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REPORTABLE  

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1706  OF  2015 (Arising out of  SLP(Crl.) No.6701 of  2015)

GAUTAM KUNDU …   APPELLANT(S)

:VERSUS:

MANOJ KUMAR, ASSISTANT DIRECTOR,  EASTERN REGION, DIRECTORATE OF  ENFORCEMENT (PREVENTION OF MONEY  LAUNDERING ACT) GOVT. OF INDIA  …  RESPONDENT(S)

J U D G M E N T

Pinaki Chandra Ghose, J.   

1. Leave granted.  

2. This  appeal,  by  special  leave,  is  directed  against  the

judgment and order dated 21st July, 2015 passed by the High

Court of Calcutta in CRM No.6285 of 2015, whereby the High

Court  has  rejected  appellant's  application  for  bail  under

Section  439  of  the  Code  of  Criminal  Procedure,  1973.  The

appellant was arrested on 25.03.2015 in relation to an offence

alleged  to  have  been  committed  under  Section  3  of  the

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Prevention  of  Money  Laundering  Act,  2002,  (hereinafter

referred to as "PMLA").  

3. The appellant is the Chairman of Rose Valley Real Estate

Construction Ltd. (hereinafter referred to as the "Rose Valley"),

a  public  company  incorporated  in  the  year  1999  and

registered  under  the  Companies  Act,  1956.  Certain

non-convertible debentures were issued by the Rose Valley by

'private  placement  method.'  No  advertisements  etc.  were

issued to the public. The said debentures were issued to the

employees of the Company and to their friends and associates

after  fulfilling  the  formalities  for  private  placement  of

debentures.  Thus,  the  appellant  collected money by  issuing

secured debentures by way of private placement in compliance

with  the  guidelines  issued  by  the  Securities  and  Exchange

Board of India from time to time.  

4. On 26.03.2013,  the  Adjudicating  Officer,  SEBI,  passed

an order imposing a penalty of Rs.1 crore upon the Rose Valley

for  violation  of  the  provisions  of  Sections  11(C)  of  the

Securities and Exchange Board of India Act, 1992 (hereafter

referred to as the SEBI Act) which was reduced to Rs.10 lakhs

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by  the  Securities  Appellate  Tribunal,  Mumbai.  A  letter  was

issued on 26.06.2013 by the Securities and Exchange Board

of  India ("SEBI")  to  the appellant  Rose Valley  informing the

appellant about the offences alleged to have been committed

by it under the Companies Act, SEBI Act & Regulations, and

Section 405 of the Indian Penal Code. The appeal filed by the

appellant before the Securities Appellate Tribunal was allowed

on  12.12.2013,  holding  that  the  appellant  Company  has

repaid  all  the  money  collected  from  the  investors.  It  was

further held by the Securities Appellate Tribunal that there are

no grounds for violation of Section 11(C)(3) of the SEBI Act.  

5. On  the  basis  of  the  aforementioned  letter  dated

26.06.2013  issued  by  SEBI,  the  respondent  filed  a  report

being  ECIR  No.KIZO/02/2014  dated  27.02.2014,  alleging

commission  of  offence  by  the  Rose  Valley  and  its  officers,

punishable  under  Section  24  of  the  SEBI  Act.  Thereafter,

search and seizure was conducted at the offices of the Rose

Valley.

6. A  complaint  was  filed  by  the  respondent  authorities,

being  C/14214  of  2013,  alleging  that  the  Rose  Valley

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transferred the money raised by issue of debentures from the

account of one company to that of another company. It is also

alleged that the money collected by issuing the debentures for

the purpose of one business has been invested in some other

business. The proceedings under Section 24 of the SEBI Act

has been challenged in the High Court by way of revision and

the said revision is pending for hearing and further proceeding

of  the  complaint  case,  being  C/14214  of  2013,  has  been

stayed by the High Court. The High Court also directed the

respondent  not  to  take  any  coercive  measure  against  the

appellant.  

7. Vide  its  order  dated  18.06.2014,  SEBI  directed  the

appellant Rose Valley to refund the money to the customers of

the Ashirbad Scheme. This order was challenged before the

Securities  Appellate  Tribunal  by  way  of  Appeal  No.233  of

2014. On 19.06.2014, a Show Cause Notice under Section 8(1)

of  the  PMLA was served upon Rose  Valley  and its  officials.

Rose  Valley  filed  a  writ  petition  before  the  High  Court  of

Calcutta  challenging  the  said  Show Cause  Notice.  The  said

writ petition was dismissed by the learned Single Judge of the

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High Court. Thereafter, the matter was taken in appeal before

the  Division  Bench  of  the  Calcutta  High  Court,  being  AST

No.345  of  2014.  The  Division  Bench  of  the  High  Court

dismissed  the  said  appeal  and  directed  the  appellant  Rose

Valley  to  appear  before  the  Adjudicating  Authority  under

Section 8 of the PMLA and directed the Adjudicating Authority

to decide the preliminary objections as may be raised by the

Rose Valley, including the applicability of the PMLA as also the

validity of the search and seizure against Rose Valley. It was

further directed that the Adjudicating Authority should pass a

reasoned order in the matter and communicate the same to

the appellant  Rose Valley within two days from the date  of

passing such order.  

