Karnataka High Court
Dr Madhukar G Angur vs Enforcement Of Directorate on 30 March, 2022
Author: V. Srishananda
Bench: V. Srishananda
®
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 30TH DAY OF MARCH, 2022
BEFORE
THE HON'BLE MR. JUSTICE V. SRISHANANDA
CRIMINAL PETITION NO.1189/2022
BETWEEN
DR MADHUKAR G ANGUR
S/O LATE SHRI GUDDAPPA BASAPPA ANGUR
AGE 64 YEARS, CHANCELLOR
M/S ALLIANCE UNIVERSITY
RESIDING AT NO.703,
K.BLOCK, ADARSH PALM RETREAT
JACARANDA DEVARABISANAHALLI
BANGALORE 560103
PRESENTLY IN JUDICIAL CUSTODY
...PETITIONER
(BY SRI KIRAN S. JAVALI, SR. ADVOCATE FOR
SRI SHIVAJI H. MANE, ADVOCATE)
AND
ENFORCEMENT OF DIRECTORATE
THROUGH DEPUTY DIRECTORATE
GOVERNMENT OF INDIA
3RD FLOOR, 'B' BLOCK
BMTC, SHANTHINAGR
TTMC, K H ROAD, SHANTHINAGAR, BENGALURU
KARNATAKA 560027
...RESPONDENT
(BY SRI P.PRASANNA KUMAR, SPL. PP
SRI M.S.SHYAM SUNDAR, ADVOCATE FOR DEFACTO
COMPLAINANT)
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THIS PETITION IS FILED UNDER SECTION 439 OF
THE CR.P.C. PRAYING TO ENLARGE THE PETITIONER ON
BAIL IN CONNECTION WITH ECIR NO.BGZO/33/2020,
DATED 16.10.2020 REGISTERED BY RESPONDENT
AUTHORITY FOR THE ALLEGED OFFENCE P/U/S 3 AND 4
OF PREVENTION OF MONEY LAUNDERING ACT, 2002 AND
WHICH PROCEEDINGS ARE PENDING BEFORE THE
HONBLE PRL.CITY CIVIL AND SESSIONS JUDGE AND
SPL.JUDGE FOR PMLA CASES AT BENGALURU.
THIS CRIMINAL PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 23.3.2022, COMING ON FOR
'PRONOUNCEMENT OF ORDER' THIS DAY, THE COURT MADE
THE FOLLOWING:-
ORDER
This petition is filed under Section 439 Cr.PC., with the following prayer:
"WHEREFORE, it is humbly prayed that this Hon'ble Court be pleased to:
(a) Allow this petition and be pleased to grant bail to the Petitioner in connection with ECIR No.-BGZO/33/2020 dated 16/10/2020 registered by Respondent Authority for the alleged offence under Section 3 and punishable under Section 4 of Prevention of Money Laundering Act, 2002 and which proceedings are pending before the Hon'ble Principal City Civil and 3 Session Judge and Special Judge for PMLA Cases at Bangalore (CCH-1);
(b) Grant such other order or orders as deemed fit and proper in the circumstances of the case; in the interest of justice and equity."
2. Brief facts of the case are as under:
Between the years 2016 and 2017, four first information reports came to be filed against the petitioner alleging certain scheduled offences. Consequent upon the investigation of those cases, an action was initiated against the petitioner herein under the provisions of the Prevention of Money Laundering Act, 2002 [hereinafter referred to as the "Act" for short] in ECIR.No.BGZO/33/2020 dated 16.10.2020. The Directorate of Enforcement [hereinafter referred to as "ED" for short], after investigation, issued a provisional attachment order bearing No.9/2021 dated 27.09.2021 under Section 5(1) of the PML Act, subsequent thereto as contemplated under Section 5(5) of the said Act, a complaint was also filed in OC No.1541/2021 before the adjudicating authority.4
3. The adjudicating authority has been adjudicating the same and is now pending for consideration, wherein the petitioner has filed an explanation before the adjudicating authority as contemplated under Section 8 of the said Act.
4. When the matter stood thus, acting under the powers vested with the Investigating Agency under Section 19 of the said Act, petitioner was arrested on 7.1.2022 by complying the required procedure and thereafter, he was produced before the Special Court and petitioner was remanded to judicial custody. The petitioner sought for grant of bail under Section 439 Cr.PC., before Special Court. Same was rejected by order dated 2.2.2022. Therefore, the petitioner is before this court seeking grant of bail. When the matter was pending before this court, on 7.3.2022 a complaint (final report) as contemplated under Section 45 of the said Act came to be filed and the learned Special Judge is yet to take cognizance of the same.
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5. The petitioner contended that when the accused came to be remanded to the judicial custody, since under Section 5(1) of the said Act, a provisional attachment order is issued and when the matter is pending before the adjudicating authority by filing necessary application under Section 5(5) of the said Act, on 13.10.2021, investigation is deemed to have been completed and there was no necessity to arrest the petitioner. Further, the arrest of the petitioner having been effected on 07.01.2022, the petitioner is entitled to be enlarged on bail under Section 167(2) of Cr.PC., forthwith. The learned Special Judge having not taken note of the said aspect of the matter, has rejected the bail application filed by the petitioner by order dated 2.2.2022, and therefore, he is entitled for grant of bail in this petition.
6. In the bail petition, following grounds have been raised:
There has been failure to appreciate that the ECIR had been registered on 16/10/2020 and 6 investigation undertaken leading to issuance of a Provisional Attachment Order 9/2021 dated and making of a Complaint OC No.1541/2021 dated 27/09/2021. Hence, the investigation had stood completed.
There has been failure to appreciate that if the action taken by the Respondent to register the ECIR, record statement of various persons under Section 50 of the P.M.L.Act and thereafter issuance of Provisional Attachment Order had constituted investigation and had stood completed. The question of further investigation under the provisions of the P.M.L.Act contrary to the provisions of the Law has not been appreciated, affecting the legality of the impugned Order.
There has been failure to appreciate that the Petitioner had been arrested purportedly in accordance with Section 19 of the P.M.L.Act. Material to show entertainment of reasons to believe requiring the exercise of power to arrest had not been submitted before the Designated Court for appreciation of the 7 application for bail. This has affected the impugned Order.
There has been failure to appreciate that the basis for registration of an ECIR and purported conduct of an investigation under the provisions of the P.M.L.Act was directly arising as a consequent to the registration of a crime (predicate offence). The Petitioner/Accused had been accorded bail/anticipatory bail in the predicate offence which fact has not been noticed nor appreciated by the Hon'ble Trial Court.
There has been failure to appreciate that there cannot be multiple arrests or grant of bail in an offence or related offences thereto, merely because there is power to arrest. The intention of bail being to ensure the presence of the Accused to face Trial having been already achieved ought to have been appreciated by the Designated Court affecting the correctness and legality of the impugned Order.
There has been failure to appreciate that the Crime which had formed the basis for 8 registration of an ECIR by the Directorate of Enforcement were of the year 2016 and 2017 and no adverse Report or action against the Petitioner existed or had the Petitioner had been raised. The Petitioner had also participated in the investigation by the Respondent which fact has not been appreciated.
There has been failure to appreciate that the PML Act was a special Act and was governed by the provisions of Section 4(2) of the Cr.P.C., Section 65 of the P.M.L.Act and Section 71 of the P.M.L.Act. The Respondent Officers being not Police Officers and the procedure of presentation of Complaint and its conduct of Trial being that of a public servant being not a Police Officer, has not been appreciated.
There has been failure to appreciate that the twin conditions provided under Section 45 of the P.M.L.Act has been held to be unconstitutional by the Hon'ble Supreme Court of India. There has been further failure to appreciate that Consistent decisions of various High Courts which have held that by 9 insertion of the Explanation to Section 45 of the P.M.L.Act the twin conditions as existed earlier had not been resurrected. The same has affected the legality of correctness of the impugned Order.
