moneylaundering =possession of such huge quantum of demonetized currency and new currency in the form of Rs.2000/­ notes, without disclosing the source from where it is received = we are not inclined to interfere with the well considered opinion of the Sessions Court and the High Court rejecting the prayer for grant of regular bail to the appellant. However, considering the fact that the appellant is in custody since 28th December, 2016 and the offence is punishable with imprisonment for a term extending to seven years only, but not less than three years, the Trial Court will be well advised to proceed with the trial on day­to­day basis expeditiously.

CRIMINAL APPEAL NOS.1878­1879   OF  2017
(Arising out of SLP (Crl.) No. 6896–6897 of 2017)
Rohit Tandon       …Appellant
The Enforcement Directorate        …Respondent
A.M. Khanwilkar, J.
1. By these appeals the order of the High Court of Delhi at
New Delhi dated 5th May, 2017, rejecting the Bail Application
No.119 of 2017 and Criminal M.B. No.121 of 2017 has been
assailed. The appellant was arrested on 28th December, 2016 in
connection with ECIR/18/DZ­II/2016/AD(RV) registered under
Sections 3 & 4 of the Prevention of Money­Laundering Act,
2002 (hereinafter referred to as “the Act of 2002”).  The said
ECIR was registered on 26th  December, 2016 as a sequel to
FIR No.205/2016 dated 25th December, 2016 in relation to the
offences punishable under Sections 420, 406, 409, 468, 471,
188 and 120B of the Indian Penal Code, 1860 (“IPC” for short).
The said FIR was registered by the Crime Branch of Delhi
Police, New Delhi.  The ECIR, however, has been registered at
the   instance   of   Assistant   Director   (PMLA),   Directorate   of
Enforcement, empowered to investigate the offences punishable
under the Act of 2002.
2. The appellant first approached the Additional Sessions
Judge­02, South East Saket Court, New Delhi for releasing him
on bail by way of an application under Section 439 of the Code
of Criminal Procedure, 1973 read with Section 45 of the Act of
2002.     The   said   bail   application   came   to   be   rejected   vide
judgment   dated   7th  January,   2017   by   the   said   Court.   The
appellant thereafter approached the High Court of Delhi at New
Delhi   by   way   of   Bail   Application   No.119   of   2017   and   an
interlocutory   application   filed   therein,   being   Criminal   M.B.
No.121 of 2017. The High Court independently considered the
merits of the arguments but eventually rejected the prayer for
bail vide impugned judgment dated 5th May, 2017.
3. The ECIR   has been registered against Ashish Kumar,
Raj   Kumar   Goel   and   other   unknown   persons   for   offences
punishable under Sections 3/4 of the Act of 2002 on the basis
of information/material, as evident from the predicate offence
registered   by   P.S.   Crime   Branch,   Delhi   against   the   named
accused and unknown accused for offences punishable under
Sections 420, 406, 409, 467, 468, 471, 188 and 120B of IPC,
being   FIR   No.205/2016   dated   25th  December,   2016.     The
relevant facts noted in the ECIR read thus:
“A. It is reported that during the course of investigation of
Case FIR No.242/16 u/s 420, 467,468,471, 120­B IPC, PS
C.R. Park, Delhi, it is revealed that Accused Raj Kumar Goel
along  with associates  are  engaged  into  earning  profits  by
routing   money   into   various   accounts   by   using   forged
documents   and   thereby   receiving   commission   from   the
prospective clients who either need money by cheque or in
cash. In order to obtain large profits, accused Raj Kumar Goel
and few of his associates have opened many Bank Accounts
in Kotak Mahindra and ICICI Bank at Naya Bazar, Chandni
Chowk, Delhi.
B. On   08.11.2016,   the   Government   if   India   announced
demonetization   of   one   thousand­   (1000)   and   five   hundred
(500) rupee notes. On this accused Raj Kumar Goel conspired
with the bank manager of Kotak Mahindra Bank, Cannaught
Place, namely Ashish Kumar r/o A­701, Bestech Park, Sector
61, Gurugram, Haryana and one Chartered Accountant, name
unknown, having mobile number 9711329619 to earn huge
profit by converting black money in the form of old currency
notes into new currency notes. In this conspiracy, the said CA
acted as a mediator and arranged prospective clients who
intended to convert their black money into legitimate money.
For the same, alleged CA offered 2% commission to the other
accused persons on all such transactions.
C. The accused were having bank accounts in the Naya
Bazar branch of Kotak Mahindra Bank but the CA and Bank
Manager  Ashish  asked  accused  Raj   Kumar  to  deposit  old
currency notes in Cannaught Place branch of Kotak Mahindra
Bank.   It   is   also   revealed   that   the   accused   opened   bank
accounts   in the   name   of   Quality  Trading  Company,  Swati
Trading   Company,   Shree   Ganesh   Enterprises,   R.K.
International,   Mahalxmi   Industires,   Virgo   International   and
Sapna International on the basis of forged/false documents
and deposited approx. Rs.25 Crore after the demonetization.
As  per the  preliminary investigation of the said case  it is
transpired   that   accused   Raj   Kumar   Goel,   Bank   Manager
Ashish, CA along with their associates are involved in a deep
roted conspiracy and were indulged in converting old currency
which   were   entrusted   to   bank/Govt   officials   and   were
supposed to be delivered to general public/guidelines issued
by the Reserve Bank of India/Ministry of Finance and hand
thus cheated the public at large. The accused persons have
also caused monetary loss to the Govt. of India and thereby
Committed offences u/s 420, 406, 409, 467, 468, 471, 188,
120­B IPC.”
It is then noted that the offences under Sections 420,
468, 471 and 120B of IPC are scheduled offences under the Act
of   2002   and   that   from   the   available   facts,   a   reasonable
inference   is   drawn   that   the   named   accused   and   unknown
accused  have  made  illegal  earnings  arising out  of  the  said
criminal conspiracy which might have undergone the process
of laundering and thereby an offence under Section 3 of the Act
of 2002 was made out.   It is noted that prima facie case for
commission   of   offence   under   Section   3   punishable   under
Section 4 of the Act of 2002 was made out and accordingly the
case is being registered and taken up for investigation under
the Act of 2002 and rules framed thereunder.
4. The learned Sessions Judge while considering the bail
application adverted to the relevant   materials including the
CDR   analysis   of   Mobile   number   of   Ashish   Kumar,   Branch
Manager, Kotak Mahindra Bank, K.G. Marg Branch, Kamal
Jain,   CA   of   Rohit   Tandon   (hereinafter   referred   to   as
“appellant”), Dinesh Bhola, Raj Kumar Goel;  the statements of
Kamal Jain, Dinesh Bhola and Ashish Kumar, recorded under
Section 50 of the Act of 2002; and analysis of bank statements
of   stated   companies.   All   these   reveal   that   Ashish   Kumar
conspired with other persons to get deposited Rs.38.53 Crore
in   cash   of   demonetized   currency     into   bank   accounts   of
companies and got demand drafts issued in fictitious names
with intention of getting them cancelled and thereby converting
the   demonetized   currency   into   monetized   currency   on
commission   basis.     Further,   the   investigation   also   revealed
that the entire cash was collected on the instructions of the
appellant herein, by Ashish Kumar, Raj Kumar Goel and others
through   Dinesh   Bhola,   an   employee   of   the   appellant.
