Supreme Court of India
TARUN KUMARversusASSISTANT DIRECTOR DIRECTORATE OF ENFORCEMENT
- Citation
- 2023 INSC 1006
- Decided
- 20 November 2023
- Disposal
- Dismissed
- Bench
- ANIRUDDHA BOSE
Holding
Bail cannot be granted as the appellant failed to satisfy the mandatory conditions of Section 45 of the PMLA and the evidence establishes his involvement in money‑laundering.
Summary
The appellant, a Vice President of Purchases at Shakti Bhog Foods Ltd., was arrested under the fourth supplementary complaint filed under Sections 44 and 45 of the Prevention of Money Laundering Act, 2002 (PMLA) for alleged money‑laundering offences linked to a bank fraud investigated under the Prevention of Corruption Act, 1988 and several IPC sections. The appellant argued that he was not named in the FIR or earlier complaints and that bail should be granted on the basis of parity with co‑accused who were released. The Supreme Court examined the admissibility of witness statements under Section 50 of the PMLA, the mandatory nature of the twin conditions in Section 45, and the principle that money‑laundering is an independent offence under Section 3. The Court held that substantial documentary evidence and witness statements established the appellant’s involvement, that the burden of proof under Section 45 lies on the accused, and that parity is not a binding rule. Consequently, the Court found no reasonable grounds to believe the appellant was not guilty or unlikely to re‑offend, and dismissed the appeal, refusing bail.
Issues considered
- The admissibility and evidentiary value of witness statements recorded under Section 50 of the PMLA.
- Whether the mandatory conditions of Section 45 of the PMLA have been satisfied for granting bail.
- Whether the principle of parity can compel the court to grant bail to the appellant.
- Whether the appellant’s non‑inclusion in the FIR and earlier complaints precludes his liability under the PMLA.
Legislation cited
- Code of Criminal Procedure, 1973s. 436A, s. 439
- Constitution of Indias. 14, s. 21
- Indian Penal Code, 1860s. 120B, s. 420, s. 465, s. 467, s. 468, s. 471
- Prevention of Corruption Act, 1988
- Prevention of Money Laundering Act, 2002s. 24, s. 3, s. 44, s. 45, s. 50, s. 71
Subjects
bailmoney launderingPMLAeconomic offencesSection 45Section 50paritynon‑bailable offenceArticle 14Article 21
Judgment
[2023] 14 S.C.R. 813 : 2023 INSC 1006
CASE DETAILS
TARUN KUMAR
v.
ASSISTANT DIRECTOR DIRECTORATE OF ENFORCEMENT
(Criminal Appeal No. 3593 of 2023)
NOVEMBER 20, 2023
[ANIRUDDHA BOSE AND BELA M. TRIVEDI, JJ.]
HEADNOTES
Issue for consideration: Appellant was arrested on the fourth
supplementary complaint filed u/ss.44, 45, Prevention of Money Laundering
Act, 2002, in continuation of three complaints in the Complaint Case, for
the commission of the offence of money laundering. High Court whether
justified in dismissing the bail application of the appellant seeking bail in
connection with the said Complaint Case bearing ECIR No. arising out of the
FIR registered for offence u/s.13(2) r/w 13(1)(d), Prevention of Corruption
Act, 1988 and u/s.120B r/w ss.420, 465, 467, 468, 471, IPC.
Prevention of Money Laundering Act, 2002 – ss.50, 45 – Plea of the
appellant that he was not named in the FIR nor in first three prosecution/
supplementary complaints and was implicated only on the basis of the
statements of witnesses recorded pursuant to the summons issued u/s.50,
without there being any material in support thereof:
Held: There is no merit in the said submission – The statements of
witnesses/accused are admissible in evidence in view of s.50 and such
statements may make out a formidable case about the involvement of the
accused in the commission of a serious offence of money laundering – As
transpiring from the supplementary complaint filed against the appellant,
apart from the statements of witnesses recorded u/s.50, PMLA, there was
sufficient material collected in the form of documents prima facie showing
as to how the appellant was knowingly a party and actually involved in the
process and in the activities connected with the proceeds of crime, how he
was projecting/claiming such proceeds of crime as untainted and how he
813
814 SUPREME COURT REPORTS [2023] 14 S.C.R.
was the beneficiary of the proceeds of crime acquired through the criminal
activities relating to the scheduled offences – Appellant has not been able
to overcome the threshold stipulations contemplated in s.45 as he has failed
to prima facie prove that he is not guilty of the alleged offence and is not
likely to commit any offence while on bail – Burden of proof lies on the
accused for the purpose of the condition set out in the s.45 that he is not
guilty of such offence – Of course, such discharge of burden could be on the
probabilities, nonetheless in the instant case there being sufficient material
on record adduced by the respondent showing the thick involvement of the
appellant in the alleged offence of money laundering u/s.3, PMLA, thus,
bail cannot be granted to the appellant – The submission to grant bail to the
appellant on the ground that the other co-accused similarly situated as the
appellant were granted bail, not accepted – Bail – Prevention of Corruption
Act, 1988 – Penal Code, 1860 – ss.420, 465, 467, 468, 471. [Paras 15, 16, 20]
Prevention of Money Laundering Act, 2002 – s.3:
Held: The offence of money laundering u/s.3 is an independent offence
regarding the process or activity connected with the proceeds of crime which
had been derived or obtained as a result of criminal activity relating to or
in relation to a scheduled offence – It is not dependent or linked to the date
on which the scheduled offence or predicate offence has been committed
– The relevant date is the date on which the person indulges in the process
or activity connected with the proceeds of crime – Thus, the involvement
of the person in any of the criminal activities like concealment, possession,
acquisition, use of proceeds of crime as much as projecting it as untainted
property or claiming it to be so, would constitute the offence of money
laundering u/s. 3. [Para 15]
Bail – Principle of Parity:
Held: Parity is not the law – While applying the principle of parity,
the Court is required to focus upon the role attached to the accused whose
application is under consideration – In the instant case, the main accused,
Managing Director of SBFL, and KMP of group companies and the other
accused, owner/ operator/ controller of various shell companies were
granted bail on the ground of infirmity and medical grounds – The co-
accused who was the internal auditor of SBFL was granted bail by the
TARUN KUMAR v. ASSISTANT DIRECTOR DIRECTORATE 815
OF ENFORCEMENT
High Court, however the said order of High Court was challenged by the
respondent before this Court by filing being SLP and the same is pending
under consideration – High Court in the impugned order while repelling
the said submission made on behalf of the appellant, had distinguished the
said co-accused and observed that unlike him who was an internal auditor
of SBFL (for a brief period statutory auditor of SBFL), the applicant was
the Vice President of Purchases and as a Vice President, he was responsible
for the day-to-day operations of the company and his role was made out
from the financials, where direct loan funds have been siphoned off to the
sister concerns of SBFL, where the appellant was either a shareholder or
director – In any case, the order granting bail to the said co-accused being
under consideration before this Court, it would not be appropriate to make
any observation with regard to the said order passed by the High Court –
Furthermore, the principle of parity is based on the guarantee of positive
equality before law enshrined in Article 14 – However, if any illegality or
irregularity has been committed in favour of any individual or a group of
individuals, or a wrong order has been passed by a judicial forum, others
cannot invoke the jurisdiction of the higher or superior court for repeating or
multiplying the same irregularity or illegality or for passing similar wrong
order – Article 14 is not meant to perpetuate the illegality or irregularity –
Constitution of India – Article 14. [Para 18]
Bail – Economic offences – Duty of Court:
Held: Economic offences constitute a class apart and need to be visited
with a different approach in the matter of bail – Such offences having deep-
rooted conspiracies and involving huge loss of public funds need to be
viewed seriously and considered as grave offences affecting the economy
of the country as a whole and thereby posing serious threat to the financial
health of the country – Court while considering an application seeking
bail, is not required to weigh the evidence collected by the investigating
agency meticulously, nonetheless, it should keep in mind the nature of
accusation, the nature of evidence collected in support thereof, the severity
of the punishment prescribed for the alleged offences, the character of
the accused, circumstances which are peculiar to the accused, reasonable
possibility of securing the presence of the accused at the trial, reasonable
apprehension of the witness being tampered with, the larger interests of
816 SUPREME COURT REPORTS [2023] 14 S.C.R.
the public/State etc. – Though, the findings recorded by the Court while
granting or refusing bail would be tentative in nature, nonetheless the Court
is expected to express prima facie opinion for granting or refusing to grant
bail which would demonstrate an application of mind, particularly dealing
with the economic offences. [Paras 13, 22]
Prevention of Corruption Act, 1988 – s.45 – Conditions specified
under:
Held: Are mandatory – They need to be complied with – The Court
is required to be satisfied that there are reasonable grounds for believing
that the accused is not guilty of such offence and he is not likely to commit
any offence while on bail – As per the statutory presumption permitted u/s.
24, the Court or the Authority is entitled to presume unless the contrary is
proved, that in any proceedings relating to proceeds of crime under the Act,
in the case of a person charged with the offence of money laundering u/s.3,
such proceeds of crime are involved in money laundering – Such conditions
enumerated in s.45 will have to be complied with even in respect of an
application for bail made u/s.439, CrPC in view of the overriding effect
given to the PML Act over the other law for the time being in force, u/s.71
of the PML Act – Code of Criminal Procedure, 1973 – s.439. [Para 17]
Criminal Law – Economic offences – Continued detention of
accused, courts to conclude trials within reasonable time ensuring the
right of speedy trial guaranteed by Article 21:
Held: With the advancement of technology and Artificial Intelligence,
the economic offences like money laundering have become a real threat to
the functioning of the financial system of the country and have become a
great challenge for the investigating agencies to detect and comprehend the
intricate nature of transactions, as also the role of the persons involved therein
– Lot of minute exercise is expected to be undertaken by the Investigating
Agency to see that no innocent person is wrongly booked and that no culprit
escapes from the clutches of the law – When the detention of the accused is
continued by the Court, the courts are also expected to conclude the trials
within a reasonable time ensuring the right of speedy trial guaranteed by
Article 21 – Constitution of India – Article 21. [Para 23]
TARUN KUMAR v. ASSISTANT DIRECTOR DIRECTORATE 817
OF ENFORCEMENT
LISTS OF CITATIONS AND OTHER REFERENCES
Vijay Madanlal Choudhary and Others vs. Union of India and
Others (2022) SCC Online SC 929; Gautam Kundu vs. Directorate of
Enforcement (2015) 16 SCC 1: [2015] 15 SCR 499; Rohit Tandon vs.
