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REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS.1878­1879   OF  2017 (Arising out of SLP (Crl.) No. 6896–6897 of 2017)

Rohit Tandon       …Appellant

                         :Versus:

The Enforcement Directorate        …Respondent

J U D G M E N T

A.M. Khanwilkar, J.

1. By these appeals the order of the High Court of Delhi at

New Delhi dated 5th May, 2017, rejecting the Bail Application

No.119 of 2017 and Criminal M.B. No.121 of 2017 has been

assailed. The appellant was arrested on 28th December, 2016 in

connection with ECIR/18/DZ­II/2016/AD(RV) registered under

Sections  3  & 4  of the  Prevention  of  Money­Laundering  Act,

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2002 (hereinafter referred to as “the Act of 2002”).   The said   

ECIR was registered on 26th  December, 2016 as a sequel to

FIR No.205/2016 dated 25th December, 2016 in relation to the

offences punishable under Sections 420, 406, 409, 468, 471,

188 and 120B of the Indian Penal Code, 1860 (“IPC” for short).

The said  FIR  was registered  by the  Crime  Branch  of  Delhi

Police, New Delhi.   The ECIR, however, has been registered at

the instance of Assistant Director (PMLA), Directorate of

Enforcement, empowered to investigate the offences punishable

under the Act of 2002.  

2. The appellant first  approached the Additional  Sessions

Judge­02, South East Saket Court, New Delhi for releasing him

on bail by way of an application under Section 439 of the Code

of Criminal Procedure, 1973 read with Section 45 of the Act of

2002.   The said bail application came to be rejected vide

judgment dated 7th  January, 2017 by the said  Court. The

appellant thereafter approached the High Court of Delhi at New

Delhi by way of Bail Application No.119 of 2017 and an

interlocutory application filed therein, being Criminal M.B.

No.121 of 2017. The High Court independently considered the

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merits of the arguments but eventually rejected the prayer for

bail vide impugned judgment dated 5th May, 2017.   

3. The ECIR has  been registered  against  Ashish  Kumar,

Raj Kumar Goel and other unknown persons for offences

punishable under Sections 3/4 of the Act of 2002 on the basis

of information/material, as evident from the predicate offence

registered by P.S. Crime  Branch, Delhi against the named

accused and unknown accused for offences punishable under

Sections 420, 406, 409, 467, 468, 471, 188 and 120B of IPC,

being FIR No.205/2016 dated 25th  December, 2016.   The

relevant facts noted in the ECIR read thus:

“A. It is reported that during the course of investigation of Case FIR No.242/16 u/s 420, 467,468,471, 120­B IPC, PS C.R. Park, Delhi, it is revealed that Accused Raj Kumar Goel along  with  associates  are engaged into earning  profits by routing money into various accounts by using forged documents and thereby receiving commission from the prospective clients who either  need money by cheque or in cash. In order to obtain large profits, accused Raj Kumar Goel and few of his associates have opened many Bank Accounts in Kotak Mahindra and ICICI Bank at Naya Bazar, Chandni Chowk, Delhi.  

B. On 08.11.2016, the Government if India announced demonetization of one thousand­ (1000) and five hundred (500) rupee notes. On this accused Raj Kumar Goel conspired with the bank manager of Kotak Mahindra Bank, Cannaught Place, namely Ashish Kumar r/o A­701, Bestech Park, Sector 61, Gurugram, Haryana and one Chartered Accountant, name unknown, having mobile number 9711329619 to earn huge profit by converting black money in the form of old currency

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notes into new currency notes. In this conspiracy, the said CA acted as  a mediator  and arranged prospective clients  who intended to convert their black money into legitimate money. For the same, alleged CA offered 2% commission to the other accused persons on all such transactions.  

C. The accused were having bank accounts in the Naya Bazar branch of Kotak Mahindra Bank but the CA and Bank Manager  Ashish asked  accused  Raj  Kumar to  deposit old currency notes in Cannaught Place branch of Kotak Mahindra Bank. It is also revealed that the accused opened bank accounts in the name of  Quality Trading  Company, Swati Trading Company, Shree Ganesh Enterprises, R.K. International,  Mahalxmi Industires, Virgo International and Sapna International on the basis of forged/false documents and deposited approx. Rs.25 Crore after the demonetization. As  per the  preliminary investigation  of the said case it is transpired that accused Raj Kumar Goel, Bank Manager Ashish, CA along with their associates are involved in a deep roted conspiracy and were indulged in converting old currency which were entrusted to bank/Govt officials and were supposed to be delivered to general public/guidelines issued by the Reserve Bank of India/Ministry of Finance and hand thus cheated the public at large. The accused persons have also caused monetary loss to the Govt. of India and thereby Committed offences u/s 420, 406, 409, 467, 468, 471, 188, 120­B IPC.”   

It is then noted that the offences under Sections 420,

468, 471 and 120B of IPC are scheduled offences under the Act

of 2002 and that from the available facts, a reasonable

inference is drawn that the named accused and unknown

accused  have  made illegal earnings arising out of the said

criminal conspiracy which might have undergone the process

of laundering and thereby an offence under Section 3 of the Act

of 2002 was made out.   It is noted that prima facie case for

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commission of offence under Section 3 punishable under

Section 4 of the Act of 2002 was made out and accordingly the

case is being registered and taken up for investigation under

the Act of 2002 and rules framed thereunder.  

4. The  learned Sessions Judge while  considering the  bail

application adverted to  the relevant   materials  including the

CDR analysis of  Mobile number of Ashish Kumar, Branch

Manager,  Kotak  Mahindra  Bank,  K.G.  Marg  Branch,  Kamal

Jain, CA of Rohit Tandon (hereinafter referred to as

“appellant”), Dinesh Bhola, Raj Kumar Goel;  the statements of

Kamal Jain, Dinesh Bhola and Ashish Kumar, recorded under

Section 50 of the Act of 2002; and analysis of bank statements

of stated companies. All these reveal that Ashish Kumar

conspired with other persons to get deposited Rs.38.53 Crore

in cash of demonetized currency   into bank accounts of

companies and got demand drafts issued in fictitious names

with intention of getting them cancelled and thereby converting

the demonetized currency into monetized currency on

commission basis.   Further, the investigation also revealed

that the entire cash was collected on the instructions of the

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appellant herein, by Ashish Kumar, Raj Kumar Goel and others

through Dinesh Bhola, an employee of the appellant.