The Petitioner submits that, the purported predicate offence as alleged is consequent to the complaint arising out of the family member and their representative and interse dispute which are purely civil in nature and given colour of criminal complaints and the civil disputes interse between the parties are pending adjudication before the respective Civil Courts and the Hon'ble High Courts. Further the learned trial court failed to appreciate above civil disputes between the parties, which have directly bearing on the alleged predicate offence were the Respondent Authority has registered by the above said ECIR state supra. Hence, this Hon'ble Court be pleased to enlarge the Petitioner on bail.
The Petitioner submits that, Petitioner has not violated or committed any offence as alleged by the Respondent Authority, only on 10 the basis of false information on the assumption that, the Petitioner has committed an offence of money laundering which is totally opposed to law. Hence, the Petitioner be pleased to enlarge on bail.
The Petitioner submits that, there has been failure to appreciate by the Hon'ble trail court that, the parallel proceedings under Section 5 of PMLA 2002 been initiated by the Respondent Authority and provisionally attached several property of the Petitioners, his wife and others in connection with above said ECIR stated supra the correctness and legality of the questioned before the Adjudicating proceedings has been Authority, the same is pending consideration. Hence, there is no question of the Petitioner flee from justice and the Petitioner be pleased to enlarge on bail.
The Petitioner submits that, in pursuance to summons issued by the Respondent Authority in connection with the above said investigation of the Respondent, the Petitioner has appeared before the investigating agency and the Petitioner 11 statement has been recorded under Section 50(3) of PMLA 2002 recorded and he has given detail explanation and furnished voluminous record to substantiate that, he has not committed any offence of money laundering and failure to appreciate the same, the learned trial erred in rejecting the plea of bail of the Petitioner, which is opposed to law. Thus, the question of Petitioner flee from justice not available in the present case. Hence, the Petitioner be pleased to enlarge on bail.
The Petitioner submits that, there has been failure to appreciate by the learned trial court that, the entire allegation being made based upon the records and the accounts of the said Alliance University as well as M/s. Srivari Educations Services which was hired by the Alliance University, by executing an agreement dated 10/01/2017 by virtue of resolution passed by the body of governors of the Alliance University under the Alliance University Act, 2010. All the banking transaction is being reflected in the books of account filed by the respective authority and 12 it can be easily accessed and available for investigation to the Respondent Authority. Similarly the Banks Statement also available with the respective banks and it can be verified by the Respondent Authority. Hence, the tampering of any records would not be available.
The Petitioner submits that, the content of the allegations made in the remand application and in the statement of objections filed by the Respondent is yet to be decided during the trail and no credence can be given to the content of the same at this juncture. The Petitioner is always available for the investigating agency for any investigation in the matter and all the way he has been cooperated in the investigation, and denying the bail to the Petitioner by the Hon'ble Trial Court is opposed to law. The Petitioner be pleased to enlarge on bail.
The Petitioner submits that, he is innocent of the alleged offence, the Respondent Authority without any prima facie material exists to invoke the provisions of the PMLA 2002. The Respondent Authority only on the basis of 13 instigation and false and motivated information provided by the family member of the Petitioner in order to overtake the administration of the Alliance University. The Respondent has registered a false case on the false pretext. Hence, the Petitioner be pleased to enlarge on bail.
There has been failure to appreciate the contents of the Complaint and the applicability of the provisions of Law invoked consequent thereto and the rejection of the bail application is bad at Law.
There has been failure to notice that the decision relied upon has been totally misunderstood in denying the bail to the Petitioner/Accused person. Hence, the wrong understanding of the Judgment has affected the correctness and legality of thee impugned Order.
The Trial Court failed to appreciate that there is nothing on the records that indicate the commission of any illegality by the Petitioner and therefore the Petitioner ought to have been granted bail. The trial court further 14 failed to appreciate that there is material on record either in the remand application or the statement of objections, therefore the bail has been wrongly rejected on the facts and circumstances of the case.
There has been failure to notice that the maximum punishment for the alleged offence alleged is upto seven years and not punishable with life or death and consequently ought to have granted him bail inasmuch as the Petitioner/Accused is in custody for more than 30 days and keeping the Petitioner in judicial custody would not serve any purpose, nor assist the investigating agency in any manner. Further, he has also been taken to the custodial interrogation for One Week by the Respondent Authority, thereafter he has been remanded to the Judicial Custody and his further custodial interrogation in the present case is unwarranted. Hence, the Petitioner be pleased to enlarge on bail.
The trial court erred in holding that the Petitioner is required for custodial interrogation and investigation which is 15 pending consideration and he is not entitled for bail, during the investigation stage is opposed to law and facts. Hence, the Petitioner already taken for custodial interrogation and investigation which is pending consideration and he is not entitled for bail, during the investigation stage is opposed to law and facts. Hence, the Petitioner already taken for custodial investigation and thereafter he has been remanded to judicial custody. Hence, for requiring further investigation of the Petitioner in the matter would be unreasonable and Petitioner be pleased to enlarge on bail.
The Petitioner submits that presumption of innocence is the privilege of every accused. Further, there is also a presumption that accused /Petitioner would not tamper with the witness if he enlarged on bail. In the present case accused has not committed any offence and is innocent of the alleged offence. The matter tried is yet to be tried and keeping the petitioner in custody with indefinite period is unwarranted requiring this 16 Hon'ble Court to interfere and be pleased to accord bail to Petitioner.
The trial court failed to appreciate that the fundamental rule of law laid down by the Hon'ble Apex that grant of bail is rule and its denial is the exception.
The trial court erred in not granting bail because denying bail amounts to punishing the Petitioner before trial which is impermissible under law. Further if he is not released on bail, his family members will be put to undue hardship and the Petitioner will be always available for investigation as he has deep roots in society.
The Petitioner further submits that he a resident of Bengaluru and there is no apprehension of the Petitioner absconding or fleeing from justice if he is released on bail.
The Petitioner submits that, he is aged about Sixty Five years, senior citizen and he is suffering from various age related ailments is also required routine medications. Further the Petitioner has a history of heart condition and had undergone a surgery for arterial 17 fibrillation in 2014, he is also on medication for managing his cholesterol and blood pressure. He also has the history of arrhythmia which can lead to palpitations under stressful conditions. Hence, be pleased to enlarge the Petitioner on bail. The copy of the medical records are produced herewith as ANNEXURE "H" for kind perusal of this Hon'ble Court.
The Petitioner submits that he has no antecedents of any prior involvement and there are no possibilities of the Petitioner fleeing from justice. The Petitioner submits that the accusations made against the Petitioner are only to harass the Petitioner. The Petitioner has a valid and tenable defense and are willing to offer solvent surety for grant of bail.
The Petitioner is ready and willing to abide by any of the conditions that this Hon'ble Court would impose while granting the benefit of Bail.
The Petitioner submits that, he has got valid and tenable defense to prove his innocence 18 and disproving the case of the Respondent Authority during the course of Trial with cogent materials demonstrating his innocence.
The Petitioner submits that he has not filed any other Petition before this Hon'ble Court on the same cause of action.
The Petitioner crave leave to raise additional both on facts and Law in support of this petition if found necessary.
7. Re-iterating the above grounds, Sri Kiran S. Javali, learned Senior Counsel contended that the investigation for all practical purposes has been completed when the provisional attachment order came to be issued by the adjudicating authority on 27.09.2021 or atleast on 13.10.2021 when an application is made before the adjudicating authority which is now pending in Original Complaint No.1541/2021.
