2025 (6) TMI 1185 - HC - Money Laundering

Seeking anticipatory bail under Sections 45 and 65 of the Prevention of Money Laundering Act 2002 - Money Laundering - predicate offence - twin conditions u/s 45(1) of PMLA for grant of bail satisfied or not - HELD THAT - The investigation is being carried out over a period of 5 years and during this period despite serving summons to the Applicant several times no attempt was made by the Respondent Agency to apprehend the Applicant - It is not denied by the Respondent Agency that the Applicant had joined the investigation and appeared 13 times before the Respondent Agency in addition to providing the documents as sought by the Respondent Agency - Even when the Applicant did not appear in response to summons received under Section 50 of PMLA between 14.12.2022 and 30.11.2023 the Applicant had responded to each of the summons by giving the information sought by the Respondent Agency or justifying the reasons for not being able to appear before the Respondent Agency. The twin conditions under Section 45 of PMLA has been satisfied in the facts and circumstances of the case as the learned SPP was given an opportunity to oppose this Application and this Court is satisfied that there are reasonable ground for believing that the Applicant is not guilty of the alleged offence under PMLA as the investigation has taken considerable time and the Respondent Agency has already filed a Chargesheet and a Supplementary Chargesheet without taking any steps to arrest the Applicant for custodial investigation - The Applicant is not likely to commit an offence while on bail as the Status Report filed by the Respondent Agency does not mention that any offence has been committed since filing of the ECIR on 20.11.2020. The present Application for grant of Anticipatory Bail is deserved to be allowed. In the event of arrest it is directed that the Applicant shall be released on bail on furnishing personal bond for Rs. 2, 00, 000/- with two sureties of the like amount subject to the satisfaction of the Respondent Agency on fulfilment of specified terms and conditions - bail application allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the Applicant is entitled to anticipatory bail under Sections 45 and 65 of the Prevention of Money Laundering Act, 2002 (PMLA) read with Section 482 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) in connection with the ECIR registered under Sections 3 and 14 of PMLA.

- Whether the 'twin conditions' under Section 45(1) of PMLA for grant of bail, namely (i) reasonable grounds to believe that the accused is not guilty of the offence, and (ii) that the accused is not likely to commit any offence while on bail, are satisfied in the present case.

- Whether the Applicant has cooperated with the investigation and whether custodial interrogation is necessary.

- The admissibility and evidentiary value of the material relied upon by the Respondent Agency, including statements recorded under the Income Tax Act and documents seized from the Applicant's accountant.

- The impact of prior bail granted by other courts in predicate offences on the present bail application under PMLA.

- Whether the Applicant has misused the liberty granted in prior proceedings or evaded investigation.

- The applicability and interpretation of relevant Supreme Court precedents concerning anticipatory bail under PMLA and custodial interrogation.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Entitlement to anticipatory bail under Sections 45 and 65 of PMLA read with Section 482 BNSS

Legal framework and precedents: Section 45(1) of PMLA mandates that no person accused of an offence under the Act shall be released on bail unless the Public Prosecutor is given an opportunity to oppose and the court is satisfied on reasonable grounds that the accused is not guilty and not likely to commit any offence while on bail. This 'twin conditions' test has been reiterated in several Supreme Court decisions including Directorate of Enforcement v. M. Gopal Reddy and others, Vijay Madanlal Choudhary and others v. Union of India, and others.

Court's interpretation and reasoning: The Court noted that the investigation has been ongoing for five years, during which the Applicant has appeared before the Respondent Agency 13 times and provided documents. The Respondent Agency had not taken steps to arrest the Applicant despite multiple summons. The Court found that the 'twin conditions' under Section 45 are satisfied because the Respondent Agency failed to demonstrate reasonable grounds to believe the Applicant's guilt or likelihood to commit an offence while on bail.