According to the prosecution, all the associates of the appellant

acted on  instructions of the appellant for  getting  issued the

demand drafts  against  cash deposit  with  the help of  Ashish

Kumar, Branch Manager of Kotak Mahindra Bank  and others,

to the tune of Rs.34.93 Crore from Kotak Mahindra Bank, K.G.

Marg Branch. It  was also noted that the demand drafts  of

Rs.3.60 Crore were issued in fictitious names on the

instructions of Bank Manager Ashish Kumar in lieu of

commission received by him in old cash currency. The demand

drafts amounting to Rs.38 Crore were issued in favour of

Dinesh Kumar and Sunil  Kumar which were recovered  from

the custody  of  Kamal  Jain  who  had  kept the same  on the

instructions of the appellant.  Out of the said amount, the

demand  drafts of other banks, apart from  Kotak  Mahindra

Bank Limited, were also recovered. The prosecution suspected

that there could be other dubious transactions made by the

appellant in other banks and that Ashish Kumar, Bank

Manager and  others  were acting on the instructions of the

appellant for executing the crime.

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5. The Sessions Court rejected the argument of the

appellant that the investigation of the offence registered against

the appellant and others under Section 3/4 of the Act of 2002

being a sequel to the FIR registered by the Crime Branch of

Delhi Police, it cannot be investigated by the Enforcement

Directorate. For, the Enforcement Directorate was not

concerned with the outcome of the investigation of the

predicate offence registered by the Delhi Police. It thus opined

that the matter on hand must be examined only in reference to

the registration of ECIR by the Enforcement Directorate.   The

fact that the investigation in FIR registered by the Crime

Branch of  Delhi Police, bearing FIR  No.205/2016, had not

commenced  will also be of no avail to the appellant.   The

Sessions Court also found that as per Section 19 of the Act of

2002, the only condition to be satisfied for arrest of a person is

the reasonable belief of the authority gathered on the basis of

material in  its  possession.  Further, in  the present  case, the

accused was arrested by the competent authority on the basis

of material in his possession giving rise to a reasonable belief

about the complicity of the accused in the commission of

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offence punishable under the Act of 2002.  As such the arrest

of the appellant under the Act of 2002 cannot be termed as

illegal.  After having dealt with those contentions, the Sessions

Court took  note  of the  material  pressed into  service  by the

prosecution and analysed the same in the following words:

“21. Pursuant to registration of FIR No.205/2016 under section 420, 406, 409, 468, 471, 188, 120­B IPC by Crime Branch, the matter was taken up by ED and ECIR No.18/16 was opened for investigation. Transaction statements of accounts in Kotak Mahindra Bank in FIR No.205/16 in respect of companies i.e.  Delhi  Training  Company,  Kwality Tading  Company,  Mahalaxmi Industries,  R.K. International, Sapna Trading Company, Shree Ganesh Enterprises, Swastik Trading Company arid Virgo International  were sought and scrutinized,  Huge  cash deposits in the  said  accounts  were identified during November, 2016, post demonetization announcement it was found that demand drafts were issued in fictitious names like Dinesh Kumar, Sunil Kumar, Abhilasha Dubey, Madan Kumar, Madan Saini, Satya Narain Dagdi and Seema Bai.  

22. Statement of  Ashish  Kumar, accused  named in FIR No.205/16, Branch Manager, Kotak Mahindra Bank, K.G.  Marg branch  was recorded  under section  50  of PMLA which revealed that Kamal Jain, CA of accused Rohit Tandon contacted  him to get the  demonetized currency on behalf of accused/applicant, converted into monetized currency on commission basis.  The commission of Ashish Kumar was decided @ 35%, who in turn contacted one Yogesh Mittal and Rajesh Kumar Goel, accused in FIR No.205/16 to carry out the criminal design of getting the  demonetized  cash  converted into  monetized  7  valuable form. Demonetized currency was deposited in different accounts of companies pertaining to Raj Kumar Goel besides others through Raj Kumar Goel with the help of Ashish Kumar in different bank accounts of Kotak Mahindra Bank and DDs were issued in fictitious names. The illegal conversion of demonetized currency, getting the same deposited and issuance of demand drafts is corroborated through CDR

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analysis of relevant persons for the relevant period. Dinesh Bhola and Kamal  Jain, in  their  statements recorded under section 50 of  PMLA have also confirmed and reiterated the facts as stated by Ashish Kumar, the Branch Manager.  The statements of persons recorded under section 50 of PMLA, which has evidentiary value under section 50(4) of PMLA, have confirmed that the old demonetized currency pertains to accused  Rohit Tandon  and the conspiracy was executed on his instructions.  

23. Lastly, it was submitted by learned senior counsel for accused that accused fully cooperated with the investigating agency and there was no need to arrest him in this case. He further submitted that the actions of Accused persons as mentioned in the  FIR  attract implications  and  as  such the correct  authority to  investigate  into the same is  the  Income Tax Department and not the ED. Per contra, learned Special Prosecutor for ED submitted that accused only cooperated in the investigation in ECIR No.14/16 and not in ECIR No. 18/16. He further submitted that as sufficient material surfaced on record against the present accused and he did not  cooperate  in the  investigation  in  the  present case, therefore, accused Rohit Tandon was arrested in this case.  He submitted that he does not dispute the jurisdiction of Income Tax Department so far as other aspects of the matter are concerned.  

24. As per section 45 of PMLA, while considering grant of bail to accused, the court has to satisfy that:­

i. There are reasonable grounds for believing that accused is not guilty of such offence and that

ii. He is not likely to commit any offence, while on bail.

25. In the present case, accused has failed to satisfy this court that he is not guilty of alleged offence punishable under section 3 of PMLA. He has not been able to  discharge the  burden  as  contemplated  under section 24 of the Act.  

26. Accused  is  alleged  to  have been found  involved  in a white collar crime. The alleged offence  was committed by accused in conspiracy with other co­accused persons in a well planned and thoughtful  manner. It  has been observed in a catena of decisions by Hon’ble Superior Courts that economic

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offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge  loss of public, funds needs 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.”   

