Dheeraj Wadhawan v. Directorate of Enforcement & Anr.

Heard Mr. Desai, learned Senior Advocate for Applicants; Mr. Venegavkar, learned Advocate for Respondent – ED and Mr. Dedhia, learned Advocate for Respondent – State.

The twin Bail Applications have been filed under Section 436-A read with Sections 439 and 482 of Code of Criminal Procedure, 1973 (for short ‘Cr.P.C.’) seeking Bail in connection with ECIR/MBZO- I/03/2020 dated 07.03.2020 registered with Central Bureau of 1 of 32 Investigation (‘CBI’), EO-I, New Delhi for offences punishable under Sections 120-B read with 420 of the Indian Penal Code, 1860 (for short ‘IPC’) and Section 3 of the Prevention of Money Laundering Act, 2002 (for short ‘PMLA’). There are in all 36 accused in the matter and Applicants before me are arraigned as Accused Nos.9 and 10 in the crime incarcerated since 14.05.2020 i.e. almost 4 years 9 months. Since facts are common as also charges qua both accused arising out of the same ECIR, both Applications are disposed of by this common order.

Briefly stated on 07.03.2020 CBI filed FIR bearing No. RC 219 of 2020 E0004 for offences under Sections 120-B read with 420 of the IPC and on the basis of that FIR, on the same date i.e. 07.03.2020 Directorate of Enforcement (‘ED’) registered ECIR/MBZO- I/03/2020 under Section 3 of the PMLA. On 14.05.2020, Applicants were arrested by the ED in connection with ECIR/MBZO- I/03/2020.

3.1. On 13.07.2020 Applicants filed Applications for default bail under Section 167(2) of the Cr.P.C. before the Special Court established under the PMLA (hereinafter referred to as ‘PMLA Court’) and on the same date ED filed 1st supplementary prosecution complaint before the PMLA Court, inter alia, against present Applicants before stating that investigation was completed with respect to the properties mentioned in the principal complaint and investigation with respect to 2 of 32 other properties / transactions / persons / entities was underway.

3.2. By order dated 14.07.2020 the PMLA Court rejected Applicants’ Application for default bail which was assailed by the Applicants before this Court and this Court by order dated 20.08.2020 granted default bail to the Applicants. The Order dated 20.08.2020

was challenged by the ED before the Supreme Court and the Supreme Court stayed the operation of order dated 20.08.2020 pending the Appeals.

3.3. On 14.03.2022 ED filed 2nd supplementary prosecution complaint citing pendency of investigation in respect of other properties / transaction / persons/ entities and the 3rd supplementary prosecution complaint was filed by ED on 05.08.2022 keeping open further investigation in respect of other properties / transaction / persons/ entities. In this complaint, ED has relied upon the evidence of total 51 witnesses.

3.

By order dated 10.05.2023 passed by the Supreme Court in Criminal Appeal Nos.701-702 of 2020 Applicants were granted interim bail for a period of 3 months initially and the same has been extended from time to time.

3.

On 20.07.2023 ED filed draft charges before the PMLA Court. 3 of 32

3.

On 13.11.2023 Applicants filed Bail Application under Section 436-A of the CrPC before the PMLA Court which was rejected by the PMLA Court by its order dated 10.05.2024. Hence the Applicants are before this Court seeking Bail under Section 436-A of the CrPC.

4. Mr. Desai, learned Senior Advocate for the Applicants has streamlined his submissions under three main grounds. Firstly, Mr. Desai has argued that the maximum punishment which can be imposed on Applicants upon conviction is 7 years however Applicants have already undergone pre-trial incarceration of almost a period of 4 years and 9 months. He would submit that it is a settled position of law that Section 436-A of the CrPC1 recognising the constitutional right to speedy trial of the accused – undertrial emanating from Article 21 of the Constitution of India. He would submit that the same is equally applicable to offences under the PMLA as held by the Supreme Court in the case of Vijay Madanlal Choudhary Vs. Union of India 2.

4.1. Next Mr. Desai would submit that the PMLA Court has completely ignored the intent behind the incorporation of Section 436- A of CrPC and applied the proviso to the said Section to deny the statutory relief to present Applicants when the trial has not commenced. He would submit that the PMLA Court ought to have 1 2 Inserted in the Code by CrPC (Amendment) Act, 2005 (25 of 2005) 2022 SCC OnLine 929 4 of 32 considered the decisions of the Supreme Court in the case of Vijay Madanlal Choudhary (supra) and this Court in the case of Sarang Wadhawan @ Rakesh Kumar Wadhawan 3 in its true essence and granted bail to the present Applicants.

