Delhi High Court
Aditya Krishna vs Directorate Of Enforcement on 28 January, 2025
Author: Chandra Dhari Singh
Bench: Chandra Dhari Singh
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of order: 28th January, 2025
+ BAIL APPLN. 3464/2024 & CRL.M.A. 34021/2024 & CRL.M.A.
37399/2024 & CRL.M.(BAIL) 2021/2024
ADITYA KRISHNA .....Petitioner
Through: Mr. Siddharth Aggarwal, Senior
Advocate with Ms. Tanya Agarwal
and Mr. Gaurav Kalra, Advocates
versus
DIRECTORATE OF ENFORCEMENT .....Respondent
Through: Mr. Manish Jain, Special Counsel,
ED with Mr. Snehal Sharda, Ms.
Gulnaz Khan and Ms. Dhanvati,
Advocates
CORAM:
HON'BLE MR. JUSTICE CHANDRA DHARI SINGH
ORDER
CHANDRA DHARI SINGH, J (Oral)
1. The instant bail application has been filed under Section 439 of the
Code of Criminal Procedure, 1973 (hereinafter “CrPC“) [now Section 483 of
the Bharatiya Nagarik Suraksha Sanhita, 2023 (hereinafter “BNSS”)]
seeking grant of regular bail in ECIR/DLZO-II/03/2024 dated 22nd April,
2024 registered under Sections 3 and 4 of the PMLA by the Directorate of
Enforcement (hereinafter “ED”), arising out of FIR No. 59/2024 dated 12th
March, 2024, registered at Police Station – Crime Branch, Delhi for offences
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punishable under Sections 274, 275, 276, 420, 468, 471 read with 120B and
34 of the Indian Penal Code, 1860 (hereinafter “IPC“).
2. The brief facts that led to the filing of the instant application are that
on 12th March, 2024, FIR No. 59/2024 was registered at Police Station –
Crime Branch, Delhi under Sections 274, 275, 276, 420, 468, 471 read with
120B and 34 of the IPC, based on a complaint by SI Gulab Singh. The
complaint alleged the involvement of several accused persons in the
procurement, manufacturing and sale of spurious anti-cancer medicines.
3. In the said FIR, it has been alleged that the primary accused, namely
Viphil Jain and Suraj Shat, in collusion with their several associates, were
engaged in the illegal procurement of empty vials and raw materials of anti-
cancer drugs such as Keytruda and Opdyta. These counterfeit drugs were
allegedly manufactured and distributed in the market to unsuspecting cancer
patients.
4. Pursuant to the information received, the police formed six teams to
conduct simultaneous raids across Delhi-NCR on 11th March, 2024. During
the raid at Flat No. 1101, Block-2, Eleventh Floor, CSP Units, DLF Capital
Greens, Moti Nagar, New Delhi, the accused persons were allegedly caught
in the act of filling empty vials with unauthorized substances and packaging
them using specialized machinery. The police seized a substantial quantity
of raw materials, counterfeit vials, packaging equipment etc.
5. Based on the FIR, the respondent ED initiated ECIR/DLZO-
II/03/2024 dated 16th March, 2024 under Sections 3 and 4 of the PMLA. The
applicant was initially included as a witness in the investigation, however,
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following further investigation, he was named as accused No. 9 in the first
supplementary prosecution complaint dated 20th July, 2024 filed before the
learned Special Judge under the allegations of money laundering.
6. It has been alleged that the applicant operates a pharmacy in
Muzaffarpur, Bihar by the name and style of „M/s Popular Medicine‟ and is
also involved in selling of medicines on online e-commerce platforms such
as „India Mart‟.
7. The applicant was allegedly implicated based on the disclosure
statements of co-accused persons, who claimed that he used to purchase
spurious anti-cancer medicines from Viphil Jain and transferred sale
proceeds from the bank account of his firm M/s Popular Medicine into his
bank account and further transfer these funds to various persons.
8. It has been alleged that the applicant provided Rs. 80,000/- for the
purchase of these medicines and actively participated in the business
operations by supplying the spurious medicines to various outlets. It has also
been alleged that the applicant took assistance of the co-accused persons in
re-capping and delivery of vials of anti-cancer medicines.
9. Pursuant to the above, summons dated 8th April, 2024 was issued to
the applicant by the respondent and his statement was recorded under
Section 50 of the PMLA on the same day in the premises of Tihar Jail.
Thereafter, the applicant was arrested under Section 19 of the PMLA on 8th
April, 2024.
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10. The respondent claims that the financial transactions linked to his
pharmacy, M/s Popular Medicine, indicate his involvement in the laundering
of proceeds of crime amounting to Rs. 1,05,000/- to Rs. 1,10,000/- per sale.
11. The applicant had previously sought regular bail in FIR No. 59/2024
under Sections 274, 275, 276, 420, 468, 471, 120B and 34 of the IPC which
was granted vide order dated 29th July, 2024 citing that the evidence is
primarily documentary in nature and the possibility of the applicant
tampering with the evidence or influencing the witnesses is very remote.
12. Subsequently, the applicant sought regular bail before the learned
Special Judge, which was rejected vide order dated 18th September, 2024.
Hence, the present bail application.
13. Mr. Siddharth Aggarwal, learned senior counsel appearing on behalf
of the applicant submitted that the applicant has already been granted bail by
the Coordinate Bench of this Court in FIR No. 59/2023. While granting bail,
the Court observed that the evidence in the case is primarily documentary in
nature and is already in police custody, thereby significantly reducing the
possibility of tampering with evidence or influencing witnesses. The
applicant submits that since the present case under the PMLA arises from
the same predicate offence, the reasoning applied in the previous bail order
should be extended to the present matter.
14. It is submitted that no spurious medicines, vials or incriminating
materials have been recovered from the applicant. His arrest is based solely
on the disclosure statements of co-accused persons, which as per the
Hon‟ble Supreme Court‟s decision in Prem Prakash v. Enforcement
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Directorate, (2024) 9 SCC 787, do not constitute substantive evidence. It is
submitted that the Hon‟ble Court has categorically held that statements of
co-accused, without corroborative evidence, cannot form the basis of
prosecution under PMLA.
15. It is submitted that the allegations in FIR No. 59/2024, which form the
foundation of the present ECIR, are contradictory to those made in the
predicate offence case (FIR). It is submitted that the co-accused Suraj Shat‟s
statement in the present case is “Aditya Krishna gave him Rs. 80,000/- for
purchasing 02 vial sealing and capping machine. On instructions of Aditya
Krishna, he purchased the said 02 vial sealing and capping machine in his
name.” It is also submitted that his statement, however, in the case under
FIR 59/2024 is “On instructions of Viphil Jain, I purchased the Handmade
machine from Bawana for sealings the vials……………. I bought one
Automatic manually cap sealing machine from bawana for 48,000/-.” It is
submitted that such contradictions weaken the respondent‟s case and cast
serious doubts on the credibility of the allegations since both the statements
are inconsistent, and thus, the respondent‟s case does not sustain.
16. It is submitted that the applicant was engaged in genuine and lawful
business operations through his pharmacy, M/s Popular Medicine
Specialties. The transactions conducted by the applicant were in the ordinary
course of business, and no evidence has been presented to suggest that the
applicant had any knowledge or intent to be part of an alleged money
laundering syndicate. It is further submitted that mere financial transactions,
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without establishing criminal intent or knowledge, cannot be considered as
proceeds of crime under the PMLA.
