TaxTMI 
TaxTMI 
2022 (3) TMI 1439
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....er order or orders as deemed fit and proper in the circumstances of the case; in the interest of justice and equity." 2. Brief facts of the case are as under: Between the years 2016 and 2017, four first information reports came to be filed against the petitioner alleging certain scheduled offences. Consequent upon the investigation of those cases, an action was initiated against the petitioner herein under the provisions of the Prevention of Money Laundering Act, 2002 [hereinafter referred to as the "Act" for short] in ECIR.No.BGZO/33/2020 dated 16.10.2020. The Directorate of Enforcement [hereinafter referred to as "ED" for short], after investigation, issued a provisional attachment order bearing No.9/2021 dated 27.09.2021 under Section 5(1) of the PML Act, subsequent thereto as contemplated under Section 5(5) of the said Act, a complaint was also filed in OC No.1541/2021 before the adjudicating authority. 3. The adjudicating authority has been adjudicating the same and is now pending for consideration, wherein the petitioner has filed an explanation before the adjudicating authority as contemplated under Section 8 of the said Act. 4. When the matter stood thus, acting....
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....lure to appreciate that the Petitioner had been arrested purportedly in accordance with Section 19 of the P.M.L.Act. Material to show entertainment of reasons to believe requiring the exercise of power to arrest had not been submitted before the Designated Court for appreciation of the application for bail. This has affected the impugned Order. There has been failure to appreciate that the basis for registration of an ECIR and purported conduct of an investigation under the provisions of the P.M.L.Act was directly arising as a consequent to the registration of a crime (predicate offence). The Petitioner/Accused had been accorded bail/anticipatory bail in the predicate offence which fact has not been noticed nor appreciated by the Hon'ble Trial Court. There has been failure to appreciate that there cannot be multiple arrests or grant of bail in an offence or related offences thereto, merely because there is power to arrest. The intention of bail being to ensure the presence of the Accused to face Trial having been already achieved ought to have been appreciated by the Designated Court affecting the correctness and legality of the impugned Order. ....
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.... on bail. The Petitioner submits that, there has been failure to appreciate by the Hon'ble trail court that, the parallel proceedings under Section 5 of PMLA 2002 been initiated by the Respondent Authority and provisionally attached several property of the Petitioners, his wife and others in connection with above said ECIR stated supra the correctness and legality of the questioned before the Adjudicating proceedings has been Authority, the same is pending consideration. Hence, there is no question of the Petitioner flee from justice and the Petitioner be pleased to enlarge on bail. The Petitioner submits that, in pursuance to summons issued by the Respondent Authority in connection with the above said investigation of the Respondent, the Petitioner has appeared before the investigating agency and the Petitioner statement has been recorded under Section 50(3) of PMLA 2002 recorded and he has given detail explanation and furnished voluminous record to substantiate that, he has not committed any offence of money laundering and failure to appreciate the same, the learned trial erred in rejecting the plea of bail of the Petitioner, which is opposed to ....
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....understood in denying the bail to the Petitioner/Accused person. Hence, the wrong understanding of the Judgment has affected the correctness and legality of thee impugned Order. The Trial Court failed to appreciate that there is nothing on the records that indicate the commission of any illegality by the Petitioner and therefore the Petitioner ought to have been granted bail. The trial court further failed to appreciate that there is material on record either in the remand application or the statement of objections, therefore the bail has been wrongly rejected on the facts and circumstances of the case. There has been failure to notice that the maximum punishment for the alleged offence alleged is upto seven years and not punishable with life or death and consequently ought to have granted him bail inasmuch as the Petitioner/Accused is in custody for more than 30 days and keeping the Petitioner in judicial custody would not serve any purpose, nor assist the investigating agency in any manner. Further, he has also been taken to the custodial interrogation for One Week by the Respondent Authority, thereafter he has been remanded to the Judicial Custody a....
