2025 (2) TMI 563 - SC - Money Laundering

Legality of granting bail - Money Laundering - proceeds of crime - illegal mining and selling of sand without using the departmental pre-paid transportation E-challan - compliance with Section 45 of the PMLA or not - admissibility of statements recorded - HELD THAT - It is well settled position of law that Section 45 of the PMLA starting with a non-obstante clause has an overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them. Section 45 imposes two conditions for the grant of bail to any person accused of an offence punishable for a term of imprisonment of more than 3 years under Part A of the Schedule. The two conditions are that (i) the prosecutor must be given an opportunity to oppose the application for bail; and (ii) the Court must be satisfied that there are reasonable grounds for believing that the accused person is not guilty of such offence and that he is not liable to commit any offence while on bail. As well settled these two conditions are mandatory in nature and they need to be complied with before the accused person is released on bail. It is further required to be noted that Section 65 of PMLA requires that the provisions of Cr.P.C. shall apply insofar as they are not inconsistent with the provisions of the PMLA and Section 71 provides that the provisions of PMLA shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Hence the conditions enumerated in Section 45 will have to be complied with even in respect of application for bail made under Section 439 of Cr.P.C. So far as facts of the present case are concerned the High Court in a very casual and cavalier manner without considering the rigours of Section 45 granted bail to the respondent on absolutely extraneous and irrelevant considerations. There is no finding whatsoever recorded in the impugned order that there were reasonable grounds for believing that the respondent was not guilty of the alleged offence under the Act and that he was not likely to commit any offence while on bail. Noncompliance of the mandatory requirement of Section 45 has on the face of it made the impugned order unsustainable and untenable in the eye of law. There are no substance in the submission made by learned Senior Advocate Ranjit Kumar for the respondent that the respondent has not been shown as an accused in the predicate offence. It is no more res integra that the offence of money laundering is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a schedule offence. Hence involvement in any one of such process or activity connected with the Proceeds of Crime would constitute offence of money laundering. This offence otherwise has nothing to do with the criminal activity relating to a schedule offence except the Proceeds of Crime derived or obtained as a result of that crime. As well settled the offence of money laundering is not an ordinary offence. The PMLA has been enacted to deal with the subject of money laundering activities having transnational impact on financial systems including sovereignty and integrity of the countries. The offence of money laundering has been regarded as an aggravated form of crime world over and the offenders involved in the activity connected with the Proceeds of Crime are treated as a separate class from ordinary criminals. Any casual or cursory approach by the Courts while considering the bail application of the offender involved in the offence of money laundering and granting him bail by passing cryptic orders without considering the seriousness of the crime and without considering the rigours of Section 45 cannot be vindicated. The impugned order passed by the High Court being in teeth of Section 45 of PMLA and also in the teeth of the settled legal position it is opined that the impugned order deserves to be set aside and the matter is required to be remanded to the High Court for fresh consideration. Accordingly the impugned order is set aside and the matter is remanded to the High Court for consideration afresh with the request to the Chief Justice to place the matter before the Bench other than the Bench which had passed the impugned order. Conclusion - i) Section 45 of the PMLA imposes mandatory conditions for granting bail requiring courts to be satisfied of the accused s non-guilt and low likelihood of reoffending. The High Court s failure to adhere to these conditions rendered its bail order unsustainable. ii) Statements recorded under Section 50 of the PMLA are admissible and Article 20(3) does not apply to investigative processes under this section. Appeal allowed by way of remand.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Supreme Court in this judgment are:

1. Whether the High Court erred in granting bail to the respondent without adhering to the mandatory conditions prescribed under Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA).

2. Whether the statements recorded under Section 50 of the PMLA are admissible, and if Article 20(3) of the Constitution provides protection against self-incrimination in this context.

3. Whether the offence of money laundering is independent of the predicate offence, and the implications of such independence on the prosecution of the accused.

