The Union Of India vs Yogesh Narayanrao Deshmukh And ...
2021 Latest Caselaw 12830 Bom

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 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
      CRIMINAL APPELLATE JURISDICTION

          CRIMINAL APPLICATION NO.158 OF 2021

The Union of India,
Through,
Directorate of Enforcement,
4th Floor, Kaiser-I-Hind,
Currimbhoy Road, Ballard Estate,
Mumbai-400 001.
(Mr. Niraj Kumar, the Asst. Director, ED       ... Applicants

Vs

1 Shri Yogesh Narayanrao Deshmukh
Age 43 years,
Virajmaan Villa, Opp: Rosalie Complex,
Behind D Mart, Godrej Hill Road,
Barave, Kalyan (West) 421 301      .. Respondent/Accd.

2 The State of Maharashtra

                                ...

Mr. Anil Singh, Additional Solicitor General a/w Mr.
Aditya Thakkar with Mr. Shreeram Shirsat a/w Ms.Smita
Thakur a/w Mr. Pranav Thakur a/w Mr. Amardeep Singh
Sra, for the Applicants.

Mr. Rajiv Chavan, Senior Counsel, a/w Mr. Aniket Nikam
a/w. Mr. Mayank Tripathi with Ms. Priyanka Dubey a/w
Ms. Aamrin Malik i/by Hedgehog & Fox LLP for the
Respondent No.1.




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Ms. P.P.Shinde, APP for the Respondent-State.


              CORAM : SANDEEP K. SHINDE J.
              RESERVED ON: 25TH AUGUST, 2021.
             PRONOUNCED ON: 8TH SEPTEMBER, 2021

JUDGMENT :

This application under Section 439(2) of the Code

of Criminal Procedure, 1973 ('Cr.P.C' for short) challenges

the order dated 11th August, 2021 passed by the learned

Special Judge designated under the PMLA Act at Greater

Bombay for Bombay, granting bail in PMLA Case, ECIR

14/MZO/2013 to the respondent.

2 Applicant Directorate of Enforcement Department

of Revenue, Ministry of Finance, Government of India is,

the statutory Investigating Agency established in India, and

entrusted with the task and authority to implement and

enforce the provisions of the Prevention of Money

Laundering Act, 2002 (Hereinafter referred to as "PMLA

Act").

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                                                   Cri.APPLN-158-2021.odt




3               Heard Mr. Anil Singh, the learned Additional

Solicitor General and Mr. Rajiv Chavan, the learned Senior

Counsel for the respondent no.1.

4 Mr. Chavan the learned Senior Counsel for the

respondent no.1 has raised preliminary issue as to the

maintainability of the application fled under Section 439(2)

of the Code of Criminal Procedure, 1973 ('Cr.P.C.' for short)

and would contend that provisions of Section 439(2) of the

Cr.P.C. cannot apply in a case where an order for release of

bail has not been availed of.

5 Mr. Anil Singh, the learned Additional Solicitor

General for applicants contended that;

(i) The Trial Court while granting bail relied on the

irrelevant material although prima-facie, case of money

laundering has been made out against the respondent no.1;

(ii)      The learned Court has not recorded, what were the


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fresh grounds which persuade it to take a view diferent

from one taken in the earlier application;

(iii) after rejecting frst bail application on 18 th June, 2021,

there was no change in circumstance to review its frst

order

(iv) that twin conditions of Section 45(1) of the PMLA Act

were not adhered to by the learned Judge while granting

bail to the respondent no.1.

6 Two points of law of some consequences have

fallen for decision in this application;

(i) Whether Section 439(2) of the Cr.P.C. can have no application unless accused is released from the 'custody' ?

(ii) Whether decision in Nikesh Tarachand Shah 2016(11) SCC 1 has lost its signifcance because of amendment in Section 45(1) of the PMLA Act

AND

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(iii) Whether Trial Court while granting bail, acted upon the irrelevant material and ignored the relevant material ?

FACTUAL MATRIX-PROSECUTION CASE :

7 Briefy stating, case of the prosecution is that the

MRA Marg Police Station registered First Information Report

No.216 of 2013 dated 30th September, 2013 under Sections

120B, 467 and 471 of the Indian Penal Code, 1861 ('IPC' for

short) against M/s. National Spot Exchange Limited

(hereinafter referred to as 'NSEL'), its directors and key

officials of NSEL, 25 defaulters of NSEL and others on a

complaint fled by the Shri Pankaj Ramnaresh Saraf. He

stated that he was to receive payments against trader's

contracts ofered by the NSEL for various commodities; that

he was cheated by NSEL by creating false impression of

being proper spot exchange with correct risk management

systems in order to induce him to trade on the spot

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exchange. He would allege that genuine investors were

defrauded of their investments by way of serious

misappropriations since NSEL allowed trading on the

commodities of sellers without ensuring goods of

appropriate quantity and quality stored in exchange

controlled warehouses, which resulted in thousands of

investors trading in "non-existent goods". The accused

persons hatched a criminal conspiracy to defraud the

investors, induced them to trade on platform of spot NSEL,

created forged documents like bogus warehouse receipts,

falsifed the accounts and thereby committed criminal

breach of trust in respect of Rs.202 Lakhs of the

complainant and Rs.5600 Crores of others approximately

13,000 investors.

