Khageswar Patra vs Directorate Of Enforcement
2023 Latest Caselaw 10478 Ori

         IN THE HIGH COURT OF ORISSA AT CUTTACK

                   BLAPL No.6743 of 2023

  (In the matter of application under Section 439 of the
  Code of Criminal Procedure).

  Khageswar Patra                       ....       Petitioner

                           -versus-

  Directorate of Enforcement,           ... Opposite Party
  Government of India,
  Bhubaneswar



  For Petitioner           :   Mr. Y. Das, Sr. Advocate
                               along with Mr. A. Patra,
                               Advocate


  For Opposite Party       :   Mr. G.Agarwal, Advocate
                               (E.D.)

      CORAM:
                    JUSTICE G. SATAPATHY

               DATE OF JUDGMENT : 31.08.2023


G. Satapathy, J.

1. This is a bail application U/S.439 of Cr.P.C. by

the petitioner for grant of bail in connection with

Enforcement Case Information Report (ECIR) Case

No.BBZO/16/2022 corresponding to PMLA Case

No.10 of 2022 for commission of offence Under

Section 3 of the Prevention of Money Laundering

Act, 2002 (in short "PMLA") which is punishable

Under Section 4 PMLA pending in the file of learned

Additional Sessions Judge-Cum-CBI Court-I,

Bhubaneswar, Khurda.

2. An overview of the facts involved in this case

are on 02.10.2022, one FIR was registered against

the Petitioner and others vide Khandagiri PS Case

No. 496 of 2022 for commission of offences

punishable Under Sections 341 / 328 / 324 / 354-C/

370 /386 /387/ 388/389/419/420/465/506/120-B of

Indian Penal Code (in short IPC), 1860 and Under

Section 66-E/67 of the Information Technology Act,

2000(In short the "IT Act"), but before registration

of this case, another case was also registered

against the co-accused persons for similar offences.

In the FIR against the Petitioner and others, the

Informant had alleged that the Petitioner who is

stated to be a second hand car dealer and co-

accused persons had extorted crores of Rupees from

different rich people by blackmailing them to get

their video footage containing objectionable and

inappropriate photographs viral. The aforesaid two

cases were investigated into by the local police, but

in the course of investigation, the Assistant Director

of Enforcement, Bhubaneswar claiming the offences

alleged against the Petitioner and others to be

scheduled offences as defined Under Section 2(1y)

of the PMLA instituted a complaint against the

Petitioner and others before the special Court under

PMLA for commission of offence U/S. 3 of PMLA

which is punishable U/S. 4 of PMLA. It is stated in

the complaint that soon after registration of the

aforesaid two police cases, ECIR Case

No.BBZO/16/2022 was recorded against the

Petitioner and others for commission of aforesaid

offence under PMLA and the matter was investigated

into by ED. It is also alleged in the complaint that

the Petitioner and others had generated illegal

income of Crores of Rupees through extortion by

way of honey trapping rich and influential people

and making their nude videos and threatening as

well as blackmailing them for lodging false police

cases and getting their nude videos viral in social

media and, thereby, the income of the Petitioner and

others are proceeds of crime as defined Under

Section 2(1)(u) of the PMLA. This is how the

complaint against the Petitioner and others came to

be instituted for commission of offences Under

Sections 3/4 of PMLA.

3. In the course of hearing of the bail application,

this Court has heard Mr.Y. Dash, learned Sr. Counsel

for the Petitioner and Mr. G.Agrawal, learned counsel

for the ED extensively. In support of his contention,

Mr. G.Agrawal, learned counsel for the ED has relied

upon the decision in Vijay Madanlal Choudhary

and others Vrs. Union of India and others;

(2022) SCC Online SC 929 in addition to his

written objection to the bail application of the

Petitioner, whereas Mr.Y.Dash, learned Sr. Counsel

for the Petitioner has relied upon a number of

decisions for the relief of bail to the Petitioner. Both

the parties have also filed their written notes of

submission in support of their contentions.