8. He further contended that the power under Section 19 of the said Act has not been properly exercised 19 by the Investigating Agency as the arrest of the petitioner is totally unwarranted. He also contended that the petitioner if arrested under the guise of further investigation, since the Investigating agency is not a Police Officer, provisions of Section 173(8) of Cr.PC., would not be applicable to the Investigating Agency and therefore, the arrest of the petitioner is illegal as investigation has already been completed, the petitioner would be entitled to be enlarged on bail immediately by resorting to Section 167(2) of Cr.PC., the powers vested with this court.
9. He alternatively contended that in the event, this court negating the contention of the petitioner that petitioner is not entitled to be released on bail forthwith under Section 167(2) of Cr.PC., the petitioner is entitled to be enlarged on bail by powers vested with this court under Section 439 Cr.PC.,
10. In support of the contentions of the learned Senior Counsel for the petitioner, following judgments have been relied on:
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(1) The copy of Bail order in Crl.Misc. No.5533/2017 passed by Hon'ble III Additional District and Sessions Judge, Bengaluru Rural District at Anekal;
(2) The copy of order sheet in Crime No.730/2016 dated 17.09.2018 of the Hon'ble III Additional CMM, Bengaluru;
(3) The copy of Bail order dated 4.4.2016 in Crl.Misc.
No.1776/2016 passed by Hon'ble LIV Additional City Civil and Sessions Judge, Bengaluru;
(4) The copy of the Bail order in Crl.Misc. No.8778/2017 passed by Hon'ble LXV Additional City Civil and Sessions Judge, Bengaluru;
(5) (2014) 8 SCC 273 - Arnesh Kumar Vs. State of Bihar and others;
(6) (2020) 5 SCC 1 - Sushila Agarwal & Others Vs. State (NCT of Delhi) and another;
(7) (2021) 2 SCC 427 - Arnab Manoranjan Goswami Vs. State of Maharashtra and others;
(8) (2020) 13 SCC 791 - P.Chidambaram vs. Directorate of Enforcement;
(9) 2021 SCC Online Del. 1081 - Sai Chandrasekhar Vs. Directorate of Enforcement;
(10) Paritosh Kumar Singh Vs. State of Chattisgarh & Others - reported in MANU/CG/O665/2021; 21
(11) Mr. Bineesh Kodiyeri Vs. Directorate of Enforcement
- MANU/KA/5164/2021;
(12) (2012) 1 SCC 40 - Sanjay Chandra Vs. Central Bureau of Investigation;
(13) (2018) 11 SCC 1 - Nikesh Tarachand Shah Vs. Union of India;;
(14) Upendra Rai Vs. Directorate of Enforcement - reported in 2019 SCC Online Del. 9086;
(15) Dr. Shivinder Mohan Singh Vs. Directorate of Enforcement - reported in 2020 SCC online Del.766;
(16) Ahilya Devi Vs. The State of Bihar and others reported in MANU/BH/0245/2020;
(17) Joginder Kumar Vs. State of UP and Others - reported in (1994) 4 SCC 260;
(18) 2018 SCC Online Del. 8873 - Raj Kumar Goel & Others Vs. Directorate of Enforcement.
11. Per contra, learned counsel representing the Directorate of Enforcement Sri Prasanna Kumar, vehemently contended that at no stretch of imagination, the contentions urged on behalf of the petitioner can be countenanced. He further contended that the proceedings of issuing a provisional attachment order and seeking confirmation as is contemplated under Section 5(5) of the 22 said Act, 2002 would not amount to completion of the investigation. He also contended that the Directorate of Enforcement is having the power to effect the arrest of an accused by exercising power under Section 19 of the said Act, 2002, so as to un-earth the truth in the incident and to curb further laundering of the money.
12. He also contended that since the money laundering is a continuous offence as contemplated under Explanation (ii) to Section 3 of the said Act, 2002, till the filing of the complaint, the investigation would not be completed. However, if any person is arrested by exercising power under Section 19 of the Act, having regard to the punishment prescribed for the offence of money laundering being minimum of three years and maximum of seven years, the maximum period available for the Directorate of Enforcement to file a complaint (final report) would be 60 days and the same has been complied. In the case on hand, the date of arrest is on 7.1.2022 as contemplated under Section 45 of the said 23 Act, 2002 came to be filed before the Special Court on 07.03.2022. He also contended that having regard to the nature and magnitude issue involved in the case, the Directorate of Enforcement will retain the power of further investigation having regard to the scheme of PML Act and sought for dismissal of the bail petition.
13. He also pointed out that there is no embargo on the powers of this court under Section 439 of Cr.PC., to entertain a bail petition having regard to Section 45 of the said Act. He also contended that in view of Sections 65 and 71 of the said Act, wherever it is necessary, the court can borrow the provisions of Cr.P.C. even though the Act itself is a stand alone statute.
14. He also pointed out that the legal principles enunciated in P Chidambaram Vs. Directorate of Enforcement reported in (2019) 9 SCC 24 and Mohammad Arif Vs. Directorate of Enforcement reported in (2020) SCC online Orissa 545 would also support the contentions urged on behalf of the Directorate of 24 Enforcement. In support of his contentions, Sri Prasannakumar relied on the following Judgments:
Sl.No. Contents 1 (2019) 9 SCC 24
P.Chidambaram vs Directorate of Enforcement Relevant Para 37, 80,81 at Page No. 21, 38 2 2020 SCC Online Ori 544 Mohammed Arif v. Directorate of Enforcement Relevant Para 23 at Page No. 46 3 Order dated 24.11.2020 passed by the Hon'ble Supreme Court of India in SLP (crl) No. 4878/2020 Mohammed Arif vs. Enforcement Directorate 4 Crl. Appln. (BA) No. 1149/2021 - Bombay HC Ajay Kumar vs Directorate of Enforcement Relevant Para 5,44-49 at Page No.56,65,92-98 5 2020 SCC Online Kar 1269 Vinod Ramanani vs. Station House Officer Relevant Para 7(b), (c), (e), (f) at Page No. 105, 106, 108 6 CRL.P 5698/2019 Katta Subramanya Naidu vs. Directorate of Enforcement Relevant Para 48-49 at Page No. 172-175 7 WP 18442/2017- KAR HC SC Jayachandra vs. Directorate of Enforcement Relevant Para 10 at Page No. 199-200 8 (2013) 7SCC 439 Y.S Jagan Mohan Reddy vs CBI 9 (2013) 7 SCC 466 Nimmagadda Prasad vs. CBI Relevant para 23, 25, 26 at Page No. 229, 230 10 Judgment of the High Court of Judicature at Madras in the case of N. Umashankar @ N.M. Umashankar Vs. The Assistant Director, Chennai, in the case of Crl.OP Nos.3381, 3383 and 3385 of 2021.
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15. Among the above decisions:
(1) In the case of Directorate of Enforcement v.
Deepak Mahajan and another reported in (1994) 3 SCC 440 : 1994 SCC (Cri) 785 the Hon'ble Apex Court has held at para Nos.4 and 5 thus:
"4. This appeal, by special leave is directed against the judgment of the High Court of Delhi dated April 6, 1990 rendered by a five-Judge Bench in Criminal Writ No. 316 of 1989 overruling the decision of the same High Court in Union of India v. O.P. Gupta [(1990) 2 Del Lawyer 23 (FB)] rendered in Criminal Writ Nos. 104 and 116 of 1984 by a three-Judge Bench reversing an earlier decision in Dalam Chand Baid v. Union of India [1982 Cri LJ 747 : (1982) 21 DLT 144 (Del)] which was decided by a Division Bench of the same High Court holding that a Magistrate has no power to remand a person accused of an offence punishable under the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as 'FERA') to judicial custody.
5. Though normally, it may not be necessary to make any reference about the constitution of a particular bench which is the prerogative of the Chief 26 Justice of the High Court concerned, yet regrettably in this case, it has become unavoidable to make reference concerning the constitution of the Bench since during the course of the arguments, a diatribe, though not justifiable was made about the formation of the Bench, presided over by Charanjit Talwar, J. who gave a dissenting judgment in the case of O.P. Gupta [(1990) 2 Del Lawyer 23 (FB)] ."