Directorate of Enforcement (2018) 11 SCC 46: [2017] 13 SCR 156 –
relied on.
Manish Sisodia vs. Central Bureau of Investigation (2023)
SCC Online SC 1393; Sanjay Raghunath Agarwal Vs. Directorate of
Enforcement (2023) SCC Online SC 455; Satender Kumar Antil vs.
Central Bureau of Investigation and Another (2022) 10 SCC 51; State
of Madhya Pradesh vs. Sheetla Sahai and Others (2009) 8 SCC 617:
[2009] 12 SCR 1048; Y.S. Jagan Mohan Reddy vs. Central Bureau of
Investigation (2013) 7 SCC 439; Nimmagadda Prasad vs. Central Bureau
of Investigation (2013) 7 SCC 466; Gautam Kundu vs. Directorate of
Enforcement (supra) State of Bihar and Another vs. Amit Kumar alias
Bachcha Rai (2017) 13 SCC 751: [2017] 4 SCR 503; State of Gujarat
vs. Mohanlal Jitamalji Porwal and Another (1987) 2 SCC 364: [1987]
2 SCR 677 – referred to.
OTHER CASE DETAILS INCLUDING IMPUGNED
ORDER AND APPEARANCES
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No.3593 of 2023.
From the Judgment and Order dated 18.07.2023 of the High Court of
Delhi at New Delhi in BA No.152 of 2023.
Appearances:
Sidharth Luthra, Sr. Adv., Malak Manish Bhatt, Ms. Neeha Nagpal,
Ms. Samridhi, Karitikeye Dang, Rudraditya Khare, Sahir Seth, Naveen
Sharma, Karan Kumar Panesar, Advs. for the Appellant.
S.V. Raju, A.S.G., Mukesh Kumar Maroria, Annam Venkatesh, Arkaj
Kumar, Zoheb Hussain, Advs. for the Respondent.
818 SUPREME COURT REPORTS [2023] 14 S.C.R.
JUDGMENT / ORDER OF THE SUPREME COURT
JUDGMENT
BELA M. TRIVEDI, J.
1. Leave granted.
2. The Appellant-accused being aggrieved by the Judgment and Order
dated 18.07.2023 passed by the High Court of Delhi at New Delhi in Bail
Application No. 152 of 2023 has preferred the present appeal. The High
Court vide the impugned order has dismissed the said bail application of the
appellant seeking bail in connection with the Complaint Case No. 20/2021
bearing ECIR /DLZO-1/12/2021 arising out of FIR No. RC0742020E0014,
registered for the offence under Section 13(2) read with 13(1)(d) of the
Prevention of Corruption Act, 1988 and under Section 120B read with
sections 420, 465, 467, 468 and 471 of IPC. The appellant was arrested on
22.06.2022 on the fourth supplementary complaint having been filed by the
respondent under Sections 44 and 45 of the Prevention of Money Laundering
Act, 2002 (hereinafter referred to as the ‘PML Act’), in continuation of
the complaint dated 01.09.2021, 11.10.2021 and 18.11.2021 in Case No.
20/2021, for the commission of the offence of money laundering as defined
under Section 3 punishable under Section 4 of PML Act.
3. The broad facts and events as discernible from the record may be
stated as under:
(i) M/s. Shakti Bhog Foods Ltd. (SBFL) was engaged in
manufacturing and selling food items under the brand name of
“Shakti Bhog”. The company was managed through its Directors/
Guarantors – Sh. Kewal Krishan Kumar, Sh. Siddharth Kumar
and Smt. Sunanda Kumar. The appellant is the nephew of Sh.
Kewal Krishan Kumar, and was shown as one of the employees
in SBFL.
(ii) The consortium of banks led by the State Bank of India vide the
Letter of Engagement dated 18.05.2018 engaged the services of
a Forensic Auditor – BDO India LLP for conducting the Forensic
Audit of SBFL.
TARUN KUMAR v. ASSISTANT DIRECTOR DIRECTORATE 819
OF ENFORCEMENT [BELA M. TRIVEDI, J.]
(iii) The Forensic Auditor conducted audit review for the period
01.04.2013 to 31.03.2017 and submitted the report on 25.06.2019,
disclosing several financial irregularities and discrepancies in
the functioning of SBFL, and alleged that SBFL had failed to
discharge its loan liability and caused loss to the consortium
member banks to the tune of Rs.3269.42 crores.
(iv) An FIR being NO. RC0742020E0014 came to be registered on
31.12.2020 by the CBI, Bank Securities and Fraud Cell, New
Delhi for the offences under Section 13(2) read with 13(1)(d) of
the Prevention of Corruption Act, 1988 and under Section 120B
read with Sections 420, 465, 467, 468 and 471 of IPC, on the
basis of a written complaint given by the Bank Officials against
the Directors/Guarantors of SBFL and against the Employees/
servants and other unknown persons.
(v) Since the offences under Section 120B read with Sections 420,
467 and 471 of IPC and Section 13(2) read with Section 13(1)
(d) of the Prevention of Corruption Act were specified as the
scheduled offences under the Schedule to the PML Act, an ECIR
bearing No. ECIR/DLZO-1/12/2021 came to be recorded on 31st
January, 2021 against SBFL and others with regard to the said
FIR registered by the CBI against the accused for investigation
of the commission of offence under Section 3 punishable under
Section 4 of the PML Act.
