Dr Madhukar G Angur vs Enforcement Of Directorate
2022 Latest Caselaw 5691 Kant

                                        ®
                         1

  IN THE HIGH COURT OF KARNATAKA AT BENGALURU

      DATED THIS THE 30TH DAY OF MARCH, 2022

                      BEFORE

      THE HON'BLE MR. JUSTICE V. SRISHANANDA

        CRIMINAL PETITION NO.1189/2022

BETWEEN

DR MADHUKAR G ANGUR
S/O LATE SHRI GUDDAPPA BASAPPA ANGUR
AGE 64 YEARS, CHANCELLOR
M/S ALLIANCE UNIVERSITY
RESIDING AT NO.703,
K.BLOCK, ADARSH PALM RETREAT
JACARANDA DEVARABISANAHALLI
BANGALORE 560103
PRESENTLY IN JUDICIAL CUSTODY
                                        ...PETITIONER
(BY SRI KIRAN S. JAVALI, SR. ADVOCATE FOR
SRI SHIVAJI H. MANE, ADVOCATE)

AND

ENFORCEMENT OF DIRECTORATE
THROUGH DEPUTY DIRECTORATE
GOVERNMENT OF INDIA
3RD FLOOR, 'B' BLOCK
BMTC, SHANTHINAGR
TTMC, K H ROAD, SHANTHINAGAR, BENGALURU
KARNATAKA 560027
                                    ...RESPONDENT
(BY SRI P.PRASANNA KUMAR, SPL. PP
SRI M.S.SHYAM SUNDAR, ADVOCATE FOR DEFACTO
COMPLAINANT)
                                 2


     THIS PETITION IS FILED UNDER SECTION 439 OF
THE CR.P.C. PRAYING TO ENLARGE THE PETITIONER ON
BAIL IN CONNECTION WITH ECIR NO.BGZO/33/2020,
DATED 16.10.2020 REGISTERED BY RESPONDENT
AUTHORITY FOR THE ALLEGED OFFENCE P/U/S 3 AND 4
OF PREVENTION OF MONEY LAUNDERING ACT, 2002 AND
WHICH PROCEEDINGS ARE PENDING BEFORE THE
HONBLE PRL.CITY CIVIL AND SESSIONS JUDGE AND
SPL.JUDGE FOR PMLA CASES AT BENGALURU.

     THIS CRIMINAL PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 23.3.2022, COMING ON FOR
'PRONOUNCEMENT OF ORDER' THIS DAY, THE COURT MADE
THE FOLLOWING:-

                              ORDER

This petition is filed under Section 439 Cr.PC., with

the following prayer:

"WHEREFORE, it is humbly prayed that this Hon'ble Court be pleased to:

(a) Allow this petition and be pleased to grant bail to the Petitioner in connection with ECIR No.-BGZO/33/2020 dated 16/10/2020 registered by Respondent Authority for the alleged offence under Section 3 and punishable under Section 4 of Prevention of Money Laundering Act, 2002 and which proceedings are pending before the Hon'ble Principal City Civil and

Session Judge and Special Judge for PMLA Cases at Bangalore (CCH-1);

(b) Grant such other order or orders as deemed fit and proper in the circumstances of the case; in the interest of justice and equity."

2. Brief facts of the case are as under:

Between the years 2016 and 2017, four first

information reports came to be filed against the petitioner

alleging certain scheduled offences. Consequent upon the

investigation of those cases, an action was initiated against

the petitioner herein under the provisions of the Prevention

of Money Laundering Act, 2002 [hereinafter referred to as

the "Act" for short] in ECIR.No.BGZO/33/2020 dated

16.10.2020. The Directorate of Enforcement [hereinafter

referred to as "ED" for short], after investigation, issued a

provisional attachment order bearing No.9/2021 dated

27.09.2021 under Section 5(1) of the PML Act, subsequent

thereto as contemplated under Section 5(5) of the said

Act, a complaint was also filed in OC No.1541/2021 before

the adjudicating authority.

3. The adjudicating authority has been adjudicating

the same and is now pending for consideration, wherein

the petitioner has filed an explanation before the

adjudicating authority as contemplated under Section 8 of

the said Act.

4. When the matter stood thus, acting under the

powers vested with the Investigating Agency under Section

19 of the said Act, petitioner was arrested on 7.1.2022 by

complying the required procedure and thereafter, he was

produced before the Special Court and petitioner was

remanded to judicial custody. The petitioner sought for

grant of bail under Section 439 Cr.PC., before Special

Court. Same was rejected by order dated 2.2.2022.

Therefore, the petitioner is before this court seeking grant

of bail. When the matter was pending before this court, on

7.3.2022 a complaint (final report) as contemplated under

Section 45 of the said Act came to be filed and the

learned Special Judge is yet to take cognizance of the

same.

5. The petitioner contended that when the accused

came to be remanded to the judicial custody, since under

Section 5(1) of the said Act, a provisional attachment

order is issued and when the matter is pending before the

adjudicating authority by filing necessary application under

Section 5(5) of the said Act, on 13.10.2021, investigation

is deemed to have been completed and there was no

necessity to arrest the petitioner. Further, the arrest of

the petitioner having been effected on 07.01.2022, the

petitioner is entitled to be enlarged on bail under Section

167(2) of Cr.PC., forthwith. The learned Special Judge

having not taken note of the said aspect of the matter, has

rejected the bail application filed by the petitioner by order

dated 2.2.2022, and therefore, he is entitled for grant of

bail in this petition.

6. In the bail petition, following grounds have been

raised:

There has been failure to appreciate that the ECIR had been registered on 16/10/2020 and

investigation undertaken leading to issuance of a Provisional Attachment Order 9/2021 dated and making of a Complaint OC No.1541/2021 dated 27/09/2021. Hence, the investigation had stood completed.

There has been failure to appreciate that if the action taken by the Respondent to register the ECIR, record statement of various persons under Section 50 of the P.M.L.Act and thereafter issuance of Provisional Attachment Order had constituted investigation and had stood completed. The question of further investigation under the provisions of the P.M.L.Act contrary to the provisions of the Law has not been appreciated, affecting the legality of the impugned Order.

There has been failure to appreciate that the Petitioner had been arrested purportedly in accordance with Section 19 of the P.M.L.Act. Material to show entertainment of reasons to believe requiring the exercise of power to arrest had not been submitted before the Designated Court for appreciation of the

application for bail. This has affected the impugned Order.

There has been failure to appreciate that the basis for registration of an ECIR and purported conduct of an investigation under the provisions of the P.M.L.Act was directly arising as a consequent to the registration of a crime (predicate offence). The Petitioner/Accused had been accorded bail/anticipatory bail in the predicate offence which fact has not been noticed nor appreciated by the Hon'ble Trial Court.

There has been failure to appreciate that there cannot be multiple arrests or grant of bail in an offence or related offences thereto, merely because there is power to arrest. The intention of bail being to ensure the presence of the Accused to face Trial having been already achieved ought to have been appreciated by the Designated Court affecting the correctness and legality of the impugned Order.

There has been failure to appreciate that the Crime which had formed the basis for

registration of an ECIR by the Directorate of Enforcement were of the year 2016 and 2017 and no adverse Report or action against the Petitioner existed or had the Petitioner had been raised. The Petitioner had also participated in the investigation by the Respondent which fact has not been appreciated.

There has been failure to appreciate that the PML Act was a special Act and was governed by the provisions of Section 4(2) of the Cr.P.C., Section 65 of the P.M.L.Act and Section 71 of the P.M.L.Act. The Respondent Officers being not Police Officers and the procedure of presentation of Complaint and its conduct of Trial being that of a public servant being not a Police Officer, has not been appreciated.

There has been failure to appreciate that the twin conditions provided under Section 45 of the P.M.L.Act has been held to be unconstitutional by the Hon'ble Supreme Court of India. There has been further failure to appreciate that Consistent decisions of various High Courts which have held that by

insertion of the Explanation to Section 45 of the P.M.L.Act the twin conditions as existed earlier had not been resurrected. The same has affected the legality of correctness of the impugned Order.

