Madras High Court
N.Umashankar @ N.M.Umashankar vs “.......... 36. Reliance By The on 10 March, 2021
Crl.O.P.Nos.3381, 3383 and 3385 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 23.12.2021
DELIVERED ON : 03.01.2022
CORAM:
THE HON'BLE MR. JUSTICE M.DURAISWAMY
AND
THE HON'BLE MR. JUSTICE J. SATHYA NARAYANA PRASAD
Crl.O.P.Nos.3381, 3383 and 3385 of 2021
1. N.Umashankar @ N.M.Umashankar
... Petitioner in Crl.O.P.No.3381/2021
2.V.Janarthanan
3.N.Arunkumar ... Petitioners in
Crl.O.P.No.3383/2021
4. Saravanakumar ... Petitioner in Crl.O.P.No.3385/2021
v.
The Assistant Director,
Directorate of Enforcement,
Government of India,
Chennai Zone-2,
3rd Floor, 3rd Block,
Shastri Bhawan, Haddows Road,
Chennai 600 006. ... Respondent
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COMMON PRAYER: Criminal Original Petition filed under Section 45
of the Prevention of Money Laundering Act, 2002 read with section 439
of the Criminal Procedure Code, to enlarge the petitioners on bail
pertaining to ECIR No.ECIR/MDSZO/04/2018 pending investigation on
the file of the respondent.
For Petitioners
in all Crl.O.Ps : Mr.R.Jayaprakash
For Respondent : Mr.Rajinish Pathiyil
in all Crl.O.Ps Special Public Prosecutor
COMMON ORDER
M. DURAISWAMY, J.
The petitioners, namely, N.Umashankar @ N.M.Umashankar
V.Janarthanan, N.Arunkumar and Saravanakumar, are arrayed as
accused Nos. 2, 3, 4 and 9, respectively in ECIR No.ECIR/MDSZO/
04/2018, on the file of the Court of Principal Sessions Judge, City Civil
Court, Chennai.
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2. The Division Bench of this Court, by order dated 10.03.2021,
granted bail to the petitioners. Aggrieved over the order passed by the
Division Bench, the respondent filed Appeals before the Hon'ble Supreme
Court in S.L.P. (Crl.) Nos. 7563-7565 of 2021 and the Apex Court, by
order dated 22.11.2021, set aside the order dated 10.03.2021 and
relegated the parties before this Court for reconsideration of Criminal
Original Petitions to be decided in accordance with law.
3. Pursuant to the order passed by the Apex Court, the learned
counsel on either side made their submissions in the bail petitions.
4. It is not in dispute that the petitioners were arrested by the
respondent for the alleged offence under Section 3 of the Prevention of
Money Laundering Act (hereinafter referred to as "PMLA") and
punishable under Section 4 of PMLA. The petitioners filed petitions in
Crl.O.P.Nos.673, 675 and 677 of 2021 seeking for bail. The said
petitions were dismissed on 02.02.2021 on the ground that
investigation was pending. The Economic Offences Wing of Tamil Nadu
Police had registered a case in Crime No.6 of 2016 on 02.06.2016, for
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the alleged commission of offences under Sections 406, 420, 120B of IPC
read with Section 5 of the Tamil Nadu Protection of Interest of Depositors
(in Financial Establishment) Act, 1997 (TNPID Act) and they were
granted Anticipatory Bail and subsequently, the Anticipatory Bail granted
to them came to be cancelled and during their incarceration, the
Committee of Administrator appointed by the Hon'ble First Bench of this
Court had seized and got over almost all documents pertaining to the
properties and some of the properties are also brought for sale and this
Court had also confirmed the sale in respect of some of the properties.
5.1 Mr.R.Jayaprakash, learned counsel appearing for the
petitioners submitted that since the investigation done by the
respondent has been completed and complaint has also been filed, which
is yet to be taken on file, the question of hampering investigation and
tampering of witnesses would not arise. The learned counsel also
submitted that the passports of the petitioners were also ordered to be
surrendered, in connection with the case in Crime No.6 of 2016,
registered by the Economic Offences Wing of Tamil Nadu Police and as
such, the question of fleeing from the hands of justice also would not
arise.
