Allahabad High Court
Anil Mittal vs U.O.I. Thru Enforcement Directorate ... on 9 December, 2020
Author: Dinesh Kumar Singh
Bench: Dinesh Kumar Singh
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH Court No. - 28 Case :- BAIL No. - 6824 of 2020 Applicant :- Anil Mittal Opposite Party :- U.O.I. Thru Enforcement Directorate Lucknow Counsel for Applicant :- Arun Sinha,Alok Kumar Singh,Dhruv Kumar Singh,Palash Banerjee,Ritwick Rai,Siddhartha Sinha Counsel for Opposite Party :- Shiv P. Shukla Hon'ble Dinesh Kumar Singh,J.
1. This bail application under Section 439 of the Code of Criminal Procedure, 1973 (for short 'CrPC') read with Section 45 of The Prevention of Money Laundering Act, 2020 (for short 'PMLA') has been filed by the accused-applicant after his application for bail came to be rejected by the Special Judge, PMLA/Sessions Judge, Lucknow vide order dated 10th July, 2020 passed in Bail Application No.2299 of 2020 in FIR No.0549 of 2020, ECIR No. PMLA/LKZO/06/2019, under Section 3/4 PMLA, Police Station ED-Lucknow (Zonal Office), District Lucknow.
2. The accused-applicant had been Statutory Auditor of M/s Amrapali Group of Companies (hereinafter referred to as 'the Companies') since very inception. The Companies started several housing/real-estate projects in Noida and Greater Noida and, proposed to construct approximately forty-two thousands flats. In their brochure published, they promised to deliver possession of flats/homes, complete in all respects, within thirty-six months, having world-class amenities.
3. Having own home is a cherished dream of every middle class Indian. Impressed by the promises made by the Companies and believing in their bona fide, thousands of flat/home buyers entered into allotment-cum-flat-buyer agreement and, made payment of 40-100% of the total, consideration. However, despite having invested their life-time-saving money, to have their own home and, making payment to the extent of 40-100%, the Companies failed to keep their promise to deliver the flats/homes to the buyers. Several revised dates of possession were also made by them. Several home buyers, feeling cheated of their life-time-saving money by the builder, who failed to keep their promise every time as their cherished dream of having their homes had come crushing down in the hands of promoters of these Companies, some of them had approached the National Consumer Dispute Redressal Commission by way of filing complaints. In the meantime, one of the financial institutions, who had advanced loan to the group of companies filed Company Petition No. (IB)- 121(PB)/2017 before the National Company Law Tribunal (for short, ''the NCLT'), which triggered the Corporate Insolvency Resolution Process in the matter of M/s Amrapali Silicon City Private Limited. The NCLT appointed the Interim Resolution Professional (in short, the ''IRP'). Moratorium was declared thereby restricting the institution of any suits against the corporate debtor including execution of any judgment, decree or order.
4. Since the proceedings before the NCLT had direct bearing on the flat/home buyers, who had booked flats/homes with the Companies, a few petitions under Article 32 of the Constitution of India, with thousands of intervention applications were filed before the Supreme Court. The Supreme Court, looking at the plight, distress and gigantic fraud played with the flat/home buyers by the accused, including the present accused-applicant, entertained the petitions filed under Article 32 of the Constitution of India, leading petition being Writ Petition (C) No.940 of 2017 'Bikram Chatterjee and others Vs. Union of India and others'. The Supreme Court was at pain to find the precarious condition and plight of flat/home buyers, who had invested their lifetime-saving-money, but because of dishonest, illegal and fraudulent act of the Companies, they were left in lurches. The Supreme Court had passed several orders to secure the interests of the flat/home buyers and, to ascertain the bona fide of the promoters and other persons of the Companies for delivering the promises made to the flat/home buyers, who had invested their lifetime-saving-money with these Companies.