(vi) The appellant was summoned by the respondent-authorities
for the purposes of investigation and interrogation for about
seven times till the first complaint was filed by the respondent
on 01.09.2021. Second and third supplementary complaints
were filed by the respondent on 11.10.2021 and 18.11.2021
respectively. However, the appellant was not named in the said
three complaints.
(vii) When the appellant was in attendance before the respondent
pursuant to the call by the investigating authorities on 22.06.2022,
he was arrested and on 18.08.2022 the fourth supplementary
complaint came to be filed by the respondent arraigning the
appellant as the Accused No. 10.
820 SUPREME COURT REPORTS [2023] 14 S.C.R.
(viii) The appellant filed a bail application in complaint case
no.20/2021 before the Special Judge (PC-ACT), Rouse Avenue
Court Complex, New Delhi on 18.10.2022, which came to be
dismissed by the Special Judge vide the order dated 23.12.2022.
(ix) The bail application being No. 152 of 2023 preferred by the
appellant before the High Court of Delhi also came to be rejected
vide the impugned order dated 18.07.2023.
4. The allegations against the appellant have been detailed in paragraph
nos. 7, 7.1,7.2, & 7.11 and the summary thereof is stated in para 10 of the
fourth Supplementary Complaint filed by the respondent. The role of the
appellant in the commission of the alleged offence of money laundering in
terms of Section 3 of PML Act reads as under:
“Tarun Kumar was Vice President (Purchases) in Shakti Bhog Limited
and was also a director in various Shakti Bhog Group companies. He
was actively involved in the bank fraud committed by Shakti Bhog
Foods Ltd. Tarun Kumar was directly involved in procuring fake
invoices from shell companies operated by Devki Nandan Garg and
Ashok Kumar Goel, Entry Operators. Investigation revealed that emails
from and related to the shell entities supplying fake invoices to Shakti
Bhog Foods Ltd. were also marked to Tarun Kumar. Further, Tarun
Kumar used to transfer proceeds of crime to the shell companies for
procuring fake invoices without any genuine business transactions
and collected part thereof in cash from Vivek Prasad, Entry Operator.
Besides, he used to verify the fake bills for LC settlement with the
lending banks. He also was involved in the criminal conspiracy of
stock manipulation and inflation of the financial results of Shakti Bhog
Foods Ltd. Tarun Kumar also used the platform of group companies
under his directorship and control for diversion, rotation and siphoning
of the proceeds of crime. Further, he played active role in the export
activities of Shakti Bhog Foods Ltd. and then in siphoning and stashing
the proceeds of crime abroad.
Tarun Kumar along with his directed company Goal Securities Pvt.
Ltd. acquired proceeds of crime to the tune of Rs.3.69 Crore.
Tarun Kumar was knowingly a party and actually involved in process
TARUN KUMAR v. ASSISTANT DIRECTOR DIRECTORATE 821
OF ENFORCEMENT [BELA M. TRIVEDI, J.]
and activity connected with proceeds of crime including its acquisition,
use, possession, concealment and/or projecting as well claiming the
same as untainted. He was beneficiary of proceed of crime acquired
through the criminal activities related to scheduled offences. Therefore,
Tarun Kumar has committed offence of money laundering u/s r.w.s.
4 of PMLA, 2002.”
5. The learned Senior Counsel Mr. Sidharth Luthra for the appellant
taking the Court through the documents on record made the following
submissions:
(i) The offending transactions in the ECIR/Prosecution Complaints
and FIR were common, yet the appellant was not named in the
FIR or in the first three prosecution/supplementary complaints.
(ii) The co-accused Raman Bhuraria, who is similarly placed as
the appellant has been granted bail by the High Court of Delhi
vide the judgment and order dated 08.02.2023, and therefore the
appellant is entitled to the bail on the ground of parity.
(iii) The investigation qua the appellant is complete and the further
investigation is kept open with regard to the other accused
persons, if any, and the trial of the case is likely to take long time.
Hence, the appellant ought not to be incarcerated indefinitely. The
right to bail in cases of delay, coupled with incarceration for a
long period, depending on the nature of the allegations, should be
read into Section 439 of the Cr.P.C. and Section 45 of PML Act.
In this regard, Mr. Luthra has relied upon the observations made
by this Court in case of Manish Sisodia vs. Central Bureau of
Investigation1 in Criminal Appeal arising out of SLP (Crl) No.
8167 of 2023 and in case of Sanjay Raghunath Agarwal Vs.
Directorate of Enforcement2.
(iv) Bail cannot be denied merely on account of the crime being an
economic offence. In this regard, Mr. Luthra has relied upon the
1 (2023) SCC Online SC 1393
2 (2023) SCC Online SC 455
822 SUPREME COURT REPORTS [2023] 14 S.C.R.
decision in case of Satender Kumar Antil vs. Central Bureau
of Investigation and Another3.
(v) ED failed to establish the rationale behind discriminating between
the appellant and the individuals with similar roles who have not
been taken as accused. In this regard, learned Senior Counsel has
relied upon the observations made in State of Madhya Pradesh
vs. Sheetla Sahai and Others4.
