements and also that the Term loan granted by the Bank was not going to be utilized for the sanctioned purpose. Thus, he was instrumental in the generation of proceeds of crime. In this regard, it was also submitted that the emails exchanged between the applicant and Sh. Rana Kapoor, as well as betw....
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.... being under PMLA, the onus to prove his innocence is on the applicant, which has not been discharged. Further, the likelihood of his indulging in subsequent money laundering activities and repeating the offence cannot be ruled out. 11. In support of his submissions, learned CGSC placed reliance on the decisions in Bimal Kumar Jain and Another v. Directorate of Enforcement reported as 2021 SCC OnLine Del 3847, P. Chidambaram v. Directorate of Enforcement reported as (2019) 9 SCC 24, Mohammad Arif v. Directorate of Enforcement, Govt. of India reported as 2020 SCC OnLine Ori 544, Y.S. Jagan Mohan Reddy v. Central Bureau of Investigation reported as (2013) 7 SCC 439, Deepak Talwar v. Enforcement Directorate reported as 2019 SCC OnLine Del 10135, Central Bureau of Investigation v. Ramendu Chattopadhyay reported as (2020) 14 SCC 396, State of Bihar and Another v. Amit Kumar alias Bachcha Rai reported as (2017) 13 SCC 751, State of Gujarat v. Mohanlal Jitamalji Porwal and Another reported as (1987) 2 SCC 364, Dr. V.C. Mohan (Supra), Suresh N. Patel v. State, CRL. OP(MD) Nos.6883/2021 & 7966/2021, Vijay Madanlal Choudhary & Ors. v. Union of India & Ors., Special Leave to Appeal (Crl.) ....
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....guilt of the accused beyond reasonable doubt but there ought always to be a prima facie satisfaction of the court in support of the charge. (d) Frivolity in prosecution should always be considered and it is only the element of genuineness that shall have to be considered in the matter of grant of bail, and in the event of there being some doubt as to the genuineness of the prosecution, in the normal course of events, the accused is entitled to an order of bail." 16. In Masroor v. State of Uttar Pradesh and Another reported as (2009) 14 SCC 286, it was noted that while deciding the question of bail, Courts must strike a balance between the interest of the society in general and the right of an accused to personal liberty. While stressing on the importance of achieving said balance, the Supreme Court held:- "15. There is no denying the fact that the liberty of an individual is precious and is to be zealously protected by the courts. Nonetheless, such a protection cannot be absolute in every situation. The valuable right of liberty of an individual and the interest of the society in general has to be balanced. Liberty of a person accused of an offence would depend....
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....t has been laid down from the earliest times that the object of bail is to secure the appearance of the accused person at his trial by reasonable amount of bail. The object of bail is neither punitive nor preventative. Deprivation of liberty must be considered a punishment, unless it can be required to ensure that an accused person will stand his trial when called upon. The courts owe more than verbal respect to the principle that punishment begins after conviction, and that every man is deemed to be innocent until duly tried and duly found guilty. 22. From the earliest times, it was appreciated that detention in custody pending completion of trial could be a cause of great hardship. From time to time, necessity demands that some unconvicted persons should be held in custody pending trial to secure their attendance at the trial but in such cases, "necessity" is the operative test. In this country, it would be quite contrary to the concept of personal liberty enshrined in the Constitution that any person should be punished in respect of any matter, upon which, he has not been convicted or that in any circumstances, he should be deprived of his liberty upon only the belief t....
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....also to be kept in mind that for the purposes of granting the bail the legislature has used the words 'reasonable grounds for believing' instead of 'the evidence' which means the court dealing with the grant of bail can only satisfy it (sic itself) as to whether there is a genuine case against the accused and that the prosecution will be able to produce prima facie evidence in support of the charge. It is not expected, at this stage, to have the evidence establishing the guilt of the accused beyond reasonable doubt." xxx 45. In Bihar Fodder Scam (Laloo Prasad case) this Court, taking into consideration the seriousness of the charges alleged and the maximum sentence of imprisonment that could be imposed including the fact that the appellants were in jail for a period of more than six months as on the date of passing of the order, was of the view that the further detention of the appellants as pretrial prisoners would not serve any purpose. 46. We are conscious of the fact that the accused are charged with economic offences of huge magnitude. We are also conscious of the fact that the offences alleged, if proved, may jeopardise the economy of the country. A....
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....relating to bail has been taken into consideration in the background of the term of sentence being seven years if convicted and in that regard it has been held that in determining the grant or otherwise of bail, the seriousness of the charge and severity of the punishment should be taken into consideration. 23. ...the basic jurisprudence relating to bail remains the same inasmuch as the grant of bail is the rule and refusal is the exception so as to ensure that the accused has the opportunity of securing fair trial. However, while considering the same the gravity of the offence is an aspect which is required to be kept in view by the Court. The gravity for the said purpose will have to be gathered from the facts and circumstances arising in each case. Keeping in view the consequences that would befall on the society in cases of financial irregularities, it has been held that even economic offences would fall under the category of "grave offence" and in such circumstance while considering the application for bail in such matters, the Court will have to deal with the same, being sensitive to the nature of allegation made against the accused. One of the circumstances to consi....