The Petitioner submits that, the purported predicate offence as alleged is consequent to the complaint arising out of the family member and their representative and interse dispute which are purely civil in nature and given colour of criminal complaints and the civil disputes interse between the parties are pending adjudication before the respective Civil Courts and the Hon'ble High Courts. Further the learned trial court failed to appreciate above civil disputes between the parties, which have directly bearing on the alleged predicate offence were the Respondent Authority has registered by the above said ECIR state supra. Hence, this Hon'ble Court be pleased to enlarge the Petitioner on bail.

The Petitioner submits that, Petitioner has not violated or committed any offence as alleged by the Respondent Authority, only on

the basis of false information on the assumption that, the Petitioner has committed an offence of money laundering which is totally opposed to law. Hence, the Petitioner be pleased to enlarge on bail.

The Petitioner submits that, there has been failure to appreciate by the Hon'ble trail court that, the parallel proceedings under Section 5 of PMLA 2002 been initiated by the Respondent Authority and provisionally attached several property of the Petitioners, his wife and others in connection with above said ECIR stated supra the correctness and legality of the questioned before the Adjudicating proceedings has been Authority, the same is pending consideration. Hence, there is no question of the Petitioner flee from justice and the Petitioner be pleased to enlarge on bail.

The Petitioner submits that, in pursuance to summons issued by the Respondent Authority in connection with the above said investigation of the Respondent, the Petitioner has appeared before the investigating agency and the Petitioner

statement has been recorded under Section 50(3) of PMLA 2002 recorded and he has given detail explanation and furnished voluminous record to substantiate that, he has not committed any offence of money laundering and failure to appreciate the same, the learned trial erred in rejecting the plea of bail of the Petitioner, which is opposed to law. Thus, the question of Petitioner flee from justice not available in the present case. Hence, the Petitioner be pleased to enlarge on bail.

The Petitioner submits that, there has been failure to appreciate by the learned trial court that, the entire allegation being made based upon the records and the accounts of the said Alliance University as well as M/s. Srivari Educations Services which was hired by the Alliance University, by executing an agreement dated 10/01/2017 by virtue of resolution passed by the body of governors of the Alliance University under the Alliance University Act, 2010. All the banking transaction is being reflected in the books of account filed by the respective authority and

it can be easily accessed and available for investigation to the Respondent Authority. Similarly the Banks Statement also available with the respective banks and it can be verified by the Respondent Authority. Hence, the tampering of any records would not be available.

The Petitioner submits that, the content of the allegations made in the remand application and in the statement of objections filed by the Respondent is yet to be decided during the trail and no credence can be given to the content of the same at this juncture. The Petitioner is always available for the investigating agency for any investigation in the matter and all the way he has been cooperated in the investigation, and denying the bail to the Petitioner by the Hon'ble Trial Court is opposed to law. The Petitioner be pleased to enlarge on bail.

The Petitioner submits that, he is innocent of the alleged offence, the Respondent Authority without any prima facie material exists to invoke the provisions of the PMLA 2002. The Respondent Authority only on the basis of

instigation and false and motivated information provided by the family member of the Petitioner in order to overtake the administration of the Alliance University. The Respondent has registered a false case on the false pretext. Hence, the Petitioner be pleased to enlarge on bail.

There has been failure to appreciate the contents of the Complaint and the applicability of the provisions of Law invoked consequent thereto and the rejection of the bail application is bad at Law.

There has been failure to notice that the decision relied upon has been totally misunderstood in denying the bail to the Petitioner/Accused person. Hence, the wrong understanding of the Judgment has affected the correctness and legality of thee impugned Order.

The Trial Court failed to appreciate that there is nothing on the records that indicate the commission of any illegality by the Petitioner and therefore the Petitioner ought to have been granted bail. The trial court further

failed to appreciate that there is material on record either in the remand application or the statement of objections, therefore the bail has been wrongly rejected on the facts and circumstances of the case.

There has been failure to notice that the maximum punishment for the alleged offence alleged is upto seven years and not punishable with life or death and consequently ought to have granted him bail inasmuch as the Petitioner/Accused is in custody for more than 30 days and keeping the Petitioner in judicial custody would not serve any purpose, nor assist the investigating agency in any manner. Further, he has also been taken to the custodial interrogation for One Week by the Respondent Authority, thereafter he has been remanded to the Judicial Custody and his further custodial interrogation in the present case is unwarranted. Hence, the Petitioner be pleased to enlarge on bail.

The trial court erred in holding that the Petitioner is required for custodial interrogation and investigation which is

pending consideration and he is not entitled for bail, during the investigation stage is opposed to law and facts. Hence, the Petitioner already taken for custodial interrogation and investigation which is pending consideration and he is not entitled for bail, during the investigation stage is opposed to law and facts. Hence, the Petitioner already taken for custodial investigation and thereafter he has been remanded to judicial custody. Hence, for requiring further investigation of the Petitioner in the matter would be unreasonable and Petitioner be pleased to enlarge on bail.

The Petitioner submits that presumption of innocence is the privilege of every accused. Further, there is also a presumption that accused /Petitioner would not tamper with the witness if he enlarged on bail. In the present case accused has not committed any offence and is innocent of the alleged offence. The matter tried is yet to be tried and keeping the petitioner in custody with indefinite period is unwarranted requiring this

Hon'ble Court to interfere and be pleased to accord bail to Petitioner.

The trial court failed to appreciate that the fundamental rule of law laid down by the Hon'ble Apex that grant of bail is rule and its denial is the exception.

The trial court erred in not granting bail because denying bail amounts to punishing the Petitioner before trial which is impermissible under law. Further if he is not released on bail, his family members will be put to undue hardship and the Petitioner will be always available for investigation as he has deep roots in society.

The Petitioner further submits that he a resident of Bengaluru and there is no apprehension of the Petitioner absconding or fleeing from justice if he is released on bail.

The Petitioner submits that, he is aged about Sixty Five years, senior citizen and he is suffering from various age related ailments is also required routine medications. Further the Petitioner has a history of heart condition and had undergone a surgery for arterial

fibrillation in 2014, he is also on medication for managing his cholesterol and blood pressure. He also has the history of arrhythmia which can lead to palpitations under stressful conditions. Hence, be pleased to enlarge the Petitioner on bail. The copy of the medical records are produced herewith as ANNEXURE "H" for kind perusal of this Hon'ble Court.

The Petitioner submits that he has no antecedents of any prior involvement and there are no possibilities of the Petitioner fleeing from justice. The Petitioner submits that the accusations made against the Petitioner are only to harass the Petitioner. The Petitioner has a valid and tenable defense and are willing to offer solvent surety for grant of bail.

The Petitioner is ready and willing to abide by any of the conditions that this Hon'ble Court would impose while granting the benefit of Bail.

The Petitioner submits that, he has got valid and tenable defense to prove his innocence

and disproving the case of the Respondent Authority during the course of Trial with cogent materials demonstrating his innocence.

The Petitioner submits that he has not filed any other Petition before this Hon'ble Court on the same cause of action.

The Petitioner crave leave to raise additional both on facts and Law in support of this petition if found necessary.

7. Re-iterating the above grounds, Sri Kiran S.

Javali, learned Senior Counsel contended that the

investigation for all practical purposes has been completed

when the provisional attachment order came to be issued

by the adjudicating authority on 27.09.2021 or atleast on

13.10.2021 when an application is made before the

adjudicating authority which is now pending in Original

Complaint No.1541/2021.

8. He further contended that the power under

Section 19 of the said Act has not been properly exercised

by the Investigating Agency as the arrest of the petitioner

is totally unwarranted. He also contended that the

petitioner if arrested under the guise of further

investigation, since the Investigating agency is not a Police

Officer, provisions of Section 173(8) of Cr.PC., would not

be applicable to the Investigating Agency and therefore,

the arrest of the petitioner is illegal as investigation has

already been completed, the petitioner would be entitled to

be enlarged on bail immediately by resorting to Section

167(2) of Cr.PC., the powers vested with this court.