ISSUE-WISE DETAILED ANALYSIS

1. Grant of Bail under Section 45 of the PMLA

Relevant legal framework and precedents: Section 45 of the PMLA imposes stringent conditions for granting bail to individuals accused of money laundering. The section mandates that the court must be satisfied that there are reasonable grounds for believing the accused is not guilty and is unlikely to commit an offence while on bail. This provision overrides the general bail provisions under the Code of Criminal Procedure.

Court's interpretation and reasoning: The Court emphasized that Section 45 is a special provision with an overriding effect, requiring strict compliance with its conditions before granting bail. The High Court failed to record any satisfaction regarding the innocence of the accused or the likelihood of reoffending, making its order unsustainable.

Key evidence and findings: The High Court granted bail without addressing the mandatory conditions of Section 45, focusing instead on extraneous considerations.

Application of law to facts: The Supreme Court found that the High Court's order did not comply with Section 45, as it did not consider whether the accused was likely to commit further offences or whether there were reasonable grounds to believe in his non-guilt.

Treatment of competing arguments: The respondent argued that the statements under Section 50 were inadmissible and that he had cooperated with the investigation. The Court dismissed these arguments, emphasizing the mandatory nature of Section 45.

Conclusions: The Supreme Court concluded that the High Court's order granting bail was flawed due to non-compliance with Section 45, warranting its reversal.

2. Admissibility of Statements under Section 50 of the PMLA

Relevant legal framework and precedents: Section 50 of the PMLA empowers authorities to summon individuals and record their statements, which are admissible as evidence. Article 20(3) of the Constitution protects against self-incrimination.

Court's interpretation and reasoning: The Court referenced the Vijay Madanlal Choudhary case, clarifying that statements under Section 50 are not protected by Article 20(3) since the protection applies to testimonial compulsion in court, not to statements made during investigations.

Key evidence and findings: The respondent's argument that the statements were inadmissible was rejected based on established precedents.

Application of law to facts: The Court applied the reasoning from Vijay Madanlal, affirming the admissibility of Section 50 statements and dismissing the respondent's claim of inadmissibility.

Treatment of competing arguments: The respondent's reliance on Article 20(3) was dismissed as the Court emphasized the distinction between investigative and testimonial compulsion.

Conclusions: The Court upheld the admissibility of statements recorded under Section 50, rejecting the respondent's arguments to the contrary.

3. Independence of Money Laundering Offence from Predicate Offence

Relevant legal framework and precedents: The PMLA defines money laundering as an independent offence, distinct from the predicate offence from which proceeds of crime are derived.

Court's interpretation and reasoning: The Court reiterated that money laundering is a standalone offence, focusing on the process or activity involving proceeds of crime, irrespective of the status of the predicate offence.

Key evidence and findings: The respondent's argument that he was not shown as an accused in the predicate offence was deemed irrelevant, as money laundering is prosecuted independently.

Application of law to facts: The Court applied the established principle that involvement in the process or activity related to proceeds of crime constitutes money laundering, independent of the predicate offence.

Treatment of competing arguments: The respondent's argument was dismissed, with the Court emphasizing the independence of money laundering from the predicate offence.

Conclusions: The Court affirmed the independent nature of money laundering as an offence, rejecting arguments linking it to the predicate offence status.

SIGNIFICANT HOLDINGS

The Supreme Court's significant holdings include:

- Section 45 of the PMLA imposes mandatory conditions for granting bail, requiring courts to be satisfied of the accused's non-guilt and low likelihood of reoffending. The High Court's failure to adhere to these conditions rendered its bail order unsustainable.

- Statements recorded under Section 50 of the PMLA are admissible, and Article 20(3) does not apply to investigative processes under this section.

- Money laundering is an independent offence, distinct from the predicate offence, focusing on the process or activity involving proceeds of crime.

Final determinations:

The Supreme Court set aside the High Court's bail order and remanded the case for fresh consideration, emphasizing the need for compliance with Section 45 of the PMLA. The respondent was directed to surrender, and the matter was to be reconsidered by a different High Court bench.