Twin Conditions For Bail U/S. 45 PMLA Mandatory: SC Sets Aside Patna HC Order In Money Laundering Case

The appellant-Union of India through the Enforcement Directorate challenged the legality of the impugned judgment passed by the Patna High Court whereby the respondent Kanhaiya Prasad was released on bail.

The Division Bench comprising Justice Bela M. Trivedi and Justice Prasanna B. Varale asserted, “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.”

Advocate Zoheb Hussain represented the Appellant while Senior Advocate Ranjit Kumar represented the Respondent.

Factual Background

As per the case of the appellant-ED, around 20 FIRs were registered at various Police Stations in 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 was alleged 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 and thus had caused a revenue loss of Rs 161,15,61,164 to the Government Exchequer. The said FIRs also contained Scheduled offences as defined under Section 2(1)(y) of the Prevention of Money Laundering Act, 2002 (PMLA) and the investigation for the offences of Money Laundering was initiated.

It was found that the respondent-accused was 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. The respondent thus 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 PMLA Court took cognizance of the alleged offences. The respondent filed an application seeking regular bail in connection with the Prosecution Complaint and the same was allowed by the High Court vide the impugned order.

Reasoning

Outlining the objective of PMLA, the Bench said, “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 stringent provisions have been made in the Act to combat the menace of money laundering.” Referring to section 45, the Bench observed, “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 that the prosecutor must be given an opportunity to oppose the application for bail, and 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. It was also explained by the Bench that the conditions enumerated in Section 45 will have to be complied with even with respect to bail application made under Section 439 of Cr.P.C.The burden to prove that proceeds of crime are not involved in money laundering would lie on the person charged with the offence.

“In view of the above, there remains no shadow of doubt that the consideration of the two conditions mentioned in Section 45 is mandatory, and that while considering the bail application, the said rigours of Section 45 have to be reckoned by the court to uphold the objectives of the PMLA”, it stated. The Bench was of the view that the High Court 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 was 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. “Noncompliance of the mandatory requirement of Section 45 has, on the face of it, made the impugned order unsustainable and untenable in the eye of law”, it further said.

The Bench also found no substance in the submission made by the Senior Advocate representing the respondent that the respondent has not been shown as an accused in the predicate offence. “It is no more res integra 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 schedule offence. Hence, involvement in any one of such process or activity connected with the Proceeds of Crime would constitute offence of money laundering”, the Bench explained.

As per the Apex Court, 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. “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”, it added.

Thus, setting aside the impugned order, the Bench allowed the Appeal and asked the respondent to surrender. The Apex Court remanded the matter to the High Court for consideration afresh with the request to the Chief Justice to place the matter before the Bench other than the Bench which had passed the impugned order.

Cause Title: The Union of India Through the Assistant Director v. Kanhaiya Prasad (Neutral Citation:2025 INSC 210)

Appearance:

Appellant: ASG Suryaprakash V. Raju, Advocates Zoheb Hussain, Annam Venkatesh, AOR Arvind Kumar Sharma

Respondent: Senior Advocate Ranjit Kumar, Advocates Mohit Agrawal, AOR M/S. SAA Chambers

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