8 Prosecution case is that, suspect persons have

committed ofence punishable under Section 120B, 467,

471 of the Indian Penal Code, 1860, which are Scheduled

Ofences under Paragraph 1 of Paragraph A of the Schedule

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to Prevention of Money Laundering Act, 2002 (As Amended)

('PMLA Act' for short). On the basis of aforesaid information,

PMLA Case vide ECIR 14/MZ0/2013, dated 14 th October,

2013 was registered against NSEL, Directors, its key

officials, 25 defaulters of NSEL and others for investigation

under the provisions of the PMLA Act.

9 Investigation revealed that defaulters M/s. Astha

Minmet India Private Limited and M/s. Juggernaut Projects

Ltd. resorted to large-scale laundering of funds earned by

indulging into the criminal activity of fctitious trading of

commodities. Multiple transactions were used to bring such

proceeds of crime into the banking channel and to layer

and mask the criminal origin of funds so as to further layer

and project the same as untainted and avoid detection.

Investigation revealed that funds / movable / immovable

properties totally valued at Rs.186.22 Crores were

purchased by the said accused out of proceeds of crime.

During the course of the investigation, bank accounts of

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M/s. Vihang Aastha Housing Projects LLP was called and

scrutinised. It was noticed, that M/s. Vihang Aastha

Housing Projects LLP received Rs.21,74,000,00/- from M/s.

Aastha Group of Companies, i.e., M/s. Aastha Minmet India

Limited, Aastha Alloy Steel Limited during the September,

2012 to April, 2013.

10 Investigation disclosed, that earlier M/s. Vihang

Housing LLP was formed on 21st May, 2012 with the

partners; Vihang Pratap Sarnaik; Purvesh Pratap Sarnaik;

Yogesh Kishor Chandigala; Vihang Infrastructure Pvt. Ltd.;

Vihang Constructions & Hospitality LLP. On 8 th November,

2012, a retiring agreement was executed and partners of M/

s. Vihang Infrastructure Pvt. Ltd. and Vihang Constructions

& Hospitality LLP exited from the Vihang Housing LLP. On

the same day of retiring the old partners, a LLP agreement

was executed vide which new partners, Mr. Pratap Sarnaik,

Mr. Mohit Aggarwal, Mrs. Shilpa Aggarwal and M/s. Aastha

Alloy Steel Pvt. Ltd. were inducted and name of M/s. Vihang

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Housing LLP was changed to M/s. Vihang Aastha Housing

Projects LLP.

11 It is the prosecution's case that the respondent

no.1 received Rs. 10.50 Crores from M/s. Vihang Aastha

Housing Projects LLP during December, 2012 to September,

2013.

12 Investigation revealed that the respondent no.1

was a land aggregator based in Titwala. He had purchased

lands from various farmers and consolidated the same into

three parcels; That vide agreements dated 11th February,

2013, 5th March, 2013 and 17th September, 2013, he

handed over possession of the land under the said three

agreements to the Vihang Group; that the land was

measuring approximately 78 acres and total consideration

for the said land was Rs.20,85,94,000/-; that however, vide

the three agreements an amount of Rs.8.50 Crores was

shown as paid to him and the balance amount was to be

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paid after efecting all the clearances pertaining to the said

land. It is further the case that in actual, the respondent

no.1 only utilized Rs.1.34 Crores for land acquisition and

rest of funds were further diverted by him to acquire

various properties in his name and in the name of his wife.

13 Thus, it is the applicants' case that respondent

no.1 has received, 'proceeds of the crime', to the tune of

Rs.10.5 Crores siphoned of by Aastha Group from NSEL.

The said proceeds of crime was received by the respondent

no.1 through M/s. Vihang Aastha Housing Projects LLP in the

name of acquisition of land parcels of 78 acres in Titwala.

Although the respondent no.1 received total amount of

Rs.10.5 Crores against the said land parcels, total

acquisition value of the said land parcels was only Rs.1.70

Crores. Thus, alleged in actual, rest of the funds were

further diverted by him to acquire various properties in his

name and in the name of his wife. Investigation also

revealed that the farmers/land owners whose lands,

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respondent no.1, sold to M/s. Vihang Aastha Housing Project

LLP, have not been sold to Respondent No.1 by these

farmers and the said farmers are actual owners of the said

land parcels. Respondent No.1 transferred these land

parcels fraudulently to M/s. Vihang Aastha Housing Projects

LLP and thus, also cheated the farmers. Therefore, it is the

case of the applicant that, the respondent no.1 is in receipt

of proceeds of crime to the tune of Rs.10.5 Crores within

the purview of Section 2(1)(u) of the PMLA Act, which he

layered and integrated in form of properties in the name of

himself and his wife.