17. It is submitted that the financial transactions alleged by the respondent
are matters to be tested during the trial and cannot be a ground for continued
incarceration at the stage of bail. It is submitted that the Hon‟ble High Court
of Delhi, in various precedents related to the NDPS Act and PMLA, has held
that such monetary transactions require thorough scrutiny at trial and should
not preclude the grant of bail.
18. It is submitted that the respondent is required to establish its case
beyond reasonable doubt. It is submitted that the applicant‟s alleged role as a
supplier of medicines remains unsubstantiated, as no spurious medicines or
end users have been identified or recovered. The respondent‟s case lacks a
complete evidentiary chain to establish the petitioner‟s involvement in the
alleged offence.
19. It is submitted that as per the proviso to Section 45(1) of the PMLA,
individuals accused of laundering money below Rs. 1 Crore are entitled to
bail at the discretion of the Special Court and fall under the exemption from
the applicability of the twin conditions prescribed under Section 45 of the
PMLA. In the present case, the alleged amount involved falls below the said
threshold, thereby making the applicant eligible for the benefit under the
statutory provision.
20. It is submitted that the established principle that bail is the rule and
jail is an exception, as reiterated by the Hon‟ble Supreme Court in multiple
judgments including Manish Sisodia v. Enforcement Directorate, 2024
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SCC OnLine SC 1920. The applicant has been in custody for a substantial
period and continued detention would amount to pre-trial punishment,
violating the applicant‟s fundamental right under Article 21 of the
Constitution of India.
21. It is submitted that considering the voluminous nature of documents
and the complexity of the case, the trial is likely to be protracted. It is
submitted that the prolonged incarceration without a conclusive
determination of guilt would amount to a violation of the applicant‟s right to
a speedy trial and personal liberty.
22. In light of the above submissions, it is prayed that the instant
application may be allowed and the reliefs be granted as prayed for.
23. Per Contra, learned counsel appearing on behalf of respondent
vehemently opposed the instant application submitting to the effect that the
same is liable to be dismissed being devoid of any merit.
24. It is submitted that the present bail application must be adjudicated in
accordance with the twin mandatory conditions prescribed under Section 45
of the PMLA. As per the statutory mandate, bail can only be granted if the
Court is satisfied that there are reasonable grounds to believe that the
applicant is not guilty of the offence of money laundering, and the applicant
is not likely to commit any offence while on bail.
25. It is submitted that given the gravity of the allegations and the
applicant‟s role in the complex and organized scheme of money laundering,
it is submitted that the applicant has failed to satisfy these conditions,
thereby disentitling him from the relief sought.
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26. It is submitted that the charges against the applicant are of grave and
heinous nature, involving the manufacture and distribution of counterfeit
anti-cancer medicines. The applicant is alleged to have been an active
participant in an elaborate conspiracy to manufacture and sell spurious
drugs, thereby endangering public health and defrauding unsuspecting
patients. Evidence on record demonstrates that the applicant operated a
pharmacy in Muzaffarpur, Bihar and engaged in selling these counterfeit
drugs on online platforms such as India Mart without issuing invoices,
thereby generating proceeds of crime.
27. It is submitted that the applicant‟s role in money laundering can be
established through various phases such as placement, layering and
integration. Regarding placement, it is submitted that the applicant
facilitated the introduction of proceeds of crime into the financial system
through the sale of counterfeit drugs, generating significant illicit cash
inflows into his bank accounts without proper documentation. About
layering, it is submitted that the applicant concealed the illicit origin of the
funds by engaging in a series of financial transactions, including the
procurement of empty vials and related paraphernalia through hawala
channels, making it difficult for authorities to trace the source of funds. With
regard to integration, it is submitted that the applicant reinvested the
laundered funds into the conspiracy by providing financial support for
procuring sealing and capping machines, thereby furthering the
manufacturing and distribution of counterfeit medicines. The applicant‟s
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financial involvement clearly indicates his direct role in the perpetuation of
the crime.
28. It is submitted that the learned Special Judge has rightly rejected the
applicant‟s bail application after considering the severity of the allegations
and the potential risk of evidence tampering and witness intimidation. It is
submitted that the trial court correctly concluded that the applicant failed to
satisfy the twin conditions under Section 45 of the PMLA, and that his
release would compromise the integrity of the ongoing investigation. It is
submitted that the learned Special Judge‟s order is well-founded and
consistent with the legislative intent to curb organized economic offences.
Reliance in this regard has been placed on the judgments of the Hon‟ble
Supreme Court such as Vijay Madanlal Chaudhary v. Union of India,
(2023) 12 SCC 1, and Tarun Kumar v. Enforcement Directorate, 2023
SCC OnLine SC 1486, wherein, the Hon‟ble Court upheld the
constitutional validity of Section 45 of the PMLA and held that the twin
conditions must be strictly satisfied for the grant of bail. It is submitted that
it has been affirmed in the above judgements that the conditions specified
under Section 45 of the PMLA are mandatory and must be applied even
when considering bail applications under Section 439 of the CrPC.
29. It is further submitted that under Section 24 of the PMLA, there is a
statutory presumption against the accused once he is charged with the
offence of money laundering. It is contended that the applicant has failed to
rebut this presumption and has not provided any credible material to
establish his innocence. The law places the burden on the applicant to prove
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that the transactions attributed to him do not constitute proceeds of crime,
which he has not discharged at this stage.
30. It is submitted that the granting of bail to the applicant would pose a
serious risk to the ongoing investigation. Given the applicant‟s deep
involvement in the syndicate, there is a high likelihood that he may abscond
or influence key witnesses. The offence of money laundering is transnational
in nature, and the applicant‟s connections with the other accused persons
could facilitate his escape from the investigation agency.
31. It is submitted that the offences alleged against the applicant have
serious ramifications for public health and safety. The distribution of
spurious anti-cancer medicines poses a grave risk to patients, and allowing
the applicant to be released on bail would undermine the deterrent effect of
stringent anti-money laundering provisions. It is submitted that the Hon‟ble
Supreme Court has consistently emphasized the need for a strict approach in
cases where offences pose a broader threat to the society.
32. It is contended that the applicant‟s plea for bail does not merit
consideration, as he failed to demonstrate any exceptional circumstances
justifying his release. The legal provisions under PMLA override general
bail principles due to the serious economic and social implications of money
laundering offence. The respondent relies upon on the judgement titled
Union of India v. Rattan Malik, (2009) 2 SCC 624, which states that the
courts should refrain from conducting a mini trial at the stage of bail and
should instead assess whether a prima facie case is made out.
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33. In the light of the foregoing submissions, it is prayed that the present
bail application may be dismissed.
34. Heard the counsel for the parties at length and perused the material
available on record.
35. In light of the submissions made before this Court, it is made out that
the grounds contended by the applicant for grant of bail are multifold.
Firstly, the alleged amount involved falls below Rs. 1 Crore, making the
applicant eligible for the benefit of the statutory proviso that allows
discretion in granting bail. Secondly, it has been contended that even if it is
assumed for the sake of argument that the proviso is not applicable to him,
the applicant has satisfied the twin mandatory conditions under Section 45 of
the PMLA, i.e., whether there are reasonable grounds to believe that he is
not guilty of the offence and whether he is unlikely to commit any offence
while on bail. Lastly, the statutory presumption of guilt under Section 24 of
the PMLA applies in the present case and in view of the same, whether the
applicant has successfully rebutted this presumption.
