REPORTABLE

IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.1883      OF 2011 (Arising out of SLP(Crl.) No.6114 OF 2011)

Union of India …    Appellant  

         Vs.

Hassan Ali Khan & Anr.  …    Respondents

O R D E R

ALTAMAS KABIR, J.

1. Leave granted.   

2. The Special Leave Petition out of which this  

Appeal arises has been filed against the judgment

and final order dated 12th August, 2011, passed by  

the  Bombay  High  Court  in  Crl.  Bail  Application  

No.994 of 2011, whereby the High Court granted bail  

to  the  Respondent  No.1,  Hassan  Ali  Khan,  in  

connection with Special Case No.1 of 2011, wherein  

the Respondent No.1 is the Accused No.1.   

3. The allegation against the Respondent No.1 and  

the other accused is that they have committed an  

offence  punishable  under  Section  4  of  the  

Prevention  of  Money  Laundering  Act,  2002,  

hereinafter referred to as ‘the PML Act’.  The said  

case  has  been  registered  on  the  basis  of  a  

complaint filed by the Deputy Director, Directorate  

of Enforcement, Ministry of Finance, Department of  

Revenue, Government of India, on 8th January, 2007,  

on the basis of Enforcement Case Information Report  

No.02/MZO/07  based  on  certain  information  and  

documents received from the Income Tax Department.  

2

On the said date, the Income Tax Department carried  

out a search in the premises owned and/or possessed  

by the Respondent No.1 and a sum of Rs.88,05,000/-  

in cash was found in his residence at Peddar Road,  

Mumbai,  and  was  seized.  A  number  of  imported  

watches  and  some  jewellery  were  also  found  and  

seized during the search.   

4. The search also revealed that the Respondent  

No.1 had purchased an expensive car, worth about  

Rs.60  lakhs,  from  one  Anil  Shankar  of  Bangalore  

through one Sheshadari and that he had paid till  

then a sum of Rs.46 lakhs towards purchase of the  

said car.  It also appears that the documents which  

were  recovered  by  the  Income  Tax  Department  

contained  several  transfer  instructions  said  to  

have  been  issued  by  the  Respondent  No.1  for  

transfer of various amounts to different persons  

from the bank accounts held by him outside India.  

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The said amounts forming the subject matter of the  

instructions issued by the Respondent No.1 ran into  

billions  of  dollars.  The  Income  Tax  Department  

assessed the total income of the Respondent No.1  

for  the  Assessment  Years  2001-02,  2006-07  and  

2007-08  as  Rs.110,412,68,85,303/-.  Furthermore,  

during  the  investigation,  the  Directorate  of  

Enforcement also obtained a document said to have  

been signed by the Respondent No.1 on 29th June,  

2003, which was notarized by one Mr. Nicolas Ronald  

Rathbone  Smith,  Notary  Public  of  London,  on  30th  

June, 2003.

5. Further, an investigation was conducted under  

the  Foreign  Exchange  Management  Act,  1999,  

hereafter referred to as ‘FEMA’. Show-cause notices  

were  issued  to  the  Respondent  No.1  for  alleged  

violation of Sections 3A and 4 of FEMA for dealing  

in and acquiring and holding foreign exchange to  

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the  extent  of  US$  80,004,53,000,  equivalent  to  

Rs.36,000 crores approximately in Indian currency,  

in his account with the Union Bank of Switzerland,  

AG, Zurich, Switzerland.

6.  Inquiries also revealed that Shri Hassan Ali  

Khan had obtained at least three Passports in his  

name by submitting false documents, making false  

statements  and  by  suppressing  the  fact  that  he  

already had a Passport.  In addition to the above,  

it  was  also  indicated  that  investigations  had  

revealed  that  he  had  sold  a  diamond  from  the  

collection of the Nizam of Hyderabad and had routed  

the sale proceeds through his account in Sarasin  

Bank in Basel, Switzerland, to the Barclays Bank in  

the United Kingdom.  

