Appeal against order releasing the accused on bail
2. The appellant-Union of India through the Enforcement Directorate has challenged the legality of the impugned judgment and order dated 06.05.2024 passed by the High Court of Judicature at Patna in Criminal Miscellaneous No. 17738/2024, whereby the High Court had allowed the said petition and released the respondent Kanhaiya Prasad on bail, in connection with the Special Trial (PMLA) Case No. 8 of 2023 arising out of ECIR No. PTZO/14/2023.
PMLA and other IPC offences registered against respondent
3. As per the case of the appellant-ED, some 20 FIRs were registered at the various Police Stations at Patna, Saran and Bhojpur Districts under Sections 38, 120B, 378, 379, 406, 409, 411, 420, 467, 468 and 471 of IPC, and under Section 39(3) of the Bihar Mineral, (Concession, Prevention of Illegal Mining, Transportation & Storage) Rule, 2019. It was alleged inter alia that M/s Broad Son Commodities Private Ltd and its Directors were engaged in illegal mining and selling of sand without using the departmental pre-paid transportation E-challan, issued by the Mining Authority Bihar, and thus had caused revenue loss of Rs.161,15,61,164/- to the Government Exchequer. Since the said FIRs contained Scheduled offences as defined under Section 2(1)(y) of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as the ‘’PMLA’’), an ECIR bearing No. ECIR/PTZO/14/2023 dated 15.03.2023, addendum ECIR No. ECIR/PTZO/14/2023 dated 08.11.2023 and dated 04.05.2024 came to be registered, and the investigation for the offences of Money Laundering was initiated.
4. During the course of investigation and pursuant to the information made available, search operations were carried out under Section 17 of PMLA at the various locations and premises related with the said Company and its Directors, including four premises of Radha Charan Sah, (father of the respondent). During the course of inquiry, the statements of the respondent-Kanhaiya Prasad, being son of the said Radha Charan Sah came to be recorded on 01.09.2023 and 04.09.2023 under Section 50 of the PMLA. It has been alleged by the appellant-ED that thereafter the respondent was issued summons to appear before the Directorate on 11.09.2023, 12.09.2023 and 13.09.2023, however, he failed to appear on the said dates. The respondent thereafter was arrested at the ED, Patna Zonal Office, Bihar on 18.09.2023. On production of the respondent before the concerned court, his custody was handed over to the appellant- ED on 22.09.2023.
Respondent has concealed the proceeds of crime and transferred using hawala network
5. From the documents seized from the premises of the Radha Charan Sah and from the statements recorded under Section 50 of the Witnesses, of the respondent and of his father, it was found that the respondent-accused was actually involved in the process of concealing and the possession of the proceeds of crime amounting to Rs.17,26,85,809/- which were used for carrying out the renovation work in the resort at Manali and for the construction work of the school owned by his trust. It was also found that the respondent-accused had handled the said proceeds of crime and transferred it by using hawala network for acquisition of the resort at Manali. It was also alleged that the entire work of family-owned LLP’s and of Maa Sharda Devi Buildings and Construction, was handled by the respondent to route the proceeds of crime generated by his father to portray it as untainted money. The respondent thus had allegedly layered and laundered the proceeds of crime generated by his father, being a syndicate member involved in illegal sale of sand using hawala network. The respondent also had allegedly concealed the proceeds of crime by way of purchasing properties, carrying out renovation work and constructions in the family owned trust property using the said proceeds of crime.
ED (appellant) filed complaint against respondent under section 3r/w 4 PMLA
6. The appellant-ED therefore filed Prosecution Complaint against the respondent and other accused on 10.11.2023 for the offences under Section 3 read with Section 4 of the PMLA. The specific role of the respondent-accused has been mentioned in paragraph 11.6 of the said Prosecution Complaint. The concerned PMLA Court had taken cognizance of the alleged offences on 10.11.2023.
Respondent filed petition for bail and the same was allowed
7. The respondent filed the application being Criminal Misc. No.17738/2024 before the High Court of Judicature at Patna seeking regular bail in connection with the said Prosecution Complaint registered as Special Trial (PMLA Case No.8/2023) before the Special Judge, PMLA. The said application has been allowed by the High Court vide the impugned order.
8. The bone of contention raised by the learned counsel Mr. Zoheb Hussain appearing for the appellant-ED is that the impugned order passed by the High Court is in the teeth of Section 45 of the PMLA as also of various pronouncements made by this Court with regard to the mandatory requirement of the said provision. According to him, the High Court has thoroughly misinterpreted and misread the ratio of the judgments particularly of the judgment of the three-judge bench in Vijay Madanlal Choudhary & Ors. Vs. Union of India & Ors.1 , while holding that the provisions of Article 20(3) of the Constitution shall prevail upon Section 50 of the PMLA. Mr. Zoheb Hussain relying upon the Prosecution Complaint and other material on record submitted that there was a prima-facie case made out by the appellant against the respondent, and the offence under the PMLA being very serious and grave, High Court had committed an error in granting bail to the respondent without considering the rigours of Section 45.