According to the prosecution, all the associates of the appellant
acted on instructions of the appellant for getting issued the
demand drafts against cash deposit with the help of Ashish
Kumar, Branch Manager of Kotak Mahindra Bank  and others,
to the tune of Rs.34.93 Crore from Kotak Mahindra Bank, K.G.
Marg Branch. It was also noted that the demand drafts   of
Rs.3.60   Crore   were   issued   in   fictitious   names   on   the
instructions   of   Bank   Manager   Ashish   Kumar   in   lieu   of
commission received by him in old cash currency. The demand
drafts   amounting   to   Rs.38   Crore   were   issued   in   favour   of
Dinesh Kumar and Sunil Kumar which were recovered from
the custody of Kamal Jain who had kept the same on the
instructions   of   the   appellant.   Out   of   the   said   amount,   the
demand  drafts  of  other banks,  apart  from  Kotak  Mahindra
Bank Limited, were also recovered. The prosecution suspected
that there could be other dubious transactions made by the
appellant   in   other   banks   and   that   Ashish   Kumar,   Bank
Manager and others were acting on the instructions of the
appellant for executing the crime.
5. The   Sessions   Court   rejected   the   argument   of   the
appellant that the investigation of the offence registered against
the appellant and others under Section 3/4 of the Act of 2002
being a sequel to the FIR registered by the Crime Branch of
Delhi   Police,   it   cannot   be   investigated   by   the   Enforcement
Directorate.   For,   the   Enforcement   Directorate   was   not
concerned   with   the   outcome   of   the   investigation   of   the
predicate offence registered by the Delhi Police. It thus opined
that the matter on hand must be examined only in reference to
the registration of ECIR by the Enforcement Directorate.  The
fact   that   the   investigation   in   FIR   registered   by   the   Crime
Branch   of   Delhi   Police,   bearing   FIR   No.205/2016,   had   not
commenced  will also  be of  no  avail to  the  appellant.   The
Sessions Court also found that as per Section 19 of the Act of
2002, the only condition to be satisfied for arrest of a person is
the reasonable belief of the authority gathered on the basis of
material in its possession. Further, in the present case, the
accused was arrested by the competent authority on the basis
of material in his possession giving rise to a reasonable belief
about   the   complicity   of   the   accused   in   the   commission   of
offence punishable under the Act of 2002.  As such the arrest
of the appellant under the Act of 2002 cannot be termed as
illegal.  After having dealt with those contentions, the Sessions
Court took note of the material pressed into service by the
prosecution and analysed the same in the following words:
“21. Pursuant   to   registration   of   FIR   No.205/2016   under
section 420, 406, 409, 468, 471, 188, 120­B IPC by Crime
Branch, the matter was taken up by ED and ECIR No.18/16
was   opened   for   investigation.   Transaction   statements   of
accounts   in   Kotak   Mahindra   Bank   in   FIR   No.205/16   in
respect of companies i.e. Delhi Training Company, Kwality
Tading Company, Mahalaxmi Industries, R.K. International,
Sapna Trading Company, Shree Ganesh Enterprises, Swastik
Trading Company arid Virgo International were sought and
scrutinized, Huge cash deposits in the said accounts were
identified   during   November,   2016,   post   demonetization
announcement it was found that demand drafts were issued
in   fictitious   names   like   Dinesh   Kumar,   Sunil   Kumar,
Abhilasha Dubey, Madan Kumar, Madan Saini, Satya Narain
Dagdi and Seema Bai.
22. Statement   of   Ashish   Kumar,   accused   named   in
FIR No.205/16, Branch Manager, Kotak Mahindra Bank,
K.G.   Marg   branch   was   recorded   under   section   50   of
PMLA  which  revealed  that  Kamal  Jain,  CA  of  accused
Rohit   Tandon   contacted   him   to   get   the   demonetized
currency on behalf of accused/applicant, converted into
monetized   currency   on   commission   basis.  The
commission of Ashish Kumar was decided @ 35%, who in turn
contacted one Yogesh Mittal and Rajesh Kumar Goel, accused
in FIR No.205/16 to carry out the criminal design of getting
the demonetized cash converted into monetized 7 valuable
form.   Demonetized   currency   was   deposited   in   different
accounts of companies pertaining to Raj Kumar Goel besides
others through Raj Kumar Goel with the help of Ashish Kumar
in different bank accounts of Kotak Mahindra Bank and DDs
were   issued   in   fictitious   names.   The   illegal   conversion   of
demonetized   currency,   getting   the   same   deposited   and
issuance   of   demand   drafts   is   corroborated   through   CDR
analysis of relevant persons for the relevant period. Dinesh
Bhola and Kamal Jain, in their statements recorded under
section 50 of PMLA have also confirmed and reiterated the
facts as stated by Ashish Kumar, the Branch Manager. The
statements   of   persons   recorded   under   section   50   of
PMLA, which has evidentiary value under section 50(4)
of   PMLA,   have   confirmed   that   the   old   demonetized
currency   pertains   to   accused   Rohit   Tandon   and   the
conspiracy was executed on his instructions.
23. Lastly, it was submitted by learned senior counsel for
accused that accused fully cooperated with the investigating
agency and there was no need to arrest him in this case. He
further   submitted   that   the   actions   of   Accused   persons   as
mentioned in the FIR attract implications and as such the
correct authority to investigate into the same is the Income
Tax Department and not the ED. Per contra, learned Special
Prosecutor for ED submitted that accused only cooperated in
the   investigation   in   ECIR   No.14/16   and   not   in   ECIR   No.
18/16. He further submitted that as sufficient material
surfaced on record against the present accused and he
did  not   cooperate   in   the   investigation   in   the   present
case, therefore, accused Rohit Tandon was arrested in
this   case.  He   submitted   that   he   does   not   dispute   the
jurisdiction of Income Tax Department so far as other aspects
of the matter are concerned.
24. As per section 45 of PMLA, while considering grant of
bail to accused, the court has to satisfy that:­
i. There are reasonable grounds for believing that
accused is not guilty of such offence and that
ii. He is not likely to commit any offence, while on
25. In the present case, accused has failed to satisfy
this   court   that   he   is   not   guilty   of   alleged   offence
punishable  under  section  3  of  PMLA.  He  has  not  been
able   to   discharge   the   burden   as   contemplated   under
section 24 of the Act.
26. Accused is alleged to have been found involved in a
white   collar   crime.   The   alleged   offence   was   committed   by
accused in conspiracy with other co­accused persons in a well
planned and thoughtful manner. It has been observed in a
catena of decisions by Hon’ble Superior Courts that economic
offences constitute a class apart and need to be visited with a
different approach in the matter of bail. The economic offence
having deep rooted conspiracies and involving huge loss of
public, funds needs to be viewed seriously and considered as
grave   offences   affecting   the   economy   of   the   country   as   a
whole   and   thereby   posing   serious   threat   to   the   financial
health of the country.”
(emphasis supplied)
6. Having   formed   that   opinion   and   noticing   that   the
investigation was at the initial and crucial stage and that the
source of funds of proceeds of crime was yet to be ascertained
till then and that the recovery of balance proceeds of crime was
in the process, the question of enlarging the appellant on bail
does not arise,  more so, when there was every possibility that
he may tamper with the evidence and influence the material
prosecution witnesses. Accordingly, the bail application was
rejected by the Sessions Court vide judgment and order dated
th January, 2017.