7. Based  on  the  aforesaid  material,  the  

Directorate  of  Enforcement,  Mumbai  Zonal  Office,  

arrested  the  Respondent  No.1  on  7th March, 2011,  

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and, thereafter, he was produced before the Special  

Judge, PMLA, Mumbai, on 8th March, 2011, and was  

remanded  in  custody.  Subsequently,  by  an  order  

dated  11th March,  2011,  the  Special  Judge,  PMLA,  

rejected  the  prayer  made  on  behalf  of  the  

Directorate  of  Enforcement  for  remand  of  the  

Respondent No.1 to its custody and released him on  

bail.  However, since a Public Interest Litigation  

was pending in this Court in which the Directorate  

of Enforcement was required to file a status report  

in  respect  of  the  investigations  carried  out  in  

connection  with  the  case,  the  fact  that  the  

Respondent  No.1  had  been  released  on  bail  was  

brought to the notice of this Court and this Court  

stayed  the  operation  of  the  bail  order  and  

authorized the detention of the Respondent No.1 in  

custody, initially for a period of four days.  The  

Union  of  India  thereupon  filed  Special  Leave  

Petition (Crl.) No.2455 of 2011 and upon observing  

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that the material made available on record prima  

facie discloses the commission of an offence by the  

Respondent No.1 punishable under the provisions of  

the PML Act, this Court vide order dated 29th March,  

2011, disposed of the appeal as well as the Special  

Leave Petition and set aside the order dated 11th  

March, 2011, of the Special Judge, PMLA, Mumbai,  

and directed that the Respondent No.1 be taken into  

custody.   Thereafter,  the  Respondent  No.1  was  

remanded into custody from time to time and the  

complaint  came  to  be  filed  on  6th May,  2011.  A  

further  prayer  for  bail  was  thereafter  made  on  

behalf of the Respondent No.1 on 1st July, 2011, but  

the same was dismissed by the Special Judge, PMLA,  

Mumbai, on the same day.    

8. The  said  order  of  the  Special  Judge,  PMLA,  

Mumbai, rejecting the Respondent No.1’s prayer for  

bail was challenged before the Bombay High Court in  

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Bail Application No.994 dated 2nd July, 2011.  After  

a contested hearing, the Bombay High Court by its  

order dated 12th August, 2011, granted bail to the  

Respondent No.1 and the said order is the subject  

matter of the present proceedings before this Court.  

9. Learned Additional Solicitor General, Mr. Haren  

P.  Raval,  appearing  for  the  Union  of  India,  

submitted that the High Court failed to appreciate  

the astronomical amounts of foreign exchange dealt  

with by the Respondent No.1, for which there was no  

accounting and in respect whereof the Income Tax  

Department had for the Assessment years 2001-02 to  

2007-08  assessed  the  total  income  as  

Rs.110,412,68,85,303/-.  The  learned  ASG  also  

submitted that transfer of the huge sums from one  

bank to another was one of the methods adopted by  

persons involved in money-laundering to cover the  

trail  of  the  monies  which  were  the  proceeds  of  

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crime. The learned ASG contended that the large sums  

of unaccounted money, with which the Respondent No.1  

had been dealing, attracted the attention of the  

Revenue  Department  and  on  investigation  conducted  

under  the  Foreign  Exchange  Management  Act,  1959,  

(FEMA),  show  cause  notices  were  issued  to  the  

Respondent No.1 for alleged violation of Sections 3A  

and  4  thereof  for  acquiring  and  holding  foreign  

exchange and dealing with the same to the extent of  

US$ 80,004,53,000, equivalent to Rs.36,000/- crores,  

approximately, in Indian currency, in his account  

with  the  Union  Bank  of  Switzerland,  AG,  Zurich,  

Switzerland.   

