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2025 (6) TMI 1819 - HC - Money LaunderingMoney Laundering - accused not arrested during investigation u/s 19 of the PMLA - applicability of Section 91 of the BNSS - HELD THAT - It is not in dispute that the petitioner was not arrested by the E.D. under Section 19 of the PMLA in course of investigation till filing of prosecution complaint. Summons was issued upon the petitioner by the learned Special Court pursuant to which the petitioner appeared before the Court and filed two petitions one for bail and the other for his release under Section 91 of the BNSS. The second application was not taken into consideration by the learned Court. The bail application was rejected considering the material on record. True the petitioner filed an application for bail before the learned Special Court. But the learned Special Court ought not to have lost sight of the provision laid down under Section 91 of the BNSS as well as the mandate of the Hon ble Supreme Court in Tarsem Lal 2024 (5) TMI 837 - SUPREME COURT . The learned Court has misdirected itself in applying the rigours of Section 45(1) of the PMLA in rejecting the bail application when no bail application was required to be filed at all. This Court cannot remain oblivious of the fact that despite serious allegations against the petitioner the E.D. chose not to arrest him during investigation by invoking Section 19 of the Act. In such a situation when the petitioner appeared before the learned Special Court in response to the summons issued upon him the learned Special Court ought to have released him upon execution of bond under Section 91 of the BNSS. The authority in Serious Fraud Investigation Office 2025 (4) TMI 640 - SUPREME COURT deals with a situation where non-bailable warrant was issued since the accused kept on avoiding the bailable warrants. Thereafter a proclamation proceeding under Section 82 of the Code of Criminal Procedure was also initiated by the learned Special Court. The fact situation of the case can be distinguished from the present one. Conclusion - This Court is inclined to hold that despite the gravity of the allegations against the petitioner and material that has transpired against him during investigation the petitioner ought to be released forthwith upon execution of bond under Section 91 of the BNSS in view of the law laid down by the Hon ble Supreme Court in Tarsem Lal. Revision allowed.
1. ISSUES PRESENTED and CONSIDERED
- Whether the petitioner, who was not arrested under Section 19 of the Prevention of Money Laundering Act, 2002 (PMLA) during investigation but was summoned after filing of the prosecution complaint, should be released upon furnishing bond under Section 91 of the Bengal Nagpur Steel Syndicate (BNSS) Act instead of being taken into custody or subjected to bail conditions under Section 45 of the PMLA. - Whether the learned Special Court erred in rejecting the petitioner's bail application by applying the stringent conditions under Section 45 of the PMLA, despite the petitioner appearing pursuant to summons and no arrest having been made during investigation. - Whether the observations and ratio laid down by the Hon'ble Supreme Court in Tarsem Lal v/s Directorate of Enforcement regarding issuance of summons versus warrants and the procedure for custody under the PMLA are applicable to the facts of the present case. - Whether the petitioner's alleged involvement in smuggling and money laundering justifies denial of relief under Section 91 of the BNSS and refusal of bail under the PMLA. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Applicability of Section 91 of the BNSS for release upon appearance pursuant to summons in PMLA proceedings Relevant Legal Framework and Precedents: Section 91 of the BNSS empowers a Court to require a person appearing pursuant to summons or warrant to execute a bond or bail bond for appearance in Court. The Hon'ble Supreme Court in Tarsem Lal (2024) clarified that if an accused is not arrested under Section 19 of the PMLA prior to filing of complaint, the Special Court should issue summons rather than a warrant, and upon appearance, the accused should be released on furnishing bond under Section 91 of the BNSS rather than being treated as in custody or requiring bail. Court's Interpretation and Reasoning: The Court emphasized that the petitioner was not arrested during investigation under Section 19 of the PMLA, and summons were issued by the Special Court. The petitioner appeared accordingly and filed applications for bail and release under Section 91 BNSS. The Court held that the learned Special Court erred in rejecting the release application and treating the petitioner as if in custody, thereby applying the stringent bail conditions under Section 45 of the PMLA. The Court reasoned that the object of summons is to secure presence, not custody, and therefore, the petitioner ought to have been released upon furnishing bond under Section 91 BNSS. Key Evidence and Findings: It was undisputed that no arrest under Section 19 PMLA was made before complaint filing, and summons were issued. The petitioner complied by appearing before the Court. No application for custody for further investigation was made by the Enforcement Directorate (E.D.). Application of Law to Facts: Applying the Supreme Court's ratio in Tarsem Lal, the Court found that the petitioner's release on bond was mandated, and the bail application under Section 45 PMLA was not necessary or appropriate at this stage. Treatment of Competing Arguments: The E.D. argued the seriousness of allegations and prior bail