Case Note & Summary
The applicant, Sachin Balasaheb Sawant, an IRS officer, was arrested on 27 June 2023 by the Enforcement Directorate (ED) in connection with ECIR No. ECIR/MBZO-I/69/2022, based on a predicate FIR registered by the ACB, Mumbai on 30 June 2022 for offences under the Prevention of Corruption Act, 1988 (PC Act). The FIR alleged that between 12 January 2011 and 31 August 2020, the applicant had amassed disproportionate assets worth approximately ₹2.45 crores. The FIR was unsigned, with the complainant column blank, and no chargesheet had been filed in the predicate offence. The applicant sought bail under Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA), arguing that the unsigned FIR vitiated the ECIR, the ED had no material to arrest him, and the delay in trial warranted his release. The ED opposed bail, relying on statements recorded under Section 50 of the PMLA. The court analyzed the twin conditions under Section 45 PMLA and found that the unsigned FIR rendered the predicate offence fundamentally defective, and the ED could not presume guilt before the applicant was given an opportunity to explain the assets. The court also noted that the statements under Section 50 were recorded after arrest and were inadmissible under Section 25 of the Evidence Act, as held in Prem Prakash v. Union of India. Further, the court emphasized that the applicant had been incarcerated for over 1 year and 3 months with no prospect of trial, violating his right to speedy trial under Article 21. Relying on Ramkripal Meena v. Directorate of Enforcement and Manish Sisodia v. Directorate of Enforcement, the court granted bail, subject to conditions.
Headnote
A) Criminal Law - Bail - Prevention of Money Laundering Act, 2002 - Section 45 - Twin Conditions - Applicant, an IRS officer, arrested for money laundering based on a predicate FIR under the PC Act - The FIR was unsigned and no chargesheet filed - Held that the unsigned FIR renders the predicate offence fundamentally defective, vitiating the ECIR and arrest (Paras 2-4, 10-12).
B) Criminal Law - Predicate Offence - Prevention of Corruption Act, 1988 - Section 13(1)(e) - Disproportionate Assets - The offence requires the accused to be unable to satisfactorily account for assets - ED cannot presume guilt before the accused is given an opportunity to explain - Held that registration of ECIR before such opportunity is premature (Paras 3-4, 10-12).
C) Criminal Law - Arrest - Prevention of Money Laundering Act, 2002 - Section 19 - Reasons to Believe - Arrest order must be based on objective material - In this case, statements under Section 50 were recorded after arrest, indicating a preconceived notion of guilt - Held that arrest was illegal (Paras 4, 13-15).
D) Criminal Law - Evidence - Indian Evidence Act, 1872 - Section 25 - Confession to Police - Statement of accused recorded under Section 50 PMLA after arrest is inadmissible - Reliance on Prem Prakash v. Union of India - Held that such statements cannot be used to oppose bail (Paras 4, 16-17).
E) Criminal Law - Bail - Right to Speedy Trial - Delay in trial due to non-filing of chargesheet in predicate offence - Applicant incarcerated for over 1 year and 3 months - Held that continued detention without trial violates Article 21 and entitles bail (Paras 4, 18-20).
Issue of Consideration
Whether the applicant is entitled to bail under Section 45 of the PMLA despite the twin conditions, given the unsigned FIR in the predicate offence, lack of chargesheet, and insufficient material at the time of arrest.
Final Decision
The court allowed the bail application and directed the release of the applicant on bail, subject to conditions.
