Gujarat High Court
Sunil Surendrakumar Kakkad vs State Of Gujarat on 9 February, 2022
Author: Gita Gopi
Bench: Gita Gopi
R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION NO. 23944 of 2019
With
CRIMINAL MISC.APPLICATION NO. 1 of 2021
In
R/CRIMINAL MISC.APPLICATION NO. 23944 of 2019
With
CRIMINAL MISC.APPLICATION (FOR EXTENSION OF
TEMPORARY BAIL) NO. 7 of 2021
In
R/CRIMINAL MISC.APPLICATION NO. 23944 of 2019
=============================================
SUNIL SURENDRAKUMAR KAKKAD Versus STATE OF GUJARAT ============================================= Appearance:
MR I.H. SYED SENIOR ADVOCATE WITH MR ADITYA A GUPTA(7875) for the Applicant(s) No. 1 MOHIT A GUPTA(8967) for the Applicant(s) No. 1 MR AR GUPTA(1262) for the Applicant(s) No. 1 MR DEVANG VYAS(2794) for the Respondent(s) No. 2 MR PRANAV TRIVEDI APP for the Respondent(s) No. 1 ============================================= CORAM:HONOURABLE MS. JUSTICE GITA GOPI Date : 09/02/2022 CAV ORDER
1. The present application for regular bail under section 439 Cr.P.C. read with section 45 of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as the 'PMLA' for short), has been filed in connection with ECIR No.AMZO/02/2018 for the offences punishable under sections 3 and 4 of the PMLA, registered with Directorate of Enforcement, Ahmedabad having PMLA Case No.4 of 2019 pending before Designated Court, Ahmedabad.Page 1 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022
R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022
2. The applicant was arrested in the matter on 20.09.2019 and in the ground of arrest it was mentioned, that C.B.I. has registered different FIRs alleging violation of sections 114, 201, 406, 409, 418, 420 and 120B of the IPC read with section 13(2) of Prevention of Corruption Act, 1988 (hereinafter referred to as the 'P.C. Act' for short).
2.1 It is alleged that the applicant as one of the Directors of M/s Sai Infosystem (India) Ltd., M/s Atrium Infocomm Pvt. Ltd. and M/s. Click Telecom Pvt. Ltd., during the period between 2009-2014 has cheated the consortium of Banks laid by SBI to the tune of Rs.867.43 Crores. On the basis of FIR registered by CBI, Enforcement Directorate, Ahmedabad on 08.02.2018, registered an ECIR being ECIR/AMZO/02-2018 against the present applicant.
2.2 The first and second summons were issued on 16.07.2019 and 09.08.2019 respectively. The applicant states that he had replied both the summons, and had requested for time to appear before the Investigating Officer. On telephonic instruction, he appeared on 20.09.2019 for the purpose of investigation and till late night, he was interrogated and at around 11:55 p.m., he was informed of his arrest under the PMLA.
Page 2 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 2.3 The applicant states that he is an electronic engineer and had started his business in the year 1992 in the name and style of 'Sai Infosystems', which converted in the year 2003 as 'Sai Info System (India) Pvt. Ltd.' and in the year 2008 'Sai Info System (India) Pvt. Ltd. was again converted to closely hold public limited company i.e. 'Sai Info System (India) Ltd. (hereinafter referred to as 'SIS' for short).
2.4 The applicant states that he had very good business and had reputed clients, therefore, availed various facilities from the Bank under the consortium of SBI based on past performance with the orders on hand being the order of Rs.1600 Crores of Department of Post, order of Rs.700 Crores from Maharashtra Home Department for CCTV Surveillance for entire Mumbai, Rs.64 Crores of Bank of Baroda and Rs.25 to 30 Crores of State Bank of India. Over and above that orders, various others were pending execution. The applicant further states that by his sheer hard-work of more than a decade he had grown in the market of Information Technology, but for the circumstances beyond the applicant and SIS control, the FIRs were filed by the Bankers.
3. Learned Senior Advocate Mr. I.H. Syed along with Mr.Aditya A. Gupta, learned advocate for the applicant, presented a Chart with the details of Schedule Offence, to apprise about the status of the cases Page 3 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 registered against the applicant.
Sr. Offence Date Alleged Charge Custody Bail Quashing No. Details amount Sheet Period Granted Petition.
(crores) Filed?
