Patna High Court's Justice Dr. Anshuman's bail order for MLC's son vindicated by Supreme Court's judgement?

In Udhaw Singh vs. Enforcement Directorate (2025), Supreme Court's division bench of Justices Abhay S. Oka and Ujjal Bhuyan observed:"Our attention is invited to a decision of a coordinate Bench in the case of Union of India through the Assistant Director v. Kanhaiya Prasad, 2025 SCC OnLine SC 306 After having perused the judgment, we find that this was a case where the decisions of this Court in the case of Union of India v. K. A.Najeeb (2021) 3 SCC 713 and in the case of Senthil Balaji v. Deputy Director, Enforcement Directorate 2024 SCC OnLine SC 2626 were not applicable on facts. Perhaps that is the reason why these decisions were not placed before the coordinate Bench. The respondent-accused therein was arrested on 18th September, 2023 and the High Court granted him bail on 6th May, 2024. He was in custody for less than months before he was granted bail. There was no fining recorded that the trial is not likely to be concluded in a reasonable time. In the facts of the case, this Court cancelled the bail granted by the High Court. Therefore, there was no departure made from the law laid down in the case of Union of India v. K. A.Najeeb and Senthil Balaji." 

This observation of Justice Oka led division bench of Supreme Court made on February 17 2025 seems to vindicate the judgement of Dr. Anshuman of Patna High Court in Kanhaiya Prasad case, which has been set aside by Justice Bela Trivedi led division bench of Supreme Court on February 13, 2025. It is apparent that he is implying lapse on the part of the counsels of the respondent. On behalf the respondent, Senior Advocate. Notably, Ranjit Kumar had argued that the respondent has not been shown as accused in the predicate offence. 

Also read: Supreme Court directs Bihar MLC's son to surrender within one week in PMLA case, sets aside Patna High Court's bail order

Justice Oka led bench passed it's judgement after hearing an appeal from Udhaw Singh, the appellant from who was  arrested for the offence under Section 3 of the Prevention of Money Laundering Act (PMLA), 2002. The appellant has undergone incarceration for a period of 1 year and 2 months. There are 225 witnesses cited, out of which only 1 has been examined. Therefore, the trial is not likely to be concluded within few years. Hence, a decision of this Court in the case of Senthil Balaji v. Deputy Director, Directorate of Enforcement will apply. Paragraphs 27 and 29 of the said decision read thus:

"27.Under the Statutes like PMLA, the minimum sentence is three years, and the maximum is seven years. The minimum sentence is higher when the scheduled offence is under the NDPS Act. When the trial of the complaint under PMLA is likely to prolong beyond reasonable limits, the Constitutional Courts will have to consider exercising their powers to grant bail. The reason is that Section 45(1)(ii) does not confer power on the State to detain an accused for an unreasonably long time, especially when there is no possibility of trial concluding within a reasonable time. What a reasonable time is will depend on the provisions under which the accused is being tried and other factors. One of the most relevant factor is the duration of the minimum and maximum sentence for the offence. Another important consideration is the higher threshold or stringent conditions which a statute provides for the grant of bail. Even an outer limit provided by the relevant law for the completion of the trial, if any, is also a factor to be considered. The extraordinary powers, as held in the case of K.A. Najeeb, can only be exercised by the Constitutional Courts. The Judges of the Constitutional Courts have vast experience. Based on the facts on record, if the Judges conclude that there is no possibility of a trial concluding in a reasonable time, the power of granting bail can always be exercised by the Constitutional Courts on the grounds of violation of Part III of the Constitution of India notwithstanding the statutory provisions. The Constitutional Courts can always exercise its jurisdiction under Article 32 or Article 226, as the case may be. The Constitutional Courts have to bear in mind while dealing with the cases under the PMLA that, except in a few exceptional cases, the maximum sentence can be of seven years. The Constitutional Courts cannot allow provisions like Section 45(1)(ii) to become instruments in the hands of the ED to continue incarceration for a long time when there is no possibility of a trial of the scheduled offence and the PMLA offence concluding within a reasonable time. If the Constitutional Courts do not exercise their jurisdiction in such cases, the rights of the undertrials under Article 21 of the Constitution of India will be defeated. In a given case, if an undue delay in the disposal of the trial of scheduled offences or disposal of trial under the PMLA can be substantially attributed to the accused, the Constitutional Courts can always decline to exercise jurisdiction to issue prerogative writs. An exception will also be in a case where, considering the antecedents of the accused, there is every possibility of the accused becoming a real threat to society if enlarged on bail. The jurisdiction to issue prerogative writs is always discretionary." It further pointed out that "the appellant has been incarcerated for 15 months or more for the offence punishable under the PMLA. In the facts of the case, the trial of the scheduled offences and, consequently, the PMLA offence is not likely to be completed in three to four years or even more. If the appellant's detention is continued, it will amount to an infringement of his fundamental right under Article 21 of the Constitution of India of speedy trial."

