Goutam Kundu v. Manoj Kumar

Ranjit Kumar Bag, J.:— The petitioner has filed this application for bail under Section 439 of the Code of Criminal Procedure in connection with ML Case No. 03 of 2015 arising out of ECIR No. KLZO/02/2014 pending before the court of Learned Chief Judge in-charge, City Sessions Court, Calcutta.

2. Mr. Basu, learned senior counsel appearing on behalf of the petitioner submits that the petitioner as the Chairman of Rose Valley Real Estates Construction Ltd. (hereinafter referred to as the Rose Valley) collected money by issuing secured debentures by way of private placement in compliance with the guidelines issued by Securities and Exchange Board of India from time to time. Mr. Basu further submits that the monetary penalty of Rs. 1 crore imposed on the Rose Valley by the adjudicating authority under the Securities and Exchange Board of India Act, 1992 (hereafter referred to as the SEBI Act) was reduced to Rs. 10 lakh by the Securities Appellate Tribunal, Mumbai on December 12, 2013 in Appeal 106/2013. Mr. Basu argues that the proceeding under Section 24 of the SEBI Act, 1992 is challenged in the High Court by way of revision and the said revision is still pending for hearing and the further proceeding of the complaint case being C/14214 of 2013 has been stayed by the High Court in the said revision. Mr. Basu also argues that the Hon'ble Division Bench of this court directed the opposite party not to take any coercive measure against the petitioner in FMA 4031 of 2014 on November 28, 2014, which continued till the disposal of the appeal on March 30, 2015. Mr. Basu also submits that the complaint was filed by the opposite party on April 2, 2015 against the petitioner under Section 4 of the Prevention of Money-Laundering Act, 2002 (hereinafter referred to as the PML Act), though no offence is made out against the petitioner under Section 3 of the PML Act. The further submission made by Mr. Basu is that the petitioner is detained in custody since March 25, 2015, though the petitioner co-operated in the investigation by visiting the office of the opposite party in response to the notice on six occasions before his arrest. He also submits that the petitioner has deposited the passport in the office of the Enforcement Directorate in compliance with the direction given in connection with this case. It is also submitted on behalf of the petitioner that the petitioner was granted bail for limited period of two weeks to attend the funeral ceremony after the death of the father of the petitioner and that there is no allegation that the petitioner has tampered with the evidence at any material point of time.

3. Mr. Basu has relied on the decision of the Supreme Court reported in (2005) 5 SCC 294 to urge that the court should not weigh the evidence meticulously for arriving at a finding whether bail should be granted or refused to the petitioner. Mr. Basu also relied on the decision of the Supreme Court reported in (2007) 1 SCC (Cri) 355 in order to submit that Section 45 of the PML Act must be construed in pragmatic manner for formation of opinion about the likelihood of committing offence by the petitioner while on bail, so that the valuable right of bail must not be refused to the petitioner.

4. Mr. Mukherjee, learned senior counsel appearing on behalf of the petitioner has supplemented the argument advanced by Mr. Basu by submitting that the power of the High Court to grant bail under Section 439 of the Code of Criminal Procedure is not restricted by the conditions laid down under Section 45 of the PML Act. He further submits that the petition of complaint is already filed before the Special Court and as such the opposite party cannot take the plea that the investigation is still going on as there is no scope for filing supplementary petition of complaint under the provisions of the PML Act.

5. Dr. Shamsuddin, learned counsel appearing on behalf of the opposite party submits that the application for bail of the petitioner was rejected six times by the trial court. He further submits that the petitioner collected Rs. 12.82 crores from members of the public by issuing secured debentures to 2585 persons during 2001-2002 to 2007-2008 without submitting offer documents either to the SEBI or Registrar of companies and thereby the petitioner committed offence under Section 24 of the SEBI Act. Dr. Shamsuddin further contends that the petitioner is still now in the process of acquiring untainted property from the fund already acquired by issuing secured debentures to the members of the public in violation of the guidelines issued by SEBI and thereby offence under Section 4 of the PML Act is made out. He has pointed out about the stringent provisions laid down in Section 45 of the PML Act for the purpose of granting bail to the petitioner. By referring to the provisions of Section 24, Section 65 and Section 71 of the PML Act Dr. Shamsuddin argues that the legislatures have enacted the special provisions for drawing presumption of the offence and the general provisions of the Code of Criminal Procedure can be invoked in such economic offences only when the general provisions of the Code of Criminal Procedure are inconsistent with the special provisions laid down in the PML Act. He has relied on the decisions reported in (2014) 8 SCC 768, (1987) 2 SCC 364, (2013) 7 SCC 439, (2011) 10 SCC 235 and two unreported decisions (Criminal Appeal No. 728 of 2013 decided on 09-05-2013 and CRLMC No. 114 of 2011 decided on 16-12-2013) in support of his above contentions.

6. For proper appreciation of submission made by learned counsel representing both parties it is necessary to consider the authorities cited on behalf of the both parties. In “Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra” reported in (2005) 5 SCC 294 the Supreme Court has observed about the duty of the court in dealing with an application for bail in connection with Maharashtra Control of Organised Crime Act, 1999 in paragraph 46, wherein it is laid down that the duty of the court at the stage of hearing of bail is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. It is also held in the said paragraph that 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. In “State Of Uttaranchal v. Rajesh Kumar Gupta.” reported in (2007) 1 SCC (Cri) 355 the Supreme Court has observed in paragraph 28 what should be the approach of the court dealing with bail under the Narcotic Drugs and Psychotropic Substances Act, 1985, which is as follows:

“28. Section 37 of the 1985 Act must be construed in a pragmatic manner. It cannot be construed in such a way so as to negate the right of party to obtain bail which is otherwise a valuable right for all practical purposes”.