14 The respondent no.1 was arrested on 6 th April,

2021. On 21st May, 2021, respondent no.1 fled an

application for bail before the Special Judge. It was rejected

vide order dated 18th June, 2021 ('First Order' for short).

15 Applicant fled complaint/charge-sheet on 4th

June, 2021. Cognizance of the same was taken on 16th June,

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2021.

16 Copy of the charge-sheet of the complaint was

received by the respondent no.1 on 18th June, 2021.

17 On 19th July, 2021, respondent no.1 fled another

bail application before the Special PMLA Court.

18 The learned Special PMLA Court allowed the

application and granted bail on the following grounds:

                (I)        Filing    of      complaint/charge-sheet
                constitutes         change    in     circumstance.               It
                indicates investigation was over.


                (ii)      That prosecution has not made any

eforts to arrest partners/directors of Vihang Aastha Housing Projects LLP, from whom alleged 'Proceeds of Crime' were received by the, applicant-accused.

(iii) Since after rejection of the frst bail

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application, there was no progress in the investigation to justify further detention of the applicant.

(iv) Applicant-accused had withdrawn his objection to making the attachment of his properties absolute in proceedings MA 451 of 2016.

19 Before adverting to the contentions of the

applicants, let me deal with, preliminary objection, raised

by Mr. Chavan, the learned Senior Counsel for the

respondent, as to maintainability of the application fled

under Section 439(2) of the Cr.P.C.; Section 439(2) reads as

under:

"439. Special powers of High Court or Court of Session regarding bail-

(2) A High Court or Court of Sessions may direct that any person who has been released on bail under this Chapter be arrested and commit him to custody."

. Mr. Chavan, contended that plain reading of Section

439(2) of the Cr.P.C. implies that unless accused is actually

released on bail, the prosecution could not have applied for

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cancellation of bail. In support of this submission, Mr. Chavan

relied upon the judgment of this Court in the case of

B.S.Rawat, Assistant Collector of Customs v. Leidomanm

Heinrich, 1990 SCC Online Bombay 629, wherein it is held,

that until accused is actually released on bail, there is no right in

the respondent/prosecution to apply for his arrest or committal

to custody, i.e. cancellation of his bail. Mr. Chavan, would

contend that, in view of the clear and explicit language of

Section 439(2) of the Cr.P.C., instant application for cancellation

of bail fled by the department was premature, since accused

was not released on bail.

20 Next authority relied on by Mr. Chavan is the

judgment of this Court in the case of, Mahendra Manilal Shah

(2010) Cr.L.J. 4257. In the said judgment, Justice Kathawala

has held that the expression "any Person who has been released

on bail used in Section 439(2)" would mean, that accused is not

only granted bail but, has availed of the same and is released

from jail custody and, therefore, it is only then, that the Court

may direct person to be re-arrested and commit to the custody

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as provided in Section 439(2) of the Cr.P.C. Thus, held that, no

question of re-arrest or re-committal to the custody can arise

unless the accused is 'actually released', on bail granted to

him. Thus, Mahendra Manilal (Supra) followed the judgment

in the case of B.S.Rawat (Supra). Mr. Chavan the learned

Senior Counsel further elaborated his arguments contending

that, bail means release from the custody or prison and

delivered into the hands of sureties, who undertake to produce

the accused in the Court on appointed date. Mr. Chavan

submitted that expression "Release on bail" means release of a

person from legal custody. He contended that word "Bail" is

used in our common law for freeing or setting at liberty of one

arrested or imprisoned upon any action, either civil or criminal,

on surety taken for his appearance on a day and place certain. It

is submitted that bail means actual/physical release of a person

from legal custody and not just order releasing on bail. In

support of the submissions, he relied on the following

authorities;

(1) Amitchand and Raghunath v. Crown Indian Law

Reports (East Punjab Series) Page 515;

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(2) State of MP v. Narayan Prasad Jaiswal (1963) 2

Criminal Law Journal 375;

(3) Managing Director Balasaheb V. Kaashinath Kamble

(2009) 2 SCC 88.

21 Mr. Chavan the learned Senior Counsel further

submitted in this case, since prosecution, itself sought stay to

"Release" of the respondent from the custody, application was

obviously premature and it is required to be rejected on this

ground alone.

