Brief Facts
- Initially an FIR was registered under Section 406, 420, 467, 468, 447, 504, 506, 341, 323 and 34 of the Indian Penal Code, 1860. The appellant was not named as an accused there. In view of Section 420 and 467 of IPC, being Scheduled Offences, ECIR No. 5 of 2023 was registered and investigation under the PMLA was initiated.
- Even here the appellant was not named though the ECIR did mention certain unknown persons being involved. However, subsequent investigations by ED included him as an accused. Prosecution ultimately alleged that the appellant conspired with other accused persons for acquisition of proceeds of crime in the form of landed property. Appellant was already in custody in another case i.e. ECIR No. 4 of 2022 and thereafter he was taken in custody in the present ECIR on 25.08.2022.
- The Bail Application was filed before the High Court by the Appellant for the offence under Section 3 & 4 of the prevention of Money Laundering Act, 2002 for the money laundering case linked with a fraudulent land transaction which rejected the bail by relying on the statements of Appellant recorded under section 50 of the PMLA, statement of co-accused and call records.
- Hence the Appeal was preferred before the Supreme Court against the Order of the High Court wherein the High Court dismissed the Bail Application of the Appellant.
Issues
- Whether section 45 of the PMLA impose absolute restraint on the grant of bail and whether the principle that “bail is rule and jail is exception” applies to the offences under PMLA?
- What are the relevant considerations and scope of inquiry for the Court while considering the bail in the PMLA Cases?
- Whether the rigors of Section 45 of the PMLA can be relaxed by considering the period of custody and absence of likelihood of completion of trial in near future.
- When a person is in judicial custody/custody in another case investigated by the same Investigating Agency, whether the statements recorded for a new case in which his arrest is not yet shown, and which are claimed to contain incriminating material against the maker, would be admissible under Section 50?
- Whether the statement of the co-accused be relied by the Prosecution as the principal evidence so as to bring guilt of the Appellant?
- Whether the bail can be rejected by the Court on the ground of alleged misuse of jail facilities by the accused / appellant?
Held
- The Supreme Court allowed the Appeal of the Appellant and directed that the Appellant be released on bail. The Supreme Court held that prima facie there is nothing on record to indicate petitioner’s involvement in the creation of forged sale deed or commission of offence under section 3and 4 of the PMLA. Court even dealt with the statements of the witnesses, as recorded by the ED, and after considering these statements it was concluded that there is no substantive material against the Appellant and thus the twin conditions of bail under section 45 of the PMLA were found be fulfilled. The findings of the Court are as under:
Applicability of the principle “bail is rule and jail is exception” under PMLA
- All that Section 45 of PMLA mentions is that certain conditions are to be satisfied. The principle that, “bail is the rule and jail is the exception” is only a paraphrasing of Article 21 of the Constitution of India, which states that no person shall be deprived of his life or personal liberty except according to the procedure established by law. Liberty of the individual is always a Rule and deprivation is the exception. Deprivation can only be by the procedure established by law, which has to be a valid and reasonable procedure. Section 45 of PMLA by imposing twin conditions does not re-write this principle to mean that deprivation is the norm and liberty is the exception. As set out earlier, all that is required is that in cases where bail is subject to the satisfaction of twin conditions, those conditions must be satisfied.
- Supreme Court relied on the case of Manish Sisodia (I) Vs. Directorate of Enforcement (Criminal Appeal No. 3352 of 2023) to determine the applicability of section 45 of the PMLA and concluded that Article 21 being a higher constitutional right, statutory provisions should align themselves to the said higher constitutional edict.
Relevancy of period of custody and likelihood of completion of trial in near future
- Independently and as has been emphatically reiterated in Manish Sisodia (II) (supra) relying on Ramkripal Meena Vs Directorate of Enforcement (SLP (Crl.) No. 3205 of 2024 dated 30.07.2024) and Javed Gulam Nabi Shaikh Vs. State of Maharashtra and Another, 2024 SCC online 1693, where the accused has already been in custody for a considerable number of months and there being no likelihood of conclusion of trial within a short span, the rigours of Section 45 of PMLA can be suitably relaxed to afford conditional liberty. Further, Manish Sisodia (II) (supra) reiterated the holding in Javed Gulam Nabi Sheikh (Supra), that keeping persons behind the bars for unlimited periods of time in the hope of speedy completion of trial would deprive the fundamental right of persons under Article 21 of the Constitution of India and that prolonged incarceration before being pronounced guilty ought not to be permitted to become the punishment without trial.