7. It is also held in paragraph 30 of the said report that for deciding the future conduct of the accused for the purpose of granting bail, the court must consider the antecedents of the accused, his propensities and the nature and manner in which he is alleged to have committed the offence. I fully agree with the above proposition of law laid down by the Supreme Court for the purpose of construing the restrictions imposed under Section 45 of the PML Act for consideration of bail of the petitioner.

8. It is held by the Supreme Court in “Subrata Chattoraj v. Union of India” (Writ Petition (Civil) No. 401 of 2013 decided on May 9, 2014) that the Enforcement Directorate will take up the investigation in connection with the present case. In “State of Gujarat v. Mohanlal Jitamalji Porwal” reported in (1987) 2 SCC 364 the Supreme Court has observed in the last paragraph that the entire community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. In “Nimmagadda Prasad v. Central Bureau Of Investigation of Investigation” reported in AIR 2013 SC 2821, the Supreme Court has held in paragraph 27 that the court in dealing with bail must be satisfied whether there is a genuine case against the accused and whether the prosecution will be able to produce prima facie evidence in support of the charge. It is also held in the said paragraph that it is not expected, at this stage, to have evidence establishing the guilt of the accused beyond reasonable doubt. In “Y.S Jagan Mohan Reddy v. Central Bureau Of Investigation of Investigation” reported in (2013) 7 SCC 439 the Supreme Court has observed in paragraph 34 that the economic offences having deep rooted 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 country. In “Union of India v. Hassan Ali Khan” reported in (2011) 10 SCC 235 the Supreme Court has laid down in paragraph 34 what will be the burden of proof when attempt is made to project the proceeds of crime as untainted money. It is held in the said paragraph that 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 shifted on the accused persons under Section 24 of the PML Act, 2002. The same proposition of law is reiterated and followed by the Orissa High Court in the unreported decision of “Smt. Janata Jha v. Assistant Director, Directorate of Enforcement” (CRLMC No. 114 of 2011 decided on December 16, 2013). I would like to consider the application for bail of the petitioner by filing the above proposition of law laid down by the Supreme Court for dealing with bail of the accused person involved in the economic offences in general and in the offence punishable under Section 4 of the P.M.L Act in particular.

9. Before dealing with the application for bail on merit, I would like to decide whether the provisions of Section 45 of the P.M.L Act are binding on this court while this court is considering the application for bail under Section 439 of the Code of Criminal Procedure. There is no doubt that P.M.L Act 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. Naturally, the P.M.L Act is a special statute enacted by the Parliament for dealing with money laundering. 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 conflict. On perusal of Section 45 of the P.M.L Act, I find that the Section starts with a non obstante clause which indicates that the provisions laid down in Section 45 of the P.M.L Act will have overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them. Section 45 of the P.M.L Act has imposed the 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 Part-A of the Schedule of the P.M.L Act: first, the prosecutor must be given an opportunity to oppose the application for bail and secondly, 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. The proviso to Section 45 of the P.M.L Act indicates that the legislature has curved out an exception for grant of bail by the special court when any person is under age of 16 years or is a woman or is a sick or infirm. So, the conditions laid down in Section 45(1) of the P.M.L Act for grant of bail are binding on the High Court as 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 P.M.L Act, even when the application for bail is considered under Section 439 of the Code of Criminal Procedure. In view of my above findings, I am unable to accept the contention made on behalf of the petitioner.

10. Admittedly, the complaint is filed against the petitioner on the allegation of committing offence punishable under Section 4 of the P.M.L Act. The contention made on behalf of the petitioner that no offence under Section 24 of the SEBI Act is made out against the petitioner, which is a scheduled offence under the P.M.L Act, needs to be considered from the materials collected during investigation by the opposite party. No order has yet been passed by any competent court of law that no offence is made out against the petitioner under Section 24 of the SEBI Act, though the criminal revision praying for quashing the proceeding initiated against the petitioner under Section 24 of the SEBI Act is still pending for hearing before this court. However, I have considered the statements of the Assistant General Manager of RBI, Kolkata, Seizure List, statements of some Directors of Rose Valley, statements of some office bearers of Rose Valley, statements of some debenture trustees of Rose Valley, statements of some debenture holders of Rose Valley, statements of AGM of Accounts of Rose Valley and statements of some Regional Managers of Rose Valley for formation of opinion whether the petitioner is involved in the offence of money laundering as alleged by the opposite party. On consideration of the above statements and other materials collected during investigation I cannot persuade myself to hold that no offence of money laundering is made out against the petitioner. The question whether the opposite party is entitled to file supplementary petition of complaint to prosecute the petitioner under Section 4 of the P.M.L Act remains open for decision by the trial court.

11. By making a pragmatic approach to the provision of Section 45(1) of the P.M.L Act and on consideration of the antecedents of the petitioner in collection of money from open market for issuing secured debenture in violation of the guidelines of SEBI and on further consideration of the manner of keeping accounts of the Rose Valley, I am unable to hold that the petitioner is not likely to commit any offence while on bail. As a result, I cannot persuade myself to grant bail to the petitioner at this stage. So, prayer for bail is rejected. The application is dismissed.

12. Urgent photostat certified copy of this order, if applied for, be given to the parties on priority basis after compliance with all necessary formalities.