4. Admittedly, it is the second journey of the

Petitioner to this Court for grant of bail. The earlier

bail application of the Petitioner was turned down by

this Court mainly after taking note of the provision

contained in Section 45(1) of the PMLA and the

allegations made against him, but the Petitioner was

granted liberty therein to renew his prayer for bail

after taking cognizance of offence. The provision as

to bail is founded on the philosophy of protecting the

most precious fundamental right of personal liberty

of a person as guaranteed under Article 21 of our

sacred Constitution. Grant or refusal of bail to a

person accused of offence is the discretion of the

Court, but such discretion should not be arbitrary or

whimsical. The object of bail is primarily to prevent

punishment in the form of imprisonment or

incarceration of a person pending investigation or

trial. Law is also well settled that deprivation of

personal liberty of a person accused of offence at

some times is considered as a punishment, unless

such personal liberty is withheld according to the

procedure established by law. The object of bail is

neither punitive nor preventive; rather for protecting

the individual liberty of a person who is undoubtedly

accused of offences, but failing to protect the

personal liberty of a person without any lawful

excuse is just doing like mere lip service than

exercising discretion in accordance with law.

Personal liberty is one of the most essential

requirements of the modern man as held by the

Apex Court in a very recent decision in Satender

Kumar Antil Vrs. Central Bureau of

Investigation and another; (2022) SCC Online

SC 825, wherein it has been held:-

"Liberty is one of the most essential requirements of the modern man. It is said to be the delicate fruit of a mature civilization. It is the very quintessence of civilized existence and the essential requirements of a modern man."

5. In the above context of personal liberty,

reverting back to consider the prayer of the

Petitioner for grant of bail to him, it appears that Mr.

G. Agrawal, learned counsel for the ED has opposed

such prayer of the Petitioner mainly on two folds,

firstly, the accusations and secondly, the rigor of

Section 45(1) of PMLA, but Mr. Y. Dash, learned Sr.

Counsel has tried to counter such submission of E.D.

by drawing the attention of the Court to the first

proviso appended to Section 45(1) of PMLA by

contending inter-alia that the allegation sought to be

brought against the accused is for a sum of less than

one Crore Rupees.

6. Section 45(1) of the PMLA along with first

proviso reads as under:-

"45.(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence (under this Act) 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, or is accused either on his own or along 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."

7. It is albeit submitted by learned counsel for

the petitioner that the sentence to first proviso of

Section 45(1) of PMLA "the accused either on his

own or along with other co-accused of money

laundering a sum of less than one crore rupees"

allows some relaxation to the petitioner and he is

thereby not required to satisfy the onerous

conditions enumerated therein, but such sentence to

the aforesaid proviso which was introduced for the

first time by way of an amendment to the proviso is

couched in unambiguous terms as "when the

accusation of money laundering is either against sole

accused or against more than one accused in a case

for a sum of less than one crore rupees, the benefit

of proviso would mainly be applicable to such

accused or accused persons, but by no stretch of

imagination, it is meant for an individual against

whom the allegation of money laundering is less

than one crore rupees, out of the allegation of

money laundering for more than one crores along

with co-accused persons in one case. In other

words, the clause is not applicable to the person who

is an accused either on his own as sole accused or

along with other co-accused of money laundering a

sum of more than one crore rupees in one case. It

is, therefore, very clear that if there are more than

one accused and the allegation of money laundering

against one of the accused is less than one Crore,

but more than one Crore jointly against all the

accused, the benefit of this clause cannot be

extended to one of the accused of money laundering

a sum of less than one Crore Rupees in such case.

A conspectus of complaint in the present case would

go to reveal allegation against the petitioner and

others of money laundering a sum of rupees more

than one crores and thereby taking into

consideration the individual allegation against the

petitioner of money laundering a sum of less than

one crore rupees out of the total money laundering

for a sum of Rs.3,95,53,125/-, the benefit of first

proviso to Section 45(1) of PMLA for the offence of

money laundering a sum of less than one crore

rupees cannot be extended to the petitioner and he

is, thereby, not entitled to such benefit.

