Holding

The Supreme Court held that the threshold conditions under Section 45 of the PMLA were not met, and therefore the regular bail application must be dismissed.

Summary

The Supreme Court dismissed the appeals of Rohit Tandon challenging the denial of regular bail under the Prevention of Money Laundering Act (PMLA). The Court held that the threshold conditions of Section 45 of the PMLA were not satisfied, as the prosecution presented substantial evidence of the appellant’s involvement in converting demonetised currency into legal tender. The observations made by the High Court while granting interim bail on humanitarian grounds were held to be irrelevant to the regular bail application. The Court reiterated that Section 45, a non‑obstante clause, overrides the general provisions of the CrPC and requires the prosecutor’s opposition and a finding of reasonable grounds of innocence, which were absent. Consequently, the regular bail was refused and the appeals were dismissed. The judgment also clarified the applicability of PMLA provisions over the CrPC in bail matters and emphasized the seriousness of economic offences.

Issues considered

The relevance of the High Court's interim bail observations to the regular bail application.
Whether Section 45 of the Prevention of Money Laundering Act, 2002 applies to bail applications under Section 439 of the CrPC.
Whether the threshold conditions of Section 45 (prosecutor’s opposition and reasonable grounds of innocence) were satisfied.
Whether the appellant’s failure to explain the source of large amounts of demonetised currency precludes bail.

Legislation cited

Code of Criminal Procedure, 1973s. 439
Indian Penal Code, 1860s. 120B, s. 188, s. 406, s. 409, s. 420, s. 467, s. 468, s. 471
Prevention of Money Laundering Act, 2002s. 2(1)(u), s. 2(1)(v), s. 2(1)(y), s. 24, s. 3, s. 4, s. 45, s. 50

Subjects

bailPrevention of Money Laundering ActSection 45money launderingdemonetisationeconomic offencesinterim bailregular bailspecial statutenon‑bailable offence

Judgment

[2017] 13 S.C.R. 156

A ROHIT TANDON
v.
THE ENFORCEMENT DIRECTORATE
(Criminal Appeal Nos. 1878-1879 of2017)
B NOVEMBER 10,2017
[DIPAK MISRA, CJI, A. M. KHANWILKAR AND
D.Y. CHANDRACHUD, JJ.)
Code of Criminal Procedure, 1973: s.439 - Bail application
C filed under s.439 rlw s.45 of PML Act - Allegation was that
appellant-ac¢used conspired with a bank manager and a CA to
earn huge pKofit by converting black money in the form of old
currency notes into new currency notes and made illegal earnings
- Prosecution under s.45 for commission of offence under ss.3 and
4 of PML Act as a sequel to FIR which was registered under ss.420,
D 406, 409, 46~. 471, 188 and 1208 !PC - Prayer for bail rejected
by Sessions judge and then by High Court - Second bail application
filed before High Court - Along with that, appellant filed an
application seeking direction for his interim release on assertion
that his mother was seriously ill and required immediate .medical
attention - The said interim release application was allowed noting;
E
that the appellant never evaded the investigation; the period of 7
months of incarceration; illness of his mother; and absence of
definite reasqns assigned by counsel to substantiate allegation that
appellant would tamper with evidence especially when charge sheet
in the main case had been submitted - However, regular second
F bail application was dismissed as withdrawn - In the instant appeal,
challenge is to the rejection of first bail application filed before
High Court - Plea was that the reasons which weighed while
directing interim release would apply proprio vigore for considering
regular bail - Held: The observations made while allowing interim
G release would have no bearing on merits of the controversy - The
appellant has not succeeded in persuading about the inapplicability
of the threshold stipulation under s.45 of the Act - Prosecution
based its ca$e on the evidence of 26 witnesses - The same made out
a convincing case about involvement of appellant in commission of
serious offence of money laundering - Thus, there were reasonable
H grounds for believing that the appellant was guilty of such offence
156
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE 157