10. Mr. Raval submitted that the Respondent No.1,  

Shri Hassan Ali Khan, used the different passports  

which he had acquired by submitting false documents,  

to open bank accounts in foreign countries to engage  

in the laundering of tainted money which brought  

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such  transactions  squarely  within  the  scope  and  

ambit of Section 3 of the PML Act, 2002.  Mr. Raval  

submitted that Section 3 of the aforesaid Act by  

itself was an offence since it provides that any  

person directly or indirectly attempting to indulge  

in or knowingly assisting or knowingly being a party  

or  actually  involved  in  any  process  or  activity  

connected with the proceeds of crime and projecting  

it as untainted property, would be guilty of the  

offence  of  money-laundering.   The  learned  ASG  

submitted that the key expressions used in Section 3  

are “proceeds of crime” and “projecting it as an  

untainted property”.  In other words, in order to  

prove an offence of money-laundering, it has to be  

established  that  the  monies  involved  are  the  

proceeds of crime and having full knowledge of the  

same, the person concerned projects it as untainted  

property.   The  process  undertaken  in  doing  so,  

amounts to be offence of money-laundering.  

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11. In this connection, the learned ASG referred to  

Section  2(u)  of  the  PML  Act,  which  describes  

“proceeds of crime” to mean 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.  He,  

thereafter, referred to the definition of “scheduled  

offence” in Section 2(y) of the above Act to mean  

(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 amounted to Rs.30 lakhs or more.    

12. The  learned  ASG  submitted  that  the  enormous  

sums  of  money  held  by  Shri  Hassan  Ali  Khan  in  

foreign accounts in Switzerland, United Kingdom and  

Indonesia and the transactions in respect thereof,  

prima  facie  indicated  the  involvement  of  the  

Respondent No.1 in dealing with proceeds of crime  

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and projecting the same as untainted property, which  

was sufficient to attract the provisions of Section  

3 of the PML Act, 2002.  The learned ASG submitted  

that under Section 24 of the aforesaid Act, when a  

person is accused of having committed an offence  

under  Section  3,  the  burden  of  proving  that  the  

monies involved were neither proceeds of crime nor  

untainted property, is on the accused. It was urged  

that  once  a  definite  allegation  had  been  made  

against  Shri  Hassan  Ali  Khan  on  the  basis  of  

documents seized, that the monies in his various  

accounts were the proceeds of crime, the burden of  

proving  that  the  money  involved  was  neither  the  

proceeds of crime nor untainted, shifted to him and  

it was upto him to prove the contrary.  The learned  

ASG submitted that Shri Hassan Ali Khan had failed  

to discharge the said burden and hence the large  

sums  of  money  in  the  several  accounts  of  the  

Respondent No.1 would have to be treated as tainted  

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property, until proved otherwise.  The learned ASG  

submitted that the Respondent No.1 had himself made  

certain statements which were recorded under Section  

50 of the PML Act, parts whereof were not hit by the  

provisions of Section 27 of the Indian Evidence Act.  

13. The learned ASG also referred to the provisions  

of  Section  45  of  the  aforesaid  Act  which  make  

offences  under  the  said  Act  cognizable  and  non-

bailable and also provides that notwithstanding the  

provisions of the Code of Criminal Procedure, no  

person accused of an offence punishable for a term  

of imprisonment of more than three years under Part  

A of the Schedule to the Act, is to be released on  

bail  or  on  his  own  bond,  unless  the  Public  

Prosecutor has been given an opportunity to oppose  

the  application  for  such  release  and  where  the  

Public  Prosecutor  opposes  the  application,  the  

Court  is  satisfied  that  there  are  reasonable  

13

grounds  for  believing  that  the  accused  is  not  

guilty of such offence and that he is not likely to  

commit any offence while on bail. The learned ASG  

submitted  that  an  exception  had  been  made  for  

persons under the age of 16 years or a woman or a  

person who is sick or infirm.   

