TMI Blog2022 (3) TMI 1439X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 5(1) of the said Act for provisional attachment or on filing of application under Section 5(5) of the Act for confirmation of the same or atleast when an order is passed under Section 8(3)(a) of the said Act? - If so, if a person is arrested subsequent to the order passed under Section 8(3)(a) of the said Act would be entitled for immediate release by applying the provisions of Section 167 (2) of Cr.PC.? - HELD THAT:- It is pertinent to note that nowhere it is mentioned as to what is the time limit for filing a complaint/final report under Section 45 of the Act. However, there can not be a situation where a person is arrested and he is continued in custody eternally on the pretext that there is no time limit fixed under the Act for filing the complaint/final report as is contemplated under section 45 of the said Act. Admittedly, the proceedings under the Act is judicial proceedings. Whenever a person is arrested by the investigating agency his personal liberty is taken away by the investigating agency for a particular purpose. As is provided in Section 167 of Cr.PC., supra, if an Investigating Agency fails to file a final report as contemplated under Section 173 Cr.PC. with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate offences? - Whether twin conditions enumerated under the provisions of Section 45(1) of the Act is a Sine-qua-non for granting bail to an accused who has been arrested under Section 19 of the Act? - Whether an arrest made under Section 19 of the Act is a preventive detention? - Whether the petitioner has made out a case for grant of bail? - HELD THAT:- Close reading of section 45(1) of the Act makes it clear that before a court grants bail to an accused person, for an offence under the Act, an opportunity must be provided to the prosecutor to oppose the application and in the event of the prosecution opposing the application, court must be satisfied that there are reasonable grounds for believing that an accused is not guilty of such offence and he is not likely to commit any offence while on bail. Therefore, one can easily construe while exercising the power under Section 439 of Cr.PC., for grant of bail. The twin condition referred to supra must be satisfied before a court intends to grant the bail. The language employed in Section 45(1) of the Act is in the form of twin conditions akin to the language employed by the legislature under Section 37 of the NDPS Act - the court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner that ipso facto, petitioner is entitled for the bail in view of the fact that the petitioner is enlarged on bail for the predicated offences cannot be countenanced in law - the questions are answered in negative. The petition is allowed. - CRIMINAL PETITION NO.1189/2022 - - - Dated:- 30-3-2022 - THE HON'BLE MR. JUSTICE V. SRISHANANDA FOR THE PETITIONER:-SRI KIRAN S. JAVALI, SR. ADVOCATE FOR SRI SHIVAJI H. MANE, ADVOCATE FOR THE RESPONDENT:-SRI P.PRASANNA KUMAR, SPL. PP SRI M.S.SHYAM SUNDAR, ADVOCATE ORDER This petition is filed under Section 439 Cr.PC., with the following prayer: WHEREFORE, it is humbly prayed that this Hon ble Court be pleased to: (a) Allow this petition and be pleased to grant bail to the Petitioner in connection with ECIR No.-BGZO/33/2020 dated 16/10/2020 registered by Respondent Authority for the alleged offence under Section 3 and punishable under Section 4 of Prevention of Money Laundering Act, 2002 and which proceedings are pending before the Hon ble Principal City Civil and Session Judge and Special Judge for PMLA Cases at Bangalore (CCH-1); (b) Grant such other order or orders as deemed fit and pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n bail under Section 167(2) of Cr.PC., forthwith. The learned Special Judge having not taken note of the said aspect of the matter, has rejected the bail application filed by the petitioner by order dated 2.2.2022, and therefore, he is entitled for grant of bail in this petition. 6. In the bail petition, following grounds have been raised: There has been failure to appreciate that the ECIR had been registered on 16/10/2020 and investigation undertaken leading to issuance of a Provisional Attachment Order 9/2021 dated and making of a Complaint OC No.1541/2021 dated 27/09/2021. Hence, the investigation had stood completed. There has been failure to appreciate that if the action taken by the Respondent to register the ECIR, record statement of various persons under Section 50 of the P.M.L.Act and thereafter issuance of Provisional Attachment Order had constituted investigation and had stood completed. The question of further investigation under the provisions of the P.M.L.Act contrary to the provisions of the Law has not been appreciated, affecting the legality of the impugned Order. There has been failure to appreciate that the Petitioner had been arrested purportedly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned Order. The Petitioner submits that, the purported predicate offence as alleged is consequent to the complaint arising out of the family member and their representative and interse dispute which are purely civil in nature and given colour of criminal complaints and the civil disputes interse between the parties are pending adjudication before the respective Civil Courts and the Hon'ble High Courts. Further the learned trial court failed to appreciate above civil disputes between the parties, which have directly bearing on the alleged predicate offence were