(vi) Taking the Court to the allegations made against the appellant,
the learned Senior Counsel submitted that the allegations and the
roles attributed to the appellant in the commission of the alleged
offences are baseless.
(vii) Lastly, Mr. Luthra submitted that the parameters of bail under
Section 45 of the PML Act having been made out, and the
custodial detention of the appellant being not necessary, the
appellant should be released on bail.
6. The learned Additional Solicitor General, Mr. S.V. Raju for the
respondent however, made the following submissions:
(i) The appellant was the Vice President (Purchases) in Shakti
Bhog Limited and was also a Director in various Shakti Bhog
Group Companies and was actively involved in the bank fraud
committed by the SBFL.
(ii) The appellant along with other accused who were the Directors,
promoters and shareholders were directly involved in diversion,
rotation and siphoning of proceeds of crime. During the period
2007-08 to 2016-17, under the Directorship of the appellant crores
of proceeds of crime were transferred to the shell companies
without any genuine business transactions. The appellant had
played active role in diverting the loan funds availed by the SBFL
to shell entities on the basis of fake bills generated without any
genuine business transactions.
3 (2022) 10 SCC 51
4 (2009) 8 SCC 617
TARUN KUMAR v. ASSISTANT DIRECTOR DIRECTORATE 823
OF ENFORCEMENT [BELA M. TRIVEDI, J.]
(iii) The appellant was also involved in the export activities of SBFL.
(iv) The twin conditions contained in Section 45(1) of the PML Act
would apply to the appellant having regard to the seriousness of
the offence and the investigation qua other accused being still
in process, the appellant could not be granted bail on the ground
that the other persons allegedly involved have not been arrested.
Mr. Raju has relied upon the number of decisions of this Court
which shall be dealt with as found necessary.
7. At the outset, before adverting to the submissions made by the
learned counsels for the parties, it would be apt to note that the PML Act has
been enacted to prevent money laundering and to provide for confiscation of
property derived from, or involved in money laundering, and for the matters
connected therewith and incidental thereto. The said Act was enacted in
view of the political declaration adopted by the special session of United
Nations General Assembly in June, 1998 calling upon the member states
to adopt national money laundering legislation and programme.
8. Section 3 of the PML Act which pertains to the offence of money
laundering, reads as under: -
“3. Offence of money-laundering. - Whosoever directly or indirectly
attempts to indulge or knowingly assists or knowingly is a party or is
actually involved in any process or activity connected with the proceeds
of crime including its concealment, possession, acquisition or use and
projecting or claiming it as untainted property shall be guilty of offence
of money-laundering.
Explanation. —For the removal of doubts, it is hereby clarified that, —
(i) a person shall be guilty of offence of money-laundering if such
person is found to have directly or indirectly attempted to indulge or
knowingly assisted or knowingly is a party or is actually involved in
one or more of the following processes or activities connected with
proceeds of crime, namely: —
(a) concealment; or
(b) possession; or
(c) acquisition; or
824 SUPREME COURT REPORTS [2023] 14 S.C.R.
(d) use; or
(e) projecting as untainted property; or
(f) claiming as untainted property,
in any manner whatsoever;
(ii) the process or activity connected with proceeds of crime is a
continuing activity and continues till such time a person is directly
or indirectly enjoying the proceeds of crime by its concealment or
possession or acquisition or use or projecting it as untainted property
or claiming it as untainted property in any manner whatsoever.”
9. Section 45 of the said Act being relevant for the purpose of the
instant appeal is reproduced hereunder for ready reference: -
“45. Offences to be cognizable and non-bailable. — (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:
Provided further that the Special Court shall not take cognizance of
any offence punishable undersection 4 except upon a complaint in
writing made by—
(i) the Director; or
(ii) any officer of the Central Government or a State Government
authorised in writing in this behalf by the Central Government by a
general or special order made in this behalf by that Government.
TARUN KUMAR v. ASSISTANT DIRECTOR DIRECTORATE 825
OF ENFORCEMENT [BELA M. TRIVEDI, J.]
(1A) Notwithstanding anything contained in the Code of Criminal
Procedure, 1973 (2 of 1974), or any other provision of this Act, no
police officer shall investigate into an offence under this Act unless
specifically authorised, by the Central Government by a general or
special order, and, subject to such conditions as may be prescribed.
(2) The limitation on granting of bail specified in sub-section (1) is in
addition to the limitations under the Code of Criminal Procedure, 1973
(2 of 1974) or any other law for the time being in force on granting
of bail.
Explanation. —For the removal of doubts, it is clarified that the
expression “Offences to be cognizable and non-bailable” shall mean
and shall be deemed to have always meant that all offences under
this Act shall be cognizable offences and non-bailable offences
notwithstanding anything to the contrary contained in the Code of
Criminal Procedure, 1973 (2 of 1974), and accordingly the officers
authorised under this Act are empowered to arrest an accused without
warrant, subject to the fulfillment of conditions under section 19 and
subject to the conditions enshrined under this section.