Justice Oka recorded that the Solicitor General of India has stated that in the facts of the case, the decision in the case of V.Senthil Balaji may be followed. Hence, the appellant deserves to be enlarged on bail, pending trial.

The division bench concluded: "the appellant shall be produced before the Special Court within a maximum period of one week from today. The Special Court shall enlarge the appellant on bail on appropriate terms and conditions including the condition of regularly and punctually attending the Special Court and cooperating with the Special Court for early disposal of the case. A further condition shall be imposed directing the appellant to surrender his passport, if any." The appeal was allowed. The verdict was authored by Justice Oka. 

The appeal was against the judgement dated May 25, 2024 by Justice Jaspreet Singh of the High Court of Judicature at Allahabad, Lucknow Bench. The appeal was filed on December 3, 2024.

Supreme Court directs Bihar MLC's son to surrender within one week in PMLA case, sets aside Patna High Court's bail order

Kanhaiya Prasad, the son of Radha Charan Sah, the Member of Bihar Legislative Council (MLC) who was released on bail was directed by the Supreme Court to "surrender before the Special Court within one week" from February 13, 2025 although it has not "expressed any opinion on the merits of the case." 

Setting aside a judgement of Dr. Anshuman of Patna High Court, Supreme Court's division bench of Justices Bela M. Trivedi and Prasanna B. Varale observed: "The High Court has utterly failed to consider the mandatory requirements of Section 45 and to record its satisfaction whether any reasonable ground existed for believing that the respondent was not guilty of the alleged offence, and that he was not likely to commit any offence while on bail. Merely because the prosecution complaint had been filed and the cognizance was taken by the court that itself would not be the ground or consideration to release the respondent on bail, when the mandatory requirements as contemplated in Section 45 have not been complied with." The 16-page long judgement was authored by Justice Trivedi. 

Supreme Court's judgement reads: "As well settled, the offence of money laundering is not an ordinary offence. The PMLA has been enacted to deal with the subject of money laundering activities having transnational impact on financial systems including sovereignty and integrity of the countries. The offence of money laundering has been regarded as an aggravated form of crime world over and the offenders involved in the activity connected with the Proceeds of Crime are treated as a separate class from ordinary criminals. Any casual or cursory approach by the Courts while considering the bail application of the offender involved in the offence of money laundering and granting him bail by passing cryptic orders without considering the seriousness of the crime and without considering the rigours of Section 45, cannot be vindicated."

Some 20 FIRs were registered at the police stations at Patna, Saran and Bhojpur districts under Sections 38, 120B, 378, 379, 406, 409, 411, 420, 467, 468 and 471 of IPC, and under Section 39(3) of the Bihar Mineral, (Concession, Prevention of Illegal Mining, Transportation & Storage) Rule, 2019. It is alleged inter alia that M/s Broad Son Commodities Private Ltd and its Directors were engaged in illegal mining and selling of sand without using the departmental pre-paid transportation E-challan, issued by the Mining Authority Bihar, and thus had caused revenue loss of Rs.161,15,61,164/- to the Government Exchequer. Since the said FIRs contained Scheduled offences as defined under Section 2(1)(y) of the Prevention of Money Laundering Act, 2002 (PMLA), ECIRs dated March 15, 2023, addendum ECIR dated November 8, 2023 and dated May 4, 2024 came to be registered, and the investigation for the offences of Money Laundering was initiated.

