2025 (2) TMI 15 - HC - Money Laundering

Seeking grant of regular bail - Money Laundering - involvement of several accused persons in the procurement manufacturing and sale of spurious anti-cancer medicines - amount involved falls below Rs. 1 Crore making the applicant eligible for the benefit of the statutory proviso - twin mandatory conditions under Section 45 of the PMLA - reasonable grounds to believe for guilty of the offence - applicability of statutory presumption of guilt under Section 24 of the PMLA - admissible evidences or not - offences punishable under Sections 274 275 276 420 468 471 read with 120B and 34 of the Indian Penal Code 1860. HELD THAT - It is a settled position of law that statements recorded under Section 50 of the PMLA hold evidentiary value and are admissible in legal proceedings. The Hon ble Supreme Court while emphasizing the legal sanctity of such statements has time and again observed that they constitute valid material upon which reliance can be placed to sustain allegations under the PMLA. In a recent judgment the Hon ble Supreme Court in Abhishek Banerjee v. Enforcement Directorate 2024 (9) TMI 508 - SUPREME COURT held that It has been specifically laid down in the said decision that the statements recorded by the authorities under Section 50 PMLA are not hit by Article 20 (3) or Article 21 of the Constitution rather such statements recorded by the authority in the course of inquiry are deemed to be the judicial proceedings in terms of Section 50 (4) and are admissible in evidence whereas the statements made by any person to a police officer in the course of an investigation under Ch. XII of the Code could not be used for any purpose except for the purpose stated in the proviso to Section 162 of the Code. The Hon ble Supreme Court in the aforementioned judgment underscored that such statements being recorded in the course of an inquiry rather than an investigation are not subject to the restrictions under Article 20 (3) and Article 21 of the Constitution. Instead they are deemed to be judicial proceedings under Section 50(4) of the PMLA and therefore admissible as evidence in proceedings under the PMLA. Whether the applicant is exempted from the rigors of the twin conditions of bail if not then whether the applicant has satisfied the twin mandatory conditions under Section 45 of the PMLA? - HELD THAT - The Hon ble Supreme Court in Nikesh Tarachand Shah v. Union of India 2017 (11) TMI 1336 - SUPREME COURT struck down the twin conditions as unconstitutional. However the legislature subsequently amended the provision to cure the defects and it has since been upheld in Vijay Madanlal Choudhary 2022 (7) TMI 1316 - SUPREME COURT (LB) reaffirming the strict nature of bail conditions under the PMLA. In Prem Prakash 2024 (8) TMI 1412 - SUPREME COURT the Hon ble Supreme Court has also delved into the principles pertaining to bail in PMLA matters. This Court holds that the applicant cannot claim the benefit of the monetary threshold exemption under the proviso to Section 45 of the PMLA. The entire scheme of laundering illicit funds as uncovered by the investigation extends far beyond the threshold of one crore rupees and the applicant s role must be assessed in the broader context of the criminal conspiracy in which he actively participated. This Court finds that the twin conditions prescribed under Section 45 of the PMLA have not been satisfied and the applicant s contention regarding his bail in the predicate offence holds no weight in the present case. The evidence on record the ongoing nature of the investigation and the applicant s alleged role in the broader financial syndicate indicate that the applicant has failed to satisfy the rigors of Section 45 of the PMLA - this Court does not find any merit in the contention of the applicant that he is exempted from the twin conditions under the proviso to Section 45 of the PMLA or that he satisfies the twin conditions under Section 45 of the PMLA. Whether the statutory presumption of guilt under Section 24 of the PMLA applies in the present case and whether the applicant has successfully rebutted this presumption? - HELD THAT - From the bare perusal of Section 24 of the PMLA it is evident that once a person is charged with the offence of money laundering under Section 3 the law presumes that the proceeds of crime are involved in money laundering unless the contrary is proven by the accused - In the present case the investigating agency has relied not only on the statement of co-accused under Section 50 of the PMLA but also on financial records WhatsApp communications and transactional data which indicate the applicant s active role in the alleged money laundering activities. By virtue of Section 24 of the PMLA the respondent is not required to conclusively establish the applicant s guilt at the pre-trial stage rather the applicant must demonstrate that the proceeds of crime attributed to him are not linked to money laundering. In the absence of any rebuttal by the applicant the presumption under Section 24 of the PMLA stands in favor of the respondent thereby justifying his continued detention. In the present case the respondent has placed on record material indicating that the applicant actively participated in procurement and sale of spurious anti-cancer medicines. The investigation has revealed that the applicant engaged in financial transactions involving the proceeds of crime including payments made through banking channels and hawala transactions - Applying the legal presumption under Section 24(a) of the PMLA once the respondent has demonstrated these foundational facts the onus shifts to the applicant to rebut the presumption that the proceeds of crime were not involved in money laundering. The applicant however has failed to provide any credible evidence to rebut this presumption. Mere denial of involvement or assertion of being an investor in the firm without day-to-day operational control is insufficient to discharge the burden imposed by the statute. Conclusion - i) This Court is of the view that considering the filing of the first supplementary prosecution complaint and the ongoing nature of the investigation it is not satisfied that the applicant has fulfilled the twin conditions under Section 45 of the PMLA. The respondent has presented sufficient material to warrant further investigation including financial records electronic evidence and statements of co-accused implicating the applicant. ii) The applicant has been unable to put forth any propositions before this Court that are sufficient for grant of bail and thus the same are rejected. Application dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

