TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1073
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....GNZO/14/2024 arising out of FIRs having RC No. RC2202022E00199 dated 29.12.2022 and RC No. RC22322A009 dated 21.12.2022 which were registered by CBI, AC-V, New Delhi. Petitioner filed a bail application before the Ld. Special Judge, which was dismissed vide order dated 21.01.2025. Brief Background 2. The present proceedings arise out of an ECIR registered by the Enforcement Directorate ("ED") pursuant to large-scale allegations of financial mismanagement, fraud, and money laundering within the Amtek Group of companies, including Amtek Auto Ltd., ACIL Ltd., and allied entities. The trigger for investigation was a Public Interest Litigation before the Supreme Court highlighting bank frauds exceeding Rs. 12,000 crores, alongside multiple FIRs lodged by the CBI and other agencies. These FIRs alleged diversion of funds and creation of shell entities to siphon public money. The alleged activities have caused immense losses to public sector banks. The scale of the matter necessitated a detailed investigation under the Prevention of Money Laundering Act, 2002 ("PMLA"). 3. The investigation encompassed the affairs of M/s Amtek Auto Ltd., M/s Metalyst Forging Ltd., Castex Technologies Ltd....
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....s was on ensuring that mere settlement of bank accounts could not shield such acts from criminal scrutiny. These directions formed the foundation for the ED's ongoing investigation. 7. In parallel, several Amtek Group companies entered insolvency proceedings under the Insolvency and Bankruptcy Code, 2016. Resolution Professionals reported significant financial mismanagement aggravated by fraudulent transactions and fund diversion. Multiple entities, including Deccan Value Investments and Ramkrishna Forgings Ltd., acquired these companies through resolution plans. However, the fraudulent acts attributed to the former promoters, including the applicant, continued to be investigated. The total liabilities acknowledged in these processes exceeded Rs. 27,000 crores. 8. The ED investigation focused on fraudulent auditing practices, inflation of plant and machinery values in financial statements, and manipulation of books to obtain further credit facilities. Statements recorded under Section 50 of the PMLA from statutory auditors implicated top management in these activities. Examination of accounts since 2012-13 revealed that loans purportedly taken for capital expansion were never uti....
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....ies and was actively involved in all strategic and operational decisions. The investigation establishes that he spearheaded the diversion of loan funds and the systematic defrauding of financial creditors. As ultimate beneficial owner of the flagship companies, he exercised control through a complex web of over 500 group and shell entities. His role was central in designing and executing the fraudulent schemes. 13. The applicant manipulated the financial records of flagship companies by overstating fixed assets, inflating profits, and understating expenditures. These manipulations were achieved through fictitious sales and purchases, misclassification of expenses, and creation of false debit notes to mislead lenders and investors. He coordinated with statutory auditors to have falsified accounts audited and filed with regulatory authorities. The investigation pegs the overstatement of fixed assets alone at over Rs. 15,000 crores. Such fraudulent financial reporting facilitated continued borrowing and concealment of the group's true financial position. 14. Statements recorded under Section 50 of the PMLA from employees and dummy directors confirm that the applicant and his family ....
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....years, has already undergone incarceration for nearly one year prior to cognizance being taken. It is submitted that investigation qua the applicant stands concluded as the prosecution complaint was filed on 09.06.2024, running into hundreds of pages, with relied upon documents exceeding 20,000 pages. However, proceedings under the PMLA cannot culminate until the trial of the underlying scheduled offences is concluded, as held by the Supreme Court in V. Senthil Balaji v. ED, 2024 SCC OnLine SC 2626 .In the present case, investigation in respect of the IDBI FIR is pending, and though a charge sheet has been filed in the Bank of Maharashtra (BOM) FIR, cognizance is yet to be taken. Consequently, there is no likelihood of trial in the predicate offences commencing in the foreseeable future. 18. It is urged that the applicant had earlier been granted interim bail by this Court and had scrupulously complied with all conditions without misuse of liberty. Denial of bail in the present circumstances would amount to prolonging incarceration in violation of Article 21 of the Constitution of India. It is further submitted that the proceedings before the trial court remained stayed for over s....
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....d, as their probative value can only be tested at trial, as held in Directorate of Enforcement v. Ratul Puri2020 SCC OnLine Del 97 and Enforcement Directorate v. Rahil Hiteshbhai Chovatia2024 SCC Online Del 7002. 22. Mr. Pahwa points out that in several cases, including Kalvakuntla Kavitha v. ED SLP (Crl.) No. 10778 of 2024, V. Senthil Balaji (supra), and Ramesh Chandra v. EDBail Appln. 1913/2022, similar allegations of influencing witnesses or tampering with evidence were levelled by the ED, yet bail was granted on account of delay in trial, following the dictum in Manish Sisodia (supra). It is submitted that any apprehension of influencing witnesses can be addressed by imposing stringent conditions, as also observed by the Supreme Court in Manish Sisodia v. ED(supra). 23. Reliance has been placed on Manish Sisodia v. ED (supra), wherein the Supreme Court held that the right to speedy trial and the right to liberty are sacrosanct, and that the rigours of Section 45 of the PMLA must yield to the guarantees under Article 21 of the Constitution. It has been submitted that the applicant's case stands on an even higher footing as cognizance on the ED's prosecution complaint is yet to....
