IMPORTANT POINTS
Section 45 of PMLA overrides section 439 of CrPC.
Bail should not be readily granted in case of economic offences.
In case of economic offences burden of proof shifts on the accused.

Headnote:(a) Prevention of Money Laundering Act, 2002 – Section 45 and 71 r/w section 5, Code of Criminal Procedure, 1973 – Section 45 starting with a non-obstante clause – Section 71 providing for overriding effect of Act 2002 over CrPC – Section 5 CrPC prohibits application of the Code to special statutes – Act 2002 is a special statute – Shall prevail over CrPC in case of conflict – Section 45 prescribing only two but mandatory conditions for grant of bail – Compliance with conditions u/s 45 mandatory even in case of application for bail u/s 439 CrPC – Presumption of proceeds of crime being involved in money laundering unless proved to the contrary – Provisions of section 45 binds High Court deciding bail application u/s 439, CrPC – Section 24, SEBI Act (Para 29, 30, 31, 33)
       (2014) 8 SCC 768 – Relied upon
       (2010) 8 SCC 24; (2001) 4 SCC 534; (2007) 8 SCC 593; (1961) 1 SCR 970; (1969) 2 SCC 166; (1982) SCR 272 – Referred
       (b) Prevention of Money Laundering Act, 2002 – Section 45 r/w section 24 – Economic offences – Have deep rooted conspiracies and involve huge loss of public funds – Burden of proof that the monies were not the proceeds of crime and thus not tainted shifts on the accused – Appellant’s criminal revision for quashing proceedings u/s 24, SEBI Act still pending for hearing before High Court – high Court rightly rejected the bail application. (Para 33, 36)
       (2013) 7 SCC 439; (2011) 10 SCC 235 – Relied upon
       CRLMC No. 114 of 2011 (Orissa) – Cited with approval
       Facts of the case:
       The appellant, Chairman of Rose Valley Real Estate Construction Ltd., was arrested on 25.03.2015 in relation to an offence alleged to have been committed under Section 3 of the Prevention of Money Laundering Act, 2002.
       A complaint was filed by the respondent in the Court of learned Chief Judge, City Sessions Court at Kolkata, against the appellant under Section 4 of PMLA, though no offence is made out against the appellant under Section 3 of the PMLA.
       The High Court directed release of the appellant on provisional bail for two weeks to perform the rituals for his deceased father on the conditions mentioned in the said order. On completion of the period of provisional bail, the appellant duly surrendered before the Court of learned Chief Judge, City Sessions Court at Kolkata.
       On 06.07.2015, the appellant filed a fresh bail application before the High Court of Calcutta. The High Court has rejected the said application of the appellant holding that no order has yet been passed by any competent Court of law that no offence is made out against the appellant under Section 24 of the SEBI Act.
       Result: Appeal dismissed.

Judgment :

Pinaki Chandra Ghose, J.

1. Leave granted.

2. This appeal, by special leave, is directed against the judgment and order dated 21st July, 2015 passed by the High Court of Calcutta in CRM No.6285 of 2015, whereby the High Court has rejected appellant's application for bail under Section 439 of the Code of Criminal Procedure, 1973. The appellant was arrested on 25.03.2015 in relation to an offence alleged to have been committed under Section 3 of the Prevention of Money Laundering Act, 2002, (hereinafter referred to as "PMLA").

3. The appellant is the Chairman of Rose Valley Real Estate Construction Ltd. (hereinafter referred to as the "Rose Valley"), a public company incorporated in the year 1999 and registered under the Companies Act, 1956. Certain non-convertible debentures were issued by the Rose Valley by 'private placement method.' No advertisements etc. were issued to the public. The said debentures were issued to the employees of the Company and to their friends and associates after fulfilling the formalities for private placement of debentures. Thus, the appellant collected money by issuing secured debentures by way of private placement in compliance with the guidelines issued by the Securities and Exchange Board of India from time to time.

4. On 26.03.2013, the Adjudicating Officer, SEBI, passed an order imposing a penalty of Rs.1 crore upon the Rose Valley for violation of the provisions of Sections 11(C) of the Securities and Exchange Board of India Act, 1992 (hereafter referred to as the SEBI Act) which was reduced to Rs.10 lakhs by the Securities Appellate Tribunal, Mumbai. A letter was issued on 26.06.2013 by the Securities and Exchange Board of India ("SEBI") to the appellant Rose Valley informing the appellant about the offences alleged to have been committed by it under the Companies Act, SEBI Act & Regulations, and Section 405 of the Indian Penal Code. The appeal filed by the appellant before the Securities Appellate Tribunal was allowed on 12.12.2013, holding that the appellant Company has repaid all the money collected from the investors. It was further held by the Securities Appellate Tribunal that there are no grounds for violation of Section 11(C)(3) of the SEBI Act.

5. On the basis of the aforementioned letter dated 26.06.2013 issued by SEBI, the respondent filed a report being ECIR No.KIZO/02/2014 dated 27.02.2014, alleging commission of offence by the Rose Valley and its officers, punishable under Section 24 of the SEBI Act. Thereafter, search and seizure was conducted at the offices of the Rose Valley.

6. A complaint was filed by the respondent authorities, being C/14214 of 2013, alleging that the Rose Valley transferred the money raised by issue of debentures from the account of one company to that of another company. It is also alleged that the money collected by issuing the debentures for the purpose of one business has been invested in some other business. The proceedings under Section 24 of the SEBI Act has been challenged in the High Court by way of revision and the said revision is pending for hearing and further proceeding of the complaint case, being C/14214 of 2013, has been stayed by the High Court. The High Court also directed the respondent not to take any coercive measure against the appellant.

7. Vide its order dated 18.06.2014, SEBI directed the appellant Rose Valley to refund the money to the customers of the Ashirbad Scheme. This order was challenged before the Securities Appellate Tribunal by way of Appeal No.233 of 2014. On 19.06.2014, a Show Cause Notice under Section 8(1) of the PMLA was served upon Rose Valley and its officials. Rose Valley filed a writ petition before the High Court of Calcutta challenging the said Show Cause Notice. The said writ petition was dismissed by the learned Single Judge of the High Court. Thereafter, the matter was taken in appeal before the Division Bench of the Calcutta High Court, being AST No.345 of 2014. The Division Bench of the High Court di

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2015 Supreme(SC) 1277

IMPORTANT POINTSSection 45 of PMLA overrides section 439 of CrPC.Bail should not be readily granted in case of economic offences.In case of economic offences burden of proof shifts on the accused.

Cases Referred (9)

IMPORTANT POINTS
Section 45 of PMLA overrides section 439 of CrPC.
Bail should not be readily granted in case of economic offences.
In case of economic offences burden of proof shifts on the accused.