5. The accused, in their reply, had admitted on their own to have siphoned Rs.2,765 Crores, out of six projects, from the money paid by the flat/home buyers and, invested the same in other projects. Several orders passed by the Supreme Court were not complied with by the accused and, in view thereof, it was directed that individual bank accounts of the Directors of all the 40 companies be frozen and their properties be attached. The Supreme Court in its detailed order dated 23rd July, 2019 had noted the various orders, which would show that how false and incomplete information had been submitted on behalf of the Directors of the Companies. Considering the conduct of the Directors of the Companies, its Statutory Auditor, the Supreme Court vide order dated 6th September, 2018 appointed Mr. Ravi Bhatia of M/s. Bhatia & Co. and Mr. Pawan Kumar Aggarwal of M/s. Sharp and Tannan Company to conduct the forensic audit, which was for the period from 2008 till date. It was further directed that the said forensic audit was to be completed within a period of two months.
6. The present accused-applicant was directed to handover the original records of the Companies to the Forensic Auditors, including the documents required by the Forensic Auditors. Despite the said order, the accused did not handover the records to the Forensic Auditors in utter violation of the order passed by the Supreme Court and, thus the Supreme Court directed the police to seize all the documents and handover them over to the Forensic Auditors from the possession of 46 companies and their Directors.
7. The Forensic Auditors, on 24th October, 2018 disclosed before the Supreme Court with respect to diversion of funds of more than Rs.100 Crores to a shell company known as GauriSuta Infrastructures Pvt. Ltd. in which Ashish Jain and Vivek Mittal were the Directors. Both these Directors were close relatives of the present accused-applicant.
8. The Supreme Court recorded a finding that Auditors had not sent all files and, he sent only one file till 24th October, 2018 to the Forensic Auditors despite the order passed by it and, therefore, the Supreme Court warned that in case the documents were not handed over, the same would be viewed seriously and the accused would be likely to be punished suitably. The Supreme Court granted last opportunity to the accused-applicant to hand over the requisite documents to the Forensic Auditors and, directed him to comply with the requisition made by the Forensic Auditors.
9. Ashish Jain and Vivek Mittal were Directors of three other sham companies. Rs.242.38 Crores had been handed over to these four companies in which Ashish Jain and Vivek Mittal were Directors. Vivek Mittal was nephew of the present accused-applicant and Ashish Jain was his employee. The Supreme Court in paragraph-5 of its order dated 26th October, 2018, in respect of conduct of the accused-applicant, observed as under:
"5. It has also been pointed out by Shri Pawan K. Aggarwal in his report that so far with respect to four companies, namely, Gaurisuta Infrastructure Pvt. Ltd., Vidhyashree Buildcon Pvt. Ltd., Mannat Buildcraft Pvt. Ltd. And Jhamb Finance & Leasing Pvt. Ltd., only it has been noticed that a sum of Rs.242.38 crores has been handed over to them and in most of these firms Shri Ashish Jain and Shri Vivek Mittal are the Directors. Beside, it was stated before us by Shri Anil Mittal, statutory auditor, that his nephew- Vivek Mittal joined as a Director on the request made by Shri Chander Wadhwa, CFO, to create a company and he has in turn asked Shri Ashish Jain, an employee of his client, to join as another Directory of at least 10 companies, created at the request of the CFO and Amrapali Group of Companies. It is a shocking state of affairs that the statutory auditor himself was responsible for the creation of companies in an aforesaid manner. Shri Anil Mittal has also stated before us that he was aware that the money was flowing to the said companies through bank statements. However, on a specific query made by this Court to him, he has admitted that this fact of flow of money was not reflected in the audit report, which was signed by him in the audited Balance Sheet, in spite of knowing the fact that money has flown out of the accounts of the Amrapali Group of Companies to aforesaid companies."
10. The Forensic Auditors further pointed out that 23 more companies had been created by the M/s Amrapali Group of Companies for diversion of funds collected from the flat/home buyers with connivance and criminal conspiracy with the present accused-applicant, who was the Statutory Auditor. The Supreme Court noted the conduct of non-compliance of the order by the accused in its order dated 13th November, 2018 and in paragraphs-17 and 20 of the said order observed as under:-
17. It is a case where we find ourselves in a situation that the money of Greater Noida and Noida Authorities has not been paid, buyers have also been duped. Other financial institutions have not been paid. Construction has not been completed. Money paid by buyers has been diverted for the creation of various companies and assets have been created. All these assets are accountable and have to be sold as it is not the independent investment made by these directors. It is a patent and blatant fraud which appears to have been played, the way in which the money has been transacted and creation of companies has taken place in connivance with the CFO, statutory auditors. It was also pointed out that there are various related companies in which money has been transferred. We restrain all monetary transactions out of bank accounts or any kind of alienation of the property held by the related group of companies where the money has been siphoned and has been used for the creation of the assets. Any transfer made in any manner shall be illegal, void and inoperative.