8. Mr.G.Agarwal, learned counsel for the E.D. has

strenuously opposed the bail application of the

petitioner on the ground of Section 45(1) of PMLA,

but Mr.Y.Das, learned Senior Counsel for the

petitioner has assiduously emphasized for the

petitioner to have met the rigor of Section 45(1) of

PMLA by contending inter-alia that since the

petitioner was not charge-sheeted for predicate

offence, the stipulation of Section 45(1) of PMLA

could not operate as a bar to the release of the

petitioner on bail.

9. In addressing the aforesaid rival contentions,

this Court considers it apposite to refer to the case

of Vijay Madanlal(supra), wherein at paragraphs-

281, 400, 401 and 467(v)(d), the Apex Court has

held as under:-

"281. All or whole of the crime property linked to scheduled offence need not be regarded as proceeds of crime, but all properties qualifying the definition of "proceeds of crime" under Section 2(1)(u) will necessarily be crime properties. Indeed, in the event of acquittal of the person concerned or being absolved from allegation of criminal activity relating to scheduled offence, and if it is established in the court of law that the crime property in the concerned case has been rightfully owned and possessed by him, such a property by no stretch of imagination can be termed as crime property and ex-consequenti proceeds of crime within the meaning of Section 2(1)(u) as it stands today. On the other hand, in the trial in connection with the scheduled offence, the Court would be obliged to direct return of such property as belonging to him. It would be then paradoxical to still regard such property as proceeds of crime despite such adjudication by a Court of competent jurisdiction. It is well within the jurisdiction of the concerned Court trying to scheduled offence to pronounce on that matter.

"400. It is important to note that the twin conditions provided U/S. 45 of the 2002 Act, though restrict the right of the

accused to grant of bail, but it cannot be said that the conditions provided U/S. 45 impose absolute restraint on the grant of bail. The discretion vests in the Court which is not arbitrary or irrational, but judicial, guided by the principles of law as provided U/S 45 of the 2002 Act. xx xx xx xx xx xx xx xx xx xx xx xx

401. We are in agreement with the observations made by the Court in Ranjitsingh Brahmajeetsingh Sharma. The Court while dealing with the application for grant of bail need not delve deep into the merits of the case and only a view of the Court based on available material on record is required. The Court will not weigh the evidence to find the guilt of the accused which is, of course, the work of trial Court. The Court is only required to place its view based on probability on the basis of reasonable material collected during investigation and the said view will not be taken into consideration by the trial Court in recording its finding of the guilt or acquittal during trial which is based on the evidence adduced during the trial. As explained by this Court in Nimmagadda Prasad, the words used in Section 45 of the 2002 Act are "reasonable grounds for believing" which means the Court has to see only if there is a genuine case against the accused and the prosecution is not required to prove the charge beyond reasonable doubt.

467(v)(d) The offence under Section 3 of the 2002 Act is dependent on illegal gain

of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money- laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/ acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him."

10. In another decision in Parvathi Kollur and

another Vrs. State by Directorate of

Enforcement; 2022 SCC Online SC 1975, the

Apex Court has once again reiterated that

acquittal/discharge of the accused in predicate

offence would have the natural consequence against

the proceeding under PMLA in Paragraphs-9 and 10

of the decision in following words:-

"9. The result of the discussion aforesaid is that the view as taken by the Trial Court in this matter had been a justified view of the matter and the High Court was not right in setting aside the discharge order

had already been acquitted in relation to the scheduled offence and the present appellants were not accused of any scheduled offence.

10. In view of the above, this appeal succeeds and is allowed. The impugned judgment and order dated 17.12.2020 is set aside and the order dated 04.01.2019 as passed by the Trial Court, allowing discharge application of the appellants, is restored."