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....ion for managing his cholesterol and blood pressure. He also has the history of arrhythmia which can lead to palpitations under stressful conditions. Hence, be pleased to enlarge the Petitioner on bail. The copy of the medical records are produced herewith as ANNEXURE "H" for kind perusal of this Hon'ble Court. The Petitioner submits that he has no antecedents of any prior involvement and there are no possibilities of the Petitioner fleeing from justice. The Petitioner submits that the accusations made against the Petitioner are only to harass the Petitioner. The Petitioner has a valid and tenable defense and are willing to offer solvent surety for grant of bail. The Petitioner is ready and willing to abide by any of the conditions that this Hon'ble Court would impose while granting the benefit of Bail. The Petitioner submits that, he has got valid and tenable defense to prove his innocence and disproving the case of the Respondent Authority during the course of Trial with cogent materials demonstrating his innocence. The Petitioner submits that he has not filed any other Petition before this Hon'ble Court on the same c....
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....d another; (7) (2021) 2 SCC 427 - Arnab Manoranjan Goswami Vs. State of Maharashtra and others; (8) (2020) 13 SCC 791 - P.Chidambaram vs. Directorate of Enforcement; (9) 2021 SCC Online Del. 1081 - Sai Chandrasekhar Vs. Directorate of Enforcement; (10) Paritosh Kumar Singh Vs. State of Chattisgarh & Others - reported in MANU/CG/O665/2021; (11) Mr. Bineesh Kodiyeri Vs. Directorate of Enforcement - MANU/KA/5164/2021; (12) (2012) 1 SCC 40 - Sanjay Chandra Vs. Central Bureau of Investigation; (13) (2018) 11 SCC 1 - Nikesh Tarachand Shah Vs. Union of India;; (14) Upendra Rai Vs. Directorate of Enforcement - reported in 2019 SCC Online Del. 9086; (15) Dr. Shivinder Mohan Singh Vs. Directorate of Enforcement - reported in 2020 SCC online Del.766; (16) Ahilya Devi Vs. The State of Bihar and others reported in MANU/BH/0245/2020; (17) Joginder Kumar Vs. State of UP and Others - reported in (1994) 4 SCC 260; (18) 2018 SCC Online Del. 8873 - Raj Kumar Goel & Others Vs. Directorate of Enforcement. 11. Per contra, learned counsel representing the Directorate of Enforcement Sri Prasanna ....
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....owing Judgments: Sl.No. Contents 1 (2019) 9 SCC 24 P.Chidambaram vs Directorate of Enforcement Relevant Para 37, 80,81 at Page No. 21, 38 2 2020 SCC Online Ori 544 Mohammed Arif v. Directorate of Enforcement Relevant Para 23 at Page No. 46 3 Order dated 24.11.2020 passed by the Hon'ble Supreme Court of India in SLP (crl) No. 4878/2020 Mohammed Arif vs. Enforcement Directorate 4 Crl. Appln. (BA) No. 1149/2021 - Bombay HC Ajay Kumar vs Directorate of Enforcement Relevant Para 5,44-49 at Page No.56,65,92-98 5 2020 SCC Online Kar 1269 Vinod Ramanani vs. Station House Officer Relevant Para 7(b), (c), (e), (f) at Page No. 105, 106, 108 6 CRL.P 5698/2019 Katta Subramanya Naidu vs. Directorate of Enforcement Relevant Para 48-49 at Page No. 172-175 7 WP 18442/2017- KAR HC SC Jayachandra vs. Directorate of Enforcement Relevant Para 10 at Page No. 199-200 8 (2013) 7SCC 439 Y.S Jagan Mohan Reddy vs CBI 9 (2013) 7 SCC 466 Nimmagadda Prasad vs. CBI Relevant para 23, 2....
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.... trial court does not appear to be correct and even the learned Attorney General appearing for the respondent could not dispute the same. We may record that as per the provisions of Section 4(2) of CrPC, the procedure contained therein applies in respect of special statutes as well unless the applicability of the provisions is expressly barred. Moreover, Sections 44 to 46 of the PMLA Act specifically incorporate the provisions of Cr.PC., to the trials under the PMLA Act. Thus, not only that there is no provision in the PMLA Act excluding the applicability of Cr.PC., on the contrary, provisions of Cr.PC., are incorporated by specific inclusion. Even Section 65 of the PMLA Act itself settles the controversy beyond any doubt in this behalf which reads as under: "65. Code of Cr.PC., 1973 to apply - The provisions of the Cr.PC., shall apply, insofar as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act." 4. We may also refer to the judgment of this Court in Directorate of Enforcement v. Deepak Mahajan² wherein it was held as under: (....