Key evidence and findings: The Respondent Agency filed a prosecution complaint and supplementary complaint but did not arrest the Applicant during the prolonged investigation. The Applicant's cooperation and response to summons, including written explanations for non-appearance due to health and family reasons, were acknowledged. The Court also noted that the Applicant was granted interim and regular bail in predicate offences, which was not misused.

Application of law to facts: The Court applied the 'twin conditions' test strictly and found that the Respondent Agency's failure to arrest and the Applicant's cooperation weigh in favor of granting anticipatory bail. The prolonged investigation without arrest indicated lack of sufficient material to form a reasoned opinion of guilt.

Treatment of competing arguments: The Respondent Agency argued that the Applicant was the kingpin of a coal pilferage syndicate, had evaded summons, and that custodial interrogation was necessary. The Court rejected these contentions on the facts that the Applicant had cooperated extensively and that no fresh offence was committed during the investigation period. The Court also held that the Applicant's responses to summons were adequate and justified.

Conclusion: The Applicant is entitled to anticipatory bail under Sections 45 and 65 of PMLA as the conditions prescribed therein are met.

Issue 2: Necessity of custodial interrogation and Applicant's cooperation with investigation

Legal framework and precedents: Supreme Court decisions such as P. Chidambaram v. Directorate of Enforcement and State v. Anil Sharma emphasize that custodial interrogation is qualitatively different and more effective than questioning a suspect under bail. However, custodial interrogation should not be granted if the accused cooperates and there is no necessity.

Court's interpretation and reasoning: The Court observed that the Applicant had appeared 13 times and provided necessary documents. The Respondent Agency had not arrested the Applicant for custodial interrogation despite multiple summons. The Court found no necessity for custodial interrogation given the Applicant's cooperation and the prolonged investigation.

Key evidence and findings: The Applicant's repeated appearances and written responses to summons, including justifications for non-appearance, were considered. The Court also noted the absence of any fresh offence during the investigation period.

Application of law to facts: The Court applied the principle that custodial interrogation is not warranted if the accused cooperates and investigation is not hampered. The Applicant's conduct did not justify custodial interrogation.

Treatment of competing arguments: The Respondent Agency contended that custodial interrogation was necessary to elicit information and prevent tampering with evidence. The Court acknowledged this but balanced it against the Applicant's cooperation and absence of evidence of evasion or tampering.

Conclusion: Custodial interrogation is not necessary; the Applicant's cooperation suffices.

Issue 3: Admissibility and evidentiary value of material relied upon by Respondent Agency

Legal framework and precedents: Section 22(1) of PMLA provides presumptions regarding records or property found in possession during search or seizure. However, the Supreme Court in Common Cause v. Union of India and Arvind Kejriwal v. Directorate of Enforcement held that entries in books of account or loose sheets are corroborative evidence and independent evidence is necessary to prove guilt. Statements recorded under the Income Tax Act cannot be used indiscriminately for PMLA investigation.

Court's interpretation and reasoning: The Court noted the Applicant's contention that the Respondent Agency relied on loose sheets and private ledgers maintained by the Applicant's accountant, which are not admissible evidence under Section 34 of the Indian Evidence Act. The Court recognized that the Respondent Agency has not yet examined the accountant and that the nexus between the Applicant and the alleged proceeds of crime is not established by admissible evidence.

Key evidence and findings: The Respondent Agency relied on statements of the Applicant's accountant and records seized during Income Tax searches. The Court observed that the Applicant contested the admissibility and reliability of such evidence.

Application of law to facts: The Court applied the principle that material must be admissible and corroborated by independent evidence to form a reasoned opinion of guilt. The mere presence of loose sheets or statements under a different statute is insufficient.

Treatment of competing arguments: The Respondent Agency invoked Section 22(1) PMLA to argue for presumptions as to records found in possession. The Court balanced this against the requirement of admissibility and corroboration, finding the Applicant's challenge to be substantial.

Conclusion: The evidence relied upon by the Respondent Agency is not sufficient or admissible to establish guilt at this stage.