8. A complaint was filed by the respondent on April 2, 2015,

in the Court of  learned Chief Judge, City Sessions Court at

Kolkata,  against  the  appellant  under  Section  4  of  PMLA,

though no offence is  made out against  the appellant  under

Section 3 of the PMLA. The said complaint has been registered

as ML Case No.3 of 2015. Despite having fully cooperated with

the investigation, the appellant was arrested on 25.03.2015 on

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suspicion of  having committed an offence punishable under

the provisions of the PMLA and is detained in custody since

then.  

9. While the appellant was in custody, his father expired on

06.04.2015 upon which he moved an application before the

High Court of Calcutta for interim bail to perform the rituals

for  his  deceased  father.  The  High  Court  vide  its  order

08.04.2015,  directed release of  the appellant  on provisional

bail  for  two weeks on the conditions mentioned in the said

order.  On  completion  of  the  period  of  provisional  bail,  the

appellant duly surrendered before the Court of learned Chief

Judge, City Sessions Court at Kolkata.  

10. On  06.07.2015,  the  appellant  filed  a  fresh  bail

application  under  Section  439  of  the  Code  of  Criminal

Procedure  before  the  High  Court  of  Calcutta,  being  CRM

No.6285 of 2015. Vide impugned judgment and order the High

Court  has  rejected  the  said  application  of  the  appellant

holding that no order has yet been passed by any competent

Court of law that no offence is made out against the appellant

under Section 24 of the SEBI Act. It is pertinent to mention

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here  that  a  criminal  revision  praying  for  quashing  of  the

proceedings initiated against the appellant under Section 24 of

the  SEBI  Act  is  still  pending  for  decision  before  the  High

Court.  

11. Aggrieved  by  the  rejection  of  the  bail  application  filed

under  Section  439  of  the  Code  of  Criminal  Procedure,  the

appellant has approached this Court through this appeal by

special leave.  

12. We have heard Mr. Gopal Subramanium, learned senior

counsel  appearing  for  the  appellant  and  also  Mr.  Ranjit

Kumar,  learned  Solicitor  General  for  India.  For  proper

appreciation  of  submission  made  by  learned  counsel

appearing for the parties, it would be necessary to consider the

authorities cited on behalf of the both parties.  

13. Mr.  Gopal  Subramanium,  learned  senior  counsel

appearing for the appellant submitted that there is no offence

made out under PMLA against the appellant as Section 24 of

the SEBI Act is not a separate scheduled offence under the

PMLA. Section 12A read with Section 24 of SEBI Act is the

scheduled  offence  under  the  PMLA since  2009.  Neither  the

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complaint  filed  by  SEBI  nor  the  complaint  filed  by  the

respondent  (which  is  based  entirely  on  SEBI  complaint)

prosecutes the appellant for violation of Section 12A read with

Section 24 of the SEBI Act.  

14. According  to  learned  senior  counsel  for  the  appellant,

Section  24  of  the  SEBI  Act  was  printed  separately  in  the

Schedule of PMLA for the first time vide PMLA (Amendment)

Act,  2012 w.e.f.  15.02.2013, which is clearly an inadvertent

typographical  error.  The  description  of  offence  given  under

paragraph 11 of the Schedule to PMLA for Section 24 of the

SEBI Act reads as "acquisition of securities or control", which

is different from the description given to the Section under the

SEBI Act, which describes the Section as "Offences". Rather

the heading "acquisition of securities or control" is part of the

heading  of  Section  12A  read  with  Section  24  which  is  the

scheduled offence. The relevant extract of the Schedule to the

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PMLA, as it stood after the 2009 Amendment, is as follows:  

Paragraph 8 - The Securities and Exchange Board of India Act, 1992 (15 of 1992)  

12A read with  Section 24  

Prohibition  of  manipulative  and deceptive  devices,  insider  trading and  substantial  acquisition  of securities or control  

The relevant extract of the Schedule to the PMLA as it stands  

today after the Amendment Act of 2012 w.e.f. 15.02.2013 is as

follows:  

Paragraph 11 - The Securities and Exchange Board of India Act, 1992 (15 of 1992)  

12A read with Section 24

Prohibition  of  manipulative  and deceptive  devices,  insider  trading and substantial.