During the course of investigation, search operations were carried out under Section 17 of PMLA at the various locations and premises related with the said Company and its Directors, including four premises of Radha Charan Sah, (father of the respondent). During the course of inquiry, the statements of the respondent-Kanhaiya Prasad, being son of the said Radha Charan Sah was recorded on September 1, 2023 and September 4, 2023 under Section 50 of the PMLA. It has been alleged by the appellant-ED that thereafter the respondent was issued summons to appear before the Directorate on September 11, 2023, September 12, 2023 and September 13, 2023, however, he failed to appear on the said dates. The respondent thereafter was arrested at the ED, Patna Zonal Office, Bihar on September 18, 2023. On production of the respondent before the concerned court, his custody was handed over to ED, on September 22, 2023.

From the documents seized from the premises of the Radha Charan Sah and from the statements recorded under Section 50 of the Witnesses, of the respondent and of his father, it was found that the Kanhaiya Prasad, the respondent-accused was actually involved in the process of concealing and the possession of the proceeds of crime amounting to Rs.17,26,85,809/- which were used for carrying out the renovation work in the resort at Manali and for the construction work of the school owned by his trust. It was also found that the respondent-accused had handled the proceeds of crime and transferred it by using hawala network for acquisition of the resort at Manali. It was also alleged that the entire work of family-owned LLP’s and of Maa Sharda Devi Buildings and Construction, was handled by Kanhaiya Prasad, the respondent to route the proceeds of crime generated by his father to portray it as untainted money. Kanhaiya Prasad  had allegedly layered and laundered the proceeds of crime generated by his father, being a syndicate member involved in illegal sale of sand using hawala network. The respondent also had allegedly concealed the proceeds of crime by way of purchasing properties, carrying out renovation work and constructions in the family owned trust property using the said proceeds of crime.

ED filed Prosecution Complaint against the respondent and other accused on November 10, 2023 for the offences under  Section 3 read with Section 4 of the PMLA. The specific role of the Kanhaiya Prasad is mentioned in the Prosecution Complaint. The PMLA Court had taken cognizance of the alleged offences on November 10, 2023.

Kanhaiya Prasad haf filed the application being Criminal Miscellaneous before the High Court seeking regular bail in connection with the Prosecution Complaint registered as Special Trial (PMLA Case) before the Special Judge, PMLA. 

ED's counsel objected to the High Court's judgement as it did not comply with requirements under Section 45 of the PMLA. The High Court has misinterpreted and misread the ratio of the relevant judgments particularly of the judgment of the 3-judge bench in Vijay Madanlal Choudhary & Ors. Vs. Union of India & Ors (2022), while holding that the provisions of Article 20(3) of the Constitution shall prevail upon Section 50 of the PMLA. 

In Vijay Madanlal Choudhary case, a bench headed by Justice A M Khanwilkar had dismissed concerns raised regarding the vast powers of the ED and possibility of misuse of the exacting standard for grant of bail in money laundering cases.

The counsel for the respondent relied upon the various decisions of the submitted that the respondent had cooperated with the ED during the course of enquiry, in as much as the respondent had remained present pursuant to the summons issued under Section 50 of the PMLA on September 1, 2023 and September 4, 2023 and had also paid the entire income-tax dues as were found to be allegedly due by the authorities.

Enforcement Directorate (ED) had challenged the legality of the impugned judgment and order of Patna High Court whereby the High Court had allowed released the respondent Kanhaiya Prasad on bail in connection with the Special Trial (PMLA) Case. 

Earlier, ED has provisionally attached 2 immovable properties to the extent of Rs. 26.19 crore acquired by Radha Charan Sah. 

Supreme Court observed: "the objective of the PMLA is to prevent money laundering which has posed a serious threat not only to the financial systems of the country but also to its integrity and sovereignty. The offence of money laundering is a very serious offence which is committed by an individual with a deliberate desire and the motive to enhance his gains, disregarding the interest of the nation and the society as a whole, and such offence by no stretch of imagination can be regarded as an offence of trivial nature."

