GAUTAM KUNDUversusMANOJ KUMAR ASSISTANT DIRECTOR, EASTERN REGION, DIRECTORATE OF ENFORCEMENT(PREVENTION OF MONEY LAUNDERING ACT) GOVT. OF INDIA

                   [2015] 15 S.C.R. 499


                    GAUTAM KUNDU                             A
                            v.
      MANOJ KUMAR ASSISTANT DIRECTOR,
EASTERN REGION, DIRECTORATE OF ENFORCEMENT
   (PREVENTION OF MONEY LAUNDERING ACT)                      B
                GOVT. OF INDIA
            (Criminal Appeal No. 1706 of2015)
                  DECEMBER 16, 2015
[PINAKI CHANDRA GHOSE AND R. K. AGRAWAL, JJ.]                C
      Bail - Prosecution u/s. 4 of Prevention of Money
Laundering Act, 2002 (PMLA) - Proceedings u/s. 24 of
Securities and Exchange Board of India Act, 1992 (SEBI Act)
pending - Bail application u/s. 439 Cr.P. C. - Rejected by
High Court on the ground that there was no order holding D
that no offence was made out u/s. 24 against the applicant-
Held: In view of s. 5 of Cr.P. C. and non-obstante clause of s.
45 of PMLA, PMLA being a special statute will prevail over
the general provisions of Cr.P.C. in case of any conflict -
The conditions for grant of bail enumerated in s. 45 of PMLA E
have overriding effect on the provisions of s. 439 Cr.P. C.- u/
s. 24 of SEBI Act, unless the contrary is proved the Authority/
Court shall presume that proceeds of crime are involved in
money laundering - In the facts and circumstances of the
case, High Court rightly refused the· bail - Code of Criminal F
Procedure, 1973 - s. 439- Prevention of Money Laundering
Act, 2002 - s. 4 - Securities and Exchange Board of India
Act, 2002 - s. 24.
     Dismissing the appeal, the Court
                                                             G
     HELD 1. The Prevention of Money Laundering Act,
2002 (PMLA) 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
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                            499
500       SUPREME COURT REPORTS              [2015] 15 S.C.R.


A  Assembly. PMLA 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
B 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. [Para 28) [515-
    A-C]
          2. Section 45 of the PMLA starts with a non-obstante
C clause which indicates that the provisions laid down in
    Section 45 of the PM LA will have overriding effect on the
    general provisions of the Code of Criminal Procedure in
    case of conflict between them. Section 45 of the PMLA
    imposes following two conditions for grant of bail to any
D person accused of an offence punishable for a term of
    imprisonment of more than three years under Part-A of
    the Schedule of the PMLA: (i) That the prosecutor must
    be given an opportunity to oppose the application for
    bail; and (ii) That the Court must be satisfied that there
E 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. [Para 29] [515-
    D-E]
         3. The conditions specified under Section 45 of the
 F  PMLA are mandatory and need to be complied with
    which is further strengthened by the provisions of
    Section 65 and also Section 71 of the PMLA. PMLA has
    an overriding effect and the provisions of Cr.P.C. would
    apply only if they are not inconsistent with the provisions
 G of this Act. Therefore, the conditions enumerated in
    Section 45 of PMLA will have to be complied with even
    in respect of an application for bail made under Section
    439 of Cr.P.C. That coupled with the provisions of Section
   ·24 of Securities and Exchange Board of India Act, 1992
 H provides that unless the contrary is proved, the Authority
    GAUTAM KUNDU v. MANOJ KUMARASSISTANT                   501
                  DIRECTOR

or the Court shall presume that proceeds of crime are      A
involved in money laundering and the burden to prove
that the proceeds of crime are not involved, lies on the
appellant. [Para 30] [515-H; 516·A·B]
     4. There is no doubt that the conditions laid down
under Section 45 of the PMLA, would bind the High Court 8
as the provisions of special law having overriding effect
on the provisions of Section 439 of Cr.P.C. for grant of
bail to any person accused of committing offence
punishable under Section 4 of the PMLA, even when the
application for bail is considered under Section 439 of C
Cr.P.C. [Para 33] [518-G]
     Subrata Chattoraj v. Union of India and Ors. 2014
     (6) SCR 783 : (2014) 8 sec 768; Y.S. Jagan
     Mohan Reddy v. Central Bureau of Investigation        0
     (2013) 7 SCC 439; Union of India v. Hassan Ali
     Khan 2011 (11) SCR 778: (2011) 10 sec 235-
     referred to.
      5. The High Court has called for all the relevant
papers and duly taken note of that and thereafter after E
satisfying its conscience, refused the bail. Therefore, the
High Court has not committed any wrong in refusing bail
in the given circumstances. [Para 38] [521-C]
     Afcons Infrastructure l:.td. v. Cherian Verkey
     Construction Co. (P) Ltd. 2010 (8) SCR 1053 :         F
     (2010) 8 SCC 24; Gurudevatta VKSSS Maryadit
     v. State of Maharashtra 2001 (2) SCR 654: (2001)
     4 SCC 534; Visitor, AMU v. K.S. Misra 2007 (9)
     SCR 763 : (2007) 8 SCC 593; State of Madhya
     Pradesh v. Baldeo Prasad 1961 (1) SCR 970;            G
     Harakchand Ratanchand Banthia & Ors. v. Union
     of India & Ors. 1970 (1) SCR 479: (1969) 2 SCC
     166; A.K. Roy & Ors. v. Union of India & Ors.
     (1982) SCR 272- referred to.
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502         SUPREME COURT REPORTS                [2015) 15S.C.R.