9. He alternatively contended that in the event, this

court negating the contention of the petitioner that

petitioner is not entitled to be released on bail forthwith

under Section 167(2) of Cr.PC., the petitioner is entitled to

be enlarged on bail by powers vested with this court under

Section 439 Cr.PC.,

10. In support of the contentions of the learned

Senior Counsel for the petitioner, following judgments

have been relied on:

(1) The copy of Bail order in Crl.Misc. No.5533/2017 passed by Hon'ble III Additional District and Sessions Judge, Bengaluru Rural District at Anekal;

(2) The copy of order sheet in Crime No.730/2016 dated 17.09.2018 of the Hon'ble III Additional CMM, Bengaluru;

(3) The copy of Bail order dated 4.4.2016 in Crl.Misc. No.1776/2016 passed by Hon'ble LIV Additional City Civil and Sessions Judge, Bengaluru;

(4) The copy of the Bail order in Crl.Misc. No.8778/2017 passed by Hon'ble LXV Additional City Civil and Sessions Judge, Bengaluru;

(5) (2014) 8 SCC 273 - Arnesh Kumar Vs. State of Bihar and others;

(6) (2020) 5 SCC 1 - Sushila Agarwal & Others Vs. State (NCT of Delhi) and another;

(7) (2021) 2 SCC 427 - Arnab Manoranjan Goswami Vs. State of Maharashtra and others;

(8) (2020) 13 SCC 791 - P.Chidambaram vs. Directorate of Enforcement;

(9) 2021 SCC Online Del. 1081 - Sai Chandrasekhar Vs. Directorate of Enforcement;

(10) Paritosh Kumar Singh Vs. State of Chattisgarh & Others - reported in MANU/CG/O665/2021;

(11) Mr. Bineesh Kodiyeri Vs. Directorate of Enforcement

- MANU/KA/5164/2021;

(12) (2012) 1 SCC 40 - Sanjay Chandra Vs. Central Bureau of Investigation;

(13) (2018) 11 SCC 1 - Nikesh Tarachand Shah Vs. Union of India;;

(14) Upendra Rai Vs. Directorate of Enforcement - reported in 2019 SCC Online Del. 9086;

(15) Dr. Shivinder Mohan Singh Vs. Directorate of Enforcement - reported in 2020 SCC online Del.766;

(16) Ahilya Devi Vs. The State of Bihar and others reported in MANU/BH/0245/2020;

(17) Joginder Kumar Vs. State of UP and Others - reported in (1994) 4 SCC 260;

(18) 2018 SCC Online Del. 8873 - Raj Kumar Goel & Others Vs. Directorate of Enforcement.

11. Per contra, learned counsel representing the

Directorate of Enforcement Sri Prasanna Kumar,

vehemently contended that at no stretch of imagination,

the contentions urged on behalf of the petitioner can be

countenanced. He further contended that the proceedings

of issuing a provisional attachment order and seeking

confirmation as is contemplated under Section 5(5) of the

said Act, 2002 would not amount to completion of the

investigation. He also contended that the Directorate of

Enforcement is having the power to effect the arrest of an

accused by exercising power under Section 19 of the said

Act, 2002, so as to un-earth the truth in the incident and

to curb further laundering of the money.

12. He also contended that since the money

laundering is a continuous offence as contemplated under

Explanation (ii) to Section 3 of the said Act, 2002, till the

filing of the complaint, the investigation would not be

completed. However, if any person is arrested by

exercising power under Section 19 of the Act, having

regard to the punishment prescribed for the offence of

money laundering being minimum of three years and

maximum of seven years, the maximum period available

for the Directorate of Enforcement to file a complaint (final

report) would be 60 days and the same has been

complied. In the case on hand, the date of arrest is on

7.1.2022 as contemplated under Section 45 of the said

Act, 2002 came to be filed before the Special Court on

07.03.2022. He also contended that having regard to the

nature and magnitude issue involved in the case, the

Directorate of Enforcement will retain the power of further

investigation having regard to the scheme of PML Act and

sought for dismissal of the bail petition.

13. He also pointed out that there is no embargo on

the powers of this court under Section 439 of Cr.PC., to

entertain a bail petition having regard to Section 45 of the

said Act. He also contended that in view of Sections 65

and 71 of the said Act, wherever it is necessary, the court

can borrow the provisions of Cr.P.C. even though the Act

itself is a stand alone statute.

14. He also pointed out that the legal principles

enunciated in P Chidambaram Vs. Directorate of

Enforcement reported in (2019) 9 SCC 24 and

Mohammad Arif Vs. Directorate of Enforcement reported in

(2020) SCC online Orissa 545 would also support the

contentions urged on behalf of the Directorate of

Enforcement. In support of his contentions, Sri

Prasannakumar relied on the following Judgments:

  Sl.No.                      Contents
  1      (2019) 9 SCC 24

P.Chidambaram vs Directorate of Enforcement

2 2020 SCC Online Ori 544 Mohammed Arif v. Directorate of Enforcement

3 Order dated 24.11.2020 passed by the Hon'ble Supreme Court of India in SLP (crl) No. 4878/2020 Mohammed Arif vs. Enforcement Directorate 4 Crl. Appln. (BA) No. 1149/2021 - Bombay HC Ajay Kumar vs Directorate of Enforcement Relevant Para 5,44-49 at Page No.56,65,92-98

5 2020 SCC Online Kar 1269 Vinod Ramanani vs. Station House Officer Relevant Para 7(b), (c), (e), (f) at Page No. 105, 106, 108 6 CRL.P 5698/2019 Katta Subramanya Naidu vs. Directorate of Enforcement Relevant Para 48-49 at Page No. 172-175 7 WP 18442/2017- KAR HC SC Jayachandra vs. Directorate of Enforcement Relevant Para 10 at Page No. 199-200 8 (2013) 7SCC 439 Y.S Jagan Mohan Reddy vs CBI 9 (2013) 7 SCC 466 Nimmagadda Prasad vs. CBI

10 Judgment of the High Court of Judicature at Madras in the case of N. Umashankar @ N.M. Umashankar Vs. The Assistant Director, Chennai, in the case of Crl.OP Nos.3381, 3383 and 3385 of 2021.

15. Among the above decisions:

(1) In the case of Directorate of Enforcement v.

Deepak Mahajan and another reported in (1994) 3 SCC

440 : 1994 SCC (Cri) 785 the Hon'ble Apex Court has held at

para Nos.4 and 5 thus:

"4. This appeal, by special leave is directed against the judgment of the High Court of Delhi dated April 6, 1990 rendered by a five-Judge Bench in Criminal Writ No. 316 of 1989 overruling the decision of the same High Court in Union of India v. O.P. Gupta [(1990) 2 Del Lawyer 23 (FB)] rendered in Criminal Writ Nos. 104 and 116 of 1984 by a three-Judge Bench reversing an earlier decision in Dalam Chand Baid v. Union of India [1982 Cri LJ 747 : (1982) 21 DLT 144 (Del)] which was decided by a Division Bench of the same High Court holding that a Magistrate has no power to remand a person accused of an offence punishable under the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as 'FERA') to judicial custody.

5. Though normally, it may not be necessary to make any reference about the constitution of a particular bench which is the prerogative of the Chief

Justice of the High Court concerned, yet regrettably in this case, it has become unavoidable to make reference concerning the constitution of the Bench since during the course of the arguments, a diatribe, though not justifiable was made about the formation of the Bench, presided over by Charanjit Talwar, J. who gave a dissenting judgment in the case of O.P. Gupta [(1990) 2 Del Lawyer 23 (FB)] ."

(2) In the case of Ashok Munilal Jain and another Vs.

