The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK BLAPL No.6743 of 2023 (In the matter of application under Section 439 of the Code of Criminal Procedure). Khageswar Patra …. Petitioner -versus- Directorate of Enforcement, Government of India, Bhubaneswar … Opposite Party For Petitioner : Mr. Y. Das, Sr. Advocate along with Mr. A. Patra, Advocate For Opposite Party : Mr. G.Agarwal, Advocate (E.D.) CORAM: JUSTICE G. SATAPATHY DATE OF JUDGMENT : 31.08.2023 G. Satapathy, J. 1. This is a bail application U/S.439 of Cr.P.C. by the petitioner for grant of bail in connection with BLAPL No.6743 of 2023 Page 1 of 24 Enforcement Case Information Report (ECIR) Case No.BBZO/16/2022 corresponding to PMLA Case No.10 of 2022 for commission of offence Under Section 3 of the Prevention of Money Laundering Act, 2002 (in short “PMLA”) which is punishable Under Section 4 PMLA pending in the file of learned Additional Sessions Judge-Cum-CBI Court-I, Bhubaneswar, Khurda. 2. An overview of the facts involved in this case are on 02.10.2022, one FIR was registered against the Petitioner and others vide Khandagiri PS Case No. 496 of 2022 for commission of offences punishable Under Sections 341 / 328 / 324 / 354-C/ 370 /386 /387/ 388/389/419/420/465/506/120-B of Indian Penal Code (in short IPC), 1860 and Under Section 66-E/67 of the Information Technology Act, 2000(In short the “IT Act”), but before registration of this case, another case was also registered against the co-accused persons for similar offences. BLAPL No. 6743 of 2023 Page 2 of 24
Legal Reasoning
In the FIR against the Petitioner and others, the Informant had alleged that the Petitioner who is stated to be a second hand car dealer and co- accused persons had extorted crores of Rupees from different rich people by blackmailing them to get their video footage containing objectionable and inappropriate photographs viral. The aforesaid two cases were investigated into by the local police, but in the course of investigation, the Assistant Director of Enforcement, Bhubaneswar claiming the offences alleged against the Petitioner and others to be scheduled offences as defined Under Section 2(1y) of the PMLA instituted a complaint against the Petitioner and others before the special Court under PMLA for commission of offence U/S. 3 of PMLA which is punishable U/S. 4 of PMLA. It is stated in the complaint that soon after registration of the aforesaid two police cases, ECIR Case No.BBZO/16/2022 was recorded against the BLAPL No. 6743 of 2023 Page 3 of 24 Petitioner and others for commission of aforesaid offence under PMLA and the matter was investigated into by ED. It is also alleged in the complaint that the Petitioner and others had generated illegal income of Crores of Rupees through extortion by way of honey trapping rich and influential people and making their nude videos and threatening as well as blackmailing them for lodging false police cases and getting their nude videos viral in social media and, thereby, the income of the Petitioner and others are proceeds of crime as defined Under Section 2(1)(u) of the PMLA. This is how the complaint against the Petitioner and others came to be instituted for commission of offences Under Sections 3/4 of PMLA. 3. In the course of hearing of the bail application,
Legal Reasoning
this Court has heard Mr.Y. Dash, learned Sr. Counsel for the Petitioner and Mr. G.Agrawal, learned counsel for the ED extensively. In support of his contention, BLAPL No. 6743 of 2023 Page 4 of 24 Mr. G.Agrawal, learned counsel for the ED has relied upon the decision in Vijay Madanlal Choudhary and others Vrs. Union of India and others; (2022) SCC Online SC 929 in addition to his written objection to the bail application of the Petitioner, whereas Mr.Y.Dash, learned Sr. Counsel for the Petitioner has relied upon a number of decisions for the relief of bail to the Petitioner. Both the parties have also filed their written notes of submission in support of their contentions. 4. Admittedly, it is the second journey of the Petitioner to this Court for grant of bail. The earlier bail application of the Petitioner was turned down by this Court mainly after taking note of the provision contained in Section 45(1) of the PMLA and the allegations made against him, but the Petitioner was granted liberty therein to renew his prayer for bail after taking cognizance of offence. The provision as to bail is founded on the philosophy of protecting the BLAPL No. 6743 of 2023 Page 5 of 24 most precious fundamental right of personal liberty of a person as guaranteed under Article 21 of our sacred Constitution. Grant or refusal of bail to a person accused of offence is the discretion of the Court, but such discretion should not be arbitrary