TMI Blog2020 (7) TMI 556X X X X Extracts X X X X X X X X Extracts X X X X ..... n keep an accused in custody even on presumption of guilt. While in certain cases such message may even quench the thirst for revenge of the lay society against a person they believe to be guilty, such action would certainly not leave our criminal justice system awash in glory. An investigating agency must come to court with the confidence that they have arrested an accused, based on credible material, and have filed a complaint or a chargesheet with the certainty that they will be able to bring home guilt, by satisfying a court beyond reasonable doubt. But when an investigating agency suggests that an accused be detained in custody as an undertrial for a prolonged period, even after the complaint or chargesheet has been filed, it appears that the investigating agency is not convinced of its case and so it fears that the accused may get-off by discharge or acquittal; and that therefore the only way to punish the accused is to let him remain in custody as an undertrial. People s trust in the criminal justice system must rest on surer footing than on pre-trial punishment by keeping accused persons in prison. Statistics available on the Delhi Prisons website as on 31.12.2019 sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expiry of which period, the applicant duly surrendered; (b) that on 12.12.2019, the applicant was also arrested in the ECIR by the ED; (c) that the applicant remained in the ED s custody for 14 days, during which time his statements were recorded under section 50 of the PMLA; after which, on 26.12.2019, the applicant was remanded to judicial custody; (d) that on 01.01.2020, the applicant was also arrested by the PS: EOW in another case bearing FIR No. 189/2019 registered under sections 409/120-B IPC, in which also he stands remanded to judicial custody; (e) that on 10.01.2020, the ED filed its complaint under sections 44/45 of the PMLA before the learned Special Judge, (PMLA), Saket District Courts, New Delhi, in which the applicant was named as an accused. Although the ED claims that further investigation is going-on in the matter, no supplementary complaint has been filed since 10.01.2020; (f) that a regular bail application filed by the applicant before the learned Special Judge (PMLA) was rejected vid order dated 17.06.2020. 3. In all, there are four accused in the ED s complaint : Malvinder Mohan Singh (applicant s brother), Shivinder Mohan Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crime has been effected to the extent of about INR 51 crores. Applicant s Submissions: 5. Mr. N. Hariharan, learned Senior Counsel appearing on behalf of the applicant submits as follows in support of the applicant s plea for grant of bail: (a) that the applicant was not on the Board of Directors of RFL at any point of time and had no connection with or control over its management and affairs; (b) that in any case, RFL has not been arraigned as an accused in the matter; (c) that the applicant was not even on the Board of REL, namely the holding company of RFL, from 2010 to late 2016, during which period the offences are alleged to have been committed; (d) that furthermore, even REL has not been arraigned as an accused in the matter; (e) that the affairs of RFL were managed and supervised by a Risk Management Committee and a Related Party Transaction Committee ( RPT Committee , for short), which committees operated under the Corporate Loan Book (CLB) Loan Approval Committees. Decisions for loan approvals were made by these committees but the applicant was not a member of any of these committees; (f) that the applicant had nothing to do with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended by RFL vid letters dated 06.01.2012, 03.05.2013 and 29/30.04.2014, it requires to be noticed that the RBI never took any action under Chapter III-B of the RBI Act 1934, which provision empowers the RBI inter alia to remove directors, to supersede the Board of Directors and even to wind-up an NBFC, none of which the RBI did; (q) that while the RBI alleges that co-accused Sunil Godhwani used to issue instructions to others, like one Anil Saxena who was a Director of RFL and also Group CFO and Director of REL, there is not even an allegation that any such instructions were ever issued by the applicant; (r) that in particular, communication dated 29.12.2014, purportedly signed by the applicant, only shows that the signatories were making bona fide efforts to seek strategic investment in REL based on certain contingencies; and that this does not amount to an authorisation or instruction to perpetuate any loan transaction. In the context of communication dated 29.12.2014, it is also pointed-out that letter dated 26.12.2014, which is under reference in communication dated 29.12.2014, has maliciously not been filed with the complaint; (s) that allegations in the compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two ECIRs based on two FIRs relating to predicate offences, such cases emanate from the same set of transactions, and have been mischievously separated, in order only to create separate proceedings; which cannot be the basis to deny the applicant bail, even more so since the ED has not placed any such ECIRs on record ; (aa) that a Co-ordinate Bench of this court has already granted bail to Anil Saxena, who is a co-accused in the predicate offence in FIR No. 50/2019, vid order dated 17.06.2020 made in Bail Appl. No. 1074/2020; (bb) that by reason of his continued incarceration, now for almost 9 months, the applicant is unable to effectively instruct his lawyers and is thereby unable to effectively defend himself, in violation of his right to fair trial under Article 21 of the Constitution of India. 