1. Vastrapur 04.09.2013 33.92 Yes July, 2014- Yes Quashed Employees FIR April, 2015 (Dec 15) 308/2013 (9 months)
2. Vastrapur 19.10.2013 2 Yes July, 2014- Yes Quashed Supplier FIR Sept, 2014 (Dec 15) 395/2013 (2 months)
3. CBI 16.03.2015 104 Yes 12.05.2017 Yes (HC BSM2015E000 (Delay 2 - Bombay) 1 (Click Years) 12.12.2018 Telecom, three (19 Banks single months) FIR)
4. CBI RC.04(E). 25.06.2015 93.83 Yes Yes 2015 (Atrium (Delay of 2 (Sessions Infotech, Two years) Court Seven Banks single Bombay) Quashing FIR) Petitions
5. CBI 07.06.2016 109 are BSM2016E009 (Delay of 3 pending (SIS) Years) before Hon'ble
6. CBI 16.06.2016 377.90 Gujarat BSM2016E010 (Delay of 3 Investig Protection High (SIS) Years) Not ation is Granted Court.
Arrested
7. CBI 18.06.2016 56.14 in by BSM2016E016 (Delay of 3 progress Hon'ble (SIS) Years) Gujarat High
8. CBI 03.08.2016 51.62 Court BSM2016E023 (Delay of 3 (SIS) Years) 9 CBI 04.08.2016 104.78 BSM2016E024 (Delay of 3 (SIS) Years) 3.1 Mr. Syed submits that FIR No.308 of 2013 and FIR No.395 of 2013 for the schedule offence, were quashed on 21.12.2015. Bail was granted in regard to FIRs being CBI BSM2015E0001 and CBI RC.04(E) 2015 by the Bombay High Court and Sessions Court, Bombay respectively. Mr. Syed further stated that the protection of no coercive steps was provided by this Court vide order dated 28.11.2016 in Quashing Petitions, in regard to the Page 4 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 FIRs mentioned at serial nos.5 to 9, in the table, which was further clarified vide order dated 08.06.2017. It is stated that seven Quashing Petitions are pending before this Court and the FIRs, which were registered at Bombay were transferred by order of the Hon'ble Supreme Court in Transfer Petition (Criminal) No.272- 273 of 2018, and thus registered as Sessions Case No.63 of 2017 and Sessions Case No.77 of 2017 at the Special Court, C.B.I. at Ahmedabad.
3.2 Senior Advocate Mr. Syed submitted that, on registration of the FIRs by the C.B.I., which are schedule offences under PMLA, ECIR was registered by Directorate of Enforcement, Ahmedabad, the allegation is that the Company took loan of Rs.867.43 Crores and diverted the loan proceeds by purchasing property worth Rs.56 Crores. Mr. Syed submitted that based on the documents, which are also part of chargesheet, it could be considered as a genuine case of business failure, as till December 2012, SIS was making regular payment to the banks including the SBI. Mr. Syed stated that the Company had repaid Rs.342 Crores to the Bank.
3.3 It was submitted that the Company was I.T. Total Solution Pvt., which provided turn-key projects and was carrying out healthy operations from 1992 to 2012. In the year 2011, the revenue of the Company was Rs.1,138 Crores, net profit was Rs.74 Crores and the tax Page 5 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 paid was Rs.18.46 Crores and the Company has successfully executed business orders received from Courts and prisons, health department, education department and revenue department etc., and the Company had entered into public private agreements with BSNL and MTNL and business was done through the said agreement with various government companies. He submitted that till 2012, the financial position of the Company was sound and the Company was functioning for a period of 20 years.
3.4 Mr. Syed submitted that it was totally because of the business failure and the consequences that followed, led to registration of the FIRs. The Company has started making investment worth crores of rupees; however, State Bank of India and Allahabad Bank had delayed issuance of sanction performance bank guarantee, which resulted in cancellation of the orders given by Government of Maharashtra worth Rs.998.92 crores and Department of Post, New Delhi worth Rs.1,530 crores and the investment therefore, went in vain. He submits that the business of the Company collapsed due to non-cooperation of banks, as the sanctioned bank guarantee was not released on time, which led to withdrawal of various major orders and this led to employees unrest and financial distress.
Page 6 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 3.5 Mr. Syed submitted that the Forensic/Audit report of the SBI based on Forensic report of Dun & Bradstree, a multinational firm, has noted that the debtors worth Rs.506 Crores refused to pay dues of the Company on account of breach of agreement and the said Forensic/Audit report also reflects that as per the agreement with BSNL, due to the pre-mature termination of the contract, the assets set-up by the Company, would be transferred to BSNL at zero cost and thus, caused a total loss of Rs.602 crores of assets. He submitted that the inventory was not realized, which amounted to 204 crores, thus, led to cash crunch, as per the balance-sheet of 2012-13; and the forensic report also suggests that non tangible assets at that time i.e. research and development, technology, software, human resources, patent, copy rights, were worth Rs.500 crores, thus Mr. Syed submitted, that approximately 1812 crores got stuck with various operations and could not be recovered, which led to financial liquidity crunch and company could not honour the financial obligations of the Banks.
