Uttarakhand High Court
Rajpal Walia vs State Of Uttarakhand on 18 March, 2025
2025:UHC:1843
Reserved on:10.03.2025
Delivered on:18.03.2025
IN THE HIGH COURT OF UTTARAKHAND
AT NAINITAL
FIRST BAIL APPLICATION No. 719 of 2024
Rajpal Walia ......Applicant
Vs.
State of Uttarakhand .....Respondent
Mr. Aditya Singh, learned counsel for the applicant.
Mr. S.C. Dumka, learned AGA for the State of Uttarakhand.
Mr. Anil Kumar Dabral, learned counsel for the Buyer-Mr. Devashish Shaily.
Mr. Abhijay Negi, learned counsel for the informant-Ms. Kavita Bhatia.
Mr. Atul Bahuguna, learned counsel for the Enforcement Directorate.
Hon'ble Ashish Naithani, J (Oral)
The present bail application arises out of proceedings
initiated under the Prevention of Money Laundering Act, 2002
(PMLA) in connection with S.S.T. No. 82/2023,
ECIR/DNSZO/01/2021, registered by the Enforcement Directorate
(ED).
2. Heard learned counsels for the parties and perused the
records.
3. The case originates from multiple predicate offences
registered against the applicant under FIR Nos. 93/2020, 112/2020,
and 88/2021, alleging offences under Sections 406 and 420 of the
Indian Penal Code, 1860 (IPC).
4. These predicate offences pertain to allegations of
financial irregularities in the real estate projects developed by M/s
Pushpanjali Realms & Infratech Ltd., wherein several homebuyers
claimed that they were induced into booking flats, but the projects
remained incomplete.
5. The applicant, Rajpal Walia, was a director and
investor in M/s Pushpanjali Realms & Infratech Ltd., which
undertook real estate projects, including Eminent Heights and
Orchid Park. It is alleged that substantial amounts were collected
from homebuyers and subsequently misappropriated.
6. The Enforcement Directorate initiated proceedings
under PMLA, contending that the funds collected from homebuyers
constituted the proceeds of crime and that the applicant was
involved in money laundering. Based on the investigation, the
applicant was taken into custody on 10.10.2023, and a State
complaint was filed before the Hon'ble Special Court under PMLA.
The applicant has approached this Court seeking bail under Section
439 of the Code of Criminal Procedure, 1973 (Cr.P.C.), read with
Section 45 of PMLA.
7. He has remained in judicial custody since 10.10.2023 in
connection with the present case under PMLA, except for a seven-
day short-term interim bail granted by the court's order dated
30.12.2024,which was aimed at facilitating a settlement that
ultimately did not materialise. Although the interim bail period was
extended, no further extension was granted to the applicant by
Court order dated 11.02.2025.
8. The applicant is represented by his learned counsel, Mr.
Aditya Singh. Mr Rakesh Negi represents the respondents, learned
Brief Holder for the State; Mr Atul Bahuguna, learned counsel for
the Enforcement Directorate (ED); and Mr Abhijay Negi, learned
counsel for the informant, Ms Kavita Bhatia.
9. Additionally, Mr. Devashish, who has posed himself as
an investor, appeared through video conferencing (VC) and also
opposed the bail application.
10. At the outset, the applicant submits that the offence
alleged against him does not constitute a scheduled offence under
the PMLA. The predicate offences registered against him under
FIR Nos. 93/2020, 112/2020, and 88/2021 primarily pertain to
allegations under Section 406 of the IPC, which is not included in
the Schedule of the PMLA.
11. The applicant contends that a bare perusal of the
Enforcement Directorate's complaint reveals that the entire
proceedings under PMLA are based on these predicate offences.
Since the foundation of the PMLA case rests upon offences that do
not fall within the ambit of scheduled offences, the invocation of
Sections 3 and 4 of PMLA is ex-facie unsustainable.
12. The applicant further submits that the State has failed to
establish a legal basis for treating the present case under PMLA,
rendering his continued incarceration wholly unjustified. The
financial records and documentary evidence establish that the
applicant invested significantly more in the project than the
amounts received from homebuyers. He has invested ₹9.97 crores
in cash and bank transfers, out of which ₹4.76 crores were paid
through banks, and an additional ₹5.21 crores were invested after
selling his personal land to repay the company's outstanding loans.