A                          Case Law Reference

      2010 (8) SCR 1053           referred to          Para 18

      2001 (2) SCR 654            referred to          Para 19

B     2007 (9) SCR 763            referred to           Para 19

      1961 (1) SCR 970            referred to          Para 21

      1970 (1) SCR 479            referred to           Para 21
c     (1982) SCR 272              referred to           Para 21

      2014 (6) SCR 783            referred to           Para 34

      (2013) 1   sec 439          referred to           Para 36
D
      2011 (11) SCR 778           referred to           Para 36

          CRIMINAL APPELLATE JURISDICTION: Criminal
      Appeal No. 1706 of 2015.

E          From the Judgment and Order dated 21.07.2015 of the
      High Court of Calcutta in CRM No. 6285 of 2015.
            Gopal Subramanium and K. V. Viswanathan, Sr. Advs.,
      Zoheb Hossain, Ms.Adeeba Mujahid,Abhijit P. Medh,Advs.
      for the Appellant.
 F
            Ranjit Kumar, SG, Ms. Binu Tamta, Amal Chitale, Rajiv
      Singh (for B. K. Prasad), Dr. Shamsuddin and Manoj Singh
      (for B. K. Prasad), Advs. for the Respondent.
           The Judgment of the Court was delivered by
 G         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
 H
      GAUTAM KUNDU v. MANOJ KUMARASSISTANT                              503
        DIRECTOR [PINAKI CHANDRA GHOSE, J.]

  Court has rejected appellant's application for bail under             A
  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").                                               B
       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 C
 '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 D
 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        E
 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          F
 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            G
 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.
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504         SUPREME COURT REPORTS               [2015] 15 S.C.R.


A           5. On the basis of the aforementioned letter dated
      26.06.2013 issued by SEBI, the respondent filed a report
      being ECIR No.KIZ0/02/2014 dated 27.02.2014, alleging
      commission of offence by the Rose Valley and its officers,
      punishable under Section 24 of the SEBI Act. Thereafter,
B     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
C 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
D 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.                                      ·
 E
         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.
 F 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.
 G 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 dismissed the said
   appeal and directed the appellant Rose Valley to appear before
   the Adjudicating Authority under Section 8 of the PMLA and

 H
     GAUTAM KUNDU v. MANOJ KUMARASSISTANT                            505
       DIRECTOR [PINAKI CHANDRA GHOSE, J.]

directed the Adjudicating Authority to decide the preliminary        A
objections as may be raised by the Rose Valley, including the
applicability of the PMLA as also the validity of the search and
seizure against Rose Valley. It was further directed that the
Adjudicating Authority should pass a reasoned order in the
matter and communicate the same to the appellant Rose Valley         B
within two days from the date of passing such order.
      8. A complaint was filed by the respondent on April 2,
2015, 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            C
Section 3 of the PMLA. The said complaint has been
registered as ML Case No.3 of 2015. Despite having fully
cooperated with the investigation, the appellant was arrested
on 25.03.2015 on suspicion of having committed an offence
punishable under the provisions of the PMLA and is detained          D
in custody since then.
      9. While the appellant was in custody, his father expired
on 06.04.2015 upon which he moved an application before
the High Court of Calcutta for interim bail to perform the rituals   E
for his deceased father. The High Court vide its order
08.04.2015, directed release of the appellant on provisional
bail for two weeks 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         F
Judge, City Sessions Court at Kolkata.
      10. On 06.07 .2015, the appellant filed a fresh bail
application under Section 439 of the Code of Criminal
Procedure before the High Court of Calcutta, being CRM
No.6285 of 2015. Vide impugned judgment and order the High G
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. It is pertinent to mention here that
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506         SUPREME COURT REPORTS                   [2015] 15 S.C.R.