or whimsical. The object of bail is primarily to prevent punishment in the form of imprisonment or incarceration of a person pending investigation or trial. Law is also well settled that deprivation of personal liberty of a person accused of offence at some times is considered as a punishment, unless such personal liberty is withheld according to the procedure established by law. The object of bail is neither punitive nor preventive; rather for protecting the individual liberty of a person who is undoubtedly accused of offences, but failing to protect the personal liberty of a person without any lawful excuse is just doing like mere lip service than exercising discretion in accordance with law. BLAPL No. 6743 of 2023 Page 6 of 24 Personal liberty is one of the most essential requirements of the modern man as held by the Apex Court in a very recent decision in Satender Kumar Antil Vrs. Central Bureau of Investigation and another; (2022) SCC Online SC 825, wherein it has been held:- “Liberty is one of the most essential requirements of the modern man. It is said to be the delicate fruit of a mature civilization. It is the very quintessence of civilized existence and the essential requirements of a modern man.” 5. In the above context of personal liberty, reverting back to consider the prayer of the Petitioner for grant of bail to him, it appears that Mr. G. Agrawal, learned counsel for the ED has opposed such prayer of the Petitioner mainly on two folds, firstly, the accusations and secondly, the rigor of Section 45(1) of PMLA, but Mr. Y. Dash, learned Sr. Counsel has tried to counter such submission of E.D. by drawing the attention of the Court to the first BLAPL No. 6743 of 2023 Page 7 of 24 proviso appended to Section 45(1) of PMLA by contending inter-alia that the allegation sought to be brought against the accused is for a sum of less than one Crore Rupees. 6. Section 45(1) of the PMLA along with first proviso reads as under:- “45.(1) anything Notwithstanding contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence (under this Act) shall be released on bail or on his own bond unless:- (i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the Court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail. Provided that a person, who is under the age of sixteen years or is a woman or is sick or infirm, or is accused either on his own or along with other co- accused of money laundering a sum of less than one crore rupees may be released on bail, if the Special Court so directs.” BLAPL No. 6743 of 2023 Page 8 of 24 7. It is albeit submitted by learned counsel for the petitioner that the sentence to first proviso of Section 45(1) of PMLA “the accused either on his own or along with other co-accused of money laundering a sum of less than one crore rupees” allows some relaxation to the petitioner and he is thereby not required to satisfy the onerous conditions enumerated therein, but such sentence to the aforesaid proviso which was introduced for the first time by way of an amendment to the proviso is couched in unambiguous terms as “when the accusation of money laundering is either against sole accused or against more than one accused in a case for a sum of less than one crore rupees, the benefit of proviso would mainly be applicable to such accused or accused persons, but by no stretch of imagination, it is meant for an individual against whom the allegation of money laundering is less than one crore rupees, out of the allegation of BLAPL No. 6743 of 2023 Page 9 of 24 money laundering for more than one crores along with co-accused persons in one case. In other words, the clause is not applicable to the person who is an accused either on his own as sole accused or along with other co-accused of money laundering a sum of more than one crore rupees in one case. It is, therefore, very clear that if there are more than one accused and the allegation of money laundering against one of the accused is less than one Crore, but more than one Crore jointly against all the accused, the benefit of this clause cannot be extended to one of the accused of money laundering a sum of less than one Crore Rupees in such case. A conspectus of complaint in the present case would go to reveal allegation against the petitioner and others of money laundering a sum of rupees more than one crores and thereby taking into consideration the individual allegation against the petitioner of money laundering a sum of less than BLAPL No. 6743 of 2023 Page 10 of 24 one crore rupees out of the total money laundering for a sum of Rs.3,95,53,125/-, the benefit of first proviso to Section 45(1) of PMLA for the offence of money laundering a sum of less than one crore rupees cannot be extended to the petitioner and he is, thereby, not entitled to such benefit. 