20. It is also necessary in order to find out the actual amount invested in building activities, out of the funds collected. It also appears that certain companies were created only for the purpose of purchasing raw materials. Whether actual transactions of purchase have taken place is required to be ascertained. Let all the vouchers of the purchase, Bills, orders, etc., which are in possession of Amrapali Group of Companies and the estimates of various raw materials for each and every building without which construction of a building is not possible to be undertaken to be positively handed over to the forensic auditors within a week. We also request the forensic auditors to propose how the actual valuation of the buildings constructed so far by the Amrapali Group of Companies on the spot can be made so as to ascertain the actual investments made and extent of diversion. Let the estimate and quantities of the bills be also furnished by Amrapali Group to the forensic auditors along with the names of all the suppliers and mode of payment. They may also collect information/documents from suppliers."
11. Vide order dated 5th December, 2018, the Supreme Court issued notice to the present accused-applicant to explain as to why criminal action be not initiated against him on the basis of affidavits, various documents and, the statements made in the Court on various dates and, as to why his conduct, as projected in the case, be not reported to ICAI to enquire. The Supreme Court had also noted that M/s. Neelkanth and M/s. Rudraksha were having two Directors, namely, Chandan Kumar, who was a peon of the present accused-applicant and, was working in his office and, Vivek Mittal was his nephew, who was doing petty jobs of sub-contractors, getting a monthly income of Rs.15,000. They had purchased shares of Amrapali Zodiac for Rs.140 Crores, which amount was withdrawn by M/s. J.P. Morgan. The Supreme Court also directed the police to investigate the role of the present accused-applicant and CFO in the commission of the offences along with Directors Anil Kumar Sharma, Shivpriya and Ajay Kumar.
12. The Supreme Court, on the basis of the reports submitted by the Forensic Auditors, prima facie, found that the flat/home buyers' fund had been diverted to other companies/directors through payment of professional fees, by way of booking of bogus bills of Rs.837 Crores, by selling flats as undervalued prices in book and received differential market value in cash, by paying commission and brokerage on bogus booking of flats and by way of granting inter-corporate deposits of Rs.3,000 Crores to related entities and Rs.500 Crores to unrelated entities/trusted partners for ultimately diverting funds to unapproved uses. The Supreme Court had also noted that several companies were created for delivering assets. There was no compliance of the statutory obligations by the companies. The home buyers' fund to the extent of Rs.5,619.47 Crores had been diverted and, the present accused-applicant, blindly signed the accounts and, he along with Chander Wadhwa, CFO, was involved in manipulation of accounts. He received the payment on account of professional charges in the name of the companies in which his relatives were Directors and, he did not disclose this fact in the audited financial statements. A sum of Rs.52.07 Crores was adjusted on account of professional fees due and to be paid on account of Audit fees. Further, a sum of Rs.16.36 Crores was also adjusted against a flat in Amrapali Princely Estate on account of Professional fees due and to be paid on account of Audit fees. He, along with other accused, including CFO, had created 27 additional shell companies, whose share capital was mostly subscribed in cash and, transfer of shares was also in cash leaving no audit trail. The home-buyers funds to the extent of Rs.5,619.47 Crores had been diverted. It was further held by the Supreme Court that the present accused-applicant, who was Statutory Auditor, did not report his interest and disclose about his relatives and junior employee as Directors and share-holders. Rudraksha Infracity Pvt. Ltd. was created for money laundering as one of the two Directors, namely, Ashish Jain, was a peon and Vivek Mittal being nephew of the accused-applicant. These two Directors, who were share-holders, had no income. Rudraksha Infracity Pvt. Ltd. was incorporated to receive funds from Mannat Buildcraft which was also created by Mr. Chander Wadhwa, CFO, through his close associates. After receiving money from Mannat Buildcraft Pvt. Ltd., the same was transferred to J.P. Morgan for purchasing equity shares of Amrapali Zodiac Pvt. Ltd. at an exorbitant price. There was no transaction before or after these transfers of moneys. The Supreme Court also noted the mammoth fraud played by the builders, including the present accused-applicant, with the flat/home buyers with connivance of the authorities and bankers.
