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REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS.18781879 OF 2017
(Arising out of SLP (Crl.) No. 6896–6897 of 2017)
Rohit Tandon …Appellant
:Versus:
The Enforcement Directorate …Respondent
J U D G M E N T
A.M. Khanwilkar, J.
1. By these appeals the order of the High Court of Delhi at
New Delhi dated 5th May, 2017, rejecting the Bail Application
No.119 of 2017 and Criminal M.B. No.121 of 2017 has been
assailed. The appellant was arrested on 28th December, 2016 in
connection with ECIR/18/DZII/2016/AD(RV) registered under
Sections 3 & 4 of the Prevention of MoneyLaundering Act,
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2002 (hereinafter referred to as “the Act of 2002”). The said
ECIR was registered on 26th December, 2016 as a sequel to
FIR No.205/2016 dated 25th December, 2016 in relation to the
offences punishable under Sections 420, 406, 409, 468, 471,
188 and 120B of the Indian Penal Code, 1860 (“IPC” for short).
The said FIR was registered by the Crime Branch of Delhi
Police, New Delhi. The ECIR, however, has been registered at
the instance of Assistant Director (PMLA), Directorate of
Enforcement, empowered to investigate the offences punishable
under the Act of 2002.
2. The appellant first approached the Additional Sessions
Judge02, South East Saket Court, New Delhi for releasing him
on bail by way of an application under Section 439 of the Code
of Criminal Procedure, 1973 read with Section 45 of the Act of
2002. The said bail application came to be rejected vide
judgment dated 7th January, 2017 by the said Court. The
appellant thereafter approached the High Court of Delhi at New
Delhi by way of Bail Application No.119 of 2017 and an
interlocutory application filed therein, being Criminal M.B.
No.121 of 2017. The High Court independently considered the
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merits of the arguments but eventually rejected the prayer for
bail vide impugned judgment dated 5th May, 2017.
3. The ECIR has been registered against Ashish Kumar,
Raj Kumar Goel and other unknown persons for offences
punishable under Sections 3/4 of the Act of 2002 on the basis
of information/material, as evident from the predicate offence
registered by P.S. Crime Branch, Delhi against the named
accused and unknown accused for offences punishable under
Sections 420, 406, 409, 467, 468, 471, 188 and 120B of IPC,
being FIR No.205/2016 dated 25th December, 2016. The
relevant facts noted in the ECIR read thus:
“A. It is reported that during the course of investigation of
Case FIR No.242/16 u/s 420, 467,468,471, 120B IPC, PS
C.R. Park, Delhi, it is revealed that Accused Raj Kumar Goel
along with associates are engaged into earning profits by
routing money into various accounts by using forged
documents and thereby receiving commission from the
prospective clients who either need money by cheque or in
cash. In order to obtain large profits, accused Raj Kumar Goel
and few of his associates have opened many Bank Accounts
in Kotak Mahindra and ICICI Bank at Naya Bazar, Chandni
Chowk, Delhi.
B. On 08.11.2016, the Government if India announced
demonetization of one thousand (1000) and five hundred
(500) rupee notes. On this accused Raj Kumar Goel conspired
with the bank manager of Kotak Mahindra Bank, Cannaught
Place, namely Ashish Kumar r/o A701, Bestech Park, Sector
61, Gurugram, Haryana and one Chartered Accountant, name
unknown, having mobile number 9711329619 to earn huge
profit by converting black money in the form of old currency
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notes into new currency notes. In this conspiracy, the said CA
acted as a mediator and arranged prospective clients who
intended to convert their black money into legitimate money.
For the same, alleged CA offered 2% commission to the other
accused persons on all such transactions.
C. The accused were having bank accounts in the Naya
Bazar branch of Kotak Mahindra Bank but the CA and Bank
Manager Ashish asked accused Raj Kumar to deposit old
currency notes in Cannaught Place branch of Kotak Mahindra
Bank. It is also revealed that the accused opened bank
accounts in the name of Quality Trading Company, Swati
Trading Company, Shree Ganesh Enterprises, R.K.
International, Mahalxmi Industires, Virgo International and
Sapna International on the basis of forged/false documents
and deposited approx. Rs.25 Crore after the demonetization.
As per the preliminary investigation of the said case it is
transpired that accused Raj Kumar Goel, Bank Manager
Ashish, CA along with their associates are involved in a deep
roted conspiracy and were indulged in converting old currency
which were entrusted to bank/Govt officials and were
supposed to be delivered to general public/guidelines issued
by the Reserve Bank of India/Ministry of Finance and hand
thus cheated the public at large. The accused persons have
also caused monetary loss to the Govt. of India and thereby
Committed offences u/s 420, 406, 409, 467, 468, 471, 188,
120B IPC.”
It is then noted that the offences under Sections 420,
468, 471 and 120B of IPC are scheduled offences under the Act
of 2002 and that from the available facts, a reasonable
inference is drawn that the named accused and unknown
accused have made illegal earnings arising out of the said
criminal conspiracy which might have undergone the process
of laundering and thereby an offence under Section 3 of the Act
of 2002 was made out. It is noted that prima facie case for
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commission of offence under Section 3 punishable under
Section 4 of the Act of 2002 was made out and accordingly the
case is being registered and taken up for investigation under
the Act of 2002 and rules framed thereunder.
4. The learned Sessions Judge while considering the bail
application adverted to the relevant materials including the
CDR analysis of Mobile number of Ashish Kumar, Branch
Manager, Kotak Mahindra Bank, K.G. Marg Branch, Kamal
Jain, CA of Rohit Tandon (hereinafter referred to as
“appellant”), Dinesh Bhola, Raj Kumar Goel; the statements of
Kamal Jain, Dinesh Bhola and Ashish Kumar, recorded under
Section 50 of the Act of 2002; and analysis of bank statements
of stated companies. All these reveal that Ashish Kumar
conspired with other persons to get deposited Rs.38.53 Crore
in cash of demonetized currency into bank accounts of
companies and got demand drafts issued in fictitious names
with intention of getting them cancelled and thereby converting
the demonetized currency into monetized currency on
commission basis. Further, the investigation also revealed
that the entire cash was collected on the instructions of the
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appellant herein, by Ashish Kumar, Raj Kumar Goel and others
through Dinesh Bhola, an employee of the appellant.
According to the prosecution, all the associates of the appellant
acted on instructions of the appellant for getting issued the
demand drafts against cash deposit with the help of Ashish
Kumar, Branch Manager of Kotak Mahindra Bank and others,
to the tune of Rs.34.93 Crore from Kotak Mahindra Bank, K.G.
Marg Branch. It was also noted that the demand drafts of
Rs.3.60 Crore were issued in fictitious names on the
instructions of Bank Manager Ashish Kumar in lieu of
commission received by him in old cash currency. The demand
drafts amounting to Rs.38 Crore were issued in favour of
Dinesh Kumar and Sunil Kumar which were recovered from
the custody of Kamal Jain who had kept the same on the
instructions of the appellant. Out of the said amount, the
demand drafts of other banks, apart from Kotak Mahindra
Bank Limited, were also recovered. The prosecution suspected
that there could be other dubious transactions made by the
appellant in other banks and that Ashish Kumar, Bank
Manager and others were acting on the instructions of the
appellant for executing the crime.
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5. The Sessions Court rejected the argument of the
appellant that the investigation of the offence registered against
the appellant and others under Section 3/4 of the Act of 2002
being a sequel to the FIR registered by the Crime Branch of
Delhi Police, it cannot be investigated by the Enforcement
Directorate. For, the Enforcement Directorate was not
concerned with the outcome of the investigation of the
predicate offence registered by the Delhi Police. It thus opined
that the matter on hand must be examined only in reference to
the registration of ECIR by the Enforcement Directorate. The
fact that the investigation in FIR registered by the Crime
Branch of Delhi Police, bearing FIR No.205/2016, had not
commenced will also be of no avail to the appellant. The
Sessions Court also found that as per Section 19 of the Act of
2002, the only condition to be satisfied for arrest of a person is
the reasonable belief of the authority gathered on the basis of
material in its possession. Further, in the present case, the
accused was arrested by the competent authority on the basis
of material in his possession giving rise to a reasonable belief
about the complicity of the accused in the commission of
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offence punishable under the Act of 2002. As such the arrest
of the appellant under the Act of 2002 cannot be termed as
illegal. After having dealt with those contentions, the Sessions
Court took note of the material pressed into service by the
prosecution and analysed the same in the following words:
“21. Pursuant to registration of FIR No.205/2016 under
section 420, 406, 409, 468, 471, 188, 120B IPC by Crime
Branch, the matter was taken up by ED and ECIR No.18/16
was opened for investigation. Transaction statements of
accounts in Kotak Mahindra Bank in FIR No.205/16 in
respect of companies i.e. Delhi Training Company, Kwality
Tading Company, Mahalaxmi Industries, R.K. International,
Sapna Trading Company, Shree Ganesh Enterprises, Swastik
Trading Company arid Virgo International were sought and
scrutinized, Huge cash deposits in the said accounts were
identified during November, 2016, post demonetization
announcement it was found that demand drafts were issued
in fictitious names like Dinesh Kumar, Sunil Kumar,
Abhilasha Dubey, Madan Kumar, Madan Saini, Satya Narain
Dagdi and Seema Bai.
22. Statement of Ashish Kumar, accused named in
FIR No.205/16, Branch Manager, Kotak Mahindra Bank,
K.G. Marg branch was recorded under section 50 of
PMLA which revealed that Kamal Jain, CA of accused
Rohit Tandon contacted him to get the demonetized
currency on behalf of accused/applicant, converted into
monetized currency on commission basis. The
commission of Ashish Kumar was decided @ 35%, who in turn
contacted one Yogesh Mittal and Rajesh Kumar Goel, accused
in FIR No.205/16 to carry out the criminal design of getting
the demonetized cash converted into monetized 7 valuable
form. Demonetized currency was deposited in different
accounts of companies pertaining to Raj Kumar Goel besides
others through Raj Kumar Goel with the help of Ashish Kumar
in different bank accounts of Kotak Mahindra Bank and DDs
were issued in fictitious names. The illegal conversion of
demonetized currency, getting the same deposited and
issuance of demand drafts is corroborated through CDR
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analysis of relevant persons for the relevant period. Dinesh
Bhola and Kamal Jain, in their statements recorded under
section 50 of PMLA have also confirmed and reiterated the
facts as stated by Ashish Kumar, the Branch Manager. The
statements of persons recorded under section 50 of
PMLA, which has evidentiary value under section 50(4)
of PMLA, have confirmed that the old demonetized
currency pertains to accused Rohit Tandon and the
conspiracy was executed on his instructions.
23. Lastly, it was submitted by learned senior counsel for
accused that accused fully cooperated with the investigating
agency and there was no need to arrest him in this case. He
further submitted that the actions of Accused persons as
mentioned in the FIR attract implications and as such the
correct authority to investigate into the same is the Income
Tax Department and not the ED. Per contra, learned Special
Prosecutor for ED submitted that accused only cooperated in
the investigation in ECIR No.14/16 and not in ECIR No.
18/16. He further submitted that as sufficient material
surfaced on record against the present accused and he
did not cooperate in the investigation in the present
case, therefore, accused Rohit Tandon was arrested in
this case. He submitted that he does not dispute the
jurisdiction of Income Tax Department so far as other aspects
of the matter are concerned.
24. As per section 45 of PMLA, while considering grant of
bail to accused, the court has to satisfy that:
i. There are reasonable grounds for believing that
accused is not guilty of such offence and that
ii. He is not likely to commit any offence, while on
bail.
25. In the present case, accused has failed to satisfy
this court that he is not guilty of alleged offence
punishable under section 3 of PMLA. He has not been
able to discharge the burden as contemplated under
section 24 of the Act.
26. Accused is alleged to have been found involved in a
white collar crime. The alleged offence was committed by
accused in conspiracy with other coaccused persons in a well
planned and thoughtful manner. It has been observed in a
catena of decisions by Hon’ble Superior Courts that economic
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offences constitute a class apart and need to be visited with a
different approach in the matter of bail. The economic offence
having deep rooted conspiracies and involving huge loss of
public, funds needs to be viewed seriously and considered as
grave offences affecting the economy of the country as a
whole and thereby posing serious threat to the financial
health of the country.”
(emphasis supplied)
6. Having formed that opinion and noticing that the
investigation was at the initial and crucial stage and that the
source of funds of proceeds of crime was yet to be ascertained
till then and that the recovery of balance proceeds of crime was
in the process, the question of enlarging the appellant on bail
does not arise, more so, when there was every possibility that
he may tamper with the evidence and influence the material
prosecution witnesses. Accordingly, the bail application was
rejected by the Sessions Court vide judgment and order dated
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th January, 2017.