8. Mr.G.Agarwal, learned counsel for the E.D. has strenuously opposed the bail application of the petitioner on the ground of Section 45(1) of PMLA, but Mr.Y.Das, learned Senior Counsel for the petitioner has assiduously emphasized for the petitioner to have met the rigor of Section 45(1) of PMLA by contending inter-alia that since the petitioner was not charge-sheeted for predicate offence, the stipulation of Section 45(1) of PMLA could not operate as a bar to the release of the petitioner on bail. 9. In addressing the aforesaid rival contentions, this Court considers it apposite to refer to the case BLAPL No. 6743 of 2023 Page 11 of 24 of Vijay Madanlal(supra), wherein at paragraphs- 281, 400, 401 and 467(v)(d), the Apex Court has held as under:- if it “281. All or whole of the crime property linked to scheduled offence need not be regarded as proceeds of crime, but all properties qualifying the definition of “proceeds of crime” under Section 2(1)(u) will necessarily be crime properties. Indeed, in the event of acquittal of the person concerned or being absolved from allegation of criminal activity relating to scheduled offence, and is established in the court of law that the crime property in the concerned case has been rightfully owned and possessed by him, such a property by no stretch of imagination can be termed as crime property and ex-consequenti proceeds of crime within the meaning of Section 2(1)(u) as it stands today. On the other hand, in the trial in connection with the scheduled offence, the Court would be obliged to direct return of such property as belonging to him. It would be then paradoxical to still regard such property as such crime proceeds adjudication by a Court of competent jurisdiction. It is well within the jurisdiction of the concerned Court trying to scheduled offence to pronounce on that matter. despite of “400. It is important to note that the twin conditions provided U/S. 45 of the 2002 Act, though restrict the right of the BLAPL No. 6743 of 2023 Page 12 of 24 accused to grant of bail, but it cannot be said that the conditions provided U/S. 45 impose absolute restraint on the grant of bail. The discretion vests in the Court which is not arbitrary or irrational, but judicial, guided by the principles of law as provided U/S 45 of the 2002 Act. xx xx xx xx xx xx xx xx xx xx xx xx the Court 401. We are in agreement with the in observations made by Ranjitsingh Brahmajeetsingh Sharma. The Court while dealing with the application for grant of bail need not delve deep into the merits of the case and only a view of the Court based on available material on record is required. The Court will not weigh the evidence to find the guilt of the accused which is, of course, the work of trial Court. The Court is only required to place its view based on probability on the basis of reasonable material collected during investigation and the said view will not be taken into consideration by the trial Court in recording its finding of the guilt or acquittal during trial which is based on the evidence adduced during the trial. As explained by this Court in Nimmagadda Prasad, the words used in Section 45 of the 2002 Act are “reasonable grounds for believing” which means the Court has to see only if there is a genuine case against the accused and the prosecution is not required to prove the charge beyond reasonable doubt. 467(v)(d) The offence under Section 3 of the 2002 Act is dependent on illegal gain BLAPL No. 6743 of 2023 Page 13 of 24 of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which the offence of money- constitutes laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If finally discharged/ the person acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him.” is 10. In another decision in Parvathi Kollur and another Vrs. State by Directorate of Enforcement; 2022 SCC Online SC 1975, the Apex Court has once again reiterated that acquittal/discharge of the accused in predicate offence would have the natural consequence against the proceeding under PMLA in Paragraphs-9 and 10 of the decision in following words:- BLAPL No. 6743 of 2023 Page 14 of 24 “9. The result of the discussion aforesaid is that the view as taken by the Trial Court in this matter had been a justified view of the matter and the High Court was not right in setting aside the discharge order despite the fact that the accused No. 1 had already been acquitted in relation to the scheduled offence and the present appellants were not accused of any scheduled offence. 10. In view of the above, this appeal succeeds and is allowed. The impugned judgment and order dated 17.12.2020 is set aside and the order dated 04.01.2019 as passed by the Trial Court, allowing discharge application of the appellants, is restored.” 