Section 24 Acquisition of securities or control

15. The learned senior counsel for the appellant submitted

that  if  the  offences  prescribed  against  the  sections  in

paragraph 11 in both the rows are read together, the same will

appear  as  the  heading  of  Section  12A  of  the  SEBI  Act.  A

conjoint reading of two rows under paragraph 11 of Part A of

the  Schedule  would  show that  the  same is  in  substance  a

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reproduction of paragraph 8 of Part B of the Schedule of PMLA

as  was  prevailing  prior  to  the  amendment  effected  on

15.02.2013 and therefore,  the  position  remains  unchanged.

Section 12A of the SEBI Act is as follows:  

"Prohibition  of  manipulative  and  deceptive  devices, insider trading and substantial acquisition of securities or control.   

12A. No person shall directly or indirectly -  

(a) use or employ, in connection with the issue, purchase or sale  of  any  securities  listed  or  proposed  to  be  listed  on  a recognized  stock  exchange,  any  manipulative  or  deceptive device or contrivance in contravention of the provisions of this Act or the rules or the regulations made thereunder;  

(b) employ  any  device,  scheme  or  artifice  to  defraud  in connection with issue or dealing in securities which are listed or proposed to be listed on a recognized stock exchange;  

(c) engage  in  any  act,  practice,  course  of  business  which operates or would operate as fraud or deceit upon any person, in connection with the issue, dealing in securities which are listed or proposed to be listed on a recognized stock exchange, in contravention of the provisions of this Act or the rules or the regulations made thereunder;  

(d) engage in insider trading;  

(e) deal  in  securities  while  in  possession  of  material  or non-public  information  or  communicate  such  material  or non-public  information  to  any  other  person,  in  a  manner which is in contravention of the provisions of this Act or the rules or the regulations made thereunder;  

(f) acquire control of any company or securities more than the  percentage  of  equity  share  capital  of  a  company whose

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securities are listed or proposed to be listed on a recognized stock  exchange  in  contravention  of  the  regulations  made under this Act."  

Section 24 of the SEBI Act reads as follows:  

"24. Offences. - (1) Without prejudice to any award of penalty by  the  Adjudicating  Officer  under  this  Act,  if  any  person contravenes  or  attempts  to  contravene  or  abets  the contravention of the provisions of this Act or of any rules or regulations  made  thereunder,  he  shall  be  punishable  with imprisonment for a term which may extend to ten years, or with fine, which may extend to twenty-five crore rupees or with both.  

(2)  If  any  person  fails  to  pay  the  penalty  imposed  by  the Adjudicating  Officer  or  fails  to  comply  with  any  of  his directions  or  orders,  he  shall  be  punishable  with imprisonment  for  a  term which  shall  not  be  less  than  one month, but which may extend to ten years or with fine, which may extend to twenty-five crore rupees or with both."  

16. According to the learned senior counsel for the appellant,

the fact that no new offence was meant to be added by way of

the  2012  amendment,  is  clear  from a  plain  reading  of  the

"Statement  of  Objects  and  Reasons"  to  the  Amendment  of

2012, as well as the "Notes on Clauses" on the Amendment

Act, 2012 and from a comparison of the Schedules of PMLA of

2009  and  amended  PMLA  of  2012.  It  is  submitted  by  the

learned senior counsel for the appellant that the respondent is

wrongly  reading  Section  24  of  SEBI  Act  simplicitor  as  a

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separate scheduled offence, whereas Section 24 is a general

penal provision for violation of any and every provisions of the

SEBI Act or any rules or regulations made thereunder.  

17. It was further submitted by the learned senior counsel

appearing for the appellant that if the intent of the legislature

was to incorporate Section 24 of SEBI Act alone as an offence,

in  that  event,  there  would  have  been  no  necessity  to

incorporate "12A read with Section 24" inasmuch as Section

24 of the SEBI Act prescribes that all violations of provisions

of SEBI Act would be punishable in terms of Section 24 of the

SEBI Act, 1992. Had that been the intention of the legislature,

the  legislature  would  have  mentioned  either  "offences  and

penalties under SEBI Act, 1992" or only Section 24 and the

heading thereof, as scheduled offence. There was or could be

no necessity to specify section 12A separately if the legislature

intended to incorporate Section 24 as a separate scheduled

offence.  

18. Further,  the  Enforcement  Directorate's  own  document

titled "FAQs" on their website mentions the Schedule to PMLA

which treats Section 12A r/w Section 24 of the SEBI Act as a

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scheduled  offence  and  not  Section  24  alone.  Similarly,  the

Schedule  to  PMLA  on  the  website  of  the  Ministry  of

Finance-Financial Intelligence Unit also mentions S.12A r/w

24 of the SEBI Act as the scheduled offence and not Section

24  alone.  This  reflects  the  authority/government's  own

understanding of the Schedule. Thus, it can be safely said that

the printing of  Section 24 of SEBI Act separately under the

Schedule  to  the  PMLA is  vide  an  inadvertent  typographical

error that has crept into the legislation as is apparent from the

marginal  note  therein.  It  is  an  accepted  principle  of

interpretation  of  statutes  that  where  an  inadvertent

grammatical  or  other  error  has  palpably  crept  into  the

legislation,  the  Court  is  at  liberty  to  disregard the  error  in

applying the statute. (Afcons Infrastructure Ltd. v. Cherian

Verkey Construction Co. (P) Ltd., (2010) 8 SCC 24).  