the Respondent Authority has registered by the above said ECIR state supra. Hence, this Hon ble Court be pleased to enlarge the Petitioner on bail. The Petitioner submits that, Petitioner has not violated or committed any offence as alleged by the Respondent Authority, only on the basis of false information on the assumption that, the Petitioner has committed an offence of money laundering which is totally opposed to law. Hence, the Petitioner be pleased to enlarge on bail. The Petitioner submits that, there has been failure to appreciate by the Hon'ble trail court that, the parallel proceedings under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been cooperated in the investigation, and denying the bail to the Petitioner by the Hon'ble Trial Court is opposed to law. The Petitioner be pleased to enlarge on bail. The Petitioner submits that, he is innocent of the alleged offence, the Respondent Authority without any prima facie material exists to invoke the provisions of the PMLA 2002. The Respondent Authority only on the basis of instigation and false and motivated information provided by the family member of the Petitioner in order to overtake the administration of the Alliance University. The Respondent has registered a false case on the false pretext. Hence, the Petitioner be pleased to enlarge on bail. There has been failure to appreciate the contents of the Complaint and the applicability of the provisions of Law invoked consequent thereto and the rejection of the bail application is bad at Law. There has been failure to notice that the decision relied upon has been totally misunderstood in denying the bail to the Petitioner/Accused person. Hence, the wrong understanding of the Judgment has affected the correctness and legality of thee impugned Order. The Trial Court failed to appreciate that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Apex that grant of bail is rule and its denial is the exception. The trial court erred in not granting bail because denying bail amounts to punishing the Petitioner before trial which is impermissible under law. Further if he is not released on bail, his family members will be put to undue hardship and the Petitioner will be always available for investigation as he has deep roots in society. The Petitioner further submits that he a resident of Bengaluru and there is no apprehension of the Petitioner absconding or fleeing from justice if he is released on bail. The Petitioner submits that, he is aged about Sixty Five years, senior citizen and he is suffering from various age related ailments is also required routine medications. Further the Petitioner has a history of heart condition and had undergone a surgery for arterial fibrillation in 2014, he is also on medication for managing his cholesterol and blood pressure. He also has the history of arrhythmia which can lead to palpitations under stressful conditions. Hence, be pleased to enlarge the Petitioner on bail. The copy of the medical records are produced herewith as ANNEXURE H for kind perusal of this Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the contentions of the learned Senior Counsel for the petitioner, following judgments have been relied on: (1) The copy of Bail order in Crl.Misc. No.5533/2017 passed by Hon ble III Additional District and Sessions Judge, Bengaluru Rural District at Anekal; (2) The copy of order sheet in Crime No.730/2016 dated 17.09.2018 of the Hon ble III Additional CMM, Bengaluru; (3) The copy of Bail order dated 4.4.2016 in Crl.Misc. No.1776/2016 passed by Hon ble LIV Additional City Civil and Sessions Judge, Bengaluru; (4) The copy of the Bail order in Crl.Misc. No.8778/2017 passed by Hon ble LXV Additional City Civil and Sessions Judge, Bengaluru; (5) (2014) 8 SCC 273 Arnesh Kumar Vs. State of Bihar and others; (6) (2020) 5 SCC 1 Sushila Agarwal Others Vs. State (NCT of Delhi) and another; (7) (2021) 2 SCC 427 Arnab Manoranjan Goswami Vs. State of Maharashtra and others; (8) (2020) 13 SCC 791 - P.Chidambaram vs. Directorate of Enforcement; (9) 2021 SCC Online Del. 1081 Sai Chandrasekhar Vs. Directorate of Enforcement; (10) Paritosh Kumar Singh Vs. State of Chattisgarh Others reported in MANU/CG/O665/2021; (11) Mr. Bineesh Kodiyeri Vs. Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there is no embargo on the powers of this court under Section 439 of Cr.PC., to entertain a bail petition having regard to Section 45 of the said Act. He also contended that in view of Sections 65 and 71 of the said Act, wherever it is necessary, the court can borrow the provisions of Cr.P.C. even though the Act itself is a stand alone statute. 14. He also pointed out that the legal principles enunciated in P Chidambaram Vs. Directorate of Enforcement reported in (2019) 9 SCC 24 and Mohammad Arif Vs. Directorate of Enforcement reported in (2020) SCC online Orissa 545 would also support the contentions urged on behalf of the Directorate of Enforcement. In support of his contentions, Sri Prasannakumar relied on the following Judgments: Sl.No. Contents 1 (2019) 9 SCC 24 P.Chidambaram vs Directorate of Enforcement Relevant Para 37, 80,81 at Page No. 21, 38 2 2020 SCC Online Ori 544 Mohammed Arif v. Directorate of Enforcement Relevant Para 23 at Page No. 46 3 Order dated 24.11.2020 passed by the Hon'ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to make reference concerning the constitution of the Bench since during the course of the arguments, a diatribe, though not justifiable was made about the formation of the Bench, presided over by