22 Mr. Singh the learned ASG controverted submissions

of Mr. Chavan and would submit that scope of Section 439(2)

and right of prosecution under Section 439(2) to challenge

unsustainable and perverse order cannot be narrowed down or

curtailed by subjecting it to condition of actual release of

accused. Mr. Singh submitted, this interpretation would defeat

the scope and object of Section 439(2). Mr. Singh further

submitted that the words used in Subsection (2) of Section 439

have to be read not disjunctively. Mr. Singh submitted that this

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Court in the case of Assistant Collector of Customs v.

Madam Ayabo 1992 Criminal Law Journal 4239 has dealt

with the identical issue, after referring to the judgment of Justice

Dhabe, in the case of B.S.Rawat (Supra). Mr. Singh, the

learned ASG has taken me through the said judgment. In the

said case, accused was a Nigerian lady to whom the bail

was granted by the Additional Sessions Judge. The bail

order was challenged before this Court on the ground that if

the accused is released from the custody being Nigerian

National, it may be difficult for the Customs Department to

trace the accused. It was submitted on behalf of the

Customs Department, that regardless of whatever

conditions which the Court may impose, experience shows

that the department was not able to trace foreigners, who

were released on bail because they themselves scare by

going to diferent parts of the country itself or by leaving

the country. Opposing the application on behalf of the

accused, it was submitted that provisions of Section 439(2)

cannot apply in any case, where order of release of bail has

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not been availed of. Justice M.F. Saldanha, who delivered

the said judgment has held and concluded that;

(a) This is a Section that takes into account circumstances under which a superior Court may interfere with a bail order that has been passed by a subordinate Court or wherein a Court may review an earlier bail order passed by a Court of parallel jurisdiction.

(b) An order directing the release of an accused on bail is an order that becomes efective forthwith unless the Court specifes that it will take efect after a certain amount of time has elapsed.

(c) An order for release of an accused on bail, therefore, is permissible of reconsideration, under Section 439(2) of the Code of Criminal Procedure, at any point of time after the order is passed.

(d) The law does not take into account formalities relating to the release of the accused, such as approval of surety nor does the law take into account a situation whereby for whatever reason the Accused person may not immediately avail of the bail order that is passed.

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(e) that the clause "any person who has been released on bail under this Chapter" will have to be strictly construed as meaning any person who has been released on bail by a Court.

(f) The subsequent part of the Section entitles a Court to direct re-arrest and confnement to custody if the bail order has been availed of and in cases where the bail order has not been availed of, the subsequent part of the Section would be rendered redundant.

(g) The Section is required to be interpreted rationally and in keeping with the purpose for which it was put on the statute book.

23 The next authority, relied on by Mr. Singh is the order

passed in the case of, State of Maharashtra v. Santosh

Hiraman Purankar (2005) SCC On-line Bombay 246. In this

case the State sought cancellation of anticipatory bail granted in

the ofence punishable under Section 306 of the IPC. Besides,

merit challenge was also founded on the ground that

accused/respondent have violated conditions on which

anticipatory bail was granted in their favour. In the sense neither

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they reported to the police station at any point of time after the

order was passed, though that was one of the conditions.

Respondent/accused in the said case relied on the judgment of

this Court in the case of B.S.Rawat (Supra) to contend that

application was premature unless order to arrest or re-arrest is

passed. Meeting with this contention, the learned Judge of this

Court has held that:

"9............The exposition in the case of B.S.Rawat (Supra), which is pressed into service, in my opinion, are of no avail to the Respondents. The observations in the said decision are misread by the Counsel for the Respondents. On the other hand, the learned A.P.P. has rightly pressed into service decision of our High Court reported in 1992 Cri.L.J.2349 in the case of Assistant Collector of Customs (P), Bombay v. Madam Ayabo Atenda Ciadipo Orisan which had occasion to consider the reported decision in the case of B.S.Rawat (Supra) relied upon by the Respondents. In paras 8 and 9 of the said decision, the Court has considered the purport of section 439(2) of the Cr.P.C. Similar argument was canvassed in that case which, however, has been rejected. The Court has observed that if such argument was to be accepted, it would amount to grafting on a clause to the Section which does not exist in it and it would amount to narrowing down the scope of that section which is something that is impermissible having regard to the principles of law that govern the interpretation of statutes."

24 Mr. Singh the learned ASG submitted that the

judgment of this Court in the case of Mahendra M. Shah

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(Supra) is per-incuriam. Submission is, although in Mahendra

M. Shah, judgment in B.S.Rawat (Supra) has been followed,

but judgment in the case of Madam Ayabo (Supra) delivered

in October, 1990 was not brought to the notice of the Court. Mr.