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....hall advert at the very outset to the provision, as it stood prior to the amendment in 2018:- "45. Offences to be cognizable and non-bailable.-(1) [Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence punishable for a term of imprisonment of more than three years under Part A of the Schedule shall be released on bail or on his own bond unless-] (i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail : Provided that a person, who, is under the age of sixteen years, or is a woman or is sick or infirm, may be released on bail, if the Special Court so directs : Provided further that the Special Court shall not take cognizance of any offence punishable under Section 4 except upon a complaint in writing made by- (i) the Director; or (ii) any officer of the Central Government or a State Go....
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....t. ...Therefore, there is no doubt that the conditions laid down under Section 45-A of PMLA, would bind the High Court as the provisions of special law having overriding effect on the provisions of Section 439 of the Code of Criminal Procedure for grant of bail to any person accused of committing offence punishable under Section 4 of PMLA, even when the application for bail is considered under Section 439 of the Code of Criminal Procedure." 26. Later, while relying on the decision in Gautam Kundu (Supra), the Supreme Court, in Rohit Tandon v. Directorate of Enforcement reported as (2018) 11 SCC 46, observed thus:- "18. ...The other observations in the said order will have no bearing on the merits of the controversy and required to be reckoned whilst considering the prayer for grant of regular bail. For that, the appellant must succeed in overcoming the threshold of the rigors of Section 45 of the 2002 Act... Suffice it to observe that indulgence shown to the appellant in terms of order dated 10-8-2017 will be of no avail. In that, the facts such as the appellant never tried to evade the investigation or that he has suffered incarceration for over 7½ months or tha....
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.... Provided that a person, who, is under the age of sixteen years, or is a woman or is sick or infirm [or is accused either on his own or along with other co-accused of money-laundering a sum of less than one crore rupees], may be released on bail, if the Special Court so directs : Provided further that the Special Court shall not take cognizance of any offence punishable under Section 4 except upon a complaint in writing made by- (i) the Director; or (ii) any officer of the Central Government or a State Government authorised in writing in this behalf by the Central Government by a general or special order made in this behalf by that Government." 29. Mr. Rohatgi, learned Senior Counsel appearing for the applicant, while placing reliance on the decisions of different High Courts, had submitted that the amendment made to Section 45 PMLA in 2018 does not revive the twin conditions set out in sub-clause (1). Learned CGSC appearing for the respondent, on the other hand, had placed reliance on the views expressed in certain other decisions of High Courts, where discordant notes were sounded. 30. During the course of submissions, learned counsels fo....
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....that while considering the prayer for grant of anticipatory bail in connection with PMLA offence, the mandate of Section 45 of the PMLA Act would not come into play. Mr. Dama Seshadri Naidu, learned senior counsel appearing for the respondent invited our attention to the dictum in paragraph 42 of the judgment in Nikesh Tarachand Shah vs. Union of India & Anr. reported in (2018) 11 SCC 1. The observations made therein have been misunderstood by the respondent. It is one thing to say that Section 45 of the PMLA Act to offences under the ordinary law would not get attracted but once the prayer for anticipatory bail is made in connection with offence under the PMLA Act, the underlying principles and rigors of Section 45 of the PMLA Act must get triggered - although the application is under Section 438 of Code of Criminal Procedure. As aforesaid, the High Court has not touched upon this aspect at all. It is urged before us by the respondent that this objection was never taken before the High Court as it is not reflected from the impugned judgment. It is not a question of taking objection but the duty of court to examine the jurisdictional facts including the mandate of....
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.... SCC 337]. 36. At the same time however, based on the categorical observations made by the Supreme Court in Dr. V.C. Mohan (Supra) and Parkash Gurbaxani (Supra), this Court reckons that the present bail application needs to be tested on the touchstone of the twin conditions set out in Section 45(1) PMLA as well. 37. At this stage, it is deemed apposite to refer to the observations made in Rohit Tandon (Supra), where while relying on its earlier decisions in Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra and Another reported as (2005) 5 SCC 294 and State of Maharashtra v. Vishwanath Maranna Shetty reported as (2012) 10 SCC 561, the Supreme Court outlined the parameters for adjudication of bail application in terms of Section 45(1)(ii) PMLA and held as under: "22. It is not necessary to multiply the authorities on the sweep of Section 45 of the 2002 Act which, as aforementioned, is no more res integra. The decision in Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra and State of Maharashtra v. Vishwanath Maranna Shetty dealt with an analogous provision in the Maharashtra Control of Organised Crime Act, 1999. It has been expounded that the Court at the....