(2) In the case of Ashok Munilal Jain and another Vs. Assistant Director, Directorate of Enforcement reported in (2018) 16 SCC 158, the Hon'ble Apex Court has held at para Nos.3 to 5 thus:
"3. We have gone through the orders passed by the trial court as well as by the High Court. We may state at the outset that insofar as the High Court is concerned, it has not given any reasons in support of its aforesaid view except endorsing the view of the trial court to the effect that the provisions of Section 167(2) CrPC. are not applicable to the cases under the PMLA Act. This position in law stated by the trial court does not appear to be correct and even the learned Attorney General appearing for the respondent could not dispute the same. We may record that as per the provisions of Section 4(2) of CrPC, the procedure contained therein applies in respect of special 27 statutes as well unless the applicability of the provisions is expressly barred. Moreover, Sections 44 to 46 of the PMLA Act specifically incorporate the provisions of Cr.PC., to the trials under the PMLA Act. Thus, not only that there is no provision in the PMLA Act excluding the applicability of Cr.PC., on the contrary, provisions of Cr.PC., are incorporated by specific inclusion. Even Section 65 of the PMLA Act itself settles the controversy beyond any doubt in this behalf which reads as under:
"65. Code of Cr.PC., 1973 to apply - The provisions of the Cr.PC., shall apply, insofar as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act."
4. We may also refer to the judgment of this Court in Directorate of Enforcement v. Deepak Mahajan² wherein it was held as under: (SCC p.
480. para 136) "136. In the result, we hold that sub-
sections (1) and (2) of Section 167 are squarely applicable with regard to the production and detention of a person 28 arrested under the provisions of Section 35 of FERA and Section 104 of the Customs Act and that the Magistrate has jurisdiction under Section 167(2) to authorise detention of a person arrested by any authorised officer of the Enforcement under FERA and taken to the Magistrate in compliance of Section 35(2) of FERA."
5. We, thus, do not agree with the opinion of the High Court that the provisions of Section 167(2) Cr.PC would not be applicable to the proceedings under the PMLA Act. In the present case, as no complaint was filed even after the expiry of 60 days from the date when the appellant was taken into custody, he was entitled to statutory bail in view of the provisions contained in Section 167(2) Cr.PC."
16. Sri M.S. Shyam Sundar, learned Counsel, appearing on behalf of the de-facto complainant filed an application under Section 301(2) of Cr.PC., and sought permission of this court to aid the prosecution. This court permitted him.
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17. Having regard to the intrinsic issues involved, with the consent of the learned counsel for the petitioner, learned counsel for de-facto complainant Sri Shyam Sundar was also heard on the merits of the matter. He adopted the arguments put forth on behalf of the Directorate of Enforcement and supplemented his arguments by contending that this court is required to meticulously consider the scheme of the Act while entertaining the bail petition.
18. Further, he submitted that the action taken by the Investigating Agency prior to filing of the complaint under Section 45 of the Act is judicial in nature and before arresting a person, the Investigating Agency would be of prima facie opinion that an accused in a given case is guilty of the offences alleged against him which pre- supposes that there are sufficient materials on record which would prima facie result in conviction of an accused.
19. In view of the rival contentions of the parties, the points for determination are as under: 30
(1) Whether the investigation of an offence under the provisions of the PMLA would complete on issuance of an order under Section 5(1) of the said Act for provisional attachment or on filing of application under Section 5(5) of the Act for confirmation of the same or atleast when an order is passed under Section 8(3)(a) of the said Act?
(2) If so, if a person is arrested subsequent to the order passed under Section 8(3)(a) of the said Act would be entitled for immediate release by applying the provisions of Section 167 (2) of Cr.PC.?
(3) Whether an accused is entitled for grant of bail taking note of the fact that he has been enlarged on bail in respect of predicate offences?
(4) Whether twin conditions enumerated under the provisions of Section 45(1) of the Act is a Sine-qua-non for granting bail to an accused who has been arrested under Section 19 of the Act?
(5) Whether an arrest made under Section 19 of the Act is a preventive detention? 31
(6) Whether the petitioner has made out a case for grant of bail?"
REGARDING POINT NOS.1 & 2:
20. In order to appreciate the rival contentions of the parties and the issues involved in the case and in the light of the points for determination raised above, it is necessary for this court to cull out the relevant provisions of PML Act. Sections 19, 45, 50, 65 and 71 of the said Act reads as under:
"19. Power to arrest.--
(1) If the Director, Deputy Director, Assistant Director, or any other officer authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.
(2) The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under sub-section (1), forward a copy of the order, along with the material in his possession, 32 referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such order and material for such period, as may be prescribed.
(3) Every person arrested under sub-section (1) shall within twenty-four hours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest to the Magistrate's Court.
45. Offences to be cognizable and non-
bailable.--
(1) 1[Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence punishable for a term of imprisonment of more than three years under Part A of the Schedule shall be released on bail or on his own bond unless--]
(i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and
(ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail: Provided that a person who is under the age of sixteen years or is a woman or is sick or infirm, may be released on bail, if the special court so 33 directs: Provided further that the Special Court shall not take cognizance of any offence punishable under section 4 except upon a complaint in writing made by--
(i) the Director; or
(ii) any officer of the Central Government or State Government authorised in writing in this behalf by the Central Government by a general or a special order made in this behalf by that Government. 28
[(1A) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), or any other provision of this Act, no police officer shall investigate into an offence under this Act unless specifically authorised, by the Central Government by a general or special order, and, subject to such conditions as may be prescribed.] 29 (2) The limitation on granting of bail specified in [***] sub-section (1) is in addition to the limitations under the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force on granting of bail.
50. Powers of authorities regarding summons, production of documents and to give evidence, etc.-- (1) The Director shall, for the purposes of section 13, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:--
(a) discovery and inspection;
(b) enforcing the attendance of any person, including any officer of a banking company or a financial institution or a company, and examining him on oath;34
(c) compelling the production of records;
(d) receiving evidence on affidavits;
(e) issuing commissions for examination of witnesses and documents; and
(f) any other matter which may be prescribed. (2) The Director, Additional Director, Joint Director, Deputy Director or Assistant Director shall have power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this Act.
(3) All the persons so summoned shall be bound to attend in person or through authorised agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required.
(4) Every proceeding under sub-sections (2) and (3) shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code, 1860 (45 of 1860).
(5) Subject to any rules made in this behalf by the Central Government, any officer referred to in sub-
section (2) may impound and retain in his custody for such period, as he thinks fit, any records produced before him in any proceedings under this Act: Provided that an Assistant Director or a Deputy Director shall not--
(a) impound any records without recording his reasons for so doing; or 35
(b) retain in his custody any such records for a period exceeding three months, without obtaining the previous approval of the Director.
65. Code of Criminal Procedure, 1973 to apply.-- The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply, insofar as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act.
71. Act to have overriding effect.--The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force."
21. So also, it is necessary for this court to cull out Section 167 of Cr.P.C which reads as under:
"167. Procedure when investigation cannot be completed in twenty four hours.
(1) Whenever any person is arrested and detained in custody and it appears that the investigation cannot be completed within the period of twenty- four hours fixed by section 57, and there are grounds for believing that the accusation or information is well- founded, the officer in charge of the police station or the police officer making the investigation, if he is not below the rank of sub-36
inspector, shall forthwith transmit to the nearest Judicial Magistrate a copy of the entries in the diary hereinafter prescribed relating to the case, and shall at the same time forward the accused to such Magistrate.