19. Learned  senior  counsel  for  the  appellant  further

submitted  that  the  description  given  to  the  offence  under

Section  24  of  SEBI  Act,  in  the  Schedule  to  PMLA  is

"acquisition of securities or control", and even if Section 24 is

treated as a separate scheduled offence, the words used in the

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description have to be given meaning to and its application

has to be restricted to the offence described under it in the

Schedule. The learned senior counsel for the appellant further

submitted that this Court has held in numerous judgments

that the Court should give meaning to each and every word

used  by  the  legislature  and  it  is  not  a  sound  principle  of

construction  to  brush  aside  words  in  a  statute  as  being

inapposite surplus, if  they can have a proper application in

circumstances  conceivable  within  the  contemplation  of  the

statute.  [See:  Gurudevatta  VKSSS  Maryadit  v.  State  of

Maharashtra, (2001) 4 SCC 534 at para 26]. It has also been

held by this Court that "the courts always presume that the

legislature inserted every part thereof for a purpose and the

legislative intent is that every part of the statute should have

effect. The legislature is deemed not to waste its words or to

say  anything  in  vain  and  a  construction  which  attributes

redundancy to the legislature will not be accepted except for

compelling  reasons."  [Visitor,  AMU  v.  K.S.  Misra,

(2007) 8 SCC 593, at para 13)].

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20.  Therefore ,  learned  senior  counsel  for  the

appellant submitted,  the  words  "acquisition  of

securities or control", appearing next to Section 24 of

the  SEBI  Act  in  the  Schedule  to  the  PMLA  must  be

given  due  meaning  and  construed  to  mean  that

only  that  extent  o f  the  offence  which  pertains  to

""acquisition  of  securities  or  control"  is  a  punishable

offence under PMLA and not any other violation under

the SEBI Act.

21.  It  was  further  submitted  by  the  learned  senior

counsel  for the appellant that  Section  24  alone  cannot

by itself  be a scheduled offence under the  PMLA since

it does not enumerate a specific offence rather it is the

nature of a "catch-all" penal provision, which imposes

punishment  for  any  contravention  of  the  SEBI  Act,

Rules  or  Regulations  and  does  not  precisely  def ine

or  specify  any  offence  in  particular.  Inclusion  of

Section 24 as a separate offence would be a violation

of  the  basic  principle  of  criminal  jurisprudence  that

'criminal  law  has  to  be  clear  and  unambiguous.'  It

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has been held by this  Court  in numerous judgments

that  criminal  law  ought  to  be  absolutely  clear,

specific  and not  vague,  failing  which it  would  suffer

from  arb i t rar iness .  [Re f :  ( i )  State  of  Madhya

Pradesh  v .  Baldeo  P rasad ,  ( 1961 )  1  SC R  970 ;

( i i )  Harakchand  Ratanchand  Banthia & Ors. v.

Union  of  India  & Ors.,  (1969)  2  SCC  166;  and  (iii)

A.K.  Roy  &  Ors.  v.  Union  of  India  &  Ors.,  (1982)

SCR 272].

22.  It  was  alternatively  submitted  by  the  learned

senior  counsel  appearing  for  the  appellant  that

assuming  if  Section  24  simplicitor  is  treated  as  a

scheduled  offence,  it  was  introduced  vide  PMLA

(Amendment)  Act ,  2012,  w.e . f .  15.02.2013  i .e .

much  af ter  the  offences  were  alleged  to  have  been

committed  and  bar  against  ex-post  facto  laws  under

Article 20(1) would be attracted. Section 2(u) of PMLA

defines "proceeds of  crime" and states that it  must be

as  a  result  of  criminal  activity  relating  to  a

scheduled  offence.  Under  Section  3  of  the  PMLA,  in

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order  for  the  offence  of  money  laundering  to  be

tr iggered,  i t  must  be  establ ished  at  the  threshold

that  the  "proceeds  of  crime"  was  as  a  result  of

criminal  activity  relating  to  a  scheduled  o f fence  on

the  date  such  cr ime was  commit ted.  He  submitted

that  the  of fences  are  al leged  to  have  been

committed  between  the  years  2001  and  2007.  The

offence  under  Section  12A  r/w  Section  24  of  SEBI

Act  became  scheduled  offence  only  by  way  of  the

Prevention  of  Money  Laundering  (Amendment)  Act,

2009  w.e.f.  01.06.2009,  much  after  the  alleged

commission  of  crime  and  the  appellant  is  admittedly

not accused of violation of Section 12A r/w Section 24

of the SEBI Act.