36. This Court shall now proceed to examine the present matter.
37. It is a settled position of law that statements recorded under Section
50 of the PMLA hold evidentiary value and are admissible in legal
proceedings. The Hon‟ble Supreme Court, while emphasizing the legal
sanctity of such statements, has time and again observed that they constitute
valid material upon which reliance can be placed to sustain allegations under
the PMLA. In a recent judgment, the Hon‟ble Supreme Court in Abhishek
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Banerjee v. Enforcement Directorate, (2024) 9 SCC 22 has made such
observations which are as under:
“21. …Section 160 which falls under Ch. XII empowers the
police officer making an investigation under the said chapter to
require any person to attend within the limits of his own or
adjoining station who, from the information given or otherwise
appears to be acquainted with the facts and circumstances of
the case, whereas, the process envisaged by Section 50 PMLA
is in the nature of an inquiry against the proceeds of crime and
is not “investigation” in strict sense of the term for initiating
prosecution; and the authorities referred to in Section 48
PMLA are not the police officers as held in Vijay Madanlal
[Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC
1] .
22. It has been specifically laid down in the said decision that
the statements recorded by the authorities under Section 50
PMLA are not hit by Article 20(3) or Article 21 of the
Constitution, rather such statements recorded by the authority
in the course of inquiry are deemed to be the judicial
proceedings in terms of Section 50(4), and are admissible in
evidence, whereas the statements made by any person to a
police officer in the course of an investigation under Ch. XII of
the Code could not be used for any purpose, except for the
purpose stated in the proviso to Section 162 of the Code. In
view of such glaring inconsistencies between Section 50 PMLA
and Sections 160/161CrPC, the provisions of Section 50 PMLA
would prevail in terms of Section 71 read with Section 65
thereof.”
38. The Hon‟ble Supreme Court in the aforementioned judgment
underscored that such statements, being recorded in the course of an inquiry
rather than an investigation, are not subject to the restrictions under Article
20(3) and Article 21 of the Constitution. Instead, they are deemed to be
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judicial proceedings under Section 50(4) of the PMLA and, therefore,
admissible as evidence in proceedings under the PMLA.
39. At this stage, it is to be determined whether the applicant is exempted
from the rigors of the twin conditions of bail, if not, then whether the
applicant has satisfied the twin mandatory conditions under Section 45 of the
PMLA. In light of the same, it is imperative to carefully examine the
prosecution complaint, statements of the applicant and co-accused persons
alongwith the relevant bank statements.
40. Accordingly, this Court has referred to the statement of the co-
accused persons, relevant extracts of which are as under:
“Statement of Sh. Suraj Shat recorded under Section 50 of the
PMLA reads as:
iv. He disclosed that he had purchased two Cap Sealing
Machine “Vial Cap Sealing Machine” in his name; one for 49
Page 42 of 140 the purpose of re-capping of vials of Keytruda
anti-cancer medicines and another for the purpose of re-
capping of vials of Opdyta anti-cancer medicine on instruction
of Aditya Krishna as Aditya Krishna was also engaged in the
preparation and distribution of spurious anti-cancer medicines.
v. He was employed by Viphil Jain for a salary of Rs. 30,000/-
per month in cash; that his bank accounts were used by Viphil
Jain to layer sale proceeds of spurious anticancer medicines.
He had also received funds in his bank account from Aditya
Krishna for some medicines. He further transferred funds to
various persons on instruction of Viphil Jain as well as Aditya
Krishna.
vi. Aditya Krishna used to purchase spurious anti-cancer
medicines from Viphil Jain and transferred sale proceeds from
the bank account to M/s Popular Medicine Specialities into hisSignature Not Verified
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bank account on instruction of Viphil Jain. He used to further
transfer these funds to various persons including Viphil Jain.
Statement of Sh. Suraj Shat recorded under Section 161 of the
CrPC reads as:
“viii. On being asked about the recovery and seizure of 02 Vial
Sealing Machine from Suraj Shat‟s house viz. G-286, Gali No
8/31, West Karawal Nagar, Delhi-94, Suraj Shat stated that
the above said 02 Vial Sealing and Capping Machines were
purchased by him from M/s ACMEtech i.e. a wholesale shop
at Poot Kala, Bawana, Delhi for Rs. 21,500/- per machine. He
stated that Aditya Krishna gave him Rs 80,000/- for
purchasing 02 Vial Sealing and Capping Machine. On
instruction of Aditya Krishna, he purchased the said 02 Vial
Sealing and Capping Machine in his name. He also stated that
Aditya Krishna told him that Gagan Khurana broke the Caps
of Vials of anti-cancer medicines, which were very costly vials
and told him to fix the Caps of those broken vials of anti-
cancer medicines.
ix. Aditya Krishna told him that he is residing in Bihar and if he
(Suraj Shat) does repacking and distribution of vials of
anticancer medicines for him (Aditya Krishna), Aditya
Krishna would give him Rs. 500/- per parcel delivery. Suraj
Shat accepted the offer of Aditya Krishna and agreed to do
work for Aditya Krishna for re-capping and assisting in
delivery of vials of anti-cancer medicines.
x. On instruction of Aditya Krishna, he used to receive big
parcel of unsealed vials of anti-cancer medicines, opened the
same and re-packed these anti-cancer medicines into small
boxes as instructed by Aditya Krishna. He used to give these
51 Page 44 of 140 small packs of unsealed anti-cancer
medicines to courier boy (whose contact details were already
provided by Aditya Krishna) for delivering the same at Blue
Dart Courier Centre, Terminal-2, IGI Airport for further
supply to various places all over India. He also stated thatSignature Not Verified
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these small packs of unsealed vials of anti-cancer medicines
were further delivered through one Vinod, employee of Blue
Dart. For this work, Aditya Krishna used to give him Rs. 500/-
per small box (parcel).
xi. He received funds in his bank account 016651100004793
from M/s Popular Medicines Specialties on instruction of his
employer Viphil Jain. He stated that M/s Popular Medicines
Specialty controlled by Aditya Krishna to whom Viphil Jain
used to sell unsealed vials of spurious anti-cancer medicines.
Sometimes, Viphil Jain used to sell these vials on credit to
Aditya Krishna. He further stated that the funds received in his
bank accounts from Aditya Krishna is nothing but the sale
proceeds of these vials of spurious anti-cancer medicines sold
without bill. On instruction of Viphil Jain, he received funds in
his bank account and transferred it to the bank account
numbers provided to him by Viphil Jain.”
***
“I used to supply Refilled Anti Cancer Injections in the market
as per th instructions of Viphil Jain by contacting my
acquaintance Aditya Krishna who lives in Mujaffarpur,
Bihar. Aditya Krishna always booked the porter himself. Aditya
Krishna used to get the goods delivered to Delhi Airport
through the porter and then sell it further.”
