2025 (5) TMI 1693 - HC - Money Laundering

Seeking grant of anticipatory - involvement in money laundering - Offences under the Prevention of Money Laundering Act 2002 (PMLA) - twin conditions under section 45 are mandatory - non-bailable and cognizable - HELD THAT - It is remonstrated by learned Dy. Solicitor General that the investigation pertains to applicant is still going on as he is still dealing with proceeds of crime hence in light of Section 45 of PMLA applicant cannot be benefited for grant of anticipatory bail. Learned counsel for the petitioner relying upon the judgment of Hon ble Apex Court passed in Tarsem Lal vs. Directorate of Enforcement Jalandhar Zonal Office 2024 (5) TMI 837 - SUPREME COURT submitted that applicant is ready to co-operate with the investigation therefore he should not be arrested. Thus it is evident that in the aforesaid judgment the point of anticipatory bail has not been considered. Certainly it was held that application for cancellation of warrant should be filed by applicant. In this case it prima facie appears that petitioner is involved in economic transaction of huge money hence on the basis of the aforesaid judgment he cannot be released on anticipatory bail. Since the matter is related to the economic offences of money laundering the applicant cannot be released under the provisions of anticipatory bail and therefore anticipatory bail application filed under Section 438 of the Cr.P.C is hereby dismissed.

Summary

The core legal questions considered in this judgment are:

1. Whether the applicant is entitled to anticipatory bail under Section 438 of the Code of Criminal Procedure, 1973, in a case involving offences under the Prevention of Money Laundering Act, 2002 (PMLA) and various sections of the Indian Penal Code, 1860 (IPC), including offences related to cheating, forgery, and criminal conspiracy.

2. The applicability and interpretation of Section 45 of the PMLA regarding the non-bailable and cognizable nature of offences under the Act, and the conditions under which bail may be granted.

3. The relevance and impact of the applicant's cooperation or non-cooperation with the investigation on the grant of anticipatory bail.

4. The precedential value of Supreme Court rulings on anticipatory bail in economic offences, particularly in cases involving money laundering, and the extent to which these rulings restrict the grant of anticipatory bail.

Issue-wise Detailed Analysis

Issue 1: Entitlement to anticipatory bail under Section 438 CrPC in the context of offences under PMLA and IPC

The legal framework governing anticipatory bail is Section 438 of the CrPC, which is an extraordinary remedy to be granted sparingly, especially in cases involving serious economic offences. The applicant sought anticipatory bail fearing arrest in connection with an Enforcement Case Information Report (ECIR) for offences under Sections 420, 467, 468, 471, 120-B, and 34 of the IPC, along with money laundering charges under the PMLA.

The applicant's counsel argued innocence, reliance on statements under Section 27 of the Evidence Act from co-accused, and prior anticipatory bail orders in related cases. The applicant had deposited a significant sum as per a Supreme Court order and claimed readiness to cooperate with the investigation.

Conversely, the Enforcement Directorate (ED) opposed bail, highlighting the large-scale financial transactions amounting to Rs. 18 crores, the applicant's key role as per co-accused statements, failure to appear before the department despite multiple summons, and possession of proceeds of crime. The ED invoked Section 45 of PMLA, emphasizing its mandatory conditions for bail denial.

The Court examined the case diary and noted ongoing investigation and the serious nature of offences involving substantial economic transactions.

Issue 2: Interpretation and applicability of Section 45 of PMLA

Section 45 of the PMLA explicitly states that offences under the Act are cognizable and non-bailable, except under strict conditions: (i) the Public Prosecutor must be given an opportunity to oppose bail, and (ii) the court must be satisfied there are reasonable grounds to believe the accused is not guilty and unlikely to commit further offences while on bail. There are limited exceptions for minors, women, sick or infirm persons, or cases involving laundering of less than one crore rupees.

In this case, the applicant did not fall within these exceptions, and the prosecution opposed bail. The Court emphasized that Section 45 overrides the general provisions of the CrPC, mandating stringent conditions for bail in money laundering cases.

