2024 (8) TMI 1541 - HC - Money Laundering

Money Laundering - cancellation of bail facility allegedly granted by the trial court to the applicants/accused - conspiracy and opening of 386 bank accounts in Syndicate Bank by misusing the identity documents of various persons - Section 45 of PMLA 2002 - HELD THAT - In the decision of Tarsem Lal 2024 (5) TMI 837 - SUPREME COURT the Hon ble Supreme Court after considering the legal provision enunciated in the earlier decision Pankaj Jain vs Union of India and others 2018 (2) TMI 1943 - SUPREME COURT has held that where a non-bailable arrest warrant has been issued for the presence of the wanted accused while taking action under Section 82-83 of the Code of Criminal Procedure due to his absence then in such cases such accused is not entitled to get the benefit of Section 88 of the Code of Criminal Procedure as a right but in the present case the investigating officer has taken a conscious decision not to arrest all the accused during the investigation there is no such situation where the accused are evading their arrest or are absconding. According to Section 19 of the Act 2002 arrest is possible only on proper and strong grounds. It is clear from the guiding decision of Tarsem Lal and the subsequent orders passed that where the option of not arresting the accused has been exercised by the investigating officer by using the provisions of section 19 Act 2002 then in such a situation after the presentation of the complaint the provisions of section 200-205 of the Code of Criminal Procedure are applicable. Since the accused is not in custody the question of release on bail does not arise and the provisions of section 45 Act 2002 are not attracted in any way. If seen on the touchstone of the above legal system the order passed by the trial court to execute a bond for the regular presence of the accused during the trial does not fall in the category of bail order hence in such a situation the provisions of section 437 439 and 439 (2) of the Code of Criminal Procedure are not attracted. The Enforcement Directorate has taken a conscious decision not to arrest the present accused after which their strict attitude is completely opposite at present. Their undue leniency at one time and then adopting a very strict approach towards the accused arresting some accused related to the same charge and opposing their bail application and deciding not to arrest some including the main accused this functioning of the Enforcement Directorate cannot be considered fair whereas in such cases they are expected to perform their work impartially with full responsibility as per the legal provisions. On the basis of the above-referenced decision passed by the Hon ble Supreme Court on 08.07.2024 in the case of accused Himansh alias Himanshu Verma 2024 (7) TMI 1610 - SC ORDER the Enforcement Directorate is definitely required to introspect and introspect on its functioning. Therefore the office is directed to send a copy of it to the Secretary Ministry of Finance Government of India New Delhi by speed post and email to bring it to his notice. Conclusion - The challenged orders have been passed by the trial court under Section 88 of the Code of Criminal Procedure which are completely in accordance with the facts and law there is no justification for any interference in them. The present application filed by the Enforcement Directorate under Section 439(2) of the Code of Criminal Procedure is liable to be dismissed. Application dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the trial court's order allowing the accused to execute bonds under Section 88 of the Code of Criminal Procedure (CrPC), without arrest, constitutes a bail order, thereby necessitating compliance with the conditions under Section 45 of the Prevention of Money Laundering Act 2002 (PMLA).
• Whether the Enforcement Directorate's (ED) decision not to arrest the accused during the investigation affects the applicability of Section 45 of the PMLA.
• The impact of conflicting Supreme Court decisions on the interpretation of Section 45 of the PMLA and the procedural implications under Section 88 of the CrPC.
• Whether the ED's conduct in handling the investigation and prosecution was impartial and consistent with legal standards.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Nature of the Order under Section 88 CrPC

• Legal Framework and Precedents: Section 88 of the CrPC allows a court to take a bond for ensuring the appearance of the accused. Section 45 of the PMLA outlines conditions for bail, including the requirement for the Public Prosecutor's opportunity to oppose release and the court's satisfaction that the accused is not guilty.
• Court's Interpretation and Reasoning: The court interpreted the order under Section 88 CrPC as not constituting a bail order. It referenced the Supreme Court's decision in Tarsem Lal, which clarified that bonds under Section 88 are not equivalent to bail.
• Key Evidence and Findings: The trial court's order was based on the accused's regular appearance and compliance with summons, negating the need for a bail order.
• Application of Law to Facts: The court applied the Tarsem Lal precedent, determining that since the accused were not in custody, the question of bail under Section 45 of the PMLA did not arise.
• Treatment of Competing Arguments: The court addressed the ED's argument that the order was effectively a bail order, rejecting it based on the Supreme Court's guidance in Tarsem Lal.
• Conclusions: The court concluded that the trial court's order under Section 88 CrPC was appropriate and did not require compliance with Section 45 of the PMLA.

Issue 2: Impact of Non-Arrest Decision by ED

• Legal Framework and Precedents: The PMLA's Section 19 allows arrest based on reasonable grounds. The Supreme Court in Tarsem Lal emphasized the procedural distinction when the ED opts not to arrest before filing a complaint.
• Court's Interpretation and Reasoning: The court noted that the ED's decision not to arrest the accused during the investigation was a conscious choice, aligning with the procedural guidelines in Tarsem Lal.
• Key Evidence and Findings: The ED did not provide a satisfactory explanation for its decision not to arrest, which the court found significant.
• Application of Law to Facts: The court applied the reasoning from Tarsem Lal, affirming that the absence of arrest negated the immediate applicability of Section 45's bail conditions.
• Treatment of Competing Arguments: The court considered the ED's assertion of the crime's seriousness but found it inconsistent with their non-arrest decision.
• Conclusions: The court upheld the trial court's actions, emphasizing the ED's decision not to arrest as pivotal.

Issue 3: Conflicting Supreme Court Decisions

• Legal Framework and Precedents: The court considered the binding nature of larger bench decisions, referencing Vijay Madal Lal Choudhary and Satendra Kumar Antil, alongside Tarsem Lal.
• Court's Interpretation and Reasoning: The court acknowledged the binding nature of larger bench decisions but emphasized that Tarsem Lal specifically addressed the procedural context of non-arrest situations.
• Key Evidence and Findings: The court found that Tarsem Lal had considered the relevant precedents and provided a specific framework for non-arrest scenarios.
• Application of Law to Facts: The court applied Tarsem Lal's reasoning, determining it directly applicable to the present case.
• Treatment of Competing Arguments: The court reconciled the conflicting decisions by focusing on the specific procedural context addressed in Tarsem Lal.
• Conclusions: The court concluded that Tarsem Lal provided the appropriate legal framework for the case at hand.

Issue 4: ED's Conduct

• Legal Framework and Precedents: The court evaluated the ED's conduct against legal standards of impartiality and consistency.
• Court's Interpretation and Reasoning: The court criticized the ED's inconsistent approach, noting the disparity in their treatment of different accused in similar circumstances.
• Key Evidence and Findings: The court highlighted the ED's lack of explanation for its selective arrest decisions.
• Application of Law to Facts: The court found the ED's conduct lacking in fairness and consistency, undermining their position.
• Treatment of Competing Arguments: The court considered the ED's justification for its actions but found it insufficient.
• Conclusions: The court directed the ED to introspect on its procedures and conduct.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "A bond furnished according to Section 88 is only an undertaking by an accused who is not in custody to appear before the Court on the date fixed. Thus, an order accepting bonds under Section 88 from the accused does not amount to a grant of bail."
• Core Principles Established: The decision clarified that non-arrest decisions by the ED impact the applicability of Section 45 of the PMLA, and that bonds under Section 88 CrPC do not equate to bail.
• Final Determinations on Each Issue: The court dismissed the ED's applications under Section 439(2) CrPC, affirming the trial court's orders and emphasizing the procedural distinction established in Tarsem Lal.