Friday, October 25, 2024

Delhi High Court grants regular bail in PMLA case

In it's judgement dated October 24, 2024 in Pankaj Kumar Tiwari & Ors. vs. Directorate of Enforcement, Delhi High Court observed: "Bail is the rule and jail is the exception. This principle is nothing but a crystallisation of the constitutional mandate enshrined in Article 21, which says that that no person shall be deprived of his life or personal liberty except according to the procedure established by law. Liberty is the usual course of action, and deprivation of it a detour, which is why there are safeguards imposed to ensure that the deprivation of liberty is only by procedure established by law. This procedure should be fair and reasonable, and right of the accused to speedy trial is an important aspect which the Court must keep in contemplation when deciding a bail application as the same are higher sacrosanct constitutional rights, which ought to take precedence." The judgement was authored by Justice Manoj Kumar Ohri. It was reserved on October 8, 2024. The applicants had prayed for regular bail in a PMLA case of August 2019. applications were taken up for consideration 

The predicate offence was investigated by the Serious Fraud Investigation Office (hereafter, the SFIO) which culminated into filing of complaint case being Complaint No. 770 of 2019 under Section 447 of Companies Act , 2013 and Sections 409, 467, 468, 471, 120B IPC. On the complaint filed by SFIO, cognizance stands taken. As the said offences are also scheduled offences under PMLA, 2002, a supplementary prosecution complaint was filed on March 7, 2024. 

In the prosecution complaint filed by ED, l the allegations in nutshell was that as per the SFIO investigation report, ex-promoters of M/s Bhushan Steel Ltd. (BSL) i.e., Brij Bhushan Singhal and Neeraj Singhal had obtained loan of Rs. 56,000 Crores from various banks and financial institutions before BSL went into insolvency and CIRP were initiated. The aforesaid accused needed to infuse capital in BSL in order to avail credit facilities from the lender banks for its teel plant in Orissa; and to do so as well as to maintain the required level of debt equity, the said accused persons assisted by their employees and close associates siphoned off funds from BSL and Bhushan Energy Ltd (BEL) by using complex web of companies and financial transactions starting from the year 2009-10 onwards. The funds were transferred from BSL and BEL to the connected category "B" and "C" companies (approx. 150 in number in which employees of BSL were appointed as Directors/signatories and whose effective control was with the promoters) terming them as "Capital Advances". 

The recipient companies through layering ultimately invested the said sum in BSL as promoter equity and for issuance of preference shares. Further, the layered funds were consolidated through bank accounts held by Uma Singhal and Ritu Singhal (the respective wives of Brij Bhushan Singhal and Neeraj Singhal). 

The said accused persons in the garb of availing credit facilities from banks used forged documents. BSL opened a Letter of Credit (LC) with consortium banks for availing non-fund based limits against forged invoices for supply of goods by M/s Jindal Steel Works (JSW) and M/s Hindustan Zinc Ltd. (HZL). On the basis of forged documents, the LCs were discounted by using account No. of BSL on the request letters of JSW and HZL. No goods were ever supplied by JSW/HZL to BSL against the said LCs. The fraud was covered up by showing false increase in valuation of assets and fraudulent valuation and inflated figures of Stock-in-Transit. In this manner public funds to the tune of Rs. 45,818 Crores were diverted during the period 2013-14 to 2016-17 to its accounts. 

It was alleged that in the said siphoning off of funds, the main accused persons were aided, amongst others, by the present applicants. 

The judgement reads: "The right of bail was read into the provisions of Section 45 by the Supreme Court where the accused was incarcerated for about a year and the case was pending at the stage of charge." The Court relied on some recent decisions in Vijay Madanlal Choudhary v. Union of India, reported as 2022 SCC OnLine SC 929 and Ramkripal Meena v. Directorate of enforcement SLP (Crl) No. 3205 of 2024 dated July 30, 2024. 

The Court concluded: "Thus, where it is evident that the trial is not likely to conclude in a reasonable time, Section 45 cannot be allowed to become a shackle which leads to unreasonably long detention of the accused persons. What is reasonable and unreasonable would have to be assessed in light of the maximum and minimum sentences provided for in the statute. In cases under the PMLA that, except in a few exceptional cases, the maximum sentence can be of seven years. The same has to be kept in mind while considering he period of incarceration which has been undergone."

The Court observed: "In the present cases, both the applicants were arrested on 11.01.2024. They have been in custody since more than 9 months. Moreover, the trial in the predicate as well as the present complaint is yet to commence and would take some time to conclude. It is also pertinent to note that the main accused and other similarly placed co-accused persons have been enlarged on bail."

It observed: "No evidence has been led to show that the present applicants are a flight risk. In fact, records would show that both the applicants have joined investigation on multiple occasions. There is no incident alleged by the respondent wherein the applicants have tried to tamper with evidence or influence witnesses."

The Court's order reads: "Considering the totality of the facts and circumstances, the fact that the main accused are out on bail, the period of custody undergone and that the trial is yet to commence, keeping in mind the import of the Catena of decisions of Supreme Court discussed hereinabove, it is directed that both the applicants be released on regular bail subject to them furnishing a personal bond in the sum of Rs.1,00,000/- with one surety of the like amount each to the satisfaction of the concerned Jail Superintendent/concerned Court/Duty J.M." and subject to certain conditions. 

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