14. Referring to Part A of the Schedule to the PML  

Act, the learned ASG submitted that the same had  

been  divided  into  paragraphs  1  and  2.   While  

paragraph 1 deals with offences under the Indian  

Penal Code under Sections 121 and 121-A thereof,  

paragraph 2 deals with offences under the Narcotic  

Drugs  &  Psychotropic  Substances  Act,  1985.   The  

learned ASG submitted that, on the other hand, Para  

B  is  divided  into  five  paragraphs.  Paragraph  1  

deals with offences under the Indian Penal Code,  

while  paragraph  2  deals  with  offences  under  the  

Arms Act, 1959.  Paragraph 3 deals with offences  

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under  the  Wild  Life  (Protection)  Act,  1972,  

paragraph 4 deals with offences under the Immoral  

Traffic  (Prevention)  Act,  1956,  and  paragraph  5  

deals  with  offences  under  the  Prevention  of  

Corruption Act, 1988.  The learned ASG submitted  

that the facts of the case attracted the provisions  

of paragraph 1 of Part A of the Schedule, since the  

money  acquired  by  Shri  Hassan  Ali  Khan,  besides  

being the proceeds of crime, is also connected with  

transactions  involving  the  international  arms  

dealer, Adnan Khashoggi. The learned ASG submitted  

that  the  same  became  evident  from  the  notarized  

document which had been obtained by the Directorate  

of Enforcement during the course of investigation  

which had been signed by the Respondent No.1 on 29th  

June, 2003, at London and notarized by Mr. Nicolas  

Ronald  Rathbone  Smith,  Notary  Public  of  London,  

England, on 30th June, 2003.  It was also submitted  

that the said document certified the genuineness of  

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the  signature  of  the  Respondent  No.1  and  also  

mentioned his Indian Passport No. Z-1069986.  The  

learned  ASG  further  contended  that  the  said  

notarized  document  also  referred  to  Dr.  Peter  

Wielly, who was a link between Mr. Adnan Khashoggi,  

and one Mr. Retro Hartmann on whose introduction  

the  Respondent  No.1  opened  an  account  at  UBS,  

Singapore, and was also linked with Mr. Kashinath  

Tapuriah.   The  learned  ASG  submitted  that  there  

were other materials to show the involvement of Dr.  

Wielly  in  the  various  transactions  of  the  

Respondent No.1, Hassan Ali Khan.   

15. Further submissions on behalf of the Appellant  

were  advanced  by  Mr.  A.  Mariarputham,  learned  

Senior  Advocate,  who  referred  to  the  purported  

theft of the jewellery of the Nizam of Hyderabad  

and the sale of the same by the Respondent No.1, on  

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account whereof US$ 700,000 had been deposited by  

the Respondent No.1 in the Barclays Bank in London.  

16. Mr. Mariarpurtham then submitted that although  

the  High  Court  had  relied  on  the  provisions  of  

Section  167(2)  Cr.P.C.  in  granting  bail  to  the  

Respondent  No.1,  the  said  provisions  were  not  

attracted to the facts of this case since charge  

sheet had already been filed within the statutory  

period  and  the  High  Court  could  not,  therefore,  

have granted statutory bail to the Respondent No.1  

on the ground that it had been submitted on behalf  

of the Appellant that it would still take some time  

for  the  Appellant  to  commence  the  trial.   Mr.  

Mariarputham  submitted  that  while  the  Respondent  

No.1 had been arrested on 7th March, 2011 and had  

been produced before the Special Judge and remanded  

to custody on 8th March, 2011, the charge sheet had  

been filed on 6th May, 2011 within the prescribed  

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period of 60 days.  It was submitted that the High  

Court  had  wrongly  interpreted  the  provisions  of  

Section  167(2)  Cr.P.C.  in  granting  bail  to  the  

Respondent No.1.