Scope of Inquiry under Section 45 of PMLA
- Coming back to the scope of inquiry under Section 45, Vijay Madanlal Choudhary (Supra), while reiterating and agreeing with the holding in Ranjitsing Brahmajeetsing Sharma vs. State of Maharashtra and Another reported in (2005) 5 SCC 294, held that the Court while dealing with the application for grant of bail in PMLA need not delve deep into the merits of the case and only a view of the Court based on the available material available on record is required. It held that the Court is only required to place its view based on probability on the basis of reasonable material collected during investigation. The words used in Section 45 are “reasonable grounds for believing” which means that 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.
Importance of the counter to the bail application – filed in the original Court
- In view of the importance of the three basic foundational facts that the prosecution needs to establish, the counter/response to the bail application in the original Court is very significant in PMLA bail matters. In cases where the Public Prosecutor takes a considered decision to oppose the bail application, the counter affidavit of the Investigating Agency should make out a cogent case as to how the three foundational facts set out hereinabove are prima facie established in the given case to help the Court at the bail application stage to arrive at a conclusion within the framework laid down in Vijay Madanlal Choudhary (supra). It is only thereafter the presumption under Section 24 would arise and the burden would shift on the accused. The counter to the bail application should specifically crystallize albeit briefly the material sought to be relied upon to establish prima facie the three foundational facts. It is after the foundational facts are set out that the accused will assume the burden to convince the court within the parameters of the enquiry at the Section 45 stage that for the reasons adduced by him there are reasonable grounds to believing that he is not guilty of such offence.
Statement under section 50 of the PMLA cannot be considered when the accused was already in custody of ED in another case at time of giving such statement
- In the facts of the present case, we hold that the statement of the appellant if to be considered as incriminating against the maker, will be hit by Section 25 of the Evidence Act since he has given the statement whilst in judicial custody, pursuant to another proceeding instituted by the same Investigating Agency. Taken as he was from the judicial custody to record the statement, it will be a travesty of justice to render the statement admissible against the appellant.
- We have no hesitation in holding that when an accused is in custody under PMLA irrespective of the case for which he is under custody, any statement under Section 50 PMLA to the same Investigating Agency is inadmissible against the maker. The reason being that the person in custody pursuant to the proceeding investigated by the same Investigating Agency is not a person who can be considered as one operating with a free mind. It will be extremely unsafe to render such statements admissible against the maker, as such a course of action would be contrary to all canons of fair play and justice.
- In view of the above and keeping the salutary principle of Article 21 in mind, we hold that since the words ‘procedure established by law’ occurring in Article 21 has to be a reasonable and valid procedure, the statement of the appellant under Section 50 cannot be relied upon against the appellant in ECIR No. 5 of 2023 even though the appellant was at that point in custody in ECIR No. 4 of 2022.
Relevance of the statement of co-accused.
- Being a co-accused with the appellant, his statement against the appellant assuming there is anything incriminating against the present appellant will not have the character of substantive evidence. The prosecution cannot start with such a statement to establish its case. We hold that, in such a situation, the law laid down under Section 30 of the Evidence Act by this Court while dealing with the confession of the co-accused will continue to apply.
Allegations of misuse of jail facilities
- Elaborate contentions have been made on the conduct of the appellant about certain facilities having been extended to him in jail. We do not comment on them and if at all there is any violation of the Prison Rules, the investigating agency ought to take it up with the higher officials of the Jail. On the facts of the present case, they are not reasons enough to deny the appellant his liberty.
Relevant Para No.
- 11, 12, 13, 15, 24, 25, 27, 32, 33, 34, 37 and 47