2024 (2) TMI 1402 - HC - Money Laundering

Rejection of bail - Money Laundering - whether there are reasonable grounds for pleading before and impressing this court that the petitioner is not guilty of such offence, and he is not likely to commit any offence while on bail? - HELD THAT - Whether or not the decision on the part of J K State Cooperative Bank, Srinagar, Kashmir headed by the petitioner as its chairman was an act of a prudent banking or not , with due diligence or not is surely a matter which can be looked from the criminal culpability view and that is why the Anti-Corruption Bureau ACB Kashmir has come to present a police challan against the culprits including the petitioner but still the advancement of a bank loan has taken place by disbursement of amount to the bank accounts of the beneficiaries who are said to be, and are not disputed to be, the actual landowners who willingly parted with their respective possession of the respective lands in favor of River Jhelum Cooperative House Building Society and in return received the consideration amount. Thus, the use of the bank loan amount per se cannot be presumed to be meant for the purpose of generation and diversion of the proceeds of crime from the point of perspective of a banker. The transfer of land title on the basis of utilization of loan amount is supposed to be in the name of cooperative society i.e. River Jhelum Cooperative House Building Society and not in the name of any individual. The petitioner is well within his right to say and agitate that so long as the decision to grant loan on behalf of the J K State Cooperative Bank, Kashmir, Srinagar is to be reckoned as having been taken by the Board of Management then the liability and the responsibility for the said decision cannot be individualized to the petitioner alone and absolving the rest of the board members. The petitioner has ceased to be the chairman of J K State Cooperative Bank since 2020 and as such that denudes him from any position to influence any aspect relatable to the case - There is no denying the fact that the petitioner is 63 years old person and at this stage of life any health deteriorating condition if neglected that too in a state of custody can cause complications and in the present case. There is a medical reference on record to prima facie establish that the petitioner is having heard related complication which the petitioner in exercise of his fundamental right to personal liberty is well within his right to get it treated to the best of his resources and discretion and in that regard the public exchequer can be absolved from bearing the burden of medically attending the petitioner in custody. The petitioner is hereby granted bail subject to the terms and conditions of furnishing personal bond to the tune of rupees ten lacs to the satisfaction of the Superintendent of Jail concerned and surety bond of two sureties of like amount to the satisfaction of Registrar Judicial, Srinagar of this court - a case is made out for grant of bail by allowing the bail plea of the petitioner. The petition is thus allowed.

Summary

Issues Involved:
1. Legality of the arrest and detention of the petitioner by the Directorate of Enforcement (ED).
2. Examination of the petitioner’s role and actions in the alleged money laundering case.
3. Evaluation of the petitioner's health condition as a ground for bail.
4. Consideration of the petitioner’s potential influence on the investigation and trial.
5. Application of legal standards for granting bail under the Prevention of Money Laundering Act, 2002.

Detailed Analysis:

1. Legality of the Arrest and Detention:
The petitioner was arrested on 30.11.2023 by the ED under section 19 of the Prevention of Money Laundering Act, 2002, in connection with Case No. ECIR/SRZO/04/2021. The arrest was based on allegations of money laundering linked to the disbursement of a loan by the J&K State Cooperative Bank, Srinagar, to the River Jhelum Cooperative House Building Society. The petitioner sought bail under section 439 of the Criminal Procedure Code, 1973 read with section 44(2) of the Prevention of Money Laundering Act, 2002.

2. Examination of the Petitioner’s Role:
The petitioner, as the then Chairman of the J&K State Cooperative Bank, Srinagar, was involved in the sanctioning and disbursement of a loan amounting to Rs. 233 crores to the River Jhelum Cooperative House Building Society. The ED alleged that the petitioner facilitated the documentation for the loan to a fictitious society without proper documents, KYC norms, or tangible security, and in violation of the bank’s credit policy. The loan amount was purportedly siphoned off and used to acquire land parcels, constituting proceeds of crime.

3. Health Condition as a Ground for Bail:
The petitioner cited his health condition, specifically a heart-related medical issue, as a significant ground for bail. The court acknowledged the petitioner’s age (63 years) and health complications, emphasizing the importance of allowing him to seek medical treatment outside custody. The court noted that neglecting his health in custody could lead to severe complications.

4. Potential Influence on Investigation and Trial:
The ED opposed the bail, arguing that the petitioner, being a former influential chairman of the bank, could adversely impact the investigation and trial. They highlighted the petitioner’s potential to tamper with evidence and influence witnesses. However, the court considered that the petitioner had ceased to hold his position since 2020, reducing his ability to influence the case.

5. Legal Standards for Granting Bail:
The court evaluated the bail plea under section 45 of the Prevention of Money Laundering Act, 2002, which requires satisfaction that there are reasonable grounds to believe the accused is not guilty and is unlikely to commit any offense while on bail. The court noted that the petitioner’s actions as chairman were part of a collective decision by the bank’s Board of Management and not solely his discretion. The court found a prima facie case for bail, emphasizing that the petitioner’s role in the loan sanctioning did not necessarily imply intent to launder money.

Conclusion:
The court granted bail to the petitioner, subject to conditions, including furnishing a personal bond of Rs. 10 lacs and two sureties of like amount. The petitioner was restricted from leaving the jurisdiction without permission and was required to cooperate with the investigation. The court’s observations were limited to the context of the bail application and did not prejudge the case’s merits. The connected Criminal Revision (Crl R 51/2023) was rendered infructuous and disposed of accordingly.