(emphasis supplied)

6. Having formed that opinion and noticing that the

investigation was at the initial and crucial stage and that the

source of funds of proceeds of crime was yet to be ascertained

till then and that the recovery of balance proceeds of crime was

in the process, the question of enlarging the appellant on bail

does not arise,  more so, when there was every possibility that

he may tamper with the evidence and influence the material

prosecution  witnesses.  Accordingly, the  bail application  was

rejected by the Sessions Court vide judgment and order dated

7th January, 2017.

7. Aggrieved, the appellant  approached the High Court  of

Delhi by  way of bail application under Section 439 of the

Cr.P.C. read with Section 45 of the Act of 2002. The High Court

independently analysed all the contentions raised by the

appellant and after adverting to the relevant materials, rejected

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the application for grant of bail preferred by the appellant.  The

High Court found that the Act of 2002  does not prescribe that

the Enforcement Directorate is debarred from conducting

investigation in relation to the offences under Sections 3 & 4 of

the Act of 2002 unless the Crime Branch concludes its

investigation in relation to FIR  No.205/2016 or  was to file

charge­sheet for commission of scheduled offence.  Further,

the proceedings under the Act of  2002 are distinct  from the

proceedings relating to scheduled offence and both the

investigations can  continue independently.  The  High  Court

then noted that Section 44 of the Act of 2002 is an enabling

provision, to  have  a joint trial in  such a  situation to  avoid

conflicting and multiple opinions of the Courts. But proceeded

to  hold that the  said  possibility  would  arise  only  when  the

charge­sheet is filed after completion of investigation in relation

to FIR No.205/2016 and the case is committed to the

concerned Court.   The High Court held that Section 44 of the

Act  of  2002 does not  envisage a  joint investigation but  is  a

provision stipulating that the trial of offence under Section 3/4

of the Act of 2002 and any scheduled offence connected to the

offence under  that  section may be  tried only  by  the  Special

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Court constituted for the area in which the offence has been

committed.  While considering the  merits of the allegations

against the appellant, in particular,  the materials on record,

the High Court analysed the same in the following words:

“14.  In  FIR  No.205/2016  allegations are that  Raj  Kumar Goel; Ashish Kumar, Bank Manager, Kotak Mahindra Bank, K.G.Marg Branch and others conspired for illegal conversion of  demonetized currency  notes into  monetized currency  by way of depositing cash in various accounts of the firms and subsequently getting Demand Drafts issued in fictitious names. It is further alleged in the said FIR that accused therein opened bank accounts in the name of ‘Group of Companies’ in Kotak Mahindra Bank. In ECIR No.18, transactions statements of accounts were collected pertaining to these ‘Group  of  Companies’ from Kotak  Mahindra  Bank and  it  emerged that from 15.11.2016  to  19.11.2016, there was huge cash deposit  to the tune of  `31.75 crores by Raj Kumar Goel and his associates. It  was also found that the Demand Drafts amounting to `38 crores were issued in fictitious names during that period. It cannot be said at this stage that offences referred in FIR No.205/2016 and the ECIR No.18 have no nexus.  

15.  Prosecution under Section 45 of PMLA for commission of offence under Section 3 punishable under Section 4 of PMLA has already been initiated by ED in the Special Court. By an order dated 25.02.2017, learned Addl. Sessions Judge / Special Court (PMLA) has taken cognizance against Rohit Tandon (present  petitioner),  Ashish  Kumar  and Raj  Kumar Goel. Dinesh Bhola and Kamal Jain have also been summoned to face trial under Section 4 of PMLA. Raj Kumar Goel and Ashish Kumar continue to be in custody in the said proceedings.  

16.  On perusal  of the complaint lodged under Section 45 PMLA, it reveals that serious and grave allegations have been leveled against the petitioner and others. The allegations are categorical  and specific;  definite role  has been assigned  to each accused. It is alleged that during the period from 15.11.2016 to 19.11.2016, huge cash to the tune of `31.75 crores was deposited in eight bank accounts in Kotak

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Mahindra Bank in the accounts of the ‘Group of Companies’. It gives details of Demand Drafts issued during 15.11.2016 to 19.11.2016 from eight  bank accounts  in  the name of  Sunil Kumar, Dinesh Kumar, Abhilasha Dubey, Madan Kumar, Madan Saini, Satya Narain Dagdi and Seema Bai on various dates.  Most  of the  Demand Drafts issued have since  been recovered. Its detail finds mention in Table No.2 given in the complaint.  

17.  During arguments,  specific  query was raised and the learned Senior Counsel for the petitioner was asked as to, to whom the money deposited in the various accounts belonged. Learned Senior Counsel for the petitioner was fair enough to admit that the whole money belonged to the petitioner.  When enquired  as to from which ‘source’, huge cash was procured, there was no clear response to it. Again, learned Senior Counsel for the petitioner was asked as to how the cash belonging to the petitioner happened  to  be  deposited  in  various accounts  of the ‘Group of Companies’  which  were not owned by the petitioner  and  what  was its  purpose. It  was further enquired as to why the Demand Drafts were got issued in the names of the persons referred above and what was its specific purpose. Learned Senior Counsel for the petitioner avoided to answer these queries stating that the defence of the petitioner could not be disclosed at this juncture to impact his case during trial. Apparently, no plausible explanation has been offered as to  what forced the petitioner to deposit the old currency to the tune of `31.75 crores in eight accounts of the different ‘Group of Companies’ in Kotak Mahindra Bank during the short period from 15.11.2016 to 19.11.2016. There was no explanation as to why the Demand Drafts for the said amount were got issued in the name of sham people whose identity was not known.  The purpose of all this exercise seemingly was to deposit the cash (old currency) first, get the Demand Drafts issued in fictitious names and obtain monetized currency  by cancelling them subsequently.  The petitioner also did not place on record any document whatsoever to show as to from which legal source, the cash was procured to deposit in the bank accounts of strangers. I find no substance in the petitioner’s plea that petitioner’s only liability was to pay income tax on the

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unaccounted money / income. In my considered view, mere payment of tax on the unaccounted money from any ‘source’ whatever would not convert it into ‘legal’ money. Needless to say, huge deposit was a sinister attempt / strategy by the petitioner and others to convert the ‘old currency’ into new one to frustrate the Demonetization Policy primarily meant to unearth black money.  