(2) The Magistrate to whom an accused person is forwarded under this section may, whether he has or has not jurisdiction to try the case, from time to time, authorise the detention of the accused in such custody as such Magistrate thinks fit, for a term not exceeding fifteen days in the whole; and if he has no jurisdiction to try the case or commit it for trial, and considers further detention unnecessary, he may order the accused to be forwarded to a Magistrate having such jurisdiction: Provided that-
1
(a) the Magistrate may authorise the detention of the accused person, otherwise than in the custody of the police, beyond the period of fifteen days; if he is satisfied that adequate grounds exist for doing so, but no Magistrate shall authorise the detention of the accused person in custody under this paragraph for a total period exceeding,-
(i) ninety days, where the investigation relates to an offence punishable with death, imprisonment for life or imprisonment for a term of not less than ten years;
37
1. subs. by Act 45 of 1978, s, 13, for paragraph (a) (w, e, f, 18- 12- 1978 ).
2. Ins. by act 10 of 1990, s. 2 (w. e. f 19- 2- 1990 )
(ii) sixty days, where the investigation relates to any other offence, and, on the expiry of the said period of ninety days, or sixty days, as the case may be, the accused person shall be released on bail if he is prepared to and does furnish bail, and every person released on bail under this sub- section shall be deemed to be so released under the provisions of Chapter XXXIII for the purposes of that Chapter;]
(b) no Magistrate shall authorise detention in any custody under this section unless the accused is produced before him;
(c) no Magistrate of the second class, not specially empowered in this behalf by the High Court, shall authorise detention in the custody of 1 the police. Explanation I.- For the avoidance of doubts, it is hereby declared that, notwithstanding the expiry of the period specified in paragraph (a), the accused shall be detained in custody so long as 2 he does not furnish bail;]. Explanation II.- If any question arises whether an accused person was produced before the Magistrate as required under paragraph (b), the production of the accused 38 person may be proved by his signature on the order authorising detention.] 1 (2A) Notwithstanding anything contained in sub- section (1) or sub- section (2), the officer in charge of the police station or the police officer making the investigation, if he is not below the rank of a sub- inspector, may, where a Judicial Magistrate is not available, transmit to the nearest Executive Magistrate, on whom the powers of a Judicial Magistrate or Metropolitan Magistrate have been conferred, a copy of the entry in the diary hereinafter prescribed relating to the case, and shall, at the same time, forward the accused to such Executive Magistrate, and thereupon such Executive Magistrate, may, for reasons to be recorded in writing, authorise the detention of the accused person in such custody as he may think fit for a term not exceeding seven days in the aggregate; and, on the expiry of the period of detention so authorised, the accused person shall be released on bail except where an order for further detention of the accused person has been made by a Magistrate competent to make such order; and, where an order for such further detention is made, the period during which the accused person was detained in custody under the orders made by an Executive Magistrate under this sub- section."
39
22. On careful and conjoint reading of the above provisions, it is pertinent to note that nowhere it is mentioned as to what is the time limit for filing a complaint/final report under Section 45 of the Act. However, there can not be a situation where a person is arrested and he is continued in custody eternally on the pretext that there is no time limit fixed under the Act for filing the complaint/final report as is contemplated under section 45 of the said Act. Admittedly, the proceedings under the Act is judicial proceedings. Whenever a person is arrested by the investigating agency his personal liberty is taken away by the investigating agency for a particular purpose. As is provided in Section 167 of Cr.PC., supra, if an Investigating Agency fails to file a final report as contemplated under Section 173 Cr.PC. within 60 days or 90 days as the case may be depending upon the maximum punishment prescribed in a given penal statute, the person who has been arrested by the Investigating Agency acquires indefeasible right to be released forthwith. In other words, the framers of legislation have put a cap on 40 the number of days that an Investigating Agency can take away the liberty of a person when he has been arrested by the said agency. The cap of 60 days equally applicable in respect of an arrest effected under the Act, in view of the maximum punishment for the offence punishable under the Money Laundering Act is seven years and minimum of three years. Therefore, even though there is no specific time limit prescribed under the Act for filing complaint/final report as contemplated under Section 45 of the Act, whenever a person is arrested by the Directorate of Enforcement under the provisions by resorting to the powers vested in it under Section 19 of the Act., the Directorate of Enforcement is expected to file a complaint/final report within 60 days from the date of arrest. In the event of failure to do so, indefeasible right is definitely to accrue to an accused under the Act. In this regard, it is worth to place reliance on the judgments of the Hon'ble Apex Court in the case of Directorate of Enforcement Vs. Deepak Mahajan and Ashok Munilal Jain supra.
41
23. Having said thus, in the case on hand, in order to invoke the provisions of the said Act, the following predicate scheduled offences were relied on by the Directorate of Enforcement. They are:
"a) FIR in crime No. 188/2017 dated
11/11/2017 was registered by Anekal Police
Station, Bangalore Rural, Bengaluru based on the complaint of Shri Madhusudan Mishra against Mr. Madhukar Angur, Ms. Priyanka B S, and seven others, under Section 143, 406, 407, 408, 409 and 149 of the IPC, 1860,
b) FIR in Crime No. 730/2016 dated 11.06.2016 was registered by Madiwala Police Station, Bangalore, based on the complaint of Shri Abhay Chhabbi against Mr. Madhukar G Angur, Smt. Priyanka M Angur and others, under Sections 506, 120 B, 143, 144, 147, 148 and 149 of the IPC, 1860.
c) FIR in crime No. 119/2016 dated 04.03.2016 was registered by Jayaprakash Nagar Police Station, Bangalore against Mr. Madhukar G Angur and others under Sections 417, 420, 376 and 506 of IPC, 1860;
42
d) FIR in crime No. 52/2017 dated 28.09.2017 was registered by Shankarapura Police Station, Bangalore against Mr. Madhukar G Angur, Smt. Priyanka M Angur and others under Sections 506, 504, 143, 149 and 420 of IPC, 1860."
24. It is the specific case of the Directorate of Enforcement that out of the aforesaid predicate offences, approximately Rs.107 crores were siphoned away by the petitioner herein by sending e-mails to the students and parents to illegally directing them to deposit the tuition fee in the illegally opened bank accounts. It is further found from the material evidence on record that the petitioner has been dismissed from the post of Chancellor and despite the same, he continued to collect the money from the students and thereby he has indulged in money laundering. Upon receipt of information they found that exceptionally high turnover is recorded in SB A/c. No.170000000516824 in the name of the petitioner, Enforcement department suspected the involvement of the petitioner in misappropriation of the funds. Accordingly, investigation under the provisions of Foreign Exchange 43 Management Act, 1999 [hereinafter referred to as 'FEMA' for short] was initiated. From such investigation, it is gathered by the Enforcement department that as many as seven FIRs. were filed against the petitioner. As such, the Directorate of Enforcement registered an ECIR. Investigation was carried out further and based on the information and materials collected during the investigation, the Directorate of Enforcement passed an order under Section 5(1) of the Act provisionally attaching the assets of the petitioner. Thereafter, on 13.10.2021, an application was also filed under Section 5(5) of the Act before the Adjudicating Authority which is now pending in OC No.1541/2021.
25. According to the learned Senior counsel Sri Javali, formation of opinion by the Enforcement Directorate that a provisional attachment order needs to be issued and same needs to be confirmed by approaching the Adjudicating Authority, for all practical purposes, the investigation stood completed and therefore, from the date 44 of arrest of the petitioner i.e., on 7.1.2022 itself, the petitioner has the benefit of the provision of Section 167 of Cr.PC. In other words, since the investigation itself is completed, there is no question of further investigation to be carried out after the arrest of the petitioner on 7.1.2022 as the Enforcement Directorate does not have the power equivalent to power under Section 173(8) of Cr.PC. and thus the continuation of the accused in custody is illegal.