13. The Supreme Court in its order dated 23.07.2019 had held that the accused-applicant, who was the Statutory Auditor of the Companies, had not only failed to discharge the duty cast upon him but also the officials of the Companies shared hard earned money of home/flat buyers in an illegal manner by siphoning it off. Directors had obtained salaries without doing anything. Money was diverted and siphoned off in other projects. Office junior employees, peons and relatives etc. were inducted as Directors just to defraud the home-buyers money and siphon it out. Without material being supplied, a large amount of money had been paid by way of forged purchases, as a method to divert money even through authorized signatories and the Companies of the relatives, family members and relatives of the Directors and Guarantors. The Supreme Court directed the concerned authorities to look into the violation of the FEMA and FDI norms as projected by the Forensic Auditors in their report and to submit progress report to this Court.
14. The Supreme Court noted that the Forensic Audit had unfolded the true story of the Companies. Right from 2015, no construction activity had taken place. Account books had not been maintained and money had been transferred continuously. No audit was made. Money was taken out from banks, and fake purchases had been shown. The Supreme Court also observed that in view of their unholy conduct, defying discretion, their contumacious and fraudulent conduct had totally dis-entitled them any indulgence and, they were required to be dealt with as sternly as possible so as to make it exemplary one, that such fraudulent actions do not recur in future, in real-estate business in India.
15. In view of the open and brazen fraud played by promoters, auditors etc., of the Companies with the flat/home buyers, the Supreme Court directed the Central Government and Government of Uttar Pradesh to take appropriate steps on time bound basis to ensure that home/flat buyers, who had been cheated in similar fashion, should be provided houses by laying down appropriate road map.
16. The Supreme Court had noted the conduct of the accused-applicant in para 147 of the aforesaid order dated 23.07.2019 and held that no accounts were prepared from the years 2015-2018 and, money withdrawn was diverted during the said period. The Statutory Auditor, accused-applicant failed in his duty and was a part of fraudulent activities as found in the Forensic Report. The Supreme Court had directed the Enforcement Directorate to make investigation in accordance with law and submit reports quarterly to the Court as money laundering aspect was also to be looked into by concerned authorities. The Supreme Court had approved the report of the Forensic Auditors and directed the concerned companies/Directors/ individuals to take steps in compliance of the observations and findings made by Auditors to refund the amount and/or to do needful as suggested within one month. In para 154, the Supreme Court had issued slew of directions and the progress of the said case is being monitored by the Supreme Court.
17. In pursuance of the aforesaid directions, the Enforcement Directorate has undertaken the investigation in respect of the money laundering by the present accused-applicant and other accused. A complaint under Sections 3/4 of the PMLA has been filed before the Special Judge (PMLA)/Sessions Judge, Lucknow. In the supplementary complaint, it has been alleged that the accused-applicant who was the Statutory Auditor of the Companies had played vital role in diversion of funds from the Companies to other sham/bogus companies as well as other group of companies having no business relations in guise of inter-corporate deposits. He also obtained monetary gains in the form of proceeds of crime and acquired properties from the same. It had been further pointed out that M/s Chandan Homes Private Ltd, M/s Mittal Homes Private Ltd, M/s Surbhi Buildhome Private Ltd are shell companies controlled by the accused-applicant which played instrumental role in diversion of funds from the Companies to the accused-directors as well as the accused-applicant. M/s Vrindawan Buildcon Pvt. Ltd., had acquired immovable properties from the funds diverted from the Companies through shell companies. He had played an active role in furtherance of criminal conspiracy of money laundering wherein the money of flat/home buyers had been illegitimately diverted and layered through various sham transactions involving shell companies having dummy directors. A flow chart showing flow of funds from the Companies to several bogus companies in active connivance with the accused-applicant had been placed with the complaint. The investigation had revealed that the accused-applicant had purchased several properties from the funds of the proceeds of crime and looking at the gamut and extent of the conspiracy, further investigation is still pending. Learned trial Court has rejected the application for bail vide order dated 10.07.2020 in above extent.