11. What would be the effect of acquittal/discharge or a closure report against the accused for predicate offence on the proceeding in PMLA has been reiterated by the Apex Court in Adjudicating Authority Vrs. Sri Ajay Kumar Gupta and others; Criminal Appeal No. 391- 392/2018 decided on 2nd December, 2022 and the following order was passed therein by the Apex Court:- BLAPL No. 6743 of 2023 Page 15 of 24 “Issue notice which learned counsel for the respondent. is accepted by Learned Solicitor General fairly states that since the proceedings before this Court arise from an order of attachment and there is acquittal in respect of predicate offence, the proceedings really would not survive. In view of the aforesaid, the appeals filed by the Adjudicating Authority (PMLA) do not survive and are accordingly disposed of.” 12. Similarly, in Directorate of Enforcement Vrs. M/s. Obulapuran Mining Company Private Limited; Criminal Appeal No. 1269 of 2017 decided on 2nd December, 2022 the Apex Court was again of the view that the proceeding under the PMLA will not survive if a closure report in respect of the predicate offence is accepted. The order of Apex Court in the aforesaid case reads as under:- “Issue notice which is accepted by the learned counsel for the State. Learned Solicitor General fairly states that since there is a closure report in respect of a predicate offence which has been accepted, the present proceeding will not BLAPL No. 6743 of 2023 Page 16 of 24 survive and consequently the ECIR No. CEZO/01/2007 stands quashed.
Decision
The application along with Special Leave Petition stands disposed of.” 13. In an order passed on 27.07.2022 in W.P. (c) No. 368 of 2021 (Indrani Patnaik and another Vrs. Enforcement Directorate and others), the Apex Court after taking note of submissions about discharge of the Petitioner therein from the scheduled offences has been pleased to observe as under :- legitimate ground “taking note of the submissions made by learned Additional Solicitor the General and in the interest of justice, we reserve the liberty for the respondents in seeking revival of these proceedings if the order discharging the petitioners is annulled or in any manner varied, and if there be any to proceed under PMLA. Subject to the observations and liberty foregoing, this petition is allowed while quashing the proceeding in Complaint Case No. 05 of 2020 dated 10.01.2020 pending in the Court of Sessions Court, Khurda at Bhubaneswar cum Special Court under the Prevention of Money Laundering Act, 2002. All pending applications also stand disposed of.” BLAPL No. 6743 of 2023 Page 17 of 24 14. A careful perusal of orders and precedent of the Apex Court as set out above leaves no manner of doubt the undeniable sequitur of the reasoning is that if there is an acquittal/discharge or closure report filed by the investigating agency after due investigation for predicate offence, the rigor of Section 45(1) of PMLA would not be attracted to refuse bail to the person accused of such offence under PMLA. Adverting to the case at hand, there appears no dispute that an FIR was registered against the petitioner in Khandagiri P.S. Case No. 496 of 2022 for predicate offence which was investigated into and the certified copy of charge sheet produced by the petitioner in the aforesaid case discloses the following “further evidence so far as collected is not sufficient to prosecute Khageswar Patra in this case” and the investigating officer after recording so in the charge sheet has submitted BLAPL No. 6743 of 2023 Page 18 of 24 charge sheet against co-accused persons, but not against the petitioner which remains unchallenged till date, meaning thereby the effect of submission of closure report against the petitioner for predicate offence after due investigation. Further, the copy of charge sheet also discloses that the petitioner was never arrested for the predicate offence in Khandagiri P.S. Case No. 496 of 2022 as unambiguously revealed from Col. No. 12 of the charge sheet of such case. 15. The complaint under PMLA also refers to another FIR in Nayapalli P.S. FIR No. 646 of 2022, but the said FIR was registered against the co- accused persons, but not against the present petitioner and charge sheet was only submitted against co-accused Archana Nag. Besides, it is informed by learned counsel for the ED that the complaint in PMLA now stands posted for execution of warrant issued against co-accused, but the BLAPL No. 6743 of 2023 Page 19 of 24 petitioner in the meanwhile has been detained in custody since 11.11.2022 and the case record against the petitioner has not been separated despite an application being made