2024 (12) TMI 90 - HC - Money Laundering

Seeking grant of bail - Illegal appointment of candidates in TET-2014 - predicate/scheduled offence - evidence to suggest involvement in concealment of any proceeds of crime or laundering of money or not - HELD THAT - The Hon ble Supreme Court, in the authority in Vijay Madanlal Choudhary 2022 (7) TMI 1316 - SUPREME COURT has held that ' The Court is not required to record a positive finding that the accused had not committed an offence under the Act. The Court ought to maintain a delicate balance between a judgment of acquittal and conviction and an order granting bail much before commencement of trial. The duty of the Court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. Further, the Court is required to record a finding as to the possibility of the accused committing a crime which is an offence under the Act after grant of bail.' In the said judgment, dealing with section 24 of the PMLA, the Hon ble Supreme Court has observed that only after the prosecution establishes at least three basic or foundational facts, the onus to rebut the presumption laid down under the said provision shifts on the accused. In the case in hand, huge assets and money have been recovered from the petitioner which according to the E.D. is tainted and can be termed as proceeds of crime. On the contrary, it is submitted on behalf of the petitioner that every unaccounted for or disproportionate property does not ipso facto lead to the inference that they are proceeds of crime. The link between the properties and the involvement of the accused in the crime is required to be proved - The petitioner shall be granted an opportunity before the learned Trial Court to substantiate the same and also rebut the presumption under section 24 of the Act. The E.D. intends to rely upon voluminous evidence including 182 statements, 210 documents spanning over 20,000 pages and examine 167 witnesses to substantiate their case. The case is primarily based on documentary evidence which is in custody of the E.D. and there is no scope for the petitioner to tamper with the same. To address the apprehension of the petitioner influencing witnesses of the case, stringent conditions may be imposed upon him while releasing him on bail - It is not in dispute that the petitioner is not at flight risk. The Hon ble Supreme Court has time and again held that prolonged incarceration before being pronounced guilty of an offence should not be permitted to become punishment without trial and in such a case Article 21 applies irrespective of the seriousness of the crime. The right to life and personal liberty enshrined under Article 21 of the Constitution is overarching and sacrosanct. A constitutional Court cannot be restrained from granting bail to an accused on account of restrictive statutory provisions in a penal statute if it finds that the right of the accused/under-trial under Article 21 of the Constitution has been infringed. Even in the case of interpretation of a penal statute, howsoever stringent it may be, a constitutional Court has to lean in favour of constitutionalism and the rule of law of which liberty is an intrinsic part. This Court is inclined to release the petitioner on bail subject to stringent conditions keeping in mind his right to speedy trial under Article 21 of the Constitution as well as his prolonged incarceration without trial - Application for bail allowed.

Issues Involved:

1. Legality of the petitioner's detention and the absence of a predicate offence.
2. Jurisdictional overreach and procedural fairness by the Enforcement Directorate (ED).
3. Evidentiary value of statements under Section 50 of the PMLA.
4. Presumption under Section 24 of the PMLA and the foundational facts required.
5. Right to speedy trial and prolonged incarceration.
6. Bail considerations and conditions.

Issue-wise Detailed Analysis:

1. Legality of the Petitioner's Detention and the Absence of a Predicate Offence:

The petitioner argued that his detention since March 20, 2023, was unwarranted as he was not named in the FIR or charge sheet of the predicate offence. The Enforcement Directorate (ED) only named him in a supplementary complaint. It was contended that no evidence suggested his involvement in money laundering or concealment of proceeds of crime. The absence of a scheduled offence against the petitioner was highlighted, arguing that the PMLA offence could not stand without it.

2. Jurisdictional Overreach and Procedural Fairness by the ED:

The petitioner alleged that the ED was attempting to incorporate unrelated allegations, such as TET-2012 and a municipality scam, into the investigation, which were beyond the scope of the predicate offence. This approach was criticized for raising questions about jurisdictional overreach, procedural fairness, and adherence to statutory and constitutional principles. It was noted that the documents relied upon by the ED related primarily to TET-2012, with minimal connection to TET-2014.

3. Evidentiary Value of Statements under Section 50 of the PMLA:

The petitioner contended that the case primarily relied on confessional statements under Section 50 of the PMLA, which were not legally sustainable as substantive evidence. The Hon'ble Supreme Court had previously held that such statements could not initiate prosecution. The evidentiary value of these statements was to be assessed during trial, not at the bail stage.

4. Presumption under Section 24 of the PMLA and the Foundational Facts Required:

The court observed that the onus to rebut the presumption under Section 24 of the PMLA shifts to the petitioner only when the ED establishes three foundational facts: (i) commission of a scheduled offence, (ii) property obtained as a result of such criminal activity, and (iii) involvement in activities connected with the proceeds of crime. The ED failed to establish these foundational facts, shifting the burden of proof to the petitioner prematurely.

5. Right to Speedy Trial and Prolonged Incarceration:

The court emphasized the fundamental right to a speedy trial under Article 21 of the Constitution. The petitioner's prolonged incarceration without trial was noted, with the ED's investigation complete but charges yet to be framed. The court highlighted that prolonged detention before being pronounced guilty should not become punishment without trial, irrespective of the crime's seriousness.

6. Bail Considerations and Conditions:

The court considered the petitioner's right to bail, noting that co-accused in similar circumstances had been granted bail. The court decided to release the petitioner on bail, subject to stringent conditions, given his prolonged incarceration and the fundamental right to a speedy trial. Conditions included surrendering his passport, not leaving the trial court's jurisdiction without permission, appearing for all hearings, and not tampering with evidence or intimidating witnesses.

The judgment concluded with a directive that the observations were solely for deciding the bail application and should not influence the trial court's independent proceedings. The petitioner was granted bail upon furnishing a bond of Rs. 10,00,000 with adequate sureties, half of whom should be local, and compliance with specified conditions.

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