3.6 Mr. Syed further contended that as per the conclusion of the SBI investigation report, based on forensic audit, the Company was awarded prestigious projects and was competing with other global players like TCS, HP, Infosys, Wipro, HCL, IBC etc. The Company did not have infrastructure which may be considered at par with other global players. Forensic report suggests that Page 7 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 the Company used to participate in high value projects without proper Techno Economic Viability and the Company did not ensure proper financial closure before furnishing EMD/PBG/Post-dated cheques and the terms of financing fixed assets were not properly understood at the time of appraisal by the member banks and since the terms of the projects were not fulfilled, the equipments stood transferred to BSNL at zero cost and the realization of receivables/debtors was linked with providing uninterrupted AMC services, failing which the entire receivables amounting to Rs.506.51 crores have become doubtful. Thus, Mr. Syed submitted that it was absolutely a business failure, which had led to the financial liquidity crunch and in the consequence FIRs came to be registered against the applicant and he is made accused in nine schedule offences.
3.7 Mr. Syed stated that earlier the standard for grant of bail in PMLA matters was higher on account of twin conditions in section 45 of PMLA; however, the same were struck down by the Hon'ble Supreme Court in the case of Nikesh Tarachand Shah Vs. Union of India (2018 11 SCC 1), thus submitted that now the considerations for grant of bail applicable to an offence under PMLA is identically similar to grant of bail in an offence under IPC. Mr. Syed, thus submitted that regular bail has been granted in large number of PMLA cases after Nikesh Tarachand Shah (supra). Mr. Syed urged to Page 8 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 consider the ground that the applicant has already spent 20 months imprisonment and cumulatively has spent 47 months and the punishment for the schedule offence is maximum of 7 years.
3.8 Countering the argument of the respondent Enforcement Directorate that by amendment made vide Finance Act, 2018, the words "under this Act" were introduced in Section 45 which has come into effect from 19.04.2018, has revived the twin conditions for grant of bail under section 45, Mr. Syed, senior advocate submits that, this argument has been rejected by all the High Courts throughout India including this Court in various cases.
3.9 Alternatively, Mr. Syed, senior advocate submitted that twin conditions do not apply in the present case, as the applicant is guilty of schedule offences, which were falling under part-B of the Schedule before 2013 amendment and the rigors of twin conditions do not apply to offences falling under part-B of the Schedule. It is submitted that after 2013 amendment, all offences under part-B of the Schedule were shifted to part-A. 3.10 Countering the argument that the present applicant was extradited from Liberia in July, 2014 and therefore, he is a flight risk, Mr. Syed stated that, when the applicant moved to Liberia in June, 2013, no FIR was Page 9 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 pending against him and the applicant was extradited in connection with FIR No.308 of 2013 and the applicant was granted temporary bail vide order dated 16.02.2015 in CRMA No.3192 of 2015 and thereafter, after considering the submission regarding flight risk, the applicant was granted bail in CRMA No.18834 of 2014 on 01.04.2015. He submits that later by order dated 21.12.2015, the FIR was quashed by this Court in CRMA No.13736 of 2015 with 13731 of 2015. He submits that in connection with FIR RCBSM2015E001, he was granted bail by the Bombay High Court and as this Court has quashed FIR No.308 of 2013, the Chief Judicial Magistrate by order dated 08.01.2016, had ordered for releasing of the passport of the applicant. Mr. Syed, stated that the applicant has been granted temporary bail on various occasions and has never violated any condition of temporary bail and always surrendered on time. Senior advocate, Mr. Syed, states that reverse burden of proof as provided under section 24 PMLA applies at the stage of trial and not at the stage of bail.
3.11 Mr. Syed relied on the recent judgment of the Hon'ble Supreme Court in case of Directorate of Enforcement Vs. Deepak Virendra Kochhar passed on 10.01.2022 in SLP (Cr.) No.7800 of 2021, to submit that, the Hon'ble Supreme Court had dismissed the SLP and found no reason to interfere with the impugned order passed by the High Court of Bombay, granting bail to the Page 10 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 applicant therein, however the question of law was kept open to be decided in an appropriate case.
3.12 Mr. Syed placed reliance on Upendra Rai Vs. CBI & Anr. (2021 SCC Online Del 2494), to submit that section 44 of PMLA, contemplates the joint trial of the schedule offences along with offence under PMLA Act, therefore, it is unlikely that the trial would commence anytime soon. He submits that the entire evidence is based on the documentary evidence and all transactions were either by cheque transaction or banking transaction, hence, the custody of the applicant is no longer necessary for those alleged offences.