4.2. Lastly on the count of delay on part of present Applicants, he would submit that admittedly as per the 3rd supplementary prosecution complaint dated 05.08.2022 filed by ED investigation is still pending and till date there is no statement or intimation made by ED that investigation is completed. He would therefore submit it is the responsibility of the investigating agency and the state machinery to ensure that the trial commences expeditiously. He would submit that the PMLA Court in order dated 26.03.2024 passed below Exhibit 586 in the present case has observed that the trial in the matter is yet to begin and there is no likelihood of the trial to commence in future in view of Section 44(1)(c) of the PMLA. He has also drawn my attention to the order dated 06.02.2025 passed by the PMLA Court below Exhibit 688 wherein in paragraph No.3 thereof the Court has observed that it would take time for the trial to commence. He would therefore submit that the delay in commencement of the trial cannot and should not be attributed to the Applicants as the same is completely contrary to the well-settled principles of law and natural justice. 3 Bail Application Nos.3377/2023 and 3867/2023 5 of 32

4.3. He would submit that all accused except the present Applicants are on bail and hence considering the pre-trial incarceration of the Applicants of more than one-half of the maximum imprisonment specified for the offence coupled with the slow progress of the trial, this Court should enlarge the Applicants on bail considering the provisions of Section 436-A of CrPC.

5. Mr. Venegavkar, learned Advocate appearing on behalf of Respondent No.1 – Directorate of Enforcement would forcefully refute the contention of Mr. Desai. He would submit that the Application is liable to be rejected since considerable period of the delay would be attributable to Applicants’ conduct itself. He would elaborate on his contention by submitting that Applicants strategically kept their bail applications pending before the PMLA Court for a period of more than one year. He would draw my attention to the Affidavit-in-reply dated

25.07.2024 on behalf of Respondent No.1 - ED and more particularly in paragraph Nos. 2.7 to 2.17 containing details of various Applications filed by the Applicants seeking various interim reliefs during their period of custody thus delaying the trial. He would submit that the progress of trial before the PMLA Court is significantly impacted due to these very pending applications as highlighted before the higher courts. He would therefore submit that the time spent in prosecuting these applications should not be included while computing the ‘one- half of maximum period of imprisonment specified for that offence” 6 of 32 provided under Section 436-A of CrPC in the facts of the present case. In support of his submissions, he would refer to the orbiter dicta of the Supreme Court in the case of In Re 122 Prisoners 4 which reads thus:-

9. It is also provided under Section 436-A of the Code that no person shall in any case be detained during the period of investigation inquiry or trial for more than the maximum period of imprisonment provided for the said offence under that law. In computing the period of detention under this section for granting bail, the period of detention passed due to delay in proceeding caused by the accused shall be excluded. Yet, as per the first proviso to section 436-A, the court may order continued detention of a person for a period longer than one-half of the said period or release him on bail, instead of the personal bond with or without sureties, after hearing the Public Prosecutor, and for reason to be recorded by the court in writing.

5.1. He would submit that the provision of Section 436-A do not provide an absolute right of bail like default bail under Section 167 of CrPC and the Court adjudicating Bail Application based on the ground of Section 436-A reserves the authority to deny the relief if trial is being delayed at the instance of Applicant himself. In support of this submissions he would refer to and rely on the decision of the Supreme Court in the case of Vijay Madanlal Choudhary (supra). He would submit that although the maximum period of punishment prescribed under the law for the relevant offence is 7 years out of which Applicants have been incarcerated for a period of about 5 years (thereby making it a case for consideration under 436-A) but the peculiar facts of the case and more particularly Applicants themselves having filed several Interim Applications before various forums should 4 2006 SCC OnLine Ker 691 7 of 32 be considered a ground for delay while deciding the present Applications.

He would submit that when the said period is accounted for and reconciled, the period of incarceration of Applicants falls below the threshold of 3 and half years and therefore provisions of Section 436-A would be squarely inapplicable. He would submit that filing of interim Applications is a strategy based on the belief of ‘Judicial Gamble’ where the accused, especially ones hailing from financially strong backgrounds make attempts to exhaust all chances available at their disposal with an endeavor to secure their liberty. He would submit that although there cannot be any legislation to restrict individuals from availing their legal remedies, Courts have adopted the approach of imposing costs on such vexatious proceedings when determined. He would argue that when liberty is at stake and in such grave economic offences as the present one where pockets are filled with embezzled funds, costs are not a deterrent to such accused persons.

He would submit that hence economic offences should be dealt with on a different footing than other offences while granting bail. In support of his submissions he would draw my attention to paragraph Nos.34 and 35 in decision of the Supreme Court in the case of Y.S. Jagan Mohan Reddy v. CBI 5 which read thus:- “34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously 5 (2013) 7 SCC 439 8 of 32 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.

While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations.”

5.2. Next, he has referred to and relied upon the decision of the Supreme Court in the case of State of Gujarat Vs. Mohanlal Jitamalji Porwal 6 wherein the Supreme Court while considering the long term ramifications of economic offences laid down basis for distinct treatment of such offender. Paragraph No.5 therein reads thus:-

5. ….. The entire community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the community. A disregard for the interest of the community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even- handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the damage done to the national economy and national interest……

5.3. He has next drawn my attention to the decision of the Supreme Court in the case of Nimmagadda Prasad Vs. Central Bureau of Investigation 7 wherein in paragraph Nos.24 and 25 the Supreme Court has observed as under:-