BY ADVS. SRI.JAISHANKAR v. NAIR SR PP

O R D E R This Bail Application is filed under Section 483 of the Bharatiya Nagarik Suraksha Sanhita.

2. Petitioner is the 2nd accused in crime registered as ECIR/KCZO/42/2023 by the office of the Directorate of Enforcement, Kochi, Ernakulam. The above case is registered against the petitioner alleging offences defined under Section 3 and punishable under Section 4 r/w 8(5) of the Prevention of Money Laundering Act, 2002 (for short 'Act 2002').

3. On the basis of several complaints received from several persons, Maranalloor Police Station, Thiruvananthapuram registered Crime Nos.726, 838, 1071, 1072, and 1073 of 2023 alleging offences punishable under Section 420 of the Indian Penal Code, 1860 against the President and Secretary of the Kandala Service Co-operative B.A.No.1068 of 2025 4 Bank, Maranalloor, Thiruvananthapuram (for short 'Society'). On the basis of the above information, a prima facie case for an offence of Money Laundering as defined under Section 3 of Act 2002 punishable under Section 4 of Act 2002 has been made out, is the prosecution case. Hence, ECIR/KCZO/42/2023 was assigned by the Directorate of Enforcement.

4. The Society was one of the wealthy and trustworthy Service Co-operative Society in Kerala. It is alleged that, since 2011, several illegal loans were availed by the 1 st accused and his associates, to grab the wealth of the Society and to loot the hardened money of depositors/investors. According to the prosecution, the petitioner brought Binami borrowers, he could influence the governing body of the Society and he has flouted the bye-laws of the Co-operative Society, the Provisions and Rules under the Co-operative Societies Act and the Circulars of Registrar of Societies, to obtain illegal loans and to acquire proceeds of crime. The Gist of the predicated cases is that the President of the Society betrayed the trust of the Depositors/Complainants and accepted the deposits by offering B.A.No.1068 of 2025 5 more interest to the depositors with the intention to cheat the Depositors/Complainants. Even though Depositors/Complainants asked to return the deposits several times, they didn't get back their hard-earned money. Hence it is alleged that the accused committed the offences under Act

2002. The petitioner was arrested on 21.11.2023. He has been in custody for about 16 months.

5. Heard the learned counsel appearing for the petitioner and the learned Standing Counsel appearing for the Enforcement Directorate.

6. The counsel for the petitioner raised a short point before this Court. The counsel submitted that the petitioner is in custody for about 16 months. He was arrested on

21.11.2023. The trial of the case is not started. The maximum punishment that can be imposed for the offence alleged is up to seven years. In such circumstances, in the light of the principle laid down by the Apex Court in V. Senthil Balaji v. Deputy Director, Directorate of Enforcement [2024 KLT OnLine 2363 (SC)], the petitioner is entitled to bail. The learned B.A.No.1068 of 2025 6 Standing Counsel appearing for the Enforcement Directorate submitted that the petitioner is not entitled to the benefit of the above dictum. The learned Standing Counsel took me through the memo filed on behalf of the Assistant Director, Enforcement Directorate before the Sessions Court/CBI-I/Special Court for PMLA Cases, Ernakulam. It is submitted that the trial court is taking steps to conclude the trial and there is no delay on the part of the prosecution in completing the trial. In such circumstances this Court may not accept the principle in Senthil Balaji’s case (supra) is the submission. Therefore it is submitted that Senthil Balaji’s case (supra) is not applicable to the facts and circumstances of the case.

