2021 (6) TMI 1091 - HC - Money Laundering

Seeking enlargement on bail - main allegation against the petitioners is that the petitioners and the others, who are family members availed loans on the basis of inflated value of the properties mortgaged - wilful diversion of funds through various group accounts - whether in the facts and circumstances of the case, bail can be granted under Section 45 (1) of Prevention of Money Laundering Act? - twin conditions satisfied or not - HELD THAT - In view of the amendment, the twin conditions must be satisfied, who seeks bail. A reading of this provision, will take us to the twin conditions that are imposed in Section 37 of NDPS Act. The wording 'in both the Section' are verbatim similar in nature. So, this shows the real purpose and object for which, this amendment has been introduced. So, I am of the considered view that the Parliament thought it fit to treat the offences against the economy on par with the offences against the health. That is why, we see verbatim reproduction of words used section 37 in NDPS Act into the provision of Money Laundering Act. The reason can be seen in the present day situation. At one end the economy of the country is growing and at another end, Offences against the economy, more particularly, Banking frauds are on the rise running to several Crores. The economic offences are more capable of destablishing the very sustenance of penniless Indian majority than affecting the society at large. When we approach this provision from this angle, we see more reason than one expressed in the words used. But, this is also greatly commented as draconian in nature. But as long as it remains in the Statute Book, it has to be applied with its full vigour and force - unless the petitioners satisfy the above important condition under Section 45 (1) of the Prevention of Money Laundering Act, they cannot be granted bail even though they are in custody for more than 70 days. Entire case depends upon the documentary evidence - HELD THAT - The question of tampering the evidence will not arise. So, according to the learned Senior counsel, continuation of detention will not serve any purpose. They are also ready to surrender their Passports; ready to abide any condition that may be imposed by this Court and also ready to co-operate with the investigation conducted by CBI as well as the Enforcement Directorate. According to them, these undertakings are sufficient enough for granting bail - Serious allegations have been levelled against these petitioners that they siphoned off the loan amount obtained from the Bank and forged documents for the purpose of laundering the money. Considering the stringent provision, the amount involved, the modes operandi adopted, they are not entitled for Bail - bail Petitions are dismissed.

Summary

Issues:
Bail application under Section 45(1) of Prevention of Money Laundering Act - Twin conditions to be satisfied for granting bail.

Analysis:
The petitioners sought bail in connection with a case involving fraudulent diversion of funds through inflated property values and wilful loan default. The prosecution alleged that the petitioners, along with others, availed loans based on inflated property values and diverted funds through various accounts, leading to a declared fraud by the Bank. The total outstanding amount was significant, and the case involved scheduled offenses under the Prevention of Money Laundering Act. The petitioners were accused of various fraudulent activities, including siphoning off loan funds, creating fraudulent transactions, and manipulating financial documents. The petitioners argued that they had repaid substantial amounts and were willing to cooperate with the investigation. They also cited the value of their secured properties and health conditions as grounds for bail.

The court considered the amended Section 45(1) of the Prevention of Money Laundering Act, which sets stringent conditions for granting bail in such cases. The court noted that the twin conditions for bail must be satisfied, similar to those in the NDPS Act. The court highlighted the seriousness of economic offenses, particularly banking frauds, and the need to apply the law rigorously. Despite the petitioners' arguments regarding property values and willingness to cooperate, the court emphasized the gravity of the allegations, including fund siphoning and document forgery. The court concluded that the petitioners did not meet the crucial condition for bail under the Act due to the significant amount involved and the nature of the offenses. Consequently, the bail applications were dismissed, and the petitioners were not granted bail despite being in custody for over 70 days.