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2024 (12) TMI 844 - HC - Money LaunderingGrant of bail u/s 439 of Cr.P.C. (now section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023) read with Section 45 of PMLA - Money Laundering - applicant fraudulently obtained import authorization in the name of his Benami entities by cheating the Government authorities with an intent to acquire wrongful gain - non-compliance of section 19 of the PMLA - applicability of section 45 of PMLA - HELD THAT - It is apparent that in case of non-compliance of section 19 of the PMLA, the court shall examine the material and resources whereby the authorized officer has to give reason to belief the guilt of accused and the court has to give reason to belief of not guilty of offence i.e. reason to belief becomes a sine-qua-non . It is also clear that when an accused is in custody under PMLA irrespective of the case for which he is under custody, any statement under section 50 of PMLA to the same investigating agency is inadmissible against the maker. Furthermore, the arrest should be rational, fair and as per law and shall not be merely based upon guilt of accused established from inadmissible evidence. Additionally, forming of opinion of the designated officer of the guilt of accused in writing is must. In the instant case before the arrest of the applicant, he was neither summoned, nor his statement was recorded by the investigating authorities. As alleged, the applicant carried out his import business under valid license. No information was called by ED from the licensing authority to show that the applicant adopted fraudulent practices in obtaining import license. Opinion formed by the ED u/s 19 of the PMLA with respect to the guilt of the applicant, is based upon the statement of the co-accused person which is prima facie inadmissible. Therefore, it appears that in this case provisions of section 19 of the PMLA has not been complied with. In the case of V. SENTHIL BALAJI VERSUS THE STATE REPRESENTED BY DEPUTY DIRECTOR AND ORS. 2023 (8) TMI 410 - SUPREME COURT in paragraph 97.2, it has been held that in any non-compliance of the mandate under section 19 of the PMLA, the same would enure to benefit of the person arrested. It also appears that as submitted by the learned counsel for the ED, no further custodial interrogation is required. Considering the aforesaid facts and circumstances of the case, in view of this court it is a fit case to grant bail to the applicant. Hence, without expressing any opinion on merit of the case, this application is allowed - bail application allowed.
Issues Involved:
1. Compliance with Section 19 of the Prevention of Money Laundering Act (PMLA). 2. Admissibility of statements under Section 50 of the PMLA. 3. Application of Section 45 of the PMLA regarding bail conditions. 4. Legitimacy of arrest and the requirement for custodial interrogation. 5. Evidence supporting the charges of money laundering. Detailed Analysis: 1. Compliance with Section 19 of the Prevention of Money Laundering Act (PMLA): The judgment scrutinizes the compliance with Section 19 of the PMLA, which mandates that an arresting officer must have material evidence to form a belief of guilt before proceeding with an arrest. The court observed that the applicant was arrested without prior summoning or recording of his statement, indicating non-compliance with Section 19. The court referenced the case of Pushpendra Singh, highlighting that the arrest must be based on a reasoned belief of guilt, which should be documented in writing. The court concluded that the arrest in this case did not comply with Section 19, as the belief of guilt was based primarily on inadmissible statements from co-accused individuals. 2. Admissibility of Statements under Section 50 of the PMLA: The court examined the admissibility of statements made under Section 50 of the PMLA, particularly when the accused is already in custody. Citing the case of Prem Prakash, the court noted that statements obtained from an individual in custody are inadmissible as they do not reflect a free mind. The court emphasized that such statements cannot be used as substantive evidence against the accused, aligning with the principle that evidence must be independently marshaled to establish guilt. 3. Application of Section 45 of the PMLA Regarding Bail Conditions: Section 45 of the PMLA imposes stringent conditions for granting bail, requiring the court to be satisfied that there are reasonable grounds for believing that the accused is not guilty and is unlikely to commit an offense if released. The court referred to the case of Pushpendra Singh, which clarified that the rigors of Section 45 are not applicable if Section 19 is not complied with. The court determined that since Section 19 was not adhered to, the conditions under Section 45 did not bar the granting of bail. 4. Legitimacy of Arrest and the Requirement for Custodial Interrogation: The judgment addressed the legitimacy of the applicant's arrest, noting that the Enforcement Directorate (ED) did not seek further custodial interrogation, which suggested that the arrest might not have been necessary. The court took into account the ED's admission that the applicant was neither summoned nor his statement recorded before the arrest. The absence of a request for further interrogation reinforced the view that the arrest lacked justification. 5. Evidence Supporting the Charges of Money Laundering: The court evaluated the evidence presented by the ED, which was primarily based on statements from co-accused individuals. The court highlighted the need for admissible evidence to substantiate the charges of money laundering. It referenced the case of Arvind Kejriwal, emphasizing that the decision to arrest must be based on material evidence that can establish guilt, rather than inadmissible statements. The court found that the ED failed to provide sufficient evidence from the licensing authority or other independent sources to support the allegations of fraudulent import activities. Conclusion: Based on the analysis of the issues, the court concluded that the non-compliance with Section 19 of the PMLA and the reliance on inadmissible evidence warranted the granting of bail to the applicant. The court ordered the release of the applicant on bail with specific conditions to ensure his cooperation with the investigation and adherence to legal obligations. The judgment underscored the importance of adhering to procedural requirements and the need for credible evidence in cases of money laundering.
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