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2021 (4) TMI 279 - HC - Money LaunderingSeeking grant of Bail - commission of economic offence - predicate or scheduled offence - burden to prove guilty - whether, in view of amendment to Section 45 of PMLA, the twin conditions stipulated therein stands revived post decision of Hon ble Supreme Court in the case of Nikesh Tarachand Shah Vs. Union of India 2017 (11) TMI 1336 - SUPREME COURT ? - HELD THAT - The question of the constitutional validity of Section 45 of PMLA was dealt with by Apex Court before amendment in the case of Nikesh Tarachand Shah. The grounds of challenge were that, Section 45 of the Act, when it imposes two further conditions before grant of bail is manifestly arbitrary, discriminatory and violative of petitioner s fundamental rights under Article 14 read with Article 21 of the Constitution. The Apex Court enumerated illustrations while examining validity of twin conditions. The first would be cases where the charge would only be of money laundering and nothing else, as would be the case where the scheduled offence in Part A has already been tried and persons charged under the scheduled offence have or have not been enlarged on bail under the Code of Criminal Procedure and thereafter convicted or acquitted. The question is the provision which was held constitutional by Apex Court in the case of Nikesh Shah stands revived in view of Amendment as stated above to Section 45 of the Act - In view of amendment, the original sub-Section (ii) of Section 45 (1) which imposes the said twin conditions automatically stands revived and the said condition therefore remain on statute book. The original Section 45 (1) (ii) has to be inferred and treated as it still exists on the statute book and holds the field even as of today for deciding application for bail by an accused under PMLA. It was further argued that by inserting words under this Act , the Judgment delivered by Supreme Court in Nikesh Shah has become in effective. The Court held that the Apex Court in Nikesh Shah (supra) has declared Section 45 (1) of PMLA in so far as it imposes two further conditions for release on bail to be unconstitutional as it violates Articles 14 and 21 of Constitution of India. After effecting amendment to Section 45 (1) of PMLA. The words under this Act are added to sub-Section (1) of Section 45 of PMLA. However, the original Section 45 (1) (ii) has not been revived or resurrected by Amending Act. Even notification dated 29.03.2018 amending Section 45 (1) of PMLA which came into effect from 19.04.2018 is silent about its retrospective applicability. Hence, contention of respondent cannot be accepted. In the case of Nikesh Tarachand Shah as stated above the Hon ble Supreme Court has declared Clause (ii) of sub-Section 1 of Section 45 of PML Act ultra vires Articles 14 and 21 of the Constitution. Sub-Section 2 the said decision the amendment referred to hereinabove was carried out. Clause (ii) of sub-Section 1 of Section 45 of PML Act places two conditions for release of a person accused of an offence under the Act, on bail, if a Public Prosecutor opposes the bail application, namely the Court is satisfied that there are reasonable grounds for believing that accused is not guilty of such offence and that he is not likely to commit any offence while on bail. The question is whether substitution of the words under this Act in place of words punishable for term of imprisonment of more than three years under Part A of the Schedule in Section 45 of the Act, has impact of meeting with reasonings discussed by the Supreme Court in the case of Nikesh Tarachand Shah for declaring clause (ii) of sub-Section 1 of Section 45 of the Act ultra vires. The Adjudicating Authority had dismissed the original complaint under Section 5 (5) of the PMLA. The appeal is pending, the order is under challenge before the Appellate Tribunal and there is an order of status quo. The applicant was arrested after the period of about 18 months pursuant to registration of ECIR. Ms. Chanda Kochhar and Mr. V. N. Dhoot has been granted bail by Special Court under PMLA. The entire loan amount was repaid to ICICI bank. The applicant is in custody for more than 6 months. The transactions in question were for the period of 2009. The entire loan of ICICI Bank was repaid in 2012. Prior to arrest, applicant had appeared before respondent No.1 on several occasions. His statements were recorded and documents were tendered - The question of absconding does not arise. Considering the circumstances, further detention of the applicant is not necessary. Hence, case for grant of bail is made out. Bail application allowed.
Issues Involved:
- Bail application for the offence under the Prevention of Money Laundering Act (PMLA) - Allegations of criminal conspiracy, cheating, and misconduct by public servants - Provisional Attachment Order of properties - Arguments for and against bail - Constitutional validity and interpretation of Section 45 of PMLA - Burden of proof under Section 24 of PMLA Issue-wise Detailed Analysis: 1. Bail Application for the Offence under PMLA: The applicant sought bail in connection with the ECIR/02/HIU/2019 registered by the Enforcement Directorate for offences punishable under Section 3 read with Section 4 of the PMLA. The case originated from an FIR registered by the CBI for criminal conspiracy, cheating, and misconduct by public servants, specifically involving the sanctioning of loans by ICICI Bank to the Videocon Group in violation of bank policies. 2. Allegations of Criminal Conspiracy, Cheating, and Misconduct by Public Servants: The FIR alleged that ICICI Bank sanctioned six high-value loans to Videocon Group companies from June 2009 to October 2011, which were later transferred to entities controlled by the applicant and his associates, resulting in illegal gratification and undue benefit to the applicant's wife, a then ICICI Bank official. The loans were alleged to be sanctioned in violation of the bank’s credit policy, leading to wrongful loss to ICICI Bank. 3. Provisional Attachment Order of Properties: During the investigation, a Provisional Attachment Order was issued, attaching various properties, including a flat at CCI Chambers and cash seized from the premises of a company associated with the applicant. The order was challenged, and the Adjudicating Authority dismissed the original complaint, stating that the attached properties were not proceeds of crime. 4. Arguments for and Against Bail: The applicant argued that he had cooperated with the investigation, provided necessary documents, and there was no need for further detention. He highlighted that the loans were repaid to ICICI Bank, and the Adjudicating Authority had found no evidence of proceeds of crime. The prosecution opposed the bail, citing the seriousness of the offence, ongoing investigation, and the risk of tampering with evidence. 5. Constitutional Validity and Interpretation of Section 45 of PMLA: A significant issue was whether the twin conditions under Section 45 of PMLA, which were declared unconstitutional by the Supreme Court in Nikesh Tarachand Shah v. Union of India, were revived by the subsequent amendment to the section. The court referred to various judgments and concluded that the amendment did not revive the twin conditions, as the Supreme Court had declared the entire section unconstitutional. 6. Burden of Proof under Section 24 of PMLA: The prosecution argued that under Section 24 of PMLA, the burden of proof lies on the accused to prove that the proceeds of crime are not involved in money laundering. The court noted that the presumption of guilt under Section 24 applies during the trial and not at the stage of bail. Conclusion: The court granted bail to the applicant, considering the repayment of loans to ICICI Bank, the applicant’s cooperation with the investigation, and the lack of necessity for further detention. The court imposed conditions, including surrendering the passport, reporting to the Enforcement Directorate, and not tampering with evidence. The court emphasized that the twin conditions under Section 45 of PMLA were not revived by the amendment and that the applicant had provided sufficient explanations for the transactions in question.
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