Law Points
- Twin test under Section 45 PMLA
- Unsigned FIR vitiates predicate offence
- ECIR cannot be registered on presumption of guilt
- Arrest without sufficient material is illegal
- Statement under Section 50 PMLA after arrest inadmissible
- Delay in trial entitles bail
Case Details
2024 LawText (BOM) (10) 90
BAIL APPLICATION NO. 728 OF 2024
Mr. Ashok Mundargi, Mr. Niranjan Mundargi, Mr. Vikram Sutaria, Mr. Mithilesh Mishra, Mr. Swapnil Balajiwale, Mr. Ujjwalkumar Chavhan, Mr. Shreeram Shirsat, Mr. Nishad Mokashi, Mr. Shekhar Mane, Mr. Nikhil Daga, Ms. Karishma Rajesh, Ms. Rutuja Anil Ambekar
The Union of India and another
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Nature of Litigation
Bail application under Section 45 of the Prevention of Money Laundering Act, 2002 in a money laundering case arising from a predicate offence under the Prevention of Corruption Act, 1988.
Remedy Sought
The applicant sought bail on the ground that despite the rigours of the twin test under Section 45 PMLA, he is entitled to relief due to the unsigned FIR, lack of chargesheet, and insufficient material at the time of arrest.
Filing Reason
The applicant was arrested on 27.06.2023 by the ED in connection with ECIR No. ECIR/MBZO-I/69/2022, based on a predicate FIR dated 30.06.2022 alleging disproportionate assets. The FIR was unsigned and no chargesheet had been filed.
Previous Decisions
The applicant had been in custody since 27.06.2023. The ED filed a complaint under Section 45 PMLA before the designated Court in August 2023, which is pending.
Issues
Whether the unsigned FIR in the predicate offence vitiates the ECIR and the arrest under PMLA?
Whether the ED can register an ECIR and arrest the applicant before the predicate offence investigation is complete and before the accused is given an opportunity to explain the assets?
Whether the arrest of the applicant was based on sufficient material and reasons to believe?
Whether the statements recorded under Section 50 PMLA after arrest are admissible?
Whether the applicant is entitled to bail due to delay in trial and prolonged incarceration?
Submissions/Arguments
The applicant argued that the FIR was unsigned, rendering it fundamentally defective and vitiating the ECIR. The ED could not presume guilt before the applicant was given an opportunity to explain the assets. The arrest was based on a preconceived notion of guilt, with statements recorded after arrest. The delay in trial due to non-filing of chargesheet entitles the applicant to bail.
The respondent ED opposed bail, relying on the statements recorded under Section 50 PMLA and the twin conditions under Section 45 PMLA.
Ratio Decidendi
An unsigned FIR in the predicate offence renders the ECIR and arrest under PMLA unsustainable. The ED cannot presume guilt before the accused is given an opportunity to explain the assets. Statements recorded under Section 50 PMLA after arrest are inadmissible under Section 25 of the Evidence Act. Prolonged incarceration without trial violates Article 21 and entitles the accused to bail.
Judgment Excerpts
The applicant in the present case was arrested on 27.06.2023 and he is seeking bail, on the basis that despite the rigours of the twin test contemplated under Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA), he is entitled to such relief.
It was submitted that a perusal of the FIR concerning the predicate offence in the present case, would show that it is an unsigned document, as the signature of the complainant/informant is missing.
Reliance was placed on the judgment of the Supreme Court in the case of Prem Prakash vs. Union of India, wherein the Supreme Court clarified the position of law that such statement of the accused recorded when he is already arrested, cannot be considered, as it would be hit by Section 25 of the Evidence Act.
Procedural History
FIR dated 30.06.2022 registered by ACB, Mumbai against the applicant for offences under PC Act. ECIR registered on 13.12.2022 by ED. Applicant arrested on 27.06.2023. Complaint filed under Section 45 PMLA before designated Court in August 2023. Bail application filed and reserved on 29.08.2024, pronounced on 09.10.2024.
Acts & Sections
- Prevention of Money Laundering Act, 2002: 3, 4, 19, 44(1)(c), 45, 50
- Prevention of Corruption Act, 1988: 13(1)(b), 13(1)(e), 13(2)
- Indian Penal Code, 1860: 109
- Indian Evidence Act, 1872: 25
- Bharatiya Nyaya Suraksha Sanhita, 2023: 479
- Constitution of India: 21