A     a criminal revision praying for quashing of the proceedings
      initiated against the appellant under Section 24 of the SEBI
      Act is still pending for decision before the High Court.
           11 . Aggrieved by the rejection of the bail application filed
      under Section 439 of the Code of Criminal Procedure, the
B     appellant has approached this Court through this appeal by
      special leave.
           12. We have heard Mr. Gopal Subramanium, learned
      senior counsel appearing for the appellant and also Mr. Ranjit
c     Kumar, learned Solicitor General for India. For proper
      appreciation of submission made by learned counsel
      appearing for the parties, it would be necessary to consider
      the authorities cited on behalf of the both parties.
           13. Mr. Gopal Subramanium, learned senior counsel
D     appearing for the appellant submitted that there is no offence
      made out under PMLA against the appellant as Section 24 of
      the SEBI Act is not a separate scheduled offence under the
      PMLA. Section 12A read with Section 24 of SEBI Act is the
      scheduled offence under the PMLA since 2009. Neither the
 E    complaint filed by SEBI nor the complaint filed by the
      respondent (which is based entirely on SEBI complaint)
      prosecutes the appellant for violation of Section 12A read with
      Section 24 of the SEBI Act.
          14. According to learned senior counsel for the appellant,
 F Section 24 of the SEBI Act was printed separately in the
   Schedule of PMLA for the first time vide PMLA (Amendment)
   Act, 2012 w.e.f. 15.02.2013, which is clearly an inadvertent
   typographical error. The description of offence given under
   paragraph 11 of the Schedule to PMLA for Section 24 of the
 G SEBI Act reads as "acquisition of securities or control", which
   is different from the description given to the Section under the
   SEBI Act, which describes the Section as "Offences". Rather
   the heading "acquisition of securities or control" is part of the
   heading of Section 12A read with Section 24 which is the
 H
    GAUTAM KUNDU v. MANOJ KU MAR ASSISTANT                       507
      DIRECTOR [PINAKI CHANDRA GHOSE, J.]

scheduled offence. The relevant extract of the Schedule to the   A
PMLA, as it stood after the 2009 Amendment, is as follows:
     Paragraph 8 - The Securities and Exchange
     Board of India Act, 1992 (15of1992)

   12A read with     Prohibition of manipulative and             B
                     deceptive devices, insider trading
   Section 24        and substantial       acquisition of
                     securities or control

The relevant extract of the Schedule to the PMLA as it stands C
today after the Amendment Act of 2012 w.e.f. 15.02.2013 is
as follows:
     Paragraph 11 -The Securities and Exchange
     Board of India Act, 1992 (15of1992)                         0
  12A read with    Prohibition  of   manipulative     and
  Section 24       deceptive devices, insider trading and
                   substantial.

 Section 24        Acquisition of securities or control          E
      15. The learned senior counsel for the appellant submitted
that if the offences prescribed against the sections in
paragraph 11 in both the rows are read together, the same will
appear as the heading of Section 12A of the SEBI Act. A
conjoint reading of two rows under paragraph 11 of Part A of F
the Schedule would show that the same is in substance a
reproduction of paragraph 8 of Part B of the Schedule of PMLA.
as was prevailing prior to the amendment effected on
15.02.2013 and therefore, the position remains unchanged. G
Section 12A of the SEBI Act is as follows:
     "Prohibition of manipulative and deceptive
     devices, insider trading and substantial
     acquisition of securities or control.
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508   SUPREME COURT REPORTS                     [2015] 15 S.C.R.


A     12A. No person shall directly or indirectly-
      (a) use or employ, in connection with the issue,
      purchase or sale of any securities listed or proposed
      to be listed on a recognized stock exchange, any
      manipulative or deceptive device or contrivance in
B     contravention of the provisions of this Act or the rules
      or the regulations made thereunder;
      (b) employ any device, scheme or artifice to defraud
      in 1.;onnection with issue or dealing in securities
      which are listed or proposed to be listed on a
c     recognized stock exchange;
      (c) engage in any act, practice, course of business
      which operates or would operate as fraud or deceit
      upon any person, in connection with the issue,
      dealing .in securities which are listed qr proposed
D     to be listed on a recognized stock exchange, in
      contravention of the provisions of this Act or the rules
      or the regulations made thereunder;
      (d) engage in insider trading;
E     (e) deal in securities while in possession of material
      or non-public information or communicate such
      material or non-public information to any other
      person, in a manner which ·is in contravention of
      the provisions of this Act or the rules or the
 F    regulations made thereunder;
      (f) acquire control of any company or securities
      more than the percentage of equity share capital
      of a company whose securities are listed or
      proposed to be listed on a recognized stock
G     exchange in contravention of the regulations made
      under this Act."
      Section 24 of the SEBI Act reads as follows:
      "24. Offences. - (1) Without prejudice to any award
      of penalty by the Adjudicating Officer under this Act,
H
     GAUTAM KUNDU v. MANOJ KUMARASSISTANT                            509
       DIRECTOR [PINAKI CHANDRA GHOSE, J.]