18.  Allegations against the petitioner are not without substance.  The prosecution has recorded statements  of the petitioner on various dates and that of Dinesh Bhola, Ashish Kumar (Branch Manager, Kotak Mahindra Bank), Raj Kumar Goel,  Kamal  Jain  (petitioner’s  Chartered Accountant),  Vimal Negi, Jivan Singh and Varun Tandon under Section 50 PMLA on various dates.  There statements have evidentiary value under Section 50 PMLA. Prima facie, the version given by them is in  consonance with the prosecution case. The prosecution has further relied upon Call Data Records, CCTV footage, Account Trend Analysis.”

(emphasis supplied)

8. The High Court opined that keeping in mind the rigors of

Section 45 of the Act of 2002 for the release of the accused

charged under Part A of the Schedule, on bail, coupled with the

antecedents of the appellant of being involved in other similar

crime registered as FIR No.197/2016, for offence under Section

420,  409,  188,  120B of IPC  dated  14th  December,  2016  by

Crime Branch and ECIR No.14/DZ/II/2016 registered on 16th

December, 2016 by Enforcement Directorate for offences under

Sections 3/4 of the Act of 2002. Further, during a raid

conducted jointly by the Crime Branch and Income Tax

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Department on 10th December, 2016 at around 10.00 P.M. at

the office premises of the appellant, currency of Rs.13.62 Crore

was recovered  including new currency in the denomination of

Rs.2000/­ amounting to Rs.2.62 Crore. In addition, the

appellant had surrendered Rs.128 Crore during the raid

conducted by  the  Income Tax Department on 6/8   October,

2016 in his office and residential premises.   No reliable and

credible documents were  forthcoming from the appellant about

the source from where he had obtained such a huge quantity of

cash. The possibility of the same being proceeds of crime

cannot be ruled out. Hence, it noted that the question of

granting bail did not arise, taking into consideration the

serious allegations against the appellant and other facts

including severity of the punishment prescribed by law.

Accordingly, the bail  application of the appellant came to be

rejected.  As a consequence, the pending application which was

considered along with the bail application was also disposed of

by the impugned judgment and order dated  5th  May, 2017

passed by the High Court.

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9. We have heard Mr. Mukul Rohatgi, learned senior

counsel  appearing for the  appellant  and Mr.  Tushar  Mehta,

learned  Additional Solicitor  General for the  Union of India.

They have also filed written submissions.    

10. Before we analyse the rival submissions, for the

completion of record,   we must mention that after the

impugned judgment, the Crime Branch filed the charge­sheet

before the appropriate Court in relation to FIR No.205/2016 on

24th  June,  2017.  Similarly, the  Enforcement  Directorate  has

filed supplementary complaint  CC No.700/2017 in relation to

ECIR 18/2016, which refers to further material gathered

during the investigation, indicating the complicity of the

concerned accused in the crime for offence punishable under

Section 3 of the Act of 2002.  A comprehensive supplementary

complaint has been filed before the District and Sessions

Judge, Saket, New Delhi (Designated Court under the

Prevention of  Money­Laundering Act, 2002) on 2nd  August,

2017.   

11. Before this supplementary complaint was filed, the

appellant preferred second bail application in the present case

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before the High Court of Delhi at New Delhi, being Bail

Application No.1361/2017.   This application was filed on 12th

July, 2017.  Along with the said bail application the appellant

filed an application being Criminal M.A. No.1293 of 2017 for

directing his interim release in connection with

ECIR/DZ/II/2016 on the assertion that his mother was

seriously ill and required immediate medical attention because

of the injuries suffered by her on 20th  June, 2017.   The said

interim release application was allowed on 10th August, 2017.

Notably, the  appellant  was  advised to  withdraw the regular

(second)  Bail Application  No.1361/2017. The learned  Single

Judge  of the  High  Court  by order  dated  10th  August,  2017

acceded to the prayer so made by the appellant.  The order

passed by the learned Single Judge of the High Court reads

thus:  

“BAIL APPLN. 1361/2017  

The  petitioner  has prayed for  bail in  connection with ECIR/18/DZII/2016/AD registered  under  Section  3  & 4  of Prevention of Money Laundering Act, 2002.  

Simultaneously an application has been filed seeking interim  bail on the ground of illness of the  mother of the petitioner who has recently suffered a fracture in the neck.  

Mr.  Mukul  Rohatgi, learned  Sr. Advocate seeks permission to withdraw the regular bail application on

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the observation of the bench that the earlier bail application  was rejected only on 5th of  May, 2017. However he presses the interim bail application.  

Accordingly the regular bail application is dismissed as withdrawn.

Crl.M.A.No.1293/2017 (application for interim bail)  

It has been submitted on behalf of the petitioner that he is the only son of his mother who has suffered a fall and has got a fracture in her neck. The sister of the petitioner is stationed abroad. The petitioner has a son who is of young age. The petitioner has also drawn the attention of this Court to the medical report which indicates that a plaster has been put  on  the fracture  but  she  has  been suffering from acute pain.  

It has been further submitted that the charge sheet in the main case has been submitted and that the petitioner has remained in jail for more than seven months by now.  

Opposing the aforesaid prayer for grant of interim bail, Mr. Mahajan, learned Sr. Standing Counsel submits that this is a case of serious fiscal impropriety of great magnitude and there is a possibility of the petitioner tampering with evidence if he comes out from the jail even for a short period.  No definite reasons, however, have been assigned by Mr.Mahajan, for such a presumption that the petitioner would tamper with the evidence specially when charge sheet in the main case has already been submitted.  

Mr.Rohtagi, learned senior counsel has drawn the attention of this Court to the fact that whenever the petitioner was summoned to answer to the Queries, he had visited the office of the ED and in the past, had never tried to evade the process of investigation.  

Taking  into  account the aforesaid  facts,  specially the period of incarceration of the  petitioner, submission of the charge sheet in the main case and the illness of the mother of the petitioner, this Court is inclined to grant interim bail to the petitioner for a period of 3 weeks.  

Let the  petitioner  be released  on interim bail for the period of 3 weeks, to be counted from the date of his release,

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on his furnishing a bond in the sum of Rs. 25,000/­ with two sureties of the like amount to the satisfaction of special court.  

However it is made clear that the petitioner shall  not tamper with the evidence or commit any act which would be prejudicial to the prosecution side.  Should anything of that kind be reported, this Court would consider the desirability of withdrawing/cancelling the interim bail.  