23.  Mr.  Ranji t  Kumar,  learned  Solicitor  General

appearing  on  behalf  of  the  respondent,  on  the  other

hand,  submitted  that  Rose  Val ley  Group  of

Companies  f loated  as  many  as  27  companies

although two out  of  them,  i.e.  Rose  Valley  Real  Estate

Construction Ltd. ("Rose Valley") and Rose Valley Hotels

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Entertainment  Ltd.  were  the  front  runners  to  allure

the  investors  to  invest  in  (i)  Ashirbad  Scheme,

( i i )T ime Share Scheme, and ( i i i )  Debenture Scheme,

promising high returns to the investors and the funds

so  collected  from  the  public  at  large  were

subsequently laundered in associated companies. Rose

Valley  made  a  public  issue  of  debentures  without

f i l ing  any  o f f er  document  in  v io la t i on  o f  Sec t ion

56  o f  the  Companies  Act,  1956,  nor  did  it  file

statement in lieu of prospectus  as  c la imed  by  i t .  On

the  basis  of  the  in formation/documents  received

from  SEBI,  the  respondent  filed  a  complaint  in  the

Court  of  Chief  Metropolitan  Magistrate  at  Calcutta  for

Scheduled Offence under Sect ion 24 of  the SEBI Act.

The  respondent  conducted  searches  of  the  premises

of  the  Rose  Valley  Group  on  22.05.2014  and

23.05.2014,  resulting  into  seizure  of  incriminating

documents and Indian currency of Rs.37.07 lacs. The

respondent's  action  of  search  and  seizure  was

challenged  by  the  appellant  by  filing  a  writ  petition

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before the High Court of Calcutta which was dismissed

on 7.7.2014.

24.  He  further  submitted  that  the  investigation

conducted  by  the  respondent  revealed  that  Rose

Valley  illegally  and  fraudulently  collected  public

money  from  the  general  public  in  the  State  of  West

Bengal,  Assam,  Tripura  and  Odisha,  amounting  to

Rs.12363.63  crores  (approx).  In  addition  to  this,

Rose  Valley  i l legal ly  and  fraudulently  collected

public  funds  from  the  States  of  Karnataka,  Bihar,

Maharashtra,  Jharkhand,  Uttar  Pradesh,  Delhi,

Madhya  Pradesh,  amounting  to  more  than

Rs.3120.97  crores  (approx) .  Therefore,  the  funds  of

Rs.12.82  crores  collected  from  the  general  public

under  the  garb  of  Debenture  Schemes  is  a  tip  of  the

iceberg.

25.  Mr.  Ranjit  Kumar,  learned  Solicitor  General

further  submitted  that  the  "scheduled  offences"  and

"offence  of  money  laundering"  are  mutually  exclusive

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and independent of each other. Section 3 of  the PMLA

deals  with  the  offence  of  money  laundering

punishable  under  Section 4  of  the  said  Act,  whereas

the  'Schedule'  to  PMLA  involving  offences  under  28

paragraphs  enable  the  respondent  to  conduct  the

investigation  for  the  collection  of  evidence  relating  to

offence of money laundering. In the present case, the

respondent  filed  the  complaint  under  Section  45  of

PMLA  and  cognizance  of  the  same  has  been  taken

by  the  Special  Court  on  02.04.2015  under  Section

44(1)(b)  of  PMLA.  He  further  submitted  that  the

complaint  filed  by  SEBI  has  nothing  to  do  with  the

merits  of  the  present  case  and  the  High  Court

stayed the proceedings of  the SEBI complaint on the

ground  that  the  CMM  had  no  authority  to  take

cognizance of  the offence as the latest  amendment in

Section  26  of  SEBI  Act  makes  the  offence  triable  by

the Court of Sessions.

26.  The  learned  Solicitor  General  submitted  that

Section  45  of  PMLA  refers  only  to  the  term  'Special

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Court'  and  therefore  has  to  be  given  restricted

meaning.  According  to  him,  PMLA  is  a  'Special  Law'

applicable  to  the  subject  of  money  laundering,  and

deals  with  economic  offenders  and  white  collar

criminals.  The  object  of  PMLA  is  to  prevent

money-laundering  and  to  provide  for  confiscation  of

property  derived  from,  or  involved  in,

money-laundering.  To  enable  the  scheme  of  the  Act,

reliance was placed on various provisions of the PMLA.