      if any person contravenes or attempts to contravene            A
      or abets the contravention of the provisions of this
      Act or of any rules or regulations made thereunder,
      he shall be punishable with imprisonment for a term
      which may extend to ten years, or with fine, which
      may extend to twenty-five crore rupees or with both.           B
      (2) If any person fails to pay the penalty imposed
      by the Adjudicating Officer or fails to comply with
      any of his directions or orders, he shall be
      punishable with imprisonment for a term which shall
      not be less than one month, but which may extend               c
      to ten years or with fine, which may extend to twenty-
      five crore rupees or with both."
      16. According to the learned senior counsel for the
appellant, the fact that no new offence was meant to be added        0
byway of the 2012 amendment, is clear from a plain reading
of the "Statement of Objects and Reasons" to the Amendment
of 2012, as well as the "Notes on Clauses" on the Amendment
Act, 2012 and from a comparison of the Schedules of PMLA
of 2009 and amended PMLA of 2012. It is submitted by the             E
learned senior counsel for the· appellant that the respondent is
wrongly reading Section 24 of SEBI Act simplicitor as a
separate schedul~d offence, whereas Section 24 is a general
penal provision for violation of any and every provisions of the
SEBI Act or any ru.les or regulations made thereunder.     ·
                                                                     F
        17. It was further submitted by the learned senior counsel
 appearing for the appellant that if the intent of the legislature
·was to incorporate Section 24 of SEBI Act alone as an offence,
 in that event, there would have been no necessity to incorporate
 "12A read with Section 24" inasmuch as Section 24 of the            G
 SEBI Act prescribes that all violations of provisions of SEBI
 Act would be punishable in terms of Section 24 of the SEBI
 Act, 1992. Had that been the intention of the legislature, the
 legislature would have mentioned either "offences and
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510          SUPREME COURT REPORTS                    [2015] 15 S.C.R.


A     penalties under SEBI Act, 1992" or only Section 24 and the
      heading thereof, as scheduled offence. There was or could be
      no necessity to specify section 12A separately if the legislature
      intended to incorporate Section 24 as a separate scheduled
      offence.
B             18. Further, the Enforcement Directorate's own document
      titled "FAQs" on their website mentions the Schedule to PMLA
      which treats Section 12A r/w Section 24 of the SEBI Act as a
      scheduled offence and not Section 24 alone. Similarly, the
      Schedule to PMLA on the website of the Ministry of Finance-
C     Financial Intelligence Unit also mentions S.12A r/w 24 of the
      SEBI Act as the scheduled offence and not Section 24 alone.
      This reflects the authority/government's own understanding of
      the Schedule. Thus, it can be safely said that the printing of
      Section 24 of SEBI Act separately under the Schedule to the
D     PMLA is vide an inadvertent typographical error that has crept
      into the legislation as is apparent from the marginal note therein.
      It is an accepted principle of interpretation of statutes that
      where an inadvertent grammatical or other error has palpably
      crept into the legislation, the Court is at liberty to disregard the
E     error in applying the statute. (Afcons Infrastructure Ltd. v.
      Cherian Verkey Construction Co. {P) Ltd., (2010) 8 SCC
      24).
         19. Learned senior counsel for the appellant further
 Fsubmitted that the description given to the offence under
  Section 24 of SEBI Act, in the Schedule to PMLA is "acquisition
  of securities or control", and even if Section 24 is treated as a
  separate scheduled offence, the words used in the description
  have to be given meaning to and its application has to be
  restricted to the offence described under it in the Schedule.
G The learned senior counsel for the appellant further submitted
  that this Court has held in numerous judgments that the Court
  should give meaning to each and every word used by the
  legislature and it is not a sound principle of construction to
  brush aside words in a statute as being inapposite surplus, if
H
     GAUTAM KUNDU v. MANOJ KUMARASSISTANT                          511
       DIRECTOR [PINAKI CHANDRA GHOSE, J.)

