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TMI Blog2022 (4) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... cted, wiped away or ceased to continue. It may continue till the ED concludes investigation and either files a complaint or closure report before the Court of competent jurisdiction. Besides the bar imposed in Section 45(1)(ii) of the PMLA, it is the bounden duty of the court to decide while disposing of an application for bail the prima facie material available to fortify commission of offence, gravity of offence, severity of punishment, opportunity of the petitioner of fleeing away and tempering with the evidence if the bail is granted to him. The complaint under the PMLA was registered on 5th May, 2021 vide ML Case No.1 of 2021. The petitioner was not found in his residence at Hyderabad. Finally he was apprehended from Lonavala on 28th November, 2021 - there is always a possibility that the petitioner may flee away in order to evade trial of the case. The petitioner having financial influence, there is every chance that the witnesses may be influenced by the petitioner. Therefore, the established tests for granting or refusal of a application for bail under Section 439 of the Cr.P.C also runs against the petitioner. Section 2(p) of the PMLA defines money laundering which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of DRI. 2. The petitioner, his son, wife, since claimed to be divorced and other associates of the alleged offence of alleged smuggling were implicated for committing offences under Section 135 of the Customs Act, Section 12 of the Passport Act and also under the penal provision of Prevention of Money Laundering Act (PMLA, for short). Petitioner s case 3. The petitioner purchased gold from authorised companies, like MMTC, STC etc submitting security deposit equivalent to the duty payable on the gold. The gold in question were legally purchased property of the petitioner and not smuggled goods as alleged by the opposite party. Only allegation against the petitioner is that he sold out gold jewelleries made of the said purchased gold in domestic market without exporting the same. 4. It is further submitted on behalf of the petitioner that in the complaint in Final Form, it was mentioned by DRI that about 500 kgs of gold were not exported by the petitioner for which duties imposed by the appropriate authorities and penalties have been paid. It is the allegation of DRI that the petitioner had smuggled gold amounting to 2700 kgs. Thereafter, the ED proceeded on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 27th August, 2018 the detention order of the petitioner and his brother under the COFEPOSA Act was set aside by the High Court at Delhi. The ED preferred special leave petition before the Hon ble Supreme Court being SLP No.6940 of 2019 which was also dismissed on 11th March, 2019. The petitioner was also enlarged on bail by the learned Chief Judicial Magistrate, North 24 Pgs in case No.C-562 of 2018 filed by DRI over the incident that allegedly took place on 4th April, 2018 vide order dated 28th August, 2018. When the petitioner was released on bail in almost all other proceedings instituted either by DRI or CBI, the ED registered a case in the month of March, 2021 under Section 3 of the PMLA Act which is punishable under Section 4 of the PMLA Act and arrested the petitioner s son under Section 19 of the PMLA Act. Mr. Mukherjee has also urged that the son of the petitioner was released on bail by a Coordinate Bench of this Court in CRM 3549 of 2021 vide order Dated 5th May, 2021 in ML Case No.1 of 2021 under Sections 3/4 of the PMLA Act. It is clearly observed by the Hon ble Judge while disposing of CRM 3549 of 2021 that the petitioner was arrested on 6th April, 2018 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime. Absent any such compelling State interest, the indiscriminate application of the provisions of Section 45 will certainly violate Article 21 of the Constitution. Provisions akin to Section 45 have only been upheld on the ground that there is a compelling State interest in tackling crimes of an extremely heinous nature. 47. The judgment in Kartar Singh v. State of Punjab, is an instance of a similar provision that was upheld only because it was necessary for the State to deal with terrorist activities which are a greater menace to modern society than any other. It needs only to be mentioned that, unlike Section 45 of the present Act, Section 20(8) of TADA, which speaks of the same twin conditions to be applied to offences under TADA, would pass constitutional muster for the reasons stated in the aforesaid judgment. Ultimately, in paragraph 349 of the judgment, this Court upheld Section 20(8) of TADA in the following terms: 349. The conditions imposed under Section 20(8)(b), as rightly pointed out by the Additional Solicitor General, are in consonance with the conditions prescribed under clauses (i) and (ii) of sub-section (1) of Section 437 and clause (b) of sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be heard on merits, without application of the twin conditions contained in Section 45 of the 2002 Act. Considering that persons are languishing in jail and that personal liberty is involved, all these matters are to be taken up at the earliest by the respective Courts for fresh decision. The writ petitions and the appeals are disposed of accordingly. 