Relevant part of the chargesheet which is Annexure P-13 reads
as:
“xvi. He, thereafter, started to buy anti-cancer medicines from
Viphil Jain. He used to buy anti-cancer medicine viz. Keytruda,
Perjetta, Opdita etc, however, mostly, he used to purchase
Keytruda from Viphil Jain. Viphil Jain charged an amount of
Rs. 1,00,000/- to 1,05,000/- from him and the same was further
sold in the open market by him for an amount of Rs. 1,05,000/-
to 1,10,000/-.
xvii. That, Aditya Krishna sent Rs. 2 lac on 21.22.2022 to
Viphil Jain and Rs. 5 lac on 02.12.2022 to Deepali Jain fromSignature Not Verified
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his firms account number 030605011289. In this connection,
Aditya Krishna replied that he purchased medicines from Viphil
Jain.,”
Statement of Sh. Viphil Jain recorded under Section 50 of the
PMLA reads as:
“ii. He and Suraj Shat had rented the flat no. 1101 and 1110
and installed the capping and labeling machines for preparing
fake/spurious anti-cancer medicines. They used to fill
Fluconazol (FORCAN IV) in the empty vials of the anti-cancer
medicine viz. Keytruda. Thereafter, they sold the same in open
market through Aditya Krishna, Akshay Kumar, Neeraj
Chauhan, Keshav Anand, Sneha and others.
iii. He procured empty vials of Keytruda from Pravez Khan
and Neeraj Chauhan for making fake/ spurious anticancer
medicines and after preparing such spurious anticancer
medicines, he used to sell the same in open market through
Aditya Krishna and some other persons;
***
v. He used to get original empty vials of anti-cancer
medicines (Keytruda) from Neeraj Chauhan and Pravez
Khan. He and Suraj Shat also used to paste the label of
empty vials on the vials which were either “not for sale” or
were “short expiry vials” of anti-cancer medicines (Keytruda)
provided by Neeraj Chauhan and Aditya Krishna. He also
stated that Suraj Shat is an expert in the work of pasting
labels on vials.
***
x. That, Viphil Jain received funds of Rs. 42,02,100/- from
Lovee Narula, Rs. 19,52,500 from Aditya Krishna and Rs.
5,40,000/- from Sneha Shivaji Kandhare in his bank
account against the sale of unsealed vials of anti-cancer
medicines without any bill and invoice to Lovee Narula.
Further, he disclosed that Lovee Narula used to purchase
these unsealed vials of anti-cancer medicines without any billSignature Not Verified
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and invoice in cash from Aditya Krishna, Neeraj Chauhan,
Gagan Khurana, Ayonij Jain and himself and used to sell the
same to his customers in India as well as abroad.
xi. That Viphil Jain received funds to the tune of Rs.
23,00,000/- from M/s Delhi Medicine Hub (Akshay Kumar) in
the bank account of his son Sanyam Jain. He used to sell
unsealed vials of anti-cancer medicines without any bill and
invoice to M/s Delhi Medicine Hub mostly in cash. However,
some balance funds were received in his bank account. As
such, M/s Kesha Enterprises also paid the balance amount in
the bank account of his son Sanyam Jain.
xii. He had received funds of Rs. 11.40 lacs from M/s Delhi
Medicine Hub (Akshay Kumar), Rs. 95,000/- from M/s
Cancer Medicine (Akshay Kumar) in the bank account
number 1338104000051484, Rs. 24.46 lacs from Aditya
Krishna, Rs. 7.55 lacs from M/s Popular Medicine
Specialties, Rs. 13.00 lacs from Suraj Shat in the bank
account of his wife Deepali Jain, which was nothing but the
sale proceeds of spurious/ fake anti-cancer medicines.”
Statement of Sh. Parvez Khan recorded under Section 50 of
the PMLA reads as:
“xi. That, Pravez Khan earlier stated in his statement that he
neither knew Aditya Krishna nor he knew any person named
Aditya Krishna before registration of FIR. He also stated that
he does not have any business or financial transaction with
Aditya Krishna. However, thereafter account statement of bank
account number 191801502731 maintained in the name of
Pravez Khan containing credit entries from Aditya Krishna was
shown to him, then Pravez Khan replied that he asked Viphil
Jain for Rs. 2.50 lacs and therefore, Viphil Jain arranged the
fund of Rs. 2.50 lacs through Aditya Krishna.”
Relevant part of the statement of the applicant recorded under
Section 50 of the PMLA reads as:
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“vi. That, Aditya Krishna alsoadmitted that he purchased some
empty vials of anti-cancer medicines from Neeraj Chauhan for
the purpose of converting „Not for sale‟ anti-cancer medicine
to saleable anti-cancer medicines by changing of label and
relabelling. He purchased approx. 6 empty vials of original
Keytruda injection having MRP on it from Neeraj Chauhan by
paying approx. 30,000/- rupees for all the 06 empty vials and
re-label the said original Keytruda injection label on the vials
of „Not for sale‟ Keytruda Vials.
vii. That, he transferred sale proceeds of Keytruda Injection in
the bank accounts of Viphil Jain, Deepali Jain, Suraj Shat,
Sanyam Jain and other accounts provided by Viphil Jain.
Further, some payments were also made in cash. He used to
transfer sale proceeds of such spurious Keytruda Injection
from his account and his firm‟s account namely M/s Popular
Medicines Specialty.
***
ix. That the sale proceeds of the spurious/ fake Keytruda
Injection were received in cash and the same was deposited in
his bank account and M/s Popular Medicine Specialties‟ bank
account and further the same was utilized in his business.
***
xvii. That, Aditya Krishna sent Rs. 2 lac on 21.22.2022 to Viphil
Jain and Rs. 5 lac on 02.12.2022 to Deepali Jain from his firms
account number 030605011289. In this connection, Aditya
Krishna replied that he purchased medicines from Viphil Jain,
therefore, as per requirement he transferred the aforesaid
amount.”
“The relevant part of the „Investigation with the Banks‟ which
is a part of Annexure A-2 reads as under:
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***..”
41. Upon the perusal of the requisite documents, including the statements
of the applicant quoted hereinabove, co-accused and the relevant bank
statements, the following inferences can be drawn with respect to the issues
under consideration.
A. First, that the applicant in his statements recorded under Section
50 of the PMLA, admitted to purchasing empty vials of the anti-
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cancer medicines from co-accused and relabeling them for sale,
thereby actively participating in the alleged criminal activity.
B. Second, that the applicant‟s financial transactions demonstrate
direct involvement in the sale and distribution of spurious
medicines, with multiple transfers to the accounts of co-accused
namely Viphil Jain, Deepali Jain and Suraj Shat, all of whom
have admitted to their roles in the laundering process.
C. Third, that statements of co-accused Suraj Shat and Viphil Jain
implicate the applicant as an active participant in the procurement
and sale of fake medicines, with specific references to
instructions given by the applicant for purchasing sealing
machines and repacking vials.
42. This Court shall now peruse the provisions of Section 45 of the
PMLA, which lays down the statutory mandate regarding the grant of bail in
such cases and establishes the twin conditions that the applicant must fulfill
to secure release on bail.
“Section 45. Offences to be cognizable and non-bailable.
(1) [Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), no person accused of an
offence 2[under this Act] shall be released on bail or on his
own bond unless–]
(i) the Public Prosecutor has been given a opportunity to
oppose the application for such release; and
(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:
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Provided that a person, who, is under the age of sixteen years,
or is a woman or is sick or infirm, 3[or is accused either on his
own or along with other co-accused of money-laundering a sum
of less than one crore rupees] 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 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 sub-section
(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.
[Explanation.–For the removal of doubts, it is clarified that the
expression “Offences to be cognizable and non-bailable” shall
mean and shall be deemed to have always meant that all
offences under this Act shall be cognizable offences and non-
bailable offences notwithstanding anything to the contrary
contained in the Code of Criminal Procedure, 1973 (2 of 1974),
and accordingly the officers authorised under this Act are
empowered to arrest an accused without warrant, subject to the
fulfillment of conditions under section 19 and subject to the
conditions enshrined under this section.]”