3.13 Mr. Syed during the course of arguments referred the judgments of (i) Sanjay Chandra Vs. CBI [2012 1 SCC 40], (ii) P.Chidambaram Vs. Directorate of Enforcement [2019 SCC Online 1549], (iii) Jignesh Kishorebhai Bhajiawala Vs. State of Gujarat [CRMA No.7970 of 2017] (iv) Afroz Hasanfatta Vs. State of Gujarat [CRMA No.1291 of 2015] (v) D.K. Shivakumar Vs. Directorate of Enforcement [2019 264 DLT 586] (vi) Kirit Rasiklal Shah Vs. Rajesh Pandey [Criminal Appeal No.398 of 2019] (vii) Ankush Bansal S/o. Nareshbansal Vs. State of Gujarat [CRMA No.14446 of 2015] (viii) Aman Krishanlal Sachdeva S/o. Shri Krishan Lal Sachdeva Vs. Enforcement Directorate [CRMA No.16555 of 2015] (ix) Kiran Jayantilal Mala Vs. State of Gujarat [CRMA No.3952 Page 11 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 of 2016] (x) Afroz Hasanfatta Vs. Director of Enforcement [SLP (Crl) No.8528 of 2015] (xi) Rohit Tandon Vs. Enforcement Directorate [Bail Appl. No. 437 of 2018] (xii) Pasumarthi Venkata Satyanarayana Sarma Vs. Assistant Director, Enforcement Directorate [CRMA No.2774 of 2021] (xiii) Sai Chandrasekhar Vs. Directorate of Enforcement [(2021) SCC Online 1081] (xiv) Deepak Virendra Kochhar Vs. Directorate of Enforcement [Criminal Bail Application No.1322 of 2020] (xv) Vinod Bhandari Vs. Assistant Director, Directorate of Enforcement [MANU/MP/0618/2018] (xvi) Sameer M. Bhujbal Vs. Assistant Director, Directorate of Enforcement and Anr. [Bail Application No.286 of 2018] (xvii) Ahilya Devi Vs. The State of Bihar And Ors. [MANU/ BH/0245/2020] (xviii) All Cargo Movers Vs. Dinesh Bhadarmal Jani [2007 14 SCC] (xix) Nikesh Tarachand Shah Vs. Union of India [2018 11 SCC 1].
4. Mr. Devang Vyas, learned A.S.G., submitted that on the basis of information/material, as evident from FIRs of CBI Mumbai, bearing FIRs Nos.
RCBSM2016E0024 dated 04.08.2016, RCBSM2016E0023 dated 03.08.2016, RCBSM2016E009 dated 07.06.2016, RCBSM2016E016 dated 28.06.2016 and RCBSM2016E010 dated 16.06.2016, under sections 120B read with section 420 of IPC and section 13(2) read with section 13(1)(d) of P.C. Act, the Directorate of Enforcement, Ahmedabad Zonal Office, has started investigation for commission of offence under Section 3 of Page 12 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 PMLA punishable under section 4 of the said Act against M/s. SIS, Chairman of SIS and others, who by criminal conspiracy cheated the Bank of Baroda, Allahabad Bank, Corporation Bank, State bank of Bikaner and Jaipur and State Bank of India to the tune of Rs.699.44 crores under various types of loan/credit facilities.
4.1 Mr. Vyas, learned A.S.G., further stated that, for availing maximum loan from the banks, the Directors of SIS entered into a conspiracy with Banks and in pursuance of the same, the company showed false and inflated stocks and inflated dues from the debtors and on the basis of these false documents, the company induced the banks and availed various credit facilities and got sanctioned higher amounts of loans, which were later on diverted in purchase of properties and for other personal purposes; the LCs were opened on related companies and all of them got developed, and the accused company fraudulently and dishonestly siphoned off the public funds.
4.2 Learned A.S.G., Mr. Vyas contended that during the course of investigation under PMLA, it was found that the applicant had incorporated various group of companies, which were basically shell companies and having no genuine business, for use of circular transactions to show higher turnover. He submits that the applicant is also director of M/s. Atruim Infocomm Pvt.
Page 13 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 Ltd. and M/s. Click Telecom Pvt. Ltd, group companies of SIS, against them the FIRs were registered by CBI, BS&FC Mumbai and chargesheets were filed for causing loss of approximately Rs.93.93 crores and approximately Rs.74.16 crores respectively to the various banks by commission of cheating.
4.3 He submits that during the course of investigation, the statements of bank employees/complainants of various Banks and statement of Directors and employees of SIS were recorded under the provisions of section 50(2) & (3) of PMLA, which reveals that the main person responsible for day-to-day business activities of SIS is the Director of SIS. Relying on the statement of one of the Director of SIS dated 14.03.2018, Mr. Vyas stated that, in his statement the Director had stated that he was working as Personal Assistant of Samir Kakkad and he had joined SIS during the year 2007 as Peon and used to get salary of Rs.9500 per month till 2013, thereafter he was made Director of SIS in September 2013. Mr. Vyas submits that statements CFO/VP of SIS were recorded on 11.05.2018 and 26.09.2019, wherein he stated that most of the transactions with group of companies are circular transactions which were done for inflating the balance sheet of SIS, so that it can participate in big tenders and avail loans from various banks.