The Supreme Court concluded: "The impugned order passed by the High Court being in teeth of Section 45 of PMLA and also in the teeth of the settled legal position, we are of the opinion that the impugned order deserves to be set aside, and the matter is required to be remanded to the High Court for fresh consideration." Justice Trivedi clarified: "we have not expressed any opinion on the merits of the case."

 

During the course of the hearing in the High Court, the counsel for Kanhaiya Prasad, the petitioner had submitted that "the petitioner has been made accused for an offence which is not schedule." He had also submitted that "evasion of income tax and the wrong under income tax does not come within the purview of the schedule offences as mentioned in the Prevention of Money and Laundering Act, 2002. He further submits that in the complaint itself, the Enforcement Directorate has intimated about 19 criminal cases pending and the petitioner is not an accused in any one of the 19 cases." He submitted that "all those cases come within the purview of the schedule offences, but petitioner is not an accused of the scheduled offence." These submissions are recorded in Dr. Anshuman's order dated March 14, 2024. Notably, this submission has not been disputed as yet. In this backdrop, it is significant that Supreme Court has not "expressed any opinion on the merits of the case."   

In his 40-page long judgement dated May 6, 2024, Dr. Anshuman concluded: "let the petitioner above named, be granted bail on furnishing bail bonds of Rs.1,00,000/- (Rupees One lacs only) with two sureties of the like amount each to the satisfaction of learned Special Judge, PMLA -cum- District and Sessions Judge, Patna in connection with Special Trial (PMLA) Case...." He imposed the following terms and conditions:-
"a) The petitioner shall furnish a personal bond with a surety in the sum of Rs. 1,00,000 to the satisfaction of the Trial Court;
b) The petitioner shall give up his citizenship of Dominican Republic within a period of 1 week from the date of release and documentary proof of the same be placed before the learned Trial Court;
c) The petitioner shall not leave the country during the bail period and surrender his Dominican Republic passport at the time of release before the Trial Court;
d) The petitioner shall join the investigation as and when called by the ED authority concerned;
e) The petitioner shall appear before the Court as and when the matter is taken up for hearing;
f) The petitioner shall provide his mobile number to the ED authority concerned at the time of release, which shall be kept in working condition at all times. The applicant shall not switch off, or change the same without prior intimation to the ED authority concerned, during the period of bail;
g) In case he changes his address, he will inform the ED authority concerned and this Court concerned also;
h) The petitioner shall not indulge in any criminal activity during the bail period;

i) The petitioner shall not communicate with or intimidate or influence any of the prosecution witnesses or tamper with the evidence of the case"

 

In his clarificatory order dated May 14, 2024, Dr. Anshuman observed: "it is directed to the trial Court that he shall accept the affidavit filed by the pairvikar in this regard that petitioner has no citizenship of Dominican Republic and he is ready to surrender his Indian Passport and then after taking the affidavit and undertaking of the petitioner in the light of Clauses (b) and (c) of the conditions, he is directed to release the petitioner on bail immediately. The order passed today shall be treated as part of order dated 06.05.2024." It is not clear as to how the reference to "citizenship of Dominican Republic" came in the judgement dated May 6, 2024. The criminal miscellaneous petition was filed on February 17, 2024 and registered on February 29, 2024 in the High Court.

 