7. Aggrieved, the appellant approached the High Court of
Delhi by way of bail application under Section 439 of the
Cr.P.C. read with Section 45 of the Act of 2002. The High Court
independently analysed all the contentions raised by the
appellant and after adverting to the relevant materials, rejected
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the application for grant of bail preferred by the appellant. The
High Court found that the Act of 2002 does not prescribe that
the Enforcement Directorate is debarred from conducting
investigation in relation to the offences under Sections 3 & 4 of
the Act of 2002 unless the Crime Branch concludes its
investigation in relation to FIR No.205/2016 or was to file
chargesheet for commission of scheduled offence. Further,
the proceedings under the Act of 2002 are distinct from the
proceedings relating to scheduled offence and both the
investigations can continue independently. The High Court
then noted that Section 44 of the Act of 2002 is an enabling
provision, to have a joint trial in such a situation to avoid
conflicting and multiple opinions of the Courts. But proceeded
to hold that the said possibility would arise only when the
chargesheet is filed after completion of investigation in relation
to FIR No.205/2016 and the case is committed to the
concerned Court. The High Court held that Section 44 of the
Act of 2002 does not envisage a joint investigation but is a
provision stipulating that the trial of offence under Section 3/4
of the Act of 2002 and any scheduled offence connected to the
offence under that section may be tried only by the Special
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Court constituted for the area in which the offence has been
committed. While considering the merits of the allegations
against the appellant, in particular, the materials on record,
the High Court analysed the same in the following words:
“14. In FIR No.205/2016 allegations are that Raj Kumar
Goel; Ashish Kumar, Bank Manager, Kotak Mahindra Bank,
K.G.Marg Branch and others conspired for illegal conversion
of demonetized currency notes into monetized currency by
way of depositing cash in various accounts of the firms and
subsequently getting Demand Drafts issued in fictitious
names. It is further alleged in the said FIR that accused
therein opened bank accounts in the name of ‘Group of
Companies’ in Kotak Mahindra Bank. In ECIR No.18,
transactions statements of accounts were collected pertaining
to these ‘Group of Companies’ from Kotak Mahindra Bank
and it emerged that from 15.11.2016 to 19.11.2016, there
was huge cash deposit to the tune of `31.75 crores by Raj
Kumar Goel and his associates. It was also found that the
Demand Drafts amounting to `38 crores were issued in
fictitious names during that period. It cannot be said at this
stage that offences referred in FIR No.205/2016 and the ECIR
No.18 have no nexus.
15. Prosecution under Section 45 of PMLA for commission of
offence under Section 3 punishable under Section 4 of PMLA
has already been initiated by ED in the Special Court. By an
order dated 25.02.2017, learned Addl. Sessions Judge /
Special Court (PMLA) has taken cognizance against Rohit
Tandon (present petitioner), Ashish Kumar and Raj Kumar
Goel. Dinesh Bhola and Kamal Jain have also been
summoned to face trial under Section 4 of PMLA. Raj Kumar
Goel and Ashish Kumar continue to be in custody in the said
proceedings.
16. On perusal of the complaint lodged under Section 45
PMLA, it reveals that serious and grave allegations have been
leveled against the petitioner and others. The allegations are
categorical and specific; definite role has been assigned to
each accused. It is alleged that during the period from
15.11.2016 to 19.11.2016, huge cash to the tune of `31.75
crores was deposited in eight bank accounts in Kotak
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Mahindra Bank in the accounts of the ‘Group of Companies’.
It gives details of Demand Drafts issued during 15.11.2016 to
19.11.2016 from eight bank accounts in the name of Sunil
Kumar, Dinesh Kumar, Abhilasha Dubey, Madan Kumar,
Madan Saini, Satya Narain Dagdi and Seema Bai on various
dates. Most of the Demand Drafts issued have since been
recovered. Its detail finds mention in Table No.2 given in the
complaint.
17. During arguments, specific query was raised and the
learned Senior Counsel for the petitioner was asked as to, to
whom the money deposited in the various accounts belonged.
Learned Senior Counsel for the petitioner was fair
enough to admit that the whole money belonged to the
petitioner. When enquired as to from which ‘source’,
huge cash was procured, there was no clear response to
it. Again, learned Senior Counsel for the petitioner was
asked as to how the cash belonging to the petitioner
happened to be deposited in various accounts of the
‘Group of Companies’ which were not owned by the
petitioner and what was its purpose. It was further
enquired as to why the Demand Drafts were got issued
in the names of the persons referred above and what
was its specific purpose. Learned Senior Counsel for the
petitioner avoided to answer these queries stating that
the defence of the petitioner could not be disclosed at
this juncture to impact his case during trial.
Apparently, no plausible explanation has been offered
as to what forced the petitioner to deposit the old
currency to the tune of `31.75 crores in eight accounts
of the different ‘Group of Companies’ in Kotak
Mahindra Bank during the short period from
15.11.2016 to 19.11.2016. There was no explanation
as to why the Demand Drafts for the said amount were
got issued in the name of sham people whose identity
was not known. The purpose of all this exercise seemingly
was to deposit the cash (old currency) first, get the Demand
Drafts issued in fictitious names and obtain monetized
currency by cancelling them subsequently. The petitioner
also did not place on record any document whatsoever
to show as to from which legal source, the cash was
procured to deposit in the bank accounts of strangers. I
find no substance in the petitioner’s plea that
petitioner’s only liability was to pay income tax on the
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unaccounted money / income. In my considered view, mere
payment of tax on the unaccounted money from any ‘source’
whatever would not convert it into ‘legal’ money. Needless to
say, huge deposit was a sinister attempt / strategy by the
petitioner and others to convert the ‘old currency’ into new one
to frustrate the Demonetization Policy primarily meant to
unearth black money.
18. Allegations against the petitioner are not without
substance. The prosecution has recorded statements of the
petitioner on various dates and that of Dinesh Bhola, Ashish
Kumar (Branch Manager, Kotak Mahindra Bank), Raj Kumar
Goel, Kamal Jain (petitioner’s Chartered Accountant), Vimal
Negi, Jivan Singh and Varun Tandon under Section 50 PMLA
on various dates. There statements have evidentiary
value under Section 50 PMLA. Prima facie, the version
given by them is in consonance with the prosecution
case. The prosecution has further relied upon Call Data
Records, CCTV footage, Account Trend Analysis.”
(emphasis supplied)
8. The High Court opined that keeping in mind the rigors of
Section 45 of the Act of 2002 for the release of the accused
charged under Part A of the Schedule, on bail, coupled with the
antecedents of the appellant of being involved in other similar
crime registered as FIR No.197/2016, for offence under Section
420, 409, 188, 120B of IPC dated 14th December, 2016 by
Crime Branch and ECIR No.14/DZ/II/2016 registered on 16th
December, 2016 by Enforcement Directorate for offences under
Sections 3/4 of the Act of 2002. Further, during a raid
conducted jointly by the Crime Branch and Income Tax
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Department on 10th December, 2016 at around 10.00 P.M. at
the office premises of the appellant, currency of Rs.13.62 Crore
was recovered including new currency in the denomination of
Rs.2000/ amounting to Rs.2.62 Crore. In addition, the
appellant had surrendered Rs.128 Crore during the raid
conducted by the Income Tax Department on 6/8 October,
2016 in his office and residential premises. No reliable and
credible documents were forthcoming from the appellant about
the source from where he had obtained such a huge quantity of
cash. The possibility of the same being proceeds of crime
cannot be ruled out. Hence, it noted that the question of
granting bail did not arise, taking into consideration the
serious allegations against the appellant and other facts
including severity of the punishment prescribed by law.
Accordingly, the bail application of the appellant came to be
rejected. As a consequence, the pending application which was
considered along with the bail application was also disposed of
by the impugned judgment and order dated 5th May, 2017
passed by the High Court.
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9. We have heard Mr. Mukul Rohatgi, learned senior
counsel appearing for the appellant and Mr. Tushar Mehta,
learned Additional Solicitor General for the Union of India.
They have also filed written submissions.
10. Before we analyse the rival submissions, for the
completion of record, we must mention that after the
impugned judgment, the Crime Branch filed the chargesheet
before the appropriate Court in relation to FIR No.205/2016 on
24th June, 2017. Similarly, the Enforcement Directorate has
filed supplementary complaint CC No.700/2017 in relation to
ECIR 18/2016, which refers to further material gathered
during the investigation, indicating the complicity of the
concerned accused in the crime for offence punishable under
Section 3 of the Act of 2002. A comprehensive supplementary
complaint has been filed before the District and Sessions
Judge, Saket, New Delhi (Designated Court under the
Prevention of MoneyLaundering Act, 2002) on 2nd August,
2017.
11. Before this supplementary complaint was filed, the
appellant preferred second bail application in the present case
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before the High Court of Delhi at New Delhi, being Bail
Application No.1361/2017. This application was filed on 12th
July, 2017. Along with the said bail application the appellant
filed an application being Criminal M.A. No.1293 of 2017 for
directing his interim release in connection with
ECIR/DZ/II/2016 on the assertion that his mother was
seriously ill and required immediate medical attention because
of the injuries suffered by her on 20th June, 2017. The said
interim release application was allowed on 10th August, 2017.
Notably, the appellant was advised to withdraw the regular
(second) Bail Application No.1361/2017. The learned Single
Judge of the High Court by order dated 10th August, 2017
acceded to the prayer so made by the appellant. The order
passed by the learned Single Judge of the High Court reads
thus:
“BAIL APPLN. 1361/2017
The petitioner has prayed for bail in connection with
ECIR/18/DZII/2016/AD registered under Section 3 & 4 of
Prevention of Money Laundering Act, 2002.
Simultaneously an application has been filed seeking
interim bail on the ground of illness of the mother of the
petitioner who has recently suffered a fracture in the neck.
Mr. Mukul Rohatgi, learned Sr. Advocate seeks
permission to withdraw the regular bail application on
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the observation of the bench that the earlier bail
application was rejected only on 5th of May, 2017.
However he presses the interim bail application.
Accordingly the regular bail application is
dismissed as withdrawn.
Crl.M.A.No.1293/2017 (application for interim bail)
It has been submitted on behalf of the petitioner that he
is the only son of his mother who has suffered a fall and has
got a fracture in her neck. The sister of the petitioner is
stationed abroad. The petitioner has a son who is of young
age. The petitioner has also drawn the attention of this Court
to the medical report which indicates that a plaster has been
put on the fracture but she has been suffering from acute
pain.
It has been further submitted that the charge sheet in
the main case has been submitted and that the petitioner has
remained in jail for more than seven months by now.
Opposing the aforesaid prayer for grant of interim bail,
Mr. Mahajan, learned Sr. Standing Counsel submits that this
is a case of serious fiscal impropriety of great magnitude and
there is a possibility of the petitioner tampering with evidence
if he comes out from the jail even for a short period. No
definite reasons, however, have been assigned by
Mr.Mahajan, for such a presumption that the petitioner would
tamper with the evidence specially when charge sheet in the
main case has already been submitted.
Mr.Rohtagi, learned senior counsel has drawn the
attention of this Court to the fact that whenever the petitioner
was summoned to answer to the Queries, he had visited the
office of the ED and in the past, had never tried to evade the
process of investigation.
Taking into account the aforesaid facts, specially the
period of incarceration of the petitioner, submission of the
charge sheet in the main case and the illness of the mother of
the petitioner, this Court is inclined to grant interim bail to the
petitioner for a period of 3 weeks.
Let the petitioner be released on interim bail for the
period of 3 weeks, to be counted from the date of his release,
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on his furnishing a bond in the sum of Rs. 25,000/ with two
sureties of the like amount to the satisfaction of special court.
However it is made clear that the petitioner shall not
tamper with the evidence or commit any act which would be
prejudicial to the prosecution side. Should anything of that
kind be reported, this Court would consider the desirability of
withdrawing/cancelling the interim bail.
The petitioner shall not, unnecessary, seek extension of
the interim bail granted to him. It is also specified that the
petitioner shall not leave the country under any circumstances
whatsoever. Should the petitioner intend to go out of the
territorial confines of NCR of Delhi, permission would be
required to be taken from the Special Court. The petitioner
shall also deposit his passport before the Special court while
furnishing his bonds.
Application is disposed of accordingly.
Dasti.”
(emphasis supplied)
12. It is relevant to note that the aforementioned order for
interim release of the appellant was confirmed by this Court on
12th August, 2017.
13. The appellant was thereafter advised to file the present
appeals to assail the judgment and order dated 5th May, 2017
passed by the High Court of Delhi at New Delhi in Bail
Application No.119 of 2017 and Criminal M.B. No.121 of 2017.
The special leave petitions were filed on 18th August, 2017.