7. The short point to be decided in this case is whether the principle in Senthil Balaji’s case (supra) is applicable to the facts and circumstances of the case. It will be better to extract the relevant portion of Senthil Balaji’s case (supra). “27. Under the Statutes like PMLA, the minimum sentence is three years, and the maximum is seven years. The minimum sentence is higher when the scheduled offence is under the NDPS Act. When the trial of the complaint under PMLA is likely to prolong beyond reasonable limits, the B.A.No.1068 of 2025 7 Constitutional Courts will have to consider exercising their powers to grant bail. The reason is that S.45(1)(ii) does not confer power on the State to detain an accused for an unreasonably long time, especially when there is no possibility of trial concluding within a reasonable time. What a reasonable time is will depend on the provisions under which the accused is being tried and other factors. One of the most relevant factors is the duration of the minimum and maximum sentence for the offence. Another important consideration is the higher threshold or stringent conditions which a statute provides for the grant of bail. Even an outer limit provided by the relevant law for the completion of the trial, if any, is also a factor to be considered. The extraordinary powers, as held in the case of K. A. Najeeb ((2021) 3 SCC 713), can only be exercised by the Constitutional Courts. The Judges of the Constitutional Courts have vast experience. Based on the facts on record, if the Judges conclude that there is no possibility of a trial concluding in a reasonable time, the power of granting bail can always be exercised by the Constitutional Courts on the grounds of violation of Part III of the Constitution of India notwithstanding the statutory provisions. The Constitutional Courts can always exercise its jurisdiction under Art.32 or Art.226, as the case may be. The Constitutional Courts have to bear in mind while dealing with the cases under the PMLA that, except in a few exceptional cases, the maximum sentence can be of seven years. The Constitutional Courts cannot allow provisions like S.45(1)(ii) to become instruments in the B.A.No.1068 of 2025 8 hands of the ED to continue incarceration for a long time when there is no possibility of a trial of the scheduled offence and the PMLA offence concluding within a reasonable time. If the Constitutional Courts do not exercise their jurisdiction in such cases, the rights of the undertrials under Art.21 of the Constitution of India will be defeated. In a given case, if an undue delay in the disposal of the trial of scheduled offences or disposal of trial under the PMLA can be substantially attributed to the accused, the Constitutional Courts can always decline to exercise jurisdiction to issue prerogative writs. An exception will also be in a case where, considering the antecedents of the accused, there is every possibility of the accused becoming a real threat to society if enlarged on bail. The jurisdiction to issue prerogative writs is always discretionary.

28. Some day, the courts, especially the Constitutional Courts, will have to take a call on a peculiar situation that arises in our justice delivery system. There are cases where clean acquittal is granted by the criminal courts to the accused after very long incarceration as an undertrial. When we say clean acquittal, we are excluding the cases where the witnesses have turned hostile or there is a bona fide defective investigation. In such cases of clean acquittal, crucial years in the life of the accused are lost. In a given case, it may amount to violation of rights of the accused under Art.21 of the Constitution which may give rise to a claim for compensation.

29. As stated earlier, the appellant has been incarcerated for 15 months or more for the offence punishable under B.A.No.1068 of 2025 9 the PMLA. In the facts of the case, the trial of the scheduled offences and, consequently, the PMLA offence is not likely to be completed in three to four years or even more. If the appellant's detention is continued, it will amount to an infringement of his fundamental right under Art.21 of the Constitution of India of speedy trial.”

8. In this case also, for the offences alleged, the minimum sentence is three years and the maximum sentence is seven years. Admittedly the trial in the case has not started. Now the case is posted for consideration of the discharge petition and charges have not yet been framed. As per the report of the Special Judge (SPE/CBI)-I dated 17.03.2025, it is stated that a further investigation is being conducted under section 178(8) CrPC. That itself shows that the trial has not yet started. Admittedly the petitioner in this case is in custody from

21.11.2023. That means he is in custody for 16 months. In such circumstances, the principle laid down by the Apex Court in Senthil Balaji’s case (supra) is squarely applicable in this case. The rigour under Section 45 of Act 2002 can be relaxed in the peculiar facts and circumstances of the case. Therefore the B.A.No.1068 of 2025 10 petitioner can be released on bail after imposing stringent conditions.

9. Moreover, it is a well-accepted principle that the bail is the rule and the jail is the exception. The Hon'ble Supreme Court in Chidambaram. P v Directorate of Enforcement [2019 (16) SCALE 870], after considering all the earlier judgments, observed that, the basic jurisprudence relating to bail remains the same inasmuch as the grant of bail is the rule and refusal is the exception so as to ensure that the accused has the opportunity of securing fair trial.