• Whether the applicant is entitled to bail under Section 45 of the Prevention of Money Laundering Act (PMLA), considering the twin conditions for bail.
• Whether the applicant can claim the benefit of the proviso to Section 45 of the PMLA due to the alleged amount involved being below Rs. 1 Crore.
• Whether the applicant has successfully rebutted the statutory presumption of guilt under Section 24 of the PMLA.
• Whether the applicant's previous grant of bail in the predicate offence under the Indian Penal Code (IPC) affects the current proceedings under the PMLA.

2. ISSUE-WISE DETAILED ANALYSIS

For each identified issue, the following analysis is provided:

Issue 1: Entitlement to Bail under Section 45 of the PMLA

• Relevant Legal Framework and Precedents: Section 45 of the PMLA imposes stringent conditions for bail, requiring the court to be satisfied that the accused is not guilty of the offence and is unlikely to commit any offence while on bail. The Supreme Court in Vijay Madanlal Choudhary and Prem Prakash has emphasized the need for these conditions to be met.
• Court's Interpretation and Reasoning: The court emphasized that the twin conditions under Section 45 are mandatory and must be satisfied for bail to be granted. The applicant failed to demonstrate that he is not guilty of the offence or that he is unlikely to commit any offence while on bail.
• Key Evidence and Findings: The evidence includes financial transactions, statements of co-accused, and the applicant's involvement in the alleged money laundering activities.
• Application of Law to Facts: The court applied the stringent conditions of Section 45 to the facts, finding that the applicant did not meet the necessary criteria for bail.
• Treatment of Competing Arguments: The applicant's argument that he was granted bail in the predicate offence was dismissed as the PMLA proceedings are independent and have their own legal framework.
• Conclusions: The court concluded that the applicant does not satisfy the conditions under Section 45, and therefore, bail cannot be granted.

Issue 2: Benefit of Proviso to Section 45 of the PMLA

• Relevant Legal Framework and Precedents: The proviso to Section 45 allows for bail if the amount involved is below Rs. 1 Crore, among other conditions.
• Court's Interpretation and Reasoning: The court found that the overall scheme of money laundering exceeded the threshold of Rs. 1 Crore, and the applicant's involvement must be viewed in the context of the entire conspiracy.
• Key Evidence and Findings: Evidence showed a coordinated effort involving significant sums of money, indicating organized crime.
• Application of Law to Facts: The court applied the proviso to Section 45, finding the applicant ineligible for its benefit due to the broader context of the criminal conspiracy.
• Treatment of Competing Arguments: The applicant's argument regarding the monetary threshold was rejected based on the collective nature of the crime.
• Conclusions: The applicant cannot claim the benefit of the proviso due to the scale of the alleged money laundering activities.

Issue 3: Rebuttal of Statutory Presumption under Section 24 of the PMLA

• Relevant Legal Framework and Precedents: Section 24 of the PMLA presumes involvement in money laundering unless the accused proves otherwise.
• Court's Interpretation and Reasoning: The court found that the applicant failed to rebut the presumption of guilt, as required under Section 24.
• Key Evidence and Findings: The evidence included financial records, digital communications, and the applicant's admissions.
• Application of Law to Facts: The presumption under Section 24 was applied, and the applicant's failure to provide credible evidence to rebut it was noted.
• Treatment of Competing Arguments: The applicant's denial of involvement was deemed insufficient to rebut the presumption.
• Conclusions: The presumption of guilt stands, justifying the applicant's continued detention.

Issue 4: Impact of Bail in Predicate Offence on PMLA Proceedings

• Relevant Legal Framework and Precedents: The PMLA proceedings are independent of the predicate offence, as established in Amar S. Mulchandani v. Enforcement Directorate.
• Court's Interpretation and Reasoning: The court emphasized the distinct nature of PMLA proceedings and the independent conditions for bail under the Act.
• Key Evidence and Findings: The applicant's previous bail in the IPC offence does not influence the PMLA proceedings.
• Application of Law to Facts: The court applied the principle of independence of PMLA proceedings to the applicant's case.
• Treatment of Competing Arguments: The argument that bail in the predicate offence should extend to PMLA proceedings was rejected.
• Conclusions: The applicant's bail in the predicate offence does not affect the current PMLA proceedings.

3. SIGNIFICANT HOLDINGS

• The court held that the applicant failed to satisfy the twin conditions under Section 45 of the PMLA, which are mandatory for the grant of bail.
• The applicant cannot claim the benefit of the proviso to Section 45 due to the scale and organized nature of the money laundering activities.
• The statutory presumption of guilt under Section 24 of the PMLA stands, as the applicant did not provide sufficient evidence to rebut it.
• The grant of bail in the predicate offence does not influence the independent proceedings under the PMLA.
• The court emphasized the need for continued investigation and custodial interrogation due to the complexity and organized nature of the alleged offences.