26. In order to appreciate the said aspect of the matter, it is just and necessary to refer Section 19 of the said Act as referred to supra. It is pertinent to note that arrest of a person under the Act should be only in accordance with Section 19 of the said Act. The purpose of the Act under section 19 is for further investigation and to arrest/Shun the further money laundering as money laundering is a continuous offence. The said proposition can be deduced by cumulative consideration of the scheme of the Act. Therefore, the argument put forth on behalf of the petitioner that necessary application is filed under 45 Section 5(1) of the Act for seeking confirmation of the provisional attachment order under Section 5(5) of the Act can be construed as completion of the investigation, cannot be countenanced in law.
27. This court also directed the Directorate of Enforcement to furnish a copy of the manual issued by the department in respect of arrest and how to deal with an arrested person. Accordingly, Sri Prasanna Kumar, learned counsel for the respondent-Directorate of Enforcement, made available the copy of the manual. It is worth to note that the relevant portion of the manual which reads as under:
"2.26 Arrest:
The Director, Deputy Director, Assistant Director or any officer authorized in this behalf by the Central Government, may exercise the power to arrest under section 19(1) of the PMLA. The Arresting Officer shall, on the basis of material in his possession, record reasons to believe that the person arrested is guilty of an offence of money laundering punishable under section 4 of the PMLA.46
The Arresting Officer shall sign the Arrest Order in Format No. VI (Annexure M) and give a copy of Arrest Order to the arrestee. Before arresting, the Arresting Authority shall obtain prior approval from the Regional Special Director. The Arrest Register shall be maintained at the zonal/sub-zonal office in the form of Annexure Ill (Register No.7).
2.27 Guidelines for Arrest:
The following guidelines laid down by the Supreme Court in the case of D.K.Basu Vs. State of West Bengal, AIR 1997 SC 610 shall be followed while exercising the power to arrest:
1. Grounds of arrest should be communicated to the arrestee and acknowledgment to this effect may be obtained...
2. Arrest Order should be in the language known to the person arrested. If arrestee is an illiterate, Arrest Order should be explained to him.
3. The arrestee must be made aware of his right to have some one informed of his arrest or detention as soon as he is put under arrest.
4. One of the relatives or any other person known to the arrestee including his lawyer should be informed, as soon as possible.
5. The time and place of arrest of the arrestee must be notified. Where the next of kin of the arrestee lives outside the district or town, they may be notified through the Legal Aid Organization in 47 the district and the police station of the area concerned telegraphically within a period of 8 to 12 hours after the arrest.
6. The arrestee should, where he so requests, be also examined at the time of his arrest and major and minor Injuries, if any, present on his/her body, must be recorded at that time. The spection Memo" must be signed by both, the arrestee and the Arresting Officer effecting the arrest with a copy to the arrestee.
7. The arrestee shall be subjected to medical examination by a government doctor every 48 hours during his detention in custody.
8. Information of the arrestee should be displayed on the Notice Board of the Directorate of Enforcement.
2.28 Enforcement Custody:
Section 167 of the Code of Criminal Procedure, 1973 provides two types of custody, viz. (0) Police Custody and (ii) otherwise than in the custody of Police. The Investigating Authority may seek Enforcement Custody (EC) under section 167 of the Cr. PC If the facts and circumstances of the case so warrant. The Apex Court in the case of Directorate of Enforcement Vs. Deepak Mahajan & another in Cri. Appeal No. 537 of 1990 (1994 SCC (Cru) 785) has confirmed this proposition. The Investigating Authority may seek Enforcement Custody as early 48 as possible after effecting arrest, if so required, for the purposes of follow-up action for collection of further evidence, recovery of documents/property, identification of property/assets etc. T-21/02-Coord./2010 has advised the officers that in the event of arrest of an accused under Section 19 of the PMLA, there is absolutely no necessity of any police report under Section The Hqrs, vide Technical Circular No. 02/2010, dated 12/01/2010 issued from F.No. 173(2) of Cr.P C or a complaint for taking cognizance in respect of scheduled offence. The arrest could be made if it is so warranted and sufficient material is available against the arrestee with the Directorate. The Judgment pronounced in the case of Directorate of Enforcement Vs. Deepak Mahajan & another, 1994 SCC (Cri) 785 at para 136 has held that sub- section (1) and (2) of Section 167 of the Cr. P C are squarely applicable with regard to the production and detention of a person arrested under the provisions of Section 35 of FERA and Section 104 of Customs Act and that the Magistrate has jurisdiction under Section 167 (2) of the Cr.RC. to authorize of a person arrested by any authorized officer of the Directorate of Enforcement under FERA and taken to the Magistrate in compliance of Section 35 (2) of FERA The Hon'ble Supreme Court in the case of Central Bureau of Investigation Vs. 49 Anupam J.Kulkarni (1992) 3 SCC 141 has held that the investigating agency can seek remand for custodial interrogation, Le, police custody (in our cases Enforcement Custody) during the first 15 days, court shall not remand the accused for custodial interrogation. Copy available at the end of the Manual."
28. Having regard to the scheme of the Act, especially the investigation powers is given to the Directorate of Enforcement and the proceedings before the Directorate of Enforcement in summoning the accused recording his statement, collection of evidence being treated as judicial proceedings as is found in Section 50(4) of the Act referred to supra, the said proceedings cannot be termed as completion of investigation. The proceedings that takes place before filing of the final report is for the purpose of prima facie satisfaction of the Directorate of Enforcement that a provisional attachment order was passed which needs confirmation in order to protect the assets and to put an end to the money laundering. The said proceedings at any rate can be construed as an order 50 and seeking its confirmation is only in the form of damage control and to protect the assets from further siphoning away. Hence, the contention of Sri Javali, learned Senior Counsel that issuing of preliminary order and seeking its confirmation by filing application before the Adjudicating Authority under Section 5(5) and final order by adjudicatory authority passed under Section 8(3)(a) of the Act cannot be construed as completion of the investigation.
29. Having said thus, since the petitioner is arrested on 7.1.2022 and complaint/final report came to be filed by the Directorate of Enforcement before the Special Court on 7.3.2022, is well within 60 days and therefore, no right accrued to the petitioner to seek for statutory bail as is contemplated under Section 167(2) of Cr.PC, in the case on hand, even though Section 167(2) of the Act is applicable to the accused. The enquiry made by the Directorate of Enforcement for the purpose of issuance of the provisional order of attachment under Section 5(1) of the Act and seeking its confirmation before the 51 adjudicating authority, no doubt, telescopes itself into portion of the investigation for the purpose of filing a complaint/final report under Section 45 of the Act. But, such investigation is for the purpose of attachment of the properties only. Materials collected in such investigation is no doubt would be used by the Directorate of Enforcement in the final report as well. Therefore, the arguments put forth on behalf of the petitioner that the petitioner is entitled for statutory bail under Section 167(2) of the Cr.PC., on issuance of the order passed under Section 5(1) of the Act for provisional attachment or filing an application for its confirmation before the adjudicating authority under Section 5(5) of the Act. In other words, the attachment of the property and its confirmation though is part of the same investigation, it is not for the purpose of filing the complaint under Section 45 of the Act and it is for the purpose of attachment of the property. Therefore, for all practical purposes, the investigation would not be complete so as to make available a right to the petitioner for statutory bail under Section 167(2) of Cr.P.C. 52 Accordingly, Point Nos.1 & 2 are answered in the Negative.
REGARDING POINT NOS.3 TO 6:
30. Now, the task of this court is to find out whether the petitioner is entitled for grant of bail by resorting to powers vested in this court under Section 439 of Cr.PC.
Section 45 of the Act commence with a non obstante clause whereby the application of Cr.P.C., is limited. By virtue of Section 45(1) of the said Act, which deals with the situation for granting bail only to the following persons:
"(a) If an accused person is under the age of 16;
(b) If an accused person is a women;
(c) If an accused person is a sick or infirm person;
(d) If an accused person is alleged of committing money laundering offence of less than 1 crore rupees."53
Section 45(2) of the Act, however, makes it clear that granting of bail to an accused under Section 45(1) of the Act is in addition to limitation under Cr.P.C.
