Point of Law: To attract offence under section 420 IPC, dishonest intention must exist from very beginning.

ORDER :

The constitutional courts are entrusted with the solemn function of protecting the liberty of the individual, which manifests as fundamental rights. Punishment before conviction is the antithesis of the rule of law. When the liberty of an individual is pitted against the remote possibility of a conviction much later, the scales of balance must lean in favour of the former. The above prefatory observations are necessary in this case.

2. Petitioner is the accused in Crime No. ECIR No.KCZO/32/2020 on the files of the Directorate of Enforcement, Kochi, alleging offences punishable under section 4 of the Prevention of Money Laundering Act, 2002 (for short ‘PML Act’). Petitioner seeks regular bail under section 45 of the PML Act.

3. Prosecution alleges that petitioner and the other accused had cheated many depositors by collecting fixed deposits without authority, after promising to pay interest and failed to pay either the interest or repay the amounts collected and thereby committed the offence of breach of trust and cheating. The amounts so collected were allegedly used as untainted money for the acquisition of property and has thus committed an offence under section 3 of the PML Act.

4. Crime No.1740 of 2020 of Konni Police Station was initially registered, and petitioner was arrested on 29.08.2020. Later, as many as 1368 crimes were registered against the accused. Those crimes form the basis for the predicate offences. Petitioner continued in custody till 11-03-2021. Thereafter, based on the directions of this Court, the crimes were transferred to the Central Bureau of Investigation, which registered Crime No. RC 1/2021/CBI/Cochin of 2021 alleging offences under the Banning of Unregulated Deposit Schemes Act, 2019 apart from sections 406 and 420 of the Indian Penal Code 1860 (for short, the IPC). The investigation by the CBI is still proceeding, and no final report has been filed for the alleged predicate offences. While so, the Enforcement Directorate (for short, ‘the ED’) filed ECIR No.32/2020, initiating proceedings under sections 3 and 4 of the PML Act and arrested the petitioner on 09.08.2021. Thereafter, on 07.10.2021, i.e. on the 58th day after arresting the petitioner by ED, a complaint under section 44 of the PML Act was filed. Thus, the accused is alleged to have committed the offence of money laundering under the PML Act.

5. The bail application filed earlier before this Court was dismissed by order dated 05-05-2022, in B.A No. 7709/2021. Thereafter, petitioner filed an application for grant of default bail under section 167(2)(i)(a) of Cr.P.C before the Sessions Court, Ernakulam. After the application claiming default bail was filed on 15-06-2022, the learned Sessions Judge took cognizance of the offence on 20-06-2022 and dismissed the bail application by order dated 30-06-2022.

6. This application is preferred by the petitioner pleading that he is innocent of the allegations and that he has not committed any offence of money laundering. Petitioner alleges that from the year 1965 onwards he had been conducting the business without any complaint and that not a single penny had been siphoned off by him. Petitioner also alleged that the fixed deposits given by the complainants had not become repayable, that only the interest became payable, and that he could not cater to the interests due on the deposits from April 2020 onwards due to the lockdown imposed on account of the outbreak of the COVID-19 pandemic and not due to any fraudulent act.

7. Petitioner further alleged that he has been falsely implicated upon misconceptions and that despite investigation by the local police and even by the CBI, no offence has been made out, which is the reason for them not even filing a final report till date. Petitioner has pleaded that all documents, computers, servers, statements and books of account kept in all the branch offices as well as the head office have been seized. Further, all bank accounts and properties of the petitio