Singh submitted, Justice M.F.Saldanha, who had delivered the

judgment in Madam Ayabo (Supra) has distinguished the

judgment in B.S.Rawat (Supra) and concluded that application

under Section 439(2) of Cr.P.C. was maintainable, against the

unsustainable bail order irrespective of fact, whether accused is

actually released on bail. Mr. Singh vehemently submitted that

the two learned Judges of this Court in the case of Madam

Ayabo (Justice M.F.Saldanha) and in the case of State of

Maharashtra v. Santosh Hiraman Purankar (Justice

A.M.Khanwilkar) have taken consistent view that if bail order

itself is manifestly wrong, section 439(2) would not provide any

bar to the prosecution from asking for review of that order and

question as to where accused is physically released or not is

quite irrelevant. Mr. Singh, therefore, submitted that the ratio

laid down in the case of B.S.Rawat (Supra) would not deter

this Court from entertaining the application and, therefore,

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preliminary objection raised by respondent/accused be

overruled and application be decided on merits.

25 I have perused the judgments cited by the learned

counsel in support of their respective contentions. In my view,

Mr. Singh the learned ASG has rightly pointed out that judgment

in the case of Mahendra M. Shah (Supra) is per incuriam

since the view taken in of Madam Ayabo (Supra) and the

order in the case of Santosh H. Purankar (Supra) as to the

scope and interpretation of Section 439(2) of the Cr.P.C. was not

brought to the notice of Justice Kathawala. The Hon'ble Apex

Court of Sandip Bafna 2014(16) SCC 623, has held; "that a

decision or judgment can be per-incuriam, any provision in

statute, rule or regulation, which was not brought to the notice

of the Court. A decision or judgment can also be per-incuriam, if

it is not possible to re-concile its ratio with that of previously

pronounced judgment of co-equal or larger bench; or if the

decision of the High Court is not in consonance with the views of

this Court." The Apex Court has further clarifed that per-

incuriam rule is strictly and correctly applicable to the ratio

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decidendi and not to obiter dicta. Herein consistent view of the

two learned Judges in two cases was not brought to the notice of

Justice Kathawala in Mahendra M. Shah and, therefore, the

judgment in Mahendra M. Shah (Supra) was per incuriam

and, therefore, it is to be kept out of consideration.

26 Thus interpretation suggested by Mr. Chavan, if

accepted, would render the provisions of Section 439(2)

redundant and uncertain. To give common instance; say in a

case, even after passing the order to release on bail, accused

does not avail the bail, by taking steps, then in that case

prosecution or person aggrieved by the order granting bail, may

have to hold back the challenge till accused is actually released

on bail. It would render the challenge "conditional". This

interpretation would not only make the operation of Section

439(2) conditional but would also suspend right of aggrieved

person to challenge the order until the accused is actually

released from the custody. May be in a case, say even after

granting bail, accused could not avail the bail for want of surety

or for such other reasons, then in that case, such order although

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was perverse would form part of the record, and may have its

own consequences. Obviously, this would, defeat not only object

of Section 439(2) but also defeat, statutory right of aggrieved

person to challenge the said order. Thus, interpretation

suggested by Mr. Chavan, would amount to grafting on a clause

of Section 439(2), which does not exist in it and would amount

to narrowing down the scope of Section 439(2) of the Cr.P.C.

which something is impermissible having regard to the

principles of law that govern the interpretation of statutes.

27 For the reasons aforestated, in my view, instant

application fled by the prosecution under Section 439(2) is

maintainable, although the accused actually has not been

released. Primary objection as to the maintainability is

overruled.

28 Next, Question is whether decision in Nikesh

Tarachan Shah (Supra) has lost its' signifcance because of

amendment in Section 45 of the PMLA Act. Mr. Singh, learned

ASG vehemently submitted that, twin conditions set out in

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Section 45 of the PMLA are valid and would be applicable in the

instant case. This submission is made on following two grounds,

viz.

(i) binding precedent of the Hon'ble Apex Court holding that

twin conditions apply; Reliance is placed on the judgment of the

Apex Court in P.Chidambaram (2018) 10 SCC 753

(ii) defect found by the Hon'ble Apex Court in Nikesh T. Shah

(Supra) has been rectifed by the legislative amendment.

29 Mr. Singh submitted that reading of Nikesh T. Shah

would show that, only two conditions were struck down and not

Section 45 in its entirety. It is submitted, that the unamended

Section 45 was read down by the Hon'ble Apex Court, as

applying to scheduled ofences only, which excludes, the

'ofence of money laundering'. Submission, is that after the

judgment of the Apex Court in the case of Nikesh T. Shah

(Supra), provisions of Section 45(1) have been amended and

amended provisions are applicable to the, 'ofence of money

laundering' , alone and nothing else. Mr. Singh submitted that

twin conditions were not found per-se arbitrary or unreasonable

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but its application to the ofences in Schedule A were found to