12. It is also submitted by Mr. Mukherjee that twin condition for bail contained in Section 45(1) being struck down by Supreme Court in Nikesh Tarachand Saha (supra), the Central Government has brought an amendment to Finance Act, 2018 which came into force from 19th April, 2018 to Section 45(1) of the PMLA thereby inserting words under this Act in Section 45(1) of the Act. In view of such amendment, it was contended on behalf of the Enforcement Directorate that the original Sub-Section (ii) of Section 45(1) which imposes the said twin conditions automatically stands revived and the said conditions therefore remain on statute book. It was further contended on behalf of the Enforcement Directorate that Amending Act of 2018 inserting words under this Act the precedent laid down by the Supreme Court in Nikesh Tarachand Saha w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irms, namely M/s PH Jewels, M/s Kalpataru Jewelles and Exports Corporation and M/s Shree Ganesh Jewels and M/s V.N. Jewellery, being managed and controlled by the petitioner. More than 120 bank accounts were used by the petitioner, his son, wife and brother and other trusted person to layer integrate and conceal the true origin of funds. Transactions were made without any invoice or bill in this way the accused diverted gold worth ₹ 650 crores in the domestic market. After placing the funds in the bank accounts of the above named firms and individuals other than those purportedly diverting the gold, the cash was withdrawn from such accounts and used for generating proceeds of crime. In order to carry out such illegal trade of money laundering, the petitioner procured fake passport in the name of Srikant Gupta and undertook multiple foreign tours with his wife, son and brother for the purpose of his illegal activities. The prosecution has already submitted complaint under Section 3 of the PMLA Act punishable under Section 4 of the said Act against the petitioner and other accused persons before the Special (PMLA) Court and cognizance was taken by the Special Court on 14th Febr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enge. 46. After decision of Nikesh Shah (supra) the Parliament has introduced an amendment to Section 45 of the Act, which has changed the entire complexion. Merely because the entire section is not re-enacted, has no consequence. Admittedly, the Amending Act is not struck down yet by the Courts as the said challenge is pending. Since the Legislative amendment on date is in existence, presumption of constitutionality would apply. In the subsequent pronouncement of P. Chidambaram's case (supra), the Supreme Court took a note of its earlier decision in case of Nikesh Shah (supra) and subsequent amendment, but never expressed that despite amendment, twin conditions do not survive. Our view is fortified by recent decision of the Supreme Court in the case of Assistant Director, Directorate of Enforcement Vs. V.C. Mohan decided on 04.01.2022. In said case, High Court of Telangana at Hyderabad has granted anticipatory bail in connection with offence under the PML Act. It is observed that though offence under the PML Act is dependent on the predicate offences that does not mean that while considering the prayer for bail, in connection with offence under the PML Act, the mandate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Conclusion :- 51. We may reiterate that the reference arose out of statutory jurisdiction and not constitutional jurisdiction of this Court. Unless there is proper challenge and pleadings, the issue of constitutional validity cannot be undertaken. Undoubtedly, the Legislature has power and competence to amend the provisions of the Act. Unless the amended provision is struck down by the Courts, it cannot be watered down. Since after the amendment the entire complexion of section 45 has been changed, we are not in agreement with the contention that the entire section has to be re- enacted by way of amendment after decision in the case of Nikesh Shah (Supra). Therefore, in our opinion, the twin conditions would revive and operate by virtue of Amendment Act, which is on date in force. In view of that, we answer the reference by stating that the twin conditions in section 45(1) of the 2002 Act, which was declared unconstitutional by the judgment of the Apex Court in Nikesh T.Shah Vs. Union of India, (2018) 11 SCC 1 , stand revived in view of the Legislative intervention vide Amendment Act 13 of 2018. 16. The Hon ble Supreme Court in the Assistant Director Enfo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of a crime under the PMLA, the only prerequisite is registration of a predicate/scheduled offence as prescribed in various paragraphs of the schedule appended to the Act nothing more than it. In other words, for initiating or setting the criminal law in motion under the PMLA, it is only that requirement of having a predicate/scheduled crime registered prior to it. Once an offence under the PMLA is registered on the basis of a scheduled offence, then it stands on its own and it thereafter does not require support of predicate/scheduled offence. It further does not depend upon the ultimate result of the predicate/scheduled offence. Even if the predicate/scheduled offence is compromised, compounded, quashed or the accused therein is/are acquitted, the investigation of ED does not get affected, wiped away or ceased to continue. It may continue till the ED concludes investigation and either files a complaint or closure report before the Court of competent jurisdiction. 20. Therefore, the PMLA is a standalone statute. If a person is booked under the PMLA, in view of the decisions of the Hon ble Supreme Court in Dr. V.C Mahan (supra) and N. Umashankar (supra) and the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d were diverted to the domestic market and sold out in domestic market rate which is higher than the gold purchased for the purpose of export, the petitioner and his associates through their companies and numerous bank accounts used to make transaction to establish that the money, he used to earn in business, are not proceeds of crime and/or untainted money. 24. Section 2(39) defines smuggling. The provision is replicated below:- S.2(39) smuggling , in relation to any goods, means any act or omission which will render such goods liable to confiscation under section 111 or section 113 . Section 113 of the Customs Act contains the provision of confiscation of goods attempted to be improperly exported, etc. Clause (k) of Section 113 states any goods cleared for exportation which are not loaded for exportation on account of any willful act, negligence or default of the exporter; his agent or employee, or which after having been loaded for exportation are unloaded without the permission of the proper officer. 25. The petitioner with the help of his son, wife and brother adopted the procedure contained in 113(k) of the Customs Act to divert gold jewellery schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X
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