Introduction

The case of Union Of India v. Yogesh Narayanrao Deshmukh adjudicated by the Bombay High Court on September 8, 2021, addresses critical issues surrounding bail applications under the Prevention of Money Laundering Act, 2002 (PMLA Act). The respondent, Yogesh Narayanrao Deshmukh, a land aggregator, was implicated in a significant money laundering scheme involving the National Spot Exchange Limited (NSEL). The central legal contention revolved around the applicability of Section 439(2) of the Criminal Procedure Code, 1973 (Cr.P.C.) in challenging the bail order granted by the Special Judge under the PMLA Act.

Summary of the Judgment

The Bombay High Court examined an application filed by the Directorate of Enforcement Department challenging the Special Judge's decision to grant bail to the respondent under the PMLA Act. The court addressed three primary questions:

• Whether Section 439(2) Cr.P.C. is applicable if the accused has not been physically released on bail.
• Whether the precedent set by Nikesh Tarachand Shah (2016) 11 SCC 1 remains significant post the amendment of Section 45(1) of the PMLA Act.
• Whether the trial court relied on irrelevant material while granting bail.

After thorough deliberation, the court concluded that the application under Section 439(2) Cr.P.C. was maintainable even though the respondent had not availed bail. Additionally, it was determined that the amendment to the PMLA Act did not revive the twin conditions initially challenged, thereby upholding the High Court's authority to cancel the bail order.

Analysis

Precedents Cited

The judgment extensively referenced several pivotal cases to support its reasoning:

• B.S. Rawat, Assistant Collector of Customs v. Leidomanm Heinrich, 1990 SCC OnLine Bom 629: Established that Section 439(2) Cr.P.C. does not apply unless the accused has been released on bail.
• Mahendra Manilal Shah, 2010 Cri LJ 4257: Reinforced the interpretation that "release on bail" necessitates the accused's actual liberation from custody.
• P. Chidambaram, (2018) 10 SCC 753: Addressed the revival of twin conditions under the amended Section 45 of the PMLA Act.
• Samir Bhujbal v. Directorate of Enforcement (Bail Application No. 286 of 2018) and Deepak Kochhar (Bail Application No. 1322 of 2020): Provided insights into the non-applicability of twin conditions post-amendment in Section 45.

Notably, the court identified certain judgments as per incuriam, particularly highlighting that the decision in Mahendra M. Shah overlooked critical earlier rulings, rendering it inapplicable for the present case.

Legal Reasoning

The court meticulously dissected the arguments presented by both the prosecution and the defense:

• Maintainability of Section 439(2) Application: Opposing counsel argued that Section 439(2) should only apply post the actual release on bail. However, the court deemed this interpretation too restrictive, emphasizing that it would negate the section's purpose by making bail challenges conditional on the accused's release.
• Impact of PMLA Amendment: The prosecution cited the amendment to Section 45(1) of the PMLA Act to argue that twin conditions were reinstated. The court, however, referenced the Supreme Court's stance in Nikesh T. Shah, which invalidated Section 45 in its entirety, thereby negating the prosecution's reliance on the amendment to uphold twin conditions.
• Relevance of Material Considered for Bail: The prosecution contended that the Special Judge relied on irrelevant material while granting bail. The High Court concurred, noting that pivotal evidence, such as farmer testimonies indicating fraud, was disregarded, undermining the bail decision's validity.

Impact

This judgment has profound implications for future PMLA cases involving bail applications. By affirming that Section 439(2) Cr.P.C. can be invoked irrespective of the accused's physical release on bail, the High Court has broadened the scope for enforcing bail cancellations. Moreover, the decision reinforces the judiciary's stance on maintaining stringent checks against the misuse of bail in economic offences, ensuring that significant evidence and material are adequately considered.

Complex Concepts Simplified

Section 439(2) of Cr.P.C.

This provision empowers higher courts to review and potentially cancel bail orders issued by subordinate courts. The key contention in this case was whether this power could be exercised even if the accused had not been physically released on bail.

Per Incuriam

A Latin term meaning "through lack of care." A decision rendered per incuriam is one that is made without considering a relevant legal authority or rule, thereby rendering the judgment flawed or incomplete.

Twin Conditions of Section 45(1) PMLA Act

Originally, Section 45(1) imposed two stringent conditions for granting bail in PMLA cases. The Supreme Court's decision in Nikesh T. Shah invalidated these conditions, deeming them arbitrary. Subsequent legislative amendments attempted to rectify this, but the High Court in this case held that the amendment did not reinstate the twin conditions.

Conclusion

The Bombay High Court's decision in Union Of India v. Yogesh Narayanrao Deshmukh serves as a pivotal reference point in the interpretation and application of Section 439(2) Cr.P.C. in the context of the PMLA Act. By affirming the maintainability of bail cancellation applications independent of the accused's physical release and dismissing the relevance of twin conditions post-amendment, the judgment fortifies the enforcement mechanisms against money laundering. This not only ensures judicial prudence in bail considerations but also upholds the integrity of investigations in economically sensitive cases.