The petitioner shall not, unnecessary, seek extension of the interim bail granted to him. It  is also specified that the petitioner shall not leave the country under any circumstances whatsoever. Should the petitioner intend to go out of the territorial confines of NCR of Delhi, permission  would be required  to  be taken  from the Special  Court.  The petitioner shall also deposit his passport before the Special court while furnishing his bonds.  

Application is disposed of accordingly.

Dasti.”

(emphasis supplied)

12. It  is relevant to note that the aforementioned order for

interim release of the appellant was confirmed by this Court on

12th August, 2017.   

13. The appellant was thereafter advised to file the present

appeals to assail the judgment and order dated 5th May, 2017

passed by the High Court of Delhi at New Delhi in Bail

Application No.119 of 2017 and Criminal M.B. No.121 of 2017.

The  special leave  petitions  were filed  on  18th  August,  2017.

During the pendency of these special leave petitions, the

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appellant was advised to also file a writ petition under Article

32 of the Constitution of India to challenge the validity of the

provisions of the Act of 2002. The same  was filed on  23rd

August, 2017, being Writ Petition (Civil) No.121 of 2017.   The

reliefs claimed in the said writ petition read thus:

“PRAER

(i) Issue a writ of mandamus or any other appropriate writ, order or direction declaring that the conditions/limitations contained in Section 45(1) of Prevention of Money Laundering Act, 2002 (Act 15 of 2003) to the extent that it imposes rigors/restrictions in the grant of bail in any offence punishable upto 7 years under the provisions of Prevention of Money Laundering Act, 2002 (Act 15 of 2003) as unreasonable, arbitrary and unconstitutional being violative of the fundamental rights of the Petitioner guaranteed and protected under Articles 14 and 21 of the Constitution of India;

(ii) In the alternative to prayer (i) above, issue a writ of mandamus or any other appropriate writ, order or direction reading down the scope and ambit of Section 45(1) of the Prevention of Money Laundering Act, 2002 (Act 15 of 2003), so that the rigors in grant of bail are not applicable in the case of the Petitioner, where the alleged scheduled offences in CC No. 41 of 2017 arising out of charge­sheet No. 1 dated 24.06.2017 filed by the Crime Branch, New Delhi alleging commission of offences under Sections 420/188/109/120B/34 IPC and Section 12 of the Prevention of  Corruption Act,  1988 (none of  which were under Part A of the Schedule prior to the Prevention of  Money Laundering  (Amendment) Act, 2012 (Act 2 of 2013) and formed part of Part B of the Schedule;

(iii) Issue a writ of mandamus or any other appropriate writ, order or direction declaring the continued incarceration of the  Petitioner  since 28.12.2016  in

21

ECIR/18/DZ­II/2016/AD  dated  26.12.2016  under Section 3/4  of the Prevention of Money Laundering Act, 2002 is illegal, unconstitutional and in violation of the fundamental right of the Petitioner guaranteed and protected under Article 21 of the Constitution of India;

(iv) Issue a writ of mandamus or any other appropriate writ, order or direction in the nature of mandamus declaring that the offences under the Prevention of Money Laundering Act, 2002 (Act 15 of 2003) pursuant to the Prevention of  Money Laundering (Amendment) Act, 2005 (Act 20 of 2005) which came into force w.e.f. 01.07.2005 are non­cognizable offences  and  therefore, it is  mandatory to  comply with the provisions of Sections 155, 177(1) and 172 of the Code of Criminal Procedure, 1973 and declare that the law laid down by the Division Bench of the Hon’ble Delhi High Court in its judgment dated 27.4.2016 (reported in 2016 SCC Online Delhi 2493) and by the Hon’ble Gujarat High Court  in Rakesh Manekchand Kothari vs. Union of India [Special Criminal Application (Habeas Corpus) No. 4247/2015] decided on 03.08.2015 holding that the offences under Section 3 of the Prevention of Money Laudnering Act,  2002 punishable under  Section 4 thereof is a non­cognizable offence is good law and the contrary view taken by the  Hon’ble Bombay High Court in its judgment dated 14.12.2016 in Chhagan Chandrakant Bhujbal vs. Union of India & Ors. is bad in law;  

(v) lay down guidelines for compliance by all Courts for grant of bail in proceedings arising out of and concerning the Prevention of Money Laundering Act, 2002 by expounding the scope of Section 439 of the Code of Criminal Procedure, 1973;

(vi) Issue rule nisi  in terms of Prayers (i) to  (v) above; and

(vii) And/or pass any other or further orders which Your Lordships may deem fit and proper in the interest of justice.  

14. The aforementioned writ petition was listed together with

the appeals on 30th  October,  2017.   During oral  arguments,

22

however, the counsel appearing for the appellant, in all

fairness, stated that the grounds urged in the said writ petition

need  not be considered at this stage and that the appeals

preferred against the impugned judgment and order dated 5th

May, 2017 be examined on the basis of the prevailing statutory

provisions, including the rigors of  Section  45 of the  Act of

2002. In other words, the challenge to the impugned judgment

will have to be considered as per the prevailing provisions and

not with reference to the challenge regarding the validity

thereof.  

15. Reverting to the first contention of the appellant, that

the reasons which weighed with the learned Single Judge of the

High  Court  while  directing interim release of the appellant,

would apply  proprio vigore  for considering the regular bail.  In

that,  the  learned Single Judge vide order dated 10th  August,

2017 noted the following circumstances:

i) Petitioner never tried to evade the investigation; ii) The period of incarceration (7 ½ months); iii) Submission of charge­sheet in the  main case on

24/6/17; iv) Illness of the mother of the Petitioner;

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v) No definite reasons assigned by the Counsel for the

Respondent to substantiate allegation that

Petitioner would tamper with evidence especially

when charge­sheet in the main case has been

submitted.

