Case Note & Summary
The Directorate of Enforcement, Union of India, filed an application under Section 439(2) of the Code of Criminal Procedure, 1973 before the Bombay High Court challenging the order dated 11 August 2021 passed by the Special Judge designated under the Prevention of Money Laundering Act, 2002 at Greater Bombay, which granted bail to respondent no.1 in PMLA Case ECIR 14/MZO/2013. The matter arose from FIR No.216 of 2013 registered by MRA Marg Police Station on 30 September 2013 under Sections 120B, 467 and 471 of the Indian Penal Code, 1860 against M/s. National Spot Exchange Limited, its directors, key officials, 25 defaulters and others, on a complaint by Pankaj Ramnaresh Saraf alleging cheating, forgery and criminal breach of trust involving Rs.202 lakhs of the complainant and approximately Rs.5,600 crores of 13,000 investors. Based on this, ECIR 14/MZO/2013 was registered on 14 October 2013 under the PMLA. Investigation revealed that defaulters M/s. Astha Minmet India Private Limited and M/s. Juggernaut Projects Ltd. laundered proceeds of crime. Bank accounts of M/s. Vihang Aastha Housing Projects LLP were scrutinised; it received Rs.21,74,00,000 from Aastha Group companies between September 2012 and April 2013. Respondent no.1, a land aggregator based in Titwala, received Rs.10.50 crores from the LLP during December 2012 to September 2013, purportedly for acquisition of 78 acres of land in Titwala. The prosecution alleged that the actual land acquisition cost was only Rs.1.34 crores, and the remaining funds were diverted to acquire properties in his name and his wife's name. Respondent no.1 was arrested on 6 April 2021. His first bail application filed on 21 May 2021 was rejected on 18 June 2021. The complaint/charge-sheet was filed on 4 June 2021, cognizance taken on 16 June 2021, and copy received by respondent on 18 June 2021. He filed a second bail application on 19 July 2021, which the Special PMLA Court allowed on 11 August 2021, citing filing of charge-sheet as a change in circumstance, no progress in investigation, non-arrest of partners/directors of the LLP, and withdrawal of objection to making attachment absolute in MA 451 of 2016. The ED challenged the bail order, raising three legal issues: maintainability of cancellation under Section 439(2) CrPC when accused not actually released; continued relevance of Nikesh Tarachand Shah v. Union of India, (2016) 11 SCC 1 after amendment to Section 45(1) PMLA; and whether the Special Court relied on irrelevant material while ignoring relevant material. The respondent raised a preliminary objection that Section 439(2) cannot apply unless the accused is actually released, relying on B.S. Rawat v. Leidomanm Heinrich, 1990 SCC Online Bombay 629 and Mahendra Manilal Shah, (2010) Cr.L.J. 4257. The High Court heard arguments on 25 August 2021 and pronounced judgment on 8 September 2021, but the provided excerpt ends before the court's analysis and final decision, so the operative holding and directions are not available from the text.
Headnote
A) Criminal Procedure - Cancellation of Bail - Section 439(2) CrPC - Maintainability requires actual release from custody - Code of Criminal Procedure, 1973, Section 439(2) - The Directorate of Enforcement sought cancellation of bail granted to respondent no.1; respondent raised preliminary objection that no application lies unless accused is actually released on bail, relying on B.S. Rawat v. Leidomanm Heinrich, 1990 SCC Online Bombay 629 and Mahendra Manilal Shah, (2010) Cr.L.J. 4257. The High Court was called upon to decide whether Section 439(2) can be invoked before actual release (Paras 19-20). B) Prevention of Money Laundering - Bail Conditions - Twin Conditions under Section 45(1) PMLA and Effect of Nikesh Tarachand Shah - Prevention of Money Laundering Act, 2002, Section 45(1) - The applicant contended that the Special Court failed to comply with twin conditions while granting bail and that the decision in Nikesh Tarachand Shah v. Union of India, (2016) 11 SCC 1 remained applicable despite subsequent amendment to Section 45(1). The High Court identified this as a point of law requiring determination (Para 6). C) Criminal Procedure - Bail Grant - Consideration of Relevant Material and Change in Circumstances - Code of Criminal Procedure, 1973, Section 439(2) - The applicant alleged that the Special Court relied on irrelevant material, ignored relevant material, and failed to record fresh grounds after earlier rejection; the Special Court had cited filing of charge-sheet, lack of progress, and withdrawal of objection to attachment as grounds for bail. The High Court was to examine whether the Special Court acted on relevant material (Paras 5-6, 18).
Issue of Consideration
Whether Section 439(2) of the Cr.P.C. can have no application unless accused is released from the custody; Whether decision in Nikesh Tarachand Shah 2016(11) SCC 1 has lost its significance because of amendment in Section 45(1) of the PMLA Act; Whether Trial Court while granting bail acted upon the irrelevant material and ignored the relevant material
Law Points
- Cancellation of bail under Section 439(2) CrPC requires actual release from custody
- Twin conditions under Section 45(1) PMLA must be satisfied
- Nikesh Tarachand Shah continues to apply despite amendment to Section 45(1) PMLA
- Filing of charge-sheet may constitute change in circumstance for bail
- Court must consider relevant material and ignore irrelevant material