Assistant Director, Directorate of Enforcement reported in

(2018) 16 SCC 158, the Hon'ble Apex Court has held at para

Nos.3 to 5 thus:

"3. We have gone through the orders passed by the trial court as well as by the High Court. We may state at the outset that insofar as the High Court is concerned, it has not given any reasons in support of its aforesaid view except endorsing the view of the trial court to the effect that the provisions of Section 167(2) CrPC. are not applicable to the cases under the PMLA Act. This position in law stated by the trial court does not appear to be correct and even the learned Attorney General appearing for the respondent could not dispute the same. We may record that as per the provisions of Section 4(2) of CrPC, the procedure contained therein applies in respect of special

statutes as well unless the applicability of the provisions is expressly barred. Moreover, Sections 44 to 46 of the PMLA Act specifically incorporate the provisions of Cr.PC., to the trials under the PMLA Act. Thus, not only that there is no provision in the PMLA Act excluding the applicability of Cr.PC., on the contrary, provisions of Cr.PC., are incorporated by specific inclusion. Even Section 65 of the PMLA Act itself settles the controversy beyond any doubt in this behalf which reads as under:

"65. Code of Cr.PC., 1973 to apply - The provisions of the Cr.PC., shall apply, insofar as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act."

4. We may also refer to the judgment of this Court in Directorate of Enforcement v. Deepak Mahajan² wherein it was held as under: (SCC p.

480. para 136)

"136. In the result, we hold that sub-

sections (1) and (2) of Section 167 are squarely applicable with regard to the production and detention of a person

arrested under the provisions of Section 35 of FERA and Section 104 of the Customs Act and that the Magistrate has jurisdiction under Section 167(2) to authorise detention of a person arrested by any authorised officer of the Enforcement under FERA and taken to the Magistrate in compliance of Section 35(2) of FERA."

5. We, thus, do not agree with the opinion of the High Court that the provisions of Section 167(2) Cr.PC would not be applicable to the proceedings under the PMLA Act. In the present case, as no complaint was filed even after the expiry of 60 days from the date when the appellant was taken into custody, he was entitled to statutory bail in view of the provisions contained in Section 167(2) Cr.PC."

16. Sri M.S. Shyam Sundar, learned Counsel,

appearing on behalf of the de-facto complainant filed an

application under Section 301(2) of Cr.PC., and sought

permission of this court to aid the prosecution. This court

permitted him.

17. Having regard to the intrinsic issues involved,

with the consent of the learned counsel for the petitioner,

learned counsel for de-facto complainant Sri Shyam

Sundar was also heard on the merits of the matter. He

adopted the arguments put forth on behalf of the

Directorate of Enforcement and supplemented his

arguments by contending that this court is required to

meticulously consider the scheme of the Act while

entertaining the bail petition.

18. Further, he submitted that the action taken by

the Investigating Agency prior to filing of the complaint

under Section 45 of the Act is judicial in nature and before

arresting a person, the Investigating Agency would be of

prima facie opinion that an accused in a given case is

guilty of the offences alleged against him which pre-

supposes that there are sufficient materials on record

which would prima facie result in conviction of an accused.

19. In view of the rival contentions of the parties,

the points for determination are as under:

(1) Whether the investigation of an offence under the provisions of the PMLA would complete on issuance of an order under Section 5(1) of the said Act for provisional attachment or on filing of application under Section 5(5) of the Act for confirmation of the same or atleast when an order is passed under Section 8(3)(a) of the said Act?

(2) If so, if a person is arrested subsequent to the order passed under Section 8(3)(a) of the said Act would be entitled for immediate release by applying the provisions of Section 167 (2) of Cr.PC.?

(3) Whether an accused is entitled for grant of bail taking note of the fact that he has been enlarged on bail in respect of predicate offences?

(4) Whether twin conditions enumerated under the provisions of Section 45(1) of the Act is a Sine-qua-non for granting bail to an accused who has been arrested under Section 19 of the Act?

(5) Whether an arrest made under Section 19 of the Act is a preventive detention?

(6) Whether the petitioner has made out a case for grant of bail?"

REGARDING POINT NOS.1 & 2:

20. In order to appreciate the rival contentions of

the parties and the issues involved in the case and in the

light of the points for determination raised above, it is

necessary for this court to cull out the relevant provisions

of PML Act. Sections 19, 45, 50, 65 and 71 of the said Act

reads as under:

"19. Power to arrest.--

(1) If the Director, Deputy Director, Assistant Director, or any other officer authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.

(2) The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under sub-section (1), forward a copy of the order, along with the material in his possession,

referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such order and material for such period, as may be prescribed.

(3) Every person arrested under sub-section (1) shall within twenty-four hours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest to the Magistrate's Court.

45. Offences to be cognizable and non- bailable.--

(1) 1[Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence punishable for a term of imprisonment of more than three years under Part A of the Schedule shall be released on bail or on his own bond unless--]

(i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and

(ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail: Provided that a person who is under the age of sixteen years or is a woman or is sick or infirm, may be released on bail, if the special court so

directs: Provided further that the Special Court shall not take cognizance of any offence punishable under section 4 except upon a complaint in writing made by--

(i) the Director; or

(ii) any officer of the Central Government or State Government authorised in writing in this behalf by the Central Government by a general or a special order made in this behalf by that Government.

[(1A) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), or any other provision of this Act, no police officer shall investigate into an offence under this Act unless specifically authorised, by the Central Government by a general or special order, and, subject to such conditions as may be prescribed.]

(2) The limitation on granting of bail specified in [***] sub-section (1) is in addition to the limitations under the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force on granting of bail.

50. Powers of authorities regarding summons, production of documents and to give evidence, etc.--

(1) The Director shall, for the purposes of section 13, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:--

(a) discovery and inspection;

(b) enforcing the attendance of any person, including any officer of a banking company or a financial institution or a company, and examining him on oath;

(c) compelling the production of records;

(d) receiving evidence on affidavits;

(e) issuing commissions for examination of witnesses and documents; and

(f) any other matter which may be prescribed. (2) The Director, Additional Director, Joint Director, Deputy Director or Assistant Director shall have power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this Act.

(3) All the persons so summoned shall be bound to attend in person or through authorised agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required.

(4) Every proceeding under sub-sections (2) and (3) shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code, 1860 (45 of 1860).

(5) Subject to any rules made in this behalf by the Central Government, any officer referred to in sub- section (2) may impound and retain in his custody for such period, as he thinks fit, any records produced before him in any proceedings under this Act: Provided that an Assistant Director or a Deputy Director shall not--

(a) impound any records without recording his reasons for so doing; or

(b) retain in his custody any such records for a period exceeding three months, without obtaining the previous approval of the Director.

65. Code of Criminal Procedure, 1973 to apply.-- The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply, insofar as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act.

71. Act to have overriding effect.--The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force."

21. So also, it is necessary for this court to cull out

Section 167 of Cr.P.C which reads as under:

"167. Procedure when investigation cannot be completed in twenty four hours.

(1) Whenever any person is arrested and detained in custody and it appears that the investigation cannot be completed within the period of twenty- four hours fixed by section 57, and there are grounds for believing that the accusation or information is well- founded, the officer in charge of the police station or the police officer making the investigation, if he is not below the rank of sub-

inspector, shall forthwith transmit to the nearest Judicial Magistrate a copy of the entries in the diary hereinafter prescribed relating to the case, and shall at the same time forward the accused to such Magistrate.

(2) The Magistrate to whom an accused person is forwarded under this section may, whether he has or has not jurisdiction to try the case, from time to time, authorise the detention of the accused in such custody as such Magistrate thinks fit, for a term not exceeding fifteen days in the whole; and if he has no jurisdiction to try the case or commit it for trial, and considers further detention unnecessary, he may order the accused to be forwarded to a Magistrate having such jurisdiction: Provided that-

(a) the Magistrate may authorise the detention of the accused person, otherwise than in the custody of the police, beyond the period of fifteen days; if he is satisfied that adequate grounds exist for doing so, but no Magistrate shall authorise the detention of the accused person in custody under this paragraph for a total period exceeding,-

(i) ninety days, where the investigation relates to an offence punishable with death, imprisonment for life or imprisonment for a term of not less than ten years;

1. subs. by Act 45 of 1978, s, 13, for paragraph (a) (w, e, f, 18- 12- 1978 ).