During the pendency of these special leave petitions, the
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appellant was advised to also file a writ petition under Article
32 of the Constitution of India to challenge the validity of the
provisions of the Act of 2002. The same was filed on 23rd
August, 2017, being Writ Petition (Civil) No.121 of 2017. The
reliefs claimed in the said writ petition read thus:
“PRAER
(i) Issue a writ of mandamus or any other appropriate
writ, order or direction declaring that the
conditions/limitations contained in Section 45(1) of
Prevention of Money Laundering Act, 2002 (Act 15 of
2003) to the extent that it imposes rigors/restrictions
in the grant of bail in any offence punishable upto 7
years under the provisions of Prevention of Money
Laundering Act, 2002 (Act 15 of 2003) as
unreasonable, arbitrary and unconstitutional being
violative of the fundamental rights of the Petitioner
guaranteed and protected under Articles 14 and 21
of the Constitution of India;
(ii) In the alternative to prayer (i) above, issue a writ of
mandamus or any other appropriate writ, order or
direction reading down the scope and ambit of
Section 45(1) of the Prevention of Money Laundering
Act, 2002 (Act 15 of 2003), so that the rigors in grant
of bail are not applicable in the case of the
Petitioner, where the alleged scheduled offences in
CC No. 41 of 2017 arising out of chargesheet No. 1
dated 24.06.2017 filed by the Crime Branch, New
Delhi alleging commission of offences under Sections
420/188/109/120B/34 IPC and Section 12 of the
Prevention of Corruption Act, 1988 (none of which
were under Part A of the Schedule prior to the
Prevention of Money Laundering (Amendment) Act,
2012 (Act 2 of 2013) and formed part of Part B of
the Schedule;
(iii) Issue a writ of mandamus or any other appropriate
writ, order or direction declaring the continued
incarceration of the Petitioner since 28.12.2016 in
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ECIR/18/DZII/2016/AD dated 26.12.2016 under
Section 3/4 of the Prevention of Money Laundering
Act, 2002 is illegal, unconstitutional and in violation
of the fundamental right of the Petitioner guaranteed
and protected under Article 21 of the Constitution of
India;
(iv) Issue a writ of mandamus or any other appropriate
writ, order or direction in the nature of mandamus
declaring that the offences under the Prevention of
Money Laundering Act, 2002 (Act 15 of 2003)
pursuant to the Prevention of Money Laundering
(Amendment) Act, 2005 (Act 20 of 2005) which came
into force w.e.f. 01.07.2005 are noncognizable
offences and therefore, it is mandatory to comply
with the provisions of Sections 155, 177(1) and 172
of the Code of Criminal Procedure, 1973 and declare
that the law laid down by the Division Bench of the
Hon’ble Delhi High Court in its judgment dated
27.4.2016 (reported in 2016 SCC Online Delhi 2493)
and by the Hon’ble Gujarat High Court in Rakesh
Manekchand Kothari vs. Union of India [Special
Criminal Application (Habeas Corpus) No.
4247/2015] decided on 03.08.2015 holding that the
offences under Section 3 of the Prevention of Money
Laudnering Act, 2002 punishable under Section 4
thereof is a noncognizable offence is good law and
the contrary view taken by the Hon’ble Bombay
High Court in its judgment dated 14.12.2016 in
Chhagan Chandrakant Bhujbal vs. Union of India &
Ors. is bad in law;
(v) lay down guidelines for compliance by all Courts for
grant of bail in proceedings arising out of and
concerning the Prevention of Money Laundering Act,
2002 by expounding the scope of Section 439 of the
Code of Criminal Procedure, 1973;
(vi) Issue rule nisi in terms of Prayers (i) to (v) above;
and
(vii) And/or pass any other or further orders which Your
Lordships may deem fit and proper in the interest of
justice.
14. The aforementioned writ petition was listed together with
the appeals on 30th October, 2017. During oral arguments,
22
however, the counsel appearing for the appellant, in all
fairness, stated that the grounds urged in the said writ petition
need not be considered at this stage and that the appeals
preferred against the impugned judgment and order dated 5th
May, 2017 be examined on the basis of the prevailing statutory
provisions, including the rigors of Section 45 of the Act of
2002. In other words, the challenge to the impugned judgment
will have to be considered as per the prevailing provisions and
not with reference to the challenge regarding the validity
thereof.
15. Reverting to the first contention of the appellant, that
the reasons which weighed with the learned Single Judge of the
High Court while directing interim release of the appellant,
would apply proprio vigore for considering the regular bail. In
that, the learned Single Judge vide order dated 10th August,
2017 noted the following circumstances:
i) Petitioner never tried to evade the investigation;
ii) The period of incarceration (7 ½ months);
iii) Submission of chargesheet in the main case on
24/6/17;
iv) Illness of the mother of the Petitioner;
23
v) No definite reasons assigned by the Counsel for the
Respondent to substantiate allegation that
Petitioner would tamper with evidence especially
when chargesheet in the main case has been
submitted.
16. The argument though attractive at the first blush
deserves to be rejected. In our opinion, the order dated 10th
August, 2017 passed by the High Court directing interim
release of the appellant was primarily on account of the illness
of his mother. No more and no less. The other observations in
the said order will have no bearing on the merits of the
controversy and required to be reckoned whilst considering the
prayer for grant of regular bail. For that, the appellant must
succeed in overcoming the threshold of the rigors of Section 45
of the Act of 2002. Indubitably, the appellant having withdrawn
the regular (second) bail application, the consideration of
prayer for grant of interim release could not have been taken
forward. Besides, in the backdrop of the opinion recorded by
the Coordinate Bench of the High Court (in its decision dated
5
th May, 2017) whilst considering the application for grant of
regular bail, which was after filing of the initial complaint CC
24
No.700/2017 (on 23rd February, 2017), was binding until
reversed or a different view could be taken because of changed
circumstances. Suffice it to observe that indulgence shown to
the appellant in terms of order dated 10th August, 2017 will be
of no avail. In that, the facts such as the appellant never tried
to evade the investigation or that he has suffered incarceration
for over 7½ months or that the chargesheet has been filed in
the predicate offence registered under FIR No.205/2016 or the
factum of illness of the mother of the appellant or the
observation that no definite reason has been assigned by the
respondents for substantiating the allegation that the appellant
would tamper with the evidence, may become relevant only if
the threshold stipulation envisaged under Section 45 of the Act
of 2002 was to be fulfilled. The said provision reads thus:
“45. Offences to be cognizable and nonbailable.—(1)
Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), no person
accused of an offence punishable for a term of
imprisonment of more than three years under Part A
of the Schedule shall be released on bail or on his
own bond unless
(i) the Public Prosecutor has been given an opportunity to
oppose the application for such release; and
25
(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 a 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.
(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 to such conditions as may be prescribed.
(2) The limitation on granting of bail specified in
subsection (1) is in addition to the limitations under
the Code of Criminal Procedure, 1973 (2 of 1974) or
any other law for the time being in force on granting
of bail.”
(emphasis supplied)
The sweep of Section 45 of the Act of 2002 is no more res
intergra. In a recent decision of this Court in the case of
Gautam Kundu Vs. Directorate of Enforcement
(Prevention of MoneyLaundering Act), Government of
26
India,
1
this Court has had an occasion to examine it in
paragraphs 2830. It will be useful to advert to paragraphs 28
to 30 of this decision which read thus:
“28. Before dealing with the application for bail on merit, it
is to be considered whether the provisions of Section 45 of the
PMLA are binding on the High Court while considering the
application for bail under Section 439 of the Code of Criminal
Procedure. There is no doubt that PMLA deals with the offence
of money laundering and the Parliament has enacted this law
as per commitment of the country to the United Nations
General Assembly. PMLA is a special statute enacted by the
Parliament for dealing with moneylaundering. Section 5 of
the Code of Criminal Procedure, 1973 clearly lays down that
the provisions of the Code of Criminal Procedure will not affect
any special statute or any local law. In other words, the
provisions of any special statute will prevail over the general
provisions of the Code of Criminal Procedure in case of any
conflict.
29 . Section 45 of the PMLA starts with a non obstante
clause which indicates that the provisions laid down in
Section 45 of the PMLA will have overriding effect on the
general provisions of the Code of Criminal Procedure in case
of conflict between them. Section 45 of the PMLA imposes
following two conditions for grant of bail to any person
accused of an offence punishable for a term of
imprisonment of more than three years under PartA of
the Schedule of the PMLA:
(i) That the prosecutor must be given an opportunity
to oppose the application for bail; and
(ii) That the Court must be satisfied that there are
reasonable grounds for believing that the accused
person is not guilty of such offence and that he is not
likely to commit any offence while on bail.
30 . The conditions specified under Section 45 of the PMLA
are mandatory and needs to be complied with which is
further strengthened by the provisions of Section 65 and also
1 (2015) 16 SCC 1
27
Section 71 of the PMLA. Section 65 requires that the
provisions of Cr.P.C. shall apply in sofaras they are not
inconsistent with the provisions of this Act and Section 71
provides that the provisions of the PMLA shall have overriding
effect notwithstanding anything inconsistent therewith
contained in any other law for the time being in force. PMLA
has an overriding effect and the provisions of Cr.P.C. would
apply only if they are not inconsistent with the provisions of
this Act. Therefore, the conditions enumerated in Section 45 of
PMLA will have to be complied with even in respect of an
application for bail made under Section 439 of Cr.P.C. That
coupled with the provisions of Section 24 provides that
unless the contrary is proved, the Authority or the
Court shall presume that proceeds of crime are involved
in money laundering and the burden to prove that the
proceeds of crime are not involved, lies on the
appellant.”
(emphasis supplied)
17. In paragraph 34, this Court reiterated as follows:
34. “xxx xxx xxx We have noted that Section 45 of the
PMLA will have overriding effect on the general provisions of
the Code of Criminal Procedure in case of conflict between
them. As mentioned earlier, Section 45 of the PMLA imposes
two conditions for grant of bail, specified under the said Act.
We have not missed the proviso to Section 45 of the said Act
which indicates that the legislature has carved out an
exception for grant of bail by a Special Court when any person
is under the age of 16 years or is a woman or is a sick or
infirm. Therefore, there is no doubt that the conditions laid
down under Section 45A of the PMLA, would bind the High
Court as the provisions of special law having overriding effect
on the provisions of Section 439 of the Code of Criminal
Procedure for grant of bail to any person accused of
committing offence punishable under Section 4 of the PMLA,
even when the application for bail is considered under Section
439 of the Code of Criminal Procedure.”
28
The decisions of this Court in the case of Subrata Chattoraj
Vs. Union of India,
2
Y.S. Jagan Mohan Reddy Vs. CBI 3
, and
Union of India Vs. Hassan Ali Khan 4
have been noticed in
the aforesaid decision.
18. The consistent view taken by this Court is that economic
offences having deeprooted conspiracies and involving huge
loss of public funds need to be viewed seriously and considered
as grave offences affecting the economy of the country as a
whole and thereby posing serious threat to the financial health
of the country. Further, when attempt is made to project the
proceeds of crime as untainted money and also that the
allegations may not ultimately be established, but having been
made, the burden of proof that the monies were not the
proceeds of crime and were not, therefore, tainted shifts on the
accused persons under Section 24 of the Act of 2002.
19. It is not necessary to multiply the authorities on the
sweep of Section 45 of the Act of 2002 which, as
aforementioned, is no more res integra. The decision in the
2 (2014) 8 SCC 768
3 (2013) 7 SCC 439
4 (2011) 10 SCC 235
29
case of Ranjitsing Brahmajeetsing Sharma Vs. State of
Maharashtra and Anr.,
5
and State of Maharashtra Vs.
Vishwanath Maranna Shetty,
6
dealt with an analogous
provision in the Maharashtra Control of Organised Crime Act,
1999. It has been expounded that the Court at the stage of
considering the application for grant of bail, shall consider the
question from the angle as to whether the accused was
possessed of the requisite mens rea. The Court is not required
to record a positive finding that the accused had not committed
an offence under the Act. The Court ought to maintain a
delicate balance between a judgment of acquittal and
conviction and an order granting bail much before
commencement of trial. The duty of the Court at this stage is
not to weigh the evidence meticulously but to arrive at a
finding on the basis of broad probabilities. Further, the Court
is required to record a finding as to the possibility of the
accused committing a crime which is an offence under the Act
after grant of bail. In Ranjitsing Brahmajeetsing Sharma
5 (2005) 5 SCC 294
6 (2012) 10 SCC 561
30
(supra), in paragraphs 44 to 46 of the said decision, this Court
observed thus:
“44. The wording of Section 21(4), in our opinion, does not
lead to the conclusion that the Court must arrive at a positive
finding that the applicant for bail has not committed an
offence under the Act. If such a construction is placed, the
court intending to grant bail must arrive at a finding that the
applicant has not committed such an offence. In such an
event, it will be impossible for the prosecution to obtain a
judgment of conviction of the applicant. Such cannot be the
intention of the Legislature. Section 21(4) of MCOCA,
therefore, must be construed reasonably. It must be so
construed that the Court is able to maintain a delicate balance
between a judgment of acquittal and conviction and an order
granting bail much before commencement of trial. Similarly,
the Court will be required to record a finding as to the
possibility of his committing a crime after grant of bail.
However, such an offence in futuro must be an offence under
the Act and not any other offence. Since it is difficult to predict
the future conduct of an accused, the court must necessarily
consider this aspect of the matter having regard to the
antecedents of the accused, his propensities and the nature
and manner in which he is alleged to have committed the
offence.
45. It is, furthermore, trite that for the purpose of
considering an application for grant of bail, although detailed
reasons are not necessary to be assigned, the order granting
bail must demonstrate application of mind at least in serious
cases as to why the applicant has been granted or denied the
privilege of bail.