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43. Section 45 of the PMLA governs the grant of bail in cases of money
laundering and it imposes stringent conditions on the grant of bail. A careful
reading of the provision reveals the following essential ingredients that must
be satisfied before bail can be granted.
44. Firstly, Section 45(1) of the PMLA mandates that no person accused
of an offence under the PMLA shall be released on bail or on his own bond
unless two cumulative conditions are satisfied i.e., (i) the Public Prosecutor
must be given an opportunity to oppose the bail application; and (ii) if the
Public Prosecutor opposes the application, the Court must be satisfied that
there are reasonable grounds for believing that the accused is not guilty of
the offence and is not likely to commit any offence while on bail.
45. Secondly, Section 45(2) of the PMLA provides that the limitations on
the grant of bail under sub-section (1) are in addition to the limitations
imposed under the CrPC, or any other law applicable at the time. This makes
it clear that the provisions of the PMLA are to be applied over and above the
general principles of bail applicable to criminal offences under the CrPC,
thereby, reinforcing the stringent approach adopted by the legislature in
dealing with money laundering offences.
46. Thirdly, the proviso to Section 45(1) of the PMLA carves out an
exception to the rigorous twin conditions by allowing bail to be granted, at
the discretion of the Special Court, to specific categories of persons, namely:
(i) individuals below the age of sixteen years, (ii) women, (iii) persons who
are sick or infirm, and (iv) those accused, either alone or with others, of
money laundering involving a sum of less than rupees one Crore.
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47. Following a perusal of the statutory provision, it becomes imperative
to examine the judicial pronouncements that have interpreted and applied
Section 45 of the PMLA in various factual contexts.
48. The Hon‟ble Supreme Court in Nikesh Tarachand Shah v. Union of
India, (2018) 11 SCC 1 struck down the twin conditions as unconstitutional.
However, the legislature subsequently amended the provision to cure the
defects, and it has since been upheld in Vijay Madanlal Choudhary
(Supra), reaffirming the strict nature of bail conditions under the PMLA. In
Prem Prakash (Supra), the Hon‟ble Supreme Court has also delved into the
principles pertaining to bail in PMLA matters. The relevant paragraphs are
as under:
“…Section 45 PMLA — Contours
10. Considering that the present is a bail application for the
offence under Section 45 PMLA, the twin conditions mentioned
thereof become relevant. Section 45(1) PMLA reads as under:
“45. Offences to be cognizable and non-bailable. — (1)
Notwithstanding anything contained in the Code of Criminal
Procedure, 1973 (2 of 1974), no person accused of an offence
[under this Act] 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
(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 or is accused either on his
own or along with other co-accused of money-laundering a sumSignature Not Verified
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of less than one crore rupees, 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 special order made in this behalf
by that Government.”
11. In Vijay Madanlal Choudhary v. Union of India [Vijay
Madanlal Choudhary v. Union of India, (2023) 12 SCC 1] , this
Court categorically held that while Section 45 PMLA restricts
the right of the accused to grant of bail, it could not be said that
the conditions provided under Section 45 impose absolute
restraint on the grant of bail. Para 302 is extracted
hereinbelow : (SCC p. 259)
“302. It is important to note that the twin conditions provided
under Section 45 of the 2002 Act, though restrict the right of the
accused to grant of bail, but it cannot be said that the
conditions provided under Section 45 impose absolute restraint
on the grant of bail. The discretion vests in the court, which is
not arbitrary or irrational but judicial, guided by the principles
of law as provided under Section 45 of the 2002 Act.”
These observations are significant and if read in the context of
the recent pronouncement of this Court dated 9-8-2024 in of
Sisodia v. Enforcement Directorate [Manish Sisodia v.
Enforcement Directorate, (2024) 12 SCC 660 : 2024 SCC
OnLine SC 1920] , it will be amply clear that even under PMLA
the governing principle is that “Bail is the Rule and Jail is the
Exception”. In para 52 of Manish Sisodia [Manish Sisodia v.
Enforcement Directorate, (2024) 12 SCC 660 : 2024 SCC
OnLine SC 1920] , this Court observed as under:
“52. … From our experience, we can say that it appears that
the trial courts and the High Courts attempt to play safe inSignature Not Verified
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matters of grant of bail. The principle that bail is a rule and
refusal is an exception is, at times, followed in breach. On
account of non-grant of bail even in straightforward open-and-
shut cases, this Court is flooded with huge number of bail
petitions thereby adding to the huge pendency. It is high time
that the trial courts and the High Courts should recognise the
principle that “bail is rule and jail is exception.”
12. All that Section 45 PMLA mentions is that certain
conditions are to be satisfied. The principle that, “bail is the
rule and jail is the exception” is only a paraphrasing of Article
21 of the Constitution of India, which states that no person
shall be deprived of his life or personal liberty except
according to the procedure established by law. Liberty of the
individual is always a Rule and deprivation is the exception.
Deprivation can only be by the procedure established by law,
which has to be a valid and reasonable procedure. Section 45
PMLA by imposing twin conditions does not re-write this
principle to mean that deprivation is the norm and liberty is the
exception. As set out earlier, all that is required is that in cases
where bail is subject to the satisfaction of twin conditions, those
conditions must be satisfied.
***
Scope of inquiry under Section 45 PMLA
16. Coming back to the scope of inquiry under Section 45, Vijay
Madanlal Choudhary [Vijay Madanlal Choudhary v. Union of
India, (2023) 12 SCC 1] , while reiterating and agreeing with
the holding in Ranjitsing Brahmajeetsing Sharma v. State of
Maharashtra [Ranjitsing Brahmajeetsing Sharma v. State of
Maharashtra, (2005) 5 SCC 294 : 2005 SCC (Cri) 1057] , held
that the court while dealing with the application for grant of
bail in PMLA need not delve deep into the merits of the case
and only a view of the court based on the available material
available on record is required. It held that the court is only
required to place its view based on probability on the basis of
reasonable material collected during investigation. The words
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used in Section 45 are “reasonable grounds for believing”
which means that the court has to see only if there is a genuine
case against the accused and the prosecution is not required to
prove the charge beyond reasonable doubt…”
49. Having considered the legislative intent behind Section 45 and the
judicial precedents interpreting its application, this Court shall now proceed
to apply the established principles to the facts of the present case to assess as
to whether the applicant can claim benefit of proviso to Section 45 of the
PMLA.
50. The material on record demonstrates that the accused persons
operated in a highly coordinated and systematic manner, with clear
understanding and collaboration among them to facilitate the offence. The
evidence shows deliberate concealment of the origin of funds and the
layering of transactions to evade detection by regulatory authorities. The
sheer scale of operations, involving the movement of funds across multiple
jurisdictions, use of hawala channels, and sale of counterfeit medicines to
unsuspecting patients and hospitals, underscores the organized and
syndicated nature of the offence.
51. The respondent has provided a detailed representation of the modus
operandi of the accused persons in the form of a graphic illustration:
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52. In Saumya Chaurasia v. Enforcement Directorate, (2024) 6 SCC
401, the Hon‟ble Supreme Court has stated that the Courts should be
mindful in keeping the evidence of movement of funds acquired out of the
syndicate and utilization of the proceeds of crime to judge whether the
individual is a part of the syndicate. The relevant part of the said precedent is
herein below:
“19. As stated hereinabove, the supplementary complaint was
filed against the appellant along with the other accused on 30-
1-2023, in which the summary of investigative findings against
each of the accused persons have been recorded in Para 8
thereof. The details of the investigation conducted by the
respondent ED have been stated in Para 9 and the role of each
accused including the appellant in the commission of alleged
offence of money laundering has been stated in Para 10 thereof,
which reads as under:
“10. Role of accused in the offence of money laundering
A. Evidences of offence of money laundering against Smt
Saumya Chaurasia–
Mrs Saumya Chaurasia is an officer of the Chhattisgarh State
Civil Services who was posted as the Deputy Secretary in the
Office of Chief Minister of Chhattisgarh and was working as an
OSD to CM. Despite being relatively very junior in the
bureaucratic hierarchy, she enjoyed unprecedented power and
control because of her direct access to higher political powers.