7. Aggrieved, the appellant approached the High Court of
Delhi   by   way   of   bail   application   under   Section   439   of   the
Cr.P.C. read with Section 45 of the Act of 2002. The High Court
independently   analysed   all   the   contentions   raised   by   the
appellant and after adverting to the relevant materials, rejected
the application for grant of bail preferred by the appellant.  The
High Court found that the Act of 2002  does not prescribe that
the   Enforcement   Directorate   is   debarred   from   conducting
investigation in relation to the offences under Sections 3 & 4 of
the   Act   of   2002   unless   the   Crime   Branch   concludes   its
investigation  in  relation   to  FIR  No.205/2016 or  was  to   file
charge­sheet for commission of scheduled offence.   Further,
the proceedings under the Act of 2002 are distinct from the
proceedings   relating   to   scheduled   offence   and   both   the
investigations can continue independently.   The High Court
then noted that Section 44 of the Act of 2002 is an enabling
provision, to have a joint trial in such a situation to avoid
conflicting and multiple opinions of the Courts. But proceeded
to hold that the said possibility would arise only when the
charge­sheet is filed after completion of investigation in relation
to   FIR   No.205/2016   and   the   case   is   committed   to   the
concerned Court.  The High Court held that Section 44 of the
Act of 2002 does not envisage a joint investigation but is a
provision stipulating that the trial of offence under Section 3/4
of the Act of 2002 and any scheduled offence connected to the
offence under that section may be tried only by the Special
Court constituted for the area in which the offence has been
committed.   While considering the merits of the allegations
against the appellant, in particular, the materials on record,
the High Court analysed the same in the following words:
“14.  In  FIR   No.205/2016  allegations   are   that  Raj  Kumar
Goel; Ashish Kumar, Bank Manager, Kotak Mahindra Bank,
K.G.Marg Branch and others conspired for illegal conversion
of demonetized  currency notes into  monetized currency by
way of depositing cash in various accounts of the firms and
subsequently   getting   Demand   Drafts   issued   in   fictitious
names.   It   is   further   alleged   in   the   said   FIR   that   accused
therein   opened   bank   accounts   in   the   name   of   ‘Group   of
Companies’   in   Kotak   Mahindra   Bank.   In   ECIR   No.18,
transactions statements of accounts were collected pertaining
to these ‘Group of Companies’ from Kotak Mahindra Bank
and it emerged that from 15.11.2016 to 19.11.2016, there
was huge cash deposit to the tune of `31.75 crores by Raj
Kumar Goel and his associates. It was also found that the
Demand   Drafts   amounting   to   `38   crores   were   issued   in
fictitious names during that period. It cannot be said at this
stage that offences referred in FIR No.205/2016 and the ECIR
No.18 have no nexus.
15.  Prosecution under Section 45 of PMLA for commission of
offence under Section 3 punishable under Section 4 of PMLA
has already been initiated by ED in the Special Court. By an
order   dated   25.02.2017,   learned   Addl.   Sessions   Judge   /
Special   Court   (PMLA)   has   taken   cognizance   against   Rohit
Tandon (present petitioner), Ashish Kumar and Raj Kumar
Goel.   Dinesh   Bhola   and   Kamal   Jain   have   also   been
summoned to face trial under Section 4 of PMLA. Raj Kumar
Goel and Ashish Kumar continue to be in custody in the said
16.  On perusal of the complaint lodged under Section 45
PMLA, it reveals that serious and grave allegations have been
leveled against the petitioner and others. The allegations are
categorical and specific; definite role has been assigned to
each   accused.   It   is   alleged   that   during   the   period   from
15.11.2016 to 19.11.2016, huge cash to the tune of `31.75
crores   was   deposited   in   eight   bank   accounts   in   Kotak
Mahindra Bank in the accounts of the ‘Group of Companies’.
It gives details of Demand Drafts issued during 15.11.2016 to
19.11.2016 from eight bank accounts in the name of Sunil
Kumar,   Dinesh   Kumar,   Abhilasha   Dubey,   Madan   Kumar,
Madan Saini, Satya Narain Dagdi and Seema Bai on various
dates. Most of the Demand Drafts issued have since been
recovered. Its detail finds mention in Table No.2 given in the
17.  During arguments, specific query was raised and the
learned Senior Counsel for the petitioner was asked as to, to
whom the money deposited in the various accounts belonged.
Learned   Senior   Counsel   for   the   petitioner   was   fair
enough to admit that the whole money belonged to the
petitioner.  When   enquired   as   to   from   which   ‘source’,
huge cash was procured, there was no clear response to
it. Again, learned Senior Counsel for the petitioner was
asked  as   to   how  the   cash  belonging  to  the  petitioner
happened   to   be   deposited   in   various   accounts   of   the
‘Group   of   Companies’   which   were   not   owned   by   the
petitioner   and   what   was   its   purpose.   It   was   further
enquired as to why the Demand Drafts were got issued
in  the  names  of  the  persons   referred  above  and  what
was its specific purpose. Learned Senior Counsel for the
petitioner avoided to answer these queries stating that
the defence of the petitioner could not be disclosed at
this   juncture   to   impact   his   case   during   trial.
Apparently, no plausible explanation  has  been  offered
as   to   what   forced   the   petitioner   to   deposit   the   old
currency to the tune of `31.75 crores in eight accounts
of   the   different   ‘Group   of   Companies’   in   Kotak
Mahindra   Bank   during   the   short   period   from
15.11.2016   to  19.11.2016.   There  was  no   explanation
as to why the Demand Drafts for the said amount were
got issued in the name of sham people whose identity
was not known. The purpose of all this exercise seemingly
was to deposit the cash (old currency) first, get the Demand
Drafts   issued   in   fictitious   names   and   obtain   monetized
currency by cancelling them subsequently.  The   petitioner
also did not place on record any document whatsoever
to  show  as  to   from  which   legal   source,  the  cash  was
procured to deposit in the bank accounts of strangers. I
find   no   substance   in   the   petitioner’s   plea   that
petitioner’s only liability was to pay income tax on the
unaccounted money / income. In my considered view, mere
payment of tax on the unaccounted money from any ‘source’
whatever would not convert it into ‘legal’ money. Needless to
say, huge deposit was a sinister attempt / strategy by the
petitioner and others to convert the ‘old currency’ into new one
to   frustrate   the   Demonetization   Policy   primarily   meant   to
unearth black money.
18.  Allegations   against   the   petitioner   are   not   without
substance. The prosecution has recorded statements of the
petitioner on various dates and that of Dinesh Bhola, Ashish
Kumar (Branch Manager, Kotak Mahindra Bank), Raj Kumar
Goel, Kamal Jain (petitioner’s Chartered Accountant), Vimal
Negi, Jivan Singh and Varun Tandon under Section 50 PMLA
on   various   dates.  There   statements   have   evidentiary
value under Section 50 PMLA. Prima facie, the version
given   by   them   is   in   consonance  with   the   prosecution
case. The prosecution has further relied upon Call Data
Records, CCTV footage, Account Trend Analysis.”