46. The duty of the court at this stage is not to weigh the
evidence meticulously but to arrive at a finding on the basis of
broad probabilities. However, while dealing with a special
statute like MCOCA having regard to the provisions contained
in Subsection (4) of Section 21 of the Act, the Court may have
to probe into the matter deeper so as to enable it to arrive at a
finding that the materials collected against the accused
during the investigation may not justify a judgment of
conviction. The findings recorded by the Court while granting
31
or refusing bail undoubtedly would be tentative in nature,
which may not have any bearing on the merit of the case and
the trial court would, thus, be free to decide the case on the
basis of evidence adduced at the trial, without in any manner
being prejudiced thereby.”
20. Reverting to the decision in the case of Manoranjana
Sinh Vs. Central Bureau of Investigation,
7
we hold that the
same is on the facts of that case. Even in the said decision,
the Court has noted that the grant or denial of bail is regulated
to a large extent by the facts and circumstances of each case.
In the case of Sanjay Chandra Vs. Central Bureau of
Investigation,
8
the Court was not called upon to consider the
efficacy of Section 45 of the Act of 2002 which is a special
enactment.
21. Keeping in mind the dictum in the aforesaid decisions,
we find no difficulty in upholding the opinion recorded by the
Sessions Court as well as the High Court in this regard. In our
opinion, both the Courts have carefully analysed the
allegations and the materials on record indicating the
complicity of the appellant in the commission of crime
punishable under Section 3/4 of the Act of 2002. The Courts
7 (2017) 5 SCC 218
8 (2012) 1 SCC 40
32
have maintained the delicate balance between the judgment of
acquittal and conviction and order granting bail before
commencement of trial. The material on record does not
commend us to take a contrary view.
22. Realizing this position, the learned counsel appearing for
the appellant would contend that even if the allegations against
the appellant are taken at its face value, the incriminating
material recovered from the appellant or referred to in the
complaint, by no stretch of imagination, would take the colour
of proceeds of crime. In fact, there is no allegation in the
chargesheet filed in the scheduled offence case or in the
prosecution complaint that the unaccounted cash deposited
by the appellant is as a result of criminal activity. Absent this
basic ingredient, the property derived or obtained by the
appellant would not become proceeds of crime. To examine this
contention, it would be useful to advert to Sections 3 and 4 of
the Act of 2002. The same read thus:
“3. Offence of moneylaundering. Whosoever directly or
indirectly attempts to indulge or knowingly assists or
knowingly is a party or is actually involved in any process or
activity connected proceeds of crime including its concealment,
possession, acquisition or use and projecting or claiming it as
33
untainted property shall be guilty of offence of moneylaundering.
4. Punishment for moneylaundering. Whoever commits
the offence of moneylaundering shall be punishable with
rigorous imprisonment for a term which shall not be less than
three years but which may extend to seven years and shall
also be liable to fine.
Provided that where the proceeds of crime involved in
moneylaundering relates to any offence specified under
paragraph 2 of Part A of the Schedule, the provisions of this
section shall have effect as if for the words "which may
extend to seven years", the words "which may extend to ten
years" had been substituted.”
23. As the fulcrum of Section 3 quoted above, is expression
‘proceeds of crime’, the dictionary clause in the form of Section
2(1)(u) is of some relevance. The same reads thus:
“2(1)(u) ‘proceeds of crime’ means any property derived or
obtained, directly or indirectly, by any person as a result of
criminal activity relating to a scheduled offence or the value of
any such property or where such property is taken or held
outside the country, then the property equivalent in value held
within the country;”
It will be useful to advert to the meaning of expression
“property” as predicated in Section 2(1)(v). The same reads
thus:
“2(1)(v) “property” means any property or assets of every
description, whether corporeal or incorporeal, movable or
immovable, tangible or intangible and includes deeds and
34
instruments evidencing title to, or interest in, such property or
assets, wherever located;
The expression ‘scheduled offence’ has been defined in Section
2(1)(y) of the Act of 2002. The same reads thus:
“2(1)(y) ‘scheduled offence’ means
(i) the offences specified under Part A of the Schedule; or
(ii) the offences specified under Part B of the Schedule if
the total value involved in such offences is one crore rupees
or more; or
(iii) the offences specified under Part C of the Schedule;”
Indisputably, the predicate offence is included in Part A in
paragraph 1 of the Schedule in the Act of 2002, in particular
Sections 420, 467, 471 and 120B of IPC. Indeed, the
expression “criminal activity” has not been defined. By its very
nature the alleged activities of the accused referred to in the
predicate offence are criminal activities. The possession of
demonetized currency in one sense, ostensibly, may appear to
be only a facet of unaccounted money in reference to the
provisions of the Income Tax Act or other taxation laws.
However, the stated activity allegedly indulged into by the
accused named in the commission of predicate offence is
replete with mens rea. In that, the concealment, possession,
35
acquisition or use of the property by projecting or claiming it
as untainted property and converting the same by bank drafts,
would certainly come within the sweep of criminal activity
relating to a scheduled offence. That would come within the
meaning of Section 3 and punishable under Section 4 of the
Act, being a case of moneylaundering. The expression ‘moneylaundering’
is defined thus:
“2(1)(p) “moneylaundering” has the meaning assigned to it
in section 3;
24. The appellant then relies upon the decision in the case of
Gorav Kathuria Vs. Union of India,
9
of the Punjab and
Haryana High Court which has taken the view that Section
45(1) of the Act of 2002 requires to be read down to apply only
to those scheduled offences which were included prior to the
amendment in 2013 in the Schedule. It is contended that the
offence, in particular, under Sections 420, 467 and 471 of IPC,
may not be treated as having been included in the scheduled
offences for the purpose of the Act of 2002. Further, if any
other view was to be taken, the provision would be rendered
ultra vires. We are in agreement with the stand taken by the
9 (2016 SCC Online P & H 3428
36
respondents that the appellant cannot be permitted to raise the
grounds urged in the writ petition, hearing whereof has been
deferred on the request of the appellant. In other words, the
appellant should be in a position to persuade the Court that
the allegations in the complaint and the materials on record
taken at its face value do not constitute the offence under
Section 3 read with the schedule of the Act of 2002 as in force.
25. It has been brought to our notice that the decision in
Gorav Kathuria (supra) was challenged before this Court by
way of Criminal Appeal No.737 of 2016, which has already
been dismissed on 12th August, 2016. The order originally
passed on the said criminal appeal reads thus:
“Though the High Court has granted certificate to appeal,
after arguing the matter for some time, learned counsel for the
petitioner concedes that the impugned judgment of the High
Court is correct.
This appeal is, accordingly, dismissed.”
However, that order has been subsequently revised which
reads thus:
“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.
37
This appeal is, accordingly, dismissed.”
At the same time the respondents have drawn our attention to
a chart contained in their written submissions pointing out
that other High Courts have disagreed with the principle
expounded in Gorav Kathuria’s case. The said chart reads
thus:
(i) Crl. Misc. Application (for Regular Bail)
No.7970/17
Jignesh Kishorebhai Bajiawala vs. State
of Gujarat & Ors.
Manu/GJ/1035/2017
High Court of
Gujarat
(ii) Crl. Petition No.366/2017
SC Jayachandra vs Enforcement
Directorate, Bangalore
2017 (349) ELT 392 KAR
High Court of
Karnataka at
Bengaluru
(iii) WP[Crl.] No.333 of 2015
Kishin S. Loungani vs. UOI & ors.
(2017) 1 KHC 355
High Court of
Kerala at
Ernakulam
(iv) Crl. Mic. Application (for Regular Bail)
No.30674/16
Pradeep Nirankarnath Sharma vs
Directorate of Enforcement
2017 (350) ELT 449 (GUJ)
High Court
Gujarat at
Ahmedabad
(v) Crl. Writ Petition No.3931/2016
Chhagan Chandrakant Bhujbal vs Union
of India & Ors.
2016 SCC Online Bom 9983
High Court of
Bombay
38
26. For the time being, it is not necessary for us to examine
the issues arising from the decision of the Punjab and Haryana
High Court or the rejection of criminal appeal by this Court
against that decision. The constitutional validity of Section 45
of the Act of 2002 will have to be examined by this Court in
the writ petition on its own merits. The summary dismissal of
criminal appeal will not come in the way of considering the
correctness of the decision of the Punjab and Haryana High
Court in view of the conflict of opinion with the other High
Courts.
27. Suffice it to observe that the appellant has not succeeded
in persuading us about the inapplicability of the threshold
stipulation under Section 45 of the Act. In the facts of the
present case, we are in agreement with the view taken by the
Sessions Court and by the High Court. We have independently
examined the materials relied upon by the prosecution and
also noted the inexplicable silence or reluctance of the
appellant in disclosing the source from where such huge value
of demonetized currency and also new currency has been
acquired by him. The prosecution is relying on statements of
39
26 witnesses/accused already recorded, out of which 7 were
considered by the Delhi High Court. These statements are
admissible in evidence, in view of Section 50 of the Act of 2002.
The same makes out a formidable case about the involvement
of the appellant in commission of a serious offence of moneylaundering.
It is, therefore, not possible for us to record
satisfaction that there are reasonable grounds for believing that
the appellant is not guilty of such offence. Further, the Courts
below have justly adverted to the antecedents of the appellant
for considering the prayer for bail and concluded that it is not
possible to hold that the appellant is not likely to commit any
offence ascribable to the Act of 2002 while on bail. Since the
threshold stipulation predicated in Section 45 has not been
overcome, the question of considering the efficacy of other
points urged by the appellant to persuade the Court to favour
the appellant with the relief of regular bail will be of no avail. In
other words, the fact that the investigation in the predicate
offence instituted in terms of FIR No.205/2016 or that the
investigation qua the appellant in the complaint CC
No.700/2017 is completed; and that the proceeds of crime is
already in possession of the investigating agency and
40
provisional attachment order in relation thereto passed on 13th
February, 2017 has been confirmed; or that chargesheet has
been filed in FIR No.205/2016 against the appellant without
his arrest; that the appellant has been lodged in judicial
custody since 2nd January, 2017 and has not been interrogated
or examined by the Enforcement Directorate thereafter; all
these will be of no consequence.
28. It was urged on behalf of the appellant that
Demonetization Notification dated 8th November, 2016 imposes
no limit in KYC compliant accounts on the quantum of deposit
and no restrictions on noncash transactions. The relevant
portion of the said notification reads thus:
“(iii) there shall not be any limit on the quantity or value of
specified bank notes to be credited to the account maintained
with the bank by a person, where the specified bank notes
are tendered; however, where compliance with extant Know
Your Customer (KYC) norms is not complete in an account, the
maximum value of specified bank notes as may be deposited
shall be Rs. 50,000/;
(vii) there shall be no restriction on the use of any noncash
method of operating the account of a person including
cheques, demand drafts, credit or debit cards, mobile wallets
and electronic fund transfer mechanisms or the like;”
41
We fail to understand as to how this argument can be
countenanced. The fact that no limit for deposit was specified,
would not extricate the appellant from explaining the source
from where such huge amount has been acquired, possessed
or used by him. The volume of demonetized currency recovered
from the office and residential premises of the appellant,
including the bank drafts in favour of fictitious persons and
also the new currency notes for huge amount, leave no manner
of doubt that it was the outcome of some process or activity
connected with the proceeds of crime projecting the property as
untainted property. No explanation has been offered by the
appellant to dispel the legal presumption of the property being
proceeds of crime. Similarly, the fact that the appellant has
made declaration in the Income Tax Returns and paid tax as
per law does not extricate the appellant from disclosing the
source of its receipt. No provision in the taxation laws has been
brought to our notice which grants immunity to the
appellant from prosecution for an offence of moneylaundering.
In other words, the property derived or obtained by the
appellant was the result of criminal activity relating to a
scheduled offence. The argument of the appellant that there is
42
no allegation in the chargesheet filed in the scheduled offence
case or in the prosecution complaint that the unaccounted
cash deposited by the appellant is the result of criminal
activity, will not come to the aid of the appellant. That will have
to be negatived in light of the materials already on record. The
possession of such huge quantum of demonetized currency
and new currency in the form of Rs.2000/ notes, without
disclosing the source from where it is received and the
purpose for which it is received, the appellant has failed to
dispel the legal presumption that he was involved in moneylaundering
and the property was proceeds of crime.
29. Taking overall view of the matter, therefore, we are not
inclined to interfere with the well considered opinion of the
Sessions Court and the High Court rejecting the prayer for
grant of regular bail to the appellant. However, considering the
fact that the appellant is in custody since 28th December, 2016
and the offence is punishable with imprisonment for a term
extending to seven years only, but not less than three years,
the Trial Court will be well advised to proceed with the trial on
daytoday basis expeditiously. We clarify that the Trial Court
43
must examine the evidence/material brought on record during
the trial on its own merit and not be influenced by the
observations in this decision which are limited for considering
the prayer for grant of regular bail.
30. Accordingly, the appeals are dismissed in the above
terms.
…………………………….CJI.
(Dipak Misra)
…………………………..….J.
(A.M. Khanwilkar)
…………………………..….J.