- Also appellant was reluctant in disclosing source from where such A
huge value of demonetized currency and new currency was acquired
by him - The volume of demonetized currency recovered from the
office and residential premises of appellant, including the bank
drafts in favour of fictitious persons and also new currency notes
for huge amount, leave no manner of doubt that it was the outcome B
of some activity connected with the proceeds of crime projecting
the property as untainted property - Np case made out for
interference with the order of High Court rejecting the prayer for
grant of regular bail to the appellant - Prevention of Money
Laundering Act, 2002 - ss.3 and 4.
Dismissing the appeals, the Court c
HELD : 1. The possession of demonetized currency in one
sense, ostensibly, may appear to be only a facet of unaccounted
money in reference to the provisions of the Income Tax Act or
other taxation laws. However, the stated activity allegedly
indulged into by the accused named in the commission of predicate D
offence is replete with mens rea. In that, the concealment,
possession, acquisition or use of the property by projecting or
claiming it as untainted property and converting the same by bank
drafts, would certainly come within the sweep of criminal activity
relating to a scheduled offence. That would come within the E
meaning of Section 3 and punishable under Section 4 of the Act,
being a case of money-laundering. [Para 23] [183-E-F]
Manoranjana Sinh v. Central Bureau of Investigation
(2017) 5 SCC 218 ; Sanjay Chandra v. Central Bureau
of Investigation (2012) 1 SCC 40 : [2011 J 13 SCR 309 F
- distinguished.
Gautam Kundu v. Directorate of Enforcement
(Prevention of Money-Laundering Act), Government of
India (2015) 16 SCC 1 ; Subrata Chattoraj v. Union of
India (2014) 8 SCC 768 : [2014] 6 SCR 783 ; G
Y.S. Jagan Mohan Reddy v. CBI (2013) 7 SCC 450 ;
Union of India v. Hassan Ali Khan (2011) 10 SCC
235 : (2011] 11 SCR 778 ; Ranjitsing Brahmajeetsing
Sharma v. State of Maharashtra and Anr. (2005) 5 SCC
294 : [2005] 3 SCR 345 ; State of Maharashtra v.
H
158 SUPREME COURT REPORTS [2017] 13 S.C.R.

A Vishwaniath Maranna Shettv (2012) 10 SCC 561 :
[2012] 9 SCR 873 - referred to.
Gorav Kmhuria v. Union of India (2016) SCC Online
P & H 3428 - referred to.
2. The appellant has not succeeded in persuading about
B the inapplicability of the threshold stipulation under Section 45
of the Act. The appellant is reluctant in disclosing the source
from where such huge value of demonetized currency and also
new currency has been acquired by him. The prosecution is relying
on statements of 26 witnesses/accused already recorded, out of
c which 7 were considered by the High Court. These statements
are admissiblie in evidence, in view of Section 50 of the Act of
2002. The S'1mc makes out a formidable case about the
involvement of the appellant in commission of a serious offence
of money-laundering. It is, therefore, not possible to record
satisfaction that there are reasonable grounds for believing that
D the appellant is not guilty of such offence. Further, the Courts
below have justly adverted to the antecedents of the appellant
for considering the prayer for bail and concluded that it is not
possible to hpld that the appellant is not likely to commit any
offence ascribable to the Act of 2002 while on bail. Since the
E threshold stipulation predicated in Section 45 has not been
overcome, the question of considering the efficacy of other points
urged by the appellant to persuade the Court to favour the
appellant with the relief ofregular bail will be of no avail. In other
words, the fact that the investigation in the predicate offence or
that the investigation qua the appellant in the complaint is
F completed; and that the proceeds of crime is already in possession
of the investigating agency and provisional attachment order in
relation thereto passed on 13'" February, 2017 has been
confirmed; or that charge-sheet against the appellant without his
arrest; that the appellant has been lodged in judicial custody since
G 2"' January, 2017 and has not been interrogated or examined by
the Enforcei;nent Directorate thereafter; all these will be of no
consequence. [Para 27] [185-G-H; 186-A-E]
3. The fact that no limit for deposit was specified, would
not extricate the appellant from explaining the source from where
H
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE 159

such huge amount has been acquired, possessed or used by him. A
No explanation was offered by the appellant to dispel the legal
presumption of the property being proceeds of crime. Similarly,
the fact that the appellant has made declaration in the Income
Tax Returns and paid tax as per law does not extricate the
appellant from disclosing the source of its receipt. There is no B
provision in the taxation laws which grants immunity to the
appellant from prosecution for an offence of money-laundering.
In other words, the property derived or obtained by the appellant
was the result of criminal activity relating to a scheduled offence.
The argument of the appellant that there is no allegation in the
charge-sheet filed in the scheduled offence case or in the C
prosecution complaint that the unaccounted cash deposited by
the appellant is the result of criminal activity, will not come to the
aid of the appellant. That will have to be negatived in light of the
materials already on record. The possession of such huge quantum
of demonetized currency and new currency in the form of
D
Rs.2000/- notes, without disclosing the source from where it is
received and the purpose for which it is received, the appellant
has failed to dispel the legal presumption that he was involved in
money-laundering and the property was proceeds of crime. There
is no reason to interfere with the well considered opinion of the
Sessions Court and the High Court rejecting the prayer for grant E
of regular bail to the appellant. [Paras 28, 29] [187-B-G]
Case Law Reference