they can have a proper application in circumstances                A
conceivable within the contemplation of the statute. [See:
Gurudevatta VKSSS Maryadit v. State of Maharashtra,
(2001) 4 SCC 534 at para 26). It has also been held by this
Court that "the courts always presume that the legislature
inserted every part thereof for a purpose and the legislative       B
intent is that every part of the statute should have effect. The
legislature is deemed not to waste its words or to say anything
in vain and a construction which attributes redundancy to the
legislature will not be accepted except for compelling reasons."
{Visitor, AMU v. K.S. Misra, (2007) 8 SCC 593, at para 13)).        C
      20. Therefore, learned senior counsel for the appellant
submitted, the words "acquisition of securities or control",
appearing next to Section 24 of the SEBI Act in the Schedule
to the PMLA must be given due meaning and construed to
mean that only that extent of the offence which pertains to         D
""acquisition of securities or control" is a punishable offence
under PMLA and not any other violation under the SEBI Act.
      21. It was further submitted by the learned senior counsel
for the appellant that Section 24 alone cannot by itself be a E
scheduled offence under the PMLA since it does not
enumerate a specific offence rather it is the nature of a "catch-
all" penal provision, which imposes punishment for any
contravention of the SEBI Act, Rules or Regulations and does
not precisely define or specify any offence in particular. Inclusion F
of Section 24 as a separate offence would be a violation of
the basic principle of criminal jurisprudence that 'criminal law
has to be clear and unambiguous.' It has been held by this
Court in numerous judgments that criminal law ought to be
absolutely clear, specific and not vague, failing which it would G
suffer from arbitrariness. [Ref: (i) State of Madhya Pradesh
v. Baldeo Prasad, (1961) 1 SCR 970; (ii) Harakchand
Ratanchand Banthia & Ors. v. Union of/ndia & Ors., (1969)
2 SCC 166; and (iii) A.K. Roy & Ors. v. Union of India &
Ors., (1982) SCR 272).                           .
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512       SUPREME COURT REPORTS                 [2015] 15S.C.R.


A        22. It was alternatively submitted by the learned senior
  counsel appearing for the appellant that assuming if Section
  24 simplicitor is treated as a scheduled offence, it was
  introduced vide PMLA (Amendment) Act, 2012, w.e.f.
  15.02.2013 i.e. much after the offences were alleged to have
B been committed and bar against ex-post facto laws under
  Article 20(1) would be attracted. Section 2(u) of PMLA defines
  "proceeds of crime" and states that it must be as a result of
  criminal activity relating to a scheduled offence. Under Section
  3 of the PMLA, in order for the offence of money laundering to
c be triggered, it must be established at the threshold that the
  "proceeds of crime" was as a result of criminal activity relating
  to a scheduled offence on the date such crime was committed.
  He submitted that the offences are alleged to have been
  committed between the years 2001 and 2007. The offence
o under Section 12A r/w Section 24 of SEBI Act became
  scheduled offence only by way of the Prevention of Money
  Laundering (Amendment) Act, 2009 w.e.f. 01.06.2009, much
  after the alleged commission of crime and the appellant is
  admittedly not accused of violation of Section 12A r/w Section
E 24 of the SEBIAct.
         23. Mr. Ranjit Kumar, learned Solicitor General appearing
  on behalf of the respondent, on the other hand, submitted that
  Rose Valley Group of Companies floated as many as 27
  companies although two out of them, i.e. Rose Valley Real
F Estate Construction Ltd. ("Rose Valley'') and Rose Valley Hotels
  Entertainment Ltd. were the front runners to allure the investors
  to invest in (i)Ashirbad Scheme, (ii)Time Share Scheme, and
  (iii) Debenture Scheme, promising high returns to the investors
  and the funds so collected from the public at large were
G subsequently laundered in associated companies. Rose
  Valley made a public issue of debentures without filing any
  offer document in violation of Section 56 of the Companies
  Act, 1956, nor did it file statement in lieu of prospectus as
  claimed by it. On the basis of the information/documents
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    GAUTAM KUNDU v. MANOJ KUMARASSISTANT                       513
      DIRECTOR [PINAKI CHANDRA GHOSE, J.]