by him in this regard which was rejected by learned Special Judge CBI(I), Bhubaneswar. Moreover, the petitioner was subjected to custodial interrogation by the ED and the other reason that might delay the trial is the fact that co-accused is yet to be arrested. In such situation, it is quite uncertain as to when the trial will commence and how much time it will require for completion. In the aforesaid situation and on a cumulative assessment materials placed on record together with the petitioner having not charge sheeted for predicate offence, even after completion of investigation in Khandagiri P.S. Case No.496 of 2022, this Court has no hesitation to hold that the petitioner has successfully demonstrated his case for BLAPL No. 6743 of 2023 Page 20 of 24 compliance of Section 45(1) of PMLA which stands complied with in the aforesaid situation. 16. While dealing bail application, three factors are mainly required and the accused is required to satisfy the tripod test:- (i) flight risk, (ii) tampering of evidence and (iii) influencing of witnesses. In the circumstance of the case, the petitioner does not appear to be a flight risk and such apprehension can be arrested by directing the petitioner to surrender his Passport if any. Since the complaint has been filed, there appears little apprehension of tampering evidence by the petitioner and the third one i.e. influencing witnesses can be curbed by imposing appropriate conditions. Further, the petitioner has already remained in custody for more than nine months. 17. In view of the aforesaid situation and the discussion made in the foregoing paragraphs and taking into consideration the pretrial detention of the BLAPL No. 6743 of 2023 Page 21 of 24 petitioner together with petitioner being not charge sheeted for predicate offence, this Court considers that the petitioner has made out a case for grant of bail. 18. The bail application of the petitioner stands allowed and the petitioner may be released on bail on furnishing bail bonds in the sum of Rs.2,00,000/- (Rupees Two lakhs) with two local solvent sureties each for the like amount to the satisfaction of the learned Court in seisin of the case, with following additional conditions:- (i) the petitioner shall not commit any offence while on bail and he 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 from disclosing such facts to the Court or to any Officer of ED or tamper with the evidence, (ii) The petitioner shall appear before the Court in seisin of the case on each and every fail unless his date of posting without attendance is dispensed with and in case the Petitioner fails without sufficient cause to appear in the Court in accordance with the terms of the bail, the learned trial Court may BLAPL No. 6743 of 2023 Page 22 of 24 proceed against the Petitioner for offence U/S.229-A of IPC in accordance with law, (iii) The petitioner shall deposit his Passport, if any, in the Court in seisin of the case till conclusion of trial, unless he is permitted to take back such Passport to use for specific purpose during the pendency of case. (iv) The Petitioner shall inform the Court as well as the ED as to his place of residence during the trial by providing his mobile number(s), residential address, e-mail, if any, and other documents in support of proof of residence. (v) In case the petitioner misuses the liberty of bail and in order to secure his presence, proclamation U/S.82 of Cr.P.C. is issued and the petitioner fails to appear before the Court on the date fixed in such proclamation, then, the learned trial Court is at liberty to initiate proceeding against him for offence U/S.174-A of the IPC in accordance with law. (vi) The Petitioner shall appear before the ED as and when required and shall cooperate with the ED in the present case. It is clarified that the Court in seisin of the case will be at liberty to cancel the bail of the Petitioner without further reference to this Court, if any of the BLAPL No. 6743 of 2023 Page 23 of 24 above conditions are violated or a case for cancellation of bail is otherwise made out. It is, however, made clear that nothing stated in the order shall be construed as a final expression or opinion on the merits of the case and the trial would proceed independently of the observation made above and such observation has been made purely for the purpose of adjudication of the present bail application. Accordingly, the BLAPL stands disposed of. Judge (G. Satapathy) Orissa High Court, Cuttack, Dated the 31st of August, 2023/Priyajit Signature Not Verified Digitally Signed Signed by: PRIYAJIT SAHOO Designation: Jr. Stenographer Reason: Authentication Location: HIGH COURT OF ORISSA Date: 01-Sep-2023 16:44:29 BLAPL No. 6743 of 2023 Page 24 of 24