Information shared by the Income Tax Department and analysis
of documents and digital devices seized during the searches
conducted under Section 17 PMLA, 2002 revealed that Smt
Saumya Chaurasia, Deputy Secretary working in the Chief
Minister’s Office, is one of the key persons in creation of the
syndicate headed by Shri Suryakant Tiwari. An extortion racket
of this magnitude and nature was possible only when multiple
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acts of Suryakant Tiwari. This was made possible by Saumya
Chaurasia so that pliant officers were posted in the coal mining
districts who would listen to Suryakant Tiwari. Also, it was an
unwritten rule that instructions of Suryakant Tiwari meant the
voice of Saumya Chaurasia and the powers to be. The fact that
Suryakant Tiwari had personal and close official dealings with
her and was carrying her instructions to the officers, made it
possible for Suryakant Tiwari to also command senior district
level officers. This illegal authority was essential for him to run
his empire of illegal extortion from coal & iron pellet
transportation. Without his concurrence, no NOC was issued by
the district machinery. All this was made possible by the fact
that he was in the good books of Mrs Saumya Chaurasia.
Therefore, she has directly indulged in the offence of money
laundering as defined under Section 3 PMLA, 2002 being
actually involved in the process of money laundering by way of
possession, concealment, use, acquisition and projecting the
proceeds of crime as untainted property.
As per the findings of the investigation, it can be inferred that
Saumya Chaurasia has directly acquired “proceeds of crime”
as defined under Section 2(l)(u) PMLA, 2002 to an extent of
more than Rs 30 crores. ED’s investigation makes it evident
that although all the money of extortion on coal & iron pellet
transportation was collected by the syndicate of Suryakant
Tiwari, he was not the final beneficiary of this scam. He did
utilise large amounts of money for purchasing benami assets,
but big chunks of the money were transferred to Saumya
Chaurasia, spent on political funding and transferred as per the
instructions of higher powers.
Mr Manish Upadhyay, a relative of Mr Suryakant Tiwari, is a
close associate of both Mrs Saumya Chaurasia & Mr Suryakant
Tiwari. ED investigation has established that Mr Manish
Upadhyay was inserted in as an extra layer of protection for
cash dealings between Mr Suryakant Tiwari and Mrs Saumya
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Chaurasia. He used to transport cash from Mr Suryakant
Tiwari to Mrs Saumya Chaurasia.
ED investigation has established that Mrs Saumya Chaurasia
and her family went on a spree of acquiring immovable assets
during the period which coincided with the coal levy scam.
These assets of which she is the real beneficial owner were
identified and attached by issuance of provisional attachment
orders(s) as detailed in succeeding paragraphs.
20. The evidence relating to strong relations between the
appellant and Mr Suryakant Tiwari, between the appellant and
Mr Manish Upadhyay, and between the appellant and Mr
Anurag Chaurasia; the evidences of movement of funds
acquired out of extortion syndicate run by Mr Suryakant Tiwari
to Manish Upadhyay, proxy of the appellant; the utilisation of
proceeds of crime and acquisition of properties by the appellant
in the name of her mother Shanti Devi and cousin Mr Anurag
Chaurasia along with the details of the said properties, etc.
have been detailed in the said prosecution complaint, which
leave no doubt in the mind of the Court that prima facie the
appellant has been found involved in the commission of the
offence of money laundering as defined in Section 3 of the said
Act.”
53. As the Hon‟ble Supreme Court has emphasized in a catena of
judgments, the offence of money laundering must be viewed in the context
of the entire criminal enterprise rather than in isolation with respect to
individual roles. The collective nature of the operations, the financial
interlinks between the accused persons and the fraudulent intent evidenced
through sustained unlawful activity, leave no doubt that the applicant was an
integral part of the broader scheme to launder proceeds of crime.
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54. The respondent has indicated that the applicant actively participated in
multiple stages of the laundering process, including the placement, layering
and integration of illicit funds into the legitimate economy. The applicant‟s
financial transactions, his association with co-accused individuals, and his
admitted involvement in acquiring equipment for repackaging counterfeit
medicines, indicate a deeper level of complicity beyond mere business
dealings.
55. In the same judgement, the Hon‟ble Supreme Court has also
emphasized that although the proviso to Section 45 of the PMLA confers
discretion on the Court to grant bail where the accused falls within the
conditions of the proviso, it does not mean that the person specified in the
said proviso should necessarily be released on bail. The relevant part of
Saumya Chaurasia (Supra) is reproduced herein below:
“23. The use of the expression “may be” in the first proviso to
Section 45 clearly indicates that the benefit of the said proviso
to the category of persons mentioned therein may be extended
at the discretion of the court considering the facts and
circumstances of each case, and could not be construed as
mandatory or obligatory on the part of the court to release
them. Similar benevolent provision for granting bail to the
category of persons below the age of sixteen years, women, sick
or infirm has been made in Section 437CrPC and many other
special enactments also, however by no stretch of imagination
could such provision be construed as obligatory or mandatory
in nature, otherwise all serious offences under such special
Acts would be committed involving women and persons of
tender age below 16 years. No doubt the courts need to be more
sensitive and sympathetic towards the category of persons
included in the first proviso to Section 45 and similarSignature Not Verified
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provisions in the other Acts, as the persons of tender age and
women who are likely to be more vulnerable, may sometimes be
misused by the unscrupulous elements and made scapegoats for
committing such crimes, nonetheless, the courts also should not
be oblivious to the fact that nowadays the educated and well
placed women in the society engage themselves in the
commercial ventures and enterprises, and advertently or
inadvertently engage themselves in illegal activities. In
essence, the courts should exercise the discretion judiciously
using their prudence, while granting the benefit of the first
proviso to Section 45 PMLA to the category of persons
mentioned therein. The extent of involvement of the persons
falling in such category in the alleged offences, the nature of
evidence collected by the investigating agency, etc. would be
material considerations.”
56. In view of the foregoing, this Court holds that the applicant cannot
claim the benefit of the monetary threshold exemption under the proviso to
Section 45 of the PMLA. The entire scheme of laundering illicit funds, as
uncovered by the investigation, extends far beyond the threshold of one
crore rupees, and the applicant‟s role must be assessed in the broader context
of the criminal conspiracy in which he actively participated.
57. Therefore, the argument that the applicant‟s financial involvement
falls below the statutory threshold lacks merit, as the illicit funds form part
of a larger organized effort to disguise the proceeds of crime.
58. Now this Court shall decide as to the applicant has successfully
discharged the burden of proving that he is not guilty of the alleged offence
and is unlikely to commit any offence while on bail.
