MONEY LAUNDERING CASES & BAIL

PMLA

The Prevention of Money Laundering Act, 2002 (PMLA) is one of the main legislative acts drafted to combat the laundering of money and its utilisation for financing terrorist and unlawful activities. It is pertinent to mention that the power vested in the state machinery to take cogniege of the violation of PMLA legislation is very wide which is a necessary legislative measure for regulating the well being of the economy of the nation as a whole. This large enforcement power of the state has led to imposition of some stringent conditions for grant of bail in cases related to PMLA.

It is essential to understand that taking cognizance of an offence under the PMLA requires the Central Government to transfer the case from the police to the Enforcement Directorate (ED) which is entitled to investigate the offence under the PMLA. It is pertinent to mention that the ED enjoys a great degree of investigation and enforcement power in money laundering cases including the right to attachment of property being handled by accused persons and search and seizure of properties. The grant of bail in such offences is a serious matter and is considered with great caution.

It is an established principle of law that bail is a matter of right unless certain conditions are satisfied which would make the grant of bail a matter of discretion as well. In PMLA related offences these conditions generally include a deposit of partial proceeds of the crime or attachment of properties which are claimed by the defendant to be his and involvement of accused persons in other pending cases. This has the effect of closely monitoring the activities of the accused persons and ensuring that they don’t flee with the illegally obtained funds. It is thus very clear that these stringent conditions are in compliance with certain governmental policies and objectives and are not invented keeping the hardships of the accused persons in mind.

To conclude, it can be said that in PMLA related offences, bail is considered seriously and certain stringent conditions which are laid down have to be satisfied in order to secure it. These conditions are generally designed in compliance with certain governmental objectives which would help in effectively regulating and controlling the illegally obtained money. Thus, not only are these conditions practical but also are definitely viable and necessary.

BAIL

The conditions imposed on the grant of bail in cases of money laundering revolve around two main points, namely, that the applicant can produce evidence to show that they are not guilty of the offence and that they are not likely to commit any offence while on bail.

The legal validity of the conditions imposed under section 45 of PMLA, and Finance Act, 2018 was struck down by the Hon'ble Supreme Court in its judgment of Nikesh Tarachand (supra).

Despite the invalidity of the two conditions imposed, other statutes, such as the Narcotic Drugs and Psychotropic Substances Act, 1985, U.P. Gangsters and Anti-Social Activities (Prevention) Act, 1986, Terrorist and Disruptive Activities (Prevention) Act, 1987, Drugs and Cosmetics Act, 1940, impose similar conditions for the grant of bail.

Regarding the conditions ,it has been held by the Supreme Court, in the case Ranjitsing Brahmajeetsing Sharma V State of Maharashtra (2005), that the conditions cannot take away the right of the accused to be granted bail.It has also been held that a more than prima facie determination of merits ought to be done at the bail stage by the court. Furthermore, the conclusion drawn in bail proceedings cannot impact the trial, and upon conclusion of trial, an opposite finding may be reached by the court. With respect to the second condition, it has been held that the offence in futuro must be an offence under the same Act, and not any other offence. Further, the antecedents of the accused should weigh critically with the court before determining bail.

CASE STUDY

P. Chidambaram v. Directorate Of Enforcement .

Supreme Court Of India

2019 SCC ONLINE SC 1143

Facts:

This appeal relates to the alleged irregularities in Foreign Investment Promotion Board (FIPB) clearance given to the INX Media for receiving foreign investment to the tune of Rs.305 crores against approved inflow of Rs.4.62 crores. The High Court of Delhi rejected the appellant's plea for anticipatory bail in the case registered by Central Bureau of Investigation (CBI) being RC No.220/2017-E-0011 under Section 120B IPC read with Section 420 IPC, Section 8 and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. By the impugned order, the High Court also refused to grant anticipatory bail in the case registered by the Enforcement Directorate in ECIR No.07/HIU/2017 punishable under Sections 3 and 4 of the Prevention of Money-Laundering Act, 2002.

Issues:

Whether the appellant is entitled to anticipatory bail?

Whether the High Court denied anticipatory bail to the appellant on the basis of materials produced by the respondent in the cover before the court which were never shown to the appellant nor was the appellant confronted with the same?

Whether prosecution under Prevention of Money-Laundering Act, 2002 is maintainable?

Held:

Anticipatory bail is not to be granted as a matter of rule and it has to be granted only when the court is convinced that exceptional circumstances exist to resort to that extraordinary remedy. In the present case, no direction could be issued to the respondent to produce the transcripts of the questions put to the appellant and answers given by the appellant. In the result, the appeal is dismissed. It is for the appellant to work out his remedy in accordance with law. As and when the application for regular bail is filed, the same shall be considered by the learned trial court on its own merits and in accordance with law without being influenced by any of the observations made in this judgment and the impugned order of the High Court.

-Kunal Sinha

[Kunal Sinha is an accomplished Indian lawyer, he is currently practising at the Supreme Court of India and the High Court of Delhi. Mr. Sinha is reachable through his email address – kunaldev@gmail.com and chambers.sinha@gmail.com and his phone number –+ 91 8287409593.]