Delhi High Court
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Delhi High Court: In a case filed seeking bail for an accused being involved in an alleged bank loan scam by Shakti Bhog Foods Limited (SBFL), Jasmeet Singh, J. granted bail considering the medical condition of the accused as the proviso to Section 45(1) of Prevention of Money Laundering Act, 2002 (PMLA), carves out an exception from the rigors of Section 45 for persons who are sick or infirm.

An FIR was registered under Section 120-B read with Sections 420, 467, 468 and 471 of Penal Code, 1860 (‘IPC’) and Section 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988 (‘PC Act’) and since the offences in the FIR are scheduled offences under the provisions of the Prevention of Money Laundering Act, 2002 Enforcement Directorate was roped in.

Submissions

Relying on the medical reports, the counsel for applicant submitted that the applicant suffers from multiple serious ailments like one kidney is non-functional and the other one is impaired resulting in inability to effectively remove toxicity from his body. The Applicant also has a serious heart condition which highlights that he is not only sick, but infirm, and hence, needs to be released on bail in accordance with Proviso to Section 45(1) of PMLA.

Counsel for respondents submitted that a bare perusal of the medical history will show that the applicant is suffering from these ailments from 2001 onwards, and even during the period of alleged offences i.e., from the year 2007 to 2012, the applicant was suffering from these ailments. Hence, all the medical conditions of the applicant are historical. He further submits that the jail provided proper and satisfactory medical facilities to the applicant.

Observations

The Court noted that a bare perusal of the Statement of Objects and Reasons of PMLA goes to show that inclusion of the above conditions for grant of bail as a proviso to section 45(1) of PMLA elucidates the legislature’s intent to incorporate relaxations for persons below sixteen years of age; a woman; or one who is sick or infirm. Thus, the proviso to Section 45(1) of PMLA carves out an exception from the rigors of Section 45 for persons who are sick or infirm.

The Court opined that sick and infirm have not been defined under the PMLA, therefore, the Court relied on dictionaries to define the term, “Sick” which refers to being “affected by illness; unwell, ailing.” and “infirm” is defined as “not physically strong or healthy; weak or feeble, esp. through old age”.

Issue 1: Whether the applicant falls within the category of sick or infirm so as to grant him the benefit of the proviso to section 45(1) PMLA?

The Court noted that in view of the said medical reports, it leaves no room for doubt that the applicant is both, sick and infirm as he is functioning on 30% capacity of one kidney and the other kidney is dead and requires constant monitoring otherwise his fluctuations can cause death. He has also undergone multiple surgeries for removal of his large intestine, gall bladder, peptic ulcer, colostomy and even a hernia operation. He has a pacemaker installed due to his heart condition and is also suffering from Spondylitis and Vertigo.

Issue 2: Whether the applicant suffers from a condition which cannot be addressed from the jail?

On the contention raised by the respondents that that to enlarge the accused on bail, the High Court has to record a finding that the treatment accorded to the accused by the jail authorities is not “Satisfactory”, the Court noted that prisons provide medical facilities but the services are not comparable to or equivalent to the level of treatment and care one can avail from private hospitals. The facilities in the jail are of a general nature and character which is inadequate to monitor proper health of the applicant who is suffering from multiple serious ailments. The jail is not equipped to provide special and intensive treatment and care that the applicant is in need of.

Conclusion

Thus, the Court concluded that his condition is such that he requires emergent medical assistance which cannot be provided in jail in a prompt and efficient manner vis-à-vis hospital atmosphere. The fact that the applicant is suffering from these ailments from the year 2001 is also not of much help to the respondents” as it is a given fact that ailments aggravate with age. Therefore, the ailments which, coupled with old age bring the applicant within the purview of “Infirm Person”.

The Court granted bail to the accused on furnishing a personal bond with surety in the sum of Rs. 50,000 each to the satisfaction of the Investigating Officer, considering that the applicant is aged, sick and infirm, who is suffering from various complicated diseases.