received from SEBI, the respondent filed a complaint in the A
Court of Chief Metropolitan Magistrate at Calcutta for
Scheduled Offence 1.1nder Section 24 of the SEBI Act. The
respondent conducted searches of the premises of the Rose
Valley Group on 22.05.2014 and 23.05.2014, resulting into
seizure of incriminating documents and Indian currency of B
Rs.37 .07 lacs. The respondent's action of search and seizure
was challenged by the appellant by filing a writ petition before
the High Court of Calcutta which was dismissed on 7.7.2014.
     24. He further submitted that the investigation conducted
by the respondent revealed that Rose Valley illegally and C
fraudulently collected public money from the general public in
the State of West Bengal, Assam, Tripura and Odisha,
amounting to Rs.12363.63 crores (approx). In addition to this,
Rose Valley illegally and fraudulently collected public funds from
the States of Karnataka, Bihar, Maharashtra, Jharkhand, Uttar D
Pradesh, Delhi, Madhya Pradesh, amounting to more than
Rs.3120.97 crores (approx). Therefore, the funds of Rs.12.82
crores collected from the general public under the garb of
Debenture Schemes is a tip of the iceberg.
                                                                E
      25. Mr. Ranjit Kumar, learned Solicitor General further
submitted that the "scheduled offences" and "offence of money
laundering" are mutually exclusive and independent of each
other. Section 3 of the PMLA deals with the offence of money
laundering punishable under Section 4 of the said Act, whereas F
the 'Schedule' to PMLA involving offences under 28
paragraphs enable the respondent to conduct the investigation
for the collection of evidence relating to offence of money
laundering. In the present CdSe, tt1e respondent filed the
complaint under Section 45 of PMLA and cognizance of the G
same has been taken by the Special Court on 02.04.2015
under Section 44(1 )(b) of PMLA. He further submitted thatthe
complaint filed by SEBI has nothing to do with the merits of the
present case and the High Court stayed the proceedings of
the SEBI cvmplaint on the ground that the CMM had no
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514         SUPREME COURT REPORTS                   [2015] 15 S.C.R.


A     authority to take cognizance of the offence as the latest
      amendment in Section 26 of SEBI Act makes the offence triable
      by the Court of Sessions.
        26. The learned Solicitor General submitted that Section
  45 of PMLA refers only to the term 'Special Court' and therefore
B has to be given restricted meaning. According to him, PMLA
  is a 'Special Law' applicable to the subject of money
  laundering, and deals with economic offenders and white collar
  criminals. The object of PMLA is to prevent money-laundering
  and to provide for confiscation of property derived from, or
C involved in, money-laundering. To enable the scheme of the
  Act, reliance was placed on various provisions of the PMLA.
  He further submitted that Section 44 of the PMLA only confers
  jurisdiction on the Special Court to deal with offences under
  the PMLA. Section 45 of PMLA makes the offence of money
D laundering cognizable and non-bailable and also provides that
  notwithstanding the provisions of Criminal Procedure Code,
  1973, no person accused of an offence punishable for a term
  of imprisonment of more than three years under Part A of the
  Schedule shall be released on bail or on his own bond, unless
E the Public Prosecutor has been given an opportunity1o oppose
  the application for such release.
        27. The learned Solicitor General lastly submitted that
  'money laundering' being an economic offence poses a
F serious threat to the National Economy and National Interest
  and committed with cool calculation and deliberate design with
  the motive of personal gain regardless of the consequences
  to the society. Hence, for Money Launderers 'jail is the rule
  and bail is an exception, which finds support from many
G landmark judgments of this Court.
              28. Before dealing with the application for bail on merit,
      it is to be considered whether the provisions of Section 45 of
      the PMLA are binding on the High Court while considering the
      application for bail under Section 439 of the Code of Criminal
H
    GAUTAM KUNDU v. MANOJ KUMARASSISTANT                       515
      DIRECTOR [PINAKI CHANDRA GHOSE, J.]

Procedure. There is no doubt that PMLA deals with the offence A
of money laundering and the Parliament has enacted this law
as per commitment of the country to the United Nations
General Assembly. PMLAis 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 B
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.                                                        C
       29. Section 45 of the PMLA starts with a non obstante
clause which indicates that the provisions laid down in Section
45 of the PMLA will have overriding effect on the general
provisions of the Code of Criminal Procedure in case of conflict
between them. Section 45 of the PMLA imposes following two D
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 PMLA: (i) That the
prosecutor must be given an opportunity to oppose the
application for bail; and (ii) That the Court must be satisfied E
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.
      30. The conditions specified under Section 45 of the F
PMLA are mandatory and needs to be complied with which is
further strengthened by the provisions of Section 65 and also
Section 71 ofthe PMLA. Section 65 requires that the provisions
of Cr.P.C. shall apply in so far as they are not inconsistent with
the provisions of this Act and Section 71 provides that the G
provisions of the PMLA shall have overriding effect
notwithstanding anything inconsistent therewith contained in
any other law for the time being in force. PMLA has an
overriding effect and the provisions of Cr.P.C. would apply only
if they are not inconsistent with the provisions of this Act.
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516       SUPREME COURT REPORTS                  [2015] 15 S.C.R.


