TaxTMI 
TaxTMI 
2026 (1) TMI 1568
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....nt (hereinafter referred to as 'ED') in Case No. ECIR/BGZO/25/2024 pending on the file of LXXXI Additional City Civil and Sessions Judge and Special Court for Trial of MPs/MLAS Cases at Bengaluru (CCH-82). [I] BRIEF FACTS :- 2. The brief facts are that the petitioner has been arraigned as an accused in Case No. ECIR/BGZO/25/2024 ('hereinafter referred to as 'ECIR'). It is made out from the records that initially, a Private Complaint came to be filed in PCR No. 28/2024 as well as FIR in Crime No.11/2024 which was registered by the Karnataka Lokayukta Police, Mysuru. The FIR has been registered for the offences punishable under Sections 120B, 166, 403, 406, 420, 426, 465, 468, 340, 351 of IPC, 1860 read with Sections 9 and 13 of the Prevention of Corruption Act, 1988 ['P.C. Act' for brevity] and read with Sections 3, 53 and 54 of the Prohibition of Benami Property Transactions Act, 1988 and read with Sections 3 and 4 of the Karnataka Land Grabbing Prohibition Act, 2011. 3. It is asserted that pursuant to PCR No.28/2024 (Crime No.11/2024), the Karnataka Lokayukta Police, Mysuru has filed 'B' Final Report only against accused Nos.1 to 4 in t....
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....fficer on the basis of material in his possession has reason to believe that any person has been guilty of an offence punishable under the PMLA. The said provision further stipulates that upon arrest, the accused must be informed of the grounds of such arrest. Apart from Section 45 of PMLA, Section 19 of PMLA would be of relevance, as the petitioner has raised a contention regarding violation of Section 19 of PMLA while resorting to arrest and other procedural lapses in such process of arrest warranting release on bail irrespective of the compliance under Section 45 of PMLA. 10. It is necessary to also note that an application under Section 167(2) of Cr. P.C. read with Section 45 of PMLA seeking to be enlarged on statutory/default bail on the ground that the respondent - 'ED' had failed to file a complete and final Prosecution Complaint within the statutory period. 11. The petitioner's contentions in the petition were essentially on the grounds :- (i) That the investigation of the predicate offence not having concluded, the Prosecution ought not to have proceeded to file the Prosecution Complaint; (ii) That the PMLA offence is not a stand alone o....
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....he Apex Court in Vijay Madanlal Choudhary and Others v. Union of India and Others [(2023) 12 SCC 1] [Vijay Madanlal Choudhary] are satisfied, viz., where there is acquittal on merits after trial as regards the predicate offence, when the person accused of the predicate offence is absolved from the allegations on merits, when it is established through evidence that the property in question was rightfully owned by the person and was not derived from any criminal activity and only under such enumerated circumstances it could be said that the proceedings under PMLA would come to a close. Such conditions, it is submitted, are not found in the present case. 13. The respondent - 'ED' has further contended that there is substantial evidence in establishing the involvement of accused, that the grounds of arrest and reasons to believe are detailed and sufficient, that in light of the statutory presumption under Section 24 of PMLA and the mandatory twin conditions under Section 45 of PMLA, no grounds are made out to enlarge the petitioner on bail. 14. It is also contended that no grounds are made out for enlarging the petitioner on default bail on the ground of incomplete charge....
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....cretion vests in the court which is not arbitrary or irrational but judicial, guided by the principles of law as provided under Section 45 of the 2002 Act. While dealing with a similar provision prescribing twin conditions in MCOCA, this Court in Ranjitsing Brahmajeetsing Sharma [(2005) 5 SCC 294], held as under : (SCC pp. 318-19, paras 44-46) "44. The wording of Section 21(4), in our opinion, does not lead to the conclusion that the court must arrive at a positive finding that the applicant for bail has not committed an offence under the Act. If such a construction is placed, the court intending to grant bail must arrive at a finding that the applicant has not committed such an offence. In such an event, it will be impossible for the prosecution to obtain a judgment of conviction of the applicant. Such cannot be the intention of the legislature. Section 21(4) of MCOCA, therefore, must be construed reasonably. It must be so construed that the court is able to maintain a delicate balance between a judgment of acquittal and conviction and an order granting bail much before commencement of trial. Similarly, the court will be required to record a finding as to the pos....