Notably, Sah, the father of Kanhaiya Prasad was arrested in 2023 in connection with a money laundering case, lodged by ED. He was granted regular bail on July 3, 2024 by Justice Dr. Anshuman. In his 34-page long order, Justice Dr. Anshuman observed that "The petitioner is in custody since 14.09.2023 having age of 70 years and suffering from medical ailments. This Court is also conscious of the fact that the accused is charged in case of PMLA of high magnitude, but at the same time, this is also going on in the mind of this Court that the Investigating agency has already completed the investigation and charge-sheet has been filed in the form of complaint before Special Judge, E.D., Patna on which the Special Judge, E.D., Patna has already taken cognizance. It is due to this reason, the presence of the petitioner in judicial custody may not be necessary for further investigation and therefore, considering the old age of the petitioner, this Court is of the opinion that there is no chance of commission of crime by the petitioner while on bail and hence, in view of the Court, petitioner is entitled to grant bail pending trial on stringent conditions in order to alike the apprehension expressed by the E.D. In view of the discussions above, this Court is of the considered opinion that the petitioner is entitled for grant of bail on merit. Hence, the petitioner is directed to be released on bail on furnishing bail bonds of Rs.10,00,000/- (Rupees Ten Lacs) with two sureties of the like amount each to the satisfaction of learned Special Judge, PMLA-cum-District & Sessions Judge, Patna in connection with Special Trial (PMLA) Case...." He imposed the following conditions on Sah:
a) The petitioner shall not leave the country during the bail period and surrender his passport at the time of release before the Trial Court;
b) The petitioner shall appear before the Court as and when the matter shall be taken up i.e. to say on each and every date.
c) The petitioner shall provide his mobile number to the ED authority concerned at the time of release, which shall be kept in working condition at all times and he shall not switch off or change the same without prior intimation to the ED authority concerned, during the period of bail.
d) In case, he changes his address, he will inform the ED as well as to the concerned Court.
e) The petitioner shall not indulge in any criminal activity during the bail period.
f) The petitioner shall not influence the prosecution witness directly or remotely. The prosecuting agency will be at liberty to file an appropriate application for modification/for calling the order passed by this Court for any reason or the petitioner violates any of the conditions imposed by this Court. 

It has come to light that the respondent's father used to help his father in his sweet shop in the 1970s. His job was to make jalebis and sell them outside the Ara railway station in Bhojpur. Later on, he started his own hotels, resorts, rice mils and cold storage units in Bihar and other States such as Uttarakhand and Himachal Pradesh. He was elected as an MLC from the Bhojpur-Buxar Local Authority Constituency— first from RJD and then from JD(U) in the 2022 elections. ED has alleged that the proceeds of crime has been used for the construction of a school in Ghaziabad. An application was filed seeking quashing of the order dated February 2, 2024 passed in Special Trial (PMLA) case of March 15, 2023 by the Court of Special Judge, PMLA-cum-District and Sessions Judge, Patna whereby the application dated January 23, 2024 seeking permission to attend the sitting of Bihar Vidhan Parishad on February 12, 2024 at 11.00 A.M. and from judicial custody under police escort, was rejected. It is recorded in High Court's order dated February 9, 2024. 

Supreme Court dismisses appeal of ED, sets aside orders of Special Court taking cognizance against accused

In Directorate of Enforcement vs. Bibhu Prasad Acharya, ED had filed complaints against the respondents and others under Section 44(1)(b) of the Prevention of Money Laundering Act, 2002 (PMLA). The complaint is for an offence under Section 3 of the PMLA, which is punishable under Section 4 of the Act. Both private respondents, namely, Bibhu Prasad Acharya and Adityanath Das. The Special Court took cognizance of the complaints and issued summons to the respondents and other accused persons. Both of them had filed writ petitions before the High Court challenging the cognizance taken by the Trial Court and prayed for quashing the complaints on the ground that both of them were public servants and, therefore, it was necessary to obtain prior sanction under sub-section (1) of Section 197 of the Code of Criminal Procedure, 1973 (CrPC). By the impugned judgment, the High Court upheld the respondents' contentions and quashed the orders of taking cognizance passed by the Special Court on the complaints only as against the said respondents. The ED approached the Supreme Court. 

The Supreme Court's bench of Justices Abhay S. Oka and Augustine George Masih observed: "17. Section 65 makes the provisions of the CrPC applicable to all proceedings under the PMLA, provided the same are not inconsistent with the provisions contained in the PMLA. The words ‘All other proceedings’ include a complaint under Section 44 (1)(b) of the PMLA. We have carefully perused the provisions of the PMLA. We do not find that there is any provision therein which is inconsistent with the provisions of Section 197(1) of CrPC. Considering the object of Section 197(1) of the CrPC, its applicability cannot be excluded unless there is any provision in the PMLA which is inconsistent with Section 197(1). No such provision has been pointed out to us. Therefore, we hold that the provisions of Section 197(1) of CrPC are applicable to a complaint under Section 44(1)(b) of the PMLA."