Charanjit Talwar, J. who gave a dissenting judgment in the case of O.P. Gupta [(1990) 2 Del Lawyer 23 (FB)] . (2) In the case of Ashok Munilal Jain and another Vs. Assistant Director, Directorate of Enforcement r eported in (2018) 16 SCC 158 , the Hon ble Apex Court has held at para Nos.3 to 5 thus: 3. We have gone through the orders passed by the trial court as well as by the High Court. We may state at the outset that insofar as the High Court is concerned, it has not given any reasons in support of its aforesaid view except endorsing the view of the trial court to the effect that the provisions of Section 167(2) CrPC. are not applicable to the cases under the PMLA Act. This position in law stated by the trial court does not appear to be correct and even the learned Attorney General appearing for the respondent could not dispute the same. We may record that as per the provisions of Section 4(2) of CrPC, the procedure contained therein applies in respect of special statutes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s required to meticulously consider the scheme of the Act while entertaining the bail petition. 18. Further, he submitted that the action taken by the Investigating Agency prior to filing of the complaint under Section 45 of the Act is judicial in nature and before arresting a person, the Investigating Agency would be of prima facie opinion that an accused in a given case is guilty of the offences alleged against him which pre supposes that there are sufficient materials on record which would prima facie result in conviction of an accused. 19. In view of the rival contentions of the parties, the points for determination are as under: (1) Whether the investigation of an offence under the provisions of the PMLA would complete on issuance of an order under Section 5(1) of the said Act for provisional attachment or on filing of application under Section 5(5) of the Act for confirmation of the same or atleast when an order is passed under Section 8(3)(a) of the said Act? (2) If so, if a person is arrested subsequent to the order passed under Section 8(3)(a) of the said Act would be entitled for immediate release by applying the provisions of Section 167 (2) of Cr.PC.? (3) Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his own bond unless-] (i) the Public Prosecutor has been given an 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: Provided that a person who is under the age of sixteen years or is a woman or is sick or infirm, may be released on bail, if the special court so directs: Provided further that the Special Court shall not take cognizance of any offence punishable under section 4 except upon a complaint in writing made by- (i) the Director; or (ii) any officer of the Central Government or State Government authorised in writing in this behalf by the Central Government by a general or a special order made in this behalf by that Government. 28 [(1A) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), or any other provision of this Act, no police officer shall investigate into an offence under this Act unless specifically authorised, by the Central Government by a general or special order, and, subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Criminal Procedure, 1973 (2 of 1974) shall apply, insofar as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act. 71. Act to have overriding effect.-The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. 21. So also, it is necessary for this court to cull out Section 167 of Cr.P.C which reads as under: 167. Procedure when investigation cannot be completed in twenty four hours. (1) Whenever any person is arrested and detained in custody and it appears that the investigation cannot be completed within the period of twenty- four hours fixed by section 57, and there are grounds for believing that the accusation or information is well- founded, the officer in charge of the police station or the police officer making the investigation, if he is not below the rank of sub- inspector, shall forthwith transmit to the nearest Judicial Magistrate a copy of the entries in the diary hereinafter prescribed relating to the case, and shall at the same time forw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained in sub- section (1) or sub- section (2), the officer in charge of the police station or the police officer making the investigation, if he is not below the rank of a sub- inspector, may, where a Judicial Magistrate is not available, transmit to the nearest Executive Magistrate, on whom the powers of a Judicial Magistrate or Metropolitan Magistrate have been conferred, a copy of the entry in the diary hereinafter prescribed relating to the case, and shall, at the same time, forward the accused to such Executive Magistrate, and thereupon such Executive Magistrate, may, for reasons to be recorded in writing, authorise the detention of the accused person in such custody as he may think fit for a term not exceeding seven days in the aggregate; and, on the expiry of the period of detention so authorised, the accused person shall be released on bail except where an order for further detention of the accused person has been made by a Magistrate competent to make such order; and, where an order for such further detention is made, the period during which the accused person was detained in custody under the orders made by an Executive Magistrate under this sub- section. 