A Therefore, the conditions enumerated in Section 45 of PMLA
  will have to be complied with even in respect of.an application
  for bail made under Section 439 of Cr.P.C. That coupled with
  the provisions of Section 24 provides that unless the contrary
  is proved, the Authority or the Court shall presume that
B proceeds of crime are involved in money laundering and the
  burden to prove t~at the proceeds of crime are not involved,
  lies on the appellant.
        31. It was submitted on behalf of the appellant that Section
  12A read with Section 24 of the SEBI Act does not include
C Section 24 of the said Act as a scheduled offence but it is only
  Section 12A which is to be construed as a scheduled offence
  as the description of offence against Section 24 of the SEBI
  Act mentioned under paragraph 11 of the Schedule to PMLA
  is part of Section 12A of the said Act. In this context it was
D submitted by the learned Solicitor General that PMLA being a
  Special Statute cannot be given restricted meaning while
  interpreting its provisions including the Schedule which is an
  integral part of this Act. PMLA has been enacted by the
  Parliament as per commitment of the country to the United
E Nations and having global dimensions and cannot be confined
  to national boundaries of our country. Moreover, its legislative
  intent has to be gathered from the plain reading of the language
  used in the provisions of the Act and the Schedule appended
  thereunder. Hence, there is no ambiguity that Section 24 of
F the SEBI Act is a scheduled offence under Paragraph 11 of
  the Schedule. The fact remains that Section 24 of the SEBI
  Act is inclusive in nature and also includes Section 12A within
  its ambit and scope. Further, on perusal of various offences
  listed in the Schedule in 28 Paragraphs, it could be seen that
G only penal provisions of the Statutes have been incorporated
  in the Schedule. There is no denying the fact that Section 24
  of the SEBI Act is a penal provision of inclusive nature and
  thus it clearly reflects the legislative intent of a scheduled
  offence under PMLA. Admittedly, the complaint was filed by
H
     GAUTAM KUNDU v. MANOJ KU MAR ASSISTANT                          517
       DIRECTOR [PINAKI CHANDRA GHOSE, J.]

SEBI against the appellant on the allegation of committing A
offence punishable under Section 4 of PMLA. The complaint
reveals that SEBI received a letter from the Ministry of
Corporate Affairs, Office of the Registrar of Companies
("ROC"), West Bengal, with reference to Rose Valley in which
the ROC had.stated that Rose Valley has repeatedly issued B
debentures in the years 2001-2002, 2004-2005, 2005-2006
and 2007-2008 to more than 49 persons in each financial year
without filing offer documents with either the ROC or the SEBI
and requested SEBI to investigate into the matter. From the
information provided by ROC, it was observed that Rose Valley        c
had raised a total sum of Rs.1282.225 lakhs from 2585 persons
by issuing secured debentures to the general public without
complying with the norms related to IPO of securities as per
first provision to Section 67(3) of the Companies Act, 1956.
Rose Valley by making public issue of debentures during the o
period between 2001-2002 to 2007-2008, without complying
with the public issue norms, violated the provisions of erstwhile
SEBI (Disclosure and Investor Protection) Guidelines, 2000
and the provisions of Section 117(A) of the Companies Act,
1956 and other provisions of SEBI Act which is a Scheduled E
Offence under PMLA.
      32. We have heard the learned counsel for the parties.
At this stage we refrained ourselves from deciding the
questions tried to be raised at this stage since it is nothing but
a bail application. We cannot forget that this case is relating      F
to "Money Laundering" which we f~el is a serious threat to the
national economy and national interest. We cannot brush aside
the fact that the schemes have been prepared in a calculative
manner with a deliberative design and motive of personal gain,
regardless of the consequence to the members of the society.         G
     33. With regard to the questions raised by Mr. Gopal
Subramanium, learned senior counsel appearing on behalf of
the appellant, at this stage, we do not think that we should

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518       SUPREME COURT REPORTS                  [2015] 15 S.C.R.