(emphasis supplied)
8. The High Court opined that keeping in mind the rigors of
Section 45 of the Act of 2002 for the release of the accused
charged under Part A of the Schedule, on bail, coupled with the
antecedents of the appellant of being involved in other similar
crime registered as FIR No.197/2016, for offence under Section
420, 409, 188, 120B of IPC dated 14th  December, 2016 by
Crime Branch and ECIR No.14/DZ/II/2016 registered on 16th
December, 2016 by Enforcement Directorate for offences under
Sections   3/4   of   the   Act   of   2002.   Further,   during   a   raid
conducted   jointly   by   the   Crime   Branch   and   Income   Tax
Department on 10th December, 2016 at around 10.00 P.M. at
the office premises of the appellant, currency of Rs.13.62 Crore
was recovered  including new currency in the denomination of
Rs.2000/­   amounting   to   Rs.2.62   Crore.   In   addition,   the
appellant   had   surrendered   Rs.128   Crore   during   the   raid
conducted by the Income Tax Department on 6/8   October,
2016 in his office and residential premises.   No reliable and
credible documents were  forthcoming from the appellant about
the source from where he had obtained such a huge quantity of
cash.   The   possibility   of   the   same   being   proceeds   of   crime
cannot   be   ruled   out.   Hence,   it   noted   that   the   question   of
granting   bail   did   not   arise,   taking   into   consideration   the
serious   allegations   against   the   appellant   and   other   facts
including   severity   of   the   punishment   prescribed   by   law.
Accordingly, the bail application of the appellant came to be
rejected.  As a consequence, the pending application which was
considered along with the bail application was also disposed of
by the impugned judgment and  order dated 5th  May, 2017
passed by the High Court.
9. We   have   heard   Mr.   Mukul   Rohatgi,   learned   senior
counsel appearing for the appellant and Mr. Tushar Mehta,
learned  Additional   Solicitor  General  for  the  Union  of  India.
They have also filed written submissions.
10. Before   we   analyse   the   rival   submissions,   for   the
completion   of   record,     we   must   mention   that   after   the
impugned judgment, the Crime Branch filed the charge­sheet
before the appropriate Court in relation to FIR No.205/2016 on
24th  June, 2017. Similarly, the Enforcement Directorate has
filed supplementary complaint  CC No.700/2017 in relation to
ECIR   18/2016,   which   refers   to   further   material   gathered
during   the   investigation,   indicating   the   complicity   of   the
concerned accused in the crime for offence punishable under
Section 3 of the Act of 2002.  A comprehensive supplementary
complaint   has   been   filed   before   the   District   and   Sessions
Judge,   Saket,   New   Delhi   (Designated   Court   under   the
Prevention   of   Money­Laundering   Act,   2002)   on   2nd  August,
11. Before   this   supplementary   complaint   was   filed,   the
appellant preferred second bail application in the present case
before   the   High   Court   of   Delhi   at   New   Delhi,   being   Bail
Application No.1361/2017.  This application was filed on 12th
July, 2017.  Along with the said bail application the appellant
filed an application being Criminal M.A. No.1293 of 2017 for
directing   his   interim   release   in   connection   with
ECIR/DZ/II/2016   on   the   assertion   that   his   mother   was
seriously ill and required immediate medical attention because
of the injuries suffered by her on 20th  June, 2017.   The said
interim release application was allowed on 10th August, 2017.
Notably, the appellant was advised to withdraw the regular
(second) Bail Application  No.1361/2017. The learned Single
Judge of the High Court by order dated 10th  August, 2017
acceded to the prayer so made by the appellant.   The order
passed by the learned Single Judge of the High Court reads
“BAIL APPLN. 1361/2017
The petitioner has prayed for bail in connection with
ECIR/18/DZII/2016/AD registered under Section 3 & 4 of
Prevention of Money Laundering Act, 2002.
Simultaneously an application has been filed seeking
interim  bail   on  the  ground   of  illness  of   the   mother  of   the
petitioner who has recently suffered a fracture in the neck.
Mr.   Mukul   Rohatgi,   learned   Sr.   Advocate   seeks
permission to withdraw the regular bail application on
the   observation   of   the   bench   that   the   earlier   bail
application   was   rejected   only   on   5th   of   May,   2017.
However he presses the interim bail application.
Accordingly   the   regular   bail   application   is
dismissed as withdrawn.
Crl.M.A.No.1293/2017 (application for interim bail)
It has been submitted on behalf of the petitioner that he
is the only son of his mother who has suffered a fall and has
got   a   fracture   in   her   neck.   The   sister   of   the   petitioner   is
stationed abroad. The petitioner has a son who is of young
age. The petitioner has also drawn the attention of this Court
to the medical report which indicates that a plaster has been
put on the fracture but she has been suffering from acute
It has been further submitted that the charge sheet in
the main case has been submitted and that the petitioner has
remained in jail for more than seven months by now.
Opposing the aforesaid prayer for grant of interim bail,
Mr. Mahajan, learned Sr. Standing Counsel submits that this
is a case of serious fiscal impropriety of great magnitude and
there is a possibility of the petitioner tampering with evidence
if   he   comes   out   from   the   jail   even   for  a   short   period.  No
definite   reasons,   however,   have   been   assigned   by
Mr.Mahajan, for such a presumption that the petitioner would
tamper with the evidence specially when charge sheet in the
main case has already been submitted.
Mr.Rohtagi,   learned   senior   counsel   has   drawn   the
attention of this Court to the fact that whenever the petitioner
was summoned to answer to the Queries, he had visited the
office of the ED and in the past, had never tried to evade the
process of investigation.
Taking into account the aforesaid facts, specially the
period  of  incarceration  of  the  petitioner, submission of  the
charge sheet in the main case and the illness of the mother of
the petitioner, this Court is inclined to grant interim bail to the
petitioner for a period of 3 weeks.
Let the petitioner be released on interim bail for the
period of 3 weeks, to be counted from the date of his release,
on his furnishing a bond in the sum of Rs. 25,000/­ with two
sureties of the like amount to the satisfaction of special court.
However it is made clear that the petitioner shall not
tamper with the evidence or commit any act which would be
prejudicial to the prosecution side. Should anything of that
kind be reported, this Court would consider the desirability of
withdrawing/cancelling the interim bail.
The petitioner shall not, unnecessary, seek extension of
the interim bail granted to him. It is also specified that the
petitioner shall not leave the country under any circumstances
whatsoever.   Should   the   petitioner   intend   to   go   out   of   the
territorial   confines   of   NCR   of   Delhi,   permission   would   be
required to be taken from the Special Court. The petitioner
shall also deposit his passport before the Special court while
furnishing his bonds.
Application is disposed of accordingly.
(emphasis supplied)
12. It is relevant to note that the aforementioned order for
interim release of the appellant was confirmed by this Court on
12th August, 2017.
13. The appellant was thereafter advised to file the present
appeals to assail the judgment and order dated 5th May, 2017
passed   by   the   High   Court   of   Delhi   at   New   Delhi   in   Bail
Application No.119 of 2017 and Criminal M.B. No.121 of 2017.
The special leave petitions were filed on 18th  August, 2017.