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....ed on the evidence adduced during the trial. As explained by this Court in Nimmagadda Prasad [Nimmagadda Prasad v. CBI, (2013) 7 SCC 466], the words used in Section 45 of the 2002 Act are "reasonable grounds for believing" which means the court has to see only if there is a genuine case against the accused and the prosecution is not required to prove the charge beyond reasonable doubt." 18. Accordingly, it is clear that the Court while considering grant of bail on the twin conditions under Section 45 of PMLA is to arrive at a finding on the basis of broad probabilities, while being fully conscious that the stage at which such findings are being made is on the basis of pre-trial stage investigation records and pleadings. It is also a settled position that such findings required to be made while referring to the twin tests of Section 45 of PMLA would be tentative and would not prejudice the conclusive findings still to be arrived at after trial. 19. The nature of such findings in a factual matrix is best elucidated by referring to the findings on prima facie case vis-à-vis twin tests of Section 45 of PMLA in the case of Manish Sisodia-1 (supra) at paras-24 to 28 which wo....
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....ed by Sri N. Manjunath under undue pressure [see para-11.7(f) of Prosecution Complaint]. 24. It is narrated that, there is a specific finding that the sites allotted to Chamundeshwari Nagara Sarvodaya Sangha have been transferred to the close relatives and associates of the petitioner, G.T. Dinesh Kumar through Sale Agreements and the details are provided at para-11.7(i) of the Prosecution Complaint and the further assertion that the amount for such Agreement was paid by Sri N. Manjunath is evidenced by the Bank payments by way of Demand Draft [see para-11.7(j) of the Prosecution Complaint]. 25. It is also stated that the said Sri N. Manjunath in his statement under Section 50 of PMLA has not given any explanation for such payments made. 26. It is made out that huge payments have been made to the relatives of G.T. Dinesh Kumar by N. Manjunath including to maternal grandfather of wife of G.T. Dinesh Kumar, brother of mother-in-law of G.T. Dinesh Kumar, maternal grandmother of wife of G.T. Dinesh Kumar and sister of mother-in-law of G.T. Dinesh Kumar and no explanation has been made as regards such payments. 27. Such details referred to above would make out an offence of ....
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....on. The Prosecution Complaint crystallises the stand of the Prosecution. [III] OTHER CONTENTIONS :- 32. As regards other contentions, the same are dealt with infra. As regards the contention relating to the proceedings under PMLA having overshot by investigation of the predicate offence, it could be stated that the legal requirement of a First Information Report would be sufficient for the progress of proceedings under PMLA. The proceedings under PMLA would fail only if the proceedings relating to the predicate offence vis-à-vis the accused has resulted in discharge/acquittal or quashment of the predicate offence as against the accused. In the absence of such termination of such proceedings of the predicate offence, it could be stated that there is no bar for continuance of the proceedings under PMLA. 33. It would also be necessary to notice that the present proceedings being limited to grant of bail, the finding regarding prima facie case as regards the offence of money laundering cannot result in conversion of present petition to one under Section 482 of Cr. P.C. / Section 528 of BNSS or petition to discharge and accordingly, a detailed consideration of the ingred....
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....case for exercise of power of arrest. This Court has no reason to disagree with such finding and endorses such conclusion. 40. The trial Court has also recorded a finding after consideration that grounds of arrest are communicated, that reasons for arrest are also communicated. 41. Further, the trial Court at para-21 has referred to the grounds of arrest and in para-22 regarding reasons to believe. A finding has been recorded as regards non- circumvention of Section 19 of PMLA. 42. The remand applications are detailed and record that grounds of arrest have been communicated and acknowledged by him. 43. At paragraphs-14 to 18 of the order of the trial Court, there is detailed analysis of adherence to the factual guidelines of Apex Court in D.K. Basu v. State of W.B. [(1997) 1 SCC 416] and such factual finding also requires endorsement and petitioner has failed to make out a case for a divergent view. [V] DEFAULT BAIL :- 44. The petitioner has filed an application under Section 167(2) of Cr. P.C. [Section 187(3) of BNSS] read with Section 45 of PMLA. It is the case made out by the petitioner that the arrest was on 16.09.2025 and the sixty day period for completion o....