be arbitrary and, therefore, the legislature has amended the

said section and cured the defect, which led to validation of the

two conditions of Section 45(1) of the PMLA Act. Mr. Singh in

support of this submission, to the great extent, relied on the

judgment of the Apex Court in the case of P. Chidambaram

(Supra) and in particular paragraphs thirty-six and thirty-seven

thereof. Mr. Singh submitted that the observation in those

paragraphs is, binding dictum, and would apply by its own force

and this would have to be considered whilst determining,

whether bail is valid or not. In other words, it is submitted that

amendment of 2018 to the PMLA Act has revived twin conditions

and, therefore, non-compliance of twin conditions set out in

Section 45 of the PMLA Act would vitiate the order passed by the

learned Special Court, which is impugned herein. Mr. Singh

would also rely on the judgment of the Patna High Court in the

case of Moti Lal @ Moti Lal Patwa v. Union of India in

Criminal Miscellaneous Application No.73052 of 2019 and

judgment of Orissa High Court in the case of Mohammad Arif

in Bail Application No.2607 of 2020.

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30              In so far as the case of Mohammad Arif is concerned,

the Patna High Court, has held that in view of the amendment to

Section 45 by Amendment Act of 13 of 2018, the original

expression "Imprisonment for a term for more than three years

under Part A of the Schedule" stands substituted by the

expression "No person accused of an ofence under this Act shall

be released on bail or on his own bond". Thus, held, twin

conditions of Section 45 would revive and apply to the ofence

of, money laundering. In so far as the judgment in the case of

Moti Lal is concerned, the said judgment neither makes any

reference to the judgment in P.Chidambaram (Supra) or deal

with the efect of amendment to Section 45 of the PMLA Act. In

the said case, bail was sought on a parity. Thus, the judgment of

the Patna High Court in the case of Moti Lal does not further

the case of the applicants.

31 Mr. Singh has also invited my attention to the

judgments of this Court in Samir Bhujbal v. Directorate of

Enforcement (Bail Application No.286 of 2018) and

Deepak Kochhar (Bail Application No.1322 of 2020). In

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these judgments, this Court has held that, "amended Section

45, would not revive twin conditions as imposed in Section 45(1)

of the PMLA Act and would not have application, while granting

bail to the accused of an ofence under the PMLA Act." Mr. Singh

submitted that the judgment in the case of Samir Bhujbal was

delivered, before the judgment in the case of P. Chidambaram

and, therefore, this judgment is to be kept out of consideration,

while deciding the issue, as to the application of twin conditions

to the ofence of 'money laundering'. In so far as the judgment

in the case of, Dipak Kochhar, is concerned, Mr. Singh

submitted, the learned Judge of this Court has not considered

the, binding precedent, of the Apex Court in the case of

P.Chidambaram (Supra). Thus, Mr. Singh, learned ASG

submitted that judgments in the case of Samir Bhujbal and

Dipak Kochhar were of no assistance to the respondent-accused.

Mr. Singh, the learned ASG would submit, although the Delhi

High Court in the case of Upendra Rai 2009 SCC Online 9086

has followed the Sameer Bhujbal (Supra) and taken a view

that twin conditions do not revive, yet, the Hon'ble Apex Court

in the SLP Diary No.5150 of 2020 has stayed the operation of

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the impugned order passed in case of Upendra Rai. Therefore, it

is argued that the respondents can not place reliance on the

judgments in the case of Samir Bhujbal (Supra), Deepak

Kochhar (Supra) and Upendra Rai (Supra).

32 Mr. Singh, the learned ASG's whole endeavour is that

the challenge in Nikesh T. Shah (Supra), was limited to the

twin conditions, as applying to Schedule Ofences and the

Hon'ble Supreme Court struck down the conditions in their

application to Schedule Ofences and not ofence of 'money

laundering'. That being so, the Apex Court has not struck down

the entire Section 45, but its applicability to 'schedule ofences'.

These arguments are in, confict with the observation made in

paragraph twenty-seven of Nikesh T. Shah (Supra); wherein

Hon'ble Apex Court has held that, "Section 45 would have to be

struck down as been manifestly arbitrary and providing the

procedure, which is not fair or just and would thus, violated both

Articles 14 and 21 of the Constitution of India" and further held

thus, "Be that as it may, we are of the opinion that even though

the Punjab High Court judgment appears to be correct, it is

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unnecessary for us to go into this aspect any further in view of

the fact that we have struck down Section 45 of the 2002 Act as

a whole."(emphasis supplied)

. Thus, in Nikesh T. Shah (Supra), the Hon'ble Apex

Court has struck down Section 45 of the PMLA Act, as a

whole having found it arbitrary and violative of Article 14 &

21 of the Constitution of India and not just applicability of

twin conditions to scheduled ofences and, therefore, I agree

with a view taken by this Court in the case of Samir Bhujbal,

Dipak Kochhar and in the case of Upendra Rai by the Delhi

High Court, that Amendment of 2018, would not revive twin

conditions and would have no application while granting bail

to accused of an ofence of 'money laundering'.