During   the   pendency   of   these   special   leave   petitions,   the
appellant was advised to also file a writ petition under Article
32 of the Constitution of India to challenge the validity of the
provisions   of  the   Act   of  2002.   The  same  was  filed  on  23rd
August, 2017, being Writ Petition (Civil) No.121 of 2017.  The
reliefs claimed in the said writ petition read thus:
(i) Issue a writ of mandamus or any other appropriate
writ,   order   or   direction   declaring   that   the
conditions/limitations contained in Section 45(1) of
Prevention of Money Laundering Act, 2002 (Act 15 of
2003) to the extent that it imposes rigors/restrictions
in the grant of bail in any offence punishable upto 7
years under the provisions of Prevention of Money
Laundering   Act,   2002   (Act   15   of   2003)   as
unreasonable, arbitrary and unconstitutional being
violative of the fundamental rights of the Petitioner
guaranteed and protected under Articles 14 and 21
of the Constitution of India;
(ii) In the alternative to prayer (i) above, issue a writ of
mandamus or any other appropriate writ, order or
direction   reading   down   the   scope   and   ambit   of
Section 45(1) of the Prevention of Money Laundering
Act, 2002 (Act 15 of 2003), so that the rigors in grant
of   bail   are   not   applicable   in   the   case   of   the
Petitioner, where the alleged scheduled offences in
CC No. 41 of 2017 arising out of charge­sheet No. 1
dated 24.06.2017 filed by the Crime Branch, New
Delhi alleging commission of offences under Sections
420/188/109/120B/34 IPC and Section 12 of the
Prevention of Corruption Act, 1988 (none of which
were   under   Part   A   of   the   Schedule   prior   to   the
Prevention of Money Laundering (Amendment) Act,
2012 (Act 2 of 2013) and formed part of Part B of
the Schedule;
(iii) Issue a writ of mandamus or any other appropriate
writ,   order   or   direction   declaring   the   continued
incarceration of the Petitioner since 28.12.2016 in
ECIR/18/DZ­II/2016/AD   dated  26.12.2016   under
Section 3/4  of the Prevention of Money Laundering
Act, 2002 is illegal, unconstitutional and in violation
of the fundamental right of the Petitioner guaranteed
and protected under Article 21 of the Constitution of
(iv) Issue a writ of mandamus or any other appropriate
writ, order or direction in the nature of mandamus
declaring that the offences under the Prevention of
Money   Laundering   Act,   2002   (Act   15   of   2003)
pursuant   to   the   Prevention   of   Money   Laundering
(Amendment) Act, 2005 (Act 20 of 2005) which came
into   force   w.e.f.   01.07.2005   are   non­cognizable
offences and therefore, it is mandatory to comply
with the provisions of Sections 155, 177(1) and 172
of the Code of Criminal Procedure, 1973 and declare
that the law laid down by the Division Bench of the
Hon’ble   Delhi   High   Court   in   its   judgment   dated
27.4.2016 (reported in 2016 SCC Online Delhi 2493)
and by the Hon’ble Gujarat High Court in Rakesh
Manekchand   Kothari   vs.   Union   of   India   [Special
Criminal   Application   (Habeas   Corpus)   No.
4247/2015] decided on 03.08.2015 holding that the
offences under Section 3 of the Prevention of Money
Laudnering Act, 2002 punishable under Section 4
thereof is a non­cognizable offence is good law and
the   contrary   view   taken   by   the   Hon’ble   Bombay
High   Court   in   its   judgment   dated   14.12.2016   in
Chhagan Chandrakant Bhujbal vs. Union of India &
Ors. is bad in law;
(v) lay down guidelines for compliance by all Courts for
grant   of   bail   in   proceedings   arising   out   of   and
concerning the Prevention of Money Laundering Act,
2002 by expounding the scope of Section 439 of the
Code of Criminal Procedure, 1973;
(vi) Issue rule nisi in terms of Prayers (i) to (v) above;
(vii) And/or pass any other or further orders which Your
Lordships may deem fit and proper in the interest of
14. The aforementioned writ petition was listed together with
the appeals on 30th  October, 2017.   During oral arguments,
however,   the   counsel   appearing   for   the   appellant,   in   all
fairness, stated that the grounds urged in the said writ petition
need not be considered at this stage and that the appeals
preferred against the impugned judgment and order dated 5th
May, 2017 be examined on the basis of the prevailing statutory
provisions, including the rigors of Section 45 of the Act of
2002. In other words, the challenge to the impugned judgment
will have to be considered as per the prevailing provisions and
not   with   reference   to   the   challenge   regarding   the   validity
15.   Reverting to the first contention of the appellant, that
the reasons which weighed with the learned Single Judge of the
High Court while directing interim release of the appellant,
would apply  proprio vigore  for considering the regular bail.  In
that, the learned Single Judge vide order dated 10th  August,
2017 noted the following circumstances:
i) Petitioner never tried to evade the investigation;
ii) The period of incarceration (7 ½ months);
iii) Submission  of charge­sheet in the  main  case on
iv) Illness of the mother of the Petitioner;
v) No definite reasons assigned by the Counsel for the
Respondent   to   substantiate   allegation   that
Petitioner   would   tamper   with   evidence   especially
when   charge­sheet   in   the   main   case   has   been
16. The   argument   though   attractive   at   the   first   blush
deserves to be rejected. In our opinion, the order dated 10th
August,   2017   passed   by   the   High   Court   directing   interim
release of the appellant was primarily on account of the illness
of his mother. No more and no less. The other observations in
the   said   order   will   have   no   bearing   on   the   merits   of   the
controversy and required to be reckoned whilst considering the
prayer for grant of regular bail.  For that, the appellant must
succeed in overcoming the threshold of the rigors of Section 45
of the Act of 2002. Indubitably, the appellant having withdrawn
the   regular   (second)   bail   application,   the   consideration   of
prayer for grant of interim release could not have been taken
forward. Besides, in the backdrop of the opinion recorded by
the Co­ordinate Bench of the High Court (in its decision dated
th  May, 2017) whilst considering the application for grant of
regular bail, which was after filing of the initial complaint CC
No.700/2017   (on   23rd  February,   2017),   was   binding   until
reversed or a different view could be taken because of changed
circumstances. Suffice it to observe that indulgence shown to
the appellant in terms of order dated 10th August, 2017 will be
of no avail.  In that, the facts such as the appellant never tried
to evade the investigation or that he has suffered incarceration
for over 7½ months or that the charge­sheet has been filed in
the predicate offence registered under FIR No.205/2016 or the
factum   of   illness   of   the   mother   of   the   appellant   or   the
observation that no definite reason has been assigned by the
respondents for substantiating the allegation that the appellant
would tamper with the evidence, may become relevant only if
the threshold stipulation envisaged under Section 45 of the Act
of 2002 was to be fulfilled. The said provision reads thus:
“45. Offences to be cognizable and non­bailable.—(1)
Notwithstanding anything contained in the Code of
Criminal   Procedure,   1973   (2   of   1974),   no   person
accused   of   an   offence   punishable   for   a   term   of
imprisonment of more than three years under Part A
of the Schedule shall  be released on  bail or on  his
own bond unless­
(i) the Public Prosecutor has been given an opportunity to
oppose the application for such release; and
(ii) where the Public Prosecutor opposes the application,
the   court   is   satisfied   that   there   are   reasonable
grounds  for  believing  that  he   is  not  guilty  of  such
offence   and   that   he   is   not   likely   to   commit   any
offence while on bail:
Provided that a person who is under the age of sixteen
years or is a woman or is sick or infirm, may be released
on bail, if the Special Court so directs:
Provided   further   that   the   Special   Court   shall   not   take
cognizance   of   any   offence   punishable   under   section   4
except upon a complaint in writing made by—
(i) the Director; or
(ii)   any   officer   of   the   Central   Government   or   a   State
Government authorised in writing in this behalf by the
Central Government by a general or a special order made
in this behalf by that Government.
(1A) Notwithstanding anything contained in the Code of
Criminal   Procedure,   1973   (2   of   1974),   or   any   other
provision of this Act, no police officer shall investigate into
an offence under this Act unless specifically authorised,
by the Central Government by a general or special order,
and, subject to such conditions as may be prescribed.