31. Close reading of section 45(1) of the Act makes it clear that before a court grants bail to an accused person, for an offence under the Act, an opportunity must be provided to the prosecutor to oppose the application and in the event of the prosecution opposing the application, court must be satisfied that there are reasonable grounds for believing that an accused is not guilty of such offence and he is not likely to commit any offence while on bail. Therefore, one can easily construe while exercising the power under Section 439 of Cr.PC., for grant of bail. The twin condition referred to supra must be satisfied before a court intends to grant the bail. The language employed in Section 45(1) of the Act is in the form of twin conditions akin to the language employed by the legislature under Section 37 of the NDPS Act. Therefore, the court which is considering the bail 54 application must get satisfied that there are reasonable grounds that accused may not be guilty and he may commit further offence as money laundering is a continuous offence.
32. Sri P. Prasanna Kumar, learned counsel emphasized that satisfaction of the twin conditions for grant of bail is a sine qua non to entertain a bail application under the Act and in this regard, he relied on the un-reported judgment of the High Court of Judicature at Madras in the case of N. Umashankar supra, wherein at paragraphs 15 and 16, it is held as under:
"15. In the Judgment reported in 2018 (11) SCC-1 [cited supra], the Apex Court declared Section 45 of the PMLA as it stood then, as unconstitutional and violative of Articles 14 and 21 of the Constitution of India, but the defects pointed out by the Hon'ble Supreme Court in the said Judgment were cured by the legislature and an amendment to section 45(1) was made vide the Finance Act, 2018 (No.13 of 2018). Under the amendment Act, section 45(1) was revived and for the words "punishable for a term of imprisonment of more than three years under part A of the Schedule", the words "under this Act" were substituted in 55 Crl.OP.Nos. 3381, 3383 and 3385 of 2021, section 45(1) of the PMLA.
16. No doubt, the legislature has the power to cure the underlying defect pointed out by a Court, while striking down a provision of law and pass a suitable amendment. When such a law is passed, the legislature basically corrects the errors which have been pointed out in a judicial pronouncement. Resultantly, it amends the law, by removing the mistakes committed in the earlier legislation, the effect of which is to remove the basis and foundation of the judgment. Therefore, merely because the entire section is not re-enacted would be of no consequence, since the provision even after being declared unconstitutional, does not get repealed or wiped out from the statute book and it only becomes unenforceable. Therefore, once the Parliament steps in and cures the defect pointed out by a Constitutional Court, the defect appears to be cured and the presumption of constitutionality is to apply to such provision. Therefore, there is a presumption in favour of constitutionality since the amended section 45(1) of the PMLA has not been struck down."
He also submitted that the SLP in Umashankar's case, the matter was carried to the Hon'ble Supreme Court, wherein, the Hon'ble Supreme Court dismissed the SLP and therefore, the view taken by the High Court of Madras is up held by the Hon'ble Supreme Court.
56
33. In reply, learned Senior Counsel Sri K.S.Javali, submitted that Hon'ble Apex Court did not hold in categorical terms that the view taken by Madras High Court in the case of Umashankar's case supra is correct. He also tried to impress upon the court that mere dismissal of the SLP with a direction to expeditious disposal of the case cannot be construed as approval of the view taken by the Madras High Court.
34. Sri Prasanna Kumar however contended that since the accused tested the correctness of the order passed by the Madras High court before the Hon'ble Apex Court and the Hon'ble Apex Court, having dismissed the petition of the accused, impliedly, the view taken by the Madras high court has been up held by the Hon'ble Supreme Court. For the purpose of deciding the present bail application, this court perused the orders passed by the Hon'ble apex court which reads as under: 57
"We are not inclined to interfere in these Special Leave Petitions. The Special Leave Petitions are dismissed accordingly.
However, we direct the
prosecution/Investigating Agency to ensure
that the trial is concluded with utmost
expedition.
Pending applications, if any, stand
disposed of."
35. On perusal of the above order, it is crystal clear that the Hon'ble Apex Court did not deliver the order on merits. But refused to interfere with the order passed by the Madras High Court. Mere refusal to interfere with the order passed by the Madras High Court cannot be termed as the order of the Madras High Court is being upheld by the Hon'ble Apex Court. Therefore, the contention of the Directorate of Enforcement that this court is required to follow the order passed in Umashankar's case by the division bench of the Madras High Court cannot be countenanced in law and at best it is persuasive in nature.58
36. However, since the language employed under Section 45 of the Act, it is crystal clear that no person accused of an offence under the Act, shall be released on bail unless he satisfies the twin conditions enumerated under Section 45 of the Act. Therefore, further discussion on the aspect of whether the principles of law enunciated in the Judgment of the Madras High Court is implied confirmation by the Hon'ble Apex Court or not need not be further gone into in the present petition.
37. From the principles of law enunciated in the decisions relied on by the parties, there cannot be any iota of doubt left that whenever a bail application under the Act is to be considered, twin conditions enumerated in Section 45(2) of the Act must be satisfied.
38. In other words, the special powers vested in this court under Section 439 Cr.PC. cannot be exercised in the case of an accused facing trial under the provisions of the said Act, like any other accused who has been charged under the provisions of the IPC. Having regard to the 59 language employed in Section 45(2), there is an embargo on the powers of this court to exercise the special powers vested in this court under Section 439 Cr.P.C. On careful reading of Section 45(2) referred to supra, one can easily understand that the wordings used under the said provision is in pari materia to section 37 of the NDPS Act.
The wordings used in both the provisions are practically similar. Thus, an accused is required to satisfy before this court that there is a reasonable ground that he is not guilty of the offences alleged against him. Taking clue of the said wordings Sri Prasanna Kumar representing Directorate of Enforcement and Sri Shyam Sundar, learned Counsel representing the de-facto complainant in chorus contended that the grounds urged in the bail petition are hardly sufficient enough to establish the fact that the accused is not guilty of the offences alleged against him.
39. The principal objection of the Directorate of Enforcement and the de-facto complainant is that the petitioner having siphoned away Rs.107 crores, if enlarged 60 on bail, he may further indulge in similar offences and may tamper the prosecution witnesses.
40. In reply, Sri Javali contended that the collection of the material by the Directorate of Enforcement at the time of issuing order under Section 5(1) and Section 5(5) of the Act and the materials collected after the arrest of the petitioner on 7.1.2022 till filing of the complaint/final report under Section 45 of the said Act on 7.3.2022 did not improve the case of the Directorate of Enforcement to any extent to reasonably establish that the petitioner is involved in money laundering and therefore, petitioner is entitled for grant of bail. The proceeds sought to have been collected by the Directorate of Enforcement from the FIRs. referred to supra are not sufficient enough to say that the petitioner had indulged in money laundering. He also contended that despite the fact that the Directorate of Enforcement arrested the petitioner on 7.1.2022 till the filing of final report/complaint on 7.3.2022, no further materials are collected by the Directorate of Enforcement 61 to substantiate the allegation that petitioner. He also pointed out that since the entire investigation is now completed and materials collected by the Directorate of Enforcement is now in the form of Complaint/final report, the apprehension of the Directorate of Enforcement and de-facto complainant that the petitioner may further indulge in money laundering stands automatically quelled and as such, there is no reason whatsoever to oppose the release of the petitioner on bail.