Issue 4: Impact of prior bail in predicate offences on anticipatory bail application under PMLA

Legal framework and precedents: Supreme Court decisions such as Directorate of Enforcement v. Aditya Tripathi have clarified that grant of bail in predicate offences does not automatically entitle an accused to anticipatory bail under PMLA.

Court's interpretation and reasoning: The Court acknowledged that the Applicant was granted bail in predicate offences and that such liberty was not misused. However, the Court emphasized that the 'twin conditions' under PMLA must be independently satisfied.

Key evidence and findings: The Applicant was granted interim and regular bail in proceedings emanating from the FIR. No violation of bail conditions was recorded.

Application of law to facts: The Court found that while prior bail is relevant, it is not determinative. The Applicant's cooperation and absence of fresh offences weigh in favor of anticipatory bail under PMLA.

Treatment of competing arguments: The Respondent Agency argued that the Applicant's bail in predicate offences should not influence the present application. The Court agreed but considered it as part of the overall assessment.

Conclusion: Prior bail in predicate offences does not preclude anticipatory bail under PMLA but is a relevant factor in the overall assessment.

Issue 5: Whether the Applicant has misused liberty granted or evaded investigation

Legal framework and precedents: The Court referred to principles that bail can be cancelled if the accused misuses liberty or tampers with evidence. Non-appearance without justification can be a ground for cancellation.

Court's interpretation and reasoning: The Court found no evidence that the Applicant misused bail or evaded investigation. The Applicant appeared 13 times, responded to summons in writing, and provided justifications for non-appearance due to health and family reasons.

Key evidence and findings: The Applicant's letter dated 06.05.2025 offering to join investigation and provide assistance was noted. The Respondent Agency's complaint under Section 174 IPC for evasion was considered but not found sufficient to deny bail.

Application of law to facts: The Court applied the principle of fair trial and liberty, finding the Applicant's conduct consistent with cooperation.

Treatment of competing arguments: The Respondent Agency alleged evasion and deliberate non-appearance. The Court found these allegations unsubstantiated in light of the Applicant's explanations and conduct.

Conclusion: The Applicant has not misused liberty or evaded investigation.

3. SIGNIFICANT HOLDINGS

"The 'twin conditions' under Section 45 of PMLA have been satisfied in the facts and circumstances of the case as the learned SPP was given an opportunity to oppose this Application and this Court is satisfied that there are reasonable ground for believing that the Applicant is not guilty of the alleged offence under PMLA as the investigation has taken considerable time and the Respondent Agency has already filed a Chargesheet and a Supplementary Chargesheet without taking any steps to arrest the Applicant for custodial investigation."

"The Applicant is not likely to commit an offence while on bail as the Status Report filed by the Respondent Agency does not mention that any offence has been committed since filing of the ECIR on 20.11.2020."

"Custodial interrogation is qualitatively more elicitation-oriented than questioning the Applicant who is well ensconced with a favourable order granting Anticipatory Bail. However, given the Applicant's cooperation and absence of fresh offences, custodial interrogation is not necessary."

"The statement of one Mr. Niraj Singh, which was recorded under Section 132 (2) of the IT Act, cannot be used indiscriminately for the purpose of investigation under the PMLA. The Respondent Agency is wrongly relying upon a private ledger and loose sheets of documents maintained by Mr. Niraj Singh to presume that the money allegedly mentioned in the private ledger emanated from the Applicant, however, there is no evidence to show any nexus."

"Mere non-cooperation of the Applicant in responding to summons issued under Section 50 of PMLA would not be sufficient to render him liable to be arrested under Section 19 of the PMLA."

"The grant of anticipatory bail in economic offences would definitely hamper the effective investigation if misused. However, in the present case, the Applicant has not misused any liberty granted to him in the Predicate Offence in the present proceedings under PMLA."

"In the event of there being any violation of the stipulated conditions, it would be open to the Respondent Agency to seek redressal by filing an Application seeking cancellation of the bail."