2023 (1) TMI 502 - HC - Money Laundering

Seeking grant of Bail - existence of offence of Money Laundering or not - scheduled offences punishable under Sections 402 406 465 467 468 471 and 120-B of the Indian Penal Code 1860 - predicate offence - filing of C-Summary report - whether filing of C-Summary report and acceptance by the Magistrate take away the seriousness of the offence as independent proceedings are registered and as charge- sheet is already filed in the PMLA case? - HELD THAT - It is pertinent to note that in the present case the complainant at whose instance the proceedings were initiated submitted his no objection to the acceptance of the C-Summary report. The MMRDA which is alleged to have suffered losses has not filed any complaint of breach of contract or that they are defrauded. Of course these are matters to be taken into consideration by the Special Court trying the PMLA case and my observations therefore may be construed as prima facie in nature for the purpose of considering the request for releasing the applicants on interim bail. Once the C-Summary report has been filed and accepted by the Court of competent jurisdiction in view of the observations of the Supreme Court in Vijay Madanlal Choudhary and ors. 2022 (7) TMI 1316 - SUPREME COURT prima facie there can be no offence of money laundering against the applicants. There are no force in the submission of Mr. Venegaonkar that till the period of 90 days for filing the Revision challenging the order of the Metropolitan Magistrate accepting the C-Summary report is over the application for bail is not tenable. The question is of liberty of an individual which is valuable. The period of 90 days for filing the Revision challenging the acceptance of the C-Summary report cannot be read to mean as an automatic stay to the order accepting C-Summary report. The Revision is but a statutory remedy provided by law to challenge the impugned order (acceptance of C-Summary). The limitation prescribed for filing the Revision cannot be construed as a stay to the order of the Metropolitan Magistrate. The applicants are in custody for more than 2 years. The maximum punishment for the offence under Section 4 is 7 years imprisonment. The applicant-Marath is 71 years of age and a retired officer of the Indian Navy who has roots in the society. The applicant-Amit is an entrepreneur. There are no criminal antecedents reported against the applicants. In my opinion subject to the challenge if any to the order of C-Summary and subject to further orders that may be passed thereon the prayer of the applicants for grant of interim bail needs to be considered - on filing of a C-Summary report in the EOW case in the light of the observations quoted abbove in Vijay Madanlal Choudhary and ors. the rigours of Section 45 of the PMLA will not apply. The charge-sheet has been filed. The investigation is complete. Application allowed.

Summary

Issues Involved:
1. Predicate Offence and its Impact on PMLA Case
2. Acceptance of C-Summary Report
3. Applicability of Supreme Court Judgment in Vijay Madanlal Choudhary Case
4. Interim Bail Consideration

Issue-wise
Detailed Analysis:

1. Predicate Offence and its Impact on PMLA Case
The primary contention revolved around the existence of a predicate offence, which is essential for the maintainability of a PMLA case. The applicants argued that since the scheduled offence (under IPC sections 402, 406, 465, 467, 468, 471, and 120-B) no longer existed due to the acceptance of a C-Summary report, the PMLA case against them was not maintainable. The Enforcement Directorate (ED) had registered the ECIR based on the FIR which was later accepted as C-Summary by the Metropolitan Magistrate.

2. Acceptance of C-Summary Report
The C-Summary report, which effectively closes the investigation on the scheduled offence, was accepted by the Metropolitan Magistrate on 14/09/2022. The complainant had no objection to this acceptance, and the MMRDA, which was allegedly defrauded, did not file any complaint. The ED opposed the bail applications, arguing that the acceptance of the C-Summary report did not negate the seriousness of the offence and that they intended to challenge the C-Summary report within the 90-day period allowed for filing a revision.

3. Applicability of Supreme Court Judgment in Vijay Madanlal Choudhary Case
The applicants relied heavily on the Supreme Court's judgment in Vijay Madanlal Choudhary and ors. vs. Union of India and ors., which held that if a person is finally absolved by a competent court due to discharge, acquittal, or quashing of the criminal case pertaining to a scheduled offence, there can be no action for money-laundering against such a person. The court noted that the acceptance of the C-Summary report prima facie had a similar effect to an acquittal or discharge, thus impacting the PMLA case.

4. Interim Bail Consideration
The court considered whether the applicants could be released on interim bail in light of the accepted C-Summary report. The applicants had been in custody for over two years, and the court acknowledged their right to liberty. The court found that the trial court's decision to wait for the 90-day period for filing a revision before granting bail was not justified. The court emphasized that the acceptance of the C-Summary report should be taken into account for granting interim bail, subject to any future orders that might be passed on the challenge to the C-Summary report.

Conclusion:
The court allowed the interim bail applications of the applicants, subject to several conditions, including periodic reporting to the ED, surrendering passports, and not leaving the jurisdiction of Greater Mumbai without permission. The court clarified that these observations were prima facie and limited to the consideration of interim bail, without commenting on the merits of the ongoing PMLA case.

Order:
1. The applications for interim bail (Exhibit 45 and Exhibit 47) were allowed.
2. The applicants were granted interim bail with specific conditions, including a bail amount of Rs. 1,00,000 each, reporting requirements, and travel restrictions.
3. The order is subject to any future orders by a superior court regarding the acceptance of the C-Summary report.
4. The court emphasized that the observations made were prima facie and for the limited purpose of considering interim bail.