2. Ins. by act 10 of 1990, s. 2 (w. e. f 19- 2- 1990 )

(ii) sixty days, where the investigation relates to any other offence, and, on the expiry of the said period of ninety days, or sixty days, as the case may be, the accused person shall be released on bail if he is prepared to and does furnish bail, and every person released on bail under this sub- section shall be deemed to be so released under the provisions of Chapter XXXIII for the purposes of that Chapter;]

(b) no Magistrate shall authorise detention in any custody under this section unless the accused is produced before him;

(c) no Magistrate of the second class, not specially empowered in this behalf by the High Court, shall authorise detention in the custody of

the police. Explanation I.- For the avoidance of doubts, it is hereby declared that, notwithstanding the expiry of the period specified in paragraph (a), the accused shall be detained in custody so long as

he does not furnish bail;]. Explanation II.- If any question arises whether an accused person was produced before the Magistrate as required under paragraph (b), the production of the accused

person may be proved by his signature on the order authorising detention.]

(2A) Notwithstanding anything contained in sub- section (1) or sub- section (2), the officer in charge of the police station or the police officer making the investigation, if he is not below the rank of a sub- inspector, may, where a Judicial Magistrate is not available, transmit to the nearest Executive Magistrate, on whom the powers of a Judicial Magistrate or Metropolitan Magistrate have been conferred, a copy of the entry in the diary hereinafter prescribed relating to the case, and shall, at the same time, forward the accused to such Executive Magistrate, and thereupon such Executive Magistrate, may, for reasons to be recorded in writing, authorise the detention of the accused person in such custody as he may think fit for a term not exceeding seven days in the aggregate; and, on the expiry of the period of detention so authorised, the accused person shall be released on bail except where an order for further detention of the accused person has been made by a Magistrate competent to make such order; and, where an order for such further detention is made, the period during which the accused person was detained in custody under the orders made by an Executive Magistrate under this sub- section."

22. On careful and conjoint reading of the above

provisions, it is pertinent to note that nowhere it is

mentioned as to what is the time limit for filing a

complaint/final report under Section 45 of the Act.

However, there can not be a situation where a person is

arrested and he is continued in custody eternally on the

pretext that there is no time limit fixed under the Act for

filing the complaint/final report as is contemplated under

section 45 of the said Act. Admittedly, the proceedings

under the Act is judicial proceedings. Whenever a person

is arrested by the investigating agency his personal liberty

is taken away by the investigating agency for a particular

purpose. As is provided in Section 167 of Cr.PC., supra, if

an Investigating Agency fails to file a final report as

contemplated under Section 173 Cr.PC. within 60 days or

90 days as the case may be depending upon the maximum

punishment prescribed in a given penal statute, the person

who has been arrested by the Investigating Agency

acquires indefeasible right to be released forthwith. In

other words, the framers of legislation have put a cap on

the number of days that an Investigating Agency can take

away the liberty of a person when he has been arrested by

the said agency. The cap of 60 days equally applicable in

respect of an arrest effected under the Act, in view of the

maximum punishment for the offence punishable under the

Money Laundering Act is seven years and minimum of

three years. Therefore, even though there is no specific

time limit prescribed under the Act for filing complaint/final

report as contemplated under Section 45 of the Act,

whenever a person is arrested by the Directorate of

Enforcement under the provisions by resorting to the

powers vested in it under Section 19 of the Act., the

Directorate of Enforcement is expected to file a

complaint/final report within 60 days from the date of

arrest. In the event of failure to do so, indefeasible right is

definitely to accrue to an accused under the Act. In this

regard, it is worth to place reliance on the judgments of

the Hon'ble Apex Court in the case of Directorate of

Enforcement Vs. Deepak Mahajan and Ashok Munilal

Jain supra.

23. Having said thus, in the case on hand, in order

to invoke the provisions of the said Act, the following

predicate scheduled offences were relied on by the

Directorate of Enforcement. They are:

         "a)   FIR    in   crime    No.    188/2017     dated
     11/11/2017      was   registered     by   Anekal   Police

Station, Bangalore Rural, Bengaluru based on the complaint of Shri Madhusudan Mishra against Mr. Madhukar Angur, Ms. Priyanka B S, and seven others, under Section 143, 406, 407, 408, 409 and 149 of the IPC, 1860,

b) FIR in Crime No. 730/2016 dated 11.06.2016 was registered by Madiwala Police Station, Bangalore, based on the complaint of Shri Abhay Chhabbi against Mr. Madhukar G Angur, Smt. Priyanka M Angur and others, under Sections 506, 120 B, 143, 144, 147, 148 and 149 of the IPC, 1860.

c) FIR in crime No. 119/2016 dated 04.03.2016 was registered by Jayaprakash Nagar Police Station, Bangalore against Mr. Madhukar G Angur and others under Sections 417, 420, 376 and 506 of IPC, 1860;

d) FIR in crime No. 52/2017 dated 28.09.2017 was registered by Shankarapura Police Station, Bangalore against Mr. Madhukar G Angur, Smt. Priyanka M Angur and others under Sections 506, 504, 143, 149 and 420 of IPC, 1860."

24. It is the specific case of the Directorate of

Enforcement that out of the aforesaid predicate offences,

approximately Rs.107 crores were siphoned away by the

petitioner herein by sending e-mails to the students and

parents to illegally directing them to deposit the tuition fee

in the illegally opened bank accounts. It is further found

from the material evidence on record that the petitioner

has been dismissed from the post of Chancellor and

despite the same, he continued to collect the money from

the students and thereby he has indulged in money

laundering. Upon receipt of information they found that

exceptionally high turnover is recorded in SB A/c.

No.170000000516824 in the name of the petitioner,

Enforcement department suspected the involvement of the

petitioner in misappropriation of the funds. Accordingly,

investigation under the provisions of Foreign Exchange

Management Act, 1999 [hereinafter referred to as 'FEMA'

for short] was initiated. From such investigation, it is

gathered by the Enforcement department that as many as

seven FIRs. were filed against the petitioner. As such, the

Directorate of Enforcement registered an ECIR.

Investigation was carried out further and based on the

information and materials collected during the

investigation, the Directorate of Enforcement passed an

order under Section 5(1) of the Act provisionally attaching

the assets of the petitioner. Thereafter, on 13.10.2021, an

application was also filed under Section 5(5) of the Act

before the Adjudicating Authority which is now pending in

OC No.1541/2021.

25. According to the learned Senior counsel Sri

Javali, formation of opinion by the Enforcement Directorate

that a provisional attachment order needs to be issued and

same needs to be confirmed by approaching the

Adjudicating Authority, for all practical purposes, the

investigation stood completed and therefore, from the date

of arrest of the petitioner i.e., on 7.1.2022 itself, the

petitioner has the benefit of the provision of Section 167 of

Cr.PC. In other words, since the investigation itself is

completed, there is no question of further investigation to

be carried out after the arrest of the petitioner on 7.1.2022

as the Enforcement Directorate does not have the power

equivalent to power under Section 173(8) of Cr.PC. and

thus the continuation of the accused in custody is illegal.

26. In order to appreciate the said aspect of the

matter, it is just and necessary to refer Section 19 of the

said Act as referred to supra. It is pertinent to note that

arrest of a person under the Act should be only in

accordance with Section 19 of the said Act. The purpose

of the Act under section 19 is for further investigation and

to arrest/Shun the further money laundering as money

laundering is a continuous offence. The said proposition

can be deduced by cumulative consideration of the scheme

of the Act. Therefore, the argument put forth on behalf of

the petitioner that necessary application is filed under

Section 5(1) of the Act for seeking confirmation of the

provisional attachment order under Section 5(5) of the Act

can be construed as completion of the investigation,

cannot be countenanced in law.