The judgement was authored by Justice Oka. It reads: "18. Section 71 gives an overriding effect to the provisions of the PMLA notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Section 65 is a prior section which specifically makes the provisions of the CrPC applicable to PMLA, subject to the condition that only those provisions of the CrPC will apply which are not inconsistent with the provisions of the PMLA. Therefore, when a particular provision of CrPC applies to proceedings under the PMLA by virtue of Section 65 of the PMLA, Section 71 (1) cannot override the provision of CrPC which applies to the PMLA. Once we hold that in view of Section 65 of the PMLA, Section 197(1) will apply to the provisions of the PMLA, Section 71 cannot be invoked to say that the provision of Section 197(1) of CrPC will not apply to the PMLA."

It also notes "A provision of Cr. P.C made applicable to the PMLA by Section 65, will not be overridden by Section 71. Those provisions of CrPC which apply to the PMLA by virtue of Section 65 will continue to apply to the PMLA, notwithstanding Section 71. If Section 71 is held applicable to such provisions of the CrPC, which apply to the PMLA by virtue of Section 65, such interpretation will render Section 65 otiose. No law can been interpreted in a manner which will render any of its provisions redundant."

It concluded: "In this case, the cognizance of the offence under Section 3, punishable under Section 4 of the PMLA, has been taken against the respondents accused without obtaining previous sanction under Section 197(1) of CrPC.Therefore, the view taken by the High Court is correct. We must clarify that the effect of the impugned judgment is that the orders of the Special Court taking cognizance only as against the accused B.P.Acharya and Adityanath Das stand set aside. The order of cognizance against the other accused will remain unaffected." The Court endorsed the verdict of Justice B. Siva Sankara Rao of Telangana High Court. 

It is not clear from the judgement as to why the order of cognizance against the other accused will remain unaffected. The judgement was delivered on November 6, 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. 

Patna High Court refuses bail in PMLA case, Supreme Court to hear it in January 2025

In Shashikant Kumar vs. Union of India and Mannu Singh vs. The State of Bihar & Others, the final order of Justice Rudra Prakash Mishra of Patna High Court refused to grant bail to the petitioner after considering the provisions under Section 45(1) of Prevention of Money Laundering Act (PMLA) and the gravity of the offence. The order noted the apparent involvement of the petitioners in the alleged concealment, possession and use of the properties acquired out of proceeds of crime. 

The penultimate conclusion of the High Court's order dated April 23, 2024 reads: "....from perusal of records, it appears that there is enough material on the record to show that the petitioners were actively involved in acquisition, disposal and transfer of proceeds of crime in connivance with main accused Sumit Kumar along with other co-accused persons. Further, petitioners aided the main accused Sumit Kumar in laundering the amount of Rs. 31,92,70,129/-fraudulently from the account of CALA-cum-DLAO to the accounts of different persons/entities using various documents and also tried to convert the proceeds of crime into untaintedmovable and immovable properties. It also transpires from the materials on record that the accused-petitioners also purchased agricultural land below the market price using the proceeds of crime. Further from perusal of the records, it appears that the accused-petitioners are involved in hawala business and the allegation against the petitioners are grave and serious in nature. Further, it appears that accused-petitioners have direct involvement in receipt of proceeds of crime and further layering and laundering of proceeds of crime which make him liable for the offence of money laundering punishable under Section 4 of the PMLA."

Ansul, counsel for Shashikant Kumar, the petitioner had argued that the petitioner has falsely been implicated in this case by the investigating officer with a view to appease his senior officers on the score of solving the case. He submitted that during investigation, the petitioner was not found involved in the predicate offence and due to the same, the petitioner was not charge-sheeted in the said case, i.e. Gandhi Maidan P.S. Case No. 02 of 2021 and this fact has also been admitted by the Enforcement Directorate (ED) in the Complaint petition. The name of this petitioner has transpired in this case only on the basis of disclosure made by the co-accused Sumit Kumar, the then Branch Manager of Kotak Mahindra Bank, Patna. He further submitted that if the confessional statements of co-accused person and petitioner which were recorded by ED are taken as a whole, then it becomes crystal clear that the petitioner was not having knowledge about the predicate offence and the petitioner could not be connected with any process related to the proceeds of crime. Except the statement of the co-accused amounting to confession, there is no cogent material against the petitioner to show his involvement in the alleged offence. He informed the Court that the petitioner is in custody since August 2, 2023 and has no criminal antecedent.

