2025 (4) TMI 668 - HC - Money Laundering

Money Laundering - proceeds of crime - illegal allotment of tender for supply installation testing and commissioning of electromagnetic flow meters and corresponding operations - admissibility of the Section 50 of PMLA - availability of benefit from the proviso to Section 45(1) of the PMLA - Whether the Petitioners are entitled to be released on the ground of delay in trial? - HELD THAT - It is now a well-settled position in law that the right to personal liberty under Article 21 of the Constitution is not fettered by the rigours of Section 45 of the PMLA. Consequently where a prolonged delay in trial infringes upon this fundamental right an accused may justifiably seek bail on constitutional grounds. The Supreme Court as well as various High Courts have consistently affirmed that undue delay in the conduct of trial constitutes a legitimate ground for grant of bail even in cases governed by stringent statutory frameworks such as the NDPS Act and the PMLA. The right to a speedy trial is thus an essential facet of Article 21 of the Constitution and in appropriate circumstances prolonged incarceration without any foreseeable conclusion to the trial can constitutes a valid ground for seeking bail. It must also be noted that recently in Union of India through the Assistant Director v. Kanhaiya Prasad 2025 (2) TMI 563 - SUPREME COURT the Supreme Court has reiterated that the twin conditions under Section 45 of the PMLA are mandatory and must be objectively satisfied while considering a bail application. Emphasising the legislative intent behind the stringent bail provisions under the PMLA the Court set aside the order of the High Court and cancelled the bail granted to the accused. This ruling reaffirmed the importance of strict adherence to the conditions stipulated in Section 45 while adjudicating bail pleas under the PMLA. As regards the contention that the delay is attributable to the Applicants the Court finds no merit in that argument. The application seeking deferment of argument on charge has admittedly been moved not by the Applicants but by the co-accused company NKGIL. Even assuming the ED s characterisation of that application as frivolous were accepted it would be impermissible to attribute that delay to the Applicants. No material has been placed on record to show that the Applicants have either encouraged or benefited from any obstruction to the progress of the trial. In the absence of any demonstrable conduct suggesting abuse of process by the Applicants themselves the inference of delay cannot be drawn against them. Applicability of threshold Clause under proviso to Section 45 (1) of PMLA - HELD THAT - The prosecution complaint as filed by the Enforcement Directorate clearly records that the proceeds of crime attributable to Applicant Anil Kumar Aggarwal amount to INR 4.26 crores of which INR1.63 crores were allegedly retained and utilised by him. These figures have not been shown to be incorrect on the face of the record - It is the total sum of money laundering in the offence which is to be seen for the purpose of the proviso which in the present case is to the tune of INR. 8.80 Crores - In view of the above the Applicant cannot avail the benefit of the monetary threshold under the proviso to Section 45 of the PMLA. The entire scheme as unearthed during the course of investigation involves multiple layers of laundering and routing of funds well above the statutory limit of INR 1 crore. Scope of the Court s Jurisdiction and the Twin Conditions under Section 45 (1) (ii) of the PMLA - HELD THAT - A plain reading of the provision indicates that the definition is broad and intentionally expansive. The use of the phrase criminal activity relating to a scheduled offence rather than as a result of a scheduled offence is significant. It reflects a deliberate legislative choice to widen the scope beyond direct proceeds of a specific offence to encompass property derived from any activity connected to such an offence. In this light the contention that the absence of a charge of bribery in the CBI chargesheet negates the very existence of proceeds of crime is misconceived. So long as the property or value thereof is traceable to criminal activity linked to the scheduled offence it falls within the net of money laundering under Section 3 of the Act. In the present case the core of the ED s case against the Applicants appears to be grounded in the statements of the approver and a set of Excel sheets recovered from a pen drive. These sheets are unsigned do not bear the Applicants names and were not recovered from their possession. Further the prosecution complaint does not disclose any direct financial flow of alleged bribe money to Applicant Mr. Jagdish Kumar Arora. It is rather the case that such funds were allegedly collected by Mr. Tajinder Pal Singh now an approver. In these circumstances while the evidentiary weight and reliability of the said materials can only be tested during trial at present the same are not conclusive enough for the court to deny the benefit of bail to the Applicants. Accordingly in the opinion of the court the Applicants have prima facie satisfied the twin conditions under Section 45 (1) (ii) of the PMLA and are thus entitled to be enlarged on bail. Whether there is evidence to infer that the Applicant (Jagdish Kumar Arora) is likely to tamper with the evidence? - HELD THAT - Upon examining the material placed on record this Court finds that the alleged incident occurred in January 2023. There is no contemporaneous complaint police report or corroborative material placed on record by the approver to support his version. It is also not the case that he reported these threats to the ED or any other authority at the earliest available opportunity. His allegations were disclosed belatedly to the Respondent i.e. six months after his initial statement which significantly weakens their reliability. Moreover there is no material to suggest that the Applicant attempted to interfere with the investigation during his time in custody or that he possesses the capacity to subvert the course of justice especially now that the ED s investigation is substantially complete and the prosecution complaint has been filed - In the considered view of this Court the mere assertion of an apprehension of interference absent credible corroboration cannot form the basis for denying bail. The prosecution s concern in this regard can be adequately addressed by imposing stringent conditions on the Applicant to prevent any misuse of liberty or contact with witnesses during the pendency of trial. Conclusion - i) The prolonged incarceration without trial constitutes a valid ground for bail under Article 21 of the Constitution even in cases governed by the PMLA. ii) The Applicants cannot avail the benefit of the monetary threshold under the proviso to Section 45 of the PMLA as the total proceeds of crime exceed INR 1 crore. This Court is satisfied that the Applicants have made a sufficient case for the grant of regular bail. Both the Applicants are therefore directed to be released on bail subject to fulfilment of conditions imposed - bail application allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The primary legal questions considered in this judgment include:

- Whether the Applicants are entitled to bail on the grounds of prolonged incarceration and delay in trial under the Prevention of Money Laundering Act, 2002 (PMLA).

- Whether the Applicants can benefit from the proviso to Section 45(1) of the PMLA, which exempts cases involving proceeds of crime below INR 1 crore from the stringent bail conditions.

- The evidentiary value of statements made by an accomplice-turned-approver and whether such statements can substantiate the prosecution's case against the Applicants.

- Whether there is a reasonable apprehension that the Applicants may tamper with evidence or influence witnesses if released on bail.

2. ISSUE-WISE DETAILED ANALYSIS

Delay in Trial and Right to Bail

- Legal Framework: The Applicants invoke Article 21 of the Constitution, emphasizing the right to personal liberty and a speedy trial. The Supreme Court has previously held that prolonged incarceration without trial infringes upon this fundamental right.

- Court's Interpretation: The Court acknowledges that undue delay in trial constitutes a valid ground for bail, even under stringent statutory frameworks like the PMLA. The right to a speedy trial is integral to Article 21, and prolonged detention without foreseeable trial conclusion may justify bail.

- Key Evidence and Findings: The Applicants have been in custody for over a year, with no significant progress in the trial. The voluminous nature of the prosecution's record suggests that both trials (PMLA and the scheduled offence) will be lengthy and complex.

- Application of Law to Facts: Given the delay and the absence of any conduct by the Applicants to obstruct the trial, the Court finds that continued detention would contravene Article 21.

- Conclusions: The Court concludes that the Applicants are entitled to bail due to the delay in trial, notwithstanding the rigours of Section 45 of the PMLA.

Applicability of the Proviso to Section 45(1) of PMLA

- Legal Framework: The proviso to Section 45(1) exempts cases involving proceeds of crime below INR 1 crore from the twin conditions for bail.

- Court's Interpretation: The Court finds that the total proceeds of crime attributed to the Applicants exceed INR 1 crore, disqualifying them from the proviso's benefit.

- Key Evidence and Findings: The prosecution complaint attributes INR 4.26 crores to Applicant Anil Kumar Aggarwal, with INR 1.63 crores allegedly retained by him.

- Application of Law to Facts: The Court holds that the Applicants cannot claim the benefit of the monetary threshold under the proviso, as the total laundering amount exceeds INR 1 crore.

- Conclusions: The Applicants cannot avail the exemption under the proviso to Section 45(1) of the PMLA.

Evidentiary Value of Accomplice Testimony

- Legal Framework: Section 133 of the Indian Evidence Act allows the testimony of an accomplice, but it is considered weak evidence requiring corroboration.

- Court's Interpretation: The Court emphasizes that while accomplice testimony can be considered, it must be corroborated by independent evidence.

- Key Evidence and Findings: The prosecution relies heavily on the statements of an accomplice-turned-approver and unsigned Excel sheets, which lack direct linkage to the Applicants.

- Application of Law to Facts: The Court finds the evidence insufficiently conclusive to deny bail, given the lack of corroboration and direct evidence against the Applicants.

- Conclusions: The Court concludes that the Applicants have satisfied the prima facie conditions for bail under Section 45(1)(ii) of the PMLA.

Apprehension of Tampering with Evidence

- Legal Framework: The prosecution must demonstrate a reasonable apprehension of evidence tampering to oppose bail.

- Court's Interpretation: The Court finds the prosecution's apprehension speculative and unsupported by credible evidence.

- Key Evidence and Findings: Allegations of threats by Applicant Jagdish Kumar Arora are uncorroborated and delayed, weakening their credibility.

- Application of Law to Facts: The Court imposes stringent conditions on the Applicants to mitigate any potential risk of interference with witnesses or evidence.

- Conclusions: The Court concludes that the Applicants should be granted bail with conditions to prevent misuse of liberty.

3. SIGNIFICANT HOLDINGS

- The Court holds that prolonged incarceration without trial constitutes a valid ground for bail under Article 21 of the Constitution, even in cases governed by the PMLA.

- The Applicants cannot avail the benefit of the monetary threshold under the proviso to Section 45 of the PMLA, as the total proceeds of crime exceed INR 1 crore.

- The Court finds that accomplice testimony, without independent corroboration, is insufficient to deny bail.

- The Court imposes conditions on the Applicants to prevent any potential interference with the trial process.

- The Applicants are granted bail, subject to conditions ensuring their cooperation with the investigation and trial proceedings.