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....t itself. If that were to be so, it cannot be held that the defects such as Index Sheet as noticed in the present case cannot have the effect of vitiating the chargesheet. 52. In the case of Sajith v. State of Kerala [Bail Appl. No.399/2007] relied on by the petitioner, the chargesheet was not re-presented after it was returned as defective. Accordingly, the said order would not come to the aid of the petitioner. 53. Insofar as the aspect of incomplete chargesheet being a ground for default bail, it must be noticed that as regards the petitioner is concerned, a Final Report was filed within the period of sixty days. No doubt, investigation against other accused is still under progress, however, by virtue of the law laid down by the Apex Court in Central Bureau of Investigation v. Kapil Wadhawan and Another [(2024) 3 SCC 734] [Kapil Wadhawan (supra)], wherein it is clarified that once the chargesheet is filed against the particular accused, the statutory right of default bail cannot be claimed on the ground that investigation qua other accused was pending, the question of contending that there was incomplete chargesheet warranting extending of relief of default bail does not a....
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....procure sufficient evidence for the court to inquire into the offence and the necessary information is being sent to the court. In fact, the report under Section 173(2) purports to be an opinion of the Investigating Officer that as far as he is concerned he has been able to procure sufficient material for the trial of the accused by the court. The report is complete if it is accompanied with all the documents and statements of witnesses as required by Section 175(5). Nothing more need be stated in the report of the Investigating Officer. It is also not necessary that all the details of the offence must be stated. The details of the offence are required to be proved to bring home the guilt to the accused at a later stage i.e. in the course of the trial of the case by adducing acceptable evidence." (emphasis supplied) 22. In view of the above settled legal position, there remains no shadow of doubt that the statutory requirement of the report under Section 173(2) would be complied with if the various details prescribed therein are included in the report. The report under Section 173 is an intimation to the court that upon investigation into the cognizable offence, the inv....
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....tu Chhabaria v. Union of India and Others [(2024) 12 SCC 116 - [W.P.(Crl.) No.60/2023]] [Ritu Chhabaria (supra)] had observed that without completing investigation of a case, the Prosecution Complaint cannot be filed by the Investigating Agency only to deprive the accused of right of default bail under Section 167(2) of Cr. P.C. However, in the case of Director of Enforcement v. Manpreet Singh Talwar [SPL (Crl.) 5724/2023], the Apex Court by its order of 12.05.2023 has clarified that the application for grant of default bail could be proceeded independent of and without relying on the judgment in W.P.(Crl.) No.60/2023, disposed of on 26.04.2023. In effect, the Apex Court has held as hereunder :- "In continuation of the interim order of this Court dated 1 May 2023, we clarify that the order shall not preclude any trial court or, as the case may be, High Court from considering an application for the grant of default bail under Section 167 of the Code of Criminal Procedure 1973 independent of and without relying on the judgment dated 26 April 2023 in Writ Petition (Criminal) No 60 of 2023." [VI] MEDICAL BAIL :- 60. The petitioner has also raised the medical ground and s....
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....ourt. The observations made by Apex Court in Manish Sisodia v. Central Bureau of Investigation [(2024) 12 SCC 691] [Manish Sisodia-1] are extracted hereinbelow :- "28. In view of the aforesaid discussion and for the reasons stated, we are not inclined to accept the prayer for grant of bail at this stage. 29. However, we are also concerned about the prolonged period of incarceration suffered by the appellant Manish Sisodia. In P. Chidambaram v. Enforcement Directorate [(2020) 13 SCC 791], the appellant therein was granted bail after being kept in custody for around 49 days [(2020) 13 SCC 337, the appellant therein was granted bail after being kept in custody for around 62 days.], relying on the Constitution Bench in Gurbaksh Singh Sibbia v. State of Punjab [(1980) 2 SCC 565] and Sanjay Chandra v. CBI [(2012) 1 SCC 40], that even if the allegation is one of grave economic offence, it is not a rule that bail should be denied in every case. Ultimately, the consideration has to be made on a case-to-case basis, on the facts. The primary object is to secure the presence of the accused to stand trial. The argument that the appellant therein was a flight risk or that there....