6. In support of his case, the applicant has cited the following judicial precedents : (a) G. Udayan Dravid Ors vs. State Ors (supra): to argue, that even though banks accept deposits from members of the public and extend loans and other facilities to their clients and make profit out of such transactions, that does not mean that public money is involved in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or that needs to be considered while granting bail; and that the object of bail is not punitive but to secure the presence of the accused for trial; and that the Supreme Court had granted bail to the accused in that case being conscious that the accused was charged with economic offences of huge magnitude; (h) Nikesh Tarachand Shah vs. Union of India Anr. (2018) 11 SCC 1 ; paras 53, 54 : to argue that the twin conditions for granting bail under section 45 PMLA were held to be unconstitutional, and matters where bail was denied by reason of section 45 were remanded for consideration on merits without application of section 45 PMLA; (i) Gaurav Gupta vs. Director of Enforcement 2015 SCC OnLine Del 9929 ; para 23 : to say that statements of the accused recorded under section 50 of the PMLA after his arrest were inadmissible in evidence as being hit by Article 20(3) of the Constitution (in that case); (j) Raj Kumar Goel vs. Directorate of Enforcement 2018 SCC OnLine Del 8873 ; paras 23-25 : to urge that the twin conditions under section 45 PMLA were not to be applied to bail applications; (k) Upendra Rai vs. Directorate of Enforcement 2019 SCC OnLine D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, RFL gave an unsecured loan of INR 150 crores to one M/s Star Artworks Pvt. Ltd., which amount was immediately transferred by M/s Star Artworks Pvt. Ltd. to RHC, which is a private company owned by the applicant and his brother. RHC in-turn utilized the said amount of INR 150 crores for repaying its existing liability to RFL. In this manner an unsecured loan given by RFL to M/s Star Artworks Pvt. Ltd. was used for evergreening of a previous loan taken by RHC from RFL. And this loan was taken by RHC on 10.02.2017 and 15.02.2017 when the applicant and his brother were controlling REL as well as the RHC Group of Companies; (f) that it is further the ED s allegation that at the relevant time, when loans were approved and further routing of money was done, the applicant was holding a position whereby he could control the decisions taken by the respective companies; (g) that it is also the ED s allegation that similar transactions were conducted by the applicant, or at his instance, through a number of companies, whereby ultimately RFL lost money ; and RFL s other shareholders also suffered losses; (h) that the ED also says that directors of most of these companies hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant is enlarged on bail, he would most definitely, whether directly or indirectly, ensure that persons who were in the know of things, including banks, financial institutions and others with whom investigation is being followed-up, do not disclose the true state of affairs to the investigating agency. It is further stated that the applicant may, if enlarged on bail, destroy evidence and records and thereby defeat the investigation process; (m) that there are a total of 50 prosecution witnesses in the case and there is reasonable apprehension that the applicant would attempt to influence witnesses; and (n) that since the on-going investigation involves foreign assets, such assets may be disposed of or evidence may be otherwise tampered with. 8. In opposition to the grant of bail, the ED has relied upon the following judicial precedents : (a) Directorate of Enforcement vs. Upendra Rai SLP (Crl.) 2598/2020, order dated 03.06.2020 : to argue that in this case, bail was granted to a PMLA accused observing that the twin conditions as imposed by section 45 were not revived by the amendment to the statute; but that this order was stayed by the Supreme Court, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctorate of Enforcement (supra), it is argued that though the monetary sum involved in that case was about INR 305 crores, the 'gravity' of the offence was much higher since the allegations were against a former Finance Minister, in relation to what was allegedly done while he held public office, which would therefore have a greater impact on public faith in the system. Yet, the Supreme Court was pleased to enlarge the accused on bail after about 04 months of his initial arrest in the predicate offence; (b) that in P. Chidambaram vs. Directorate of Enforcement (supra), the Supreme Court has considered earlier decisions as also the tripod test before enlarging the accused on bail; (c) that it has been pointed-out that some of the other decisions cited by the ED are not cases under the PMLA but were cases involving offences attracting life sentence or even capital punishment; (d) to allay the apprehension expressed by the ED as to influencing witnesses or tampering with evidence, senior counsel contends that for one, unlike the statement recorded under section 161 Cr.P.C. which is not admissible in evidence, the witness statements recorded under section 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all earlier decisions; (k) that most importantly, the Explanation to section 3 of the PMLA was added with effect from 01.08.2019, while the ECIR in the present case was recorded on 24.07.2019 i.e. before 01.08.2019 and is therefore not covered by the amendment, namely that the offence alleged against the applicant is not a continuing offence; and (l) that keeping the applicant in