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5.2 The learned counsel further submitted that the provisions of
section 45 of the PMLA has no application for the reason that the
Hon'ble Supreme Court in its Judgment reported in 2018(11) SCC -1
[Nikesh Tarachand Shah v. Union of India and another], had
declared section 45(1) of the Act as unconstitutional. Further the
learned counsel submitted that the amendment brought in section 45 of
the Act on 19.04.2018 is also having no application for the reason that
the provisions of section 45 has already been struck down by the Apex
Court.
5.3 It is the contention of the learned counsel for the petitioners
that once section 45 of the Act has been struck down by the Apex Court,
the legislature cannot bring in amendment to the said provision, which is
not in existence. The learned counsel also submitted that the petitioners
are law abiding citizens and they would co-operate with the investigation,
hence, bail may be granted as per the provisions of section 45(1)(ii).
5.4 In support of his contention, the learned counsel, has relied
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upon the following judgments:-
(i) 2018 (11) SCC-1 [Nikesh Tarachand Shah v. Union of
India and another], wherein the Hon'ble Supreme Court held as
follows:-
“ ........29 By the Amendment Act of 2012,
which is Act 2 of 2013, a very important amendment
was made to the Schedule by which the entire Part B
offences were transplanted into Part A. The object for
this amendment, as stated in the Statement of Objects
and Reasons for the amendment in clause 3 (j),
specifically provided:
“(j) putting all the offences listed in Part A
and Part B of the Schedule to the aforesaid
Act into Part A of that Schedule instead of
keeping them in two Parts so that the
provision of monetary threshold does not
apply to the offences.”
30. By the Finance Act of 2015, by Section
145, the limit of Rs.30 lakhs in Section 2(y) was
raised to Rs.1 crore and in the Schedule after Part A,
Part B was populated with only one entry,
namely Section 132 of the Customs Act. Certain
other amendments were made, by the Finance Act of
2016, to the 2002 Act with which we are not directly
concerned.
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31. The statutory history of Section 45, read
with the Schedule, would, thus show that in its
original avatar, as Clause 44 of the 1999 Bill, the
Section dealt only with offences under the Act
itself. Section 44 of the 2002 Act makes it clear that
an offence punishable under Section 4 of the said Act
must be tried with the connected scheduled offence
from which money laundering has taken place. The
statutory scheme, as originally enacted, with Section
45 in its present avatar, would, therefore, lead to the
same offenders in different cases having different
results qua bail depending on whether Section 45 does
or does not apply. The first would be cases where the
charge would only be of money laundering and
nothing else, as would be the case where the
scheduled offence in Part A has already been tried,
and persons charged under the scheduled offence have
or have not been enlarged on bail under the Code of
Criminal Procedure and thereafter convicted or
acquitted. The proceeds of crime from such scheduled
offence may well be discovered much later in the
hands of Mr. X, who now becomes charged with the
crime of money laundering under the 2002 Act. The
predicate or scheduled offence has already been tried
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and the accused persons convicted/acquitted in this
illustration, and Mr. X now applies for bail to the
Special Court/High Court. The Special Court/High
Court, in this illustration, would grant him bail
under Section 439 of the Code of Criminal Procedure
– the Special Court is deemed to be a Sessions Court –
and can, thus, enlarge Mr. X on bail, with or without
conditions, under Section 439. It is important to note
that Mr. X would not have to satisfy the twin
conditions mentioned in Section 45 of the 2002 Act in
order to be enlarged on bail, pending trial for an
offence under the 2002 Act.
32. The second illustration would be of Mr. X
being charged with an offence under the 2002 Act
together with a predicate offence contained in Part B
of the Schedule. Both these offences would be tried
together. In this case, again, the Special Court/High
Court can enlarge Mr. X on bail, with or without
conditions, under Section 439 of the Code of Criminal
Procedure, as Section 45 of the 2002 Act would not
apply. In a third illustration, Mr. X can be charged
under the 2002 Act together with a predicate offence
contained in Part A of the Schedule in which the term
for imprisonment would be 3 years or less than 3
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years (this would apply only post the Amendment
Act of 2012 when predicate offences of 3 years and
less than 3 years contained in Part B were all lifted
into Part A). In this illustration, again, Mr. X would
be liable to be enlarged on bail under Section 439 of
the Code of Criminal Procedure by the Special
Court/High Court, with or without conditions,
as Section 45 of the 2002 Act would have no
application.