Object of PML Act
10. At the outset, it hardly needs to be stated that the objective of the PMLA is to prevent money laundering which has posed a serious threat not only to the financial systems of the country but also to its integrity and sovereignty. The offence of money laundering is a very serious offence which is committed by an individual with a deliberate desire and the motive to enhance his gains, disregarding the interest of the nation and the society as a whole, and such offence by no stretch of imagination can be regarded as an offence of trivial nature. The stringent provisions have been made in the Act to combat the menace of money laundering.
Section 45 PMLA overrides general provisions of Cr.P.C
12. It is well settled position of law that Section 45 of the PMLA starting with a non-obstante clause has an overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them. Section 45 imposes two conditions for the grant of bail to any person, accused of an offence punishable for a term of imprisonment of more than 3 years under Part A of the Schedule. The two conditions are that (i) the prosecutor must be given an opportunity to oppose the application for bail; and (ii) the Court must be satisfied that there are reasonable grounds for believing that the accused person is not guilty of such offence and that he is not liable to commit any offence while on bail. As well settled, these two conditions are mandatory in nature and they need to be complied with before the accused person is released on bail.
As per section 65 PMLA the Cr.P.C shall apply insofar as they are not inconsistent with the provision of PMLA
13. It is further required to be noted that Section 65 of PMLA requires that the provisions of Cr.P.C. shall apply insofar as they are not inconsistent with the provisions of the PMLA and Section 71 provides that the provisions of PMLA shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Hence the conditions enumerated in Section 45 will have to be complied with even in respect of application for bail made under Section 439 of Cr.P.C. Further, Section 24 provides that in case of a person charged with the offence of money-laundering under Section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering. Therefore, the burden to proof that proceeds of crime are not involved in money laundering would lie on the person charged with the offence.
14. The aforesaid position of law has been reiterated time and again in catena of judgments by this Court. To cite a few judgments are in case of Gautam Kundu Vs. Directorate of Enforcement, Rohit Tandon Vs. Directorate of Enforcement, Tarun Kumar Vs. Assistant Director Directorate of Enforcement, etc.
Two conditions mentioned in section 45 PMLA should be considered while considering bail application
16. In view of the above, there remains no shadow of doubt that the consideration of the two conditions mentioned in Section 45 is mandatory, and that while considering the bail application, the said rigours of Section 45 have to be reckoned by the court to uphold the objectives of the PMLA.
17. So far as facts of the present case are concerned, the High Court in a very casual and cavalier manner, without considering the rigours of Section 45 granted bail to the respondent on absolutely extraneous and irrelevant considerations. There is no finding whatsoever recorded in the impugned order that there were reasonable grounds for believing that the respondent was not guilty of the alleged offence under the Act and that he was not likely to commit any offence while on bail. Noncompliance of the mandatory requirement of Section 45 has, on the face of it, made the impugned order unsustainable and untenable in the eye of law.
20. The High Court has utterly failed to consider the mandatory requirements of Section 45 and to record its satisfaction whether any reasonable ground existed for believing that the respondent was not guilty of the alleged offence, and that he was not likely to commit any offence while on bail. Merely because the prosecution complaint had been filed and the cognizance was taken by the court that itself would not be the ground or consideration to release the respondent on bail, when the mandatory requirements as contemplated in Section 45 have not been complied with.
Money Laundering is an aggravated form of crime
21. As well settled, the offence of money laundering is not an ordinary offence. The PMLA has been enacted to deal with the subject of money laundering activities having transnational impact on financial systems including sovereignty and integrity of the countries. The offence of money laundering has been regarded as an aggravated form of crime world over and the offenders involved in the activity connected with the Proceeds of Crime are treated as a separate class from ordinary criminals. Any casual or cursory approach by the Courts while considering the bail application of the offender involved in the offence of money laundering and granting him bail by passing cryptic orders without considering the seriousness of the crime and without considering the rigours of Section 45, cannot be vindicated.
Matter set aside and remanded to High Corut for fresh consideration
22. The impugned order passed by the High Court being in teeth of Section 45 of PMLA and also in the teeth of the settled legal position, we are of the opinion that the impugned order deserves to be set aside, and the matter is required to be remanded to the High Court for fresh consideration. Accordingly, the impugned order is set aside, and the matter is remanded to the High Court for consideration afresh with the request to the Chief Justice to place the matter before the Bench other than the Bench which had passed the impugned order. We may clarify that we have not expressed any opinion on the merits of the case.
Judgments relied/cited
- Vijay Madanlal Choudhary & Ors. vs. Union of India & Ors. – 2022 SCC On Line 929
- Gautam Kundu vs. Directorate of Enforcement – (2015) 16 SCC 1
- Rohit Tandon vs. Directorate of Enforcement – (2018) 11 SCC 46
- Tarun Kumar vs. Assistant Director Directorate of Enforcement – 2023 SCC OnLine 1486
Party
The Union of India through the Assistant Director vs Kanhaiya Prasad – Criminal Appeal No. 728 of 2025 (Special Leave Petition (Crl.) No. 7140 of 2024) – 2025 INSC 210 – 13th February 2025
