2020 (7) TMI 556 - HC - Money Laundering

Grant of Regular bail - Money Laundering - siphoning of funds - the allegation is that the amount was given by RFL to entities which were, directly or indirectly, owned or controlled by the applicant, or in which the applicant otherwise had financial interest, including companies linked to RHC - HELD THAT - Sanctity must attach to filing of a complaint pursuant to an ECIR. It must, as a matter of law, be taken to be the culmination of investigation into the offence to the extent the offence is defined in that complaint. No one is seeking to prevent or forestall further investigation but for the sake of on-going investigation, this court cannot warp the entire concept of pre-trial imprisonment and bail. Nowhere is it the law that an accused, yet to be tried, is to be kept in custody only on a hunch or a presumption that he will prejudice or impede trial; or to send any message to the society. If anything, the only message that goes-out to the society by keeping an accused in prison before finding him guilty, is that our system works only on impressions and conjectures and can keep an accused in custody even on presumption of guilt. While in certain cases such message may even quench the thirst for revenge of the lay society against a person they believe to be guilty, such action would certainly not leave our criminal justice system awash in glory. An investigating agency must come to court with the confidence that they have arrested an accused, based on credible material, and have filed a complaint or a chargesheet with the certainty that they will be able to bring home guilt, by satisfying a court beyond reasonable doubt. But when an investigating agency suggests that an accused be detained in custody as an undertrial for a prolonged period, even after the complaint or chargesheet has been filed, it appears that the investigating agency is not convinced of its case and so it fears that the accused may get-off by discharge or acquittal; and that therefore the only way to punish the accused is to let him remain in custody as an undertrial. People s trust in the criminal justice system must rest on surer footing than on pre-trial punishment by keeping accused persons in prison. Statistics available on the Delhi Prisons website as on 31.12.2019 show that the proportion of undertrials to convicts in Delhi prisons is about 82 percent to 18 per cent. These numbers are telling. Prison is a place for punishment ; and no punishment can be legitimate without a trial. There must be compelling basis, grounds and reasons to detain an undertrial in judicial custody, which this court does not discern in the present case - It is beyond contention that the consequences of pre-trial detention are deleterious; and that keeping an undertrial in jail seriously jeopardises the preparation of his legal defence. If kept in custody, the applicant will not be able to effectively brief and consult with his lawyers, collate evidence in his defence and thereby defend himself effectively. Thereby the applicant will be denied his right to fair trial guaranteed under Article 21 of the Constitution. There seems to be no rationale for continuing the applicant s judicial custody as an undertrial in this case - this court is persuaded to the applicant to regular bail in the proceedings registered under sections 3/4 of the Prevention of Money Laundering Act 2002 - Bail application allowed.

Summary

Issues Involved:
1. Applicant's plea for regular bail.
2. Allegations and contentions of the Enforcement Directorate (ED).
3. Applicant's submissions and defense.
4. Respondent's opposition to bail.
5. Legal principles and precedents regarding bail.
6. Court's analysis and decision on the bail application.

Detailed Analysis:

1. Applicant's Plea for Regular Bail:
The applicant seeks regular bail in a complaint case arising from an Enforcement Case Information Report (ECIR) registered under sections 3/4 of the Prevention of Money Laundering Act 2002 (PMLA). The applicant was arrested on multiple occasions related to different FIRs and ECIRs, with the ED filing a complaint under sections 44/45 of the PMLA.

2. Allegations and Contentions of the ED:
- The applicant, a 50% shareholder and promoter of M/s RHC Holding Pvt. Ltd., is alleged to have misappropriated or siphoned-off monies lent by M/s Religare Finvest Ltd. (RFL) to entities owned or controlled by him.
- The ED alleges that RFL extended loans amounting to INR 47,000 crores, of which INR 2036.39 crores went into default, with funds being used to repay loans to RFL itself.
- The ED's investigation is complete for INR 450 crores, with the remaining amount still under investigation. Provisional attachment of proceeds of crime worth INR 51 crores has been effected.

3. Applicant's Submissions and Defense:
- The applicant was not on the Board of Directors of RFL or REL during the period the offences were committed and had no control over their management.
- The applicant argues that the allegations are of vicarious liability without direct evidence of conspiracy.
- The investigation vis-a-vis the applicant is complete, and further judicial custody is unwarranted.
- The applicant is not a flight risk, has no propensity to tamper with evidence, and has already surrendered all relevant documents and digital evidence to the ED.
- The applicant cites several judicial precedents to support the plea for bail, emphasizing that the nature of the offence and severity of punishment should not be the sole factors for denying bail.

4. Respondent's Opposition to Bail:
- The ED contends that the applicant was a promoter with substantial shareholding in REL, which owned 99.99% of RFL.
- The applicant controlled the defaulting companies through 'front' persons and indulged in 'evergreening' of loans, causing losses to RFL and its shareholders.
- The ED argues that the applicant's release on bail would risk tampering with evidence, influencing witnesses, and disposing of foreign assets.
- The ED relies on judicial precedents emphasizing the seriousness of economic offences and the need for a different approach in granting bail for such offences.

5. Legal Principles and Precedents Regarding Bail:
- The court recapitulates the principles for granting bail, emphasizing the presumption of innocence, the need to secure the presence of the accused for trial, and the balance between individual liberty and societal interest.
- The court refers to several Supreme Court judgments, including P. Chidambaram vs. Directorate of Enforcement, Sanjay Chandra vs. CBI, and Nikesh Tarachand Shah vs. Union of India, which highlight the importance of not denying bail solely based on the gravity of the offence and the need for a fair trial.

6. Court's Analysis and Decision on the Bail Application:
- The court notes that the applicant's alleged offences arise from financial transactions through banking channels, with substantial time elapsed before the applicant's arrest without any tampering with evidence.
- The records of the transactions are already seized, and the complaint has been filed, making further judicial custody unnecessary.
- The court finds no real risk of the applicant absconding or interfering with the investigation.
- The court emphasizes that pre-trial detention should not be used as a form of punishment and that the applicant's right to a fair trial must be preserved.
- The court grants bail to the applicant subject to stringent conditions, including surrendering the passport, not leaving the country without permission, and cooperating with further investigation.

Conclusion:
The court allows the bail application, directing the applicant to be released on bail subject to specified conditions, ensuring that the applicant's presence for trial is secured while respecting the principles of individual liberty and fair trial.