22. On car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in crime No. 188/2017 dated 11/11/2017 was registered by Anekal Police Station, Bangalore Rural, Bengaluru based on the complaint of Shri Madhusudan Mishra against Mr. Madhukar Angur, Ms. Priyanka B S, and seven others, under Section 143, 406, 407, 408, 409 and 149 of the IPC, 1860, b) FIR in Crime No. 730/2016 dated 11.06.2016 was registered by Madiwala Police Station, Bangalore, based on the complaint of Shri Abhay Chhabbi against Mr. Madhukar G Angur, Smt. Priyanka M Angur and others, under Sections 506, 120 B, 143, 144, 147, 148 and 149 of the IPC, 1860. c) FIR in crime No. 119/2016 dated 04.03.2016 was registered by Jayaprakash Nagar Police Station, Bangalore against Mr. Madhukar G Angur and others under Sections 417, 420, 376 and 506 of IPC, 1860; d) FIR in crime No. 52/2017 dated 28.09.2017 was registered by Shankarapura Police Station, Bangalore against Mr. Madhukar G Angur, Smt. Priyanka M Angur and others under Sections 506, 504, 143, 149 and 420 of IPC, 1860. 24. It is the specific case of the Directorate of Enforcement that out of the aforesaid predicate offences, approximately Rs.107 crores were siphoned away by the petitioner herein by sending e-mails to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Section 19 of the said Act. The purpose of the Act under section 19 is for further investigation and to arrest/Shun the further money laundering as money laundering is a continuous offence. The said proposition can be deduced by cumulative consideration of the scheme of the Act. Therefore, the argument put forth on behalf of the petitioner that necessary application is filed under Section 5(1) of the Act for seeking confirmation of the provisional attachment order under Section 5(5) of the Act can be construed as completion of the investigation, cannot be countenanced in law. 27. This court also directed the Directorate of Enforcement to furnish a copy of the manual issued by the department in respect of arrest and how to deal with an arrested person. Accordingly, Sri Prasanna Kumar, learned counsel for the respondent-Directorate of Enforcement, made available the copy of the manual. It is worth to note that the relevant portion of the manual which reads as under: 2.26 Arrest: The Director, Deputy Director, Assistant Director or any officer authorized in this behalf by the Central Government, may exercise the power to arrest under section 19(1) of the PMLA. The Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty may seek Enforcement Custody (EC) under section 167 of the Cr. PC If the facts and circumstances of the case so warrant. The Apex Court in the case of Directorate of Enforcement Vs. Deepak Mahajan another in Cri. Appeal No. 537 of 1990 (1994 SCC (Cru) 785) has confirmed this proposition. The Investigating Authority may seek Enforcement Custody as early as possible after effecting arrest, if so required, for the purposes of follow-up action for collection of further evidence, recovery of documents/property, identification of property/assets etc. T-21/02-Coord./2010 has advised the officers that in the event of arrest of an accused under Section 19 of the PMLA, there is absolutely no necessity of any police report under Section The Hqrs, vide Technical Circular No. 02/2010, dated 12/01/2010 issued from F.No. 173(2) of Cr.P C or a complaint for taking cognizance in respect of scheduled offence. The arrest could be made if it is so warranted and sufficient material is available against the arrestee with the Directorate. The Judgment pronounced in the case of Directorate of Enforcement Vs. Deepak Mahajan another, 1994 SCC (Cri) 785 at para 136 has held that subsection (1) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Cr.PC, in the case on hand, even though Section 167(2) of the Act is applicable to the accused. The enquiry made by the Directorate of Enforcement for the purpose of issuance of the provisional order of attachment under Section 5(1) of the Act and seeking its confirmation before the adjudicating authority, no doubt, telescopes itself into portion of the investigation for the purpose of filing a complaint/final report under Section 45 of the Act. But, such investigation is for the purpose of attachment of the properties only. Materials collected in such investigation is no doubt would be used by the Directorate of Enforcement in the final report as well. Therefore, the arguments put forth on behalf of the petitioner that the petitioner is entitled for statutory bail under Section 167(2) of the Cr.PC., on issuance of the order passed under Section 5(1) of the Act for provisional attachment or filing an application for its confirmation before the adjudicating authority under Section 5(5) of the Act. In other words, the attachment of the property and its confirmation though is part of the same investigation, it is not for the purpose of filing the complaint under Section 45 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and in this regard, he relied on the un-reported judgment of the High Court of Judicature at Madras in the case of N. Umashankar supra, wherein at paragraphs 15 and 16, it is held as under: 15. In the Judgment reported in 2018 (11) SCC-1 [cited supra], the Apex Court declared Section 45 of the PMLA as it stood then, as unconstitutional and violative of Articles 14 and 21 of the Constitution of India, but the defects pointed out by the Hon'ble Supreme Court in the said Judgment were cured by the legislature and an amendment to section 45(1) was made vide the Finance Act, 2018 (No.13 of 2018). Under the amendment Act, section 45(1) was revived and for the words punishable for a