(2015) 16 sec 1 referred to Para 16 F
[2014] 6 SCR 783 referred to Para 17
(2013) 1 sec 450 referred to Para 17
[2011) 11 SCR 778 referred to Para 17
[2005) 3 SCR 345 referred to Para 19 G
[2012] 9 SCR 873 referred to Para 19
(2017) 5 sec 218 distinguished Para 20
[2011) 13 SCR 309 distinguished Para 20
H
160 SUPREME COURT REPORTS [2017] 13 S.C.R.

A CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
Nos. 1878-1879 of2017.
From the Ju(lgment and Order dated 05.05.2017 of the High Court
of Delhi at New Delhi in Bail Application No. 119/2017 and Cr!. M. B.
No. 121/2017.
B Mukul Roh~tgi, Subramonium Prasad, Sr. Advs, Jayant Mohan,
Arunabh Chowdhury, Anupam Lal Das, Manu Sharma, Sarvesh Singh
Baghel, Vaibhav Tomar, Abhir Datt, Ms. Shruti Chaudhry, Karma Dorjee,
Anirudh Singh, Ac;lvs for the Appellant.
Tushar Mehta, ASG, Ms. Binu Tamta, Prateek Jalan, B. Krishna
c Prasad, Advs for the Respondent.
The Judgment of the Court was delivered by
A. M. KHANWILKAR, J. !. By these appeals the order of
the High Court of Delhi at New Delhi dated 5th May, 2017, rejecting the
D Bail Application No.119 of2017 and Criminal M.B. No.121 of2017 has
been assailed. The appellant was arrested on 28th December, 2016 in
connection with EC!R/l 8/DZ-Il/2016/AD(RV) registered under Sections
3 & 4 of the Prevention of Money-Laundering Act, 2002 (hereinafter
referred to as "the Act of 2002"). The said ECIR was registered on
26'" December, 2016 as a sequel to FIR No.205/2016 dated 25th
E December, 2016 In relation to the offences punishable under Sections
420, 406, 409, 468, 471, 188 and 120B of the Indian Penal Code, 1860
("!PC" for short). The said FIR was registered by the Crime Branch of
Delhi Police, New Delhi. The ECIR, however, has been registered at
the instance of A~sistant Director (PMLA), Directorate of Enforcement,
empowered to investigate the offences punishable under the Act of2002.
F
2. The appellant first approached the Additional Sessions Judge-
02, South East Sake! Court, New Delhi for releasing him on bail by way
of an application under Section 439 of the Code of Criminal Procedure,
1973 read with Section 45 of the Act of2002. The said bail application
G came to be rejected vide judgment dated 7th January, 2017 by the said
Court. The appellant thereafter approached the High Court of Delhi at
New Delhi by wa:y ofBail Application No.119 of2017 and an interlocutory
application filed therein, being Criminal M.B. No.121 of2017. The High
Court independently considered the merits of the arguments but eventually
rejected the praytr for bail vide impugned judgment dated 5" May, 2017.
H
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE 161
[A.M. KHANWILKAR, J.]

3. The ECIR has been registered against Ashish Kumar, Raj A
Kumar Goel and other unknown persons for offences punishable under
Sections 3/4 of the Act of 2002 on the basis of information/material, as
evident from the predicate offence registered by P. S. Crime Branch,
Delhi against the named accused and unknown accused for offences
punishable under Sections 420,406,409, 467,468, 471, 188and120B of B
!PC, being FIR No.205/2016 dated 25ili December, 2016. The relevant
facts noted in the ECIR read thus:
"A. It is reported that during the course of investigation of
Case FIR No.242116 uls 420, 467,468,471, 120-B IPC, PS
C.R. Park, Delhi, it is revealed that Accused Raj Kumar Goel
along with associates are engaged into earning profits by c
routing money into various accounts by using forged
documents and thereby receiving commission from the
..
prospective clients who either need money by cheque or in
cash. In order to obtain large profits, accused Raj Kumar
Goel and few of his associates have opened many Bank D
Accounts in Kotak Mahindra and ICICI Bank at Naya Bazar,
Chandni ·Chowk, Delhi.
B. On 08.11.2016, the Government if India announced
demonetization of one thousand- (I 000) and five hundred
(500) rupee notes. On this accused Raj Kumar Goel conspired E
with the bank manager of Kotak Mahindra Bank, Cannaught
Place, namely Ashish Kumar rlo A-701, Bestech Park, Sector
61, Gurugram, Haryana and one Chartered Accountant, name
unknown, having mobile number 97 II 329619 to earn huge
profit by converting black money in the form of old currency
notes into new currency notes. In this conspiracy, the said F
CA acted as a mediator and arranged prospective clients who
intended to convert their black money into legitimate money.
For the same, alleged CA offered 2% commission to the other
accused persons on all such transactions.
C. The accused were having bank accounts in the Naya Bazar G'
branch of Kotak Mahindra Bank but the CA and Bank
. Manager Ashish asked accused Raj Kumar to deposit old
. .currency notes in Cannaught Place branch of Kotak
· Mahindra Bank. It is also revealed that the accused opened
H
162 SUPREME COURT REPORTS [2017] 13 S.C.R.