41. This court has meticulously perused the materials on record in the light of Section 45 of the Act.
The wordings used in Section 45 of the said Act is in the form of casting reverse burden on the accused. In the light of the legal principles enunciated in the judgments referred to supra and also taking note of the fact that the Directorate of Enforcement has already collected necessary materials to form an opinion that the petitioner is prima facie guilty of the offences alleged against him, is only for the purpose of effecting the arrest under Section 19 of the 62 Act. However, if that opinion of the Investigating Agency that accused is guilty, is to be held as sacrosanct, there remains nothing before the Special court to be adjudicated upon further. in this regard, it is rightly argued by Sri Javali that no further materials are collected by the Directorate of Enforcement from the date of arrest of the petitioner till the filing of the complaint/final report under Section 45 of the Act on 7.3.2022. Copy of the complaint is made available before this court on 23.3.2022. This court meticulously perused the complaint as well. As could be seen from the same, the statement of the petitioner has been recorded on 12.1.2022, 13.1.2022, 15.1.2022 and 16.1.2022 by exercising power under Section 50(2) and (3) of the Act.
42. The statement of the petitioner was also recorded by the Directorate of Enforcement before his arrest. On keeping the statements recorded by the Directorate of Enforcement before his arrest and after arrest in Juxtaposition one can easily find out that both the 63 statements are practically mirror image of each other, except for few instances which were not stated by the petitioner earlier to his arrest.
43. In other words by the arrest of the petitioner Directorate of Enforcement did not gain much in the case on hand for the purpose of its further investigation. Any way, this court is not oblivious of the fact that this court cannot hold a mini trial at the time of considering the bail application. However, since the accused is required to reasonably make out a case that he is not guilty of the offence alleged against him, to that extent the statements have been perused by this court. On such perusal of the materials on record, since the Directorate of Enforcement had already seized necessary documents and also taken control over the assets of the petitioner, apprehension of the prosecution that release the accused may result in continuation of the money laundering, in the considered opinion of this court is not available in the case on hand. Therefore, this court is of the considered opinion that the 64 petitioner has made out a case for grant of bail. Further, the remaining apprehension/s of the prosecution if any, can be met with by imposing suitable and stringent conditions.
44. The alternate argument put forth on behalf of the petitioner is that the petitioner is enlarged on bail in respect of the predicate offences and the court having taken note of the fact that the petitioner is no longer required to be continued in judicial custody and State having not sought for cancellation of bail in respect of the predicate offences, ipso facto the petitioner is entitled for grant of bail in respect of a complaint/final report filed under Section 45 of the Act in an action taken under the provisions of the said Act.
45. The said argument cannot be countenanced in law inasmuch as arrest under Section 19 of the said Act is for the different purpose altogether. The language employed in Section 19 of the Act and the manual referred to supra, on careful perusal is altogether different from the 65 language employed under Section 41 of the Cr.P.C., Much has been argued by the counsel for petitioner and for the de-facto complainant as to the nature and purpose of arrest under Section 19 of the said Act.
46. Sri M.S. Shyam Sundar, learned Counsel for de- facto complainant argued that the arrest under Section 19 of the said Act is in the nature of preventive detention. To substantiate his argument, he further contended that the wordings used in Section 19 of the said Act, is that the authorised officer of the Directorate of Enforcement would be forming an opinion that accused is guilty of the offences under the provisions of the said Act and then only he has got the power to arrest the accused and therefore, to shun the further damage and to put an end to the continuing offence of the money laundering arrest is effected. Therefore, the arrest under Section 19 of the said Act is preventive detention.
47. However, Sri Kiran S. Javali, learned Senior Counsel while dealing with the purpose of arrest under 66 Section 19 of the said Act has emphasized that having regard to the offence under Section 19 of the said Act, the rules framed under the Act and the Rules, there is a duty cast on the Investigating Agency to justify the need for arrest. He further argued that in the case on hand, no such reasons are forth coming from Investigating Agency. He also contended that in the absence of the relevant safeguards being provided to treat the arrest under Section 19 of the said Act as the preventive detention, it should be construed that the arrest if any is only for the further investigation and such arrest is not to be construed as preventive detention.
48. Sri M.S. Shyam Sundar, learned Counsel also referred to the definition of the word guilty found under Section 19 of the said Act by placing reliance on the definition of the word 'guilty' as defined in BLACK's LAW DICTIONARY -
(a) A plea of a criminal defendant who does not contest the charges;
67
(b) A jury verdict convicting the defendant of the crime charged.
49. He further referred that the scheme under the Code of Criminal Procedure in the form of Sections 229, 241, 248, 253 and 255, it is for the court to express opinion and to pronounce the guilt or otherwise of the accused. Since the Act provides for the Investigating Agency to form an opinion of guilty of the accused, having regard to sub section (4) of Section 50 authorising the proceedings before the Investigating Agency as a judicial proceedings, the opinion formed by the Investigating Agency that the accused is guilty and therefore, the arrest is preventive in nature. Any other opinion if formed would defeat the very object of section 19 of the said Act and therefore, the arrest of the petitioner needs to be treated as preventive detention.
50. This court considered the rival contentions of the parties in the light of Section 19 of the Act. Argument of the counsel for de-facto complainant that arrest under 68 Section 19 of the Act, cannot be construed as preventive detention cannot be countenanced in law.
51. If the said argument is to be accepted, there remains nothing for the Special Court to decide the guilt or otherwise of the accused in the trial. The opinion of the Investigating Agency is no doubt judicial in nature, having regard to Section 50(4) of the Act. But, the Special Court has to charge the accused for the offence under Section 3 of the Act after taking cognizance of the said offence when once a complaint/final report under Section 45 of the Act, is filed. If the opinion of the Investigating Agency for the purpose of arrest under Section 19 of the Act, that an accused under the Act is prima facie guilty of offence under the provisions of the Act, it is only for the purpose of arrest and not binding on the Special Court. Therefore, in order to justify the arrest of an accused under the Act by resorting to the power envisaged under Section 19 of the said Act, the enquiry contemplated is termed as an equivalent to judicial enquiry. This is to safeguard the 69 proposed accused from a wrongful arrest and nothing more. More so, when the very same accused has been enlarged on bail in respect of the predicated offences.
52. The above discussion would also answer question No.6 to urged on behalf of the petitioner that when once an accused is granted bail by a judicial Magistrate or the Sessions Court as the case may be in respect of the predicated offences ipso facto is entitled for grant of bail in respect of the offences under the Act.
53. In the case on hand, it is no doubt true that the petitioner is enlarged on bail in respect of the predicated offences. The Investigating Agency is very well aware of the said fact. Despite the same, the investigating Agency proceeded to effect the arrest of the petitioner by resorting to the powers vested in it under Section 19 of the said Act. Therefore, the word 'guilty' found under Section 19 of the Act is to be construed in that sense and not as an opinion that would bind the petitioner/accused and definitely not binding on the Special courts. Thus, the 70 argument put forth on behalf of the petitioner that ipso facto, petitioner is entitled for the bail in view of the fact that the petitioner is enlarged on bail for the predicated offences cannot be countenanced in law. Accordingly, point Nos.3 to 6 are answered in the Negative.
Hence, following order is passed.
ORDER The petition is allowed. Consequently, the petitioner shall be released on bail in connection with ECIR No.BGZO/33/2020, dated 16.10.2020 registered by the respondent Authority for the alleged offences, subject to the following conditions:
(1) The petitioner shall execute a personal bond for a sum of Rs.10,00,000/- (Rupees Ten Lakhs only) with two local sureties for the like sum to the satisfaction of the learned Special Judge.
(2) The petitioner shall mark his attendance before the Directorate of Enforcement on every third Sunday between 10.00 a.m., and 2.00 p.m., (3) The petitioner shall appear before the Special Court on all the future hearing dates unless exempted.71
(4) The petitioner shall not directly or indirectly tamper the prosecution witnesses.
(5) The petitioner shall not leave the jurisdiction of Bengaluru District without prior permission.
Violation of any one of the above conditions, would entitle the prosecution to seek for cancellation of the bail.
Ordered accordingly.
Sd/-
JUDGE PL*