He further submitted that Section 44 of the PMLA only

confers  jurisdiction  on  the  Special  Court  to  deal

with  offences  under  the  PMLA.  Section  45  of  PMLA

makes  the  offence  of  money  laundering  cognizable

and  non-bailable  and  also  provides  that

notwithstanding the provisions of  Criminal  Procedure

Code,  1973,  no  p e r son  accused  o f  an  o f f ence

pun i shab l e  f o r  a  t e rm  o f  impr isonment  o f  more

than  three  years  under  Par t  A  o f  the  Schedule

shall  be  released  on  bail  or  on  his  own bond,  unless

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the Public Prosecutor has been given an opportunity

to oppose the application for such release.

27.  The  learned  Solicitor  General  lastly  submitted

that  'money  laundering'  being  an  economic  offence

poses  a  serious  threat  to  the  National  Economy  and

National  Interest and committed with cool  calculation

and deliberate design with the motive of personal gain

regardless of the consequences to the society. Hence,

for  Money  Launderers  'jail  is  the  rule  and  bail  is  an

exception,  which  finds  support  from many  landmark

judgments of this Court.

28.  Before  dealing  with  the  application  for  bail  on

merit, it  is to be  considered whether  the  provisions  of

Section  45  of  the  PMLA  are  binding  on  the  High

Court  while  considering  the  application  for  bail

under  Section 439 of  the Code of  Criminal  Procedure.

There  is  no  doubt  that  PMLA  deals  with  the  offence

of  money  laundering  and the  Parliament  has enacted

this  law  as  per  commitment  of  the  country  to  the

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United  Nations  General  Assembly.  PMLA  is  a  special

s ta tu t e  enac t ed  by  the  Par l i ament  f o r  dea l ing

w i th  money  laundering.  Section  5  of  the  Code  of

Criminal  Procedure,  1973  clear ly  lays  down  that

the  provis ions  of  the  Code  of  Criminal  Procedure

will not affect any special statute or any local law. In

other words, the provisions of  any special statute will

prevail  over  the  general  provisions  of  the  Code  of

Criminal Procedure in case of any conflict.

29.   Sect ion  45  of  the  PMLA  starts  with  a  non

obstante  c lause  which  indicates  that  the  provisions

laid  down  in  Section  45  of  the  PMLA  will  have

overriding effect on the general provisions of  the  Code

of  Criminal  Procedure  in  case  of  confl ict  between

them.  Section  45  of  the  PMLA  imposes  following  two

conditions for grant of bail to any person accused of an

offence  punishable  for  a  term  of  impr isonment  o f

more  than  three  years  under  Par t -A  o f  the

Schedule  of  the  PMLA:  (i)  That  the  prosecutor  must

be  given  an  opportunity  to  oppose  the  application

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for  bail;  and  (ii )  That  the  Court  must  be  sat isf ied

that  there  are  reasonable  grounds  for  believing

that  the  accused  person is  not  guilty  of  such offence

and  that  he  is  not  likely  to  commit  any  offence  while

on bail.

30.   The  conditions specified under Section 45 of the

PMLA  are  mandatory  and  needs  to  be  compl i ed

wi th  which  i s  fur ther  strengthened  by  the

provisions  of  Section  65  and  also  Section  71  of  the

PMLA.  Section  65  requires  that  the  provisions  of

Cr.P.C.  shall  apply  in  so  far  as  they  are  not

inconsistent  with  the  provisions  of  this  Act  and

Section  71  provides  that  the  provisions  of  the  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  Cr.P.C.  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

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an  application  for  bail  made  under  Section  439  of

Cr.P.C.  That coupled with the provis ions of  Sect ion

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.

1 31.   I t  was  submitted  on  behalf  of  the  appellant

that  Section  12A  read  with  Section  24  of  the  SEBI

Act does not include Section 24 of the  said  Act  as  a

scheduled  offence  but  it  is  only  Section  12A

which is  to be construed as a scheduled offence as

the  description  of  offence  against  Section  24  of

the  SEBI Act  mentioned under  paragraph 11 of the

Schedule  to PMLA is part of  Section 12A of  the  said

Act. In this context it was submitted by the learned

Solicitor  Genera l  that  PMLA  be ing  a  Spec ia l

Statute  cannot  be  g iven  restricted meaning while

interpreting  its  provisions  including  the  Schedule

which  is  an  integral  part  of  this  Act.  PMLA  has

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been  enacted by  the  Parliament  as per  commitment

of  the  country  to  the  Uni ted  Nat ions  and  hav ing

global  d imensions  and  cannot  be  confined  to

national  boundaries  of  our  country.  Moreover,

i ts  legislative  intent  has  to  be  gathered  from  the

plain  reading  of  the  language  used  in  the

provis ions  of  the  Act  and  the  Schedule  appended

thereunder.  Hence,  there  is  no  ambiguity  that

Section  24  of  the  SEBI  Act  is  a  scheduled  offence

under  Paragraph  11  of  the  Schedule.  The  fact

remains  that  Section  24  of  the  SEBI  Act  is

inclusive  in  nature  and  also  includes  Section  12A

within its ambit  and scope.  Further,  on perusal  of

various  offences  l isted  in  the  Schedule  in  28

Paragraphs ,  i t  cou ld  be  seen  that  on ly  pena l

provisions  of  the  Statutes  have  been  incorporated

in  the  Schedule.  There  is  no  denying  the  fact  that

Section  24  of  the  SEBI  Act  is  a  penal  provision  of

inclusive  nature  and  thus  it  clearly  reflects  the

legislative intent of a scheduled offence under PMLA.