10. Moreover, in Jalaluddin Khan v. Union of India [2024 KHC 6431], the Hon'ble Supreme Court observed that: “21. Before we part with the Judgment, we must mention here that the Special Court and the High Court did not consider the material in the charge sheet objectively. Perhaps the focus was more on the activities of PFI, and therefore, the appellant's case could not be properly appreciated. When a case is made out for a grant of bail, the Courts should not have any hesitation in granting bail. The allegations of the prosecution may be very serious. But, B.A.No.1068 of 2025 11 the duty of the Courts is to consider the case for grant of bail in accordance with the law. "Bail is the rule and jail is an exception" is a settled law. Even in a case like the present case where there are stringent conditions for the grant of bail in the relevant statutes, the same rule holds good with only modification that the bail can be granted if the conditions in the statute are satisfied. The rule also means that once a case is made out for the grant of bail, the Court cannot decline to grant bail. If the Courts start denying bail in deserving cases, it will be a violation of the rights guaranteed under Art.21 of our Constitution.” (underline supplied)

11. In Manish Sisodia v. Directorate of Enforcement [2024 KHC 6426], also the Hon'ble Supreme Court observed that: “53. The Court further observed that, over a period of time, the trial courts and the High Courts have forgotten a very well-settled principle of law that bail is not to be withheld as a punishment. From our experience, we can say that it appears that the trial courts and the High Courts attempt to play safe in matters of grant of B.A.No.1068 of 2025 12 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 straight forward 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 recognize the principle that "bail is rule and jail is exception".”

12. Considering the dictum laid down in the above decisions and considering the facts and circumstances of this case, this Bail Application is allowed with the following directions:

1. Petitioner shall be released on bail on executing a bond for Rs.50,000/- (Rupees Fifty Thousand only) with two solvent sureties each, each for the like sum to the satisfaction of the jurisdictional Court.

2. The petitioner shall appear before the Investigating Officer for interrogation as and when required. The petitioner shall co- B.A.No.1068 of 2025 13 operate with the investigation and shall not, directly or indirectly make any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him/her from disclosing such facts to the Court or to any police officer.

3. Petitioner shall not leave India without permission of the jurisdictional Court.

4. Petitioner shall not commit an offence similar to the offence of which he is accused, or suspected, of the commission of which he is suspected.

5. The observations and findings in this order are only for the purpose of deciding this bail application. The principle laid down by this Court in Anzar Azeez v. State of Kerala [2025 SCC OnLine KER 1260] is applicable in this case also. B.A.No.1068 of 2025 14

6. If any of the above conditions are violated by the petitioner, the jurisdictional Court can cancel the bail in accordance to law, even though the bail is granted by this Court. The prosecution and the victim are at liberty to approach the jurisdictional court to cancel the bail, if there is any violation of the above conditions. Sd/- P.V.KUNHIKRISHNAN, JUDGE DM

O R D E R This Bail Application is filed under Section 483 of the Bharatiya Nagarik Suraksha Sanhita.

2. Petitioner is the 2nd accused in crime registered as ECIR/KCZO/42/2023 by the office of the Directorate of Enforcement, Kochi, Ernakulam. The above case is registered against the petitioner alleging offences defined under Section 3 and punishable under Section 4 r/w 8(5) of the Prevention of Money Laundering Act, 2002 (for short 'Act 2002').

3. On the basis of several complaints received from several persons, Maranalloor Police Station, Thiruvananthapuram registered Crime Nos.726, 838, 1071, 1072, and 1073 of 2023 alleging offences punishable under Section 420 of the Indian Penal Code, 1860 against the President and Secretary of the Kandala Service Co-operative B.A.No.1068 of 2025 4 Bank, Maranalloor, Thiruvananthapuram (for short 'Society'). On the basis of the above information, a prima facie case for an offence of Money Laundering as defined under Section 3 of Act 2002 punishable under Section 4 of Act 2002 has been made out, is the prosecution case. Hence, ECIR/KCZO/42/2023 was assigned by the Directorate of Enforcement.

4. The Society was one of the wealthy and trustworthy Service Co-operative Society in Kerala. It is alleged that, since 2011, several illegal loans were availed by the 1 st accused and his associates, to grab the wealth of the Society and to loot the hardened money of depositors/investors. According to the prosecution, the petitioner brought Binami borrowers, he could influence the governing body of the Society and he has flouted the bye-laws of the Co-operative Society, the Provisions and Rules under the Co-operative Societies Act and the Circulars of Registrar of Societies, to obtain illegal loans and to acquire proceeds of crime. The Gist of the predicated cases is that the President of the Society betrayed the trust of the Depositors/Complainants and accepted the deposits by offering B.A.No.1068 of 2025 5 more interest to the depositors with the intention to cheat the Depositors/Complainants. Even though Depositors/Complainants asked to return the deposits several times, they didn't get back their hard-earned money. Hence it is alleged that the accused committed the offences under Act

2002. The petitioner was arrested on 21.11.2023. He has been in custody for about 16 months.

5. Heard the learned counsel appearing for the petitioner and the learned Standing Counsel appearing for the Enforcement Directorate.

