2024 (6) TMI 1119 - HC - Money Laundering

Seeking grant of bail - Money Laundering - proceeds of crime - irregularities in framing and implementation of Excise Policy of GNCTD for the year 2021-22 - proper consideration of submissions not done by Vacation Judge - it is argued that the Impugned Order is perverse as the Vacation Judge has not given an opportunity of being heard to ED to oppose the bail application filed by the respondent as per mandate of section 45 (1) (i) of PMLA - violation of principles of natural justice - HELD THAT - The Vacation Judge while passing the Impugned Order did not appropriately appreciate the material/documents submitted on record and pleas taken by ED and the averments/grounds as raised in the petition under section 439 (2) of the Code require serious consideration while dealing with said petition. Accordingly, the present application is allowed and the operation of the Impugned Order is stayed.

Summary

Issues Involved:
1. Proper Opportunity to Present Case
2. Consideration of Previous Judgments
3. Evidence Against the Respondent
4. Role in Alleged Offense
5. Admissibility of Statements
6. Application of Section 45 of PMLA
7. Vicarious Liability
8. Cancellation vs. Grant of Bail

Analysis:

1. Proper Opportunity to Present Case:
The Enforcement Directorate (ED) argued that the Vacation Judge denied them a proper opportunity to present their case, violating the mandatory condition under Section 45 of PMLA. The oral prayer for a stay of the impugned order was also rejected, which ED claimed was against settled legal precedents. The court noted that the Vacation Judge expressed an inability to go through thousands of pages of documents but still claimed to have considered all relevant arguments, reflecting a lack of thorough consideration and resulting in a perverse order.

2. Consideration of Previous Judgments:
ED contended that the arguments made by the respondent had already been considered and rejected by a Co-ordinate Bench of the High Court in a judgment dated 09.04.2024. The Vacation Judge's order was seen as ignoring this precedent, which had considered the material collected by ED, the credibility of witnesses, and the validity of the respondent's arrest and remand order. The court noted that the Vacation Judge should not have contradicted the findings of the Co-ordinate Bench, especially since the Supreme Court had not stayed the operation of the 09.04.2024 judgment.

3. Evidence Against the Respondent:
ED argued that there was significant evidence to demonstrate the respondent's involvement in money laundering, both individually and vicariously. The Vacation Judge, however, found that ED had not provided sufficient direct evidence against the respondent. The court observed that the Vacation Judge did not adequately consider the material and arguments presented by ED, which included written notes and detailed points that were ignored in the impugned order.

4. Role in Alleged Offense:
ED claimed that the respondent had an active role in demanding kickbacks and was involved in the formulation of the Excise Policy, with proceeds of crime amounting to Rs. 45 crores. The Vacation Judge noted the lack of evidence directly linking the respondent to the proceeds of crime and questioned the delay in ED's investigation. The court found that the Vacation Judge's observations about ED's mala fide intentions were unwarranted, especially given the Co-ordinate Bench's earlier findings of no mala fide.

5. Admissibility of Statements:
ED asserted that statements recorded under Section 50 of PMLA were admissible and could be relied upon to reject bail. The Vacation Judge did not give due weight to these statements, leading to a perverse order. The court emphasized that the Vacation Judge should have considered the admissibility and relevance of these statements more thoroughly.

6. Application of Section 45 of PMLA:
ED argued that the Vacation Judge failed to satisfy the twin conditions under Section 45 of PMLA, which are crucial for granting bail. The Vacation Judge's order was seen as not adequately addressing these conditions. The court noted that while the Supreme Court had provided guidelines for bail under PMLA, the Vacation Judge did not discuss these requirements in detail, leading to an incomplete application of the law.

7. Vicarious Liability:
ED raised the issue of the respondent's vicarious liability under Section 70(1) of PMLA, arguing that the political party AAP, of which the respondent was a part, was a beneficiary of the proceeds of crime. The Vacation Judge did not address this issue in the impugned order. The court found that this omission was a significant oversight, as the issue of vicarious liability was crucial to the case.

8. Cancellation vs. Grant of Bail:
The respondent argued that the cancellation of bail and the grant of bail are different aspects, and the impugned order was not perverse. The court acknowledged that while these are different legal considerations, the factors leading to the grant of bail were not adequately considered by the Vacation Judge. The court emphasized that the Vacation Judge should have given ED a fair opportunity to present their case and should have thoroughly considered all relevant material and legal standards before granting bail.

Conclusion:
The court found that the Vacation Judge's order was perverse and lacked thorough consideration of the material and arguments presented by ED. The impugned order was stayed, and the main petition was listed for further consideration. The court emphasized that this order should not be taken as an opinion on the merits of the main petition under Section 439(2) of the Code.