10. The constitutional validity of certain provisions of the PML Act and
the procedure followed by the Enforcement Directorate while inquiring into/
investigating offences under the said Act having been challenged before this
Court in case of Vijay Madanlal Choudhary and Others vs. Union of India
and Others5, a three Judge Bench had considered the said provisions of the
Act in detail. After considering the submissions of the learned counsels for
the parties with regard to the interpretation of Section 3 of the said Act, it
was held therein as under: -
“269. From the bare language of Section 3 of the 2002 Act, it is amply
clear that the offence of money-laundering is an independent offence
regarding the process or activity connected with the proceeds of crime
which had been derived or obtained as a result of criminal activity
relating to or in relation to a scheduled offence. The process or activity
can be in any form — be it one of concealment, possession, acquisition,
5 2022 SCC Online SC 929
826 SUPREME COURT REPORTS [2023] 14 S.C.R.
use of proceeds of crime as much as projecting it as untainted property
or claiming it to be so. Thus, involvement in any one of such process
or activity connected with the proceeds of crime would constitute
offence of money-laundering. This offence otherwise has nothing to
do with the criminal activity relating to a scheduled offence — except
the proceeds of crime derived or obtained as a result of that crime.
270. Needless to mention that such process or activity can be indulged
in only after the property is derived or obtained as a result of criminal
activity (a scheduled offence). It would be an offence of money-
laundering to indulge in or to assist or being party to the process
or activity connected with the proceeds of crime; and such process
or activity in a given fact situation may be a continuing offence,
irrespective of the date and time of commission of the scheduled
offence. In other words, the criminal activity may have been committed
before the same had been notified as scheduled offence for the purpose
of the 2002 Act, but if a person has indulged in or continues to indulge
directly or indirectly in dealing with proceeds of crime, derived or
obtained from such criminal activity even after it has been notified
as scheduled offence, may be liable to be prosecuted for offence of
money-laundering under the 2002 Act — for continuing to possess or
conceal the proceeds of crime (fully or in part) or retaining possession
thereof or uses it in trenches until fully exhausted. The offence of
money-laundering is not dependent on or linked to the date on which
the scheduled offence or if we may say so the predicate offence has
been committed. The relevant date is the date on which the person
indulges in the process or activity connected with such proceeds of
crime. These ingredients are intrinsic in the original provision (Section
3, as amended until 2013 and were in force till 31.7.2019); and the
same has been merely explained and clarified by way of Explanation
vide Finance (No. 2) Act, 2019. Thus understood, inclusion of Clause
(ii) in Explanation inserted in 2019 is of no consequence as it does not
alter or enlarge the scope of Section 3 at all.
271 to 282 …………
283. Even though, the 2002 Act is a complete Code in itself, it is only
in respect of matters connected with offence of money-laundering, and
TARUN KUMAR v. ASSISTANT DIRECTOR DIRECTORATE 827
OF ENFORCEMENT [BELA M. TRIVEDI, J.]
for that, existence of proceeds of crime within the meaning of Section
2(1)(u) of the Act is quintessential. Absent existence of proceeds of
crime, as aforesaid, the authorities under the 2002 Act cannot step in
or initiate any prosecution.
284. In other words, the Authority under the 2002 Act, is to prosecute
a person for offence of money-laundering only if it has reason to
believe, which is required to be recorded in writing that the person
is in possession of “proceeds of crime”. Only if that belief is further
supported by tangible and credible evidence indicative of involvement
of the person concerned in any process or activity connected with
the proceeds of crime, action under the Act can be taken forward for
attachment and confiscation of proceeds of crime and until vesting
thereof in the Central Government, such process initiated would be a
standalone process.”
11. As regards the twin conditions for the grant of bail contained in
Section 45(1) of the said Act, it has been held in the said decision of Vijay
Madanlal (supra) as under: -
“412. As a result, we have no hesitation in observing that in whatever
form the relief is couched including the nature of proceedings, be it
under Section 438 of the 1973 Code or for that matter, by invoking
the jurisdiction of the Constitutional Court, the underlying principles
and rigors of Section 45 of the 2002 must come into play and without
exception ought to be reckoned to uphold the objectives of the 2002
Act, which is a special legislation providing for stringent regulatory
measures for combating the menace of money-laundering.”
12. In Gautam Kundu vs. Directorate of Enforcement (Prevention of
Money-Laundering Act), Government of India Through Manoj Kumar,
Assistant Director, Eastern Region6, it was observed as under: -
“30. The conditions specified under Section 45 of PMLA are mandatory
and need to be complied with, which is further strengthened by the
provisions of Section 65 and also Section 71 of PMLA. Section
65 requires that the provisions of CrPC shall apply insofar as they
6 (2015) 16 SCC 1
828 SUPREME COURT REPORTS [2023] 14 S.C.R.
are not inconsistent with the provisions of this Act and Section 71
provides that the provisions of PMLA shall have overriding effect
notwithstanding anything inconsistent therewith contained in any other
law for the time being in force. PMLA has an overriding effect and
the provisions of CrPC would apply only if they are not inconsistent
with the provisions of this Act. Therefore, the conditions enumerated
in Section 45 of PMLA will have to be complied with even in respect
of an application for bail made under Section 439 CrPC. That coupled
with the provisions of Section 24 provides that unless the contrary
is proved, the authority or the Court shall presume that proceeds of
crime are involved in money-laundering and the burden to prove that
the proceeds of crime are not involved, lies on the appellant.”