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....nfirmation of the same or atleast when an order is passed under Section 8(3)(a) of the said Act? (2) If so, if a person is arrested subsequent to the order passed under Section 8(3)(a) of the said Act would be entitled for immediate release by applying the provisions of Section 167 (2) of Cr.PC.? (3) Whether an accused is entitled for grant of bail taking note of the fact that he has been enlarged on bail in respect of predicate offences? (4) Whether twin conditions enumerated under the provisions of Section 45(1) of the Act is a Sine-qua-non for granting bail to an accused who has been arrested under Section 19 of the Act? (5) Whether an arrest made under Section 19 of the Act is a preventive detention? (6) Whether the petitioner has made out a case for grant of bail?" REGARDING POINT NOS.1 & 2: 20. In order to appreciate the rival contentions of the parties and the issues involved in the case and in the light of the points for determination raised above, it is necessary for this court to cull out the relevant provisions of PML Act. Sections 19, 45, 50, 65 and 71 of the said Act reads as under: "19. Power to arrest.....
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.... Central Government by a general or a special order made in this behalf by that Government. 28 [(1A) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), or any other provision of this Act, no police officer shall investigate into an offence under this Act unless specifically authorised, by the Central Government by a general or special order, and, subject to such conditions as may be prescribed.] (2) The limitation on granting of bail specified in 29 [***] sub-section (1) is in addition to the limitations under the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force on granting of bail. 50. Powers of authorities regarding summons, production of documents and to give evidence, etc.- (1) The Director shall, for the purposes of section 13, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:- (a) discovery and inspection; (b) enforcing the attendance of any person, including any officer of a banking company or a financial institution or a compan....
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....dy and it appears that the investigation cannot be completed within the period of twenty- four hours fixed by section 57, and there are grounds for believing that the accusation or information is well- founded, the officer in charge of the police station or the police officer making the investigation, if he is not below the rank of sub- inspector, shall forthwith transmit to the nearest Judicial Magistrate a copy of the entries in the diary hereinafter prescribed relating to the case, and shall at the same time forward the accused to such Magistrate. (2) The Magistrate to whom an accused person is forwarded under this section may, whether he has or has not jurisdiction to try the case, from time to time, authorise the detention of the accused in such custody as such Magistrate thinks fit, for a term not exceeding fifteen days in the whole; and if he has no jurisdiction to try the case or commit it for trial, and considers further detention unnecessary, he may order the accused to be forwarded to a Magistrate having such jurisdiction: Provided that- (a) 1 the Magistrate may authorise the detention of the accused person, otherwise than in the custody of the police, ....
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....orise the detention of the accused person in such custody as he may think fit for a term not exceeding seven days in the aggregate; and, on the expiry of the period of detention so authorised, the accused person shall be released on bail except where an order for further detention of the accused person has been made by a Magistrate competent to make such order; and, where an order for such further detention is made, the period during which the accused person was detained in custody under the orders made by an Executive Magistrate under this sub- section." 22. On careful and conjoint reading of the above provisions, it is pertinent to note that nowhere it is mentioned as to what is the time limit for filing a complaint/final report under Section 45 of the Act. However, there can not be a situation where a person is arrested and he is continued in custody eternally on the pretext that there is no time limit fixed under the Act for filing the complaint/final report as is contemplated under section 45 of the said Act. Admittedly, the proceedings under the Act is judicial proceedings. Whenever a person is arrested by the investigating agency his personal liberty is taken away by the ....
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....3.2016 was registered by Jayaprakash Nagar Police Station, Bangalore against Mr. Madhukar G Angur and others under Sections 417, 420, 376 and 506 of IPC, 1860; d) FIR in crime No. 52/2017 dated 28.09.2017 was registered by Shankarapura Police Station, Bangalore against Mr. Madhukar G Angur, Smt. Priyanka M Angur and others under Sections 506, 504, 143, 149 and 420 of IPC, 1860." 24. It is the specific case of the Directorate of Enforcement that out of the aforesaid predicate offences, approximately Rs.107 crores were siphoned away by the petitioner herein by sending e-mails to the students and parents to illegally directing them to deposit the tuition fee in the illegally opened bank accounts. It is further found from the material evidence on record that the petitioner has been dismissed from the post of Chancellor and despite the same, he continued to collect the money from the students and thereby he has indulged in money laundering. Upon receipt of information they found that exceptionally high turnover is recorded in SB A/c. No.170000000516824 in the name of the petitioner, Enforcement department suspected the involvement of the petitioner in misappropriation of the....