18. Heard Mr. Sanjay Hegde, learned Senior Advocate assisted by Mr. Arun Sinha, Alok Kumar Singh and Mr. Ritwik Rai, learned counsels for the accused-applicants and Mr. Shiv P. Shukla, learned counsel appearing for Directorate of Enforcement.
19. Mr. Sanjay Hegde, learned Senior Advocate has submitted that the accused-applicant was only a Statutory Auditor. He had no role in undertaking the construction of projects and offering flats/homes for sale to the buyers. He had performed his duty and he had not committed any offence. He has further submitted that from the complaint filed by the Enforcement Directorate, allegations against money laundering are not proved against him. He is suffering from various ailments and, the Supreme Court vide order dated 03.11.2020 passed in S.L.P. (Crl.) No.4993 of 2020 has enlarged him on interim bail for a period of one month from the date of release on terms and conditions to the satisfaction of the trail Court and also with a direction that in case any date for surgery was fixed, he would be at liberty for further extension of bail for the period required for surgery and recovery. It is also submitted that maximum punishment provided under PMLA is 7 years. The accused-applicant has already been in jail for six months and if, he is released on bail, he will cooperate with the investigation and will not avoid the process of the Court. He, therefore, has submitted that looking at the alleged role played by the accused-applicant in commission of the offence, his health conditions and the maximum sentence provided under the PMLA, the accused-applicant may be enlarged on bail. He has further submitted that Supreme Court in the case of P. Chidambaram vs Enforcement Directorate, 2019 SCC Online SC 1549 has held that gravity of the offence is an aspect which is required to be kept in view while considering the bail plea of the accused-applicant. In determining whether to grant bail, both seriousness of the charge and the severity of the punishment, should be taken into consideration. Gravity of the offence is to be judged from the sentence prescribed for the offence, the accused alleged to have committed. He, therefore, has submitted tha the accused-applicant is liable to be enlarged on bail.
20. Mr. Shiv P. Shukla, learned counsel appearing for the Directorate of Enforcement has submitted that the Supreme Court had noted active role played by the accused-applicant in huge diversion of funds by him in dereliction of his duty as Statutory Auditor, his active connivance with the other accused and creation of bogus/sham companies in which his employees and relatives were directors. The investigation had revealed that the accused-applicant had created assets from the proceeds of crime. Investigation is still going on.
21. Mr. Shiv P. Shukla, learned counsel has further submitted that the offence involving financial fraud of such magnitude, should be viewed differently as it is a crime against the society and, poor home buyers have been cheated, defrauded in active connivance and criminal conspiracy of the accused-applicant with other accused, which has been noted by the Supreme Court meticulously in its order dated 23.07.2019. The accused-applicant has been involved in money laundering. Economic offence of such magnitude had deep rooted conspiracy and huge loss of public funds which needs to be viewed differently and while investigation is on, the accused-applicant should not be enlarged on bail.
22. I have considered the submissions advanced on behalf of the accused-applicant as well as the Directorate of Enforcement.
23. It would be evident from the facts, as noted above, that but for the Supreme Court's intervention and undertaking painful and strenuous exercise to secure and protect the interest of innocent home/flat buyers, the fraud played by the accused-applicant and other accused in cheating and defrauding thousands innocent home/flat buyers of their hard earned money, could not have been unearthed. The Supreme Court is monitoring the investigation. The Supreme Court had been in pain to note the conduct of the accused-applicant and other accused. They had even violated the Supreme Court orders and did not comply the directions issued on several occasions. The forensic auditors appointed by the Supreme Court had meticulously flagged the fraud and cheating by the accused-applicant and other co-accused in creating bogus and sham companies and diversion of funds of the flat buyers money and creating assets etc.
24. PMLA is a special statute enacted by Parliament for dealing with money laundering. Section 5 of the Cr.P.C. clearly lays down that the provisions of Cr.P.C. will not affect any special statute or any local law. In other words, the provisions of the special statute will prevail over the general provisions of the Cr.P.C. in case of any conflict.