33. The fourth illustration would be an
illustration in which Mr. X is prosecuted for an
offence under the 2002 Act and an offence punishable
for a term of imprisonment of more than three years
under Part A of the Schedule. In this illustration, the
Special Court/High Court would enlarge Mr. X on bail
only if the conditions specified in Section 45(1) are
satisfied and not otherwise. In the fourth
illustration, Section 45 would apply in a joint trial of
offences under the Act and under Part A of the
Schedule because the only thing that is to be seen for
the purpose of granting bail, under this Section, is the
alleged occurrence of a Part A scheduled offence,
which has imprisonment for over three years. The
likelihood of Mr. X being enlarged on bail in the first
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three illustrations is far greater than in the fourth
illustration, dependant only upon the circumstance
that Mr. X is being prosecuted for a Schedule A
offence which has imprisonment for over 3 years, a
circumstance which has no nexus with the grant of
bail for the offence of money laundering. The mere
circumstance that the offence of money laundering is
being tried with the Schedule A offence without more
cannot naturally lead to the grant or denial of bail (by
applying Section 45(1)) for the offence of money
laundering and the predicate offence.
..............
53. The matter came to this Court by a
certificate of fitness granted by the High Court. Sikri, J
and Ramana, J., by their order dated 12th August,
2016, stated:
“Though the High Court has granted
certificate to appeal, we have heard the
learned counsel for some time and are of
the opinion that the impugned judgment of
the High Court is correct. This appeal is,
accordingly, dismissed.”
The complaint of the learned Attorney General is that
this was done at the very threshold without hearing
the Union of India. Be that as it may, we are of the
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opinion that, even though the Punjab High Court
judgment appears to be correct, it is 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.
54. Regard being had to the above, we
declare Section 45(1) of the Prevention of Money
Laundering Act, 2002, insofar as it imposes two
further conditions for release on bail, to be
unconstitutional as it violates Articles 14 and 21 of the
Constitution of India. All the matters before us in
which bail has been denied, because of the presence of
the twin conditions contained in Section 45, will now
go back to the respective Courts which denied bail. All
such orders are set aside, and the cases remanded to
the respective Courts to be heard on merits, without
application of the twin conditions contained in Section
45 of the 2002 Act. Considering that persons are
languishing in jail and that personal liberty is
involved, all these matters are to be taken up at the
earliest by the respective Courts for fresh decision.
The writ petitions and the appeals are disposed of
accordingly. ......”
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(ii) 2021 SCC online P & H 1567 [Prakash Gurbaxani v.
The Directorate Of Enforcement ], wherein the Hon'ble Supreme
Court held as follows:-
“ ..........18. By Act 13 of 2018 Section 45(1) of
the PMLA was sought to be amended w.e.f.
19.04.2018. Through such amendment the words
"punishable for a term of imprisonment of more than
three years under Part A of the Schedule" as occurring
in Section 45(1) before the judgment of the Supreme
Court in Nikesh Tarachand Shah's case (supra) were
substituted with the words "under this Act". As per
learned ASG, after such amendment, the defect on the
basis of which the Supreme Court had
declared Section 45(1) of the PMLA to be
unconstitutional was cured and consequently the twin
conditions prescribed in Section 45(1) stood revived.
19. The declaration by the Supreme Court in
Nikesh Tarachand Shah's case (supra) would render
the twin conditions prescribed in Section 45(1) of the
PMLA for release of an accused on bail to be void in
toto; such conditions have to be disregarded of any
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legal force from its inception; they cease to be law; the
same are rendered inoperative and that they are to be
regarded as if they had never been enacted. That being
so, the twin conditions for grant of bail under Section
45(1) of the PMLA as are now sought to be pressed
into service by the ED cannot be considered to have
revived or resurrected only on the prospective
substitution of the words 13 of 19 "punishable for a
term of imprisonment of more than three years under
Part A of the Schedule" with the words "under this
Act" especially without there being any amendment
with regard to the twin conditions for grant of bail
which had specifically been declared to be
unconstitutional as also in the absence of any
validating law in this regard with retrospective effect.
..............”
(iii) 2021 SCC Online Del 3901 [Amarendra Dhari Singh vs
Directorate Of Enforcement ], wherein the Division Bench of Delhi
High Court held as follows:
“.......... 36. Reliance by the respondent has
been placed on Bimal Kumar Jain and Naresh Jain Vs.