[Devki Nandan Garg v. Directorate of Enforcement, 2022 SCC OnLine Del 3086, decided on 26-09-2022]


Advocates who appeared in this case :

Mr. Siddharth Luthra, Sr. Adv. with Mr. Rishi Agarwala, Mr. Parminder Singh, Mr. Vishnu Tallapragada, Mr. Kanav Vir Singh, Mr. Akshat Kumar and Mr. Fazan Ahmed, Advocates, for the Applicant;

Mr. Zoheb Hossain, Adv. with Mr. Vivek Gurnani, Advocates, for the Respondent.


*Arunima Bose, Editorial Assistant, has prepared this brief.

Case BriefsSupreme Court

Supreme Court: As Congress MP Karti P. Chidambaram has sought review of the 3-judge bench verdict on the Prevention of Money Laundering Act, 2002, the 3-judge bench of NV Ramana, CJ and Dinesh Maheshwari and CT Ravikumar, JJ has agreed to hear the review petition after observing that prima facie, it appears that at least two of the issues raised in the petition require consideration. The Court has hence issued notice in the matter.

In the judgment dated 27.07.2022 in Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929, the bench of AM Khanwilkar, Dinesh Maheshwari and CT Ravikumar, JJ has, in 545-pages-long judgments, has dealt with various aspects of the Prevention of Money Laundering Act, 2002 and has upheld the validity of certain impugned provisions by holding that the same have reasonable nexus with the object sought be achieved i.e. combatting the menace of money laundering.

While the judgment runs into 545 pages, the key takeaways of the judgment are:

  1. Unlike FIR, the Enforcement Case Information Report need not be formally registered. It is also not mandatory to supply it to the accused.
  2. The twin conditions provided under Section 45, though restrict the right of the accused to grant of bail, do not impose absolute restraint on the grant of bail. Not just regular bails but this section also applies to anticipatory bail.
  3. The Court has suggested that the feasibility of placing ED Manual on the official website of ED may be explored.
  4. The power of arrest given to high-ranking officials under Section 19 is not arbitrary.
  5. The summon issued under Section 50 is in connection with the inquiry regarding proceeds of crime which may have been attached and pending adjudication before the Adjudicating Authority. It is not necessarily for initiating a prosecution against the noticee as such and hence, not violative of Articles 20(3) and 21 of the Constitution.
  6. The inclusion of minor offences as scheduled offence is reasonable as the offence of money-laundering is an independent offence and the persons involved in the commission of such offence are grouped together as offenders under this Act. There is no reason to make distinction between them insofar as the offence of money-laundering is concerned.
  7. Same reasoning has been applied to uphold Section 4 that makes no distinction between person directly involved in the process or activity connected with the proceeds of crime and the other not so directly involved. It has been held that the punishment under Section 4 is not in relation to the predicate offence, but offence of money-laundering under Section 3 of the 2002 and hence valid.
  8. The vacancies at the appellate Tribunal must be filled at the as otherwise the aggrieved persons have to rush to the High Court on every occasion which indeed is avoidable.
  9. Whether the amendments to PMLA are Finance Bill/Money Bill is a question already pending for consideration by a larger bench in another case. Hence, it was not taken up in this case.

The comprehensive analysis of the judgment can be read here.

Your cheat sheet to Supreme Court’s 545 pages long Money Laundering verdict

Also read: Supreme Court holds “twin conditions” under Section 45 of PMLA reasonable: Applicability to anticipatory bail, non-cognizable offences discussed; Exception highlighted

Video Explainer: Your cheat sheet to Supreme Court’s 545 pages long Money Laundering verdict 


[Karti P. Chidambaram v. Directorate of Enforcement, 2022 SCC OnLine SC 1084, order dated 26.08.2022]