Additionally, the applicant contributed land valued at ₹21 crores for
the Orchid Park project, making him a substantial stakeholder in its
development. The RERA report dated 03.08.2021 establishes that
the total construction work completed amounts to ₹34.87 crores,
whereas only ₹23 crores were received from homebuyers. These
facts demonstrate that the applicant was not engaged in money
laundering but was actively making efforts to complete the real
estate project.
13. The applicant further submits that the company's
financial distress was primarily caused by Deepak Mittal, the
Managing Director, who siphoned off substantial funds and
subsequently absconded.
14. Recognizing the fraudulent nature of Mittal's actions,
the applicant lodged FIR No. 0106/2020 under Sections 420 and
406 IPC at PS Dalanwala, Dehradun. However, instead of
addressing the financial crisis, Mittal absconded and obstructed the
applicant's efforts to complete the project. On 02.02.2021, Mittal
issued a legal notice halting construction, which resulted in
Queenstown Realty, the developer engaged by the applicant,
withdrawing from the project,further delaying the completion of
flats for homebuyers.
15. Despite these challenges, the applicant continued to
seek alternative developers and later entered into an MOU with
Ornate Residency Pvt. Ltd. to complete the construction. These
facts establish that the applicant was making genuine efforts to
resolve the financial crisis rather than engaging in any fraudulent
activities.
16. The applicant relies on the judgment of the Hon'ble
Supreme Court in Ramkripal Meena v. Directorate of
Enforcement, SLP(Crl) No. 3205/2024, where the Court granted
bail to the petitioner accused under the Prevention of Money
Laundering Act (PMLA) related to the REET 2021 paper leak case.
The Court observed that the rigors of Section 45 of the PMLA
could be suitably relaxed to afford conditional liberty to the
petitioner, considering the circumstances of the case. The applicant
submits that, similar to the principles upheld in this case, his
situation warrants a fair assessment beyond the stringent statutory
conditions, considering his cooperation with the investigation and
the lack of substantial evidence indicating his direct involvement in
the alleged offenses.
17. In the present case, the applicant has already been
granted bail in all predicate offences, reinforcing that the Trial
Court found no significant risk of flight or obstruction of justice.
18. Additionally, it has been submitted that the twin
conditions under Section 45 of PMLA cannot be applied
mechanically in cases where the evidence does not demonstrate
criminal intent.
19. The applicant further submits that his continued
detention is unwarranted, as the investigation has been completed,
and the State has already filed its complaint before the Hon'ble
Special Court. It is a well-established principle that bail is the rule,
jail is the exception, and an accused is entitled to bail unless there
are compelling reasons justifying prolonged incarceration.
20. In light of the above facts, legal principles, and
prolonged period of incarceration, the applicant submits that he is
entitled to bail in the interest of justice. He is willing to abide by
any conditions imposed by this Hon'ble Court, including,
cooperating with authorities, appearing as required in the ongoing
trial proceedings and not absconding.
21. The respondent contends that the present case is being
investigated by the Directorate of Enforcement, Sub-Zonal Office,
Dehradun, under the Prevention of Money Laundering Act, 2002
(PMLA) based on multiple FIRs registered against the applicant
and co-accused of offences under Sections 406 and 420 of the IPC.
The Enforcement Case Information Report (ECIR No.
ECIR/DNSZO/01/2021), recorded on 19.02.2021, forms the basis
of these proceedings.
22. The respondent submits that Section 420 IPC is a
scheduled offence under PMLA, as per Section 2(1)(y) read with
Paragraph 1 of Part A of the Schedule. Since the applicant has been
charged under Section 420 IPC, the proceedings initiated under
Sections 3 and 4 of PMLA are legally sustainable.
23. It is further submitted that FIR No. 0093/2020 (P.S.
Rajpur), along with FIR Nos. 0112/2020, 0088/2021, and
0005/2022 (P.S. Dalanwala) were clubbed together due to their
interconnected nature, as they pertain to large-scale financial fraud.
24. The applicant, along with co-accused persons, allegedly
collected funds from homebuyers under the pretence of delivering
residential flats through M/s Pushpanjali Realms & Infratech Pvt.
