2021 (6) TMI 427 - HC - Money Laundering

Grant of anticipatory bail - Constitutional validity of Section 45 of the Prevention of Money Laundering Act, 2002 - two conditions for grant of bail where an offence punishable for a term of imprisonment of more than 3 years under Part A of the Schedule to the Act - Money Laundering - scheduled offence - HELD THAT - By Act 13 of 2018 Section 45(1) of the PMLA was sought to be amended w.e.f. 19.04.2018. Through such amendment the words punishable for a term of imprisonment of more than three years under Part A of the Schedule as occurring in Section 45(1) before the judgment of the Supreme Court in NIKESH TARACHAND SHAH VERSUS UNION OF INDIA AND ANR. 2017 (11) TMI 1336 - SUPREME COURT were substituted with the words under this Act . As per learned ASG, after such amendment, the defect on the basis of which the Supreme Court had declared Section 45(1) of the PMLA to be unconstitutional was cured and consequently the twin conditions prescribed in Section 45(1) stood revived. The declaration by the Supreme Court in Nikesh Tarachand Shah's case would render the twin conditions prescribed in Section 45(1) of the PMLA for release of an accused on bail to be void in toto; such conditions have to be disregarded of any legal force from its inception; they cease to be law; the same are rendered inoperative and that they are to be regarded as if they had never been enacted. That being so, the twin conditions for grant of bail under Section 45(1) of the PMLA as are now sought to be pressed into service by the ED cannot be considered to have revived or resurrected only on the prospective substitution of the words punishable for a term of imprisonment of more than three years under Part A of the Schedule with the words under this Act especially without there being any amendment with regard to the twin conditions for grant of bail which had specifically been declared to be unconstitutional as also in the absence of any validating law in this regard with retrospective effect. This Court has no hesitation to hold that as on date the twin conditions for grant of bail, as sought to be pressed by the learned ASG, are liable to be ignored and that the present petitions are required to be considered under Section 438 Cr.P.C. In the light of the above conclusion, this Court considers it unnecessary to delve into the issues raised by the learned ASG with regard to the observations of the Supreme Court in Nikesh Tarachand Shah's case (supra) that Section 45(1) of the PMLA would not apply to anticipatory bails being per incuriam. The ED is in the midst of analysing the exact role of each of the petitioners qua the offences they are accused of. Grant of anticipatory bail to the petitioners at this stage would certainly result in putting a spoke in the wheel of the investigating agency and dampen their efforts in elucidating the required information from the petitioners - Petition dismissed.

Summary

Issues Involved:
1. Grant of anticipatory bail under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 (PMLA).
2. Applicability of Section 420 IPC in the context of alleged fraud.
3. Interpretation and applicability of Section 45(1) of the PMLA post-amendment.
4. Necessity of custodial interrogation in economic offences.

Detailed Analysis:

1. Grant of Anticipatory Bail under PMLA:
The petitioners sought anticipatory bail in connection with an Enforcement Case Information Report (ECIR) under Sections 3 and 4 of the PMLA, arising from alleged violations of the Haryana Development and Regulation of Urban Area Act, 1975, and Section 420 IPC. The prosecution argued that the petitioners, associated with Sobha Limited, Chintels India Limited, and QVC Realty Company Limited, conspired to fraudulently allot Non-Profit No Loss (NPNL) plots, violating the terms of the license agreement with the Director, Town and Country Planning, Haryana (DTCP). The petitioners contended they were falsely implicated, had cooperated with investigations, and that the ECIR was invalid as the scheduled offence under PMLA was not made out.

2. Applicability of Section 420 IPC:
The Haryana Police's supplementary charge sheet included Section 420 IPC, alleging fraud due to non-compliance with DTCP permissions, causing financial loss to the government. The petitioners argued Section 420 IPC was not applicable, as the allegations pertained to breaches of the agreement/licence covered under Section 10 of the 1975 Act. The court noted that the supplementary charge sheet was not challenged, and the investigation by the Enforcement Directorate (ED) was ongoing, making it premature to rule on the applicability of Section 420 IPC.

3. Interpretation and Applicability of Section 45(1) of PMLA Post-Amendment:
The petitioners argued that the twin conditions for bail under Section 45(1) of the PMLA, declared unconstitutional in Nikesh Tarachand Shah vs. Union of India, were not revived by the 2018 amendment. The court agreed, citing judgments from various High Courts, including the Bombay and Delhi High Courts, which held that the amendment did not resurrect the twin conditions. Consequently, the petitions were to be considered under Section 438 Cr.P.C. without the twin conditions.

4. Necessity of Custodial Interrogation in Economic Offences:
The court emphasized the importance of custodial interrogation in economic offences, as it allows for more effective elicitation of information. The ED argued that the petitioners' custodial interrogation was necessary to investigate the complex web of agreements and financial transactions involving substantial amounts of money. The court, referencing Supreme Court judgments, agreed that anticipatory bail could hinder the investigation, especially in economic offences.

Conclusion:
The court dismissed the anticipatory bail petitions, highlighting the ongoing investigation and the serious nature of the economic offences alleged. It clarified that the observations were made solely for deciding the bail petitions and should not influence the merits of the case.