16. The argument though attractive at the first blush

deserves to be rejected.  In our opinion,  the order dated 10 th

August, 2017 passed by the High Court directing interim

release of the appellant was primarily on account of the illness

of his mother. No more and no less. The other observations in

the said order will have no bearing on the  merits of the

controversy and required to be reckoned whilst considering the

prayer for grant of regular bail.   For that, the appellant must

succeed in overcoming the threshold of the rigors of Section 45

of the Act of 2002. Indubitably, the appellant having withdrawn

the regular (second) bail application, the consideration of

prayer for grant of interim release could not have been taken

forward. Besides, in the backdrop of the opinion recorded by

the Co­ordinate Bench of the High Court (in its decision dated

5th May, 2017) whilst considering the application for grant of

regular bail, which was after filing of the initial complaint CC

24

No.700/2017 (on 23rd  February, 2017), was binding until

reversed or a different view could be taken because of changed

circumstances. Suffice it to observe that indulgence shown to

the appellant in terms of order dated 10th August, 2017 will be

of no avail.  In that, the facts such as the appellant never tried

to evade the investigation or that he has suffered incarceration

for over 7½ months or that the charge­sheet has been filed in

the predicate offence registered under FIR No.205/2016 or the

factum of illness of the mother of the appellant or the

observation that no definite reason has been assigned by the

respondents for substantiating the allegation that the appellant

would tamper with the evidence, may become relevant only if

the threshold stipulation envisaged under Section 45 of the Act

of 2002 was to be fulfilled. The said provision reads thus:

“45.  Offences to be cognizable and non­bailable.—(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence punishable for a term of imprisonment of more than three years under Part A of the Schedule 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

25

(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, 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 under section 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 a special order made in this behalf by that Government.   

(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 sub­section (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.”

(emphasis supplied)    

  The sweep of Section 45 of the Act of 2002 is no more res

intergra. In a recent decision of this Court in the case of

Gautam Kundu   Vs. Directorate of Enforcement

(Prevention of Money­Laundering Act), Government of

26

India,1  this Court has had an occasion to examine it in

paragraphs 28­30.  It will be useful to advert to paragraphs 28

to 30 of this decision which read thus:

“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 United Nations General Assembly. PMLA is a special statute enacted by the Parliament for  dealing with  money­laundering.  Section  5 of the Code of Criminal Procedure, 1973 clearly lays down that the provisions 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 .  Section 45 of the PMLA starts  with a non obstante clause 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 conflict 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 imprisonment of more than three years under Part­A of the Schedule of the PMLA:  

(i) That the prosecutor must be given an opportunity to oppose the application for bail; and  

(ii) That 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 likely to commit any offence while on bail.  

30 .  The conditions specified under Section 45 of the PMLA are mandatory and needs to be complied with  which is further strengthened by the provisions of Section 65 and also

1  (2015) 16 SCC 1

27

Section 71 of the PMLA. Section 65 requires that the provisions of Cr.P.C. shall apply in sofaras 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  an application for bail made under Section 439 of Cr.P.C.  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.”

       (emphasis supplied)

17. In paragraph 34, this Court reiterated as follows:    

34. “xxx   xxx xxx    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  conflict  between them. As mentioned earlier, 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 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.”

28

The decisions of this Court in the case of  Subrata Chattoraj

Vs. Union of India,2  Y.S. Jagan Mohan Reddy Vs. CBI 3, and

Union of India Vs. Hassan Ali Khan 4   have been noticed in

the aforesaid decision.  

18. The consistent view taken by this Court is that economic

offences  having  deep­rooted 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.   Further, when attempt is made to project the

proceeds of crime as untainted money and also that the

allegations may not ultimately be established,  but having been

made, the burden of proof that the monies were not the

proceeds of crime and were not, therefore, tainted shifts  on the

accused persons under Section 24 of the Act of 2002.

19. It is not  necessary to  multiply the  authorities on the

sweep of Section 45 of the Act of 2002 which, as

aforementioned, is  no  more  res integra.  The  decision  in the 2  (2014) 8 SCC 768 3  (2013) 7 SCC 439 4  (2011) 10 SCC 235

29

case of  Ranjitsing  Brahmajeetsing  Sharma  Vs. State of

Maharashtra and Anr.,5  and  State of  Maharashtra Vs.

Vishwanath Maranna Shetty,6  dealt with an analogous

provision in the Maharashtra Control of Organised Crime Act,

1999.  It  has been expounded that the Court at  the stage of

considering the application for grant of bail, shall consider the

question from the angle as to whether the accused was

possessed of the requisite mens rea.  The Court is not required

to record a positive finding that the accused had not committed

an offence under the Act. The Court ought to  maintain a

delicate balance between a judgment of acquittal and

conviction and an order granting bail much before

commencement of trial. The duty of the Court at this stage is

not to weigh the evidence  meticulously but to arrive at a

finding on the basis of broad probabilities.  Further, the Court

is required to record a finding as to the possibility of the

accused committing a crime which is an offence under the Act

after grant of bail.   In  Ranjitsing Brahmajeetsing Sharma

5   (2005) 5 SCC 294 6  (2012) 10 SCC 561

30

(supra),  in paragraphs 44 to 46 of the said decision, this Court

observed thus:

“44.  The wording of Section 21(4), in our opinion, does not lead to the conclusion that the Court must arrive at a positive finding that the applicant for bail has not committed an offence under  the Act. If  such a construction  is placed,  the court intending to grant bail must arrive at a finding that the applicant has not committed such  an offence. In such  an event, it  will  be impossible for the  prosecution to  obtain  a judgment of conviction of the applicant. Such cannot be the intention of the Legislature. Section 21(4) of MCOCA, therefore, must be construed reasonably. It must be so construed that the Court is able to maintain a delicate balance between a judgment of acquittal and conviction and an order granting bail  much before commencement of  trial.  Similarly, the Court will be required to record a finding as to the possibility of his committing a crime after grant of bail. However, such an offence in futuro must be an offence under the Act and not any other offence. Since it is difficult to predict the future conduct of an accused, the court must necessarily consider this aspect of the matter having regard to the antecedents of the accused, his propensities and the nature and manner in  which he is  alleged  to  have committed  the offence.

45. It is, furthermore, trite that for the purpose of considering an application for grant of bail, although detailed reasons are not necessary to be assigned, the order granting bail must demonstrate application of mind at least in serious cases as to why the applicant has been granted or denied the privilege of bail.

46. The duty of the court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad  probabilities.  However,  while  dealing  with  a  special statute like MCOCA having regard to the provisions contained in Sub­section (4) of Section 21 of the Act, the Court may have to probe into the matter deeper so as to enable it to arrive at a finding that the materials collected against the accused during the investigation may not justify a judgment of conviction. The findings recorded by the Court while granting

31

or refusing  bail  undoubtedly  would  be tentative in  nature, which may not have any bearing on the merit of the case and the trial court would, thus, be free to decide the case on the basis of evidence adduced at the trial, without in any manner being prejudiced thereby.”