(D.Y. Chandrachud)
New Delhi,
Dated: 10th November, 2017.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS.18781879 OF 2017
(Arising out of SLP (Crl.) No. 6896–6897 of 2017)
Rohit Tandon …Appellant
:Versus:
The Enforcement Directorate …Respondent
J U D G M E N T
A.M. Khanwilkar, J.
1. By these appeals the order of the High Court of Delhi at
New Delhi dated 5th May, 2017, rejecting the Bail Application
No.119 of 2017 and Criminal M.B. No.121 of 2017 has been
assailed. The appellant was arrested on 28th December, 2016 in
connection with ECIR/18/DZII/2016/AD(RV) registered under
Sections 3 & 4 of the Prevention of MoneyLaundering Act,
2
2002 (hereinafter referred to as “the Act of 2002”). The said
ECIR was registered on 26th December, 2016 as a sequel to
FIR No.205/2016 dated 25th December, 2016 in relation to the
offences punishable under Sections 420, 406, 409, 468, 471,
188 and 120B of the Indian Penal Code, 1860 (“IPC” for short).
The said FIR was registered by the Crime Branch of Delhi
Police, New Delhi. The ECIR, however, has been registered at
the instance of Assistant Director (PMLA), Directorate of
Enforcement, empowered to investigate the offences punishable
under the Act of 2002.
2. The appellant first approached the Additional Sessions
Judge02, South East Saket Court, New Delhi for releasing him
on bail by way of an application under Section 439 of the Code
of Criminal Procedure, 1973 read with Section 45 of the Act of
2002. The said bail application came to be rejected vide
judgment dated 7th January, 2017 by the said Court. The
appellant thereafter approached the High Court of Delhi at New
Delhi by way of Bail Application No.119 of 2017 and an
interlocutory application filed therein, being Criminal M.B.
No.121 of 2017. The High Court independently considered the
3
merits of the arguments but eventually rejected the prayer for
bail vide impugned judgment dated 5th May, 2017.
3. The ECIR has been registered against Ashish Kumar,
Raj Kumar Goel and other unknown persons for offences
punishable under Sections 3/4 of the Act of 2002 on the basis
of information/material, as evident from the predicate offence
registered by P.S. Crime Branch, Delhi against the named
accused and unknown accused for offences punishable under
Sections 420, 406, 409, 467, 468, 471, 188 and 120B of IPC,
being FIR No.205/2016 dated 25th December, 2016. The
relevant facts noted in the ECIR read thus:
“A. It is reported that during the course of investigation of
Case FIR No.242/16 u/s 420, 467,468,471, 120B IPC, PS
C.R. Park, Delhi, it is revealed that Accused Raj Kumar Goel
along with associates are engaged into earning profits by
routing money into various accounts by using forged
documents and thereby receiving commission from the
prospective clients who either need money by cheque or in
cash. In order to obtain large profits, accused Raj Kumar Goel
and few of his associates have opened many Bank Accounts
in Kotak Mahindra and ICICI Bank at Naya Bazar, Chandni
Chowk, Delhi.
B. On 08.11.2016, the Government if India announced
demonetization of one thousand (1000) and five hundred
(500) rupee notes. On this accused Raj Kumar Goel conspired
with the bank manager of Kotak Mahindra Bank, Cannaught
Place, namely Ashish Kumar r/o A701, Bestech Park, Sector
61, Gurugram, Haryana and one Chartered Accountant, name
unknown, having mobile number 9711329619 to earn huge
profit by converting black money in the form of old currency
4
notes into new currency notes. In this conspiracy, the said CA
acted as a mediator and arranged prospective clients who
intended to convert their black money into legitimate money.
For the same, alleged CA offered 2% commission to the other
accused persons on all such transactions.
C. The accused were having bank accounts in the Naya
Bazar branch of Kotak Mahindra Bank but the CA and Bank
Manager Ashish asked accused Raj Kumar to deposit old
currency notes in Cannaught Place branch of Kotak Mahindra
Bank. It is also revealed that the accused opened bank
accounts in the name of Quality Trading Company, Swati
Trading Company, Shree Ganesh Enterprises, R.K.
International, Mahalxmi Industires, Virgo International and
Sapna International on the basis of forged/false documents
and deposited approx. Rs.25 Crore after the demonetization.
As per the preliminary investigation of the said case it is
transpired that accused Raj Kumar Goel, Bank Manager
Ashish, CA along with their associates are involved in a deep
roted conspiracy and were indulged in converting old currency
which were entrusted to bank/Govt officials and were
supposed to be delivered to general public/guidelines issued
by the Reserve Bank of India/Ministry of Finance and hand
thus cheated the public at large. The accused persons have
also caused monetary loss to the Govt. of India and thereby
Committed offences u/s 420, 406, 409, 467, 468, 471, 188,
120B IPC.”
It is then noted that the offences under Sections 420,
468, 471 and 120B of IPC are scheduled offences under the Act
of 2002 and that from the available facts, a reasonable
inference is drawn that the named accused and unknown
accused have made illegal earnings arising out of the said
criminal conspiracy which might have undergone the process
of laundering and thereby an offence under Section 3 of the Act
of 2002 was made out. It is noted that prima facie case for
5
commission of offence under Section 3 punishable under
Section 4 of the Act of 2002 was made out and accordingly the
case is being registered and taken up for investigation under
the Act of 2002 and rules framed thereunder.
4. The learned Sessions Judge while considering the bail
application adverted to the relevant materials including the
CDR analysis of Mobile number of Ashish Kumar, Branch
Manager, Kotak Mahindra Bank, K.G. Marg Branch, Kamal
Jain, CA of Rohit Tandon (hereinafter referred to as
“appellant”), Dinesh Bhola, Raj Kumar Goel; the statements of
Kamal Jain, Dinesh Bhola and Ashish Kumar, recorded under
Section 50 of the Act of 2002; and analysis of bank statements
of stated companies. All these reveal that Ashish Kumar
conspired with other persons to get deposited Rs.38.53 Crore
in cash of demonetized currency into bank accounts of
companies and got demand drafts issued in fictitious names
with intention of getting them cancelled and thereby converting
the demonetized currency into monetized currency on
commission basis. Further, the investigation also revealed
that the entire cash was collected on the instructions of the
6
appellant herein, by Ashish Kumar, Raj Kumar Goel and others
through Dinesh Bhola, an employee of the appellant.
According to the prosecution, all the associates of the appellant
acted on instructions of the appellant for getting issued the
demand drafts against cash deposit with the help of Ashish
Kumar, Branch Manager of Kotak Mahindra Bank and others,
to the tune of Rs.34.93 Crore from Kotak Mahindra Bank, K.G.
Marg Branch. It was also noted that the demand drafts of
Rs.3.60 Crore were issued in fictitious names on the
instructions of Bank Manager Ashish Kumar in lieu of
commission received by him in old cash currency. The demand
drafts amounting to Rs.38 Crore were issued in favour of
Dinesh Kumar and Sunil Kumar which were recovered from
the custody of Kamal Jain who had kept the same on the
instructions of the appellant. Out of the said amount, the
demand drafts of other banks, apart from Kotak Mahindra
Bank Limited, were also recovered. The prosecution suspected
that there could be other dubious transactions made by the
appellant in other banks and that Ashish Kumar, Bank
Manager and others were acting on the instructions of the
appellant for executing the crime.
7
5. The Sessions Court rejected the argument of the
appellant that the investigation of the offence registered against
the appellant and others under Section 3/4 of the Act of 2002
being a sequel to the FIR registered by the Crime Branch of
Delhi Police, it cannot be investigated by the Enforcement
Directorate. For, the Enforcement Directorate was not
concerned with the outcome of the investigation of the
predicate offence registered by the Delhi Police. It thus opined
that the matter on hand must be examined only in reference to
the registration of ECIR by the Enforcement Directorate. The
fact that the investigation in FIR registered by the Crime
Branch of Delhi Police, bearing FIR No.205/2016, had not
commenced will also be of no avail to the appellant. The
Sessions Court also found that as per Section 19 of the Act of
2002, the only condition to be satisfied for arrest of a person is
the reasonable belief of the authority gathered on the basis of
material in its possession. Further, in the present case, the
accused was arrested by the competent authority on the basis
of material in his possession giving rise to a reasonable belief
about the complicity of the accused in the commission of
8
offence punishable under the Act of 2002. As such the arrest
of the appellant under the Act of 2002 cannot be termed as
illegal. After having dealt with those contentions, the Sessions
Court took note of the material pressed into service by the
prosecution and analysed the same in the following words:
“21. Pursuant to registration of FIR No.205/2016 under
section 420, 406, 409, 468, 471, 188, 120B IPC by Crime
Branch, the matter was taken up by ED and ECIR No.18/16
was opened for investigation. Transaction statements of
accounts in Kotak Mahindra Bank in FIR No.205/16 in
respect of companies i.e. Delhi Training Company, Kwality
Tading Company, Mahalaxmi Industries, R.K. International,
Sapna Trading Company, Shree Ganesh Enterprises, Swastik
Trading Company arid Virgo International were sought and
scrutinized, Huge cash deposits in the said accounts were
identified during November, 2016, post demonetization
announcement it was found that demand drafts were issued
in fictitious names like Dinesh Kumar, Sunil Kumar,
Abhilasha Dubey, Madan Kumar, Madan Saini, Satya Narain
Dagdi and Seema Bai.
22. Statement of Ashish Kumar, accused named in
FIR No.205/16, Branch Manager, Kotak Mahindra Bank,
K.G. Marg branch was recorded under section 50 of
PMLA which revealed that Kamal Jain, CA of accused
Rohit Tandon contacted him to get the demonetized
currency on behalf of accused/applicant, converted into
monetized currency on commission basis. The
commission of Ashish Kumar was decided @ 35%, who in turn
contacted one Yogesh Mittal and Rajesh Kumar Goel, accused
in FIR No.205/16 to carry out the criminal design of getting
the demonetized cash converted into monetized 7 valuable
form. Demonetized currency was deposited in different
accounts of companies pertaining to Raj Kumar Goel besides
others through Raj Kumar Goel with the help of Ashish Kumar
in different bank accounts of Kotak Mahindra Bank and DDs
were issued in fictitious names. The illegal conversion of
demonetized currency, getting the same deposited and
issuance of demand drafts is corroborated through CDR
9
analysis of relevant persons for the relevant period. Dinesh
Bhola and Kamal Jain, in their statements recorded under
section 50 of PMLA have also confirmed and reiterated the
facts as stated by Ashish Kumar, the Branch Manager. The
statements of persons recorded under section 50 of
PMLA, which has evidentiary value under section 50(4)
of PMLA, have confirmed that the old demonetized
currency pertains to accused Rohit Tandon and the
conspiracy was executed on his instructions.
23. Lastly, it was submitted by learned senior counsel for
accused that accused fully cooperated with the investigating
agency and there was no need to arrest him in this case. He
further submitted that the actions of Accused persons as
mentioned in the FIR attract implications and as such the
correct authority to investigate into the same is the Income
Tax Department and not the ED. Per contra, learned Special
Prosecutor for ED submitted that accused only cooperated in
the investigation in ECIR No.14/16 and not in ECIR No.
18/16. He further submitted that as sufficient material
surfaced on record against the present accused and he
did not cooperate in the investigation in the present
case, therefore, accused Rohit Tandon was arrested in
this case. He submitted that he does not dispute the
jurisdiction of Income Tax Department so far as other aspects
of the matter are concerned.
24. As per section 45 of PMLA, while considering grant of
bail to accused, the court has to satisfy that:
i. There are reasonable grounds for believing that
accused is not guilty of such offence and that
ii. He is not likely to commit any offence, while on
bail.
25. In the present case, accused has failed to satisfy
this court that he is not guilty of alleged offence
punishable under section 3 of PMLA. He has not been
able to discharge the burden as contemplated under
section 24 of the Act.
26. Accused is alleged to have been found involved in a
white collar crime. The alleged offence was committed by
accused in conspiracy with other coaccused persons in a well
planned and thoughtful manner. It has been observed in a
catena of decisions by Hon’ble Superior Courts that economic
10
offences constitute a class apart and need to be visited with a
different approach in the matter of bail. The economic offence
having deep rooted conspiracies and involving huge loss of
public, funds needs to be viewed seriously and considered as
grave offences affecting the economy of the country as a
whole and thereby posing serious threat to the financial
health of the country.”
(emphasis supplied)
6. Having formed that opinion and noticing that the
investigation was at the initial and crucial stage and that the
source of funds of proceeds of crime was yet to be ascertained
till then and that the recovery of balance proceeds of crime was
in the process, the question of enlarging the appellant on bail
does not arise, more so, when there was every possibility that
he may tamper with the evidence and influence the material
prosecution witnesses. Accordingly, the bail application was
rejected by the Sessions Court vide judgment and order dated
7
th January, 2017.
