Cryptic Bail Orders

 

 

IN THE judgement of the case – The Union of India through the Enforcement Directorate v. Kanhaiya Prasad, delivered on February 13, 2025, Justice Bela M Trivedi and Justice Prasanna B Varale, at the Supreme Court, have expressed grave concern about adoption of “any casual and cursory approach by the Courts, while considering the bail application of the offender involved in the offence of money laundering and by granting him bail by passing cryptic orders without considering the seriousness of crime and without considering the rigours of section 45, cannot be vindicated. 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 Proceeds of Crime are treated as a separate class from ordinary criminals. The appellant-Union of India through its Enforcement Directorate has challenged the legality of the impugned judgement and order of May 6, 2024 by the Patna High Court, whereby the HC had allowed the said petition and released the respondent –Kanhaiya Prasad on bail, in connection with the Special Trial (PMLA Case). As per the case of the appellant-ED, some 20 FIRs were registered at various Police Stations of Patna, Saran and Bhojpur Districts under various sections of the IPC and under section 39(3) of the Bihar Mineral (Concession, Prevention of Illegal Mining & Storage) Rules, 2019. It was alleged that Ms Broad Son Commodities Pvt. 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 caused revenue loss of Rs 161,15,61,164/- to the Government Exchequer.

 

Since those FIRs contained Scheduled offences as defined under section 2(1) (y) of the Prevention of Money Laundering Act, 2002 (PMLA), an ECIR came to be registered and investigation of the offences of money laundering was initiated. The respondent had allegedly layered and laundered the proceeds of crime generated by his father by, carrying out renovation work, by way of purchasing properties an constructions in the family-owned trust using the said proceeds of crime. Therefore, the 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 respondent-accused has been mentioned in para 11.6 of the said prosecution complaint. The concerned PMLA Court had taken cognisance of the alleged offences on November 10, 2023. The respondent filed the application for regular bail before the Patna High Court.

 

It is well settled position of law that section 45 of the PMLA starting with a non-obstante clause has an overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them. Section 45 imposes two conditions for the grant of bail to any person, accused of an offence punishable for a term of imprisonment of more than 3 years under Part A of the Schedule. The two conditions are: (I) the prosecutor must be given an opportunity to oppose the application for bail; and (ii) the Court must be satisfied that there are reasonable grounds for believing that the accused person is not guilty of such offence and that he is not liable to commit any offence while on bail.

 

As well settled, these two conditions are mandatory in nature and they need to be complied with before the accused person is released on bail. It is further required to be noted that section 65 of the PMLA requires that the provisions of CrPC shall apply insofar as those are not inconsistent with the provisions of the PMLA and section 71 provides that the provisions of PMLA shall have overriding effect. In this case, the Supreme Court has commented that, the High Court has in a very casual and cavalier manner, without considering the rigours of section 45 granted bail to the respondent on absolutely extraneous and irrelevant considerations. There is no finding whatsoever recorded in the impugned order that there were reasonable grounds for believing that the respondent was not guilty of the alleged offence under the Act and that he was not likely to commit any offence while on bail. Non-compliance of the mandatory requirement of section 45 has, on the face of it has made the impugned order unsustainable and untenable in the eye of law.

 

The HC 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 its cognisance was taken by the Court that itself would not be ground or consideration to release the respondent on bail, when mandatory requirement under section 45 has not been complied with. As it is well-established by now that the offence of money laundering is not an ordinary offence.

 

The impugned order passed by the HC, in teeth of section 45 of PMLA and also in the teeth of the well settled legal position, has become legally unsustainable and deserves to be set aside and requires to be remanded to the HC for fresh consideration. The Chief Justice of the HC has been requested to assign this case to some Bench other than the one which had passed the impugned order. The Supreme Court has stated that it has not expressed any opinion yet, on the merits of the case. The Supreme Court has directed the respondent to surrender before the Special Court for PMLA cases within one week from February 13, 2025.