Directorate of Enforcement BAIL APPLN.112/2021
and CRL. M. (BAIL) 81/2021; BAIL APPLN.
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122/2021. The said bail application has been decided
only on the basis of parameters as laid down U/s 439
of the Cr.PC. Therefore, in view of the above, the
provisions of Section 439 of Cr.P.C and the conditions
therein will apply in the case of petitioner for grant of
bail. ...........”
(iv) 2021 SCC online Bom 2905 [The Union Of India v.
Yogesh Narayanrao Deshmukh and another], wherein the Division
Bench of Bombay High Court held as follows:-
“ .... 29. 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 Shivgan
24/41 Cri.APPLN-158-2021.odt 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
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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.
6.1 Countering the submissions made by the learned counsel
appearing for the petitioners, Mr.Rajinish Pathiyil, learned Special Public
Prosecutor appearing for the respondent submitted that the bail petitions
filed by the petitioners are liable to be rejected solely on the ground that
the amended provisions of Section 45 of the PMLA bars filing of bail
petitions. That apart, the learned Special Public Prosecutor submitted
that the petitioners never co-operated for the investigation and therefore,
they are not entitled to the grant of bail under section 45(1)(ii) of the
Act. The learned Special Public Prosecutor also submitted that the
amended provisions of section 45 of the PMLA has been challenged
before the Hon'ble Supreme Court and the Special Leave Petition is also
pending without any interim order. In these circumstances, the learned
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Special Public Prosecutor submitted that the amended provisions of
section 45 is binding on the petitioners.
6.2 In support of his contention, the learned Special Public
Prosecutor appearing for the respondent, has relied upon the following
judgments:-
(i) 2017(1) SCC 283 [ Cheviti Venkanna Yadav vs State Of
Telangana ] wherein the Hon'ble Supreme Court held as follows:-
27. In State of Himachal Pradesh v. Narain
Singh while dealing with the validation of statute the
Court ruled that:-
“It is therefore clear where there is a
competent legislative provision which
retrospectively removes the substratum of
foundation of a judgment, the said exercise is
a valid legislative exercise provided it does not
transgress any other constitutional limitation.”
28. To arrive at the said conclusion, the two-Judge
Bench reproduced from the decision in Constitution
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Bench in State of T.N. v. Arooran Sugars Ltd9 which
is to the following effect:-
“It is open to the legislature to remove the
defect pointed out by the court or to amend the
definition or any other provision of the Act in
question (2009) 13 SCC 165 (1997) 1 SCC
326 retrospectively. In this process it cannot be
said that there has been an encroachment by
the legislature over the power of the judiciary.
A court’s directive must always bind unless the
conditions on which it is based are so
fundamentally altered that under altered
circumstances such decisions could not have
been given. This will include removal of the
defect in a statute pointed out in the judgment
in question, as well as alteration or substitution
of provisions of the enactment on which such
judgment is based, with retrospective effect.”
(ii) 2019(9) SCC 24 [P. Chidambaram v. Directorate Of
Enforcement ] wherein the Hon'ble Supreme Court held as follows:
“ .........36. Insofar as the issue of grant of bail is
concerned, Section 45 of PMLA starts with non-
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obstante clause. Section 45 imposes two conditions for
grant of bail to any person accused of any offence
punishable for a term of imprisonment of more than
three years under Part-A of the Schedule of the Act
viz., (i) that the prosecutor must be given an
opportunity to oppose the application for such bail;
(ii) that the court must be satisfied that there
are reasonable grounds for believing that the accused
persons is not guilty of such offence and that he is not
likely to commit any offence while on bail.
37. The twin conditions under Section 45(1) for
the offences classified thereunder in Part-A of the
Schedule was held arbitrary and discriminatory and
invalid in Nikesh Tarachand Shah v. Union of India
and another (2018) 11 SCC 1. Insofar as the twin
conditions for release of accused on bail under Section
45 of the Act, the Supreme Court held the same to be
unconstitutional as it violates Articles 14 and 21 of the
Constitution of India. Subsequently, Section 45 has
been amended by Amendment Act 13 of 2008. The
words “imprisonment for a term of imprisonment of
more than three years under Part A of the Schedule”
has been substituted with “accused of an offence
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under this Act…..”. Section 45 prior to Nikesh
Tarachand and post Nikesh Tarachand reads as
under:-
Section 45 - Prior to Nikesh Section 45 - Post Nikesh
Tarachand Shah Tarachand Shah
Section 45. Offences to be Section 45. Offence to be
cognizable and non-bailable. cognizable and non-bailable.
bailable. bailable.