11. What would be the effect of

acquittal/discharge or a closure report against the

accused for predicate offence on the proceeding in

PMLA has been reiterated by the Apex Court in

Adjudicating Authority Vrs. Sri Ajay Kumar

Gupta and others; Criminal Appeal No. 391-

392/2018 decided on 2nd December, 2022 and the

following order was passed therein by the Apex

Court:-

"Issue notice which is accepted by learned counsel for the respondent.

Learned Solicitor General fairly states that since the proceedings before this Court arise from an order of attachment and there is acquittal in respect of predicate offence, the proceedings really would not survive.

In view of the aforesaid, the appeals filed by the Adjudicating Authority (PMLA) do not survive and are accordingly disposed of."

12. Similarly, in Directorate of Enforcement

Vrs. M/s. Obulapuran Mining Company Private

Limited; Criminal Appeal No. 1269 of 2017

decided on 2nd December, 2022 the Apex Court was

again of the view that the proceeding under the

PMLA will not survive if a closure report in respect of

the predicate offence is accepted. The order of Apex

Court in the aforesaid case reads as under:-

"Issue notice which is accepted by the learned counsel for the State.

Learned Solicitor General fairly states that since there is a closure report in respect of a predicate offence which has been accepted, the present proceeding will not

survive and consequently the ECIR No. CEZO/01/2007 stands quashed.

The application along with Special Leave Petition stands disposed of."

13. In an order passed on 27.07.2022 in W.P. (c)

No. 368 of 2021 (Indrani Patnaik and another

Vrs. Enforcement Directorate and others), the

Apex Court after taking note of submissions about

discharge of the Petitioner therein from the

scheduled offences has been pleased to observe

as under :-

"taking note of the submissions made by the learned Additional Solicitor General and in the interest of justice, we reserve the liberty for the respondents in seeking revival of these proceedings if the order discharging the petitioners is annulled or in any manner varied, and if there be any legitimate ground to proceed under PMLA. Subject to the observations and liberty foregoing, this petition is allowed while quashing the proceeding in Complaint Case No. 05 of 2020 dated 10.01.2020 pending in the Court of Sessions Court, Khurda at Bhubaneswar cum Special Court under the Prevention of Money Laundering Act, 2002. All pending applications also stand disposed of."

14. A careful perusal of orders and precedent of

the Apex Court as set out above leaves no manner

of doubt the undeniable sequitur of the reasoning is

that if there is an acquittal/discharge or closure

report filed by the investigating agency after due

investigation for predicate offence, the rigor of

Section 45(1) of PMLA would not be attracted to

refuse bail to the person accused of such offence

under PMLA. Adverting to the case at hand, there

appears no dispute that an FIR was registered

against the petitioner in Khandagiri P.S. Case No.

496 of 2022 for predicate offence which was

investigated into and the certified copy of charge

sheet produced by the petitioner in the aforesaid

case discloses the following "further evidence so far

as collected is not sufficient to prosecute Khageswar

Patra in this case" and the investigating officer after

recording so in the charge sheet has submitted

charge sheet against co-accused persons, but not

against the petitioner which remains unchallenged

till date, meaning thereby the effect of submission of

closure report against the petitioner for predicate

offence after due investigation. Further, the copy of

charge sheet also discloses that the petitioner was

never arrested for the predicate offence in

Khandagiri P.S. Case No. 496 of 2022 as

unambiguously revealed from Col. No. 12 of the

charge sheet of such case.