7. Aggrieved, the appellant approached the High Court of
Delhi by way of bail application under Section 439 of the
Cr.P.C. read with Section 45 of the Act of 2002. The High Court
independently analysed all the contentions raised by the
appellant and after adverting to the relevant materials, rejected
11
the application for grant of bail preferred by the appellant. The
High Court found that the Act of 2002 does not prescribe that
the Enforcement Directorate is debarred from conducting
investigation in relation to the offences under Sections 3 & 4 of
the Act of 2002 unless the Crime Branch concludes its
investigation in relation to FIR No.205/2016 or was to file
chargesheet for commission of scheduled offence. Further,
the proceedings under the Act of 2002 are distinct from the
proceedings relating to scheduled offence and both the
investigations can continue independently. The High Court
then noted that Section 44 of the Act of 2002 is an enabling
provision, to have a joint trial in such a situation to avoid
conflicting and multiple opinions of the Courts. But proceeded
to hold that the said possibility would arise only when the
chargesheet is filed after completion of investigation in relation
to FIR No.205/2016 and the case is committed to the
concerned Court. The High Court held that Section 44 of the
Act of 2002 does not envisage a joint investigation but is a
provision stipulating that the trial of offence under Section 3/4
of the Act of 2002 and any scheduled offence connected to the
offence under that section may be tried only by the Special
12
Court constituted for the area in which the offence has been
committed. While considering the merits of the allegations
against the appellant, in particular, the materials on record,
the High Court analysed the same in the following words:
“14. In FIR No.205/2016 allegations are that Raj Kumar
Goel; Ashish Kumar, Bank Manager, Kotak Mahindra Bank,
K.G.Marg Branch and others conspired for illegal conversion
of demonetized currency notes into monetized currency by
way of depositing cash in various accounts of the firms and
subsequently getting Demand Drafts issued in fictitious
names. It is further alleged in the said FIR that accused
therein opened bank accounts in the name of ‘Group of
Companies’ in Kotak Mahindra Bank. In ECIR No.18,
transactions statements of accounts were collected pertaining
to these ‘Group of Companies’ from Kotak Mahindra Bank
and it emerged that from 15.11.2016 to 19.11.2016, there
was huge cash deposit to the tune of `31.75 crores by Raj
Kumar Goel and his associates. It was also found that the
Demand Drafts amounting to `38 crores were issued in
fictitious names during that period. It cannot be said at this
stage that offences referred in FIR No.205/2016 and the ECIR
No.18 have no nexus.
15. Prosecution under Section 45 of PMLA for commission of
offence under Section 3 punishable under Section 4 of PMLA
has already been initiated by ED in the Special Court. By an
order dated 25.02.2017, learned Addl. Sessions Judge /
Special Court (PMLA) has taken cognizance against Rohit
Tandon (present petitioner), Ashish Kumar and Raj Kumar
Goel. Dinesh Bhola and Kamal Jain have also been
summoned to face trial under Section 4 of PMLA. Raj Kumar
Goel and Ashish Kumar continue to be in custody in the said
proceedings.
16. On perusal of the complaint lodged under Section 45
PMLA, it reveals that serious and grave allegations have been
leveled against the petitioner and others. The allegations are
categorical and specific; definite role has been assigned to
each accused. It is alleged that during the period from
15.11.2016 to 19.11.2016, huge cash to the tune of `31.75
crores was deposited in eight bank accounts in Kotak
13
Mahindra Bank in the accounts of the ‘Group of Companies’.
It gives details of Demand Drafts issued during 15.11.2016 to
19.11.2016 from eight bank accounts in the name of Sunil
Kumar, Dinesh Kumar, Abhilasha Dubey, Madan Kumar,
Madan Saini, Satya Narain Dagdi and Seema Bai on various
dates. Most of the Demand Drafts issued have since been
recovered. Its detail finds mention in Table No.2 given in the
complaint.
17. During arguments, specific query was raised and the
learned Senior Counsel for the petitioner was asked as to, to
whom the money deposited in the various accounts belonged.
Learned Senior Counsel for the petitioner was fair
enough to admit that the whole money belonged to the
petitioner. When enquired as to from which ‘source’,
huge cash was procured, there was no clear response to
it. Again, learned Senior Counsel for the petitioner was
asked as to how the cash belonging to the petitioner
happened to be deposited in various accounts of the
‘Group of Companies’ which were not owned by the
petitioner and what was its purpose. It was further
enquired as to why the Demand Drafts were got issued
in the names of the persons referred above and what
was its specific purpose. Learned Senior Counsel for the
petitioner avoided to answer these queries stating that
the defence of the petitioner could not be disclosed at
this juncture to impact his case during trial.
Apparently, no plausible explanation has been offered
as to what forced the petitioner to deposit the old
currency to the tune of `31.75 crores in eight accounts
of the different ‘Group of Companies’ in Kotak
Mahindra Bank during the short period from
15.11.2016 to 19.11.2016. There was no explanation
as to why the Demand Drafts for the said amount were
got issued in the name of sham people whose identity
was not known. The purpose of all this exercise seemingly
was to deposit the cash (old currency) first, get the Demand
Drafts issued in fictitious names and obtain monetized
currency by cancelling them subsequently. The petitioner
also did not place on record any document whatsoever
to show as to from which legal source, the cash was
procured to deposit in the bank accounts of strangers. I
find no substance in the petitioner’s plea that
petitioner’s only liability was to pay income tax on the
14
unaccounted money / income. In my considered view, mere
payment of tax on the unaccounted money from any ‘source’
whatever would not convert it into ‘legal’ money. Needless to
say, huge deposit was a sinister attempt / strategy by the
petitioner and others to convert the ‘old currency’ into new one
to frustrate the Demonetization Policy primarily meant to
unearth black money.
18. Allegations against the petitioner are not without
substance. The prosecution has recorded statements of the
petitioner on various dates and that of Dinesh Bhola, Ashish
Kumar (Branch Manager, Kotak Mahindra Bank), Raj Kumar
Goel, Kamal Jain (petitioner’s Chartered Accountant), Vimal
Negi, Jivan Singh and Varun Tandon under Section 50 PMLA
on various dates. There statements have evidentiary
value under Section 50 PMLA. Prima facie, the version
given by them is in consonance with the prosecution
case. The prosecution has further relied upon Call Data
Records, CCTV footage, Account Trend Analysis.”
(emphasis supplied)
8. The High Court opined that keeping in mind the rigors of
Section 45 of the Act of 2002 for the release of the accused
charged under Part A of the Schedule, on bail, coupled with the
antecedents of the appellant of being involved in other similar
crime registered as FIR No.197/2016, for offence under Section
420, 409, 188, 120B of IPC dated 14th December, 2016 by
Crime Branch and ECIR No.14/DZ/II/2016 registered on 16th
December, 2016 by Enforcement Directorate for offences under
Sections 3/4 of the Act of 2002. Further, during a raid
conducted jointly by the Crime Branch and Income Tax
15
Department on 10th December, 2016 at around 10.00 P.M. at
the office premises of the appellant, currency of Rs.13.62 Crore
was recovered including new currency in the denomination of
Rs.2000/ amounting to Rs.2.62 Crore. In addition, the
appellant had surrendered Rs.128 Crore during the raid
conducted by the Income Tax Department on 6/8 October,
2016 in his office and residential premises. No reliable and
credible documents were forthcoming from the appellant about
the source from where he had obtained such a huge quantity of
cash. The possibility of the same being proceeds of crime
cannot be ruled out. Hence, it noted that the question of
granting bail did not arise, taking into consideration the
serious allegations against the appellant and other facts
including severity of the punishment prescribed by law.
Accordingly, the bail application of the appellant came to be
rejected. As a consequence, the pending application which was
considered along with the bail application was also disposed of
by the impugned judgment and order dated 5th May, 2017
passed by the High Court.
16
9. We have heard Mr. Mukul Rohatgi, learned senior
counsel appearing for the appellant and Mr. Tushar Mehta,
learned Additional Solicitor General for the Union of India.
They have also filed written submissions.
10. Before we analyse the rival submissions, for the
completion of record, we must mention that after the
impugned judgment, the Crime Branch filed the chargesheet
before the appropriate Court in relation to FIR No.205/2016 on
24th June, 2017. Similarly, the Enforcement Directorate has
filed supplementary complaint CC No.700/2017 in relation to
ECIR 18/2016, which refers to further material gathered
during the investigation, indicating the complicity of the
concerned accused in the crime for offence punishable under
Section 3 of the Act of 2002. A comprehensive supplementary
complaint has been filed before the District and Sessions
Judge, Saket, New Delhi (Designated Court under the
Prevention of MoneyLaundering Act, 2002) on 2nd August,
2017.
11. Before this supplementary complaint was filed, the
appellant preferred second bail application in the present case
17
before the High Court of Delhi at New Delhi, being Bail
Application No.1361/2017. This application was filed on 12th
July, 2017. Along with the said bail application the appellant
filed an application being Criminal M.A. No.1293 of 2017 for
directing his interim release in connection with
ECIR/DZ/II/2016 on the assertion that his mother was
seriously ill and required immediate medical attention because
of the injuries suffered by her on 20th June, 2017. The said
interim release application was allowed on 10th August, 2017.
Notably, the appellant was advised to withdraw the regular
(second) Bail Application No.1361/2017. The learned Single
Judge of the High Court by order dated 10th August, 2017
acceded to the prayer so made by the appellant. The order
passed by the learned Single Judge of the High Court reads
thus:
“BAIL APPLN. 1361/2017
The petitioner has prayed for bail in connection with
ECIR/18/DZII/2016/AD registered under Section 3 & 4 of
Prevention of Money Laundering Act, 2002.
Simultaneously an application has been filed seeking
interim bail on the ground of illness of the mother of the
petitioner who has recently suffered a fracture in the neck.
Mr. Mukul Rohatgi, learned Sr. Advocate seeks
permission to withdraw the regular bail application on
18
the observation of the bench that the earlier bail
application was rejected only on 5th of May, 2017.
However he presses the interim bail application.
Accordingly the regular bail application is
dismissed as withdrawn.
Crl.M.A.No.1293/2017 (application for interim bail)
It has been submitted on behalf of the petitioner that he
is the only son of his mother who has suffered a fall and has
got a fracture in her neck. The sister of the petitioner is
stationed abroad. The petitioner has a son who is of young
age. The petitioner has also drawn the attention of this Court
to the medical report which indicates that a plaster has been
put on the fracture but she has been suffering from acute
pain.
It has been further submitted that the charge sheet in
the main case has been submitted and that the petitioner has
remained in jail for more than seven months by now.
Opposing the aforesaid prayer for grant of interim bail,
Mr. Mahajan, learned Sr. Standing Counsel submits that this
is a case of serious fiscal impropriety of great magnitude and
there is a possibility of the petitioner tampering with evidence
if he comes out from the jail even for a short period. No
definite reasons, however, have been assigned by
Mr.Mahajan, for such a presumption that the petitioner would
tamper with the evidence specially when charge sheet in the
main case has already been submitted.
Mr.Rohtagi, learned senior counsel has drawn the
attention of this Court to the fact that whenever the petitioner
was summoned to answer to the Queries, he had visited the
office of the ED and in the past, had never tried to evade the
process of investigation.
Taking into account the aforesaid facts, specially the
period of incarceration of the petitioner, submission of the
charge sheet in the main case and the illness of the mother of
the petitioner, this Court is inclined to grant interim bail to the
petitioner for a period of 3 weeks.
Let the petitioner be released on interim bail for the
period of 3 weeks, to be counted from the date of his release,
19
on his furnishing a bond in the sum of Rs. 25,000/ with two
sureties of the like amount to the satisfaction of special court.
However it is made clear that the petitioner shall not
tamper with the evidence or commit any act which would be
prejudicial to the prosecution side. Should anything of that
kind be reported, this Court would consider the desirability of
withdrawing/cancelling the interim bail.
The petitioner shall not, unnecessary, seek extension of
the interim bail granted to him. It is also specified that the
petitioner shall not leave the country under any circumstances
whatsoever. Should the petitioner intend to go out of the
territorial confines of NCR of Delhi, permission would be
required to be taken from the Special Court. The petitioner
shall also deposit his passport before the Special court while
furnishing his bonds.
Application is disposed of accordingly.
Dasti.”
(emphasis supplied)
12. It is relevant to note that the aforementioned order for
interim release of the appellant was confirmed by this Court on
12th August, 2017.
13. The appellant was thereafter advised to file the present
appeals to assail the judgment and order dated 5th May, 2017
passed by the High Court of Delhi at New Delhi in Bail
Application No.119 of 2017 and Criminal M.B. No.121 of 2017.
The special leave petitions were filed on 18th August, 2017.