Page 14 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 4.4 Mr. Vyas, learned A.S.G. relying on the statement of Sr. Finance Manager, stated that SIS was having group of companies and seven companies, were known as 'seven sisters' and all the transactions in these companies are circular transactions, which were done for inflating the balance sheet of SIS so that it can participate in big tenders and consequently availed loans.
4.5 Learned A.S.G. Mr. Vyas further submitted that on 20.09.2019, statement of the applicant was recorded; however, as he was not cooperative with investigation, he was arrested on 20.09.2019 and produced before the Special Court under P.M.L.A. at Ahmedabad along with remand application and at last on 03.10.2019, the Special Court sent the applicant in judicial custody.
4.6 Learned A.S.G. Mr. Vyas, submitted that on inquiry with the banks concerned, it was revealed that huge amounts of money running into several crores of rupees, received by the companies of the applicant and loans/advances were diverted out to the various companies and investigation revealed that more than 10 companies in India and certain other companies outside India are controlled by the applicant and these companies were used to divert and misutilize public money availed from the various banks as loans. He submits that a Provisional Attachment Order No.02/2019 was issued attaching immovable properties worth Rs.56.21 crores owned by the SIS and its group of companies.
Page 15 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 4.7 It is submitted that the applicant was having mens rea of committing crime, as he has submitted forged and false documents to the banks for availing various credit facilities. He states that enough documentary evidence/material are available with the respondent, which shows that the applicant has committed the offence of money laundering. It is stated that subsequent to the issuance of Provisional Attachment Order, a prosecution complaint being PMLA Case No.04/2019 was registered before the Special Court under PMLA on 16.11.2019 against total seven accused including the applicant and Court has issued the process. It is contended that from the said prosecution complaint, it is evident that the applicant was the master mind and he was controlling the business affairs of all the group companies.
4.8 Mr. Vyas, learned A.S.G. stated that original complaint No.1227/2019 filed before the adjudicating authority on 29.11.2019 is yet to be decided and as the matter is pending before the Special Court and the witnesses and evidences are yet to be examined by the Court, enlarging the applicant may frustrate the proceedings as the applicant may influence the witnesses and tamper the evidences. He submits that the economic offences are different from other offences. The offence of money laundering is a serious threat to the national economy and national interest.
Page 16 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 4.9 Mr. Vyas placed reliance on the decision of The Asst. Director Enforcement Directorate Vs. Dr. V.C. Mohan, rendered by the Apex Court in Criminal Appeal No.21 of 2022, dated 04.01.2022, to submit that, while remitting the matter back to the High Court, the Hon'ble Supreme Court observed that, while considering the prayer for grant of anticipatory bail in connection with PMLA offence, the mandate of Section 45 of the PMLA Act would come into play.
4.10 Learned A.S.G., Mr. Vyas, stated that section 45 of the PMLA could not be ignored. The offence is distinct and becomes punishable under section 4 of PMLA, where the proceeds of the crime involved in money laundering relates to any offences under paragraph 2 of Part A of the Schedule, the punishment extends to 10 years, which would be rigorous imprisonment. Mr. Vyas stated that definition, as provided under section 2(2) should be considered while interpreting the provisions of PMLA. Mr. Vyas submitted that the applicant was accorded sufficient opportunity to rebut the burden in regards to the properties which have been purchased in foreign countries and to explain about the proceeds of the crime. Mr. Vyas, learned A.S.G. stated that the statutory provision of sections 22, 23, 24 of the PMLA becomes applicable and the burden would be on the accused even in this proceeding. He submitted that rigor of Section 24 of PMLA while reaching the twin Page 17 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 conditions under section 45 of the Act, would become applicable and thus urged to reject the bail application.
4.11 In support of his submission, Mr. Vyas also relied on the judgments of (i) Gautam Kundu Vs. Manoj Kumar, AD, Directorate of Enforcement, (ii) Union of India Vs. Hassan Ali Khan And Anr., (iii) Gautam Khaitan Vs. Enforcement Directorate (iv) State of Gujarat Vs. Mohanlal Jitamalji Porwal And Anr. [(1987) 2 SCC 364, (v) Y.S. Jagan Mohan Reddy Vs. CBI [(2013) 7 SCC 439], (vi) Nimmagadda Prasad Vs. CBI, (vii) Motilal Patwa Vs. Union of India [CRMA No.73052 of 2019], (viii) Vidhyut Kumar Sarkar Vs. Union of India & Ors. [CRMA No.73325 of 2019], (ix) Mukeshkumar S/o. Jai Kishan Sharma Vs. State of Gujarat & Ors., [ SCRA No.5002 of 2015], (x) Directorate of Enforcement, New Delhi Vs. Upendra Rai [SLP (Crl.) Diary No.(S) 5150 of 2020] (xi) Nimmagadda Prasad Vs. Central Bureau of Investigation [(2013) 7 SCC 466] (xii) Directorate of Enforcement Vs. Dr. Shivinder Mohan Singh [SLP (Crl.) No.(s) 3474 of 2020] (xiii) State of Bihar Vs. Amit Kumar [(2017) 13 SCC 751], (xiv) Kutbuddin Vs. Raja Nizamuddin Saiyed Vs. State of Gujarat [CRMA No.9162 of 2014], (xv) Sharafat parmar [Criminal Appeal Nos.143-144 of 2015, SLP (Crl.) Nos.9805-9806], (xvi) State of Gujarat Vs. Mohanlala Jitamalji Porwal [(1987) 2 SCC 364].