33 Although the learned ASG strenuously argued that

the judgment in the case of P. Chidambaram (Supra) is

binding a precedent, as to application of twin conditions, to

ofence under the Act; however, issue as to the application of

twin conditions to the ofence of money laundering, after 2018

amendment, has not been deliberated upon either in

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paragraphs 35 or 37 or in other part of the judgment. For these

reasons, judgment in P. Chidambaram, would not advance

applicants' case.

34 Once, it is held that twin conditions enumerated

under Section 45 of the PMLA Act have no application while

granting bail to accused of money laundering, it is to be

ascertained, whether the trial Court granted bail on irrelevant

considerations.

35 Mr. Singh, the learned Additional Solicitor General

would contend that the Special Judge granted bail to the

respondent no.1 by ignoring the "relevant material",

indicating prima-facie, involvement of the respondent no.1;

yet has taken into account "irrelevant material" which has

no relevance to question of grant of bail to the respondent

no.1. While arguing the scope of Section 439(2) of the

Cr.P.C., Mr. Singh, submitted that when it appears to the

superior Court that the Court granting bail acted on the

irrelevant material and there is no application of mind or

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where the Court does not take note of any statutory bar for

grant of bail, order for cancellation of bail can be made.

36 Mr. Singh's main point of argument, is that the

learned Judge, while rejecting the frst bail application as

well as subsequent bail application, found applicant's

complicity in laundering of "proceeds of the crime" by

acquiring the property out of the amount of Rs.10.50 Crores

as untainted properties. Thus, submitted, once the Court

was satisfed about of applicant's complicity in the activity

of money laundering, applicant could not have been

released on bail in view of the nature and gravity of ofence

committed by him. Mr. Singh vehemently submitted that

the respondent-accused is, land agreegator and politically

well connected. He has purchased the lands from farmers,

who have been duped by him. He would rely on the

statement of farmers and particularly of one, Rohit

Deshmukh recorded on 8th April, 2021 under Section 50(2)

and 50(3) of the Act. Mr. Singh submitted that the applicant

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has fraudulently purchased the lands from poor farmers and

transferred to M/s. Vihang Astha Housing Projects LLP, of

which, director's are co-accused. Reliance has been placed

on the statement of one Vikram Dalvi, who has been

cheated by the respondent-accused from whom applicant

has agreed to purchase the land. Submission is that the

Special Court while granting the bail, ignored the statement

of farmers and land owners, who have been duped by the

respondent-accused. Next submission is, that ofence of

money laundering, "being economic ofence", it constitutes

a class apart and need to be visited with diferent approach

in the matter of bail. It is submitted that investigation is still

going on with regard to role of accomplice of the accused

including the accused/respondent to derive the end use and

to trace money trail. Mr. Singh submitted that the partners

and directors of Astha Group since have been granted

protection by the Hon'ble Supreme Court vide the order

dated 30th June, 2021 and therefore have not been

interrogated. Mr. Singh submitted that protection granted to

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the co-accused was not on the merits but in view of the

order dated 16th June, 2020 passed by the Hon'ble Apex

Court in the Special Leave Petition instituted by Paramvir

Singh Saini v. Baljit Singh and Ors. Mr. Singh further

submitted, interim protection granted to co-accused, itself

was not a ground to release the applicant on bail. He

further submitted, on release of the applicant, there is

every possibility of tampering the prosecution evidence

since co-accused have also been granted protection from

the arrest.

37 Mr. Singh, learned ASG, argued that although the

material in the charge-sheet was not considered by the trial

Court while deciding the frst bail application, yet, fling of

the charge-sheet would not constitute, 'change' in the

circumstance. Submission is, even assuming that the trial

Court had not referred to material in the charge-sheet while

rejecting frst bail application, yet fling of the charge-sheet,

itself would not constitute a change in the circumstance.

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According to Mr. Singh, it was irrelevant consideration. On

the point of 'irrelevant considerations\', Mr. Singh, relied on

the following judgments:

(1) Kalyan Chandra Sarkar v. Rajesh Ranjan @

Pappu Yadav and Anr. (2004) 7 Supreme Court Cases

528;

(2) Nikhil Malik v. State of Himachal Pradesh 2019

SCC OnLine HP 1294;