27. This court also directed the Directorate of

Enforcement to furnish a copy of the manual issued by the

department in respect of arrest and how to deal with an

arrested person. Accordingly, Sri Prasanna Kumar, learned

counsel for the respondent-Directorate of Enforcement,

made available the copy of the manual. It is worth to note

that the relevant portion of the manual which reads as

under:

"2.26 Arrest:

The Director, Deputy Director, Assistant Director or any officer authorized in this behalf by the Central Government, may exercise the power to arrest under section 19(1) of the PMLA. The Arresting Officer shall, on the basis of material in his possession, record reasons to believe that the person arrested is guilty of an offence of money laundering punishable under section 4 of the PMLA.

The Arresting Officer shall sign the Arrest Order in Format No. VI (Annexure M) and give a copy of Arrest Order to the arrestee. Before arresting, the Arresting Authority shall obtain prior approval from the Regional Special Director. The Arrest Register shall be maintained at the zonal/sub-zonal office in the form of Annexure Ill (Register No.7).

2.27 Guidelines for Arrest:

The following guidelines laid down by the Supreme Court in the case of D.K.Basu Vs. State of West Bengal, AIR 1997 SC 610 shall be followed while exercising the power to arrest:

1. Grounds of arrest should be communicated to the arrestee and acknowledgment to this effect may be obtained...

2. Arrest Order should be in the language known to the person arrested. If arrestee is an illiterate, Arrest Order should be explained to him.

3. The arrestee must be made aware of his right to have some one informed of his arrest or detention as soon as he is put under arrest.

4. One of the relatives or any other person known to the arrestee including his lawyer should be informed, as soon as possible.

5. The time and place of arrest of the arrestee must be notified. Where the next of kin of the arrestee lives outside the district or town, they may be notified through the Legal Aid Organization in

the district and the police station of the area concerned telegraphically within a period of 8 to 12 hours after the arrest.

6. The arrestee should, where he so requests, be also examined at the time of his arrest and major and minor Injuries, if any, present on his/her body, must be recorded at that time. The spection Memo" must be signed by both, the arrestee and the Arresting Officer effecting the arrest with a copy to the arrestee.

7. The arrestee shall be subjected to medical examination by a government doctor every 48 hours during his detention in custody.

8. Information of the arrestee should be displayed on the Notice Board of the Directorate of Enforcement.

2.28 Enforcement Custody:

Section 167 of the Code of Criminal Procedure, 1973 provides two types of custody, viz. (0) Police Custody and (ii) otherwise than in the custody of Police. The Investigating Authority may seek Enforcement Custody (EC) under section 167 of the Cr. PC If the facts and circumstances of the case so warrant. The Apex Court in the case of Directorate of Enforcement Vs. Deepak Mahajan & another in Cri. Appeal No. 537 of 1990 (1994 SCC (Cru) 785) has confirmed this proposition. The Investigating Authority may seek Enforcement Custody as early

as possible after effecting arrest, if so required, for the purposes of follow-up action for collection of further evidence, recovery of documents/property, identification of property/assets etc. T-21/02-Coord./2010 has advised the officers that in the event of arrest of an accused under Section 19 of the PMLA, there is absolutely no necessity of any police report under Section The Hqrs, vide Technical Circular No. 02/2010, dated 12/01/2010 issued from F.No. 173(2) of Cr.P C or a complaint for taking cognizance in respect of scheduled offence. The arrest could be made if it is so warranted and sufficient material is available against the arrestee with the Directorate. The Judgment pronounced in the case of Directorate of Enforcement Vs. Deepak Mahajan & another, 1994 SCC (Cri) 785 at para 136 has held that sub- section (1) and (2) of Section 167 of the Cr. P C are squarely applicable with regard to the production and detention of a person arrested under the provisions of Section 35 of FERA and Section 104 of Customs Act and that the Magistrate has jurisdiction under Section 167 (2) of the Cr.RC. to authorize of a person arrested by any authorized officer of the Directorate of Enforcement under FERA and taken to the Magistrate in compliance of Section 35 (2) of FERA The Hon'ble Supreme Court in the case of Central Bureau of Investigation Vs.

Anupam J.Kulkarni (1992) 3 SCC 141 has held that the investigating agency can seek remand for custodial interrogation, Le, police custody (in our cases Enforcement Custody) during the first 15 days, court shall not remand the accused for custodial interrogation. Copy available at the end of the Manual."

28. Having regard to the scheme of the Act,

especially the investigation powers is given to the

Directorate of Enforcement and the proceedings before the

Directorate of Enforcement in summoning the accused

recording his statement, collection of evidence being

treated as judicial proceedings as is found in Section 50(4)

of the Act referred to supra, the said proceedings cannot

be termed as completion of investigation. The proceedings

that takes place before filing of the final report is for the

purpose of prima facie satisfaction of the Directorate of

Enforcement that a provisional attachment order was

passed which needs confirmation in order to protect the

assets and to put an end to the money laundering. The

said proceedings at any rate can be construed as an order

and seeking its confirmation is only in the form of damage

control and to protect the assets from further siphoning

away. Hence, the contention of Sri Javali, learned Senior

Counsel that issuing of preliminary order and seeking its

confirmation by filing application before the Adjudicating

Authority under Section 5(5) and final order by

adjudicatory authority passed under Section 8(3)(a) of the

Act cannot be construed as completion of the investigation.

29. Having said thus, since the petitioner is arrested

on 7.1.2022 and complaint/final report came to be filed by

the Directorate of Enforcement before the Special Court on

7.3.2022, is well within 60 days and therefore, no right

accrued to the petitioner to seek for statutory bail as is

contemplated under Section 167(2) of Cr.PC, in the case

on hand, even though Section 167(2) of the Act is

applicable to the accused. The enquiry made by the

Directorate of Enforcement for the purpose of issuance of

the provisional order of attachment under Section 5(1) of

the Act and seeking its confirmation before the

adjudicating authority, no doubt, telescopes itself into

portion of the investigation for the purpose of filing a

complaint/final report under Section 45 of the Act. But,

such investigation is for the purpose of attachment of the

properties only. Materials collected in such investigation is

no doubt would be used by the Directorate of Enforcement

in the final report as well. Therefore, the arguments put

forth on behalf of the petitioner that the petitioner is

entitled for statutory bail under Section 167(2) of the

Cr.PC., on issuance of the order passed under Section 5(1)

of the Act for provisional attachment or filing an

application for its confirmation before the adjudicating

authority under Section 5(5) of the Act. In other words,

the attachment of the property and its confirmation though

is part of the same investigation, it is not for the purpose

of filing the complaint under Section 45 of the Act and it is

for the purpose of attachment of the property. Therefore,

for all practical purposes, the investigation would not be

complete so as to make available a right to the petitioner

for statutory bail under Section 167(2) of Cr.P.C.

Accordingly, Point Nos.1 & 2 are answered in the

Negative.

REGARDING POINT NOS.3 TO 6:

30. Now, the task of this court is to find out whether

the petitioner is entitled for grant of bail by resorting to

powers vested in this court under Section 439 of Cr.PC.

Section 45 of the Act commence with a non obstante

clause whereby the application of Cr.P.C., is limited. By

virtue of Section 45(1) of the said Act, which deals with

the situation for granting bail only to the following

persons:

"(a) If an accused person is under the age of 16;

(b) If an accused person is a women;

(c) If an accused person is a sick or infirm person;

(d) If an accused person is alleged of committing money laundering offence of less than 1 crore rupees."

Section 45(2) of the Act, however, makes it clear that

granting of bail to an accused under Section 45(1) of the

Act is in addition to limitation under Cr.P.C.