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Admitted ly ,  the  compla int  was  f i l ed  by  SEBI

against  the  appellant  on  the  allegation  of

committing  offence  punishable  under  Section  4  of

PMLA.  The complaint  reveals  that  SEBI  received a

letter  from  the  Ministry  of  Corporate  Affairs,  Office

of the Registrar  of Companies ("ROC"), West Bengal,

with  reference  to  Rose  Valley  in  which  the  ROC

had  stated  that  Rose  Val ley  has  repeatedly

issued  debentures  in  the  years  2001-2002,

2004-2005,  2005-2006  and  2007-2008  to  more

than  49  persons  in  each  f inancial  year  without

filing  offer  documents  with  either  the  ROC  or  the

SEBI  and  r e q u e s t e d  S E B I  t o  i n v e s t i g a t e  i n t o

t h e  m a t t e r .  F r o m  t h e  information  provided  by

ROC, it  was observed that  Rose Valley had  raised  a

total  sum  of  Rs.1282.225  lakhs  from  2585

persons  by  i s s u i n g  s e c u r e d  d e b e n t u r e s  t o  t h e

g e n e r a l  p ub l i c  w i t h o u t  complying  with  the

norms  related  to  IPO  of  securities  as  per  first

provision  to  Section  67(3)  of  the  Companies  Act,

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1956.  Rose  Valley  by  making  public  issue  of

debentures  during  the  period  between  2001-2002

to  2007-2008,  without  complying  with  the  public

issue  norms,  violated  the  provisions  of  erstwhile

SEBI  (Disclosure  and  Investor  Protection)

Guidelines,  2000  and  the  provisions  of  Section

117(A)  of  the  Companies  Act,  1956  and  other

provisions of  SEBI Act  which is  a Scheduled Offence

under PMLA.

32.  We have heard the learned counsel for the parties.

At  this  stage  we refrained ourselves  from deciding  the

questions  tried  to  be  raised  at  this  stage  since  it  is

nothing  but  a  bail  application.  We  cannot  forget  that

this  case  is  relating  to  “Money  Laundering”  which  we

feel  is  a  serious  threat  to  the  national  economy  and

national  interest.  We cannot brush aside the fact  that

the  schemes  have  been  prepared  in  a  calculative

manner  with  a  deliberative  design  and  motive  of

personal  gain,  regardless  of  the  consequence  to  the

members of the society.  

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33.  With regard to the questions raised by Mr.  Gopal

Subramanium,  learned  senior  counsel  appearing  on

behalf  of  the  appellant,  at  this  stage,  we do not  think

that we should answer or deal with the same in view of

the  fact  that  the  matter  is  pending  before  a  Division

Bench  of  the  High  Court  in  writ  jurisdiction,  as  has

been pointed out before us.  Hence, any observation or

remarks  made  by  us  may  cause  prejudice  to  the  case

of  both  the  sides.  Therefore,  we  feel  that  it  would  be

proper  for  us  only  to  deal  with  the  matter  concerning

bail.  We  note  that  admittedly  the  complaint  is  filed

against  the appellant  on the allegations of  committing

the  offence  punishable  under  Section  4  of  the  PMLA.

The  contention  raised  on  behalf  of  the  appellant  that

no  offence  under  Section  24  of  the  SEBI  Act  is  made

out against the appellant, which is a scheduled offence

under  the  PMLA,  needs  to  be  considered  from  the

materials  collected  during  the  investigation  by  the

respondents.   There  is  no  order  as  yet  passed  by  a

competent  court  of  law,  holding  that  no  offence  is

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made out against the appellant under Section 24 of the

SEBI  Act  and  it  would  be  noteworthy  that  a  criminal

revision praying for quashing the proceedings initiated

against  the  appellant  under  Section 24 of  SEBI  Act  is

still  pending  for  hearing  before  the  High  Court.  We

have  noted  that  Section  45  of  the  PMLA  will  have

overriding effect  on the general  provisions of  the  Code

of  Criminal  Procedure  in  case  of  confl ict  between

them.  As  mentioned  earl ier,  Section  45  of  the  PMLA

imposes two conditions for grant of bail, specified under

the said Act. We have not missed the proviso to Section

45  of  the  said  Act  which  indicates  that  the  legislature

has  carved  out  an  exception  for  grant  of  bail  by  a

Special  Court  when any  person  is  under  the  age  of  16

years  or  is  a  woman  or  is  a  sick  or  infirm.  Therefore,

there  is  no  doubt  that  the  conditions  laid  down under

Section 45A of the PMLA, would bind the High Court as

the provisions of special law having overriding effect on

the  provisions  of  Section  439  of  the  Code  of  Criminal

Procedure  for  grant  of  bail  to  any  person  accused  of

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committing  offence  punishable  under  Section  4  of  the

PMLA,  even when the  application for  bail  is  considered

under Section 439 of the Code of Criminal Procedure.  