25. The economic crime of such scale and magnitude are carefully and meticulously planned and executed. It is well settled that economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. While granting bail, the court has to keep in mind the nature of accusations, magnitude and gravity of offence and nature of evidence in support of the accusations.
26. The Supreme Court in the case of Y.S. Jagan Mohan Reddy vs CBI: (2013) 7 SCC 439 in paras 34 and 35 in respect of granting bail in economic offences having deep rooted conspiracy and large public money involved has held as under:-
"34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.
35. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country."
27. The Supreme Court in the case of Nimmagadda Prasad vs CBI: (2013) 7 SCC 466 has observed that the alarming rise in white collar crimes has affected the fiber of country's economic structure. Economic offences have serious repercussions on the development of the country as a whole. Economic offences constitute a class apart and a different approach has to be adopted in the matter of bail. Para 23 to 25 of the aforesaid judgment are extracted hereinbelow:-
"23. Unfortunately, in the last few years, the country has been seeing an alarming rise in white-collar crimes, which has affected the fibre of the country's economic structure. Incontrovertibly, economic offences have serious repercussions on the development of the country as a whole. In State of Gujarat v. Mohanlal Jitamalji Porwal [(1987) 2 SCC 364 : 1987 SCC (Cri) 364] this Court, while considering a request of the prosecution for adducing additional evidence, inter alia, observed as under: (SCC p. 371, para 5) "5. ... The entire community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the community. A disregard for the interest of the community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even-handed manner without fear of criticism from the quarters which view white-collar crimes with a permissive eye unmindful of the damage done to the national economy and national interest."
24. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations. It has also to be kept in mind that for the purpose of granting bail, the legislature has used the words "reasonable grounds for believing" instead of "the evidence" which means the court dealing with the grant of bail can only satisfy itself as to whether there is a genuine case against the accused and that the prosecution will be able to produce prima facie evidence in support of the charge. It is not expected, at this stage, to have the evidence establishing the guilt of the accused beyond reasonable doubt.
25. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep-rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as a grave offence affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country."
28. In judgment rendered in the case of State of Bihar Vs. Amit Kumar (2017) 13 SCC 751, it has been held that while considering the bail involving socio-economic offences stringent parameters should be applied. Paras 8-9 of the said judgment are extracted hereunder:-
"8. A bare reading of the order impugned discloses that the High Court has not given any reasoning while granting bail. In a mechanical way, the High Court granted bail more on the fact that the accused is already in custody for a long time. When the seriousness of the offence is such the mere fact that he was in jail for however long time should not be the concern of the courts. We are not able to appreciate such a casual approach while granting bail in a case which has the effect of undermining the trust of people in the integrity of the education system in the State of Bihar.
9.We are conscious of the fact that the accused is charged with economic offences of huge magnitude and is alleged to be the kingpin/ringleader. Further, it is alleged that the respondent-accused is involved in tampering with the answer sheets by illegal means and interfering with the examination system of Bihar Intermediate Examination, 2016 and thereby securing top ranks, for his daughter and other students of Vishnu Rai College, in the said examination. During the investigation when a search team raided his place, various documents relating to property and land to the tune of Rs 2.57 crores were recovered besides Rs 20 lakhs in cash. In addition to this, allegedly a large number of written answer sheets of various students, letterheads and rubber stamps of several authorities, admit cards, illegal firearm, etc. were found which establishes a prima facie case against the respondent. The allegations against the respondent are very serious in nature, which are reflected from the excerpts of the case diary. We are also conscious of the fact that the offences alleged, if proved, may jeopardise the credibility of the education system of the State of Bihar."
29. Further, the aforesaid view has been reiterated in the case of Rohit Tandon vs Directorate of enforcement (2018) 11 SSC 46. Paras 21 and 22 of the aforesaid judgement read as under:-
"21. The consistent view taken by this Court is that economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. Further, when attempt is made to project the proceeds of crime as untainted money and also that the allegations may not ultimately be established, but having been made, the burden of proof that the monies were not the proceeds of crime and were not, therefore, tainted shifts on the accused persons under Section 24 of the 2002 Act.