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59. It is well settled, as reiterated by the Hon‟ble Supreme Court in Vijay
Madanlal Choudhary (Supra) and Manish Sisodia (Supra), that while the
stringent twin conditions under Section 45 restrict the right to bail, they do
not impose an absolute bar. The discretion of the court in granting bail
remains judicial and must be exercised in accordance with the settled legal
principles. The governing principle that “bail is the rule, and jail is the
exception” must be harmonized with the legislative mandate that requires
satisfaction of the conditions laid down under Section 45 before bail can be
granted.
60. The bank records in the instant matter reveal significant cash deposits
and fund transfers that align with the proceeds of counterfeit medicines,
further establishing a prima facie case of money laundering.
61. The contradiction in the statements of co-accused Suraj Shat,
regarding the source and purpose of funds introduces some inconsistencies,
however, the overall evidence shows the applicant‟s involvement, making it
difficult to satisfy the first condition that the applicant is „innocent‟.
62. For the second condition of Section 45 of the PMLA, the pattern of
transactions and extensive network established for the distribution of
spurious medicines suggests that the applicant had a well-structured setup.
The involvement of multiple bank accounts, cash transactions and hawala
channels indicate a high risk of continued engagement in similar activities if
released.
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63. The applicant‟s admission of using hawala channels to facilitate
unaccounted transactions raises concerns about the potential interference
with the investigation and further commission of the offence while on bail.
64. At this stage, it is pertinent to note that the learned senior counsel for
the applicant has also contended that the applicant has been released on bail
in the predicate offence in FIR No. 59/2024 vide order dated 29th July, 2024
in Bail Appln No. 2236/2024 by the Coordinate Bench of this Court.
65. It has been submitted that the present PMLA proceedings against the
applicant arises out of the schedule offence in the aforesaid FIR and since
the petitioner has been released on regular bail in that case, the same ruling
may be applied to the present case as well, and the applicant‟s present bail
plea may be decided accordingly.
66. It is well settled that proceedings under the PMLA and the predicate
offence registered under the IPC or other statutes are distinct in nature,
scope, and purpose. The offence of money laundering under Section 3 of the
PMLA is an independent offence that focuses on the process of disguising
the illicit origin of funds and their integration into the financial system.
67. With regard to the above, the Division Bench of the Bombay High
Court in Amar S. Mulchandani v. Enforcement, Directorate, 2024 SCC
OnLine Bom 3327, has noted that Section 3 of the PMLA is a stand-alone
crime that attracts its own stringent legal provisions and conditions for bail:
“The Enforcement Directorate represented by the Additional
Solicitor General Mr Anil Singh urged that investigation of the
crime by ED is an independent investigation and once ECIR is
registered then the base/predicate/scheduled offence is no moreSignature Not Verified
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required for taking it to its logical end under the PMLA and the
scheduled offence is necessary only for registration of an
offence under PMLA and thereafter whatever may happen to
predicate/scheduled offence, is totally irrelevant. It was urged
that PMLA is a self-contain statute and the offence registered
under it standalone, independent of predicate offence.
The learned Single Judge appreciated the said arguments in the
backdrop of the scheme of the special enactment, which was
connected with the specific object to track and investigate cases
of money laundering.
We must quote the most pertinent observations of the learned
Single Judge, which reads thus:
“Hypothetically, „an accused‟ in a predicate/scheduled offence
is highly influential either monetarily or by muscle power and
by use of his influence gets the base offence, compromised or
compounded to avoid further investigation by ED i.e. money
laundering or the trail of proceeds of crime by him, either in the
predicate/scheduled offence or any of the activities revealed
therefrom. And, if the aforestated contention of the learned
counsel for the applicants is accepted, it will put to an end to
the independent investigation of ED i.e. certainly not the
intention of legislature in enacting the PMLA. Therefore, if the
contention of the learned counsel for the applicants is accepted,
in that event, it would be easiest mode for the accused in a case
under the PMLA to scuttle and/or put an end to the
investigation under the PMLA. Therefore, the said contention
needs to be rejected.”
Based on the aforesaid observation, since the conclusion was
drawn that in case of money laundering which involves many
stages of “placement”, “layering”, it require systematic
analysis and investigation and upholding the impugned order of
remanding the applicants to the judicial custody, the
application was dismissed.
It is to be noted that this decision was delivered on 16-3-2021,
a few days before the Supreme Court in Vijay Madanlal
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Choudhary case offered further clarification contemplating
three contingencies when the ECIR i.e. investigation under
PMLA, came to an end.
80. In the wake of the above reading, we are satisfied that
grievance of the petitioners do not deserve any consideration.
Necessarily, the writ petitions filed by different accused,
seeking similar relief cannot be entertained. Hence, the
petitions are dismissed. In view of the dismissal of the writ
petitions, pending interim applications also stand disposed off.”
68. The grant of bail in the predicate offence, therefore, does not
automatically entitle the applicant to bail under PMLA proceedings. Unlike
general offences under the IPC, the PMLA imposes stringent twin conditions
under Section 45 of the PMLA, which require the applicant to demonstrate
that he is not guilty of money laundering and that he is unlikely to commit
any offence while on bail. The distinction is further reinforced by the fact
that the burden of proof under Section 24 of the PMLA shifts onto the
accused, which is a significant departure from the principles applicable in
predicate offences under the CrPC.
69. Therefore, the mere fact that the applicant was granted bail in the
predicate offence does not, ipso facto, justify the grant of bail in the present
proceedings under PMLA.
70. In view of the facts and circumstances, this Court finds that the twin
conditions prescribed under Section 45 of the PMLA have not been satisfied
and the applicant‟s contention regarding his bail in the predicate offence
holds no weight in the present case. The evidence on record, the ongoing
nature of the investigation, and the applicant‟s alleged role in the broader
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financial syndicate indicate that the applicant has failed to satisfy the rigors
of Section 45 of the PMLA.
71. It is held that the applicant has failed to establish reasonable grounds
to believe that he is not guilty of the offence, nor has he demonstrated that
he is unlikely to commit any offence while on bail.
72. Thus, this Court does not find any merit in the contention of the
applicant that he is exempted from the twin conditions under the proviso to
Section 45 of the PMLA or that he satisfies the twin conditions under
Section 45 of the PMLA. Accordingly, the said argument stands rejected.
73. Now adverting to the other ground contended on behalf of the
applicant for grant of bail which is whether the statutory presumption of
guilt under Section 24 of the PMLA applies in the present case and whether
the applicant has successfully rebutted this presumption?
74. At this stage, this Court deems it necessary to analyze the statutory
framework governing the burden of proof in proceedings related to proceeds
of crime. Section 24 of the PMLA reads as under:
“24. Burden of proof. –In any proceeding relating to proceeds
of crime under this Act, — (a) in the case of a person charged
with the offence of money-laundering under section 3, the
Authority or Court shall, unless the contrary is proved, presume
that such proceeds of crime are involved in money-laundering;
and
(b) in the case of any other person the Authority or Court, may
presume that such proceeds of crime are involved in money-
laundering.”
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75. From the bare perusal of Section 24 of the PMLA, it is evident that
once a person is charged with the offence of money laundering under
Section 3, the law presumes that the proceeds of crime are involved in
money laundering unless the contrary is proven by the accused.
76. In the present case, the investigating agency has relied not only on the
statement of co-accused under Section 50 of the PMLA but also on financial
records, WhatsApp communications, and transactional data, which indicate
the applicant’s active role in the alleged money laundering activities.
77. By virtue of Section 24 of the PMLA, the respondent is not required
to conclusively establish the applicant’s guilt at the pre-trial stage, rather, the
applicant must demonstrate that the proceeds of crime attributed to him are
not linked to money laundering. In the absence of any rebuttal by the
applicant, the presumption under Section 24 of the PMLA stands in favor of
the respondent, thereby justifying his continued detention.
