2014 (11) TMI 1105 - HC - Money Laundering

Bail application - offence of Money Laundering - Held that - In this case not only that the applicant is in custody for a period more than 3 years but there is absolutely no possibility of the trial of this case commencing within a reasonable time. This is not disputed by the learned Public Prosecutor who submitted that steps for bringing the cases in respect of the scheduled offences allegedly committed by the applicant are before the Special Court under the PMLA Act are being taken. As aforesaid the properties belonging to the applicant and his Companies have already been attached and the process of attachment is still being undertaken. Considering the volume of evidence that would be required to be adduced before the Special Court it can be easily said that the trial would take several years for getting completed after it commences; and presently even the commencement thereof is nowhere in sight. The applicant would be required to give sureties/securities not only in the present case if released on bail but also in all the other cases of scheduled offences though they would form a part of the present case only. As such it would not be easy for him to abscond. In any case appropriate conditions can be imposed upon the applicant to ensure that he would not abscond. Detaining the applicant further in custody without granting bail in the circumstances would be unfair unreasonable and would violate the provisions of Article 21 of the Constitution of India. Thus we are inclined to release the applicant on bail subject to certain conditions.

Issues Involved:
1. Allegations of Money Laundering under PMLA.
2. Applicant's request for bail.
3. Magnitude of offences and investor grievances.
4. Applicability of Section 45 of PMLA.
5. Continuation of applicant's detention and trial commencement.

Detailed Analysis:

1. Allegations of Money Laundering under PMLA:
The applicant is accused in PMLA Special Case No.1 of 2013 for committing the offence of Money Laundering as defined in section 3 of the PMLA Act and punishable under section 4. The allegations include the applicant, as Chairman and Managing Director of City Group of Companies, floated schemes offering unrealistic returns, collected substantial amounts from investors, and shut operations without returning the investments. The cheques issued to investors bounced, leading to 42 criminal cases across multiple states. The applicant allegedly laundered over Rs. 500 crores and used the funds for personal expenses and property purchases.

2. Applicant's Request for Bail:
The applicant sought bail, arguing no dishonest intention in introducing investment schemes and attributing the failure to return funds to operational difficulties and his arrest. The applicant highlighted efforts to repay investors, including compounding 16 cases, ongoing winding-up proceedings, and attachment of properties. The applicant emphasized being in custody for over three years with no imminent trial.

3. Magnitude of Offences and Investor Grievances:
The Public Prosecutor and investors opposed bail, citing the magnitude of offences and the applicant's previous non-compliance with bail conditions. Investors argued the applicant has resources to repay but deliberately avoids doing so. Concerns were raised about the applicant potentially absconding and disposing of properties while in custody. The court acknowledged the investors' grievances but emphasized that detaining the applicant indefinitely was not a solution.

4. Applicability of Section 45 of PMLA:
A critical issue was whether Section 45 of the PMLA, which restricts bail for offences listed in Part-A of the Schedule, applied. The applicant contended that the offence of cheating (Section 420 IPC) was in Part-B at the material time and moved to Part-A only after the complaint was filed. The court agreed, noting the amendment's prospective nature and the principle that penal statutes should not retroactively affect rights. Thus, Section 45's restrictions were deemed inapplicable.

5. Continuation of Applicant's Detention and Trial Commencement:
The court considered the applicant's prolonged detention and the unlikelihood of trial commencement. The properties were attached, and ongoing adjudication proceedings were noted. The court emphasized the principle that pre-conviction imprisonment should not serve as punishment. Given the lack of trial progress and the applicant's compliance with bail conditions, the court found further detention unreasonable and a violation of Article 21 of the Constitution.

Conclusion:
The court allowed the bail application, subject to conditions ensuring the applicant's presence and compliance with legal proceedings. The applicant was ordered to be released on bail with a surety, required to report to the Enforcement Directorate, deposit his passport, and remain within specified territorial limits unless permitted. The court rejected the request to stay the order, noting the applicant's custody in other cases provided time for the Directorate to approach the Supreme Court if desired.

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