Bombay High Court Grants Bail in ₹38 Crore PMLA Case, Citing Prolonged Pre-Trial Detention, Lack of Evidence Linking Former Dean to Proceeds of Crime—”Personal Liberty Cannot Be Undermined by Indefinite Incarceration”

Court’s Decision

The Bombay High Court granted bail to the applicant, who served as the Dean of Dahisar Jumbo COVID Center during the pandemic. He was accused of being complicit in fraudulent financial activities under the PMLA and IPC. The court emphasized that the applicant’s prolonged detention without the likelihood of a speedy trial violated his fundamental right under Article 21 of the Constitution, which guarantees personal liberty and protection against undue delays in criminal trials.

Facts

1. Background of the Case:
   • During the COVID-19 pandemic, the Municipal Corporation of Greater Mumbai (MCGM) awarded contracts for operating Jumbo COVID Centers to various agencies, including M/s. Lifeline Hospital Management Services.
   • The prosecution alleged that the service provider submitted fabricated attendance sheets and fraudulent invoices to siphon approximately ₹38 crores of public money.
2. Role of the Applicant:
   • The applicant, in his capacity as the Dean at Dahisar Jumbo COVID Center, was accused of approving these fabricated invoices, facilitating fraudulent transactions, and receiving kickbacks in cash and kind worth ₹20 lakhs.
   • He held the position for only five months, from July to December 2020.
3. Arrest and Proceedings:
   • The applicant was arrested on July 19, 2023, under allegations of money laundering.
   • The chargesheet included statements from co-accused alleging that the applicant received proceeds of crime. However, no direct evidence was presented.
   • The trial had not commenced despite the applicant’s incarceration for over 18 months.

Issues

1. Does the applicant’s alleged role and the twin conditions under Section 45 of PMLA justify continued detention without a trial?
2. Does the prolonged pre-trial detention violate the applicant’s fundamental rights under Article 21 of the Constitution?

Petitioner’s Arguments

The applicant advanced the following points to support his bail application:

1. Limited Role:
   • He argued that he was not named in the original FIR or ECIR and was implicated only in the supplementary chargesheet.
   • His role as Dean was limited to verifying invoices already reviewed by other officers, with no direct involvement in the alleged fabrication of documents.
2. Prolonged Detention:
   • He highlighted that he had been in custody for over 18 months, and the trial had not progressed. Given the procedural delays, the incarceration was punitive.
3. Procedural Violations:
   • The applicant claimed his arrest violated the procedural safeguards under Section 50 of the CrPC and PMLA.
4. Right to Liberty:
   • Relying on precedents, he emphasized the principle of “bail is the rule and jail is the exception” and argued that further detention would violate his rights under Article 21.

Respondent’s Arguments

The prosecution opposed the bail application on these grounds:

1. Gravity of Offense:
   • The applicant was accused of playing a pivotal role in approving fabricated invoices and facilitating money laundering activities.
   • The ED presented statements from co-accused alleging that the applicant received proceeds of crime, including cash and a laptop worth ₹47,418.
2. Risk of Tampering:
   • The prosecution argued that releasing the applicant might lead to tampering with evidence or influencing witnesses.
3. Applicability of Section 45 of PMLA:
   • The prosecution contended that the twin conditions under Section 45, which require the court to be satisfied that the accused is not guilty, were not met.

Analysis of the Law

The court carefully analyzed the statutory framework under PMLA and constitutional principles:

1. Section 45 of PMLA:
   • This provision imposes stringent conditions for bail, requiring courts to believe that the accused is not guilty and unlikely to commit further offenses.
   • The court noted that these conditions could not override fundamental rights under Article 21, particularly when there is no likelihood of a trial concluding in the foreseeable future.
2. Proceeds of Crime:
   • The court held that proving the existence of proceeds of crime is essential under PMLA. The allegations against the applicant lacked direct evidence linking him to proceeds of crime.
3. Precedents:
   • The court cited several Supreme Court rulings, including V. Senthil Balaji v. ED, which held that prolonged detention without trial violates Article 21.
   • In K.A. Najeeb (2021), the Supreme Court ruled that delays in trial dilute the statutory bar on bail.
4. Evidentiary Gaps:
   • The court found no prima facie evidence directly implicating the applicant in fabricating documents or benefiting from proceeds of crime.
   • The applicant’s role was limited to forwarding invoices verified by other officers.

Precedent Analysis

The court referred to:

1. Vijay Madanlal Choudhary v. Union of India: Clarifying the application of twin conditions under Section 45 of PMLA.
2. K.A. Najeeb: Highlighting the importance of speedy trials in the context of bail.
3. Prem Prakash v. Union of India: Emphasizing that statutory provisions must align with constitutional rights under Article 21.

Court’s Reasoning

1. Role of the Applicant:
   • The applicant acted as Dean for only five months, during which he approved invoices already verified by other officers. There was no evidence suggesting he fabricated documents or influenced the contract allocation process.
2. Prolonged Detention:
   • The court highlighted that the applicant had been in custody for over 18 months, and the trial had not commenced. Detention under such circumstances would amount to punitive incarceration.
3. Fundamental Rights:
   • The court emphasized that prolonged pre-trial detention violated Article 21, which guarantees personal liberty and protection against arbitrary deprivation of liberty.
4. Stringent Bail Conditions:
   • The court held that Section 45 of PMLA should not become an instrument for indefinite detention, especially when the allegations are unsubstantiated.

Conclusion

The court granted bail with stringent conditions, including:

• A personal bond of ₹1,00,000.
• Monthly reporting to the ED.
• Restrictions on leaving Maharashtra without prior permission.
• Surrender of the applicant’s passport.

The court clarified that the observations were limited to the bail application and would not affect the trial’s merits.

Implications

1. Right to Liberty:
   • This case reinforces the principle that “bail is the rule and jail is the exception,” particularly when trials are delayed.
2. Judicial Oversight on Stringent Laws:
   • The judgment underscores the judiciary’s role in balancing statutory provisions with constitutional rights, ensuring that laws like PMLA are not misused to curtail liberty without trial.
3. Procedural Safeguards:
   • It highlights the importance of adhering to procedural safeguards during arrests and investigations under PMLA.

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