78. The Hon‟ble Supreme Court in Prem Prakash (Supra) has made the
following observations:
“In Vijay Madanlal Choudhary [Vijay Madanlal Choudhary v.
Union of India, (2023) 12 SCC 1] dealing with Section 24
PMLA, the three-Judge Bench held as under : (SCC pp. 229-31,
paras 237 & 239-40)
“237. Be that as it may, we may now proceed to decipher the
purport of Section 24 of the 2002 Act. In the first place, it must
be noticed that the legal presumption in either case is about the
involvement of proceeds of crime in money-laundering. This
fact becomes relevant, only if, the prosecution or the authorities
have succeeded in establishing at least three basic or
foundational facts. First, that the criminal activity relating to aSignature Not Verified
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scheduled offence has been committed. Second, that the
property in question has been derived or obtained, directly or
indirectly, by any person as a result of that criminal activity.
Third, the person concerned is, directly or indirectly, involved
in any process or activity connected with the said property
being proceeds of crime. On establishing the fact that there
existed proceeds of crime and the person concerned was
involved in any process or activity connected therewith, itself,
constitutes offence of money-laundering. The nature of
process or activity has now been elaborated in the form of
Explanation inserted vide Finance (No. 2) Act, 2019. On
establishing these foundational facts in terms of Section 24 of
the 2002 Act, a legal presumption would arise that such
proceeds of crime are involved in money-laundering. The fact
that the person concerned had no causal connection with such
proceeds of crime and he is able to disprove the fact about his
involvement in any process or activity connected therewith, by
producing evidence in that regard, the legal presumption would
stand rebutted.
***
239. Be it noted that the legal presumption under Section 24(a)
of the 2002 Act, would apply when the person is charged with
the offence of money-laundering and his direct or indirect
involvement in any process or activity connected with the
proceeds of crime, is established. The existence of proceeds of
crime is, therefore, a foundational fact, to be established by the
prosecution, including the involvement of the person in any
process or activity connected therewith. Once these
foundational facts are established by the prosecution, the onus
must then shift on the person facing charge of offence of money-
laundering–to rebut the legal presumption that the proceeds of
crime are not involved in money-laundering, by producing
evidence which is within his personal knowledge. In other
words, the expression “presume” is not conclusive. It also does
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are involved in money-laundering is to be invoked by the
authority or the court, without providing an opportunity to the
person to rebut the same by leading evidence within his
personal knowledge [Sarbananda Sonowal v. Union of India,
(2005) 5 SCC 665] .
240. Such onus also flows from the purport of Section 106 of
the Evidence Act. Whereby, he must rebut the legal presumption
in the manner he chooses to do and as is permissible in law,
including by replying under Section 313 of the 1973 Code or
even by cross-examining prosecution witnesses. The person
would get enough opportunity in the proceeding before the
authority or the court, as the case may be. He may be able to
discharge his burden by showing that he is not involved in any
process or activity connected with the proceeds of crime. In any
case, in terms of Section 114 of the Evidence Act, it is open to
the court to presume the existence of any fact which it thinks
likely to have happened, regard being had to the common
course of natural events, human conduct, and public and
private business, in their relation to the facts of the particular
case. Considering the above, the provision under consideration
[Section 24(a)] by no standards can be said to be unreasonable
much less manifestly arbitrary and unconstitutional.”
79. In light of the principles enunciated by the Hon‟ble Supreme Court in
Vijay Madanlal Choudhary (Supra) and reiterated in Prem Prakash
(Supra), this Court must determine whether the foundational facts necessary
to invoke the presumption under Section 24 of the PMLA have been
established by the respondent. The Hon‟ble Supreme Court has categorically
held that the prosecution must satisfy three essential ingredients. First, the
commission of a scheduled offence must be established. Second, the
property in question must be shown to have been derived or obtained,
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directly or indirectly, as a result of such criminal activity and third, the
accused must be linked, directly or indirectly, to any process or activity
connected with the proceeds of crime.
80. In the present case, the respondent has placed on record material
indicating that the applicant actively participated in procurement and sale of
spurious anti-cancer medicines. The investigation has revealed that the
applicant engaged in financial transactions involving the proceeds of crime,
including payments made through banking channels and hawala
transactions.
81. Applying the legal presumption under Section 24(a) of the PMLA,
once the respondent has demonstrated these foundational facts, the onus
shifts to the applicant to rebut the presumption that the proceeds of crime
were not involved in money laundering. The applicant, however, has failed
to provide any credible evidence to rebut this presumption. Mere denial of
involvement or assertion of being an investor in the firm without day-to-day
operational control is insufficient to discharge the burden imposed by the
statute.
82. Furthermore, as clarified by the Hon‟ble Supreme Court, the
presumption under Section 24(a) of the PMLA does not operate conclusively
and allows the accused an opportunity to rebut the same through cross-
examination, production of evidence, or explanations under Section 313 of
the CrPC. In the absence of any such rebuttal, the presumption stands in
favor of the respondent, and the applicant’s continued detention is justified
under the PMLA.
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83. Therefore, it is observed by this Court that the respondent had
sufficient material in its possession, including financial records, digital
evidence, and the applicant‟s communications, to establish a valid ‘reason to
believe’ that the applicant is guilty of the offence of money laundering. The
procedural safeguards under the PMLA were duly followed, and the
challenge to the legality of the arrest is without merit. Furthermore, the
contention that the applicant‟s arrest was solely based on the statement of
co-accused persons under Section 50 of the PMLA is unfounded and
rejected.
84. Having dealt with all the issues, this Court is of the view that
considering the filing of the first supplementary prosecution complaint and
the ongoing nature of the investigation, it is not satisfied that the applicant
has fulfilled the twin conditions under Section 45 of the PMLA. The
respondent has presented sufficient material to warrant further investigation,
including financial records, electronic evidence, and statements of co-
accused implicating the applicant. These materials suggest an active
involvement in laundering proceeds of crime and a pattern of financial
transactions that need further investigation.
85. The ongoing investigation is an extensive and meticulous effort by the
investigating agency to unearth a broader nexus of financial misconduct and
uncover deeper layers of the alleged offence. As new evidence continues to
emerge, it may further solidify the allegations against the applicant. The
complexity of the financial trail and its potential societal and national
ramifications require continued custodial interrogation.
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86. In light of the above discussions on facts and law, it is held that the
applicant has been unable to put forth any propositions before this Court that
are sufficient for grant of bail and thus, the same are rejected. In view of the
same, this Court is not inclined to release the applicant on bail and the
instant application, is, hereby, dismissed along with the pending
applications, if any.
87. The applicant, if on interim bail, is directed to surrender before the
Court concerned within a period of seven days from today and the
sureties/bail bond, if any shall stand discharged. If the applicant fails to
surrender as directed, the investigating agency shall take appropriate steps to
take the applicant in custody to secure his presence.
88. It is made clear that any observations made herein are only for the
purpose of deciding the present petition and shall not be construed as an
expression on the merits of the case. The learned Trial Court shall proceed
with the matter uninfluenced by any observations made by this Court and
shall decide the case strictly in accordance with law.
89. The order will be uploaded on the website forthwith.
CHANDRA DHARI SINGH, J
JANUARY 28, 2025
rk/ryp/mk
Click here to check corrigendum, if any
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