20. Reverting  to  the decision  in  the case of  Manoranjana

Sinh Vs. Central Bureau of Investigation,7  we hold that the

same is on the facts of that case.   Even in the said decision,

the Court has noted that the grant or denial of bail is regulated

to a large extent by the facts and circumstances of each case.

In the case of  Sanjay Chandra Vs. Central Bureau of

Investigation,8   the Court was not called upon to consider the

efficacy of  Section 45 of the Act  of  2002 which  is  a  special

enactment.  

21. Keeping in mind the dictum in the aforesaid decisions,

we find no difficulty in upholding the opinion recorded by the

Sessions Court as well as the High Court in this regard.  In our

opinion, both the Courts have carefully analysed the

allegations and the materials on record indicating the

complicity of the appellant in the commission of crime

punishable under Section 3/4  of the Act of 2002. The Courts

7  (2017) 5 SCC 218 8  (2012) 1 SCC 40

32

have maintained the  delicate balance between the judgment of

acquittal and conviction and order granting bail before

commencement of trial. The material on record does not

commend us to take a contrary view.   

22. Realizing this position, the learned counsel appearing for

the appellant would contend that even if the allegations against

the  appellant are taken  at its face value, the incriminating

material recovered from the appellant or referred to in the

complaint, by no stretch of imagination, would take the colour

of  proceeds  of crime.   In fact, there is  no  allegation in the

charge­sheet filed in the scheduled offence case or in the

prosecution complaint that the  unaccounted  cash  deposited

by the appellant is as a result of criminal activity.  Absent this

basic ingredient, the property derived or obtained by the

appellant would not become proceeds of crime. To examine this

contention, it would be useful to advert to Sections 3 and 4 of

the Act of 2002.  The same read thus:  

“3.  Offence  of  money­laundering.­  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 proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming  it as

33

untainted property shall be guilty of offence of money­ laundering.

4.  Punishment  for  money­laundering.­  Whoever commits the offence of  money­laundering shall be punishable  with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine.

Provided that where the proceeds of crime involved in money­laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of this section shall have effect as if for the  words "which  may extend to seven years", the words "which may extend to ten years" had been substituted.”

23. As the fulcrum of Section 3 quoted above, is expression

‘proceeds of crime’, the dictionary clause in the form of Section

2(1)(u) is of some relevance. The same reads thus:     

“2(1)(u)  ‘proceeds of crime’ means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country;”

It will be useful to advert to the meaning of expression

“property”  as  predicated in  Section  2(1)(v). The same  reads

thus:

“2(1)(v)  “property”  means any property  or  assets  of  every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible  and includes  deeds  and

34

instruments evidencing title to, or interest in, such property or assets, wherever located;

The expression ‘scheduled offence’ has been defined in Section

2(1)(y) of the Act of 2002. The same reads thus:

“2(1)(y) ‘scheduled offence’  means­

(i) the offences specified under Part A of the Schedule; or  (ii) the offences specified under Part B of the Schedule if the total value involved in such offences is  one crore rupees or more; or (iii) the offences specified under Part C of the Schedule;”

Indisputably, the  predicate  offence is included  in Part  A  in

paragraph 1 of the Schedule in the Act of 2002, in particular

Sections 420, 467, 471 and 120B of IPC. Indeed, the

expression “criminal activity”  has not been defined. By its very

nature the alleged activities of the accused referred to in the

predicate offence are criminal activities. The possession of

demonetized currency in one sense, ostensibly, may appear to

be only a facet of unaccounted  money in reference to the

provisions of the Income Tax Act or other taxation laws.

However, the stated activity allegedly indulged into by the

accused named in the commission of predicate offence is

replete with mens rea. In that, the concealment, possession,

35

acquisition or use  of the property by projecting or claiming it

as untainted property and converting the same by bank drafts,

would certainly come  within the sweep of criminal activity

relating to a scheduled offence. That would come within the

meaning of Section 3 and punishable under Section 4 of the

Act, being a case of money­laundering. The expression ‘money­

laundering’  is defined thus:

“2(1)(p)  “money­laundering” has the meaning assigned to it in section 3;

24. The appellant then relies upon the decision in the case of

Gorav Kathuria Vs. Union of India,9  of the Punjab and

Haryana High Court  which has  taken  the  view  that  Section

45(1) of the Act of 2002 requires to be read down to apply only

to those scheduled offences which were included prior to the

amendment in 2013 in the Schedule. It is contended that the

offence, in particular, under Sections 420, 467 and 471 of IPC,

may not be treated as having been included in the scheduled

offences for the purpose of the Act of 2002.   Further,  if any

other view was to be taken, the provision would be rendered

ultra vires. We are in agreement with the stand taken by the 9  (2016 SCC Online P & H 3428

36

respondents that the appellant cannot be permitted to raise the

grounds urged in the writ petition, hearing whereof has been

deferred on the request of the appellant.   In other words, the

appellant should be in a position to persuade the Court that

the allegations in the complaint and the materials on record

taken  at its face value  do  not constitute the  offence  under

Section 3 read with the schedule of the Act of 2002 as in force.

25. It  has been brought to our notice that  the decision  in

Gorav Kathuria  (supra) was challenged before this Court by

way  of  Criminal  Appeal  No.737  of  2016,  which  has  already

been  dismissed  on  12th  August,  2016.  The  order  originally

passed on the said criminal appeal reads thus:  

“Though the High Court has granted certificate to appeal, after arguing the matter for some time, learned counsel for the petitioner concedes that the impugned judgment of the High Court is correct.  

This appeal is, accordingly, dismissed.”

However, that order has been subsequently revised which

reads thus:

“Though the High Court has granted certificate to appeal, we have heard the learned counsel for some time and are of the opinion that the impugned judgment of the High Court is correct.

37

This appeal is, accordingly, dismissed.”