(3) Virupakshappa Gouda and Anr. v. the State of

Karnataka in Criminal Appeal No.601 of 2017 in

Criminal Appeal No.601 of 2017

. In the case of Kalyan Chandra (Supra),

accused Pappu Yadav, was granted bail by the High Court in

eighth, successive bail application. Earlier six applications

were rejected and SLPs were dismissed. Fifth successive

application was allowed; however, in appeal, the Hon'ble

Apex Court cancelled the bail as no fresh grounds were

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recorded by the Hon'ble Apex Court while granting bail. In

my view, this authority does not assist the prosecution. In

Nikhil Malik (Supra), High Court of Andhra Pradesh

declined, to release the applicant on the ground of gravity

and seriousness of the crime; although testimonies of three

prosecution witnesses were recorded. In the Case of

Virupakshappa (Supra), appellants' frst bail application

was rejected by the Sessions Court and the order was

confrmed by the High Court. Thereafter second Bail

Application was moved. One of the grounds was that

investigation has been completed and there has been a

change in the circumstance. And hence, applicants were

entitled to bail. Application was rejected by the Sessions

Court and the order was not interfered with, by the High

Court. The SLP was also dismissed in November, 2015.

Whereafter third application was moved before the Sessions

Court. It was allowed. At the instance of the complainant,

High Court set aside the order of the Sessions Court.

Against which accused had preferred Criminal Appeal

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No.601 of 2017, before the Supreme Court. In the back-drop

of the aforesaid facts, the Hon'ble Apex Court has held

thus;

13. On a perusal of the order passed by the learned trial Judge, we find that he has been swayed by the factum that when a charge-sheet is filed it amounts to change of circumstance. Needless to say, filing of the charge-sheet does not in any manner lessen the allegations made by the prosecution. On the contrary, filing of the charge-sheet establishes that after due investigation the investigating agency, having found materials, has placed the charge-sheet for trial of the accused persons.

38              In,         Kalyan         Chandra         (Supra)                and

Virupakshappa                   (Supra),    although       successive             bail

applications were rejected and orders were confrmed in

Special Leave Petition, bail was granted without recording

'Fresh grounds'. Here, facts are diferent. The observations

in paragraph 13 in Virupakshappa (Supra) do not

suggest that fling, of the charge-sheet/complaint, is not

change in the circumstance. What has been observed is

that fling of the "Charge-sheet" does not in any manner

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lessen the allegations made by the prosecution. Therefore,

in my considered view, the judgments in aforesaid three

cases were of no assistance to the prosecution. Be that as it

may, herein, the applicant was arrested on 6 th April, 2021

for the ofence punishable under Sections 3 and 4 of the

PMLA Act. His frst bail application was rejected on 18 th

June, 2021. Complaint/charge-sheet was fled on 4 th June,

2021. Cognizance of the same was taken on 16 th June,

2021.

39 The learned Special Court declined the bail (First

Bail) to the respondent no.1 on the following grounds:

(I) There was prima-facie material showing

complicity of the applicant in the activity of

laundering proceeds of the crime;

(ii) Investigation was in progress;

(iii) Partners/Directors of Vihang Aastha Housing

Projects LLP were remained to be arrested;

          (iv)    Release of the applicant would adversely


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hamper the investigation as to the crime proceeds.

. However, while granting bail in subsequent

application, the trial Court found, after rejecting the frst

application, there was no progress in the investigation at

all, in-as-much as observations in paragraph no.9 of the

order would show that no eforts were made by the

prosecution to question co-accused at all. Although, it is

submitted that the co-accused were granted protection by

the Apex Court on 30th June, 2021, however, the order has

not precluded the prosecution from questioning the co-

accused, who were the partners/directors of the Vihang

Aastha Housing Projects LLP. Nevertheless even before me,

applicants have not placed any material suggesting

progress in the investigation as against the respondent-

accused. This being the position, it may be stated that

prosecution, does not intend to proceed with the

investigation against the accused; yet at the same time,

would oppose bail plea of the accused on the ground that

accused's release may adversely afect "meaningful"

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investigation.            I do not see substance in this approach of

the prosecution. Even otherwise, prosecution case rests and

founded on documentary evidence and, therefore, even if

applicant is released on bail, chances of tampering the

prosecution evidence are weak and faint. Apart from that, it

is worthwhile recording here that NSEL Management,

Persons, Defaulters of NSEL and persons associated with

Aastha Group (Mohit Aggarwal and Sham Kejriwal) have

been granted bail either by Special Court or by the High

Court, having a greater role than the present applicant. Mr.

Chavan, the learned Senior Counsel for the respondent, has

placed for my perusal, orders granting bail to twenty co-

accused, who may have similar or greater role than the

present accused. Even otherwise ofence under Sections 3

and 4 of the PMLA Act is ofence punishable upto seven

years.

40 In consideration of the facts of the case and for the

reasons stated, in my view, the trial Court while granting bail to

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respondent-accused has not acted upon the irrelevant material

and ignored the relevant material.

41              Application is rejected.



                                      (SANDEEP K. SHINDE, J.)



42              At this stage, the request of Mr. Anil Singh, the

learned Additional Solicitor General, to continue interim order for

a period of two weeks is declined.

                                           (SANDEEP K. SHINDE, J.)




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