2022 (2) TMI 458 - HC - Money Laundering

Seeking grant of Regular Bail - Money Laundering - scheduled offences - twin conditions in section 45 of PMLA satisfied or not - existence of mens rea or not - submission of forged and false documents to the banks for availing various credit facilities - HELD THAT - The provisions of law which are declared unconstitutional is not law it confers no rights it imposes no duties it becomes inoperative as though it has never been passed. Since the Notification dated 29.03.2018 has remained silent about its retrospective applicability this Court in the present bail application while observing that sub-section 45(1) (ii) have neither been revived nor resurrected by the amending Act would consider this bail application on the premise that there is no rigor of the twin conditions of section 45(1) of PMLA. While dealing with the bail application three factors are mainly to be seen namely; (i) flight risk (ii) tampering evidence and (iii) influencing witnesses. So far as flight risk in context of applicant is concerned the proceeding in relation to earlier FIRs against the applicant has taken care of the said factor further the condition of surrender of passport can secure the presence of applicant during the trial. So far no overt act is alleged against the applicant who is on interim bail vide order dated 28.10.2021 in Cr.M.A. No.6 of 2021 in present Cr.M.A. No.23944 of 2019 and extended from time to time to even consider the aspect of influencing the witnesses. Further all the necessary documents and evidence would be in the custody of investigating agency so the fear of tampering with the evidence would also not arise - In the present case the applicant has already spent 20 months imprisonment and in total has spent 47 months. Considering the punishment to sections invoked under the schedule offence this Court finds the present to be a fit case where discretion could be exercised in favour of the applicant. The applicant is ordered to be released on regular bail for the offences punishable under sections 3 and 4 of the PMLA on executing a personal bond of 50, 000/- with one surety of the like amount to the satisfaction of the trial Court and subject to the fulfilment of conditions imposed - application allowed.

Summary

Issues Involved:
1. Application for regular bail under Section 439 Cr.P.C. read with Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA).
2. Allegations of cheating a consortium of banks and money laundering.
3. Arguments regarding business failure versus criminal conspiracy.
4. Applicability and interpretation of Section 45 of the PMLA post-amendment and the Nikesh Tarachand Shah judgment.
5. Consideration of flight risk, tampering of evidence, and influencing witnesses.

Detailed Analysis:

1. Application for Regular Bail:
The applicant sought regular bail under Section 439 Cr.P.C. read with Section 45 of the PMLA in connection with ECIR No.AMZO/02/2018 for offences punishable under Sections 3 and 4 of the PMLA. The applicant was arrested on 20.09.2019 and had been in custody since then.

2. Allegations of Cheating and Money Laundering:
The applicant, a director of several companies, was accused of cheating a consortium of banks led by SBI to the tune of ?867.43 Crores. The allegations included diverting loan proceeds for personal use and purchasing properties worth ?56 Crores. The applicant contended that the company had a good business track record and the financial distress was due to factors beyond control, including non-cooperation from banks.

3. Business Failure vs. Criminal Conspiracy:
The applicant's counsel argued that the financial distress and subsequent FIRs were a result of business failure and not criminal intent. They highlighted that the company had repaid ?342 Crores to the banks and had significant pending orders. The forensic audit report indicated that the company faced issues such as non-payment by debtors and premature termination of contracts, leading to financial liquidity crunch.

4. Applicability and Interpretation of Section 45 of the PMLA:
The applicant's counsel argued that the twin conditions for bail under Section 45 of the PMLA were struck down by the Supreme Court in Nikesh Tarachand Shah v. Union of India (2018 11 SCC 1). They contended that post-amendment, the twin conditions were not revived, and the bail considerations should be similar to those under the IPC. The court noted that the amendment to Section 45 did not explicitly revive the twin conditions and considered the bail application without applying these conditions.

5. Consideration of Flight Risk, Tampering of Evidence, and Influencing Witnesses:
The court considered the factors of flight risk, tampering of evidence, and influencing witnesses. The applicant had previously been granted bail in related cases and had not violated bail conditions. The court found that the applicant's surrender of passport and other conditions could mitigate the risk of flight. There was no evidence of tampering or influencing witnesses during the interim bail period.

Conclusion:
The court allowed the bail application, noting that the applicant had already spent 20 months in custody and cumulatively 47 months. The court imposed conditions including surrendering the passport, not leaving India without permission, and not acting in a manner injurious to the prosecution. The connected applications for extension of temporary bail were disposed of, and the rule was made absolute to the extent of granting bail.