For Petitioner(s): Senior Advocates Kapil Sibal, Dr. Abhishek Manu Singhvi, Sidharth Luthra, Advocates Arshdeep Singh Khurana, Prateek Chadha, Adit Pujari, Amit Bhandari, Akshat Gupta, Harsh Mittal, Harsh Srivastava, Madhavi Agarwal, Rupali Samuel, Shubhangni Jain, Pankaj Singhal, Hitesh Rai, Aditya Chopra, Ayush Agarwal, Tannavi Sharma, Shally Bhasin (AOR)

For Respondent(s):  Solicitor General Tushar Mehta, Advocates M. K. Maroria (AOR), Deepabali Dutta, Kanu Agarwal, Zoheb Hossain, Rajat Nair

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of AM Khanwilkar*, Dinesh Maheshwari and CT Ravikumar, JJ has, in 545-pages-long judgments, has dealt with various aspects of the Prevention of Money Laundering Act, 2002 and has held that the twin conditions provided under Section 45 of the 2002 Act, though restrict the right of the accused to grant of bail, do not impose absolute restraint on the grant of bail. The discretion vests in the Court which is not arbitrary or irrational but judicial, guided by the principles of law as provided under Section 45 of the 2002 Act.

The Twin Conditions under Section 45 for release on bail

  • that there are reasonable grounds for believing that the accused is not guilty of such offence; and
  • that he/she is not likely to commit any offence while on bail.

The Court has held that the provision in the form of Section 45 of the 2002 Act, as applicable post amendment of 2018, is reasonable and has direct nexus with the purposes and objects sought to be achieved by the 2002 Act to combat the menace of money-laundering having transnational consequences including impacting the financial systems and sovereignty and integrity of the countries.

It is also important to note that similar twin conditions have been provided in several other special legislations validity whereof has been upheld by the Supreme Court being reasonable and having nexus with the purposes and objects sought to be achieved by the concerned special legislations. Besides the special legislation, even the provisions in the general law, such as 1973 Code stipulate compliance of preconditions before releasing the accused on bail. The grant of bail, even though regarded as an important right of the accused, is not a mechanical order to be passed by the Courts. The prayer for grant of bail even in respect of general offences, have to be considered on the basis of objective discernible judicial parameters as delineated by this Court from time to time, on case-to-case basis.

Non-cognizable offence

The Court has rejected the argument that the scheduled offence in a given case may be a non-cognizable offence and yet rigors of Section 45 of the 2002 Act would result in denial of bail even to such accused.

Stating that such an argument was founded on clear misunderstanding of the scheme of the 2002 Act, the Court observed that the offence of money-laundering is one wherein a person, directly or indirectly, attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime. The fact that the proceeds of crime have been generated as a result of criminal activity relating to a scheduled offence, which incidentally happens to be a non-cognizable offence, would make no difference.

“The person is not prosecuted for the scheduled offence by invoking provisions of the 2002 Act, but only when he has derived or obtained property as a result of criminal activity relating to or in relation to a scheduled offence and then indulges in process or activity connected with such proceeds of crime. Suffice it to observe that the argument under consideration is completely misplaced and needs to be rejected.”

Anticipatory Bail

Holding that Section 45 applies to anticipatory bail as well, the Court explained that anticipatory bail is nothing but a bail granted in anticipation of arrest, hence, the principles governing the grant of bail in both cases are more or less on the same footing, except that in case of anticipatory bail the investigation is still underway requiring the presence of the accused before investigation authority. Thus, ordinarily, anticipatory bail is granted in exceptional cases where the accused has been falsely implicated in an offence with a view to harass and humiliate him. Therefore, it would not be logical to disregard the limitations imposed on granting bail under Section 45 of the 2002 Act, in the case of anticipatory bail as well.

“Investigation in an economic offence, more so in case of money-laundering, requires a systematic approach. Further, it can never be the intention of the Parliament to exclude the operation of Section 45 of 2002 Act in the case of anticipatory bail, otherwise, it will create an unnecessary dichotomy between bail and anticipatory bail which not only will be irrational but also discriminatory and arbitrary. Thus, it is totally misconceived that the rigors of Section 45 of the 2002 Act will not apply in the case of anticipatory bail.”