15. The complaint under PMLA also refers to

another FIR in Nayapalli P.S. FIR No. 646 of 2022,

but the said FIR was registered against the co-

accused persons, but not against the present

petitioner and charge sheet was only submitted

against co-accused Archana Nag. Besides, it is

informed by learned counsel for the ED that the

complaint in PMLA now stands posted for execution

of warrant issued against co-accused, but the

petitioner in the meanwhile has been detained in

custody since 11.11.2022 and the case record

against the petitioner has not been separated

despite an application being made by him in this

regard which was rejected by learned Special Judge

CBI(I), Bhubaneswar. Moreover, the petitioner was

subjected to custodial interrogation by the ED and

the other reason that might delay the trial is the fact

that co-accused is yet to be arrested. In such

situation, it is quite uncertain as to when the trial

will commence and how much time it will require for

completion. In the aforesaid situation and on a

cumulative assessment materials placed on record

together with the petitioner having not charge

sheeted for predicate offence, even after completion

of investigation in Khandagiri P.S. Case No.496 of

2022, this Court has no hesitation to hold that the

petitioner has successfully demonstrated his case for

compliance of Section 45(1) of PMLA which stands

complied with in the aforesaid situation.

16. While dealing bail application, three factors are

mainly required and the accused is required to

satisfy the tripod test:- (i) flight risk, (ii) tampering

of evidence and (iii) influencing of witnesses. In the

circumstance of the case, the petitioner does not

appear to be a flight risk and such apprehension can

be arrested by directing the petitioner to surrender

his Passport if any. Since the complaint has been

filed, there appears little apprehension of tampering

evidence by the petitioner and the third one i.e.

influencing witnesses can be curbed by imposing

appropriate conditions. Further, the petitioner has

already remained in custody for more than nine

months.

17. In view of the aforesaid situation and the

discussion made in the foregoing paragraphs and

taking into consideration the pretrial detention of the

petitioner together with petitioner being not charge

sheeted for predicate offence, this Court considers

that the petitioner has made out a case for grant of

bail.

18. The bail application of the petitioner stands

allowed and the petitioner may be released on bail on

furnishing bail bonds in the sum of Rs.2,00,000/-

(Rupees Two lakhs) with two local solvent sureties

each for the like amount to the satisfaction of the

learned Court in seisin of the case, with following

additional conditions:-

(i) the petitioner shall not commit any offence while on bail and he shall not directly or indirectly make any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the Court or to any Officer of ED or tamper with the evidence,

(ii) The petitioner shall appear before the Court in seisin of the case on each and every date of posting without fail unless his attendance is dispensed with and in case the Petitioner fails without sufficient cause to appear in the Court in accordance with the terms of the bail, the learned trial Court may

proceed against the Petitioner for offence U/S.229-A of IPC in accordance with law,

(iii) The petitioner shall deposit his Passport, if any, in the Court in seisin of the case till conclusion of trial, unless he is permitted to take back such Passport to use for specific purpose during the pendency of case.

(iv) The Petitioner shall inform the Court as well as the ED as to his place of residence during the trial by providing his mobile number(s), residential address, e-mail, if any, and other documents in support of proof of residence.

(v) In case the petitioner misuses the liberty of bail and in order to secure his presence, proclamation U/S.82 of Cr.P.C. is issued and the petitioner fails to appear before the Court on the date fixed in such proclamation, then, the learned trial Court is at liberty to initiate proceeding against him for offence U/S.174-A of the IPC in accordance with law.

(vi) The Petitioner shall appear before the ED as and when required and shall cooperate with the ED in the present case.

It is clarified that the Court in seisin of the case

will be at liberty to cancel the bail of the Petitioner

without further reference to this Court, if any of the

above conditions are violated or a case for

cancellation of bail is otherwise made out.

It is, however, made clear that nothing stated

in the order shall be construed as a final expression

or opinion on the merits of the case and the trial

would proceed independently of the observation

made above and such observation has been made

purely for the purpose of adjudication of the present

bail application.

Accordingly, the BLAPL stands disposed of.

(G. Satapathy) Judge

Orissa High Court, Cuttack, Signature Not Dated Verified the 31st of August, 2023/Priyajit Digitally Signed Signed by: PRIYAJIT SAHOO Designation: Jr. Stenographer Reason: Authentication Location: HIGH COURT OF ORISSA Date: 01-Sep-2023 16:44:29