Ltd. However, instead of utilising these funds for construction, the
applicant and his co-accused diverted substantial amounts for
personal gain.
25. The investigation has revealed that between March
2015 and January 2020, approximately ₹31.15 crores were
collected in the company's bank accounts. However, instead of
being utilised for the real estate projects, these funds were:
(i) Transferred to the personal accounts of the applicant and
his wife, Smt. Shefali Walia;
(ii) Used for repayment of personal loans and property
acquisitions; and
(iii) Layered through self-withdrawals and third-party
transfers to conceal the source of funds.
26. The financial trail, as evidenced in bank statements, the
ED complaint, and RUD filed before the Special Court, Dehradun,
clearly establishes that the funds meant for the real estate project
were misused. The applicant played an active role in managing
financial affairs, signing agreements with homebuyers, issuing
cheques, and making fund transfers. Statements recorded under
Section 50 of PMLA confirm his involvement in fund diversion.
27. In view of these findings, the Directorate of
Enforcement, exercising its powers under Section 5(1) of PMLA,
issued Provisional Attachment Order No. 02/2022 dated
29.03.2022, attaching movable and immovable properties
amounting to ₹31.15 crores. The attachment was confirmed by the
Adjudicating Authority, PMLA, on 23.09.2022.
28. The respondent contends that the attached properties,
including bank accounts, real estate holdings, and financial
instruments, were acquired using the proceeds of crime. The
applicant's deliberate structuring of transactions and property
acquisitions indicates active involvement in money laundering
under Section 3 of PMLA, making him liable for punishment under
Section 4 of PMLA.
29. It is further submitted that Section 45 of PMLA
imposes strict conditions for granting bail in money laundering
cases. As amended by the Finance Act, 2018, it mandates that bail
shall not be granted unless:
(i) The Public Prosecutor is given an opportunity to oppose
the bail application and;
(ii) Where the Public Prosecutor opposes the application, the
court is satisfied that the accused is not guilty and is unlikely
to commit any offence while on bail.
30. The respondent submits that the applicant has failed to
satisfy these twin conditions and is, therefore, not entitled to bail.
31. Reliance is placed on Vijay Madanlal Choudhary v.
Union of India, 2022 SCC Online SC 929, wherein the Hon'ble
Supreme Court upheld the constitutional validity of Section 45 of
PMLA, reinforcing that these strict conditions must be met before
bail can be granted. The applicant has not discharged this burden.
32. The respondent further submits that PMLA, being a
special legislation, overrides general bail provisions under Cr.P.C.
In Gautam Kundu v. Directorate of Enforcement, (2015) 16 SCC
1, the Hon'ble Supreme Court held that Section 45 of PMLA has an
overriding effect, making it mandatory for courts to apply the twin
conditions even when considering bail under Section 439 Cr.P.C.
33. Additionally, economic offences such as money
laundering are offences against the economic fabric of the nation
and must be dealt with stringently. The Hon'ble Supreme Court, in
Masroor v. State of Uttar Pradesh, (2009) 14 SCC 286, held that
individual liberty must be balanced against societal interest. In
financial fraud cases, public interest outweighs individual
considerations.
34. In light of the evidence gathered from the Section 50
statements, financial records, and judicial precedents, the
respondents submit that the applicant is not entitled to bail, as he
has failed to establish that he is not guilty of the alleged offence or
that he is unlikely to commit any offence while on bail.
35. Therefore, the respondents pray for the dismissal of the
present bail application, contending that the applicant's role in the
offence of money laundering is well-established through
documentary evidence and financial records and that his release
would not be in the interest of justice.
36. It is contended on behalf of the informant, Kavita
Bhatia, by her learned counsel, that she has opposed the bail
application at the outset, citing concerns for her safety if the
applicant is released on bail. It is further contended that the
applicant has made deliberate attempts to misrepresent facts in
order to secure bail.
37. The learned counsel for the informant has also
contended that she is a homebuyer who invested her hard-earned
money in a residential unit within the housing project undertaken
by the applicant and other builders. It is submitted that she was
allegedly defrauded, as the promised unit was never delivered,
causing her significant financial loss and mental distress.