31. Close reading of section 45(1) of the Act makes

it clear that before a court grants bail to an accused

person, for an offence under the Act, an opportunity must

be provided to the prosecutor to oppose the application

and in the event of the prosecution opposing the

application, court must be satisfied that there are

reasonable grounds for believing that an accused is not

guilty of such offence and he is not likely to commit any

offence while on bail. Therefore, one can easily construe

while exercising the power under Section 439 of Cr.PC., for

grant of bail. The twin condition referred to supra must be

satisfied before a court intends to grant the bail. The

language employed in Section 45(1) of the Act is in the

form of twin conditions akin to the language employed by

the legislature under Section 37 of the NDPS Act.

Therefore, the court which is considering the bail

application must get satisfied that there are reasonable

grounds that accused may not be guilty and he may

commit further offence as money laundering is a

continuous offence.

32. Sri P. Prasanna Kumar, learned counsel

emphasized that satisfaction of the twin conditions for

grant of bail is a sine qua non to entertain a bail

application under the Act and in this regard, he relied on

the un-reported judgment of the High Court of Judicature

at Madras in the case of N. Umashankar supra, wherein

at paragraphs 15 and 16, it is held as under:

"15. In the Judgment reported in 2018 (11) SCC-1 [cited supra], the Apex Court declared Section 45 of the PMLA as it stood then, as unconstitutional and violative of Articles 14 and 21 of the Constitution of India, but the defects pointed out by the Hon'ble Supreme Court in the said Judgment were cured by the legislature and an amendment to section 45(1) was made vide the Finance Act, 2018 (No.13 of 2018). Under the amendment Act, section 45(1) was revived and for the words "punishable for a term of imprisonment of more than three years under part A of the Schedule", the words "under this Act" were substituted in

Crl.OP.Nos. 3381, 3383 and 3385 of 2021, section 45(1) of the PMLA.

16. No doubt, the legislature has the power to cure the underlying defect pointed out by a Court, while striking down a provision of law and pass a suitable amendment. When such a law is passed, the legislature basically corrects the errors which have been pointed out in a judicial pronouncement. Resultantly, it amends the law, by removing the mistakes committed in the earlier legislation, the effect of which is to remove the basis and foundation of the judgment. Therefore, merely because the entire section is not re-enacted would be of no consequence, since the provision even after being declared unconstitutional, does not get repealed or wiped out from the statute book and it only becomes unenforceable. Therefore, once the Parliament steps in and cures the defect pointed out by a Constitutional Court, the defect appears to be cured and the presumption of constitutionality is to apply to such provision. Therefore, there is a presumption in favour of constitutionality since the amended section 45(1) of the PMLA has not been struck down."

He also submitted that the SLP in Umashankar's case, the

matter was carried to the Hon'ble Supreme Court, wherein,

the Hon'ble Supreme Court dismissed the SLP and

therefore, the view taken by the High Court of Madras is

up held by the Hon'ble Supreme Court.

33. In reply, learned Senior Counsel Sri K.S.Javali,

submitted that Hon'ble Apex Court did not hold in

categorical terms that the view taken by Madras High

Court in the case of Umashankar's case supra is correct.

He also tried to impress upon the court that mere

dismissal of the SLP with a direction to expeditious

disposal of the case cannot be construed as approval of the

view taken by the Madras High Court.

34. Sri Prasanna Kumar however contended that

since the accused tested the correctness of the order

passed by the Madras High court before the Hon'ble Apex

Court and the Hon'ble Apex Court, having dismissed the

petition of the accused, impliedly, the view taken by the

Madras high court has been up held by the Hon'ble

Supreme Court. For the purpose of deciding the present

bail application, this court perused the orders passed by

the Hon'ble apex court which reads as under:

"We are not inclined to interfere in these Special Leave Petitions. The Special Leave Petitions are dismissed accordingly.

             However,             we          direct        the
      prosecution/Investigating        Agency      to    ensure
      that   the    trial    is   concluded      with    utmost
      expedition.

             Pending        applications,   if    any,    stand
      disposed of."

35. On perusal of the above order, it is crystal clear

that the Hon'ble Apex Court did not deliver the order on

merits. But refused to interfere with the order passed by

the Madras High Court. Mere refusal to interfere with the

order passed by the Madras High Court cannot be termed

as the order of the Madras High Court is being upheld by

the Hon'ble Apex Court. Therefore, the contention of the

Directorate of Enforcement that this court is required to

follow the order passed in Umashankar's case by the

division bench of the Madras High Court cannot be

countenanced in law and at best it is persuasive in nature.

36. However, since the language employed under

Section 45 of the Act, it is crystal clear that no person

accused of an offence under the Act, shall be released on

bail unless he satisfies the twin conditions enumerated

under Section 45 of the Act. Therefore, further discussion

on the aspect of whether the principles of law enunciated

in the Judgment of the Madras High Court is implied

confirmation by the Hon'ble Apex Court or not need not be

further gone into in the present petition.

37. From the principles of law enunciated in the

decisions relied on by the parties, there cannot be any iota

of doubt left that whenever a bail application under the Act

is to be considered, twin conditions enumerated in Section

45(2) of the Act must be satisfied.

38. In other words, the special powers vested in this

court under Section 439 Cr.PC. cannot be exercised in the

case of an accused facing trial under the provisions of the

said Act, like any other accused who has been charged

under the provisions of the IPC. Having regard to the

language employed in Section 45(2), there is an embargo

on the powers of this court to exercise the special powers

vested in this court under Section 439 Cr.P.C. On careful

reading of Section 45(2) referred to supra, one can easily

understand that the wordings used under the said

provision is in pari materia to section 37 of the NDPS Act.

The wordings used in both the provisions are practically

similar. Thus, an accused is required to satisfy before this

court that there is a reasonable ground that he is not

guilty of the offences alleged against him. Taking clue of

the said wordings Sri Prasanna Kumar representing

Directorate of Enforcement and Sri Shyam Sundar, learned

Counsel representing the de-facto complainant in chorus

contended that the grounds urged in the bail petition are

hardly sufficient enough to establish the fact that the

accused is not guilty of the offences alleged against him.

39. The principal objection of the Directorate of

Enforcement and the de-facto complainant is that the

petitioner having siphoned away Rs.107 crores, if enlarged

on bail, he may further indulge in similar offences and may

tamper the prosecution witnesses.

40. In reply, Sri Javali contended that the collection

of the material by the Directorate of Enforcement at the

time of issuing order under Section 5(1) and Section 5(5)

of the Act and the materials collected after the arrest of

the petitioner on 7.1.2022 till filing of the complaint/final

report under Section 45 of the said Act on 7.3.2022 did not

improve the case of the Directorate of Enforcement to any

extent to reasonably establish that the petitioner is

involved in money laundering and therefore, petitioner is

entitled for grant of bail. The proceeds sought to have

been collected by the Directorate of Enforcement from the

FIRs. referred to supra are not sufficient enough to say

that the petitioner had indulged in money laundering. He

also contended that despite the fact that the Directorate of

Enforcement arrested the petitioner on 7.1.2022 till the

filing of final report/complaint on 7.3.2022, no further

materials are collected by the Directorate of Enforcement

to substantiate the allegation that petitioner. He also

pointed out that since the entire investigation is now

completed and materials collected by the Directorate of

Enforcement is now in the form of Complaint/final report,

the apprehension of the Directorate of Enforcement and

de-facto complainant that the petitioner may further

indulge in money laundering stands automatically quelled

and as such, there is no reason whatsoever to oppose the

release of the petitioner on bail.

41. This court has meticulously perused the

materials on record in the light of Section 45 of the Act.