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5. Post Nikesh Tarachand Shah Vs. Union of India (supra), section 45 of PMLA saw amendment vide from 19.04.2018. After effecting amendment to section 45(1) of the PMLA, the words "under this Act" are read to sub- section (1) of section 45 of the Act. On a comparative reading of section 45(1) of the Act, pre-amendment and post-amendment, as could be observed, original sub- section 45(1)(ii) is neither revived or resurrected by the amending Act. The Notification dated 29.03.2018 is silent about its retrospective applicability.
5.1 In Nikesh Tarachand Shah, the Hon'ble Apex Court while considering the effect of section 45 of PMLA had made certain observations, which would be apt to refer herein in context of the submission made by the learned advocates on record.
43. However, the learned Attorney General has argued before us that we must uphold section 45 as it is part of a complete code under the 2002 Act. According to him, section 45, when read with section 3 and 4, would necessarily lead to the conclusion that the source of the proceeds of crime, being the scheduled offence, and the money laundering offence, would have to be tried together, and the nexus that is provided is because the source of money laundering being as important as money laundering itself, conditions under section 45 would have to be applied. We are afraid that, for all the reasons given by us earlier in this judgment, we are unable to agree. The learned Attorney General asked us to read down section 45 in that when the Court is satisfied that there are reasonable grounds for Page 19 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 believing that a person is not guilty of an offence, it only meant that the Court must prima facie come to such a conclusion. Secondly, the fact that he is not likely to commit "any offence"
while on bail would only be restricted to any offence of a like nature. Again, we are afraid that merely reading down the two conditions would not get rid of the vice of manifest arbitrariness and discrimination, as has been pointed out by us hereinabove. Also, we cannot agree with the learned Attorney General that Section 45 imposes two conditions which are akin to conditions that are specified for grant of ordinary bail. For this purpose, he referred us to Amarmani Tripathi (supra) at para 18, in which it was stated that, for grant of bail, the Court has to see whether there is prima facie or reasonable ground to believe that the accused has committed the offence, and the likelihood of that offence being repeated has also be seen. It is obvious that the twin conditions set down in Section 45 are a much higher threshold bar than any of the conditions laid down in paragraph 18 of the aforesaid judgment. In fact, the presumption of innocence, which is attached to any person being prosecuted of an offence, is inverted by the conditions specified in Section 45, whereas for grant of ordinary bail the presumption of innocence attaches, after which the various factors set out in paragraph 18 of the judgment are to be looked at. Under Section 45, the Court must be satisfied that there are reasonable grounds to believe that the person is not guilty of such offence and that he is not likely to commit any offence while on bail.
46. We must not forget that Section 45 is a drastic provision which turns on its head the presumption of innocence which is fundamental to a person accused of any offence. Before application of a section which makes drastic inroads into the fundamental right of personal liberty guaranteed by Article 21 of the Constitution of India, we must be doubly sure that such provision furthers a compelling State interest for tackling serious crime. Absent any Page 20 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 such compelling State interest, the indiscriminate application of the provisions of Section 45 will certainly violate Article 21 of the Constitution. Provisions akin to Section 45 have only been upheld on the ground that there is a compelling State interest in tackling crimes of an extremely heinous nature.
6. In Nikesh Tarachand Shah, the Hon'ble Apex Court, thereafter concluded in paragraph-54 as under:
54. Regard being had to the above, we declare Section 45 (1) of the Prevention of Money Laundering Act, 2002, insofar as it imposes two further conditions for release on bail, to be unconstitutional as it violates Articles 14 and 21 of the Constitution of India. All the matters before us in which bail has been denied, because of the presence of the twin conditions contained in Section 45, will now go back to the respective Courts which denied bail. All such orders are set aside, and the cases remanded to the respective Courts to be heard on merits, without application of the twin conditions contained in Section 45 of the 2002 Act.
Considering that persons are languishing in jail and that personal liberty is involved, all these matters are to be taken up at the earliest by the respective Courts for fresh decision. The writ petitions and the appeals are disposed of accordingly.