38. It is argued that the informant's locus standi in the
present matter arises from her direct and personal connection to the
fraudulent activities allegedly perpetrated by the accused, including
the applicant. The actions of the builders, it is contended, amount to
a systematic scheme of deception involving the misappropriation of
funds, which unequivocally constitutes offences under the
Prevention of Money Laundering Act (PMLA).
39. The informant's learned counsel has emphasized that
her participation in these proceedings is essential not only for
redressing her grievance but also for upholding the broader interest
of justice, particularly in cases where builders have betrayed
homebuyers. It has been urged that the applicant's role in the
alleged fraud be thoroughly scrutinised, as granting him bail at this
stage may undermine the ongoing investigation and hinder the
delivery of justice to the victims.
40. On behalf of the informant, it is also contended that the
ongoing insolvency resolution proceedings before the National
Company Law Tribunal (NCLT) in Case No. 67/ALD/2023 are at
an advanced stage and that the appointment of an Insolvency
Resolution Professional (IRP) has ensured that the interests of
affected homebuyers are being safeguarded. Multiple resolution
applicants have submitted their plans, and the vetting process is
currently underway for final approval by the Committee of
Creditors (COC).
41. The applicant, however, has made no meaningful
contribution toward resolving the financial distress faced by
hundreds of homebuyers. Instead, it is submitted that he has
actively misused his time on interim bail to create legal obstacles,
attempting to influence and derail the insolvency process. His
actions indicate an apparent lack of bona fide intent, and his
continued presence outside custody poses a serious threat to the fair
and smooth completion of the resolution process.
42. The informant's learned counsel has further submitted
that the applicant's involvement in the stalled real estate project has
already caused irreparable harm to homebuyers, many of whom
have suffered for over a decade due to financial losses, mental
distress, and prolonged legal battles. Several homebuyers, including
senior citizens and single parents, remain in extended uncertainty
regarding their life savings and residential investments.
43. It is also contended that, now that the NCLT
proceedings are progressing toward a resolution, the applicant's
release on bail could seriously jeopardise the process. Given his
past actions, there exists a high probability of interference--
whether through coercion of stakeholders, legal manoeuvres to
delay COC approvals, or attempts to reclaim control over the
project despite his demonstrated failure to ensure its completion. It
is, therefore, submitted that granting him bail at this juncture would
be against the larger public interest, as it would enable him to
obstruct rather than facilitate justice.
44. Having considered the submissions advanced by the
learned counsel for the applicant, the learned counsels for the State,
the Enforcement Directorate, and the informant, and upon perusal
of the record, this Court proceeds to assess the merits of the present
bail application.
45. The allegations against the applicant pertain to large-
scale financial fraud and money laundering, both of which have
severe ramifications on public trust in financial institutions and the
real estate sector. The State has alleged that the applicant, in his
capacity as a director and investor in M/s Pushpanjali Realms &
Infratech Ltd., was actively involved in the collection and
misappropriation of substantial funds from homebuyers.
46. After due investigation, the Enforcement Directorate
has determined that the amounts collected constitute "proceeds of
crime" under Section 2(1)(u) of the Prevention of Money
Laundering Act, 2002 (PMLA) and that the applicant has played a
key role in their concealment andv layering.
47. It is pertinent to note that Section 420 IPC, under which
the applicant has been charged in the predicate offence, is a
scheduled offence under PMLA as per Paragraph 1 of Part A of its
Schedule. The invocation of PMLA is thus legally sustainable, and
the contention of the applicant that the offence is not a scheduled
one is devoid of merit. The Hon'ble Supreme Court, in Vijay
Madanlal Choudhary v. Union of India, (2022) 10 SCC 545, has
reaffirmed that once a predicate offence forming part of the
Schedule is made out, the rigours of PMLA follow as a necessary
consequence.
48. The Court is mindful of the settled principle that
economic offences stand on a different footing from ordinary
crimes, given their impact on public confidence and financial
stability.
49. The Hon'ble Supreme Court, in Masroor v. State of
U.P., (2009) 14 SCC 286, held that while considering bail in such
matters, individual liberty must be weighed against larger societal
interests. In the present case, the scale of the alleged fraud and its
direct impact on numerous homebuyers tilt the balance against the
grant of bail. The concept of "proceeds of crime" under PMLA
extends not just to direct gains from illegal activity but also to
assets derived from the integration of such funds into legitimate
financial channels.