S.D. Sanjay, senior counsel for Mannu Singh, the petitioner argued that petitioner is not named in the FIR and his name has been transpired during investigation by the Enforcement Department (ED) as some money was shown to have been transferred in the account of the petitioner from the account of the District Land Acquisition Officer. He submitted that the petitioner owns the enterprises registered under his mother’s and wife’s names, namely M/s Shakuntala Enterprises in which one Arun Kumar Dubey proposed to deposit Rs. 1.5 crores into the petitioner’s account for a business arrangement, promising a 5% commission. In total, an amount of Rs. 3.05 crores was transferred to the bank accounts of the petitioner and the enterprises registered under his mother’s and wife’s account. Subsequently, as the negotiations failed, the petitioner transferred Rs. 2.65 crores out of total Rs. 3.05 crores to various bank accounts as per instructions of Arun Dubey. The counsel stated that petitioner, at no point of time, was aware of the fact that the money which was transferred to the account of the petitioner, constitutes proceeds of crime. He also submitted that no properties or documents belonging to the petitioner or his enterprises have been confiscated, nor have any records or digital devices of the petitioner or his enterprises been requested/seized for retention under Section 8(3) of the PMLA. He informed the Court that the petitioner is in custody since August 18, 2023 and has no criminal antecedent. He also argued that the petitioner lacks mens rea and is not affiliated with any individual or group involved in the online betting or gaming business, which is the actual source of proceeds of crime. 

He relied on a case of Vijay Madanlal Choudhary and Others vs. Union of India and others reported in 2022 SCC OnLine SC 929 (specially paragraph 388 thereof). Drawing on this decision of the Supreme Court, he stated that the prosecuting agency falls short of providing a prima-facie satisfactory explanation for arraying the petitioner as one of the accused. He further submitted that to constitute the offence of money laundering, the ED must prove a reasonable basis to believe that the offence has been committed. Reason to believe cannot be mere suspicion. Further referring to judgment reported in Vijay Madanlal Choudhary (supra) in which the Court has observed that ‘Bail is a rule and jail is an exception’ even in economic offences. The same has been reiterated in a number of cases thereafter. He also relied on the decisions of the Supreme Court in the case of Sanjay Chandra vs. CBI (2012) 1 SCC 40 as also the case of Satendra Kumar Antil Vs. CBI (2022) 10 SCC 51. The senior counsel submitted that the petitioner satisfies the requirements of triple test as laid down in P. Chidambaram Vs. Directorate of Enforcement since reported in (2020) 13 SCC 791. He submitted that the petitioner should be granted the privilege of bail.

The High Court was not persuaded by the submission of both the counsels. The petitioners had approached the High Court to seek bail in connection with Special Trial (PMLA) P.S. case No. 03 of 2023 arising out of ECIR/PTZO/06/2021 dated July 16, 2021 instituted for the offences under Section 4 of the PMLA.

Mannu Singh, one of the two petitioners filed a Special Leave to Appeal (Criminal) in the Supreme Court on May 28, 2024. The respondents are the State of Bihar and the Union of India. It was registered on July 4, 2024 and verified on July 10, 2024. It was listed for hearing on July 15, 2024 before the bench of Justices M.M. Sundresh and Pankaj Mithal. The ordered issuance of notice. On September 23, 2024, Suryaprakash V. Raju, Additional Solicitor General, the Court granted three weeks time to file counter affidavit. On October 18, 2024, the Court ordered that the matter be listed in the 2nd week of January 2025.