(2)  The   limitation  on  granting  of  bail   specified   in
sub­section (1) is in addition to the limitations under
the Code of Criminal Procedure, 1973 (2 of 1974) or
any other law for the time being in force on granting
of bail.”
(emphasis supplied)
The sweep of Section 45 of the Act of 2002 is no more res
intergra.   In   a   recent   decision   of   this   Court   in   the   case   of
Gautam   Kundu     Vs.   Directorate   of   Enforcement
(Prevention   of   Money­Laundering   Act),   Government   of
this   Court   has   had   an   occasion   to   examine   it   in
paragraphs 28­30.  It will be useful to advert to paragraphs 28
to 30 of this decision which read thus:
“28.  Before dealing with the application for bail on merit, it
is to be considered whether the provisions of Section 45 of the
PMLA are binding on the High Court while considering the
application for bail under Section 439 of the Code of Criminal
Procedure. There is no doubt that PMLA deals with the offence
of money laundering and the Parliament has enacted this law
as   per   commitment   of   the   country   to   the   United   Nations
General Assembly. PMLA is a special statute enacted by the
Parliament for dealing with money­laundering. Section 5 of
the Code of Criminal Procedure, 1973 clearly lays down that
the provisions of the Code of Criminal Procedure will not affect
any   special   statute   or   any   local   law.   In   other  words,  the
provisions of any special statute will prevail over the general
provisions of the Code of Criminal Procedure in case of any
29 .  Section   45   of   the   PMLA   starts   with   a   non   obstante
clause   which   indicates   that   the   provisions   laid   down   in
Section 45 of  the  PMLA will  have  overriding effect  on the
general provisions of the Code of Criminal Procedure in case
of conflict between them. Section 45 of the PMLA imposes
following two conditions for grant of bail to any person
accused   of   an   offence   punishable   for   a   term   of
imprisonment of more than three years under Part­A of
the Schedule of the PMLA:
(i) That the prosecutor must be given an opportunity
to oppose the application for bail; and
(ii) That   the  Court  must  be   satisfied   that   there  are
reasonable   grounds   for   believing   that   the   accused
person is not guilty of such offence and that he is not
likely to commit any offence while on bail.
30 .  The conditions specified under Section 45 of the PMLA
are   mandatory   and   needs   to   be   complied   with   which   is
further strengthened by the provisions of Section 65 and also
1 (2015) 16 SCC 1
Section   71   of   the   PMLA.   Section   65   requires   that   the
provisions   of   Cr.P.C.   shall   apply   in   sofaras   they   are   not
inconsistent with the provisions of this Act and Section 71
provides that the provisions of the PMLA shall have overriding
effect   notwithstanding   anything   inconsistent   therewith
contained in any other law for the time being in force. PMLA
has an overriding effect and the provisions of Cr.P.C. would
apply only if they are not inconsistent with the provisions of
this Act. Therefore, the conditions enumerated in Section 45 of
PMLA will have to be complied with even in respect of an
application for bail made under Section 439 of Cr.P.C. That
coupled with the provisions of Section 24 provides that
unless   the   contrary   is   proved,   the   Authority   or   the
Court shall presume that proceeds of crime are involved
in money laundering and the burden to prove that the
proceeds   of   crime   are   not   involved,   lies   on   the
(emphasis supplied)
17. In paragraph 34, this Court reiterated as follows:
34. “xxx   xxx xxx    We have noted that Section 45 of the
PMLA will have overriding effect on the general provisions of
the Code of Criminal Procedure in case of conflict between
them. As mentioned earlier, Section 45 of the PMLA imposes
two conditions for grant of bail, specified under the said Act.
We have not missed the proviso to Section 45 of the said Act
which   indicates   that   the   legislature   has   carved   out   an
exception for grant of bail by a Special Court when any person
is under the age of 16 years or is a woman or is a sick or
infirm. Therefore, there is no doubt that the conditions laid
down under Section 45­A of the PMLA, would bind the High
Court as the provisions of special law having overriding effect
on   the   provisions   of   Section   439   of   the   Code   of   Criminal
Procedure   for   grant   of   bail   to   any   person   accused   of
committing offence punishable under Section 4 of the PMLA,
even when the application for bail is considered under Section
439 of the Code of Criminal Procedure.”
The decisions of this Court in the case of Subrata Chattoraj
Vs. Union of India,
Y.S. Jagan Mohan Reddy Vs. CBI 3
, and
Union of India Vs. Hassan Ali Khan 4
have been noticed in
the aforesaid decision.
18. The consistent view taken by this Court is that economic
offences having deep­rooted conspiracies and involving huge
loss of public funds need to be viewed seriously and considered
as grave offences affecting the economy of the country as a
whole and thereby posing serious threat to the financial health
of the country.  Further, when attempt is made to project the
proceeds   of   crime   as   untainted   money   and   also   that   the
allegations may not ultimately be established,  but having been
made,   the   burden   of   proof   that   the   monies   were   not   the
proceeds of crime and were not, therefore, tainted shifts  on the
accused persons under Section 24 of the Act of 2002.
19. It is not necessary to multiply the authorities on the
sweep   of   Section   45   of   the   Act   of   2002   which,   as
aforementioned, is no more  res integra. The decision in the
2 (2014) 8 SCC 768
3 (2013) 7 SCC 439
4 (2011) 10 SCC 235
case   of  Ranjitsing   Brahmajeetsing   Sharma   Vs.   State   of
Maharashtra   and   Anr.,
and  State   of   Maharashtra   Vs.
Vishwanath   Maranna   Shetty,
dealt   with   an   analogous
provision in the Maharashtra Control of Organised Crime Act,
1999. It has been expounded that the Court at the stage of
considering the application for grant of bail, shall consider the
question   from   the   angle   as   to   whether   the   accused   was
possessed of the requisite mens rea.  The Court is not required
to record a positive finding that the accused had not committed
an   offence   under   the   Act.   The   Court   ought   to   maintain   a
delicate   balance   between   a   judgment   of   acquittal   and
conviction   and   an   order   granting   bail   much   before
commencement of trial. The duty of the Court at this stage is
not   to   weigh   the   evidence   meticulously   but   to   arrive   at   a
finding on the basis of broad probabilities.  Further, the Court
is   required   to   record   a   finding   as   to   the   possibility   of   the
accused committing a crime which is an offence under the Act
after grant of bail.   In  Ranjitsing  Brahmajeetsing  Sharma
5 (2005) 5 SCC 294
6  (2012) 10 SCC 561
(supra),  in paragraphs 44 to 46 of the said decision, this Court
observed thus:
“44.  The wording of Section 21(4), in our opinion, does not
lead to the conclusion that the Court must arrive at a positive
finding   that   the   applicant   for   bail   has   not   committed   an
offence under the Act. If such a construction is placed, the
court intending to grant bail must arrive at a finding that the
applicant   has   not   committed   such   an   offence.   In   such   an
event, it will be impossible for the prosecution to obtain a
judgment of conviction of the applicant. Such cannot be the
intention   of   the   Legislature.   Section   21(4)   of   MCOCA,
therefore,   must   be   construed   reasonably.   It   must   be   so
construed that the Court is able to maintain a delicate balance
between a judgment of acquittal and conviction and an order
granting bail much before commencement of trial. Similarly,
the   Court   will   be   required   to   record   a   finding   as   to   the
possibility   of   his   committing   a   crime   after   grant   of   bail.