6.1 Section 45(1) of the PMLA to the extent of imposing two further conditions for release on bail were declared to be unconstitutional as it violates Articles 14 and 21 of the Constitution of India. The Hon'ble Apex Court thus considering the said aspect had relegated all the matters wherein the bails were denied, to the Page 21 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 respective Courts to hear it afresh on merits without the application of the twin conditions contained in section 45 of the PMLA. Under these directions, when the matters were to be reconsidered without application of twin conditions of section 45, as it stood prior to the judgment of Nikesh Tarachand Shah (supra), in all the bail applications necessary orders would have followed. The important issue, now for consideration would be whether the Hon'ble Supreme Court decision in the case of Nikesh Tarachand Shah (supra) can be said to have lost its significance because of the amendment in section 45 of the PMLA. It would be significant to observe that the very declaration by the Hon'ble Apex Court of the twin conditions under section 45 of the Act as unconstitutional, would mean the twin conditions are to be treated, as though have never been passed. The consequences of declaration of unconstitutionality have to be dealt with only by the Court. The notification dated 29.03.2018 is silent about retrospective applicability.
6.2 Learned A.S.G. during the course of argument placed reliance on the Division Bench judgment of the High court of Judicature at Bombay Bench at Nagpur, in case of Ajay Kumar S/o. Chandraprakash Baheti Vs. Directorate of Enforcement, in Criminal Application (BA) No.1149 of 2021, which was under reference. The bench concluded that the reference arose out of the statutory jurisdiction and not constitutional jurisdiction of Page 22 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 that Court. It was observed that unless and until there would be a proper challenge and pleading, the issue of constitutional validity cannot be undertaken. The Court has clarified at the very beginning that the constitutional validity of amending Act No.13 of 2018 was not the subject matter of challenge, and thus, further observed that the legislature has the power and competence to amend the provisions of the Act and unless the amended provision is struck down by the Courts, it cannot be watered down, and thus has observed that after the amendment, the entire complexion of section 45 has been changed, thus the Hon'ble Court did not concur with the contention that the entire section has to be re-enacted by way of amendment after the decision of Nikesh Shah (supra). Therefore, the reference Court came to their conclusion that the twin conditions would revive and operate by virtue of amendment Act, which was in force, and thus in view of the observation, the Bench answered by stating that the twin conditions in section 45(1) of 2002 Act, which was declared unconstitutional by the judgment of Apex Court in Nikesh T. Shah (supra), stand revived in view of the legislative intervention vide amendment Act 13 of 2018.
6.3 In Upendra Rai Vs. CBI & Anr. (supra), it has been observed that the amendment to section 45 does not revive the twin conditions. The decision in Upendra Rai (supra) has been challenged before the Apex Court and Page 23 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 till further orders the impugned order has been stayed by the Hon'ble Supreme Court in SLP (Crl.) No.2598 of 2020 vide order dated 03.06.2020. Decision in Dr. Shivinder Mohan Singh of Delhi High Court has also been stayed by the Hon'ble Supreme Court in its order dated 31.07.2020 in SLP (Crl.) No.3474 of 2020.
6.3.1 In Dr. V.C. Mohan (supra), the order rendered on 04.01.2022 in Criminal Appeal No.21 of 2022 by Apex Court, the observations are made that judgment of Nikesh Tavachand Shah Vs. Union of India & Anr. (supra), have been misunderstood; and that it is one thing to say that section 45 of PMLA Act, to offences under the ordinary law would not get attracted but once the prayer for anticipatory bail is made in connection with offence under the PMLA Act, the underlying principles and rigors of section 45 of the PMLA Act must get triggered. It has been further observed that the duty of Court is to examine the jurisdictional facts including the mandate of Section 45 of the PMLA Act, which must be kept in mind.
6.4 In the case of Directorate of Enforcement Vs. Deepak Virendra Kochhar & Anr. (supra), the Hon'ble Supreme Court while considering the bail application did not deem fit to interfere with the reasons passed by the High Court granting bail and further deem fit to keep the question of law open, to be decided in an appropriate case.
Page 24 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 6.5 The provisions of law which are declared unconstitutional is not law, it confers no rights, it imposes no duties, it becomes inoperative, as though it has never been passed. Since the Notification dated 29.03.2018 has remained silent about its retrospective applicability, this Court in the present bail application, while observing that sub-section 45(1) (ii) have neither been revived nor resurrected by the amending Act, would consider this bail application on the premise that there is no rigor of the twin conditions of section 45(1) of PMLA.