At the same time the respondents have drawn our attention to

a chart contained in their written submissions   pointing out

that other High Courts have disagreed with the principle

expounded  in  Gorav Kathuria’s  case.  The said chart  reads

thus:    

(i) Crl. Misc. Application (for Regular Bail)  No.7970/17 Jignesh Kishorebhai Bajiawala vs. State of Gujarat & Ors. Manu/GJ/1035/2017

High Court of  Gujarat

(ii) Crl. Petition No.366/2017 SC Jayachandra vs Enforcement  Directorate, Bangalore 2017 (349) ELT 392 KAR

High Court of  Karnataka at  Bengaluru

(iii)  WP[Crl.] No.333 of 2015 Kishin S. Loungani vs. UOI & ors. (2017) 1 KHC 355

High Court of  Kerala at  Ernakulam

(iv) Crl. Mic. Application (for Regular Bail)  No.30674/16 Pradeep Nirankarnath Sharma vs  Directorate of Enforcement 2017 (350) ELT 449 (GUJ)

High Court  Gujarat at  Ahmedabad

(v)  Crl. Writ Petition No.3931/2016 Chhagan Chandrakant Bhujbal vs Union  of India & Ors. 2016 SCC Online Bom 9983

High Court  of  Bombay

38

26. For the time being,  it is not necessary for us to examine

the issues arising from the decision of the Punjab and Haryana

High Court or the rejection of criminal appeal by this Court

against that decision. The constitutional validity of Section 45

of the Act of 2002   will have to be examined by this Court in

the writ petition on its own merits. The summary dismissal of

criminal  appeal  will  not  come  in  the way of  considering  the

correctness of  the decision of  the Punjab and Haryana High

Court in view of the conflict  of  opinion with  the other  High

Courts.

27. Suffice it to observe that the appellant has not succeeded

in persuading  us about the inapplicability of the threshold

stipulation under Section 45 of  the Act.   In the facts of  the

present case, we are in agreement with the view taken by the

Sessions Court and by the High Court. We have independently

examined the  materials relied  upon by the  prosecution  and

also noted   the inexplicable silence or reluctance of the

appellant in disclosing the source from where such huge value

of demonetized currency and also new currency has been

acquired by him.   The prosecution is relying on statements of

39

26 witnesses/accused already recorded, out of  which 7 were

considered  by the  Delhi  High  Court.  These  statements  are

admissible in evidence, in view of Section 50 of the Act of 2002.

The same makes out a formidable case about the involvement

of the appellant in commission of a serious offence of money­

laundering. It is, therefore, not possible for us to record

satisfaction that there are reasonable grounds for believing that

the appellant is not guilty of such offence.  Further, the Courts

below have justly adverted to the antecedents of the appellant

for considering the prayer for bail and concluded that it is not

possible to hold that the appellant is not likely to commit any

offence ascribable to the Act of 2002 while on bail.  Since the

threshold  stipulation predicated  in  Section 45 has not  been

overcome, the question of considering the efficacy of other

points urged by the appellant to persuade the Court to favour

the appellant with the relief of regular bail will be of no avail. In

other  words, the fact that the investigation  in  the  predicate

offence  instituted  in  terms of  FIR No.205/2016   or  that  the

investigation qua the appellant in the complaint CC

No.700/2017 is completed; and that the proceeds of crime is

already in possession of the investigating agency and

40

provisional attachment order in relation thereto passed on 13th

February, 2017 has been confirmed; or that charge­sheet has

been filed in FIR No.205/2016 against the appellant without

his arrest; that the appellant has been lodged in judicial

custody since 2nd January, 2017 and has not been interrogated

or examined by the Enforcement Directorate thereafter; all

these will be of no consequence.  

28. It was urged on behalf of the appellant that

Demonetization Notification dated 8th November, 2016 imposes

no limit in KYC compliant  accounts on the quantum of deposit

and no restrictions  on non­cash  transactions.  The relevant

portion of the said notification reads thus:    

“(iii) there shall not be any limit on the quantity or value of specified bank notes to be credited to the account maintained with the bank by a person, where the specified bank notes are tendered; however, where compliance with extant Know Your Customer (KYC) norms is not complete in an account, the maximum value of specified bank notes as may be deposited shall be Rs. 50,000/­;

(vii)  there shall be no restriction on the use of any non­cash method of operating the account of a person including cheques, demand drafts, credit or debit cards, mobile wallets and electronic fund transfer mechanisms or the like;”

41

We fail to understand as to how this argument can be

countenanced.  The fact that no limit for deposit was specified,

would not extricate the appellant from explaining the source

from where such huge amount has been acquired, possessed

or used by him. The volume of demonetized currency recovered

from the office and residential premises of the appellant,

including the bank drafts  in favour of  fictitious persons and

also the new currency notes for huge amount, leave no manner

of doubt that it was the outcome of some process or activity

connected with the proceeds of crime projecting the property as

untainted  property.  No  explanation  has  been offered  by the

appellant to dispel the legal presumption of the property being

proceeds of crime.   Similarly, the fact that the appellant has

made declaration in the Income Tax Returns and paid tax as

per law does  not  extricate the  appellant from disclosing the

source of its receipt. No provision in the taxation laws has been

brought to   our   notice   which grants   immunity to the

appellant from prosecution for an offence of money­laundering.

In other words, the property derived or obtained by the

appellant was the result of criminal activity relating to a

scheduled offence. The argument of the appellant that there is

42

no allegation in the charge­sheet filed in the scheduled offence

case or in the  prosecution  complaint that the  unaccounted

cash deposited by the appellant is the result of criminal

activity, will not come to the aid of the appellant. That will have

to be negatived in light of the materials already on record.  The

possession  of such  huge  quantum of demonetized currency

and  new currency in the form of  Rs.2000/­  notes,  without

disclosing the source from where it   is received and the

purpose for which it  is received, the appellant   has failed to

dispel the legal presumption that he was involved in money­

laundering and the property was proceeds of crime.  

29. Taking overall view of the matter, therefore, we are not

inclined to interfere  with the  well  considered opinion of the

Sessions  Court  and  the  High Court rejecting the  prayer for

grant of regular bail to the appellant.  However, considering the

fact that the appellant is in custody since 28th December, 2016

and the offence  is punishable with  imprisonment  for  a term

extending to seven years only, but not less than three years,

the Trial Court will be well advised to proceed with the trial on

day­to­day basis expeditiously. We clarify that the Trial Court

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must  examine the evidence/material brought on record during

the trial on its own merit and not be influenced by the

observations in this decision which are limited for considering

the prayer for grant of regular bail.  

30. Accordingly, the appeals are dismissed in the above

terms.     

…………………………….CJI.           (Dipak Misra)

…………………………..….J.          (A.M. Khanwilkar)

…………………………..….J.        (D.Y. Chandrachud)

New Delhi, Dated: 10th November, 2017.