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....t also directed the Directorate of Enforcement to furnish a copy of the manual issued by the department in respect of arrest and how to deal with an arrested person. Accordingly, Sri Prasanna Kumar, learned counsel for the respondent-Directorate of Enforcement, made available the copy of the manual. It is worth to note that the relevant portion of the manual which reads as under: "2.26 Arrest: The Director, Deputy Director, Assistant Director or any officer authorized in this behalf by the Central Government, may exercise the power to arrest under section 19(1) of the PMLA. The Arresting Officer shall, on the basis of material in his possession, record reasons to believe that the person arrested is guilty of an offence of money laundering punishable under section 4 of the PMLA. The Arresting Officer shall sign the Arrest Order in Format No. VI (Annexure M) and give a copy of Arrest Order to the arrestee. Before arresting, the Arresting Authority shall obtain prior approval from the Regional Special Director. The Arrest Register shall be maintained at the zonal/sub-zonal office in the form of Annexure Ill (Register No.7). 2.27 Guidelines for Arrest: ....
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....tion of property/assets etc. T-21/02-Coord./2010 has advised the officers that in the event of arrest of an accused under Section 19 of the PMLA, there is absolutely no necessity of any police report under Section The Hqrs, vide Technical Circular No. 02/2010, dated 12/01/2010 issued from F.No. 173(2) of Cr.P C or a complaint for taking cognizance in respect of scheduled offence. The arrest could be made if it is so warranted and sufficient material is available against the arrestee with the Directorate. The Judgment pronounced in the case of Directorate of Enforcement Vs. Deepak Mahajan & another, 1994 SCC (Cri) 785 at para 136 has held that subsection (1) and (2) of Section 167 of the Cr. P C are squarely applicable with regard to the production and detention of a person arrested under the provisions of Section 35 of FERA and Section 104 of Customs Act and that the Magistrate has jurisdiction under Section 167 (2) of the Cr.RC. to authorize of a person arrested by any authorized officer of the Directorate of Enforcement under FERA and taken to the Magistrate in compliance of Section 35 (2) of FERA The Hon'ble Supreme Court in the case of Central Bureau of In....
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.... of the properties only. Materials collected in such investigation is no doubt would be used by the Directorate of Enforcement in the final report as well. Therefore, the arguments put forth on behalf of the petitioner that the petitioner is entitled for statutory bail under Section 167(2) of the Cr.PC., on issuance of the order passed under Section 5(1) of the Act for provisional attachment or filing an application for its confirmation before the adjudicating authority under Section 5(5) of the Act. In other words, the attachment of the property and its confirmation though is part of the same investigation, it is not for the purpose of filing the complaint under Section 45 of the Act and it is for the purpose of attachment of the property. Therefore, for all practical purposes, the investigation would not be complete so as to make available a right to the petitioner for statutory bail under Section 167(2) of Cr.P.C. Accordingly, Point Nos.1 & 2 are answered in the Negative. REGARDING POINT NOS.3 TO 6: 30. Now, the task of this court is to find out whether the petitioner is entitled for grant of bail by resorting to powers vested in this court under Section 439 of Cr.PC. Sect....
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....udgment were cured by the legislature and an amendment to section 45(1) was made vide the Finance Act, 2018 (No.13 of 2018). Under the amendment Act, section 45(1) was revived and for the words "punishable for a term of imprisonment of more than three years under part A of the Schedule", the words "under this Act" were substituted in Crl.OP.Nos. 3381, 3383 and 3385 of 2021, section 45(1) of the PMLA. 16. No doubt, the legislature has the power to cure the underlying defect pointed out by a Court, while striking down a provision of law and pass a suitable amendment. When such a law is passed, the legislature basically corrects the errors which have been pointed out in a judicial pronouncement. Resultantly, it amends the law, by removing the mistakes committed in the earlier legislation, the effect of which is to remove the basis and foundation of the judgment. Therefore, merely because the entire section is not re-enacted would be of no consequence, since the provision even after being declared unconstitutional, does not get repealed or wiped out from the statute book and it only becomes unenforceable. Therefore, once the Parliament steps in and cures the defect pointed out....
