Bail under Prevention of Money Laundering Act

Conditions for bail under PMLA

Section 45 of PMLA is as under:

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

(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.”

Provision if binding on High Court

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 money laundering. 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.

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 Part-A 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.

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 Section 71 of the PMLA. Section 65 requires that the provisions of Cr.P.C. shall apply in so far as 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.

[Source: Gautam Kundu vs. Manoj Kumar, decided by SC on December 16, 2017]

Facts in the case of Rohit Tandon:

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 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.

Conclusion of Supreme Court

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 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 money­ laundering. 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 provisional attachment order in relation thereto passed on 13 th 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.
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 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 money­ laundering and the property was proceeds of crime.

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 28 th 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 day­ to ­day basis expeditiously. We clarify that the Trial Court 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.

[Source: Rohit Tandon vs. Enforcement decided by SC on Nov. 10, 2017]
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