custody any longer will seriously impact his right to defence in consultation with his lawyers and would thereby impact his fundamental right to a fair trial. Recap of the law and principles of bail : 10. Section 45 of PMLA, which is the provision governing bail in that statute recites as under : 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 believ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to the need for securing the presence of the bail applicant. It makes sense to assume that a man on bail has a better chance to prepare or present his case than one remanded in custody. And if public justice is to be promoted, mechanical detention should be demoted. ......... The considerable public expense in keeping in custody where no danger of disappearance or disturbance can arise, is not a negligible consideration. Equally important is the deplorable condition, verging on the inhuman, of our sub-jails, that the unrewarding cruelty and expensive custody of avoidable incarceration makes refusal of bail unreasonable and a policy favouring release justly sensible. (emphasis supplied) 14. Outlining the considerations for bail, in Ash Mohammad vs. Shiv Raj Singh Anr. (2012) 9 SCC 446 the Supreme Court expressed itself as follows : 8. In Ram Govind Upadhyay v. Sudarshan Singh (2002) 3 SCC 598, it has been opined that the grant of bail though involves exercise of discretionary power of the Court, such exercise of discretion has to be made in a judicious manner and not as a matter of course. The heinous nature of the crime warrants more caution and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... santa Kumar Sarkar v. Ashis Chatterjee (2010) 14 SCC 496 it has been observed that (SCC p. 499, para 9) normally this Court does not interfere with an order passed by the High Court granting or rejecting the bail of the accused, however, it is equally incumbent upon the High Court to exercise its discretion judiciously, cautiously and strictly in compliance with the basic principles laid down in a plethora of decisions of this Court on the point. 9. among other circumstances, the factors [which are] to be borne in mind while considering an application for bail are: (i) whether there is any prima facie or reasonable ground to believe that the accused had committed the offence; (ii) nature and gravity of the accusation; (iii) severity of the punishment in the event of conviction; (iv) danger of the accused absconding or fleeing, if released on bail; (v) character, behaviour, means, position and standing of the accused; (vi) likelihood of the offence being repeated; (vii) reasonable apprehension of the witnesses being influenced; and (viii) danger, of course, of justice being thwarted by grant of bail. * * * * * * 20. Havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iv) Given this legal position, the nature of the offence committed necessarily has a limited role to play, while examining the merits of an application for bail. This is for a simple reason that the application being examined by the court is not for suspension of sentence, but for release during trial. If the court were to allow itself to be unduly influenced by the nature of the charges against the accused, and the seriousness of the crime alleged to have been committed by him, it would result in obliterating the distinction between grant of bail and suspension of sentence. Inasmuch as the applicant, in a bail application, has yet to be found guilty of the offence with which he is charged, the significance of the nature of the offence stand substantially reduced, while examining the application for bail. Courts have to be alive to the legal position underscored in the very first paragraph of Dataram Singh (supra) - that every accused is presumed to be innocent until proved guilty. (emphasis supplied) 16. In a recent decision in Sanjay Chandra vs. CBI (supra) the Supreme Court has held that : 21. In bail applications, generally, it has been laid down from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed after trial and conviction, both under the Penal Code and the Prevention of Corruption Act. Otherwise, if the former is the only test, we would not be balancing the constitutional rights but rather recalibrating the scales of justice . * * * * * 39. Coming back to the facts of the present case, both the courts have refused the request for grant of bail on two grounds: the primary ground is that the offence alleged against the accused persons is very serious involving deep-rooted planning in which, huge financial loss is caused to the State exchequer; the secondary ground is that of the possibility of the accused persons tampering with the witnesses. In the present case, the charge is that of cheating and dishonestly inducing delivery of property and forgery for the purpose of cheating using as genuine a forged document. The punishment for the offence is imprisonment for a term which may extend to seven years. It is, no doubt, true that the nature of the charge may be relevant, but at the same time, the punishment to which the party may be liable, if convicted, also bears upon the issue. Therefore, in determining whether to grant bail, both the seriousness of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to deny bail to the appellant particularly, when there is no such whisper in the six remand applications filed by the prosecution. The charge sheet has been filed against the appellant and other co-accused on 18.10.2019. The appellant is in custody from 21.08.2019 for about two months. The co-accused were already granted bail. The appellant is said to be aged 74 years and is also said to be suffering from age related health problems. Considering the above