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....Rs. 38,760 crores, making it one of independent India's largest bank frauds. The petitioner's proposed resolution plan in insolvency proceedings envisaged payment of only Rs. 35 crores, a recovery of merely 0.09%, resulting in an unprecedented 99.91% haircut to creditors. A coordinate Bench of this Court, while rejecting the petitioner's challenge to arrest, recorded detailed observations on the large-scale diversion of public funds, operation of numerous shell companies, manipulation of corporate accounts, and the petitioner's inability to repay despite personal guarantees. 27. Investigation has revealed that the petitioner was the ultimate beneficial owner of the fraud, which was executed through manipulation of financial records, overstating assets and profits by over Rs. 15,000 crores, creating fictitious sales and purchases, floating more than 500 shell companies, and installing dummy directors. Statements of key managerial personnel and statutory auditors indicate that these activities were undertaken under the petitioner's instructions. The scale and method of the alleged fraud, it is submitted, disentitle the petitioner from seeking any exemption from the rigours of Sectio....
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....nd received back in cash. These acts, it is urged, place the petitioner within the exception noted in Senthil Balaji (supra) for cases where antecedents indicate a threat to society if released on bail. 31. On medical grounds, learned counsels for the ED submitted that the AIIMS Medical Board report dated 06.03.2025 found no requirement for overnight hospitalisation, recommending only an elective day-care coronary angiography. Interim bail granted for medical reasons was extended twice, but further extension was declined by this Court on 01.04.2025 for want of urgency. The Supreme Court, vide order dated 07.04.2025, declined to extend interim bail and directed the applicant to surrender. No fresh medical evidence has since been produced, rendering the present medical plea unsustainable. 32. It is lastly urged that the ground of delay in cognizance, now pressed by the petitioner, was already raised and effectively rejected before the Supreme Court in SLP (Crl.) No. 8997/2025, which was withdrawn after the Bench indicated disinclination to grant relief. In light of the gravity of the offence, the petitioner's conduct, failure to satisfy both the twin conditions under Section 45(1) ....
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....nt available at jail referral hospitals or AIIMS; the prescribed course of treatment had already been advised by the attending doctors, and therefore the petitioner's health could be adequately managed in custody, necessitating no special arrangements, leading to the rejection of the request for extension of interim bail. Vide report dated 06.03.2025, the AIIMS Medical Board informed this Court that the petitioner had non-obstructive coronary artery disease as per CT coronary angiography and, in view of worsening angina, required elective Coronary Angiography (CAG), which is a day-care procedure not requiring overnight admission, with further medical course to be determined based on the CAG findings, which may or may not necessitate further intervention. 36. The applicant's medical condition, though concerning, can be managed in custody, where prison authorities are obligated to provide adequate treatment, including referral to specialised hospitals if required. Illness warrants bail only when custodial treatment is clearly inadequate, which is not established in this case. Therefore, the medical plea cannot override the gravity of the offence, societal interest, and the statutory....
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....commencement of trial. The duty of the Court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. Further, the Court is required to record a finding as to the possibility of the accused committing a crime which is an offence under the Act after grant of bail." 38. The ED has placed on record materials suggesting the applicant's active role in manipulation of accounts, overstatement of fixed assets, and routing of funds through more than 500 entities. These are not isolated or spontaneous acts but appear to be part of a deliberate and sustained criminal design over years. Such conduct, if established, would exemplify the sophisticated nature of economic crime requiring robust law enforcement response. The Supreme Court in Vijay Madanlal Choudhary v. Union of India (supra) recognised the societal harm posed by money laundering and endorsed the legislature's intent to impose stringent bail conditions. This Court is bound to apply the statutory twin conditions under Section 45 of the PMLA. On the material presently available, those conditions are not satisfied. 39. The stage of trial is also a significant consideratio....
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....s, the following factors also before granting bail: (a) The nature of accusation and the severity of punishment in case of conviction and the nature of supporting evidence. (b) Reasonable apprehension of tampering with the witness or apprehension of threat to the complainant. (c) Prima facie satisfaction of the Court in support of the charge." 43. In the case of Ram Govind Upadhyay v. Sudarshan Singh 2002 SCC (Cri) 688, it is held as follows:- "3. Grant of bail though being a discretionary order but, however, calls for exercise of such discretion in a judicious manner and not as a matter of course. Order of bail bereft of any cogent reason cannot be sustained. Needless to record, however, that the grant of bail is depended upon the contextual facts of the matter being dealt with by the court and facts, however, do always vary from case to case. While placement of the accused in the society, though may be considered but that by itself cannot be a guiding factor in the matter of grant of bail and the same should and ought always to be coupled with other circumstances warranting the grant of bail. The nature of the offence is one of the basic considerations for the grant of b....
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....ence and evidence tampering. The relevant para is extracted below:- "34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. 35. While granting bail, the Court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of public/State and other similar considerations." 47. In case of Mohan Lal Jitamalji Porwal (supra), it is held as follows: "5.......The entire community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upo....
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....mplex and intricate nature of the transactions and the involvement of multiple actors. A meticulous and thorough investigation is essential to ensure that innocent persons are not wrongfully implicated and that the actual offenders are brought to justice. 53. In Anwar Dhebar v. State of Chhattisgarh MCRC No. 3455 of 2024, the Chhattisgarh High Court rejected the bail application on the ground that the offence involved grave economic irregularities, deep-rooted conspiracy, and substantial loss to the State exchequer. The Court emphasized that while considering bail in such matters, the gravity of the offence, the seriousness of the allegations, and the prescribed punishment must be considered in addition to the standard triple test. This reasoning was upheld by the Supreme Court on 14.07.2025. Notably, the financial magnitude of the offences involved in Anwar Dhebar (supra) was significantly lesser than that in the present case. The present applicant stands charged under Sections 120B IPC read with Sections 420 and 409 IPC, and Section 7(c) of the Prevention of Corruption Act, 1988 (as amended), in FIR No. RC2202022E0019. Furthermore, the applicant is also facing prosecution under ....