22. It is not necessary to multiply the authorities on the sweep of Section 45 of the 2002 Act which, as aforementioned, is no more res integra. The decision in Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra [Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra, (2005) 5 SCC 294 : (2005) SCC (Cri) 1057] and State of Maharashtra v. Vishwanath Maranna Shetty [State of Maharashtra v. Vishwanath Maranna Shetty, (2012) 10 SCC 561 : (2013) 1 SCC (Cri) 105] dealt with an analogous provision in the Maharashtra Control of Organised Crime Act, 1999. It has been expounded that the Court at the stage of considering the application for grant of bail, shall consider the question from the angle as to whether the accused was possessed of the requisite mens rea. The Court is not required to record a positive finding that the accused had not committed an offence under the Act. The Court ought to maintain a delicate balance between a judgment of acquittal and conviction and an order granting bail much before commencement of trial. The duty of the Court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. Further, the Court is required to record a finding as to the possibility of the accused committing a crime which is an offence under the Act after grant of bail.
30. The Supreme Court in its judgment in Serious Fraud Investigation Office Vs. Nitin Johri and another, (2019) 9 SCC 165, while considering the factors to be taken into account while considering the bail involving serious economic offences in para 24-27 has held as under:-
"24. At this juncture, it must be noted that even as per Section 212(7) of the Companies Act, the limitation under Section 212(6) with respect to grant of bail is in addition to those already provided in CrPC. Thus, it is necessary to advert to the principles governing the grant of bail under Section 439 of CrPC. Specifically, heed must be paid to the stringent view taken by this Court towards grant of bail with respect of economic offences. In this regard, it is pertinent to refer to the following observations of this Court in Y.S. Jagan Mohan Reddy [Y.S. Jagan Mohan Reddy v. CBI, (2013) 7 SCC 439 : (2013) 3 SCC (Cri) 552] : (SCC p. 449, paras 34-35) "34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.
35. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations."
This Court has adopted this position in several decisions, including Gautam Kundu v. Directorate of Enforcement [Gautam Kundu v. Directorate of Enforcement, (2015) 16 SCC 1 : (2016) 3 SCC (Cri) 603] and State of Biharv. Amit Kumar [State of Bihar v. Amit Kumar, (2017) 13 SCC 751 : (2017) 4 SCC (Cri) 771] . Thus, it is evident that the above factors must be taken into account while determining whether bail should be granted in cases involving grave economic offences.
25.As already discussed supra, it is apparent that the Special Court, while considering the bail applications filed by Respondent 1 both prior and subsequent to the filing of the investigation report and complaint, has attempted to account not only for the conditions laid down in Section 212(6) of the Companies Act, but also of the general principles governing the grant of bail.
26. In our considered opinion, the High Court in the impugned order has failed to apply even these general principles. The High Court, after referring to certain portions of the complaint to ascertain the alleged role of Respondent 1, came to the conclusion that the role attributed to him was merely that of colluding with the co-accused promoters in the commission of the offence in question. The Court referred to the principles governing the grant of bail as laid down by this Court in Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra[Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra, (2005) 5 SCC 294 : 2005 SCC (Cri) 1057] , which discusses the effect of the twin mandatory conditions pertaining to the grant of bail for offences under the Maharashtra Control of Organised Crime Act, 1999 as laid down in Section 21(4) thereof, similar to the conditions embodied in Section 212(6)(ii) of the Companies Act. However, the High Court went on to grant bail to Respondent 1 by observing that bail was justified on the "broad probabilities" of the case.
27. In our considered opinion, this vague observation demonstrates non-application of mind on the part of the Court even under Section 439 CrPC, even if we keep aside the question of satisfaction of the mandatory requirements under Section 212(6)(ii) of the Companies Act."
31. Section 45 of PMLA starts with a non obstante clause which indicates that the provisions laid down in Section 45 of PMLA will have overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them. Section 45 PMLA imposes the following two conditions for grant of bail to any persons accused of an offence punishable for a term of imprisonment of more than three years under Part A of the Schedule to PMLA:
(i) That the prosecutor must be given an opportunity to oppose the application for bail; and
(ii) That the court must be satisfied that there are reasonable grounds for believing that the accused persons is not guilty of such offence and that he is not likely to commit any offence while on bail.