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....e right to life, except for a valid ground such as where the trial is delayed at the instance of the accused himself. In our opinion, Section 436-A should not be construed as a mandate that an accused should not be granted bail under the PML Act till he has suffered incarceration for the specified period. This Court in Arnab Manoranjan Goswami v. State of Maharashtra [(2021) 2 SCC 427], held that while ensuring proper enforcement of criminal law on one hand, the court must be conscious that liberty across human eras is as tenacious as tenacious can be. 34. Detention or jail before being pronounced guilty of an offence should not become punishment without trial. If the trial gets protracted despite assurances of the prosecution, and it is clear that case will not be decided within a foreseeable time, the prayer for bail may be meritorious. While the prosecution may pertain to an economic offence, yet it may not be proper to equate these cases with those punishable with death, imprisonment for life, ten years or more like offences under the Narcotic Drugs and Psychotropic Substances Act, 1985, murder, cases of rape, dacoity, kidnaping for ransom, mass violence, etc. Neither ....
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....in case of ill health and medical emergency due to illness of his wife. Such application would be also examined on its own merits." 67. The relevant facts indicating the length of imprisonment are :- (a) Date of registration of FIR: - 27.09.2024 - Pursuant to direction of the Special Court in PCR No.28/2024, wherein matter was referred for investigation under Section 156(3) of Cr. P.C. (b) Date of arrest: - 16.09.2025 (c) Period of incarceration as on date of pronouncement of order :- 127 days (from the date of arrest till the date of pronouncement). 68. It is to be examined as to whether such period of incarceration would be sufficient to treat it as infringing upon rights of the petitioner under Article 21 of the Constitution of India and thus entitling the petitioner to be enlarged on bail. 69. It is to be noticed that the Apex Court in Manish Sisodia-3 (supra) while dealing with request for being enlarged on bail in light of the liberty granted under Manish Sisodia - 1(supra) has granted bail on the sole ground of long incarceration compounded by prospects of a delayed trial. 70. The Apex Court, while considering the objection of ....
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....Javed Gulam Nabi Shaikh case [(2024) 9 SCC 813] further observed that, over a period of time, the trial courts and the High courts have forgotten a very well-settled principle of law that bail is not to be withheld as a punishment. From our experience, we can say that it appears that the trial courts and the High Courts attempt to play safe in matters of grant of bail. The principle that bail is a rule and refusal is an exception is, at times, followed in breach. On account of non-grant of bail even in straightforward open-and-shut cases, this Court is flooded with huge number of bail petitions thereby adding to the huge pendency. It is high time that the trial courts and the High Courts should recognize the principle that "bail is rule and jail is exception". 73. It is significant that the decision in Manish Sisodia - 3(supra) reiterates that Section 45 of PMLA would not come in the way of considering grant of bail due to long incarceration and delay in time. 74. That apart, what is noticeable is that the reiteration of the principle, 'bail is rule and jail is exception', which observation is made even in the context of PMLA. 75. The other orders of the Apex Court....
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....r could it be construed to constitute moral conviction. 79. The Apex Court has reiterated that the right to personal liberty under Article 21 of the Constitution of India that is to be safeguarded where there is indefinite detention in cases involving voluminous documents and heavy material where trial is unlikely to begin promptly. The observations of Apex Court at para-27 in V. Senthil Balaji V. Deputy Director, Directorate of Enforcement [2024 SCC OnLine SC 2626] [Senthil Balaji (supra)] is extracted hereinbelow :- "27. Under the Statutes like PMLA, the minimum sentence is three years, and the maximum is seven years. The minimum sentence is higher when the scheduled offence is under the NDPS Act. When the trial of the complaint under PMLA is likely to prolong beyond reasonable limits, the Constitutional Courts will have to consider exercising their powers to grant bail. The reason is that Section 45(1)(ii) does not confer power on the State to detain an accused for an unreasonably long time, especially when there is no possibility of trial concluding within a reasonable time. What a reasonable time is will depend on the provisions under which the accused is being tri....