However, such an offence in futuro must be an offence under
the Act and not any other offence. Since it is difficult to predict
the future conduct of an accused, the court must necessarily
consider   this   aspect   of   the   matter   having   regard   to   the
antecedents of the accused, his propensities and the nature
and manner in which he is alleged to have committed the
45. It   is,   furthermore,   trite   that   for   the   purpose   of
considering an application for grant of bail, although detailed
reasons are not necessary to be assigned, the order granting
bail must demonstrate application of mind at least in serious
cases as to why the applicant has been granted or denied the
privilege of bail.
46. The duty of the court at this stage is not to weigh the
evidence meticulously but to arrive at a finding on the basis of
broad  probabilities. However, while  dealing with a special
statute like MCOCA having regard to the provisions contained
in Sub­section (4) of Section 21 of the Act, the Court may have
to probe into the matter deeper so as to enable it to arrive at a
finding   that   the   materials   collected   against   the   accused
during   the   investigation   may   not   justify   a   judgment   of
conviction. The findings recorded by the Court while granting
or refusing bail undoubtedly would be tentative in nature,
which may not have any bearing on the merit of the case and
the trial court would, thus, be free to decide the case on the
basis of evidence adduced at the trial, without in any manner
being prejudiced thereby.”
20. Reverting to the decision in the case of  Manoranjana
Sinh Vs. Central Bureau of Investigation,
we hold that the
same is on the facts of that case.  Even in the said decision,
the Court has noted that the grant or denial of bail is regulated
to a large extent by the facts and circumstances of each case.
In   the   case   of  Sanjay   Chandra   Vs.   Central   Bureau   of
the Court was not called upon to consider the
efficacy of Section 45 of the Act of 2002 which is a special
21. Keeping in mind the dictum in the aforesaid decisions,
we find no difficulty in upholding the opinion recorded by the
Sessions Court as well as the High Court in this regard.  In our
opinion,   both   the   Courts   have   carefully   analysed   the
allegations   and   the   materials   on   record   indicating   the
complicity   of   the   appellant   in   the   commission   of   crime
punishable under Section 3/4  of the Act of 2002. The Courts
7  (2017) 5 SCC 218
8  (2012) 1 SCC 40
have maintained the  delicate balance between the judgment of
acquittal   and   conviction   and   order   granting   bail   before
commencement   of   trial.   The   material   on   record   does   not
commend us to take a contrary view.
22. Realizing this position, the learned counsel appearing for
the appellant would contend that even if the allegations against
the appellant are taken at its face value, the incriminating
material  recovered  from   the   appellant   or   referred  to   in   the
complaint, by no stretch of imagination, would take the colour
of proceeds of crime.   In fact, there is no allegation in the
charge­sheet   filed   in   the   scheduled   offence   case   or   in   the
prosecution complaint that the unaccounted cash deposited
by the appellant is as a result of criminal activity.  Absent this
basic   ingredient,   the   property   derived   or   obtained   by   the
appellant would not become proceeds of crime. To examine this
contention, it would be useful to advert to Sections 3 and 4 of
the Act of 2002.  The same read thus:
“3.   Offence   of  money­laundering.­  Whosoever directly or
indirectly   attempts   to   indulge   or   knowingly   assists   or
knowingly is a party or is actually involved in any process or
activity connected proceeds of crime including its concealment,
possession, acquisition or use and projecting or claiming  it as
untainted   property   shall   be   guilty   of   offence   of   moneylaundering.
4.   Punishment   for  money­laundering.­ Whoever commits
the   offence   of   money­laundering   shall   be   punishable   with
rigorous imprisonment for a term which shall not be less than
three years but which may extend to seven years and shall
also be liable to fine.
Provided that where the proceeds of crime involved in
money­laundering   relates   to   any   offence   specified   under
paragraph 2 of Part A of the Schedule, the provisions of this
section   shall   have   effect   as   if   for   the   words   “which   may
extend to seven years”, the words “which may extend to ten
years” had been substituted.”
23. As the fulcrum of Section 3 quoted above, is expression
‘proceeds of crime’, the dictionary clause in the form of Section
2(1)(u) is of some relevance. The same reads thus:
“2(1)(u) ‘proceeds of crime’ means any property derived or
obtained, directly or indirectly, by any person as a result of
criminal activity relating to a scheduled offence or the value of
any such property or where such property is taken or held
outside the country, then the property equivalent in value held
within the country;”
It   will   be   useful   to   advert   to   the   meaning   of   expression
“property” as predicated in Section 2(1)(v). The same reads
“2(1)(v)  “property” means any property or assets of every
description,   whether   corporeal   or   incorporeal,   movable   or
immovable,  tangible  or  intangible  and   includes   deeds   and
instruments evidencing title to, or interest in, such property or
assets, wherever located;
The expression ‘scheduled offence’ has been defined in Section
2(1)(y) of the Act of 2002. The same reads thus:
“2(1)(y) ‘scheduled offence’  means­
(i) the offences specified under Part A of the Schedule; or
(ii) the offences specified under Part B of the Schedule if
the total value involved in such offences is  one crore rupees
or more; or
(iii) the offences specified under Part C of the Schedule;”
Indisputably, the predicate offence is included in Part A in
paragraph 1 of the Schedule in the Act of 2002, in particular
Sections   420,   467,   471   and   120B   of   IPC.   Indeed,   the
expression “criminal activity”  has not been defined. By its very
nature the alleged activities of the accused referred to in the
predicate   offence   are   criminal   activities.   The   possession   of
demonetized currency in one sense, ostensibly, may appear to
be only a facet of unaccounted money in reference to  the
provisions   of   the   Income   Tax   Act   or   other   taxation   laws.
However,   the   stated   activity   allegedly   indulged   into   by   the
accused   named   in   the   commission   of   predicate   offence   is
replete with mens rea. In that, the concealment, possession,
acquisition or use  of the property by projecting or claiming it
as untainted property and converting the same by bank drafts,
would certainly come within  the sweep of criminal  activity
relating to a scheduled offence. That would come within the
meaning of Section 3 and punishable under Section 4 of the
Act, being a case of money­laundering. The expression ‘moneylaundering’
is defined thus:
“2(1)(p) “money­laundering” has the meaning assigned to it
in section 3;
24. The appellant then relies upon the decision in the case of
Gorav   Kathuria   Vs.   Union   of   India,
of   the   Punjab   and
Haryana High Court which has taken the view that Section
45(1) of the Act of 2002 requires to be read down to apply only
to those scheduled offences which were included prior to the
amendment in 2013 in the Schedule. It is contended that the
offence, in particular, under Sections 420, 467 and 471 of IPC,
may not be treated as having been included in the scheduled
offences for the purpose of the Act of 2002.   Further, if any
other view was to be taken, the provision would be rendered
ultra vires. We are in agreement with the stand taken by the
9 (2016 SCC Online P & H 3428
respondents that the appellant cannot be permitted to raise the
grounds urged in the writ petition, hearing whereof has been
deferred on the request of the appellant.  In other words, the
appellant should be in a position to persuade the Court that
the allegations in the complaint and the materials on record
taken at its face value do not constitute the offence under
Section 3 read with the schedule of the Act of 2002 as in force.