17. In  support  of  his  submissions,  the  learned  

counsel referred to the Constitution Bench decision  

of this Court in Sanjay Dutt Vs. State through CBI,  

Bombay (II) [(1994) 5 SCC 410], wherein it was held  

that the indefeasible right of an accused to be  

released on bail by virtue of Section 20(4)(bb) of  

the  Terrorist  and  Disruptive  Activities  

(Prevention) Act, 1987, was enforceable only prior  

to the filing of the challan and it did not survive  

or remain enforceable on the challan being filed,  

if not already availed of.  Their Lordships held  

further that if the right to grant of statutory  

bail had not been enforced till the filing of the  

challan,  then  there  was  no  question  of  its  

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enforcement thereafter, since it stood extinguished  

the moment the challan was filed because Section  

167(2)  Cr.P.C.  ceased  to  have  any  application.  

Reference was also made to the decision of a Three  

Judge Bench of this Court in Uday Mohanlal Acharya  

Vs.  State  of  Maharashtra [(2001)  5  SCC  453],  

wherein the scope of Section 167(2) Cr.P.C. and the  

proviso thereto fell for consideration and it was  

the  majority  view  that  an  accused  had  an  

indefeasible  right  to  be  released  on  bail  when  

investigation is not completed within the specified  

period  and  that  for  availing  of  such  right  the  

accused was only required to file an application  

before  the  Magistrate  seeking  release  on  bail  

alleging that no challan had been filed within the  

period prescribed and if he was prepared to offer  

bail  on  being  directed  by  the  Magistrate,  the  

Magistrate was under an obligation to dispose of  

the said application and even if in the meantime a  

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charge-sheet had been filed, the right to statutory  

bail  would  not  be  affected.  It  was,  however,  

clarified that if despite the direction to furnish  

bail, the accused failed to do so, his right to be  

released on bail would stand extinguished.   

18. It was, therefore, submitted that the Bombay  

High Court had granted bail to the Respondent No.1  

on an incorrect interpretation of the law and the  

said order granting bail was, therefore, liable to  

be set aside.   

19. Appearing for the Respondent No.1, Hassan Ali  

Khan,  learned  counsel,  Shri  Ishwari  Prasad  A.  

Bagaria, firstly contended that an offence which  

did  not  form  part  of  the  scheduled  offences  

referred to in Section 45 of the PML Act would not  

attract the provisions of Section 3 of the said  

Act.  It was submitted that whatever be the amounts  

involved and even if the same had been unlawfully  

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procured, the same might attract the provisions of  

the Income Tax Act or FEMA, but that would not  

satisfy  the  two  ingredients  of  Section  3  which  

entails that not only should the money in question  

be the proceeds of crime, but the same had also to  

be projected as untainted property.  Mr. Bagaria  

submitted that in the instant case all that has  

been disclosed against the Respondent No.1 is that  

he dealt with large sums of money, even in foreign  

exchange and operated bank accounts from different  

countries, which in itself would not indicate that  

the monies in question were the proceeds of crime.  

Mr. Bagaria also submitted that at no stage has it  

been  shown  that  the  said  amounts  lying  in  the  

accounts of the Respondent No.1 in Switzerland, the  

United Kingdom and Indonesia had been projected as  

untainted  money.   Furthermore,  as  far  as  the  

allegation  regarding  the  theft  of  the  Nizam’s  

jewellery  is  concerned,  except  for  mere  

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allegations, there was no material in support of  

such submission in the face of the case made out by  

the Respondent No.1 that he had brokered the sale  

of some portions of the jewellery for which he had  

received  a  commission  of  US$30,000  which  he  had  

spent in Dubai.

20. Mr. Bagaria submitted that in the complaint,  

reference had been made in paragraph 13 thereof to  

“scheduled  offences”  which  have  been  set  out  in  

sub-paragraphs 13.1 to 13.5.  Mr. Bagaria pointed  

out that the offences indicated related to alleged  

offences under the provisions of the Indian Penal  

Code, the Passport Act, 1967 and the Antiquities  

and  Art  Treasures  Act,  1972,  which  do  not  come  

either under Part A or Part B of the Schedule to  

the PML Act, 2002, except for the offences under  

the Indian Penal Code, the sections whereof, which  

have been included in paragraph 1 of Part B, are  

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not  attracted  to  the  facts  of  this  case.   Mr.  

