The Supreme Court reiterated that the twin conditions for bail under Section 45 of Prevention of Money Laundering Act 2002 are mandatory and are required to be complied with.

The court also said that the use of advanced technology and Artificial Intelligence (AI) in economic offences makes the scrutiny of accused individuals more complex and demanding for legal authorities.

The Appellant was arrested following an ongoing money laundering investigation against Shakti Bhog Foods Ltd. for financial irregularities. The Court noted that the Appellant failed to meet the threshold stipulations outlined in Section 45 of the Prevention of Money Laundering Act, 2002 (PML Act) for granting bail.

"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,”, the Bench comprising Justice Aniruddha Bose and Justice Bela M. Trivedi observed.

Senior Advocate Sidharth Luthra appeared for the Appellant and Additional Solicitor General S.V. Raju appeared for the Respondent (Enforcement Directorate).

Shakti Bhog Foods Ltd. (SBFL) was a food manufacturing company that was investigated by Forensic Auditor for financial irregularities and discrepancies. The Enforcement Directorate (ED) initiated a money laundering investigation based on the FIR registered for offences Sections 44 and 45 of the PML Act. The properties of the company's directors and guarantors were attached. The Appellant, the nephew of one of the directors, was arrested and named as an accused in the fourth supplementary complaint. The Appellant filed bail applications in the Special Judge's Court and the High Court, but both were dismissed. Aggrieved, the Appellant/Accused approached the Apex Court challenging the judgment and order of the High Court.

The Court discussed the legal framework for considering bail applications in money laundering cases. The Court noted that the nature of the accusation, the evidence against the accused, the severity of the punishment, and other relevant factors oughtt be considered. However, the Court emphasized that the burden of proof lies with the accused to show that they are not guilty and are not likely to commit any offense while on bail. The Court, in this case, observed that the appellant had not met this burden, and therefore denied his bail application.

Furthermore, The Bench noted that the appellant was alleged to have been involved in the process of siphoning off funds from SBFL to its sister concerns. The Court reiterated that the principle of parity does not apply in cases where an order has been passed illegally or irregularly. The Court, regarding the bail granted to Raman Bhuraria (SBFL Internal Auditor), noted “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”.

The Court rejected the Appellant's argument that the investigation is complete and the trial is likely to take a long time. The Court observed that the appellant has failed to meet the threshold stipulations outlined in Section 45 of the PML Act for granting bail, namely that he has not been able to prima facie prove that he is not guilty of the alleged offense and is not likely to commit any offense while on bail.

Additionally, the Court observed that economic offenses like money laundering have become increasingly complex due to technological advancements and artificial intelligence. This poses a significant challenge for investigating agencies who must carefully scrutinize intricate transactions to identify and apprehend perpetrators while ensuring that no innocent individuals are wrongly implicated. Additionally, Courts must strive to conclude trials within a reasonable timeframe to uphold the right to speedy trial guaranteed by Article 21 of the Constitution.

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”, the Bench noted.

Accordingly, the Court dismissed the Appeal.

Cause Title: Tarun Kumar v Assistant Director Directorate Of Enforcement (2023 INSC 1006)

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