13. Keeping in view of the aforestated legal position let us consider the
submissions made by the learned counsels for the parties. It is trite that the
court while considering an application seeking bail, is not required to weigh
the evidence collected by the investigating agency meticulously, nonetheless,
the court should keep in mind the nature of accusation, the nature of evidence
collected in support thereof, the severity of the punishment prescribed for
the alleged offences, the character of the accused, circumstances which are
peculiar to the accused, reasonable possibility of securing the presence of the
accused at the trial, reasonable apprehension of the witness being tampered
with, the larger interests of the public/State etc. Though, the findings
recorded by the Court while granting or refusing bail would be tentative in
nature, nonetheless the Court is expected to express prima facie opinion for
granting or refusing to grant bail which would demonstrate an application
of mind, particularly dealing with the economic offences.
14. The first and foremost contention raised by learned Senior Counsel
Mr. Luthra would be that the appellant was not named in the FIR nor in
first three prosecution/ supplementary complaints and has been implicated
only on the basis of the statements of witnesses recorded pursuant to the
summons issued under Section 50 of the PML Act, without there being any
material in support thereof.
15. In our opinion, there is hardly any merit in the said submission
of Mr. Luthra. In Rohit Tandon vs. Directorate of Enforcement7, a three
7 (2018) 11 SCC 46
TARUN KUMAR v. ASSISTANT DIRECTOR DIRECTORATE 829
OF ENFORCEMENT [BELA M. TRIVEDI, J.]
Judge Bench has categorically observed that the statements of witnesses/
accused are admissible in evidence in view of Section 50 of the said Act and
such statements may make out a formidable case about the involvement of
the accused in the commission of a serious offence of money laundering.
Further, as held in Vijay Madanlal (supra), the offence of money laundering
under Section 3 of the Act is an independent offence regarding the process
or activity connected with the proceeds of crime which had been derived
or obtained as a result of criminal activity relating to or in relation to a
scheduled offence. The offence of money laundering is not dependent or
linked to the date on which the scheduled offence or predicate offence has
been committed. The relevant date is the date on which the person indulges
in the process or activity connected with the proceeds of crime. Thus, the
involvement of the person in any of the criminal activities like concealment,
possession, acquisition, use of proceeds of crime as much as projecting it
as untainted property or claiming it to be so, would constitute the offence
of money laundering under Section 3 of the Act.
16. So far as facts of the present case are concerned, as transpiring
from the supplementary complaint filed against the appellant, apart from the
statements of witnesses recorded under Section 50 of the said Act, there has
been sufficient material collected in the form of documents which prima facie
show as to how the appellant was knowingly a party and actually involved
in the process and in the activities connected with the proceeds of crime,
and how he was projecting/ claiming such proceeds of crime as untainted
and how he was the beneficiary of the proceeds of crime acquired through
the criminal activities relating to the scheduled offences .
17. As well settled by now, the conditions specified under Section 45
are mandatory. They need to be complied with. The Court is required to be
satisfied that there are reasonable grounds for believing that the accused is
not guilty of such offence and he is not likely to commit any offence while
on bail. It is needless to say that as per the statutory presumption permitted
under Section 24 of the Act, the Court or the Authority is entitled to presume
unless the contrary is proved, that in any proceedings relating to proceeds
of crime under the Act, in the case of a person charged with the offence of
money laundering under Section 3, such proceeds of crime are involved
in money laundering. Such conditions enumerated in Section 45 of PML
Act will have to be complied with even in respect of an application for bail
830 SUPREME COURT REPORTS [2023] 14 S.C.R.
made under Section 439 Cr.P.C. in view of the overriding effect given to
the PML Act over the other law for the time being in force, under Section
71 of the PML Act.
18. The submission of learned Counsel Mr. Luthra to grant bail to
the appellant on the ground that the other co-accused who were similarly
situated as the appellant, have been granted bail, also cannot be accepted.
It may be noted that parity is not the law. While applying the principle of
parity, the Court is required to focus upon the role attached to the accused
whose application is under consideration. It is not disputed in that the main
accused Sh. Kewal Krishan Kumar, Managing Director of SBFL, and KMP
of group companies and the other accused Devki Nandan Garg, owner/
operator/ controller of various shell companies were granted bail on the
ground of infirmity and medical grounds. The co-accused Raman Bhuraria,
who was the internal auditor of SBFL has been granted bail by the High
Court, however the said order of High Court has been challenged by the
respondent before this Court by filing being SLP (Crl.) No. 9047 of 2023
and the same is pending under consideration. In the instant case, the High
Court in the impugned order while repelling the said submission made on
behalf of the appellant, had distinguished the case of Raman Bhuraria and
had observed that unlike Raman Bhuraria who was an internal auditor of
SBFL (for a brief period statutory auditor of SBFL), the applicant was the
Vice President of Purchases and as a Vice President, he was responsible
for the day-to-day operations of the company. It was also observed that the
appellant’s role was made out from the financials, where direct loan funds
have been siphoned off to the sister concerns of SBFL, where the appellant
was either a shareholder or director. In any case, the order granting bail to
Raman Bhuraria being under consideration before the coordinate bench of
this Court, it would not be appropriate for us to make any observation with
regard to the said order passed by the High Court.
19. It is axiomatic that the principle of parity is based on the guarantee
of positive equality before law enshrined in Article 14 of the Constitution.