(1) Notwithstanding contained (2) Notwithstanding anything
in the Code of Criminal contained in the Code of
Procedure, 1973 (2 of 1974), no Criminal Procedure, 1973 (2 of
person accused of an offence 1974), no person accused of an
punishable for a term of offence under this Act shall be
imprisonment of more than released on bail or on his own
three years under Part A of the bond unless-
Schedule shall be released on (i) the Public Prosecutor has
bail or on his own bond unless- been given an opportunity to
(i) the Public Prosecutor has oppose the application for such
been given an opportunity to release; and
oppose the application for
such release; and (ii) where the Public Prosecutor
opposes the application, the
(ii) where the Public Prosecutor court is satisfied that there are
opposes the application, the reasonable grounds for believing
court is satisfied that there are that he is not guilty of such
reasonable grounds for believing offence and that he is not likely
that he is not guilty of to commit any offence while on
bail;
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such offence and that he is not Provided that a person, who, is
likely to Provided that a person, under the age of sixteen there are
who, is under the age of sixteen reasonable grounds for years, or is
there are reasonable grounds for a woman or is sick or infirm, or is a
years, or is a woman oris sick or woman or is sick or infirm, or is
infirm, may be released on bail, if accused either on his own or along
the Special Court so directs: with other co-accused of money
laundering a sum of less than one
crore rupees may be released on
bail, if the Special court so directs:
(iii) The order of the Hon'ble Supreme Court made in
S.L.P.(CRl.)No.5191 of 2021 [Satender Kumar Antil v. Central
Bureau Of Investigation ] wherein the Hon'ble Supreme Court held
as follows;-
“ ...........We are inclined to accept the
guidelines and make them part of the order of the
Court for the benefit of the Courts below. The
Guidelines areas under :-
“Categories/Types of offences”
A) Offences punishable with imprisonment of
7 years or less not falling in category B & D.
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B) Offences punishable with death,
imprisonment for life, or imprisonment for more than
7 years.
C) Offences punishable under Special Acts
containing stringent provisions for bail like NDPS
(S.No.37) PMLA (S.45), UAPA (S.430(5),
Companies Act 212(6), etc.
D) Economic offences not covered by Special;
Acts.
REQUISITE CONDITIONS
1. Not arrested during investigation.
2. Cooperated throughout in the investigation
including appearing before Investigating Officer
whenever called.
(No need to forward such an accused along
with the chargesheet (Siddharth Vs. State of
UP, 2621 SCC online SC 615)
CATEGORY - A
After filing of charge sheet/complaint taking of
cognizance
a) Ordinary summons at the 1%
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instance/including permitting appearance
through Lawyer.
b) If such an accused does not appear
despite service of summons, then Bailable
Warrant for physical appearance may be issued.
c) NBW on failure to failure to appear
despite issuance of Bailable Warrant.
d) NBW may be cancelled or converted into
a Bailable Warrant/Summons without
insisting physical appearance of accused, if
such an application is moved on behalf of
the accused before execution of the NBW on
an undertaking of the accused to appear
something physically on the next date/s of
hearing.
e) Bail applications of such accused on
appearance may be decided w/o the accused
being taken in physical custody or by
granting interim bail till the bail application
is decided.
CATEGORY. B/D
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on appearance of the accused in Court
pursuant to process issued bail application to b
decided on merits, CATEGORY – C Same as
Category B & D with the additional condition
of compliance of the provisions of bail under
NDPS S.37, 45, PMLA, 212(6) Companies Act
43(5) of UAPA, POSCO Act etc.”
Needless to say that the category A deals with
both police cases and complaint cases.
The trial courts and the High Courts will keep
in mind the aforesaid guidelines while
considering bail applications. The caveat which
has been put by learned ASG is that where the
accused have not cooperate din the investigation
nor appeared before the Investigating officers,
nor answered summons when the courts feels
that judicial custody of the accused is necessary
for the completion of the trial, where further
investigation including a possible recovery is
needed, the aforesaid approach cannot give
them benefit, something we agree with.