32. The Supreme Court in the case of Gautam Kundu Vs. Directorate of Enforcement (Prevention of Money Laundering Act), Government of India, (2015) 16 SCC 1 in paragraphs 28, 29 and 30 while dealing with the provisions of bail under Section 45 of the PMLA held as under :-
"28. Before dealing with the application for bail on merit, it is to be considered whether the provisions of Section 45 of PMLA are binding on the High Court while considering the application for bail under Section 439 of the Code of Criminal Procedure. There is no doubt that PMLA deals with the offence of money-laundering and Parliament has enacted this law as per commitment of the country to the United Nations General Assembly. PMLA is a special statute enacted by Parliament for dealing with money-laundering. Section 5 of the Code of Criminal Procedure, 1973 clearly lays down that the provisions of the Code of Criminal Procedure will not affect any special statute or any local law. In other words, the provisions of any special statute will prevail over the general provisions of the Code of Criminal Procedure in case of any conflict.
29. Section 45 of PMLA starts with a non obstante clause which indicates that the provisions laid down in Section 45 of PMLA will have overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them. Section 45 of PMLA imposes the following two conditions for grant of bail to any person accused of an offence punishable for a term of imprisonment of more than three years under Part A of the Schedule to PMLA:
(i) That the prosecutor must be given an opportunity to oppose the application for bail; and
(ii) That the court must be satisfied that there are reasonable grounds for believing that the accused person is not guilty of such offence and that he is not likely to commit any offence while on bail.
30. The conditions specified under Section 45 of PMLA are mandatory and need to be complied with, which is further strengthened by the provisions of Section 65 and also Section 71 of PMLA. Section 65 requires that the provisions of CrPC shall apply insofar as they are not inconsistent with the provisions of this Act and Section 71 provides that the provisions of PMLA shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. PMLA has an overriding effect and the provisions of CrPC would apply only if they are not inconsistent with the provisions of this Act. Therefore, the conditions enumerated in Section 45 of PMLA will have to be complied with even in respect of an application for bail made under Section 439 CrPC. That coupled with the provisions of Section 24 provides that unless the contrary is proved, the authority or the Court shall presume that proceeds of crime are involved in money-laundering and the burden to prove that the proceeds of crime are not involved, lies on the appellant."
33. The Supreme Court in the case of Nikesh Tarachand Shav Vs. Union of India, (2018) 11 SCC 1 has struck down two conditions under Section 45 of the PMLA as unconstitutional. Subsequently, Section 45 has been amended by Amendment Act 13 of 2018. The words "imprisonment for a term of imprisonment of more than three years under Part A of the Schedule" has been substituted with "accused of an offence under this Act...". Section 45 prior to Nikesh Tarachand (supra) and post Nikesh Tarachand (supra) reads as under:
Section 45 -- Prior to Nikesh Tarachand Shah Section 45 -- Post Nikesh Tarachand Shah "45. Offences to be cognizable and non-bailable.--(1) Notwithstanding 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--
"45. Offences to be cognizable and non-bailable.--(2) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence under this Act 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:
(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 directs:"
Provided that a person, who, is under the age of sixteen years, or is a woman or is sick or infirm, or is accused either on his own or along with other co-accused of money-laundering a sum of less than one crore rupees may be released on bail, if the Special Court so directs:"
(emphasis supplied)
34. The object of PMLA is to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering. Section 44 of the PMLA confers jurisdiction on special court to deal with the offences under PMLA. Section 45 of the PMLA makes the offence of money laundering cognizable and non-bailable notwithstanding anything contained in Code of criminal Procedure, 1973. Money laundering is a serious economic offence and serious threat to the national economy and national interest and, these offences are committed with cool calculation with the motive of personal gain regardless of the consequences on the society.
35. Considering the order dated 23.7.2019 passed by the Supreme Court in Writ Petition (C) No.940 of 2017, in which involvement of the accused in offence has been meticulously flagged, his conduct before the Supreme Court and, the fact that the investigation is still on and money trail has to be completely unearthed, it would not be appropriate to enlarge the accused on bail. Therefore, the plea for bail is refused and the bail application is rejected.
[D.K. Singh, J.] Order Date: 09.12.2020 MRP/-