During the pendency of these special leave petitions, the
20
appellant was advised to also file a writ petition under Article
32 of the Constitution of India to challenge the validity of the
provisions of the Act of 2002. The same was filed on 23rd
August, 2017, being Writ Petition (Civil) No.121 of 2017. The
reliefs claimed in the said writ petition read thus:
“PRAER
(i) Issue a writ of mandamus or any other appropriate
writ, order or direction declaring that the
conditions/limitations contained in Section 45(1) of
Prevention of Money Laundering Act, 2002 (Act 15 of
2003) to the extent that it imposes rigors/restrictions
in the grant of bail in any offence punishable upto 7
years under the provisions of Prevention of Money
Laundering Act, 2002 (Act 15 of 2003) as
unreasonable, arbitrary and unconstitutional being
violative of the fundamental rights of the Petitioner
guaranteed and protected under Articles 14 and 21
of the Constitution of India;
(ii) In the alternative to prayer (i) above, issue a writ of
mandamus or any other appropriate writ, order or
direction reading down the scope and ambit of
Section 45(1) of the Prevention of Money Laundering
Act, 2002 (Act 15 of 2003), so that the rigors in grant
of bail are not applicable in the case of the
Petitioner, where the alleged scheduled offences in
CC No. 41 of 2017 arising out of chargesheet No. 1
dated 24.06.2017 filed by the Crime Branch, New
Delhi alleging commission of offences under Sections
420/188/109/120B/34 IPC and Section 12 of the
Prevention of Corruption Act, 1988 (none of which
were under Part A of the Schedule prior to the
Prevention of Money Laundering (Amendment) Act,
2012 (Act 2 of 2013) and formed part of Part B of
the Schedule;
(iii) Issue a writ of mandamus or any other appropriate
writ, order or direction declaring the continued
incarceration of the Petitioner since 28.12.2016 in
21
ECIR/18/DZII/2016/AD dated 26.12.2016 under
Section 3/4 of the Prevention of Money Laundering
Act, 2002 is illegal, unconstitutional and in violation
of the fundamental right of the Petitioner guaranteed
and protected under Article 21 of the Constitution of
India;
(iv) Issue a writ of mandamus or any other appropriate
writ, order or direction in the nature of mandamus
declaring that the offences under the Prevention of
Money Laundering Act, 2002 (Act 15 of 2003)
pursuant to the Prevention of Money Laundering
(Amendment) Act, 2005 (Act 20 of 2005) which came
into force w.e.f. 01.07.2005 are noncognizable
offences and therefore, it is mandatory to comply
with the provisions of Sections 155, 177(1) and 172
of the Code of Criminal Procedure, 1973 and declare
that the law laid down by the Division Bench of the
Hon’ble Delhi High Court in its judgment dated
27.4.2016 (reported in 2016 SCC Online Delhi 2493)
and by the Hon’ble Gujarat High Court in Rakesh
Manekchand Kothari vs. Union of India [Special
Criminal Application (Habeas Corpus) No.
4247/2015] decided on 03.08.2015 holding that the
offences under Section 3 of the Prevention of Money
Laudnering Act, 2002 punishable under Section 4
thereof is a noncognizable offence is good law and
the contrary view taken by the Hon’ble Bombay
High Court in its judgment dated 14.12.2016 in
Chhagan Chandrakant Bhujbal vs. Union of India &
Ors. is bad in law;
(v) lay down guidelines for compliance by all Courts for
grant of bail in proceedings arising out of and
concerning the Prevention of Money Laundering Act,
2002 by expounding the scope of Section 439 of the
Code of Criminal Procedure, 1973;
(vi) Issue rule nisi in terms of Prayers (i) to (v) above;
and
(vii) And/or pass any other or further orders which Your
Lordships may deem fit and proper in the interest of
justice.
14. The aforementioned writ petition was listed together with
the appeals on 30th October, 2017. During oral arguments,
22
however, the counsel appearing for the appellant, in all
fairness, stated that the grounds urged in the said writ petition
need not be considered at this stage and that the appeals
preferred against the impugned judgment and order dated 5th
May, 2017 be examined on the basis of the prevailing statutory
provisions, including the rigors of Section 45 of the Act of
2002. In other words, the challenge to the impugned judgment
will have to be considered as per the prevailing provisions and
not with reference to the challenge regarding the validity
thereof.
15. Reverting to the first contention of the appellant, that
the reasons which weighed with the learned Single Judge of the
High Court while directing interim release of the appellant,
would apply proprio vigore for considering the regular bail. In
that, the learned Single Judge vide order dated 10th August,
2017 noted the following circumstances:
i) Petitioner never tried to evade the investigation;
ii) The period of incarceration (7 ½ months);
iii) Submission of chargesheet in the main case on
24/6/17;
iv) Illness of the mother of the Petitioner;
23
v) No definite reasons assigned by the Counsel for the
Respondent to substantiate allegation that
Petitioner would tamper with evidence especially
when chargesheet in the main case has been
submitted.
16. The argument though attractive at the first blush
deserves to be rejected. In our opinion, the order dated 10th
August, 2017 passed by the High Court directing interim
release of the appellant was primarily on account of the illness
of his mother. No more and no less. The other observations in
the said order will have no bearing on the merits of the
controversy and required to be reckoned whilst considering the
prayer for grant of regular bail. For that, the appellant must
succeed in overcoming the threshold of the rigors of Section 45
of the Act of 2002. Indubitably, the appellant having withdrawn
the regular (second) bail application, the consideration of
prayer for grant of interim release could not have been taken
forward. Besides, in the backdrop of the opinion recorded by
the Coordinate Bench of the High Court (in its decision dated
5
th May, 2017) whilst considering the application for grant of
regular bail, which was after filing of the initial complaint CC
24
No.700/2017 (on 23rd February, 2017), was binding until
reversed or a different view could be taken because of changed
circumstances. Suffice it to observe that indulgence shown to
the appellant in terms of order dated 10th August, 2017 will be
of no avail. In that, the facts such as the appellant never tried
to evade the investigation or that he has suffered incarceration
for over 7½ months or that the chargesheet has been filed in
the predicate offence registered under FIR No.205/2016 or the
factum of illness of the mother of the appellant or the
observation that no definite reason has been assigned by the
respondents for substantiating the allegation that the appellant
would tamper with the evidence, may become relevant only if
the threshold stipulation envisaged under Section 45 of the Act
of 2002 was to be fulfilled. The said provision reads thus:
“45. Offences to be cognizable and nonbailable.—(1)
Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), no person
accused of an offence punishable for a term of
imprisonment of more than three years under Part A
of the Schedule shall be released on bail or on his
own bond unless
(i) the Public Prosecutor has been given an opportunity to
oppose the application for such release; and
25
(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 a 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.
(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 to such conditions as may be prescribed.
(2) The limitation on granting of bail specified in
subsection (1) is in addition to the limitations under
the Code of Criminal Procedure, 1973 (2 of 1974) or
any other law for the time being in force on granting
of bail.”
(emphasis supplied)
The sweep of Section 45 of the Act of 2002 is no more res
intergra. In a recent decision of this Court in the case of
Gautam Kundu Vs. Directorate of Enforcement
(Prevention of MoneyLaundering Act), Government of
26
India,
1
this Court has had an occasion to examine it in
paragraphs 2830. It will be useful to advert to paragraphs 28
to 30 of this decision which read thus:
“28. Before dealing with the application for bail on merit, it
is to be considered whether the provisions of Section 45 of the
PMLA are binding on the High Court while considering the
application for bail under Section 439 of the Code of Criminal
Procedure. There is no doubt that PMLA deals with the offence
of money laundering and the Parliament has enacted this law
as per commitment of the country to the United Nations
General Assembly. PMLA is a special statute enacted by the
Parliament for dealing with moneylaundering. Section 5 of
the Code of Criminal Procedure, 1973 clearly lays down that
the provisions of the Code of Criminal Procedure will not affect
any special statute or any local law. In other words, the
provisions of any special statute will prevail over the general
provisions of the Code of Criminal Procedure in case of any
conflict.
29 . Section 45 of the PMLA starts with a non obstante
clause which indicates that the provisions laid down in
Section 45 of the PMLA will have overriding effect on the
general provisions of the Code of Criminal Procedure in case
of conflict between them. Section 45 of the PMLA imposes
following two conditions for grant of bail to any person
accused of an offence punishable for a term of
imprisonment of more than three years under PartA of
the Schedule of the PMLA:
(i) That the prosecutor must be given an opportunity
to oppose the application for bail; and
(ii) That the Court must be satisfied that there are
reasonable grounds for believing that the accused
person is not guilty of such offence and that he is not
likely to commit any offence while on bail.
30 . The conditions specified under Section 45 of the PMLA
are mandatory and needs to be complied with which is
further strengthened by the provisions of Section 65 and also
1 (2015) 16 SCC 1
27
Section 71 of the PMLA. Section 65 requires that the
provisions of Cr.P.C. shall apply in sofaras they are not
inconsistent with the provisions of this Act and Section 71
provides that the provisions of the PMLA shall have overriding
effect notwithstanding anything inconsistent therewith
contained in any other law for the time being in force. PMLA
has an overriding effect and the provisions of Cr.P.C. would
apply only if they are not inconsistent with the provisions of
this Act. Therefore, the conditions enumerated in Section 45 of
PMLA will have to be complied with even in respect of an
application for bail made under Section 439 of Cr.P.C. That
coupled with the provisions of Section 24 provides that
unless the contrary is proved, the Authority or the
Court shall presume that proceeds of crime are involved
in money laundering and the burden to prove that the
proceeds of crime are not involved, lies on the
appellant.”
(emphasis supplied)
17. In paragraph 34, this Court reiterated as follows:
34. “xxx xxx xxx We have noted that Section 45 of the
PMLA will have overriding effect on the general provisions of
the Code of Criminal Procedure in case of conflict between
them. As mentioned earlier, Section 45 of the PMLA imposes
two conditions for grant of bail, specified under the said Act.
We have not missed the proviso to Section 45 of the said Act
which indicates that the legislature has carved out an
exception for grant of bail by a Special Court when any person
is under the age of 16 years or is a woman or is a sick or
infirm. Therefore, there is no doubt that the conditions laid
down under Section 45A of the PMLA, would bind the High
Court as the provisions of special law having overriding effect
on the provisions of Section 439 of the Code of Criminal
Procedure for grant of bail to any person accused of
committing offence punishable under Section 4 of the PMLA,
even when the application for bail is considered under Section
439 of the Code of Criminal Procedure.”
28
The decisions of this Court in the case of Subrata Chattoraj
Vs. Union of India,
2
Y.S. Jagan Mohan Reddy Vs. CBI 3
, and
Union of India Vs. Hassan Ali Khan 4
have been noticed in
the aforesaid decision.
18. The consistent view taken by this Court is that economic
offences having deeprooted conspiracies and involving huge
loss of public funds need to be viewed seriously and considered
as grave offences affecting the economy of the country as a
whole and thereby posing serious threat to the financial health
of the country. Further, when attempt is made to project the
proceeds of crime as untainted money and also that the
allegations may not ultimately be established, but having been
made, the burden of proof that the monies were not the
proceeds of crime and were not, therefore, tainted shifts on the
accused persons under Section 24 of the Act of 2002.
19. It is not necessary to multiply the authorities on the
sweep of Section 45 of the Act of 2002 which, as
aforementioned, is no more res integra. The decision in the
2 (2014) 8 SCC 768
3 (2013) 7 SCC 439
4 (2011) 10 SCC 235
29
case of Ranjitsing Brahmajeetsing Sharma Vs. State of
Maharashtra and Anr.,
5
and State of Maharashtra Vs.
Vishwanath Maranna Shetty,
6
dealt with an analogous
provision in the Maharashtra Control of Organised Crime Act,
1999. It has been expounded that the Court at the stage of
considering the application for grant of bail, shall consider the
question from the angle as to whether the accused was
possessed of the requisite mens rea. The Court is not required
to record a positive finding that the accused had not committed
an offence under the Act. The Court ought to maintain a
delicate balance between a judgment of acquittal and
conviction and an order granting bail much before
commencement of trial. The duty of the Court at this stage is
not to weigh the evidence meticulously but to arrive at a
finding on the basis of broad probabilities. Further, the Court
is required to record a finding as to the possibility of the
accused committing a crime which is an offence under the Act
after grant of bail. In Ranjitsing Brahmajeetsing Sharma
5 (2005) 5 SCC 294
6 (2012) 10 SCC 561
30
(supra), in paragraphs 44 to 46 of the said decision, this Court
observed thus:
“44. The wording of Section 21(4), in our opinion, does not
lead to the conclusion that the Court must arrive at a positive
finding that the applicant for bail has not committed an
offence under the Act. If such a construction is placed, the
court intending to grant bail must arrive at a finding that the
applicant has not committed such an offence. In such an
event, it will be impossible for the prosecution to obtain a
judgment of conviction of the applicant. Such cannot be the
intention of the Legislature. Section 21(4) of MCOCA,
therefore, must be construed reasonably. It must be so
construed that the Court is able to maintain a delicate balance
between a judgment of acquittal and conviction and an order
granting bail much before commencement of trial. Similarly,
the Court will be required to record a finding as to the
possibility of his committing a crime after grant of bail.
However, such an offence in futuro must be an offence under
the Act and not any other offence. Since it is difficult to predict
the future conduct of an accused, the court must necessarily
consider this aspect of the matter having regard to the
antecedents of the accused, his propensities and the nature
and manner in which he is alleged to have committed the
offence.
45. It is, furthermore, trite that for the purpose of
considering an application for grant of bail, although detailed
reasons are not necessary to be assigned, the order granting
bail must demonstrate application of mind at least in serious
cases as to why the applicant has been granted or denied the
privilege of bail.