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(iv) The order of the Hon'ble Supreme Court made in
Miscellaneous Application No.1849 of 2021 in S.L.P. No.5191 of 2021
[Satender Kumar Antil v. Central Bureau Of Investigation ] wherein
the Hon'ble Supreme Court held as follows
“Learned senior counsels for parties state that
they will endeavour to work out some of the fine
tuning which is required to give meaning to the intent
of our order dated 07.10.2021
We make it clear that our intent was to ease the
process of bail and not to restrict it. The order, in no
way, imposes any additional fetters but is in
furtherance of the line of judicial thinking to enlarge
the scope of bail.
At this stage, suffice for us to say that while
referring to category ‘C’, inadvertently, Section 45 of
Prevention of Money laundering Act (PMLA) has
been mentioned which has been struck down by this
Court. Learned ASG states that an amendment was
made and that is pending challenge before this Court
before a different Bench. That would be a matter to be
considered by that Bench.
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We are also putting a caution that merely by
categorizing certain offences as economic offences
which may be non-cognizable, it does not mean that a
different meaning is to be given to our order.
We may also clarify that if during the course of
investigation, there has been no cause to arrest the
accused, merely because a charge sheet is filed, would
not be an ipso facto cause to arrest the petitioner, an
aspect in general clarified by us in Criminal Appeal
No.838/2021 –Siddharth v. State of Uttar Pradesh &
Anr. Dated 16.08.2021.
List on 20.01.2022”.
(v) Manu/OR/0157 /2020 [ Mohammad Arif vs Directorate Of
Enforcement ] wherein the Division Bench of Orissa High Court held
as follows:
“... 20. While deciding a bail application, the
provisions of Section 45 read with Section 24 which
reverses the burden of proof and creates presumption
of 3(2015) 16 SCC 1.guilt required to be dislodged by
the accused, will mandatorily apply. A similar view of
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the matter has been reiterated in Rohit Tandon vs.
Directorate of Enforcement.4 It may further be held
that the reliance placed by the petitioner on Nikesh
Tarachand Shah vs. Union of India5 is untenable in
view of the fact that Section 45 has been amended (by
the Amendment Act 13 of 2018) whereby the original
expression "imprisonment for a term of more than
three years under Part A of the Schedule"(pre-
amendment) now stands substituted by the expression
"no person accused of an offence under this Act shall
be released on bail or on his own bond". Thus, the
contention raised by the petitioner with regard
to Section 45 of the Act does not hold good. A similar
sentiment has been echoed by the apex court in P.
Chidambaram v. Directorate of Enforcement.
MAN/SC/1209/2019 : (2019) 9 SCC 24 ...”
(vi) Manu/WB/1498/2018 [Arun Mukherjee v. Enforcement
Directorate ] wherein the Division Bench of Calcutta High Court held
as follows:
“..............14. Mr. Chanda raising serious
objection to grant of bail to the petitioner, adverted to
the provision of Section 45 of PMLA,2002 and the
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amendment brought in with effect from 19.4.2018
vide GSR 383 (E) in exercise of powers conferred
under Section 207 of the Finance Act, 2018 (13 of
2018) which provisions are reproduced for profitable
understanding as under-
"S.45. Offences to be cognizable and non-
bailable.--
(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
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(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 29 [***] 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."
Amended provision :
"(e) in Section 45, in Sub-Section (1),
(i) 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" shall be
substituted;
(ii) in the proviso, after the words "sick and
infirm", the words "or is accused either on his own or
along with other co-accused of money- laundering a
sum of less than one crore rupees "shall be inserted."
15. Thus, I find from the amended provision of
Section 45 of the Act that no person accused of an
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offence under this Act shall be released on bail or on
his own bond unless he is under the age of sixteen
years or is a woman or is sick or infirm or is accused
either on his own or along with other accused of
money laundering a sum of less than one crore rupees,
may be released on bail, if the Special Court so
directs. ..........”
(vii) Manu/DE/1458/2021 [Bimal Kumar Jain Ors. v.
Directorate of Enforcement] wherein the Division Bench of Delhi
High Court held as follows:
“ ........12. The last limb of argument was qua
twin conditions of 45 of the PMLA. Admittedly the
Hon’ble Supreme Court in Nikesh Tarachand Shah
(supra) declared the 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
Nikesh Tarachand Shah (supra) 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
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of the Schedule”, the words “under this Act” were
substituted in section 45(1) of the PMLA.