6. The counsel for the petitioner raised a short point before this Court. The counsel submitted that the petitioner is in custody for about 16 months. He was arrested on

21.11.2023. The trial of the case is not started. The maximum punishment that can be imposed for the offence alleged is up to seven years. In such circumstances, in the light of the principle laid down by the Apex Court in V. Senthil Balaji v. Deputy Director, Directorate of Enforcement [2024 KLT OnLine 2363 (SC)], the petitioner is entitled to bail. The learned B.A.No.1068 of 2025 6 Standing Counsel appearing for the Enforcement Directorate submitted that the petitioner is not entitled to the benefit of the above dictum. The learned Standing Counsel took me through the memo filed on behalf of the Assistant Director, Enforcement Directorate before the Sessions Court/CBI-I/Special Court for PMLA Cases, Ernakulam. It is submitted that the trial court is taking steps to conclude the trial and there is no delay on the part of the prosecution in completing the trial. In such circumstances this Court may not accept the principle in Senthil Balaji’s case (supra) is the submission. Therefore it is submitted that Senthil Balaji’s case (supra) is not applicable to the facts and circumstances of the case.

7. The short point to be decided in this case is whether the principle in Senthil Balaji’s case (supra) is applicable to the facts and circumstances of the case. It will be better to extract the relevant portion of Senthil Balaji’s case (supra). “27. Under the Statutes like PMLA, the minimum sentence is three years, and the maximum is seven years. The minimum sentence is higher when the scheduled offence is under the NDPS Act. When the trial of the complaint under PMLA is likely to prolong beyond reasonable limits, the B.A.No.1068 of 2025 7 Constitutional Courts will have to consider exercising their powers to grant bail. The reason is that S.45(1)(ii) does not confer power on the State to detain an accused for an unreasonably long time, especially when there is no possibility of trial concluding within a reasonable time. What a reasonable time is will depend on the provisions under which the accused is being tried and other factors. One of the most relevant factors is the duration of the minimum and maximum sentence for the offence. Another important consideration is the higher threshold or stringent conditions which a statute provides for the grant of bail. Even an outer limit provided by the relevant law for the completion of the trial, if any, is also a factor to be considered. The extraordinary powers, as held in the case of K. A. Najeeb ((2021) 3 SCC 713), can only be exercised by the Constitutional Courts. The Judges of the Constitutional Courts have vast experience. Based on the facts on record, if the Judges conclude that there is no possibility of a trial concluding in a reasonable time, the power of granting bail can always be exercised by the Constitutional Courts on the grounds of violation of Part III of the Constitution of India notwithstanding the statutory provisions. The Constitutional Courts can always exercise its jurisdiction under Art.32 or Art.226, as the case may be. The Constitutional Courts have to bear in mind while dealing with the cases under the PMLA that, except in a few exceptional cases, the maximum sentence can be of seven years. The Constitutional Courts cannot allow provisions like S.45(1)(ii) to become instruments in the B.A.No.1068 of 2025 8 hands of the ED to continue incarceration for a long time when there is no possibility of a trial of the scheduled offence and the PMLA offence concluding within a reasonable time. If the Constitutional Courts do not exercise their jurisdiction in such cases, the rights of the undertrials under Art.21 of the Constitution of India will be defeated. In a given case, if an undue delay in the disposal of the trial of scheduled offences or disposal of trial under the PMLA can be substantially attributed to the accused, the Constitutional Courts can always decline to exercise jurisdiction to issue prerogative writs. An exception will also be in a case where, considering the antecedents of the accused, there is every possibility of the accused becoming a real threat to society if enlarged on bail. The jurisdiction to issue prerogative writs is always discretionary.

28. Some day, the courts, especially the Constitutional Courts, will have to take a call on a peculiar situation that arises in our justice delivery system. There are cases where clean acquittal is granted by the criminal courts to the accused after very long incarceration as an undertrial. When we say clean acquittal, we are excluding the cases where the witnesses have turned hostile or there is a bona fide defective investigation. In such cases of clean acquittal, crucial years in the life of the accused are lost. In a given case, it may amount to violation of rights of the accused under Art.21 of the Constitution which may give rise to a claim for compensation.