25. It has been brought to our notice that the decision in
Gorav Kathuria  (supra) was challenged before this Court by
way of Criminal Appeal No.737 of 2016, which has already
been dismissed on 12th  August, 2016.   The order originally
passed on the said criminal appeal reads thus:
“Though the High Court has granted certificate to appeal,
after arguing the matter for some time, learned counsel for the
petitioner concedes that the impugned judgment of the High
Court is correct.
This appeal is, accordingly, dismissed.”
However,   that   order   has   been   subsequently   revised   which
reads thus:
“Though the High Court has granted certificate to appeal,
we have heard the learned counsel for some time and are of
the opinion that the impugned judgment of the High Court is
This appeal is, accordingly, dismissed.”
At the same time the respondents have drawn our attention to
a chart contained in their written submissions   pointing out
that   other   High   Courts   have   disagreed   with   the   principle
expounded in  Gorav  Kathuria’s  case. The said chart reads
(i) Crl. Misc. Application (for Regular Bail)
Jignesh Kishorebhai Bajiawala vs. State
of Gujarat & Ors.
High Court of
(ii) Crl. Petition No.366/2017
SC Jayachandra vs Enforcement
Directorate, Bangalore
2017 (349) ELT 392 KAR
High Court of
Karnataka at
(iii)  WP[Crl.] No.333 of 2015
Kishin S. Loungani vs. UOI & ors.
(2017) 1 KHC 355
High Court of
Kerala at
(iv) Crl. Mic. Application (for Regular Bail)
Pradeep Nirankarnath Sharma vs
Directorate of Enforcement
2017 (350) ELT 449 (GUJ)
High Court
Gujarat at
(v)  Crl. Writ Petition No.3931/2016
Chhagan Chandrakant Bhujbal vs Union
of India & Ors.
2016 SCC Online Bom 9983
High Court  of
26. For the time being,  it is not necessary for us to examine
the issues arising from the decision of the Punjab and Haryana
High Court or the rejection of criminal appeal by this Court
against that decision. The constitutional validity of Section 45
of the Act of 2002  will have to be examined by this Court in
the writ petition on its own merits. The summary dismissal of
criminal appeal will not come in the way of considering the
correctness of the decision of the Punjab and Haryana High
Court in view of the conflict of opinion with the other High
27. Suffice it to observe that the appellant has not succeeded
in   persuading  us about  the  inapplicability  of  the  threshold
stipulation under Section 45 of the Act.   In the facts of the
present case, we are in agreement with the view taken by the
Sessions Court and by the High Court. We have independently
examined the materials relied upon by the prosecution and
also   noted     the   inexplicable   silence   or   reluctance   of   the
appellant in disclosing the source from where such huge value
of   demonetized   currency   and   also   new   currency   has   been
acquired by him.  The prosecution is relying on statements of
26 witnesses/accused already recorded, out of which 7 were
considered by the Delhi High Court.   These statements are
admissible in evidence, in view of Section 50 of the Act of 2002.
The same makes out a formidable case about the involvement
of the appellant in commission of a serious offence of moneylaundering.
It   is,   therefore,   not   possible   for   us   to   record
satisfaction that there are reasonable grounds for believing that
the appellant is not guilty of such offence.  Further, the Courts
below have justly adverted to the antecedents of the appellant
for considering the prayer for bail and concluded that it is not
possible to hold that the appellant is not likely to commit any
offence ascribable to the Act of 2002 while on bail. Since the
threshold stipulation predicated in Section 45 has not been
overcome,   the   question   of   considering   the   efficacy   of   other
points urged by the appellant to persuade the Court to favour
the appellant with the relief of regular bail will be of no avail. In
other words, the fact that the investigation in the predicate
offence instituted in terms of FIR No.205/2016   or that the
investigation   qua   the   appellant   in   the   complaint   CC
No.700/2017 is completed; and that the proceeds of crime is
already   in   possession   of   the   investigating   agency   and
provisional attachment order in relation thereto passed on 13th
February, 2017 has been confirmed; or that charge­sheet has
been filed in FIR No.205/2016 against the appellant without
his   arrest;   that   the   appellant   has   been   lodged   in   judicial
custody since 2nd January, 2017 and has not been interrogated
or   examined   by   the   Enforcement   Directorate   thereafter;   all
these will be of no consequence.
28. It   was   urged   on   behalf   of   the   appellant   that
Demonetization Notification dated 8th November, 2016 imposes
no limit in KYC compliant  accounts on the quantum of deposit
and no restrictions on non­cash transactions.   The relevant
portion of the said notification reads thus:
“(iii) there shall not be any limit on the quantity or value of
specified bank notes to be credited to the account maintained
with the bank by a person, where the specified bank notes
are tendered; however, where compliance with extant Know
Your Customer (KYC) norms is not complete in an account, the
maximum value of specified bank notes as may be deposited
shall be Rs. 50,000/­;
(vii)  there shall be no restriction on the use of any non­cash
method   of   operating   the   account   of   a   person   including
cheques, demand drafts, credit or debit cards, mobile wallets
and electronic fund transfer mechanisms or the like;”
We   fail   to   understand   as   to   how   this   argument   can   be
countenanced.  The fact that no limit for deposit was specified,
would not extricate the appellant from explaining the source
from where such huge amount has been acquired, possessed
or used by him. The volume of demonetized currency recovered
from   the   office   and   residential   premises   of   the   appellant,
including the bank drafts in favour of fictitious persons and
also the new currency notes for huge amount, leave no manner
of doubt that it was the outcome of some process or activity
connected with the proceeds of crime projecting the property as
untainted property. No explanation has been offered by the
appellant to dispel the legal presumption of the property being
proceeds of crime.   Similarly, the fact that the appellant has
made declaration in the Income Tax Returns and paid tax as
per law does not extricate the appellant from disclosing the
source of its receipt. No provision in the taxation laws has been
brought   to     our     notice     which   grants     immunity   to   the
appellant from prosecution for an offence of money­laundering.
In   other   words,   the   property   derived   or   obtained   by   the
appellant   was   the   result   of   criminal   activity   relating   to   a
scheduled offence. The argument of the appellant that there is
no allegation in the charge­sheet filed in the scheduled offence
case or in the prosecution complaint that the unaccounted
cash   deposited   by   the   appellant   is   the   result   of   criminal
activity, will not come to the aid of the appellant. That will have
to be negatived in light of the materials already on record.  The
possession of such huge quantum of demonetized currency
and new currency in the form of Rs.2000/­ notes, without
disclosing   the   source   from   where   it     is   received   and   the
purpose for which it is received, the appellant   has failed to
dispel the legal presumption that he was involved in moneylaundering
and the property was proceeds of crime.
29. Taking overall view of the matter, therefore, we are not
inclined to interfere with the well considered opinion of the
Sessions Court and the High Court rejecting the prayer for
grant of regular bail to the appellant.  However, considering the
fact that the appellant is in custody since 28th December, 2016
and the offence is punishable with imprisonment for a term
extending to seven years only, but not less than three years,
the Trial Court will be well advised to proceed with the trial on
day­to­day basis expeditiously. We clarify that the Trial Court
must  examine the evidence/material brought on record during
the   trial   on   its   own   merit   and   not   be   influenced   by   the
observations in this decision which are limited for considering
the prayer for grant of regular bail.
30. Accordingly,   the   appeals   are   dismissed   in   the   above
(Dipak Misra)
(A.M. Khanwilkar)
(D.Y. Chandrachud)
New Delhi,
Dated: 10th November, 2017.