13. The Supreme Court in P. Chidambaram vs
E.D. (2019) 9 SCC 24 has taken judicial note of such
amendment:-
38. The twin conditions under Section 45(1)
for the offences classified thereunder in Part A
of the Schedule was held arbitrary and
discriminatory and invalid in Nikesh Tarachand
Shah v. Union of India (2018)11 SCC 1 . Insofar
as the twin conditions for release of the accused
on bail under Section 45 of the Act are
concerned, the Supreme Court held (at SCC p.
15. para 3) the same to be unconstitutional as it
violates Articles 14 and 21 of the Constitution of
India. Subsequently, Section 45 has been
amended by Amendment Act 13 of 2018. The
words "imprisonment for a term of
imprisonment of more than three years under
Part A of the Schedule" has been substituted
with "accused of an offence under this Act...".
14. Further, in Mohd. Arif vs. Govt. of India, 2020
SCC OnLine Ori 544, the Orissa High Court has held
as under:-
“ 23. While deciding a bail application, the
provisions of Section 45 read with Section 24 which
reverses the burden of proof and creates presumption
of guilt required to be dislodged by the accused, will
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mandatorily apply. A similar view of the matter has
been reiterated in Rohit Tandon v. Directorate of
Enforcement. It may further be held that the reliance
placed by the petitioner on Nikesh Tarachand Shah v.
Union of India is untenable in view of the fact that
Section 45 has been amended (by the Amendment Act
13 of 2018) whereby the original expression
“imprisonment for a term of more than three years
under Part A of the Schedule“(pre-amendment) now
stands substituted by the expression “no person
accused of an offence under this Act shall be released
on bail or on his own bond”. Thus, the contention
raised by the petitioner with regard to Section 45 of
the Act does not hold good. A similar sentiment has
been echoed by the apex court in P. Chidambaram v.
Directorate of Enforcement”
15. The Supreme Court has dismissed the SLP
as withdrawn against the above judgment of the
Orissa High Court vide order dated 24.11.2020 in
SLP Crl 4878/2020.
16. The contrary view taken by this Court in
Upendra Rai vs Directorate of Enforcement 2019 SCC
OnLine Del 9086 has also been stayed by the Hon’ble
Supreme Court in SLP (Crl) 2598/2020 vide an order
dated 03.06.2020. Moreso, contrary view taken by
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this Court also in Dr. Shivender Mohan Singh vs.
Directorate of Enforcement 2020 SCC OnLine Del
766, has also been stayed by the Supreme Court vide
its order dated 31.07.2020 in SLP(Crl) No.3474/2020
while stating “Until further orders, status quo with
respect to release from jail be maintained and
impugned Judgment not to be treated as a precedent
for any other case. .......”
7. On a careful consideration of the materials available on record
and the submissions made by the learned counsel on either side, it could
be seen that the petitioners are the Directors of the Company, viz.,
M/s. Disc Assets Promoter India Ltd, who are the persons responsible for
the affairs of the company and they had collected money from the public
under various investment schemes from the year 2006 with a promise to
pay attractive returns in the form of loan or cash, but, they had failed to
pay the investors of the promised returns and defrauded the
investors/public by the said company and caused pecuniary loss to the
tune of Rs.1137 crores to the investors.
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8. With regard to the investment mobilized from the public, the
SEBI, by its interim order dated 20.08.2015 and final order dated
30.03.2016, directed the Company and its Directors to wind up the
investment schemes and refund the money due to the investors.
However, the Directors had failed to refund the money to the investors.
Based on the reference from the SEBI and the complaints received from
the investors/public, the Economic Offences Wing of the Tamil Nadu
Police registered a case in Crime No.6 of 2016, dated 02.06.2016, for the
offences under Sections 406, 420, 120B of IPC read with Section 5 of the
TNPID Act. The Economic Offences Wing had registered a case in
ECIR No.ECIR/MDSZO/04/2018 on 09.07.2018. The respondent
issued an order of arrest on 09.12.2020 under section 19(1) of PMLA
and remanded to judicial custody.
9. In the appeal filed against the order granting bail to the
petitioners, the Hon'ble Supreme Court in S.L.P. (Crl.)Nos. 7563-7565
of 2021, by order dated 22.11.2021, observed that the High Court has
not dealt with the issue with regard to the statutory bar for grant of bail
in offences concerning Prevention of Money Laundering Act.
