2021 (6) TMI 1069 - DSC - Money Laundering

Seeking grant of Bail - criminal conspiracy - fraudulent import of fertilizers and other materials for fertilizer production at inflated prices - commission of crime - sham consultancy agreements - fake invoices for consultancy services were prepared - Applicability of twin conditions of Section 45 of PMLA - HELD THAT - The issue of applicability of twin conditions of amended Section 45 of PMLA has arisen before the various Hon'ble High Courts of this country and divergent view has come across. The Hon'ble High Court of Delhi in the matter of UPENDRA RAI VERSUS DIRECTORATE OF ENFORCEMENT 2019 (7) TMI 576 - DELHI HIGH COURT and, the Hon'ble Madhya Pradesh High Court in the matter of DR. VINOD BHANDARI VERSUS ASSISTANT DIRECTOR DIRECTORATE OF ENFORCEMENT 2018 (8) TMI 1848 - MADHYA PRADESH HIGH COURT and the Hon'ble Bombay High Court in the matter of CHHAGAN CHANDRAKANT BHUJBAL VERSUS ASSISTANT DIRECTOR ENFORCEMENT DIRECTORATE AND ANR 2016 (6) TMI 1148 - BOMBAY HIGH COURT have taken a view that post amendment of Section 45 of PMLA, twin conditions do not get revived and hence, are inapplicable to the bail application filed under the PMLA - However, a contrary view has been taken by the Hon'ble High Court of Orissa at Cuttack in the matter of MOHAMMAD ARIF VERSUS DIRECTORATE OF ENFORCEMENT, GOVT. OF INDIA 2020 (7) TMI 425 - ORISSA HIGH COURT and by the Hon'ble High Court of Patna in the matter of VIDYUT KUMAR SARKAR VERSUS THE STATE OF BIHAR AND ORS. 2020 (7) TMI 581 - PATNA HIGH COURT . Further, till date, no court has declared the twin conditions mentioned in the amended Section 45 of PMLA to be unconstitutional on the ground of it being violative of Article 14 of the Constitution of India. Further, having regard to the fact that twin conditions in the amended Section 45 of the PMLA have not been struck down being unconstitutional till date by any court in India, therefore, twin conditions as mentioned in Section 45 of the PMLA are required to be made applicable to the present bail application. It is apparent that accused played a major role by getting the illegal commission transferred from M/s. Uralkali General Trading, Gibralter and Gulf Marine, Dubai into the account of entities owned by Rajiv Saxena and from there, the said commission was transferred as per his instructions and that of co-accused Pankaj Jain and Sanjay Jain - the accused in his statement under Section 50 of PMLA has not been able to give the source of such huge funds received by him in cash or in the entities owned by him. Therefore, there is a prima facie material to hold that accused is involved in the offence of money laundering and since the Ld. Special Counsel for the ED has opposed the grant of bail, therefore, as per Section 45 of PMLA, accused is not entitled to bail. The accused is also not entitled to bail as per proviso to Section 45 of the PMLA on the ground of he being a sick and infirm person as there is nothing on record to suggest that accused is sick to that extent that in case he remains incarcerated, then his health condition will further deteriorate. The investigation is at the stage of collection of evidence regarding identification of proceeds of crime and finding of trail of remaining ill gotten money, which in the case of money laundering is generally routed through a complex web of companies. Therefore, taking into account the above mentioned factors, even if twin conditions mentioned in Section 45 of PMLA are ignored, then also having regard to the serious economic offence committed by accused wherein the alleged amount of ₹ 685 Crores has been laundered, the possibility of tempering with the witnesses, the accused being an influential person and the investigation being at an initial stage, the court is not inclined to release the accused on bail, even as per Section 439 Cr.P.C. Bail application dismissed.

Summary

Issues Involved:
1. Applicability of twin conditions under Section 45 of the Prevention of Money Laundering Act (PMLA) for bail.
2. Consideration of bail based on general provisions if twin conditions are deemed inapplicable.
3. Bail under proviso to Section 45 of PMLA due to the accused's health condition.
4. Accusations against the accused and the severity of the alleged economic offence.
5. Risk of tampering with evidence and influencing witnesses.
6. Stage of investigation and its impact on bail decision.

Detailed Analysis:

1. Applicability of Twin Conditions under Section 45 of PMLA:
The primary issue addressed was whether the twin conditions under Section 45 of PMLA should be applied in this case. The court noted that the Supreme Court in *Nikesh Tarachand Shah vs. Union of India* had declared the twin conditions unconstitutional. However, post-amendment, Section 45 of PMLA now applies these conditions to every offence under PMLA. Despite divergent views from various High Courts, the Supreme Court has stayed judgments that found the twin conditions inapplicable. Therefore, the court concluded that the twin conditions must be applied in this case.

2. Consideration of Bail Based on General Provisions:
Even if the twin conditions were not applied, the court considered the general provisions governing bail. The court emphasized factors such as the nature of the accusation, severity of the offence, risk of tampering with evidence, and likelihood of the accused fleeing from justice. Given the gravity of the allegations involving money laundering of around ?685 crores, the court found the accusations serious enough to deny bail.

3. Bail under Proviso to Section 45 of PMLA Due to Health Condition:
The accused sought bail under the proviso to Section 45 of PMLA, citing his health conditions, including lymphatic cancer and heart ailments. The court examined medical records and found that the malignancy was controlled and no serious cardiac issues required constant medical supervision. The accused's frequent foreign travels for health, business, and leisure further indicated that his health conditions were manageable. Thus, the court concluded that the accused did not qualify for bail under the proviso for being sick and infirm.

4. Accusations Against the Accused and Severity of the Alleged Economic Offence:
The court detailed the allegations, including the fraudulent import of fertilizers at inflated prices, illegal commission transfers, and money laundering through a complex web of companies. The accused was implicated in channeling illegal funds and causing significant loss to the public exchequer. The court highlighted the Supreme Court's stance that economic offences should be viewed seriously due to their impact on the economy.

5. Risk of Tampering with Evidence and Influencing Witnesses:
Given the accused's influential position as a Rajya Sabha MP and a member of the Parliamentary Standing Committee of Fertilizers, the court found a reasonable apprehension that he could tamper with evidence or influence witnesses. Statements from witnesses and the ongoing investigation supported this concern.

6. Stage of Investigation and Its Impact on Bail Decision:
The investigation was at an initial stage, focusing on identifying the proceeds of crime and tracing the money trail. The court emphasized that releasing the accused on bail could hamper the investigation, given the complexity of money laundering cases involving multiple entities and jurisdictions.

Conclusion:
The court dismissed the bail application, applying the twin conditions under Section 45 of PMLA and considering the serious nature of the economic offence, potential for tampering with evidence, and the initial stage of the investigation. The accused's health conditions were deemed manageable, and his influential position posed a risk to the integrity of the investigation.