Bagaria submitted that as a result, none of the  

offences  mentioned  as  scheduled  offences  in  the  

charge-sheet were covered by the Schedule to the  

PML Act, 2002, and could at best be treated as  

offences under the Indian Penal Code, the Passport  

Act  and  the  Antiquities  and  Art  Treasures  Act,  

1972.  On the question of the alleged absconsion of  

the Respondent No.1, Mr. Bagaria submitted that the  

said Respondent had not gone to Singapore on his  

own  volition,  but  had  there  been  taken  by  one  

Amalendu  Kumar  Pandey  and  Shri  Tapuriah.   Shri  

Pandey  was  subsequently  made  a  witness  and  Shri  

Tapuriah was made a co-accused with the Respondent  

No.1.

21. Mr. Bagaria also contended that once bail had  

been granted, even if the special leave petition is  

maintainable,  the  power  to  cancel  grant  of  such  

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bail  lies  with  the  High  Court  or  the  Court  of  

Sessions  under  Section  439(2)  Cr.P.C.  and,  

consequently, all the principles laid down by this  

Court relating to cancellation of bail, would have  

to  be  considered  before  the  order  granting  bail  

could  be  cancelled.   Mr.  Bagaria  submitted  that  

even though the offences were alleged to have been  

committed by the Respondent No.1 as far back as in  

the year 2007, till he was arrested on 7th May,  

2011, there had been no allegation that he had in  

any  manner  interfered  with  the  investigation  or  

tampered with any of the witnesses.  Mr. Bagaria  

submitted that even the apprehension expressed on  

behalf  of  the  appellant  that  there  was  a  

possibility of the Respondent No.1 absconding to a  

foreign  country  on  being  released  on  bail,  was  

without any basis, since such attempts, if at all  

made,  could  be  secured  by  taking  recourse  to  

various measures.  Mr. Bagaria submitted that such  

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a submission could not be the reason for cancelling  

the  bail  which  had  already  been  granted  to  the  

Respondent No.1.   

22. Mr. Bagaria submitted that in the absence of  

any provisions in the PML Act that the provision  

thereof  would  have  retrospective  effect,  the  

provisions of the PML Act could not also be made  

applicable  to  the  Respondent  No.1.   Mr.  Bagaria  

submitted that once it is accepted that the PML  

Act, 2002, would not apply to the Respondent No.1,  

the provisions of Section 45 thereof would also not  

apply  to  the  Respondent’s  case  and  his  further  

detention would be unlawful.  Mr. Bagaria concluded  

on the note that, in any event, the PML Act had  

been  introduced  in  the  Lok  Sabha  on  4th August,  

1998, and all the offences alleged to have been  

committed by the Respondent No.1, were long prior  

to the said date.   

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23. Having  carefully  considered  the  submissions  

made on behalf of the respective parties and the  

enormous amounts of money which the Respondent No.1  

had been handling through his various bank accounts  

and  the  contents  of  the  note  signed  by  the  

Respondent No.1 and notarized in London, this case  

has to be treated a little differently from other  

cases of similar nature. It is true that at present  

there is only a nebulous link between the huge sums  

of money handled by the Respondent No.1 and any  

arms  deal  or  intended  arms  deals,  there  is  no  

attempt  on  the  part  of  the  Respondent  No.1  to  

disclose  the  source  of  the  large  sums  of  money  

handled by him.  There is no denying the fact that  

allegations  have  been  made  that  the  said  monies  

were the proceeds of crime and by depositing the  

same in his bank accounts, the Respondent No.1 had  

attempted to project the same as untainted money.  

