The court held that the majority of funds alleged as proceeds of crime were received before the predicate offence, thus the conditions for bail under Section 45 of the PMLA were not met, allowing bail.

ORDER :

This is an application for regular bail filed by the petitioner/accused No.1 in ECIR No.KZSZO/02/2023 registered by the Enforcement Directorate, Kozhikode Sub Zone.

2. The petitioner is alleged to have committed the offences punishable under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 (for short, 'PMLA').

3. The petitioner is an NRI conducting business in Qatar in the name and style of M/s Grand Mart Trading. The Kulavallur Police registered a crime against the petitioner on 12/1/2023 as Crime No.25/2023 under Sections 406 and 420 of the Indian Penal Code (for short, IPC). It was registered pursuant to a complaint filed by M/s United Bank Ltd., Qatar, through its power of attorney holder, Mr. Jolly Malayil, CEO of M/s Neil Debt Collections. The Crime was subsequently transferred to the Crime Branch, Economic Offences Wing (EOW), Kannur and Kasaragod Units, Kerala, which re-registered it as Crime No.976/2023 on 11/4/2023. The allegation in the FIR is that the petitioner obtained a loan from United Bank Ltd., Qatar of QAR 30,643,204 (equivalent to INR 61,28,64,080/-) on 14/3/2017 ostensibly for the expansion of his business operation in Qatar, wilfully defaulted on its repayment, misused and diverted the funds to India through illicit channels and thus cheated the bank. The alleged diversion of funds and the failure to fulfil the obligations of repayment were stated to constitute a deliberate and wilful act of deception and fraudulent intent on the part of the petitioner. The conduct of the petitioner was alleged to have resulted in a wrongful loss to the Bank and an unlawful gain to him. The petitioner was granted pre-arrest bail in the said crime by this Court. The investigation into the said crime is still going on, and the final report is yet to be filed.

4. Section 420 of IPC being a scheduled offence in the PMLA, the Directorate of Enforcement, Kozhikode Sub Zone registered an ECIR bearing No.KZSZO/02/2023 dated 30/5/2023 under the PMLA, thereby initiating an investigation into the generation, acquisition and laundering of the proceeds of crime by the petitioner. The petitioner was arrested in the said crime on 26/11/2024. Since then, he has been in judicial custody.

5. After investigation, the Enforcement Director filed a complaint under Section 44 of the PMLA against the petitioner and one Siddiq Puthan Purayil for the offence punishable under Sections 3 and 4 of the PMLA before the Special Court on 24/1/2025. The gist of the allegation in the complaint is that the proceeds of the crime arising out of the scheduled offence have been laundered by the petitioner and the 2^nd accused by acquiring immovable properties in the name of the benami individuals.

6. I have heard Sri. P.N. Prakash, the learned Senior Counsel and also Sri. C.P. Udayabhanu, the learned counsel appearing for the petitioner, Sri. Jaishankar V.Nair, the learned standing counsel for the Enforcement Directorate and Sri. K.R. Sunil, the learned counsel for the additional 3^rd respondent.

7. The learned Senior Counsel for the petitioner submitted that the petitioner is absolutely innocent of the offences alleged against him and he has been falsely implicated in the case. The learned Senior Counsel further submitted that there is no evidence on record to show that the alleged proceeds of crime were received and used by the petitioner for purchasing immovable properties in his or his nominees' name as alleged by the prosecution. The learned Senior Counsel further submitted that even if the entire prosecution case is believed in toto, no offence under the PMLA is made out against the petitioner. The Counsel also submitted that the investigation is over, a complaint has already been filed, and hence, the further detention of the petitioner is not necessary. As far as the rigour of Section 45(1) of the PMLA is concerned, the learned Counsel submitted that the twin conditions are not attracted on the facts of the case. The learned standing coun