However, if any illegality or irregularity has been committed in favour of
any individual or a group of individuals, or a wrong order has been passed
by a judicial forum, others cannot invoke the jurisdiction of the higher or
superior court for repeating or multiplying the same irregularity or illegality
TARUN KUMAR v. ASSISTANT DIRECTOR DIRECTORATE 831
OF ENFORCEMENT [BELA M. TRIVEDI, J.]
or for passing similar wrong order. Article 14 is not meant to perpetuate the
illegality or irregularity. If there has been a benefit or advantage conferred
on one or a set of people by any authority or by the court, without legal
basis or justification, other persons could not claim as a matter of right the
benefit on the basis of such wrong decision.
20. It is also difficult to countenance the submission of learned Counsel
Mr. Luthra that the investigation qua the appellant is complete and the trial
of the cases likely to take long time. According to him the appellant ought
not to be incarcerated indefinitely merely because the investigation is kept
open with regard to the other accused. In this regard, it may be noted that
the appellant has not been able to overcome the threshold stipulations
contemplated in Section 45 namely he has failed to prima facie prove
that he is not guilty of the alleged offence and is not likely to commit any
offence while on bail. It cannot be gainsaid that the burden of proof lies on
the accused for the purpose of the condition set out in the Section 45 that
he is not guilty of such offence. Of course, such discharge of burden could
be on the probabilities, nonetheless in the instant case there being sufficient
material on record adduced by the respondent showing the thick involvement
of the appellant in the alleged offence of money laundering under Section
3 of the said Act, the Court is not inclined to grant bail to the appellant.
21. The apprehension of the learned counsel for the appellant that the
trial is likely to take long time and the appellant would be incarcerated for
indefinite period, is also not well founded in view of the observations made
by this Court in case of Vijay Madanlal (supra). On the application of Section
436A of the Code of Criminal Procedure, 1973, it has been categorically
held therein that: -
“419. Section 436A of the 1973 Code, is a wholesome beneficial
provision, which is for effectuating the right of speedy trial guaranteed
by Article 21 of the Constitution and which merely specifies the outer
limits within which the trial is expected to be concluded, failing which,
the accused ought not to be detained further. Indeed, Section 436A of
the 1973 Code also contemplates that the relief under this provision
cannot be granted mechanically. It is still within the discretion of the
Court, unlike the default bail under Section 167 of the 1973 Code.
Under Section 436A of the 1973 Code, however, the Court is required
832 SUPREME COURT REPORTS [2023] 14 S.C.R.
to consider the relief on case-to-case basis. As the proviso therein itself
recognises that, in a given case, the detention can be continued by the
Court even longer than one-half of the period, for which, reasons are
to be recorded by it in writing and also by imposing such terms and
conditions so as to ensure that after release, the accused makes himself/
herself available for expeditious completion of the trial.”
22. Lastly, it may be noted that as held in catena of decisions, the
economic offences constitute a class apart and need to be visited with a
different approach in the matter of bail. The economic offences having
deep-rooted conspiracies and involving huge loss of public funds need
to be viewed seriously and considered as grave offences affecting the
economy of the country as a whole and thereby posing serious threat to
the financial health of the country. Undoubtedly, economic offences have
serious repercussions on the development of the country as a whole. To cite
a few judgments in this regard are Y.S. Jagan Mohan Reddy vs. Central
Bureau of Investigation8, Nimmagadda Prasad vs. Central Bureau of
Investigation9, Gautam Kundu vs. Directorate of Enforcement (supra),
State of Bihar and Another vs. Amit Kumar alias Bachcha Rai10. This court
taking a serious note with regard to the economic offences had observed as
back as in 1987 in case of State of Gujarat vs. Mohanlal Jitamalji Porwal
and Another11 as under:-
“5… The entire community is aggrieved if the economic offenders who
ruin the economy of the State are not brought to books. A murder may
be committed in the heat of moment upon passions being aroused. An
economic offence is committed with cool calculation and deliberate
design with an eye on personal profit regardless of the consequence
to the community. A disregard for the interest of the community can
be manifested only at the cost of forfeiting the trust and faith of the
community in the system to administer justice in an even-handed
manner without fear of criticism from the quarters which view white
collar crimes with a permissive eye unmindful of the damage done to
the National Economy and National Interest…”
8 (2013) 7 SCC 439
9 (2013) 7 SCC 466
10 (2017) 13 SCC 751
11 (1987) 2 SCC 364
TARUN KUMAR v. ASSISTANT DIRECTOR DIRECTORATE 833
OF ENFORCEMENT [BELA M. TRIVEDI, J.]
23. With the advancement of technology and Artificial Intelligence,
the economic offences like money laundering have become a real threat
to the functioning of the financial system of the country and have become
a great challenge for the investigating agencies to detect and comprehend
the intricate nature of transactions, as also the role of the persons involved
therein. Lot of minute exercise is expected to be undertaken by the
Investigating Agency to see that no innocent person is wrongly booked and
that no culprit escapes from the clutches of the law. When the detention
of the accused is continued by the Court, the courts are also expected to
conclude the trials within a reasonable time, further ensuring the right of
speedy trial guaranteed by Article 21 of the Constitution.
24. With the afore-stated observations, the appeal is dismissed.
Headnotes prepared by: Appeal dismissed.
Divya Pandey
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