29. As stated earlier, the appellant has been incarcerated for 15 months or more for the offence punishable under B.A.No.1068 of 2025 9 the PMLA. In the facts of the case, the trial of the scheduled offences and, consequently, the PMLA offence is not likely to be completed in three to four years or even more. If the appellant's detention is continued, it will amount to an infringement of his fundamental right under Art.21 of the Constitution of India of speedy trial.”

8. In this case also, for the offences alleged, the minimum sentence is three years and the maximum sentence is seven years. Admittedly the trial in the case has not started. Now the case is posted for consideration of the discharge petition and charges have not yet been framed. As per the report of the Special Judge (SPE/CBI)-I dated 17.03.2025, it is stated that a further investigation is being conducted under section 178(8) CrPC. That itself shows that the trial has not yet started. Admittedly the petitioner in this case is in custody from

21.11.2023. That means he is in custody for 16 months. In such circumstances, the principle laid down by the Apex Court in Senthil Balaji’s case (supra) is squarely applicable in this case. The rigour under Section 45 of Act 2002 can be relaxed in the peculiar facts and circumstances of the case. Therefore the B.A.No.1068 of 2025 10 petitioner can be released on bail after imposing stringent conditions.

9. Moreover, it is a well-accepted principle that the bail is the rule and the jail is the exception. The Hon'ble Supreme Court in Chidambaram. P v Directorate of Enforcement [2019 (16) SCALE 870], after considering all the earlier judgments, observed that, the basic jurisprudence relating to bail remains the same inasmuch as the grant of bail is the rule and refusal is the exception so as to ensure that the accused has the opportunity of securing fair trial.

10. Moreover, in Jalaluddin Khan v. Union of India [2024 KHC 6431], the Hon'ble Supreme Court observed that: “21. Before we part with the Judgment, we must mention here that the Special Court and the High Court did not consider the material in the charge sheet objectively. Perhaps the focus was more on the activities of PFI, and therefore, the appellant's case could not be properly appreciated. When a case is made out for a grant of bail, the Courts should not have any hesitation in granting bail. The allegations of the prosecution may be very serious. But, B.A.No.1068 of 2025 11 the duty of the Courts is to consider the case for grant of bail in accordance with the law. "Bail is the rule and jail is an exception" is a settled law. Even in a case like the present case where there are stringent conditions for the grant of bail in the relevant statutes, the same rule holds good with only modification that the bail can be granted if the conditions in the statute are satisfied. The rule also means that once a case is made out for the grant of bail, the Court cannot decline to grant bail. If the Courts start denying bail in deserving cases, it will be a violation of the rights guaranteed under Art.21 of our Constitution.” (underline supplied)

11. In Manish Sisodia v. Directorate of Enforcement [2024 KHC 6426], also the Hon'ble Supreme Court observed that: “53. The Court further observed that, over a period of time, the trial courts and the High Courts have forgotten a very well-settled principle of law that bail is not to be withheld as a punishment. From our experience, we can say that it appears that the trial courts and the High Courts attempt to play safe in matters of grant of B.A.No.1068 of 2025 12 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 straight forward 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 recognize the principle that "bail is rule and jail is exception".”

12. Considering the dictum laid down in the above decisions and considering the facts and circumstances of this case, this Bail Application is allowed with the following directions:

1. Petitioner shall be released on bail on executing a bond for Rs.50,000/- (Rupees Fifty Thousand only) with two solvent sureties each, each for the like sum to the satisfaction of the jurisdictional Court.

2. The petitioner shall appear before the Investigating Officer for interrogation as and when required. The petitioner shall co- B.A.No.1068 of 2025 13 operate with the investigation and shall not, directly or indirectly make any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him/her from disclosing such facts to the Court or to any police officer.

3. Petitioner shall not leave India without permission of the jurisdictional Court.

4. Petitioner shall not commit an offence similar to the offence of which he is accused, or suspected, of the commission of which he is suspected.

5. The observations and findings in this order are only for the purpose of deciding this bail application. The principle laid down by this Court in Anzar Azeez v. State of Kerala [2025 SCC OnLine KER 1260] is applicable in this case also. B.A.No.1068 of 2025 14

6. If any of the above conditions are violated by the petitioner, the jurisdictional Court can cancel the bail in accordance to law, even though the bail is granted by this Court. The prosecution and the victim are at liberty to approach the jurisdictional court to cancel the bail, if there is any violation of the above conditions. Sd/- P.V.KUNHIKRISHNAN, JUDGE DM