Supreme Court sets aside judgment of Jharkhand High Court that denied regular bail

In Prem Prakash vs. Union of India through Enforcement Directorate (2024), the Supreme Court's Division Bench of Justices B.R. Gavai and K.V. Viswanathan set aside judgment of Jharkhand High Court which had dismissed the regular bail application of the appellant. The regular bail was sought in connection with a case registered for the offence under Sections 3 and 4 of the Prevention of Money Laundering Act (PMLA), 2002 pending before the Court of Special Judge, PMLA, Ranchi.  The bail application was under Section 45 of PMLA. 

The Court relied on  the decision in Vijay Madanlal Choudhary vs. Union of India (2022) wherein the Court categorically held that while Section 45 of PMLA restricts the right of the accused to grant of bail, it could not be said that the conditions provided under Section 45 impose absolute restraint on the grant of bail. It also relied on Court's decision in Manish Sisodia (II) vs. Directorate of Enforcement, wherein it was made amply clear that even under PMLA the governing principle is that “Bail is the Rule and Jail is the Exception”. 

The Court observed: "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."

The judgement reads: we hold that the appellant has satisfied the twin conditions under Section 45. Inasmuch as from the material on record, this Court is satisfied that there are reasonable grounds for believing that the appellant is not guilty of the offence of Money Laundering as alleged under Sections 3 and 4 of the PMLA and the Court is further satisfied that the appellant is not likely to commit any offence, if enlarged on bail.

It has recorded that the Court does not think that "the appellant can be denied bail based on the pendency of the other matter. We say so in the facts and circumstances of the present case as we do not find any justification for his continued detention. The appellant has already been in custody for over one year. The Trial is yet to commence."

Supreme Court grants bail to K. Kavitha, the Telangana lawmaker, quashes Single Judge Bench judgement of Delhi High Court

The judgement in the bail application case of K. Kavitha vs. Central Bureau of Investigation (2024) and Enforcement Directorate was reserved by the Single Judge Bench of Justice Swarna Kanta Sharma of Delhi High Court on May 28, 2024. The 41-page long judgement was delivered on July 1, 2024. Justice Sharma's judgement concluded: "this Court is of the view that no case for grant of regular bail....is made out at this stage." 

This judgement of the High Court has been quashed and set aside by a 3-page long order of the Division Bench of Justices B.R. Gavai and K.V. Viswanathan on August 27, 2024 in Enforcement Directorate vs. K. Kavitha (2024).

The High Court judgement reads:"....as far as benefit of proviso to Section 45 is concerned, when it is the case of applicant herself that she is a well-educated and accomplished woman, who has remained Member of Parliament, Member of Legislative Council, etc., this Court is bound to keep in mind the observations of the Hon‟ble Apex Court in case of Saumya Chaurasia (supra). The material collected by the Directorate of Enforcement, which has been discussed in the preceding paragraphs has pointed out that the applicant herein was one of the chief conspirators in the entire conspiracy relating to formulation and implementation of new Excise Policy of Delhi. In fact, some other accused persons were working on behalf of the applicant and as per her instructions, as noted in the preceding discussion. Thus, Smt. K. Kavitha cannot be equated to a vulnerable woman who may have been misused to commit an offence, which is the class of women for whom the proviso to Section 45 of PMLA has been incorporated, as held by the Hon‟ble Apex Court in case of Saumya Chaurasia (supra). Accordingly, this Court is of the considered opinion that Smt. K. Kavitha is not entitled to the benefit of proviso to Section 45 of PMLA."  

The proviso to Section 45 of the Prevention of Money Laundering Act (PMLA), 2002 confers a discretion on the Court to grant bail where the accused is a woman. 

Supreme Court's order reads: "The impugned judgment and order dated 01.07.2024 passed by the learned Single Judge of the High Court of Delhi in Bail Application No.1675 of 2024 and Bail Application No.1739 of 2024 are quashed and set aside." Kavitha was arrested by ED on March 15, 2024 and subsequently by CBI. The apex Court found the reasoning of the Single Judge Bench of Delhi High Court regarding "vulnerable woman" for denying the benefit of Section 45(1) of the PML Act to be totally misdirected.