A answer or deal with the same in view of the fact that the matter
  is pending before a Division Bench of the High Court in writ
  jurisdiction, as has been pointed out before us. Hence, any
  observation or remarks made by us may cause prejudice to
  the case of both the sides. Therefore, we feel that it would be
B proper for us only to deal with the matter concerning bail. We
  note that admittedly the complaint is filed against the appellant
  on the all~gations of committing the offence punishable under
  Section 4 of the PMLA. The contention raised on behalf of the
  appellant that no offence under Section 24 of the SEBI Act is
c made out against the appellant, which is a scheduled offence
  under the PMLA, needs to be considered from the materials
  collected during the investigation by the respondents. There
  is no order as yet passed by a competent court of law, holding
  that no offence is made out against the appellant under Section
D 24 of the SEBI Act and it would be noteworthy that a criminai
  revision praying for quashing the proceedings initiated against
  the appellant under Section 24 of SEBI Act is still pending for
  hearing before the High Court. We have noted that Section 45
  of the PMLA will have overriding effect on the general
E provisions of the Code of Criminal Procedure in case of conflict
  between them. As mentioned earlier, Section 45 of the PMLA
  imposes two conditions for grant of bail, specified under the
  said Act. We have not missed the proviso to Section 45 of the
  said Act which indicates that the legislature has carved out an
F exception for grant of bail by a Special Court when any person
  is under the age of 16 years or is a woman or is a sick or
  infirm. Therefore, there is no doubt that the conditions laid down
  under Section 45A of the PMLA, would bind the High Court as
  the provisions of special law having overriding effect on the
G 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 PMLA, even when the
  application for bail is considered under Section 439 of the
  Code of Criminal Procedure.
H
     GAUTAM KUNDU v. MANOJ KUMAR ASSISTANT                         519
       DIRECTOR [PINAKI CHANDRA GHOSE, J.]

     34. We have further noted the directions given by this        A
Court in Subrata Chattoraj v. Union of India and Ors.,
(2014) 8 sec 768, in particular to paragraph 35.4.
      35. We cannot brush aside the fact that the appellant
floated as many as 27 companies to allure the investors to
invest in their different companies on a promise of high returns   B
and funds were collected from the public at large which were
subsequently laundered in associated companies of Rose
Valley Group and were used for purchasing moveable and
immoveable properties.
                                                                   c
      36. We do not intend to further state the other facts
excepting the fact that admittedly the complaint was filed against
the appellant on the allegation of committing offence punishable
under Section 4 of the PMLA. The contention made on behalf
of the appellant that no offence under Section 24 of the SEBI 0
Act is made out against the appellant, which is a scheduled
offence under the PMLA, needs to be considered from the
material collected during the investigation and further to be
considered by the competent court of law. We do not intend to
express ourselves at this stage with regard to the same as it E
may cause prejudice the case of the parties in other
proceedings. We are sure that it is not expected at this stage
that the guilt of the accused has to be established beyond
reasonable doubt through evidences. We have noted that in
Y.S. Jagan Mohan Reddy v. Central Bureau of F
Investigation, (2013) 7 SCC 439, this Court has observed
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. G
Hassan Ali Khan, (2011) 1.0 SCC 235, this Court has laid
down that 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
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520         SUPREME COURT REPORTS                   [2015] 15S.C.R.


A     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
B     unreported decision of Smt. Janata Jha v. Assistant
      Director, Directorate of Enforcement (CRLMC No. 114 of
      2011 decided on December 16, 2013). Therefore, taking into
      account all these propositions of law, we feel that the
      application for bail of the appellant should be seen at this stage
c     while the appellant is involved in the economic offence, in
      general, and for the offence punishable under Section 4 of the
      PMLA, in particular.
        37. We have further noted that the High Court at the time
  of refusing the bail application, duly considered this fact and
D further considered the statement of the Assistant General
  Manager of RBI, Kolkata, seizure list, statements of directors
  of Rose Valley, statements of officer bearers of Rose Valley,
  statements of debenture trustees of Rose Valley, statements
  of debenture holders of Rose Valley, statements of AGM of
E Accounts of Rose Valley anEl statements of Regional Managers
  of Rose Valley for formation of opinion whether the appellant
  is involved in the offence of money laundering and on
  consideration of the said statements and other materials
  collected during the investigation, the High Court specifically
F stated as follows:
            "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
G
            secured debentures in violation of the guidelines
            of SEBI and on further consideration of the manner
            of keeping accounts of 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
H
     GAUTAM KUNDU v. MANOJ KUMARASSISTANT                            521
       DIRECTOR [PINAKI CHANDRA GHOSE, J.]

      myself to grant bail to the petitioner at this stage.          A
      So, prayer for bail is rejected. The application is
      dismissed."
      38. In these circumstances, we do not find that the High
Court has exercised its discretion capriciously or arbitrarily in
the facts and circumstances of this case. We further note that B
the High Court has called for all the relevant papers and duly
taken note of that and thereafter after satisfying its conscience,
refused the bail. Therefore, we do not find that the High Court
has committed any wrong in refusing bail in the given
circumstances. Accordingly, we do not find any reason to C
interfere with the impugned order so passed by the High Court
and the bail, as prayed before us, challenging the said order
is refused. Consequently the appeal is dismissed.


Kalpana K. Tripathy                              Appeal dismissed.