in predicate offence justified custody and bail denial. The Court distinguished these arguments by focusing on procedural correctness and the absence of arrest under Section 19 PMLA, underscoring that the Supreme Court's ruling was binding and directly applicable. Conclusions: The petitioner is entitled to be released upon furnishing bond under Section 91 BNSS, and the rejection of bail under Section 45 PMLA was a misdirection. Issue 2: Interpretation of the Supreme Court's ruling in Tarsem Lal and its applicability Relevant Legal Framework and Precedents: The Supreme Court in Tarsem Lal (2024) addressed the practice of arrest and custody under the PMLA, holding that if no arrest is made during investigation, summons should be issued and appearance secured by bond rather than arrest or bail application. It deprecated custodial detention without proper procedural basis as violative of Article 21 of the Constitution. Court's Interpretation and Reasoning: The Court found the Supreme Court's judgment directly applicable, noting that the petitioner was not arrested under Section 19 PMLA and appeared pursuant to summons. The Court rejected the E.D.'s submission that the Supreme Court's observations were not ratio decidendi or binding, affirming that the ruling governs the procedural approach in such cases. Key Evidence and Findings: The Court noted the absence of any application by the E.D. for custody for further investigation, which the Supreme Court in Tarsem Lal mandated as a prerequisite for custodial detention post summons. Application of Law to Facts: The Court applied the ratio from Tarsem Lal to the petitioner's case, concluding that the learned Special Court should have released the petitioner on bond rather than rejecting bail and ordering custody. Treatment of Competing Arguments: The E.D. relied on the gravity of allegations and prior bail status, but the Court emphasized procedural safeguards and the Supreme Court's clear guidelines to prevent arbitrary custody. Conclusions: The Supreme Court's ruling in Tarsem Lal is binding and mandates release on bond in cases where no arrest under Section 19 PMLA has been made prior to complaint filing. Issue 3: Consideration of the gravity of allegations and prior bail in predicate offence in bail/release determination Relevant Legal Framework and Precedents: Section 45 of the PMLA lays down stringent conditions for bail, reflecting the seriousness of money laundering offences. The Court also considered the authority in Serious Fraud Investigation Office v/s Aditya Sarda (2025), which upheld issuance of non-bailable warrants and stringent bail conditions in cases of habitual offenders avoiding process. Court's Interpretation and Reasoning: The Court distinguished the present case from Serious Fraud Investigation Office, noting that the petitioner was not avoiding summons but appeared voluntarily, and no non-bailable warrant or proclamation proceedings were initiated. The Court held that the gravity of allegations does not override the procedural mandate that summons appearance requires release on bond unless custody is sought by the E.D. for further investigation. Key Evidence and Findings: The petitioner's admission under Section 50 PMLA regarding involvement in smuggling and commission was noted, but the Court emphasized that such material does not justify custodial detention absent proper procedural steps. Application of Law to Facts: The Court applied the law strictly, ensuring procedural safeguards were not bypassed due to seriousness of allegations. Treatment of Competing Arguments: The E.D. argued habitual offending and serious allegations warranted custody and bail denial. The Court held that such considerations cannot circumvent the procedural protections enshrined in the PMLA and BNSS. Conclusions: Seriousness of allegations does not justify denial of release on bond under Section 91 BNSS when procedural conditions for arrest and custody under PMLA are not met. 3. SIGNIFICANT HOLDINGS "If the accused was not arrested by the E.D. till filing of the complaint, while taking cognizance on a complaint under Section 44 (1) (b), as a normal rule, the Court should issue a summons to the accused and not a warrant." "If the accused appears before the Special Court pursuant to the summons, he shall not be treated as if he is in custody. Therefore it is not necessary for him to apply for bail. However, the Special Court can direct the accused to furnish bond in terms of Section 88 of the Cr.P.C. (Section 91 of the BNSS)." "If the E.D. wants custody of the accused who appears after service of summons for conducting further investigation in the same offence, the E.D. shall seek custody of the accused by applying to the Special Court who will pass an order on the application after hearing the accused." Core principles established include the procedural safeguard that appearance pursuant to summons under PMLA proceedings mandates release on bond under Section 91 BNSS, and custodial detention requires specific application and order by the Special Court. The stringent bail conditions under Section 45 PMLA apply only when the accused is in custody or arrested under Section 19 PMLA, not when the accused appears voluntarily pursuant to summons. Final determinations: The order of the learned Special Court rejecting bail and denying release under Section 91 BNSS was quashed. The petitioner was ordered to be released forthwith upon furnishing bond under Section 91 BNSS, subject to conditions ensuring attendance and non-interference with evidence or witnesses.
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