term of imprisonment of more than three years under part A of the Schedule , the words under this Act were substituted in Crl.OP.Nos. 3381, 3383 and 3385 of 2021, section 45(1) of the PMLA. 16. No doubt, the legislature has the power to cure the underlying defect pointed out by a Court, while striking down a provision of law and pass a suitable amendment. When such a law is passed, the legislature basically corrects the errors which have been pointed out in a judicial pronouncement. Resultant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed by the Madras High Court. Mere refusal to interfere with the order passed by the Madras High Court cannot be termed as the order of the Madras High Court is being upheld by the Hon'ble Apex Court. Therefore, the contention of the Directorate of Enforcement that this court is required to follow the order passed in Umashankar s case by the division bench of the Madras High Court cannot be countenanced in law and at best it is persuasive in nature. 36. However, since the language employed under Section 45 of the Act, it is crystal clear that no person accused of an offence under the Act, shall be released on bail unless he satisfies the twin conditions enumerated under Section 45 of the Act. Therefore, further discussion on the aspect of whether the principles of law enunciated in the Judgment of the Madras High Court is implied confirmation by the Hon'ble Apex Court or not need not be further gone into in the present petition. 37. From the principles of law enunciated in the decisions relied on by the parties, there cannot be any iota of doubt left that whenever a bail application under the Act is to be considered, twin conditions enumerated in Section 45(2) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er materials are collected by the Directorate of Enforcement to substantiate the allegation that petitioner. He also pointed out that since the entire investigation is now completed and materials collected by the Directorate of Enforcement is now in the form of Complaint/final report, the apprehension of the Directorate of Enforcement and de-facto complainant that the petitioner may further indulge in money laundering stands automatically quelled and as such, there is no reason whatsoever to oppose the release of the petitioner on bail. 41. This court has meticulously perused the materials on record in the light of Section 45 of the Act. The wordings used in Section 45 of the said Act is in the form of casting reverse burden on the accused. In the light of the legal principles enunciated in the judgments referred to supra and also taking note of the fact that the Directorate of Enforcement has already collected necessary materials to form an opinion that the petitioner is prima facie guilty of the offences alleged against him, is only for the purpose of effecting the arrest under Section 19 of the Act. However, if that opinion of the Investigating Agency that accused is guilty, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no longer required to be continued in judicial custody and State having not sought for cancellation of bail in respect of the predicate offences, ipso facto the petitioner is entitled for grant of bail in respect of a complaint/final report filed under Section 45 of the Act in an action taken under the provisions of the said Act. 45. The said argument cannot be countenanced in law inasmuch as arrest under Section 19 of the said Act is for the different purpose altogether. The language employed in Section 19 of the Act and the manual referred to supra, on careful perusal is altogether different from the language employed under Section 41 of the Cr.P.C., Much has been argued by the counsel for petitioner and for the de-facto complainant as to the nature and purpose of arrest under Section 19 of the said Act. 46. Sri M.S. Shyam Sundar, learned Counsel for defacto complainant argued that the arrest under Section 19 of the said Act is in the nature of preventive detention. To substantiate his argument, he further contended that the wordings used in Section 19 of the said Act, is that the authorised officer of the Directorate of Enforcement would be forming an opinion that accu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 19 of the Act, cannot be construed as preventive detention cannot be countenanced in law. 51. If the said argument is to be accepted, there remains nothing for the Special Court to decide the guilt or otherwise of the accused in the trial. The opinion of the Investigating Agency is no doubt judicial in nature, having regard to Section 50(4) of the Act. But, the Special Court has to charge the accused for the offence under Section 3 of the Act after taking cognizance of the said offence when once a complaint/final report under Section 45 of the Act, is filed. If the opinion of the Investigating Agency for the purpose of arrest under Section 19 of the Act, that an accused under the Act is prima facie guilty of offence under the provisions of the Act, it is only for the purpose of arrest and not binding on the Special Court. Therefore, in order to justify the arrest of an accused under the Act by resorting to the power envisaged under Section 19 of the said Act, the enquiry contemplated is termed as an equivalent to judicial enquiry. This is to safeguard the proposed accused from a wrongful arrest and nothing more. More so, when the very same accused has been enlarged on bail ..... X X X X Extracts X X X X X X X X Extracts X X X X
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