A bank accounts in the name of Quality Trading Company, Swati
Trading Company, Shree Ganesh Enterprises. R.K.
International, Mahalxmi Jndustires. Virgo International and
Sapna International on the basis of forged/false documents
and deposited approx. Rs.25 Crore after the demonetization.
As per the preliminary investigation of the said case it is
B
transpired that accused Raj Kumar Goel, Bank Manager
Ashish, CA along with their associates are involved in a deep
roted conspiracy and were indulged in converting old
currency which were entrusted to bank/Govt officials and
were supposed to be delivered to general public/guidelines
c issued by the Reserve Bank of India/Ministry of Finance and
hand thus cheated the public at large. The accused persons
have also caused monetary loss to the Govt. of India and
thereby Committed offences u/s 420, 406, 409. 467, 468, 471,
188, 120-B !PC."
D It is then noted that the offences under Sections 420, 468, 4 71 and
l 20B of !PC are scheduled offences under the Act of 2002 and that
from the available facts, a reasonable inference is drawn that the named
accused and unl!:nown accused have made illegal earnings arising out of
the said criminal conspiracy which might have undergone the process of
laundering and thereby an offence under Section 3 of the Act of 2002
E
was made out. It is noted that prima facie case for commission of
offence under Section 3 punishable under Section 4 of the Act of2002
was made out and accordingly the case is being registered and taken up
for investigation under the Act of 2002 and rules framed thereunder.

F 4. The learned Sessions Judge while considering the bail application
adverted to the velevant materials including the CDR analysis of Mobile
number ofAshish Kumar, Branch Manager, Kotak Mahindra Bank, K.G.
Marg Branch, Kamal Jain, CA of Ro hit Tandon (hereinafter referred to
as "appellant"), Dinesh Bhola, Raj Kumar Goel; the statements of Kamal
Jain, Dinesh Bhola andAshish Kumar, recorded under Section 50 of the
G Act of 2002; and analysis of bank statements of stated companies. All
these reveal that Ashish Kumar conspired with other persons to get
deposited Rs.38.53 Crore in cash of demonetized currency into bank
accounts of companies and got demand drafts issued in fictitious names
with intention of getting them cancelled and thereby converting the
demonetized currency into monetized currency on commission basis.
H
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE 163
[A.M. KHANWILKAR, J.]

Further, the investigation also revealed that the entire cash was collected A
on the instructions of the appellant herein, by Ashish Kumar, Raj Kumar
Goel and others through Dinesh Bhola, an employee of the appellant.
According to the prosecution, all the associates of the appellant acted on
instructions of the appellant for getting issued the demand drafts against
cash deposit with the help of Ashish Kumar, Branch Manager of Kotak
B
Mahindra Bank and others, to the tune of Rs.34.93 Crore from Kotak
Mahindra Bank, K.G. Marg Branch. It was also noted that the demand
drafts ofRs.3.60 Crore were issued in fictitious names on the instructions
of Bank Manager Ashish Kumar in lieu of commission received by him
in old cash currency. The demand drafts amounting to Rs.38 Crore were
issued in favour ofDinesh Kumar and Sunil Kumar which were recovered c
from the custody of Kamal Jain who had kept the same on the instructions
of the appellant. Out of the said amount, the demand drafts of other
banks, apart from Kotak Mahindra Bank Limited, were also recovered.
The prosecution suspected that there could be other dubious transactions
made by the appellant in other banks and that Ashish Kumar, Bank
D
Manager and others were acting on the instructions of the appellant for
executing the crime.