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.... constitutional courts on such principle enlarge the accused on bail "notwithstanding the statutory provisions". 81. The observations in Senthil Balaji (supra) has been reiterated by the latest judgment of the Apex Court in Mahesh Joshi v. Directorate of Enforcement [SLP (Crl.) No.13737/2025 vide order dated 03.12.2025] at paras-13 and 14. "13. In V. Senthil Balaji v. Deputy Director, Directorate of Enforcement, of which, one of us was a member (Augustine George Masih, J.,), this Court, particularly in para 27, held that where a trial cannot be reasonably concluded and incarceration becomes prolonged, constitutional courts must intervene to safeguard the right to personal liberty under Article 21. The Court further emphasised that Section 45(1)(ii) of the PMLA cannot be interpreted to justify indefinite detention in cases involving voluminous, document-heavy material where trial is unlikely to begin promptly. 14. Upon considering the material placed before us, we find that several co-accused, whose alleged roles will ultimately be evaluated at trial, have already been granted bail. The Appellant has remained in custody for over seven months. The record is entir....
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....one group and deny bail on that basis [Satender Kumar Antil v. CBI, (2022) 10 SCC 51]. It is well settled that if the State or any prosecuting agency including, the court concerned has no wherewithal to provide or protect the fundamental right of an accused, to have a speedy trial as enshrined under Article 21 of the Constitution, then the State or any other prosecuting agency should not oppose the plea for bail on the ground that the crime committed is serious. Article 21 of the Constitution applies irrespective of the nature of the crime [Javed Gulam NAbi Shaikh v. State of Maharashtra, (2024) 9 SCC 813]. The aforesaid proposition was quoted with approval by another two-Judge Bench of this Court and it was held that long period of incarceration for around 17 months and the trial not even having commenced, the appellant in that case has been deprived of his right to speedy trial [Manish Sisodia v. Enforcement Directorate, (2024) 12 SCC 660]. 16. A two-Judge Bench of this Court in V. Senthil Balaji's case [V. Senthil Balaji v. Deputy Director, Enforcement Directorate, 2024 SCC OnLine SC 2626] has held that under the statutes such as PMLA, where maximum sentence is seve....
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.... being enlarged on bail on the premise of rights flowing from Article 21 of the Constitution of India which could be pressed into service de hors merits of the application in terms of Section 45 of PMLA. The Apex Court has referred to constitutional mandate being higher law must be read into Section 439 of Cr.P.C. 87. In light of the above legal framework, the request of the petitioner for being enlarged on bail in the present case is to be considered. 88. However, taking note that the length of incarceration is 127 days as of now, it can be stated that it would not qualify to be long incarceration entitling the petitioner to be released on bail for the present. [VIII] CONCLUSION :- 89. The approach of Apex Court in Manish Sisodia - 1 (supra) could be adopted in the present case as well. The Apex Court while recording a positive finding though for the purposes of Section 45 of PMLA that the prayer for grant of bail could not be considered, as a prima facie case of involvement of the petitioner was made out, however, reserved liberty to approach, if there was delay in the trial while discussing the effect of prolonged incarceration. 90. The observations made at paras-....
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....thout trial. 93. Finally, the Apex Court proceeded to grant bail after taking note of the aspect of long incarceration. In the present case as well having held that the length of incarceration cannot qualify to be long incarceration, as the petitioner has been in custody for 127 days as of now, it would be appropriate to reserve liberty to the petitioner to approach this Court after a lapse of three months. 94. The petitioner then would have to point out as regards Prosecution having taken steps for commencement of trial and that there may be the possibility of joint trial contributing to further delay and that there was no possibility of trial concluding within a reasonable time. 95. The Prosecution also would have to keep such aspects in mind so as to demonstrate that trial would be concluded within a reasonable time. Upon consideration of such aspects, the Court may take an appropriate decision. 96. Reserving liberty would be justified while noticing that, as on date, it is the petitioner alone who has been arrested amongst the several accused, that prior to his arrest, he had subjected himself to interrogation and that the investigation of the predicate offence is n....