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10. So far as application of Section 45 is concerned, the said
provision was amended on 19.04.2018.
11. The learned counsel for the petitioners has not disputed that a
Special Leave Petition is pending before the Hon'ble Supreme Court
challenging the amended provision of Section 45 of PMLA.
12. In S.L.P. (Crl.)Nos. 7563-7565 of 2021, the Hon'ble Supreme
Court observed that the statutory bar for grant of bail in offences
concerning PMLA was not considered while granting bail to the
petitioners. Similarly, the Hon'ble Supreme Court in S.L.P.(CRl.)
No.5191 of 2021 [cited supra], by order dated 16.12.2021, recorded the
submissions of the learned Additional Solicitor General to the effect that
an amendment was made and that is pending challenge before the Apex
Court before a different Bench and that would be a matter to be
considered by that Bench.
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13. It is not in dispute that the Hon'ble Supreme Court had not
granted an order of stay in the Special Leave Petition challenging the
amended provisions of Section 45 of PMLA. When the amended
provision of the Act was neither set aside nor stayed by the Hon'ble
Supreme Court, we are of the considered view that it is binding on the
petitioners.
14. It is also brought to the notice of this Court by the learned
Special Public Prosecutor that as against the order passed by the Delhi
High Court [cited supra], a Special Leave Petition in S.L.P.(Crl)
No.2598 of 2020 was filed before the Apex Court and that the Hon'ble
Supreme Court, vide order dated 03.06.2020, has also granted an order
of interim stay. It is also brought to the notice of this court that the
contrary view taken by the Delhi High Court in Dr. Shivender Mohan
Singh vs. Directorate of Enforcement 2020 SCC OnLine Del 766, has
also been stayed by the Hon'ble Supreme Court vide its order dated
31.07.2020 in SLP(Crl) No.3474 of 2020.
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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
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
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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.
17. So far as section 43(1)(ii) of PMLA is concerned, the
respondent took a stand as to the attitude of the accused in not
cooperating with the Investigating Agency, Economic Offences Wing,
Government Of Tamil Nadu, their cancellation of bail, in the event of
arrest and the amount and number of depositors involved and took a
categorical stand that the petitioners have committed serious offence and
the looting of money has also been done scientifically and as such, they
are not entitled to be enlarged on bail, despite the fact that the respondent
had filed the complaint on the file of the Court of Principal Sessions
Judge, City Civil Court, Chennai.
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18. It is also brought to the notice of this Court by the respondent
in the counter affidavit that the documents collected would prima facie
disclose that all the accused have committed acts of money laundering
under Section 3 of the Prevention of Money Laundering Act and
punishable under Section 4 of the said Act and the petitioners, during
police custody also, did not co-operate with them and despite the
complaint has been filed, further investigation is also in progress. Even
before the Hon'ble Supreme Court in S.L.P. (Crl.) Nos. 7563-7565 of
2021, the respondent submitted that the petitioners are not co-operating
during the investigation. Even before this court the learned Special Pubic
Prosecutor appearing for the respondent submitted that the petitioners
never co-operated for the investigation and therefore, the petitioners
should not be enlarged on bail. It is also brought to the notice of this
Court by the learned Special Pubic Prosecutor that even after the
registration of the criminal complaint against the petitioners, they have
indirectly started new Companies by using other names.
19. In view of the past conduct of the petitioners, this court does
not believe that the petitioner are not guilty of the alleged offences and in
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such circumstances, this court cannot give a finding that the petitioners
are not likely to commit offence while on bail. It is also alleged that if
the petitioners are enlarged on bail, there is every likelihood that the
petitioners may flee the jurisdiction of this Court to avoid the process of
law. In these circumstances, we are not inclined to grant bail to the
petitioners.
In the result, the Criminal Original Petitions are dismissed. No
costs.
[M.D., J.] [J.S.N.P., J.]
03.01.2022
Index : Yes/No
Internet: Yes
Rj
To
The Assistant Director,
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Directorate of Enforcement,
Government of India,
Chennai Zone-2,
3rd Floor, 3rd Block,
Shastri Bhawan, Haddows Road,
Chennai 600 006.
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M. DURAISWAMY, J.
and
J. SATHYA NARAYANA PRASAD ,J
Rj
Order in
Crl.O.P.Nos.3381, 3383 and 3385 of 2021
03.01.2022
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