34.  We have further noted the directions given by this Court

in  Subrata Chattoraj v. Union of India and Ors., (2014) 8

SCC 768, in particular to paragraph 35.4.   

35.  We cannot brush aside the fact that the appellant floated

as many as 27 companies to allure the investors to invest in

their  different  companies on a promise of  high returns and

funds  were  collected  from  the  public  at  large  which  were

subsequently  laundered  in  associated  companies  of  Rose

Valley  Group  and  were  used  for  purchasing  moveable  and

immoveable properties.  

36.  We do not intend to further state the other facts excepting

the fact that admittedly the complaint was filed against the

appellant on the allegation of committing offence punishable

under Section 4 of the PMLA. The contention made on behalf

of the appellant that no offence under Section 24 of the SEBI

Act is made out against the appellant, which is a scheduled

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offence  under  the  PMLA,  needs  to  be  considered  from  the

material collected during the investigation and further to be

considered by the competent court of law. We do not intend to

express ourselves at this stage with regard to the same as it

may  cause  prejudice  the  case  of  the  parties  in  other

proceedings. We are sure that it is not expected at this stage

that  the  guilt  of  the  accused has to  be  established beyond

reasonable doubt through evidences.  We have noted that in

Y.S.  Jagan  Mohan  Reddy  v.  Central  Bureau  of

Investigation,  (2013)  7  SCC 439,  this  Court  has  observed

that  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 country. In Union of India v.

Hassan Ali  Khan, (2011)  10 SCC 235,  this  Court  has  laid

down that what will be the burden of proof when attempt is

made to project the proceeds of crime as untainted money. It

is  held  in  the  said  paragraph  that  allegations  may  not

ultimately be established, but having been made, the burden

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of proof that the monies were not the proceeds of crime and

were  not,  therefore,  tainted shifted  on the  accused persons

under Section 24 of the PML Act, 2002. The same proposition

of law is reiterated and followed by the Orissa High Court in

the  unreported  decision  of  Smt.  Janata  Jha  v.  Assistant

Director,  Directorate  of  Enforcement (CRLMC No.  114 of

2011 decided on December 16, 2013). Therefore, taking into

account  all  these  propositions  of  law,  we  feel  that  the

application for  bail  of  the  appellant  should  be  seen at  this

stage while the appellant is involved in the economic offence,

in general, and for the offence punishable under Section 4 of

the PMLA, in particular.   

37.   We have further noted that the High Court at the time of

refusing  the  bail  application,  duly  considered  this  fact  and

further  considered  the  statement  of  the  Assistant  General

Manager of RBI, Kolkata, seizure list, statements of directors

of  Rose Valley,  statements of  officer  bearers of  Rose Valley,

statements of debenture trustees of Rose Valley, statements of

debenture  holders  of  Rose  Valley,  statements  of  AGM  of

Accounts of  Rose Valley and statements of Regional Managers

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of Rose Valley for formation of opinion whether the appellant is

involved  in  the  offence  of  money  laundering  and  on

consideration  of  the  said  statements  and  other  materials

collected during the investigation, the High Court specifically

stated as follows:

“By making a pragmatic approach to the provision of  Section  45(1)  of  the  P.M.L.  Act  and  on consideration of the antecedents of the petitioner in collection of  money from open market  for  issuing secured debentures in violation of the guidelines of SEBI and on further consideration  of the manner of keeping  accounts  of  Rose  Valley,  I  am unable  to hold that the petitioner is not  likely to commit any offence while on bail. As a result, I cannot persuade myself to grant bail to the petitioner at this stage. So,  prayer  for  bail  is  rejected.  The  application  is dismissed.”

38.   In these circumstances, we do not find that the High

Court has exercised its discretion capriciously or arbitrarily in

the facts and circumstances of this case. We further note that

the High Court has called for all the relevant papers and duly

taken  note  of  that  and  thereafter  after  satisfying  its

conscience, refused the bail. Therefore, we do not find that the

High Court has committed any wrong in refusing bail in the

given circumstances. Accordingly, we do not find any reason to

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interfere with the impugned order so passed by the High Court

and the bail, as prayed before us, challenging the said order is

refused. Consequently the appeal is dismissed.  

………………………………J (Pinaki Chandra Ghose)   

………………………………J (R.K. Agrawal)  

New Delhi; December 16, 2015.