2025 (6) TMI 1820 - HC - Money Laundering

Money Laundering - conspiracy to issue recommendations/appointment letters to unsuccessful candidates for filling up vacancies in Group-C and D posts in various schools of the State - applicability of Section 45 of the PMLA - HELD THAT - Prosecution complaint was filed by the E.D. on 22nd January 2025 and cognizance taken. The petitioner was not arrested in connection with the case during investigation. Since he was in custody in connection with another case he was produced before the learned Special Judge on 7th March 2025. The petitioner filed a bail petition before the learned Special Judge and sought release in terms of the dictum in Tarsem Lal 2024 (5) TMI 837 - SUPREME COURT . The bail prayer was dealt with by the learned Court on merits and turned down. The observation made by the Hon ble Supreme Court in Tarsem Lal was not considered. The learned Court has misdirected itself in applying the rigours of Section 45 of the PMLA in rejecting the bail prayer when no such application was required to be filed at all. It is trite law that the E.D. cannot invoke section 19 of the Act when the accused appears before the Special Court in response to process issued against him. Since the petitioner was not arrested in course of investigation under Section 19 of the Act the learned Special Court ought to have released him in terms of Section 91 of the BNSS and not turned down his bail application on merits. Evidently the E.D. has not filed any application before the learned Special Court seeking custody of the petitioner for conducting further investigation of the case. Conclusion - In view of the provision under Section 91 of the BNSS as well as the law laid down by the Hon ble Supreme Court this Court is inclined to hold that the petitioner ought to be released forthwith upon execution of bond under Section 91 of the BNSS. Petition allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court are:

(a) Whether the petitioner, who was not arrested during investigation but produced before the Special Court pursuant to summons, is required to apply for bail under Section 45 of the Prevention of Money Laundering Act (PMLA) or is entitled to be released on furnishing bond under Section 91 of the Bengal Nagpur Steel and Shipbuilding (BNSS) Act and Section 88 of the Code of Criminal Procedure (Cr.P.C.).

(b) Whether the provisions of Section 19 of the PMLA permitting arrest after cognizance can be invoked against the petitioner who appeared before the Court on summons and was not previously arrested.

(c) The applicability and interpretation of the Supreme Court rulings in Satender Kumar Antil v. CBI and Tarsem Lal v. Directorate of Enforcement regarding arrest and bail under the PMLA.

(d) Whether the learned Special Court erred in rejecting the bail application of the petitioner by applying the rigours of Section 45 of the PMLA without considering the procedural safeguards under Section 91 of the BNSS and the Supreme Court's guidance in Tarsem Lal.

(e) The adequacy of the prosecution's justification for denying bail, including concerns about jeopardizing investigation, risk of tampering with evidence, or flight risk.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (a) and (b): Arrest, Bail, and Summons under PMLA and BNSS Act

The relevant legal framework includes Section 19 and Section 45 of the PMLA, Section 91 of the BNSS Act, and Section 88 of the Cr.P.C. Section 19 of the PMLA empowers the Enforcement Directorate (E.D.) to arrest a person after cognizance of an offence, while Section 45 of the PMLA governs bail, imposing stringent conditions for grant of bail to accused persons.

Section 91 of the BNSS Act empowers the presiding officer of a Court to require a person present in Court to execute a bond or bail bond for appearance. Section 88 of the Cr.P.C. provides for the furnishing of bonds for appearance before the Court.

The Supreme Court in Tarsem Lal clarified that if the accused is not arrested during investigation and appears before the Special Court pursuant to summons issued under Section 44(1)(b) of the PMLA, the Court should issue summons rather than warrants. Appearance on summons does not amount to custody, and the accused is not required to apply for bail. Instead, the Court may direct the accused to furnish bond under Section 88 Cr.P.C. (read with Section 91 BNSS). Custody for further investigation requires a separate application by the E.D. to the Court.

The Court noted that the petitioner was not arrested during investigation but was interrogated once on 16th January 2025 at the Correctional Home, where he was already in custody for other cases. The complaint was filed on 22nd January 2025, and he was produced before the Special Court on 7th March 2025 pursuant to summons. The E.D. did not seek custody for further investigation.

The Court reasoned that since the petitioner appeared pursuant to summons and was not arrested under Section 19 of the PMLA, the rigours of Section 45 PMLA do not apply. The learned Special Court erred in rejecting bail by applying Section 45 without considering Section 91 BNSS and the Supreme Court's ruling in Tarsem Lal. The Court emphasized that the E.D. cannot invoke Section 19 PMLA against an accused who appears on summons without arrest.

Issue (c): Interpretation of Supreme Court Precedents

The petitioner relied on Satender Kumar Antil and Tarsem Lal to argue that arrest after cognizance under Section 19 PMLA is impermissible once the accused appears on summons and that bail applications are unnecessary in such circumstances.

The Court extensively referred to Tarsem Lal, highlighting its three key observations:

(a) The Court should issue summons, not warrants, if the accused was not arrested before complaint filing.

(b) Appearance on summons does not equate to custody, so bail application is not mandatory.

(c) Custody for further investigation requires a separate application and Court order.

The Court distinguished the present case from Tarsem Lal only to the extent that the learned Special Court had failed to apply these principles. The Court found no merit in the E.D.'s attempt to justify custody based on the petitioner's existing incarceration in other cases, as the E.D. did not arrest or seek custody under the present case.

Issue (d): Validity of Bail Rejection by the Special Court

The Court observed that the learned Special Court rejected the bail application by applying Section 45 of the PMLA without considering Section 91 BNSS and the Supreme Court's mandate in Tarsem Lal. The Court held that this was a misdirection and an error of law.

Since the petitioner was not arrested in the present case and appeared pursuant to summons, bail was not required to be applied for, and the Court should have directed release upon furnishing bond under Section 91 BNSS.

The Court further noted the absence of any application by the E.D. seeking custody for further investigation, which would have justified detention under Section 19 PMLA.

Issue (e): Prosecution's Arguments on Bail Denial

The E.D. argued that the petitioner was involved in issuing fake appointment letters to unsuccessful candidates, that releasing him on bail could jeopardize investigation, and that there was a risk of tampering with evidence or influencing witnesses.

The Court found these arguments insufficient to justify denial of release on bond under Section 91 BNSS where the petitioner was not in custody in this case and was already in custody for other matters. The Court emphasized that the E.D.'s failure to seek custody under Section 19 PMLA and the procedural safeguards under the BNSS Act and Cr.P.C. must be respected.

3. SIGNIFICANT HOLDINGS

The Court held:

"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)."

"The E.D. cannot invoke section 19 of the Act when the accused appears before the Special Court in response to process issued against him."

"The learned Special Court ought to have released the petitioner in terms of Section 91 of the BNSS and not turned down his bail application on merits."

"Since the petitioner was not arrested in course of investigation under Section 19 of the Act, the learned Special Court ought to have released him in terms of Section 91 of the BNSS and not turned down his bail application on merits."

Accordingly, the Court quashed the order of the learned Chief Judge rejecting bail and directed the petitioner's release upon furnishing bond under Section 91 of the BNSS.

The core principles established are:

(i) Appearance on summons under PMLA does not amount to custody, and bail under Section 45 PMLA is not required.

(ii) The Special Court has the power to direct furnishing of bond under Section 91 BNSS and Section 88 Cr.P.C. instead of bail.

(iii) Arrest and custody under Section 19 PMLA post cognizance require express invocation and Court order; mere appearance on summons does not permit such arrest.

(iv) The procedural safeguards under the BNSS Act and Cr.P.C. must be observed alongside the PMLA provisions.