Issue 3: Applicant's cooperation with investigation and effect on bail

The applicant claimed to have cooperated by depositing funds and filing replies to show cause notices. However, the prosecution contended that the applicant had willfully avoided appearing before the investigating agency despite multiple summons, thereby demonstrating non-cooperation. The Court noted this conflict and the applicant's apprehension of arrest under Section 19 of PMLA, which allows arrest without warrant, as a reason for his non-appearance.

The Court observed that mere apprehension of arrest does not justify non-cooperation, especially in serious economic offences where investigation is ongoing and proceeds of crime are involved.

Issue 4: Precedents on anticipatory bail in economic offences and their application

The Court referred extensively to Supreme Court precedents, notably:

• The judgment in the case of P. Chidambaram v. Directorate of Enforcement (2019), which held that anticipatory bail under Section 438 CrPC is an extraordinary remedy to be granted sparingly, particularly in economic offences affecting the economic fabric of society.
• The ruling in Directorate of Enforcement v. M. Gopal Reddy (2022), which reinforced the principle that courts must be slow in exercising discretion to grant anticipatory bail in economic offences due to their societal impact.
• A recent ruling in Tarsem Lal v. Directorate of Enforcement (2024), which clarified that the issue of anticipatory bail was not considered and that cancellation of warrants should be sought through appropriate applications, thereby limiting its applicability to anticipatory bail claims.

The Court reasoned that the applicant's case involved a prima facie economic offence of money laundering involving huge sums, and the cited precedents collectively counsel against granting anticipatory bail in such circumstances.

Application of Law to Facts and Treatment of Arguments

The Court applied the stringent conditions of Section 45 of PMLA, noting the ongoing investigation and the serious nature of allegations involving Rs. 18 crores. The applicant's partial compliance and prior anticipatory bail orders in related cases were considered insufficient to outweigh the statutory mandate and judicial precedents cautioning against bail in economic offences.

The Court rejected the applicant's reliance on the Tarsem Lal judgment for anticipatory bail, distinguishing that case on its facts and procedural posture.

The prosecution's argument regarding the applicant's non-cooperation and possession of proceeds of crime was accepted as a valid ground to deny bail, given the statutory framework and the need to prevent interference with investigation.

Conclusions

The Court concluded that the applicant is not entitled to anticipatory bail under Section 438 CrPC in view of the provisions of Section 45 of PMLA and the settled judicial principles relating to economic offences. The application for anticipatory bail was dismissed accordingly.

Significant Holdings

The Court preserved the following crucial legal reasoning verbatim:

"Section 45. Offences to be cognizable and non- bailable.

(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence under this Act shall be released on bail or on his own bond unless-

(i) the Public Prosecutor has been given a opportunity to oppose the application for such release; and

(ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail."

Further, the Court quoted from P. Chidambaram v. Directorate of Enforcement:

"Ordinarily, arrest is a part of procedure of the investigation to secure not only the presence of the accused but several other purposes. Power under Section 438 of the Cr.P.C is an extraordinary power and the same has to be exercised sparingly. The privilege of the pre-arrest bail should be granted only in exceptional cases........"

And

"Power under Section 438 of the Cr.P.C being an extraordinary remedy, has to be exercised sparingly; more so, in cases of economic offences. Economic offences stand as a different class as they affect the economic fabric of the society. In 'Directorate of Enforcement v. Ashok Kumar Jain' it was held that in economic offences, the accused is not entitled to anticipatory bail."

Core principles established include:

• Section 45 of PMLA overrides general bail provisions, mandating strict conditions for bail in money laundering offences.
• Anticipatory bail is an extraordinary remedy, to be granted sparingly, particularly in economic offences that affect societal economic fabric.
• Non-cooperation with investigation and possession of proceeds of crime weigh heavily against bail.
• Prior anticipatory bail in related cases does not guarantee bail in ongoing proceedings under PMLA.

Final determination: The applicant's anticipatory bail application is dismissed, affirming the stringent approach towards bail in money laundering and related economic offences under the PMLA and IPC.