2022 (1) TMI 159 - DSC - Money Laundering

Money Laundering - proceeds of crime - Seeking default or Statutory bail - fraud and misappropriation of money - filing of the complaint by ED and also reserving the right to carry on further investigation and to file subsequent complaint as empowered u/s 44 Explanation (ii) of PML Act - incomplete investigation or filing of the complaint would be considered to be complete investigation for offence of money laundering - HELD THAT - No doubt the investigation in the offence of money laundering involves tracing of different evidence of layering, padding, fabrication of documents etc. and this process requires unearthing of evidence and documents, analyzing the same and to ascertain the laundering of the proceeds of crime but once the accused has been arrested the onus lies on the Directorate to complete the investigation within the time frame. If no time frame is fixed and Explanation (ii) added to Section 44 is taken on the face of it, the primary question would arise that even if Directorate can file supplement complaint but what would be the maximum time line within which investigation should be completed if accused is judicial custody and ED takes a plea of non-application of section 167(2) of Cr.P.C. - the provision of section 167(2) of Cr.P.C. probably has been meant for a situation like this. Therefore Explanation (ii) attached to section 44 of PMLA cannot be taken to defeat the very purpose of section 167(2) Cr.P.C. In the facts of the present case it is mentioned that further investigation in the matter is still in progress and remaining proceeds of crime amount is being traced. Para 9.2 of the complaint also mentions that complainant craves leave of the court to file further complaints to initiate necessary action as contemplated under PMLA with regard to other accused persons and also against accused Satender Singh Madhok and others, on the outcome of the investigation which is still in progress. No specific provision of PMLA has been pointed out to show non-application of section 167(2) Cr.P.C. laying down limits of 60/90 days as per the punishment prescribed for offences, for completing the investigation. Even if the investigation of money laundering involves tedious process of collecting evidence and analyzing the same but if the accused has been kept in judicial custody he to my mind has a right that either investigation qua should complete or be released on bail. In this case ED is not denying that its investigation qua accused/ applicants is also going on. Though ED is empowered to carry further investigation but accused persons to my mind are certainly entitled for bail in this case u/s 167(2) Cr.P.C. as by own assertion of ED, investigation has not been completed despite filing of the complaint on 30.10.2021. Therefore, accused persons/applicants Sandeep Singh Madhok and Satender Singh Madhok are ordered to be admitted on bail upon furnishing of bail bond for sum of ₹ 1,00,000/- with one surety of equal amount to the satisfaction of ld. CMM/ACMM on duty as well as subject to conditions imposed. Bail application allowed.

Summary

Issues Involved:
1. Entitlement to 'default' or 'statutory bail' under Section 167(2) Cr.P.C.
2. Whether the filing of the complaint by the Enforcement Directorate (ED) constitutes completion of the investigation.
3. The application of Section 44 Explanation (ii) of the Prevention of Money Laundering Act (PMLA) in the context of ongoing investigations.

Issue-wise Detailed Analysis:

1. Entitlement to 'default' or 'statutory bail' under Section 167(2) Cr.P.C.:

The accused filed a bail application under Section 167(2) Cr.P.C., seeking 'default' or 'statutory bail.' The primary argument was that the ED admitted its investigation was still ongoing despite filing a complaint on 30.10.2021. The accused argued that since the investigation was incomplete, they were entitled to statutory bail. The court noted that the right to bail under Section 167(2) Cr.P.C. is a statutory right and even considered a fundamental right flowing from Article 21 of the Constitution of India. The court emphasized that once the maximum period for investigation prescribed under Section 167(2) Cr.P.C. is over and no charge sheet is filed, the accused becomes entitled to be released on bail. The court concluded that the accused were entitled to bail under Section 167(2) Cr.P.C. as the ED admitted the investigation was still ongoing despite filing the complaint.

2. Whether the filing of the complaint by the Enforcement Directorate (ED) constitutes completion of the investigation:

The ED argued that it had filed the complaint within 60 days of the arrest, and thus the investigation was complete. However, the court noted that the ED's complaint mentioned that the investigation was still ongoing and that further evidence was being gathered. The court referred to several judgments, including those of the Madras High Court and the Supreme Court, which held that an incomplete report does not satisfy the requirements of Section 173(2) Cr.P.C. and that further investigation can only be carried out after filing a complete report. The court concluded that the filing of the complaint by the ED did not constitute the completion of the investigation, as the ED itself admitted that the investigation was still ongoing.

3. The application of Section 44 Explanation (ii) of the Prevention of Money Laundering Act (PMLA) in the context of ongoing investigations:

The ED argued that Section 44 Explanation (ii) of the PMLA allows for further investigation and filing of subsequent complaints even after filing the initial complaint. The court noted that this provision is similar to Section 173(8) Cr.P.C., which allows for further investigation if new evidence is obtained. However, the court emphasized that this provision does not preclude the requirement to complete the initial investigation within the prescribed time frame. The court reasoned that if no time frame is fixed for completing the investigation, it would be unfair to keep the accused in judicial custody indefinitely. The court concluded that Section 44 Explanation (ii) of the PMLA cannot be taken to defeat the purpose of Section 167(2) Cr.P.C., which mandates the completion of the investigation within a specific time frame.

Conclusion:

The court allowed the bail application, ordering the accused to be admitted on bail upon furnishing a bail bond of ?1,00,000/- with one surety of equal amount, subject to several conditions, including not leaving the country without court permission, not tampering with evidence, not contacting witnesses, surrendering passports, and joining the investigation as required. The court emphasized that the accused were entitled to statutory bail under Section 167(2) Cr.P.C. as the ED's investigation was still ongoing despite filing the complaint.