2021 (2) TMI 85 - HC - Money Laundering

Grant of Anticipatory Bail - Smuggling - Money Laundering - siphoning of funds - predicate offence - proceeds of crime - argument of the learned Senior Counsel that the predicate offence has not been identified and that the prosecution initially started with the proceeds of crime as that from the act of smuggling has later gone to 'kickbacks' in LIFE Mission project - HELD THAT - This Court had the opportunity to consider the application for anticipatory bail filed by the applicant and it was held that the materials suggested the complicity of the applicant and that the prosecution has to get opportunity to delve further into the allegations in the light of the statements recorded. The applicant was confronted with the statements of the co-accused in this case pertaining to his involvement and he has not been able to give a satisfactory explanation regarding the variance between his version and the versions of the other witnesses as an accused. The applicant could not give a satisfactory explanation regarding why he was anxious to introduce the 2nd accused to the witness Venugopal to facilitate parking of her money in a locker. A2 has given statements to the effect that the applicant was aware of the deposits and withdrawals from the locker. It is true that the prosecution may not have been able to establish with precision how the proceeds of crime was generated. But indications about the applicant having knowledge of the smuggling activities in which A2 was involved suggests that he also had a share in the proceeds of crime. The term proceeds of crime is wide enough to include proceeds which have been directly or indirectly obtained as a result of criminal activities mentioned as scheduled offences. Reverting to the rigour of the twin test under section 45 of the PMLA, it has to be considered whether the applicant would qualify to get bail. There is no doubt about the complicity of the applicant and there are no reasonable grounds to believe that he is not guilty. However, it should also be considered whether there is a likelihood of the applicant committing any offence while on bail. I am afraid that the prosecution has not been able to establish this fact. Going by the allegations made by the ED, the applicant was indulged in laundering of ₹ 64 lakhs which was seized from the SBI locker. There is no indication that the applicant had anything to do with the locker belonging to A2 in Federal Bank. Thus the proviso to Section 45 (1) of the PMLA would operate in view of the fact that the money allegedly laundered is less than rupees one crore. The fact that the applicant is suffering from various illness would also come to his benefit as the proviso to Section 45 exempts a sick person from the rigours of the Section - The accused may not be detained just to give him a taste of imprisonment is what the Supreme Court held. The applicant has been in custody since 28/10/2020. He has been subjected to interrogation including custodial interrogation in a number of times. The present pandemic times also does not encourage incarceration of an accused indefinitely. There are no rationale for continuing the applicant's judicial custody as an undertrial in this case The applicant is therefore, entitled to be released on regular bail on stringent conditions. The bail application is allowed and the applicant is directed to be released on bail on execution of bond for ₹ 5,00,000/- with two solvent sureties for like amount each to the satisfaction of the jurisdictional Court, and on further conditions imposed.

Issues Involved:
1. Application for regular bail under Section 439 of the Cr.P.C.
2. Allegations under the Prevention of Money Laundering Act (PMLA).
3. Proceeds of crime from gold smuggling and kickbacks from LIFE Mission project.
4. Compliance with Section 45 of the PMLA.
5. Applicant's health conditions and their impact on bail considerations.
6. Applicant's cooperation with the investigation and likelihood of tampering with evidence or absconding.

Detailed Analysis:

1. Application for Regular Bail under Section 439 of the Cr.P.C.:
The applicant, arraigned as the 5th accused, filed for regular bail under Section 439 of the Cr.P.C. The bail application was opposed by the respondent (ED), who produced documents and statements in a sealed cover, arguing that the applicant played a significant role in the offences under the PMLA.

2. Allegations under the Prevention of Money Laundering Act (PMLA):
The applicant was accused of offenses under Sections 3 and 4 of the PMLA for allegedly being involved in smuggling gold through diplomatic baggage and receiving kickbacks from the LIFE Mission project. The investigation revealed that the applicant facilitated the opening of a bank locker for A2, who was directly involved in gold smuggling, and was aware of the deposits and withdrawals from the locker.

3. Proceeds of Crime from Gold Smuggling and Kickbacks from LIFE Mission Project:
The ED claimed that the proceeds of crime were derived from gold smuggling and kickbacks received for facilitating contracts under the LIFE Mission project. The applicant allegedly received kickbacks through A2 and others, and the proceeds were kept in bank lockers. The applicant was aware of the gold smuggling activities and had shared confidential information with A2.

4. Compliance with Section 45 of the PMLA:
The respondent argued that Section 45 of the PMLA, which requires twin conditions for granting bail, was applicable. However, the applicant's counsel argued that the twin test had been declared unconstitutional in Nikesh Tarachand Shah v. Union of India and that the subsequent amendment in 2018 did not salvage the situation. The court considered whether the applicant qualified for bail under the proviso to Section 45, which exempts sick persons and those accused of laundering less than one crore rupees.

5. Applicant's Health Conditions and Their Impact on Bail Considerations:
The applicant's counsel argued that the applicant was suffering from chronic degenerative disc disease and was a cancer survivor, making him eligible for bail under the proviso to Section 45. The court noted the applicant's health conditions as a factor in granting bail.

6. Applicant's Cooperation with the Investigation and Likelihood of Tampering with Evidence or Absconding:
The applicant had cooperated with the investigation, spending over 203 hours in interrogation, and there was no evidence suggesting he was a flight risk or likely to tamper with evidence. The court found no rationale for continuing the applicant's judicial custody and granted bail on stringent conditions.

Conclusion:
The bail application was allowed, and the applicant was released on bail with conditions, including surrendering his passport, appearing before the investigating officer as required, not influencing witnesses or tampering with evidence, and not committing similar offenses during the bail period. The court emphasized that the object of bail is to secure the presence of the accused for trial, not to punish them pre-trial.

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