46. The duty of the court at this stage is not to weigh the
evidence meticulously but to arrive at a finding on the basis of
broad probabilities. However, while dealing with a special
statute like MCOCA having regard to the provisions contained
in Subsection (4) of Section 21 of the Act, the Court may have
to probe into the matter deeper so as to enable it to arrive at a
finding that the materials collected against the accused
during the investigation may not justify a judgment of
conviction. The findings recorded by the Court while granting
31
or refusing bail undoubtedly would be tentative in nature,
which may not have any bearing on the merit of the case and
the trial court would, thus, be free to decide the case on the
basis of evidence adduced at the trial, without in any manner
being prejudiced thereby.”
20. Reverting to the decision in the case of Manoranjana
Sinh Vs. Central Bureau of Investigation,
7
we hold that the
same is on the facts of that case. Even in the said decision,
the Court has noted that the grant or denial of bail is regulated
to a large extent by the facts and circumstances of each case.
In the case of Sanjay Chandra Vs. Central Bureau of
Investigation,
8
the Court was not called upon to consider the
efficacy of Section 45 of the Act of 2002 which is a special
enactment.
21. Keeping in mind the dictum in the aforesaid decisions,
we find no difficulty in upholding the opinion recorded by the
Sessions Court as well as the High Court in this regard. In our
opinion, both the Courts have carefully analysed the
allegations and the materials on record indicating the
complicity of the appellant in the commission of crime
punishable under Section 3/4 of the Act of 2002. The Courts
7 (2017) 5 SCC 218
8 (2012) 1 SCC 40
32
have maintained the delicate balance between the judgment of
acquittal and conviction and order granting bail before
commencement of trial. The material on record does not
commend us to take a contrary view.
22. Realizing this position, the learned counsel appearing for
the appellant would contend that even if the allegations against
the appellant are taken at its face value, the incriminating
material recovered from the appellant or referred to in the
complaint, by no stretch of imagination, would take the colour
of proceeds of crime. In fact, there is no allegation in the
chargesheet filed in the scheduled offence case or in the
prosecution complaint that the unaccounted cash deposited
by the appellant is as a result of criminal activity. Absent this
basic ingredient, the property derived or obtained by the
appellant would not become proceeds of crime. To examine this
contention, it would be useful to advert to Sections 3 and 4 of
the Act of 2002. The same read thus:
“3. Offence of moneylaundering. Whosoever directly or
indirectly attempts to indulge or knowingly assists or
knowingly is a party or is actually involved in any process or
activity connected proceeds of crime including its concealment,
possession, acquisition or use and projecting or claiming it as
33
untainted property shall be guilty of offence of moneylaundering.
4. Punishment for moneylaundering. Whoever commits
the offence of moneylaundering shall be punishable with
rigorous imprisonment for a term which shall not be less than
three years but which may extend to seven years and shall
also be liable to fine.
Provided that where the proceeds of crime involved in
moneylaundering relates to any offence specified under
paragraph 2 of Part A of the Schedule, the provisions of this
section shall have effect as if for the words "which may
extend to seven years", the words "which may extend to ten
years" had been substituted.”
23. As the fulcrum of Section 3 quoted above, is expression
‘proceeds of crime’, the dictionary clause in the form of Section
2(1)(u) is of some relevance. The same reads thus:
“2(1)(u) ‘proceeds of crime’ means any property derived or
obtained, directly or indirectly, by any person as a result of
criminal activity relating to a scheduled offence or the value of
any such property or where such property is taken or held
outside the country, then the property equivalent in value held
within the country;”
It will be useful to advert to the meaning of expression
“property” as predicated in Section 2(1)(v). The same reads
thus:
“2(1)(v) “property” means any property or assets of every
description, whether corporeal or incorporeal, movable or
immovable, tangible or intangible and includes deeds and
34
instruments evidencing title to, or interest in, such property or
assets, wherever located;
The expression ‘scheduled offence’ has been defined in Section
2(1)(y) of the Act of 2002. The same reads thus:
“2(1)(y) ‘scheduled offence’ means
(i) the offences specified under Part A of the Schedule; or
(ii) the offences specified under Part B of the Schedule if
the total value involved in such offences is one crore rupees
or more; or
(iii) the offences specified under Part C of the Schedule;”
Indisputably, the predicate offence is included in Part A in
paragraph 1 of the Schedule in the Act of 2002, in particular
Sections 420, 467, 471 and 120B of IPC. Indeed, the
expression “criminal activity” has not been defined. By its very
nature the alleged activities of the accused referred to in the
predicate offence are criminal activities. The possession of
demonetized currency in one sense, ostensibly, may appear to
be only a facet of unaccounted money in reference to the
provisions of the Income Tax Act or other taxation laws.
However, the stated activity allegedly indulged into by the
accused named in the commission of predicate offence is
replete with mens rea. In that, the concealment, possession,
35
acquisition or use of the property by projecting or claiming it
as untainted property and converting the same by bank drafts,
would certainly come within the sweep of criminal activity
relating to a scheduled offence. That would come within the
meaning of Section 3 and punishable under Section 4 of the
Act, being a case of moneylaundering. The expression ‘moneylaundering’
is defined thus:
“2(1)(p) “moneylaundering” has the meaning assigned to it
in section 3;
24. The appellant then relies upon the decision in the case of
Gorav Kathuria Vs. Union of India,
9
of the Punjab and
Haryana High Court which has taken the view that Section
45(1) of the Act of 2002 requires to be read down to apply only
to those scheduled offences which were included prior to the
amendment in 2013 in the Schedule. It is contended that the
offence, in particular, under Sections 420, 467 and 471 of IPC,
may not be treated as having been included in the scheduled
offences for the purpose of the Act of 2002. Further, if any
other view was to be taken, the provision would be rendered
ultra vires. We are in agreement with the stand taken by the
9 (2016 SCC Online P & H 3428
36
respondents that the appellant cannot be permitted to raise the
grounds urged in the writ petition, hearing whereof has been
deferred on the request of the appellant. In other words, the
appellant should be in a position to persuade the Court that
the allegations in the complaint and the materials on record
taken at its face value do not constitute the offence under
Section 3 read with the schedule of the Act of 2002 as in force.
25. It has been brought to our notice that the decision in
Gorav Kathuria (supra) was challenged before this Court by
way of Criminal Appeal No.737 of 2016, which has already
been dismissed on 12th August, 2016. The order originally
passed on the said criminal appeal reads thus:
“Though the High Court has granted certificate to appeal,
after arguing the matter for some time, learned counsel for the
petitioner concedes that the impugned judgment of the High
Court is correct.
This appeal is, accordingly, dismissed.”
However, that order has been subsequently revised which
reads thus:
“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.
37
This appeal is, accordingly, dismissed.”
At the same time the respondents have drawn our attention to
a chart contained in their written submissions pointing out
that other High Courts have disagreed with the principle
expounded in Gorav Kathuria’s case. The said chart reads
thus:
(i) Crl. Misc. Application (for Regular Bail)
No.7970/17
Jignesh Kishorebhai Bajiawala vs. State
of Gujarat & Ors.
Manu/GJ/1035/2017
High Court of
Gujarat
(ii) Crl. Petition No.366/2017
SC Jayachandra vs Enforcement
Directorate, Bangalore
2017 (349) ELT 392 KAR
High Court of
Karnataka at
Bengaluru
(iii) WP[Crl.] No.333 of 2015
Kishin S. Loungani vs. UOI & ors.
(2017) 1 KHC 355
High Court of
Kerala at
Ernakulam
(iv) Crl. Mic. Application (for Regular Bail)
No.30674/16
Pradeep Nirankarnath Sharma vs
Directorate of Enforcement
2017 (350) ELT 449 (GUJ)
High Court
Gujarat at
Ahmedabad
(v) Crl. Writ Petition No.3931/2016
Chhagan Chandrakant Bhujbal vs Union
of India & Ors.
2016 SCC Online Bom 9983
High Court of
Bombay
38
26. For the time being, it is not necessary for us to examine
the issues arising from the decision of the Punjab and Haryana
High Court or the rejection of criminal appeal by this Court
against that decision. The constitutional validity of Section 45
of the Act of 2002 will have to be examined by this Court in
the writ petition on its own merits. The summary dismissal of
criminal appeal will not come in the way of considering the
correctness of the decision of the Punjab and Haryana High
Court in view of the conflict of opinion with the other High
Courts.
27. Suffice it to observe that the appellant has not succeeded
in persuading us about the inapplicability of the threshold
stipulation under Section 45 of the Act. In the facts of the
present case, we are in agreement with the view taken by the
Sessions Court and by the High Court. We have independently
examined the materials relied upon by the prosecution and
also noted the inexplicable silence or reluctance of the
appellant in disclosing the source from where such huge value
of demonetized currency and also new currency has been
acquired by him. The prosecution is relying on statements of
39
26 witnesses/accused already recorded, out of which 7 were
considered by the Delhi High Court. These statements are
admissible in evidence, in view of Section 50 of the Act of 2002.
The same makes out a formidable case about the involvement
of the appellant in commission of a serious offence of moneylaundering.
It is, therefore, not possible for us to record
satisfaction that there are reasonable grounds for believing that
the appellant is not guilty of such offence. Further, the Courts
below have justly adverted to the antecedents of the appellant
for considering the prayer for bail and concluded that it is not
possible to hold that the appellant is not likely to commit any
offence ascribable to the Act of 2002 while on bail. Since the
threshold stipulation predicated in Section 45 has not been
overcome, the question of considering the efficacy of other
points urged by the appellant to persuade the Court to favour
the appellant with the relief of regular bail will be of no avail. In
other words, the fact that the investigation in the predicate
offence instituted in terms of FIR No.205/2016 or that the
investigation qua the appellant in the complaint CC
No.700/2017 is completed; and that the proceeds of crime is
already in possession of the investigating agency and
40
provisional attachment order in relation thereto passed on 13th
February, 2017 has been confirmed; or that chargesheet has
been filed in FIR No.205/2016 against the appellant without
his arrest; that the appellant has been lodged in judicial
custody since 2nd January, 2017 and has not been interrogated
or examined by the Enforcement Directorate thereafter; all
these will be of no consequence.
28. It was urged on behalf of the appellant that
Demonetization Notification dated 8th November, 2016 imposes
no limit in KYC compliant accounts on the quantum of deposit
and no restrictions on noncash transactions. The relevant
portion of the said notification reads thus:
“(iii) there shall not be any limit on the quantity or value of
specified bank notes to be credited to the account maintained
with the bank by a person, where the specified bank notes
are tendered; however, where compliance with extant Know
Your Customer (KYC) norms is not complete in an account, the
maximum value of specified bank notes as may be deposited
shall be Rs. 50,000/;
(vii) there shall be no restriction on the use of any noncash
method of operating the account of a person including
cheques, demand drafts, credit or debit cards, mobile wallets
and electronic fund transfer mechanisms or the like;”
41
We fail to understand as to how this argument can be
countenanced. The fact that no limit for deposit was specified,
would not extricate the appellant from explaining the source
from where such huge amount has been acquired, possessed
or used by him. The volume of demonetized currency recovered
from the office and residential premises of the appellant,
including the bank drafts in favour of fictitious persons and
also the new currency notes for huge amount, leave no manner
of doubt that it was the outcome of some process or activity
connected with the proceeds of crime projecting the property as
untainted property. No explanation has been offered by the
appellant to dispel the legal presumption of the property being
proceeds of crime. Similarly, the fact that the appellant has
made declaration in the Income Tax Returns and paid tax as
per law does not extricate the appellant from disclosing the
source of its receipt. No provision in the taxation laws has been
brought to our notice which grants immunity to the
appellant from prosecution for an offence of moneylaundering.
In other words, the property derived or obtained by the
appellant was the result of criminal activity relating to a
scheduled offence. The argument of the appellant that there is
42
no allegation in the chargesheet filed in the scheduled offence
case or in the prosecution complaint that the unaccounted
cash deposited by the appellant is the result of criminal
activity, will not come to the aid of the appellant. That will have
to be negatived in light of the materials already on record. The
possession of such huge quantum of demonetized currency
and new currency in the form of Rs.2000/ notes, without
disclosing the source from where it is received and the
purpose for which it is received, the appellant has failed to
dispel the legal presumption that he was involved in moneylaundering
and the property was proceeds of crime.
29. Taking overall view of the matter, therefore, we are not
inclined to interfere with the well considered opinion of the
Sessions Court and the High Court rejecting the prayer for
grant of regular bail to the appellant. However, considering the
fact that the appellant is in custody since 28th December, 2016
and the offence is punishable with imprisonment for a term
extending to seven years only, but not less than three years,
the Trial Court will be well advised to proceed with the trial on
daytoday basis expeditiously. We clarify that the Trial Court
43
must examine the evidence/material brought on record during
the trial on its own merit and not be influenced by the
observations in this decision which are limited for considering
the prayer for grant of regular bail.
30. Accordingly, the appeals are dismissed in the above
terms.
…………………………….CJI.
(Dipak Misra)
…………………………..….J.
(A.M. Khanwilkar)
…………………………..….J.
(D.Y. Chandrachud)
New Delhi,
Dated: 10th November, 2017.