The wordings used in Section 45 of the said Act is in the

form of casting reverse burden on the accused. In the

light of the legal principles enunciated in the judgments

referred to supra and also taking note of the fact that the

Directorate of Enforcement has already collected necessary

materials to form an opinion that the petitioner is prima

facie guilty of the offences alleged against him, is only for

the purpose of effecting the arrest under Section 19 of the

Act. However, if that opinion of the Investigating Agency

that accused is guilty, is to be held as sacrosanct, there

remains nothing before the Special court to be adjudicated

upon further. in this regard, it is rightly argued by Sri

Javali that no further materials are collected by the

Directorate of Enforcement from the date of arrest of the

petitioner till the filing of the complaint/final report under

Section 45 of the Act on 7.3.2022. Copy of the complaint

is made available before this court on 23.3.2022. This

court meticulously perused the complaint as well. As could

be seen from the same, the statement of the petitioner has

been recorded on 12.1.2022, 13.1.2022, 15.1.2022 and

16.1.2022 by exercising power under Section 50(2) and

(3) of the Act.

42. The statement of the petitioner was also

recorded by the Directorate of Enforcement before his

arrest. On keeping the statements recorded by the

Directorate of Enforcement before his arrest and after

arrest in Juxtaposition one can easily find out that both the

statements are practically mirror image of each other,

except for few instances which were not stated by the

petitioner earlier to his arrest.

43. In other words by the arrest of the petitioner

Directorate of Enforcement did not gain much in the case

on hand for the purpose of its further investigation. Any

way, this court is not oblivious of the fact that this court

cannot hold a mini trial at the time of considering the bail

application. However, since the accused is required to

reasonably make out a case that he is not guilty of the

offence alleged against him, to that extent the statements

have been perused by this court. On such perusal of the

materials on record, since the Directorate of Enforcement

had already seized necessary documents and also taken

control over the assets of the petitioner, apprehension of

the prosecution that release the accused may result in

continuation of the money laundering, in the considered

opinion of this court is not available in the case on hand.

Therefore, this court is of the considered opinion that the

petitioner has made out a case for grant of bail. Further,

the remaining apprehension/s of the prosecution if any,

can be met with by imposing suitable and stringent

conditions.

44. The alternate argument put forth on behalf of

the petitioner is that the petitioner is enlarged on bail in

respect of the predicate offences and the court having

taken note of the fact that the petitioner is no longer

required to be continued in judicial custody and State

having not sought for cancellation of bail in respect of the

predicate offences, ipso facto the petitioner is entitled for

grant of bail in respect of a complaint/final report filed

under Section 45 of the Act in an action taken under the

provisions of the said Act.

45. The said argument cannot be countenanced in

law inasmuch as arrest under Section 19 of the said Act is

for the different purpose altogether. The language

employed in Section 19 of the Act and the manual referred

to supra, on careful perusal is altogether different from the

language employed under Section 41 of the Cr.P.C., Much

has been argued by the counsel for petitioner and for the

de-facto complainant as to the nature and purpose of

arrest under Section 19 of the said Act.

46. Sri M.S. Shyam Sundar, learned Counsel for de-

facto complainant argued that the arrest under Section 19

of the said Act is in the nature of preventive detention. To

substantiate his argument, he further contended that the

wordings used in Section 19 of the said Act, is that the

authorised officer of the Directorate of Enforcement would

be forming an opinion that accused is guilty of the offences

under the provisions of the said Act and then only he has

got the power to arrest the accused and therefore, to shun

the further damage and to put an end to the continuing

offence of the money laundering arrest is effected.

Therefore, the arrest under Section 19 of the said Act is

preventive detention.

47. However, Sri Kiran S. Javali, learned Senior

Counsel while dealing with the purpose of arrest under

Section 19 of the said Act has emphasized that having

regard to the offence under Section 19 of the said Act, the

rules framed under the Act and the Rules, there is a duty

cast on the Investigating Agency to justify the need for

arrest. He further argued that in the case on hand, no

such reasons are forth coming from Investigating Agency.

He also contended that in the absence of the relevant

safeguards being provided to treat the arrest under

Section 19 of the said Act as the preventive detention, it

should be construed that the arrest if any is only for the

further investigation and such arrest is not to be construed

as preventive detention.

48. Sri M.S. Shyam Sundar, learned Counsel also

referred to the definition of the word guilty found under

Section 19 of the said Act by placing reliance on the

definition of the word 'guilty' as defined in BLACK's LAW

DICTIONARY -

(a) A plea of a criminal defendant who does not contest the charges;

(b) A jury verdict convicting the defendant of the crime charged.

49. He further referred that the scheme under the

Code of Criminal Procedure in the form of Sections 229,

241, 248, 253 and 255, it is for the court to express

opinion and to pronounce the guilt or otherwise of the

accused. Since the Act provides for the Investigating

Agency to form an opinion of guilty of the accused, having

regard to sub section (4) of Section 50 authorising the

proceedings before the Investigating Agency as a judicial

proceedings, the opinion formed by the Investigating

Agency that the accused is guilty and therefore, the arrest

is preventive in nature. Any other opinion if formed would

defeat the very object of section 19 of the said Act and

therefore, the arrest of the petitioner needs to be treated

as preventive detention.

50. This court considered the rival contentions of

the parties in the light of Section 19 of the Act. Argument

of the counsel for de-facto complainant that arrest under

Section 19 of the Act, cannot be construed as preventive

detention cannot be countenanced in law.

51. If the said argument is to be accepted, there

remains nothing for the Special Court to decide the guilt or

otherwise of the accused in the trial. The opinion of the

Investigating Agency is no doubt judicial in nature, having

regard to Section 50(4) of the Act. But, the Special Court

has to charge the accused for the offence under Section 3

of the Act after taking cognizance of the said offence

when once a complaint/final report under Section 45 of the

Act, is filed. If the opinion of the Investigating Agency for

the purpose of arrest under Section 19 of the Act, that an

accused under the Act is prima facie guilty of offence

under the provisions of the Act, it is only for the purpose of

arrest and not binding on the Special Court. Therefore, in

order to justify the arrest of an accused under the Act by

resorting to the power envisaged under Section 19 of the

said Act, the enquiry contemplated is termed as an

equivalent to judicial enquiry. This is to safeguard the

proposed accused from a wrongful arrest and nothing

more. More so, when the very same accused has been

enlarged on bail in respect of the predicated offences.

52. The above discussion would also answer

question No.6 to urged on behalf of the petitioner that

when once an accused is granted bail by a judicial

Magistrate or the Sessions Court as the case may be in

respect of the predicated offences ipso facto is entitled for

grant of bail in respect of the offences under the Act.

53. In the case on hand, it is no doubt true that the

petitioner is enlarged on bail in respect of the predicated

offences. The Investigating Agency is very well aware of

the said fact. Despite the same, the investigating Agency

proceeded to effect the arrest of the petitioner by resorting

to the powers vested in it under Section 19 of the said

Act. Therefore, the word 'guilty' found under Section 19 of

the Act is to be construed in that sense and not as an

opinion that would bind the petitioner/accused and

definitely not binding on the Special courts. Thus, the

argument put forth on behalf of the petitioner that ipso

facto, petitioner is entitled for the bail in view of the fact

that the petitioner is enlarged on bail for the predicated

offences cannot be countenanced in law. Accordingly,

point Nos.3 to 6 are answered in the Negative.

Hence, following order is passed.

ORDER

The petition is allowed. Consequently, the petitioner shall be released on bail in connection with ECIR No.BGZO/33/2020, dated 16.10.2020 registered by the respondent Authority for the alleged offences, subject to the following conditions:

(1) The petitioner shall execute a personal bond for a sum of Rs.10,00,000/- (Rupees Ten Lakhs only) with two local sureties for the like sum to the satisfaction of the learned Special Judge.

(2) The petitioner shall mark his attendance before the Directorate of Enforcement on every third Sunday between 10.00 a.m., and 2.00 p.m.,

(3) The petitioner shall appear before the Special Court on all the future hearing dates unless exempted.

(4) The petitioner shall not directly or indirectly tamper the prosecution witnesses.

(5) The petitioner shall not leave the jurisdiction of Bengaluru District without prior permission.

Violation of any one of the above conditions, would entitle the prosecution to seek for cancellation of the bail.

Ordered accordingly.

Sd/-

JUDGE PL*