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.... 36. However, since the language employed under Section 45 of the Act, it is crystal clear that no person accused of an offence under the Act, shall be released on bail unless he satisfies the twin conditions enumerated under Section 45 of the Act. Therefore, further discussion on the aspect of whether the principles of law enunciated in the Judgment of the Madras High Court is implied confirmation by the Hon'ble Apex Court or not need not be further gone into in the present petition. 37. From the principles of law enunciated in the decisions relied on by the parties, there cannot be any iota of doubt left that whenever a bail application under the Act is to be considered, twin conditions enumerated in Section 45(2) of the Act must be satisfied. 38. In other words, the special powers vested in this court under Section 439 Cr.PC. cannot be exercised in the case of an accused facing trial under the provisions of the said Act, like any other accused who has been charged under the provisions of the IPC. Having regard to the language employed in Section 45(2), there is an embargo on the powers of this court to exercise the special powers vested in this court under Section 439 ....
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...., there is no reason whatsoever to oppose the release of the petitioner on bail. 41. This court has meticulously perused the materials on record in the light of Section 45 of the Act. The wordings used in Section 45 of the said Act is in the form of casting reverse burden on the accused. In the light of the legal principles enunciated in the judgments referred to supra and also taking note of the fact that the Directorate of Enforcement has already collected necessary materials to form an opinion that the petitioner is prima facie guilty of the offences alleged against him, is only for the purpose of effecting the arrest under Section 19 of the Act. However, if that opinion of the Investigating Agency that accused is guilty, is to be held as sacrosanct, there remains nothing before the Special court to be adjudicated upon further. in this regard, it is rightly argued by Sri Javali that no further materials are collected by the Directorate of Enforcement from the date of arrest of the petitioner till the filing of the complaint/final report under Section 45 of the Act on 7.3.2022. Copy of the complaint is made available before this court on 23.3.2022. This court meticulously peru....
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....t purpose altogether. The language employed in Section 19 of the Act and the manual referred to supra, on careful perusal is altogether different from the language employed under Section 41 of the Cr.P.C., Much has been argued by the counsel for petitioner and for the de-facto complainant as to the nature and purpose of arrest under Section 19 of the said Act. 46. Sri M.S. Shyam Sundar, learned Counsel for defacto complainant argued that the arrest under Section 19 of the said Act is in the nature of preventive detention. To substantiate his argument, he further contended that the wordings used in Section 19 of the said Act, is that the authorised officer of the Directorate of Enforcement would be forming an opinion that accused is guilty of the offences under the provisions of the said Act and then only he has got the power to arrest the accused and therefore, to shun the further damage and to put an end to the continuing offence of the money laundering arrest is effected. Therefore, the arrest under Section 19 of the said Act is preventive detention. 47. However, Sri Kiran S. Javali, learned Senior Counsel while dealing with the purpose of arrest under Section 19 of the sai....
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....e Act after taking cognizance of the said offence when once a complaint/final report under Section 45 of the Act, is filed. If the opinion of the Investigating Agency for the purpose of arrest under Section 19 of the Act, that an accused under the Act is prima facie guilty of offence under the provisions of the Act, it is only for the purpose of arrest and not binding on the Special Court. Therefore, in order to justify the arrest of an accused under the Act by resorting to the power envisaged under Section 19 of the said Act, the enquiry contemplated is termed as an equivalent to judicial enquiry. This is to safeguard the proposed accused from a wrongful arrest and nothing more. More so, when the very same accused has been enlarged on bail in respect of the predicated offences. 52. The above discussion would also answer question No.6 to urged on behalf of the petitioner that when once an accused is granted bail by a judicial Magistrate or the Sessions Court as the case may be in respect of the predicated offences ipso facto is entitled for grant of bail in respect of the offences under the Act. 53. In the case on hand, it is no doubt true that the petitioner is enlarged on b....