7. Nikesh Tarachand Shah (supra) has referred to the judgment of Gorav Kathuria Vs. Union of India and Ors., (2016 SCC Online P&H 3428), in paragraph no.52, which reads as under:
52. In Gorav Kathuria (supra), the 2012 Amendment Act read down having regard to the object sought to be achieved by the amendment, namely, that Part B of the Schedule is being made Part A of the Schedule, so that the provision of a monetary threshold limit does not apply to the offences contained therein. The High Court concluded:
Guided by the aforesaid principles laid down by the Hon'ble Supreme Court regarding statutory interpretation and the duty of the Court to secure the ends of justice, we have no hesitation in holding that in 2013, Part B of the Schedule was omitted and the Scheduled Offences falling thereunder were incorporated in Part A with the sole object to overcome the Page 25 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 monetary threshold limit of Rs. 30 lakhs for invocation of PMLA in respect of the laundering of proceeds of crime involved in those offences. No substantive amendment was proposed with express intention to apply limitations on grant of bail as contained in Section 45 (1) in respect of persons accused of such offences which were earlier listed in Part B. Therefore, twin limitations in grant of bail contained in Section 45 (1) as it stands today, are not applicable qua a person accused of such offences which were earlier listed in Part B."
8. In case of P. Chidambaram Vs. Directorate of Enforcement, [(2020) 13 SCC 791], the Hon'ble Supreme Court in para-23 observed as under:
"23. Thus from cumulative perusal of the judgments cited on either side including the one rendered by the Constitution Bench of this Court, it could be deduced that the basic jurisprudence relating to bail remains the same inasmuch as the grant of bail is the rule and refusal is the exception so as to ensure that the accused has the opportunity of securing fair trial. However, while considering the same the gravity of the offence is an aspect which is required to be kept in view by the Court. The gravity for the said purpose will have to be gathered from the facts and circumstances arising in each case. Keeping in view the consequences that would befall on the society in cases of financial irregularities, it has been held that even economic offences would fall under the category of "grave offence" and in such circumstance while considering the application for bail in such matters, the Court will have to deal with the same, being sensitive to the nature of allegation made against the accused. One of the circumstances to consider the gravity of the offence is also the term of sentence that is prescribed for the offence the Page 26 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 accused is alleged to have committed. Such consideration with regard to the gravity of offence is a factor which is in addition to the triple test or the tripod test that would be normally applied. In that regard what is also to be kept in perspective is that even if the allegation is one of grave economic offence, it is not a rule that bail should be denied in every case since there is no such bar created in the relevant enactment passed by the legislature nor does the bail jurisprudence provides so. Therefore, the underlining conclusion is that irrespective of the nature and gravity of charge, the precedent of another case alone will not be the basis for either grant or refusal of bail though it may have a bearing on principle. But ultimately the consideration will have to be on case to case basis on the facts involved therein and securing the presence of the accused to stand trial."
8.1 While dealing with the bail application, three factors are mainly to be seen namely; (i) flight risk (ii) tampering evidence and (iii) influencing witnesses.
So far as flight risk in context of applicant is concerned, the proceeding in relation to earlier FIRs against the applicant has taken care of the said factor, further the condition of surrender of passport can secure the presence of applicant during the trial. So far, no overt act is alleged against the applicant, who is on interim bail vide order dated 28.10.2021 in Cr.M.A. No.6 of 2021 in present Cr.M.A. No.23944 of 2019 and extended from time to time, to even consider the aspect of influencing the witnesses. Further, all the necessary documents and evidence would be in the custody of investigating agency, Page 27 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 so the fear of tampering with the evidence would also not arise.
9. In the present case, the applicant has already spent 20 months imprisonment and in total has spent 47 months. Considering the punishment to sections invoked under the schedule offence, this Court finds the present to be a fit case, where discretion could be exercised in favour of the applicant.
10. Hence, the present application is allowed. The applicant is ordered to be released on regular bail in connection with ECIR No.AMZO/02/2018 registered with Directorate of Enforcement, Ahmedabad for the offences punishable under sections 3 and 4 of the PMLA on executing a personal bond of Rs.50,000/- (Rupees Fifty Thousand only) with one surety of the like amount to the satisfaction of the trial Court and subject to the conditions that he shall;
[a] not take undue advantage of liberty or misuse liberty;
[b] not act in a manner injurious to the interest of the prosecution;
[c] surrender passport, if any, to the lower court within a week;
[d] not leave India without prior permission of the concerned trial court;
[e] furnish the present address of residence to the Page 28 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022 R/CR.MA/23944/2019 CAV ORDER DATED: 09/02/2022 Investigating Officer and also to the Court at the time of execution of the bond and shall not change the residence without prior permission of the concerned trial court;
11. In view of the above, the connected Criminal Misc. Application (For extension of Temporary Bail) No.7 of 2021 and Criminal Misc. Application No.1 of 2021 stand disposed of.
12. Rule is made absolute to the aforesaid extent. Direct service is permitted. Registry to communicate this order to the concerned Court/authority by Fax or Email forthwith.
(GITA GOPI, J.) Pankaj Page 29 of 29 Downloaded on : Wed Feb 09 21:19:28 IST 2022