50. The materials placed on record, including financial
statements, Section 50 PMLA statements, and the ECIR report,
indicate that the applicant was not merely a passive investor but
actively involved in financial transactions that form the core of the
alleged offence. Investigation reveals that between March 2015 and
January 2020, approximately ₹31.15 crores were collected from
homebuyers, which were thereafter diverted for personal use
instead of being utilised for the completion of the real estate
projects.
51. Further, reliance placed by the applicant on the Ram
Kripal judgment is misplaced, as the Supreme Court has
categorically held that in economic offences, bail cannot be granted
solely on the ground that there is no likelihood of the accused
fleeing from justice. In the present case, the evidence suggests
active involvement, necessitating deeper scrutiny at the stage of
trial rather than pre-emptive relief through bail.
52. It is also significant that the applicant was released on
interim bail in an effort to facilitate an amicable resolution wherein
homebuyers and investors would be adequately compensated
through a settlement. However, despite being provided with ample
opportunity, no meaningful settlement was reached. Consequently,
the Court, upon due consideration, found no sufficient grounds to
grant him a further extension of interim bail, as the purported
settlement remained unfruitful.
53. The apprehension that the applicant may flee the
country, like his partner Deepak Mittal, who absconded with his
wife and siphoned off investors' money, cannot be ignored. This
raises a grave concern regarding the applicant's potential to evade
the legal process if granted bail.
54. Additionally, the informant's fear and apprehension
regarding a threat to her life in the event of the applicant's release
on bail cannot be ruled out. Given the scale of financial
misappropriation and the stakes involved, the Court considers this
concern to be genuine and well-founded.
55. Section 45 of PMLA imposes a twin test for bail,
requiring the accused to establish that:-
(i) He is not guilty of the offence and
(ii) He is unlikely to commit any offence while on bail.
These conditions have been upheld in Gautam Kundu v.
Directorate of Enforcement, (2015) 16 SCC 1, wherein the
Supreme Court ruled that the burden lies on the accused to satisfy
the Court that there is no prima facie case against him.
56. In the present matter, the State has placed on record
voluminous documentary evidence, including financial statements,
transaction trails, and witness statements recorded under Section 50
of PMLA, which prima facie establish the applicant's role in
financial mismanagement and laundering of proceeds. The
applicant has failed to discharge the burden under Section 45, and
no exceptional circumstances have been demonstrated that would
warrant deviation from the statutory mandate.
57. The Court also finds force in the argument that PMLA,
being a special legislation, overrides the general provisions of bail
under the Code of Criminal Procedure. In Vijay Madanlal
Choudhary v. Union of India, (2022) 10 SCC 545, the Supreme
Court held that where a special law provides for stringent bail
conditions, the same must be applied rigorously to prevent misuse
of economic resources and deter financial crimes. The present case
falls squarely within such a framework and granting bail would be
contrary to the intent and objectives of the Act.
58. The applicant's key managerial role and past attempts
to obstruct proceedings raise serious concerns about witness
tampering and evidence interference. The State has placed materials
on record indicating legal obstacles created by the applicant, while
the informant alleges misuse of bail to disrupt NCLT proceedings.
59. Given the complexity of economic offences and their
reliance on financial and digital records, his release poses a
substantial risk to the adjudication process. The Hon'ble Supreme
Court has affirmed that in financial fraud cases, public interest
outweighs individual liberty, necessitating a stricter approach to
prevent misuse of economic systems.
60. Moreover, the applicant has failed to demonstrate any
exceptional circumstances warranting bail. His contention
regarding prolonged incarceration does not hold weight in
economic offences, where the gravity of the crime and its impact on
society take precedence over the mere passage of time. The
stringent twin conditions under Section 45 of PMLA impose a high
threshold for bail, and the applicant has not discharged the burden
of proving that he is not guilty and unlikely to commit any offence
while on bail.
61. In light of the above factors, this Court finds no merit in
the bail application. The gravity of the allegations, the applicant's
failure to settle interim bail, the risk of absconding, the genuine
apprehension of threat to the informant, and the overwhelming
documentary evidence against him make his release unjustifiable.
62. Accordingly, the bail application stands rejected.
(Ashish Naithani, J.)