factors and the facts and circumstances of the case, we are of the view that the appellant is entitled to be granted bail. (emphasis supplied) 18. Furthermore in P. Chidambaram vs. Directorate of Enforcement (supra), the Supreme Court has explained the concept and application of gravity of an offence in the following way : 12. . The gravity can only beget the length of sentence provided in law and by asserting that the offence is grave, the grant of bail cannot be thwarted. The respondent cannot contend as if the appellant should remain in custody till the trial is over. * * * * * * 23. . Keeping in view the consequences that would befall on the society in cases of financial irregularities, it has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the constitutional validity of Section 45 being challenged. * * * * * * 53. The matter came to this Court by a certificate of fitness granted [Gorav Kathuria v. Union of India 2016 SCC OnLine P H 3428] by the High Court. Sikri, and Ramana, JJ., by their order dated 12-8-2016 [ Gorav Kathuria v. Union of India, (2018) 11 SCC 46 at pp. 69-70, para 29] , stated: Though the High Court has granted certificate to appeal, we have heard the learned counsel for some time and are of the opinion that the impugned judgment of the High Court is correct. This appeal is, accordingly, dismissed. The complaint of the learned Attorney General is that this was done at the very threshold without hearing the Union of India. Be that as it may, we are of the opinion that, even though the Punjab High Court judgment appears to be correct, it is unnecessary for us to go into this aspect any further, in view of the fact that we have struck down Section 45 of the 2002 Act as a whole. 54. Regard being had to the above, we declare Section 45(1) of the Prevention of Money-Laundering Act, 2002, insofar as it imposes two further conditions for release on bail, to be unconstitutional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e prosecution would turn mainly on documentary evidence, which has already been collected and the complaint has been filed, no purpose would be served by keeping the applicant is judicial custody (cf. Sanjay Chandra and P Chidambaram, supra); (e) Statements under section 50 PMLA have been recorded which are admissible in court; and in view inter alia of section 50(3) and the fact that proceedings before the empowered officers under section 50(2) and (3) are deemed to be judicial proceedings within the meaning of section 193 IPC, giving false or fabricated evidence in such proceedings would invite imprisonment upto 07 years as well as fine. It is therefore unlikely that witnesses would renege on such statements; (f) Since a complaint under section 44 PLMA has been filed arising from ECIR dated 24.07.2019, it must be taken that investigation relating to that ECIR stands completed and closed; (g) The ED has not indicated any foreseeable timeline for completing investigation in respect of the alleged remaining about INR 1600 crores and therefore to link the applicant's judicial custody to completion of that on-going investigation, if at all, would leave the key to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial. 21. Sanctity must attach to filing of a complaint pursuant to an ECIR. It must, as a matter of law, be taken to be the culmination of investigation into the offence to the extent the offence is defined in that complaint. No one is seeking to prevent or forestall further investigation but for the sake of on-going investigation, this court cannot warp the entire concept of pre-trial imprisonment and bail. 22. Nowhere is it the law that an accused, yet to be tried, is to be kept in custody only on a hunch or a presumption that he will prejudice or impede trial; or to send any message to the society. If anything, the only message that goes-out to the society by keeping an accused in prison before finding him guilty, is that our system works only on impressions and conjectures and can keep an accused in custody even on presumption of guilt. While in certain cases such message may even quench the thirst for revenge of the lay society against a person they believe to be guilty, such action would certainly not leave our criminal justice system awash in glory. An investigating agency must come to court with the confidence that they have arrested an accused, based on credible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertrial in this case. As far as the possibility of the applicant committing any further offence is concerned, that ground is purely speculative and conjectural. So is the possibility of the applicant offering any inducement, threat or promise to any prosecution witness or other such person. As observed above, the possibility of the applicant absconding also appears to be farfetched and can be addressed by imposing appropriate conditions of bail. 27. It goes without saying that, if and once convicted, the applicant would have to suffer requisite imprisonment as well as confiscation of his assets, in accordance with law. 28. It may also be recorded in the passing, that co-accused Anil Saxena has already been granted bail by a Co-ordinate Bench of this court in the predicate offence in FIR No. 50 of 2019; which order has also been upheld by the Supreme Court in Special Leave Petition (Criminal) Diary No(s). 13106/2020 vid order dated 17.07.2020 though with some observations, which however do not detract from the grant of bail. 29. As a sequitur to the aforesaid discussion, this court is persuaded to the applicant to regular bail in the proceedings arising from ECIR No. E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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