The  said  allegations  may  not  ultimately  be  

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established, but having been made, the burden of  

proof that the said monies were not the proceeds of  

crime and were not, therefore, tainted shifted to  

the Respondent No.1 under Section 24 of the PML  

Act, 2002.  For the sake of reference, Section 24  

is extracted hereinbelow :-

“24.Burden of proof. – When a person is  accused  of  having  committed  the  offence  under  Section  3,  the  burden  of  proving  that  proceeds  of  crime  are  in  tainted  property shall be on the accused.”

24. The High Court having proceeded on the basis  

that the attempt made by the prosecution to link up  

the acquisition by the Respondent No.1 of different  

Passports with the operation of the foreign bank  

accounts  by  the  said  Respondent,  was  not  

believable, failed to focus on the other parts of  

the  prosecution  case.  It  is  true  that  having  a  

foreign  bank  account  and  also  having  sizeable  

amounts of money deposited therein does not  ipso  

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facto indicate the commission of an offence under  

the PML Act, 2002.  However, when there are other  

surrounding circumstances which reveal that there  

were doubts about the origin of the accounts and  

the monies deposited therein, the same principles  

would not apply. The deposit of US$ 700,000 in the  

Barclays Bank account of the Respondent No.1 has  

not been denied.  On the other hand, the allegation  

is that the said amount was the proceeds of the  

sale of diamond jewellery which is alleged to have  

been stolen from the collection of the Nizam of  

Hyderabad.  In fact, on behalf of the Respondent  

No.1 it has been submitted that in respect of the  

said deal, the Respondent No.1 had received by way  

of commission a sum of US$ 30,000 which he had  

spent in Dubai.

25. Although,  at  this  stage,  we  are  also  not  

prepared to accept the convoluted link attempted to  

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be established by the learned ASG with the opening  

and  operation  of  the  bank  accounts  of  the  

Respondent No.1 in the Union Bank of Switzerland,  

AG, Zurich, Switzerland, the amounts in the said  

bank account have not been sought to be explained  

by the Respondent No.1.  We cannot also ignore the  

fact that the total income of the Respondent No.1  

for  the  assessment  years  2001-02  to  2007-08  has  

been  assessed  at  Rs.110,412,68,85,303/-  by  the  

Income Tax Department and in terms of Section 24 of  

the PML Act, the Respondent No.1 had not been able  

to  establish  that  the  same  were  neither  the  

proceeds  of  crime  nor  untainted  property.   In  

addition to the above is the other factor involving  

the notarized document in which the name of Adnan  

Khashoggi figures.

26. Lastly, the manner in which the Respondent No.1  

had procured three different passports in his name,  

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after  his  original  passport  was  directed  to  be  

deposited, lends support to the apprehension that,  

if  released  on  bail,  the  Respondent  No.1  may  

abscond.  

27. As far as Mr. Bagaria’s submissions regarding  

Section  439(2)  Cr.P.C.  are  concerned,  we  cannot  

ignore the distinction between an application for  

cancellation  of  bail  and  an  appeal  preferred  

against an order granting bail.  The two stand on  

different  footings.  While  the  ground  for  

cancellation  of  bail  would  relate  to  post-bail  

incidents, indicating misuse of the said privilege,  

an  appeal  against  an  order  granting  bail  would  

question  the  very  legality  of  the  order  passed.  

This  difference  was  explained  by  this  Court  in  

State of U.P. Vs. Amarmani Tripathi [(2005) 8 SCC  

21].

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28. Taking a different view of the circumstances  

which are peculiar to this case and in the light of  

what has been indicated hereinabove, we are of the  

view that the order of the High Court needs to be  

interfered with.  We, accordingly, allow the appeal  

and set aside the judgment and order of the High  

Court impugned in this appeal and cancel the bail  

granted to the Respondent No.1.

………………………………………………………J.        (ALTAMAS KABIR)

………………………………………………………J. (SURINDER SINGH NIJJAR)

NEW DELHI DATED: 30.09.2011

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