The Court went on to state that it would be preposterous and illogical to hold that if a person applies for bail after arrest, he/she can be granted that relief only if the twin conditions are fulfilled in addition to other stipulations predicated in the 1973 Code; but another person, who is yet to be arrested in connection with the same offence of money-laundering, will not be required to fulfil such twin conditions whilst considering application for grant of bail under Section 438 of the 1973 Code.

It was observed that any other view would be counterproductive and defeat the purposes and objects behind the stringent provision enacted by the Parliament for prevention of money-laundering and to combat the menace on account of such activity which directly impacts the financial systems, including the sovereignty and integrity of the country.

Hence, in whatever form the relief is couched including the nature of proceedings, be it under Section 438 of the Criminal Procedure Code, 1973 or for that matter, by invoking the jurisdiction of the Constitutional Court, the underlying principles and rigors of Section 45 of the 2002 must come into play and without exception ought to be reckoned to uphold the objectives of the 2002 Act, which is a special legislation providing for stringent regulatory measures for combating the menace of moneylaundering.

Exception to strict compliance of the twin conditions

The Court held that Section 436A CrPC, which has come into being on 23.6.2006 vide Act 25 of 2005, is an exception to the strict compliance of the twin conditions under Section 45 of the 2002 Act, which was inserted recognizing the deteriorating state of undertrial prisoners so as to provide them with a remedy in case of unjustified detention.

As the Section 436A of the 1973 Code was inserted after the enactment of the 2002 Act, it would not be appropriate to deny the relief of Section 436A of the 1973 Code which is a wholesome provision beneficial to a person accused under the 2002 Act. However, Section 436A CrPC, does not provide for an absolute right of bail as in the case of default bail under Section 167 CrPC. For, in the fact situation of a case, the Court may still deny the relief owing to ground, such as where the trial was delayed at the instance of accused himself.

The Court explained that this provision is comparable with the statutory bail provision or, so to say, the default bail, to be granted in terms of Section 167 CrPC consequent to failure of the investigating agency to file the chargesheet within the statutory period and, in the context of the 2002 Act, complaint within the specified period after arrest of the person concerned. In the case of Section 167 of the 1973 Code, an indefeasible right is triggered in favour of the accused the moment the investigating agency commits default in filing the chargesheet/complaint within the statutory period. The provision in the form of Section 436A CrPC, as has now come into being is in recognition of the constitutional right of the accused regarding speedy trial under Article 21 of the Constitution.

While this was argued before the Court that this view would impact the objectives of the 2002 Act and is in the nature of super imposition of Section 436A CrPC over Section 45 of the 2002 Act and that the same logic may be invoked in respect of other serious offences, including terrorist offences which would be counterproductive, the Court was unimpressed.

It observed,

“For, it is the constitutional obligation of the State to ensure that trials are concluded expeditiously and at least within a reasonable time where strict bail provisions apply. If a person is detained for a period extending up to one-half of the maximum period of imprisonment specified by law and is still facing trial, it is nothing short of failure of the State in upholding the constitutional rights of the citizens, including person accused of an offence.”

It was hence, held that Section 436A CrPC needs to be construed as a statutory bail provision and akin to Section 167 of the 1973 Code.

[Vijay Madanlal Choudhary v. Union of India, SPECIAL LEAVE PETITION (CRIMINAL) NO. 4634 OF 2014, decided on 27.07.2022]


*Judgment by: Justice AM Khanwilkar

For private parties:  Senior Advocates Kapil Sibal, Sidharth Luthra, Dr. Abhishek Manu Singhvi, Mukul Rohatgi, Amit Desai, S. Niranjan Reddy, Dr. Menaka Guruswamy, Aabad Ponda, Senior Counsel 9Siddharth Aggarwal, Mahesh Jethmalani, N. Hariharan, Vikram Chaudhari, and Advocates Abhimanyu Bhandari and Akshay Nagarajan,

For Union of India:  Tushar Mehta, Solicitor General of India and S.V. Raju, Additional Solicitor General of India