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2024 (7) TMI 1525 - HC - Money LaunderingSeeking grant of regular bail - Money laundering - proceeds of crime - wrongful sanction of 50 loans - misappropriation of public money of bank by cheating and forgery - mandatory provisions of PMLA, 2002 not followed - HELD THAT - On going through the provisions of law and judgment passed by Apex Court in case of Vijay Mandal Choudhary Vs. Union of India and Ors. 2022 (7) TMI 1316 - SUPREME COURT , it is clear that offence under PMLA, 2002 is a separate and distinct offence. PMLA, 2002 deals with the proceeds of crime which has been obtained by accused by committing scheduled offences. Accuse possess, conceals and acquire tainted property or money claiming it to be untainted and use the proceeds of crime. Said act of accused in dealing with ill gotten money or property constitutes separate and distinct offence from earlier offence committed to get the money. On what basis and material, reason to believe regarding guilt of applicant was formed, is not mentioned in the order. Order is accompanied by grounds of arrest. Most of the grounds of arrest are based on investigation done by CBI and on statement of applicant and other witnesses recorded under Section 17 of PMLA 2002. It is mentioned in grounds that during recording of statement, applicant did not cooperate, gave evasive answers and suppressed facts. Director failed to mention reason to believe guilt of applicant under the Act of PMLA, 2002. Under Section 19 of the PMLA, 2002, arrest is discretionary. Discretion is to be exercised wisely and arrest is not required in all cases. No reason has been mentioned in arrest order. Reason to believe has to be more than only a prima-facie case. In absence of reference to material on which reason to believe regarding guilt is based, arrest of applicant stands vitiated. Provision of Section 19 of the PMLA, 2002 is mandatory. Provisions of PMLA, 2002 places reverse burden on the accused to show that he is not guilty and there is presumption under law that applicant has committed the offence, therefore, provision under Prevention of Money Laundering Act, 2002 is to be strictly followed. Now, it is to be seen that if Section 19 of the PMLA, 2002 has not been complied with, then whether Court can grant bail without satisfying itself on twin conditions mentioned in Section 45 of PMLA, 2002. Due to noncompliance of Section 19 of the Act, whether rigors of Section 45 of the PMLA, 2002 will be wiped out. Arresting Officer has to asses the material available in charge-sheet of predicate offence and also unearthed during enquiry and investigation by authorized officer. Such officer must have material on basis of which he forms opinion that accused is guilty of offence under the Act only then discretion, vested in him to arrest, is to be exercised - Rights of liberty of a person may be jeopardized, if reason of belief of guilt under Act is not in writing in arrest order, as condition for grant of bail is rigorous under PMLA, 2002. In such conditions, Court while considering the bail application has to see that arrest has been made by complying with provisions of Section 19 of the Act. In this case, provisions of Section 19 of the Act has not been complied with. It is directed that applicant shall be released on bail on furnishing a bail bond in the sum of Rs. 5,00,000/- with two solvent sureties in the like amount to the satisfaction of the trial court for his regular appearance before Court on all such dates as may be fixed in this regard - Bail application allowed.
Issues Involved:
1. Compliance with mandatory provisions of PMLA, 2002 (Sections 19 and 50). 2. Grounds for arrest and the legality of the arrest under Section 19 of PMLA, 2002. 3. Application of twin conditions under Section 45 of PMLA, 2002 for granting bail. 4. Evidence and material collected by the Enforcement Directorate. 5. Applicant's cooperation in the investigation. Detailed Analysis: 1. Compliance with Mandatory Provisions of PMLA, 2002 (Sections 19 and 50): The applicant argued that the Enforcement Directorate (ED) did not comply with the mandatory provisions of Sections 19 and 50 of the PMLA, 2002. The applicant's counsel emphasized that the reasons for the arrest were not recorded, and no independent material was collected by ED, relying instead on the Central Bureau of Investigation (CBI) findings. The court highlighted that under Section 19, the arrest is discretionary and must be exercised wisely, requiring reasons to be recorded in writing. The court found that the arrest order lacked the necessary reasons, thus violating Section 19's mandatory provisions. 2. Grounds for Arrest and the Legality of the Arrest under Section 19 of PMLA, 2002: The court examined the arrest order dated 13.01.2024 and found that the reasons for the applicant's arrest were not specified. The grounds for arrest were primarily based on the CBI's investigation and the applicant's non-cooperation during the statement recording. The court noted that the arrest should be based on more than a prima facie case and must include specific material indicating the applicant's guilt under PMLA, 2002. The absence of such material rendered the arrest illegal and vitiated. 3. Application of Twin Conditions under Section 45 of PMLA, 2002 for Granting Bail: The court deliberated on whether the non-compliance with Section 19 would negate the twin conditions under Section 45 of PMLA, 2002, which are prerequisites for granting bail. The court concluded that the twin conditions would not apply if the mandatory provisions of Section 19 were not followed. The arresting officer must have substantial material to form a belief of guilt, and the court must be satisfied that the accused is not guilty to grant bail. The court found that in this case, the arrest did not comply with Section 19, thus the twin conditions of Section 45 were not applicable. 4. Evidence and Material Collected by the Enforcement Directorate: The applicant's counsel contended that the ED did not collect any independent evidence and relied solely on the CBI's findings. The court noted that the ED's complaint mentioned non-cooperation and evasive answers by the applicant but failed to provide concrete reasons for the belief in the applicant's guilt under PMLA, 2002. The court emphasized the need for specific material and reasons to justify the arrest, which were absent in this case. 5. Applicant's Cooperation in the Investigation: The prosecution argued that the applicant was not cooperating with the investigation, which justified the arrest. However, the court referred to the Supreme Court judgment in Pankaj Bansal Vs. Union of India, stating that non-cooperation alone is insufficient for arrest under Section 19. The court found that the applicant had cooperated during the investigation and that there was no substantial reason to believe that the applicant would tamper with evidence or threaten witnesses if released on bail. Conclusion: The court allowed the bail application, directing the applicant to be released on bail with a bond of Rs. 5,00,000/- and two solvent sureties. The applicant was also required to adhere to conditions under Section 480 (3) of B.N.S.S., including attending court as required, not committing similar offenses, and not tampering with evidence or influencing witnesses. The court emphasized that the non-compliance with Section 19 of PMLA, 2002 benefited the applicant, leading to the grant of bail.
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