5. The Sessions Court rejected the argument of the appellant that
the investigation of the offence registered against the appellant and others
under Section 3/4 of the Act of2002 being a sequel to the FIR registered E
by the Crime Branch of Delhi Police, it cannot be investigated by the
Enforcement Directorate. For, the Enforcement Directorate was not
concerned with the outcome of the investigation of the predicate offence
registered by the Delhi Police. It thus opined that the matter on hand
must be examined only in reference to the registration of ECIR by the
Enforcement Directorate. The fact that the investigation in FIR registered F
by the Crime Branch of Delhi Police, bearing FIR No.205/2016, had not
commenced will also be of no avail to the appellant. The Sessions Court
also found that as per Section 19 of the Act of 2002, the only condition to
be satisfied for arrest of a person is the reasonable belief of the authority
gathered on the basis of material in its possession. Further, in the present G
case, the accused was arrested by the competent authority on the basis
of material in his possession giving rise to a reasonable belief about the
complicity of the accused in the commission of offence punishable under
the Act of 2002. As such the arrest of the appellant under the Act of
2002 cannot be termed as illegal. After having dealt with those
H
164 SUPREME COURT REPORTS (2017] 13 S.C.R.

A contentions, the Sessions Court took note of the material pressed into
service by the prosecution and analysed the same in the following words:

"21. Pursuant to registration of FIR No.20512016 under
section 420, 406, 409, 468, 471, 188, 120-B IPC by Crime
Branch, the matter was taken up by ED and ECIR No.18116
B was opened for investigation. Transaction statements of
accounts in Kotak Mahindra Bank in FIR No. 205116 in respect
of companles i.e. Delhi Training Company. Kwality Tading
Company, Mahalaxmi Industries. R.K. International, Sapna
Trading Company, Shree Ganesh Enterprises. Swastik
Trading Company arid Virgo International were sought and
c scrutinized. Huge cash deposits in the said accounts were
ident!fied during November, 2016, post demonetization
announcement it was found that demand drafts were issued
in fictitious names like Dinesh Kumar. Sunil Kumar. Abhilasha
Dubey. Madan Kumar. Madan Saini, Satya Narain Dagdi and
D Seema Bai.
22. Statement of Ashish Kumar, accused named in FIR
No.105116, Branch Manager, Kotak Mahindra Bank, K.G.
Marg branch was recorded under section 50 of PMLA which
revealed that Kamal Jain, CA of accused Rohit Tandon
E contacted h,im to get the demonetized currency on behalf of
accused/applicant, converted into monetized currency on
commissio~ basis. The commission of Ashish Kumar was
decided @ 35%, who in turn contacted one Yogesh Mittal
and Rajesh K11mar Goel. accused in FIR No.205116 to carry
out the criminal design of getting the demonetized cash
F
converted into monetized 7 valuable form. Demonetized
currency was deposited in different accounts of companies
pertaining to Raj Kumar Goel besides others through Raj
Kumar Goel with the help of Ashish Kumar in different bank
accounts of Kotak Mahindra Bank and DDs were issued in
G fictitious names. The illegal conversion of demonetized
currency, getting the same deposited and issuance of demand
drafts is corroborated through CDR analysis of relevant
persons for the relevant period. Dinesh Bhola and Kamal
Jain, in their statements recorded under section 5 0 of PMLA
have also confirmed and reiterated the facts as stated by
H
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE 165
[A.M. KHANWILKAR, J.]

Ashish Kumar, the Branch Manager. The statements ofpersons A
recorded under section 50 of PMLA, which has evidentiary
value under section 50(4) of PMLA, have confirmed that the
old demonetized currency pertains to accused Rohit Tandon
and the conspiracy was executed on his instructions.
23. Lastly, ii was submitted by learned senior counsel for B
accused that accused folly cooperated with the investigating
agency and there was no need to arrest him in this case. He
further submitted that the actions of Accused persons as
mentioned in the FIR attract implications and as such the
correct authority to investigate into the same is the Income
Tax Department and not the ED. Per contra, learned Special C
Prosecutor for ED submitted that accused only cooperated
in the investigation in ECIR No.14116 and not in ECIR No.
18116. He further submitted that as sufficient material
surfaced on record against the present accused and he did
not cooperate in the investigation in the present case, therefore, D
accused Rohit Tandon was arrested in this case. He submitted
that he does not dispute the jurisdiction of Income Tax
Department so far as other aspects of the matter are
concerned.
24. As per section 45 of PMLA, while considering grant of E
bail to accused, the court has to satisfy that:-
i. There are reasonable grounds for believing that accused
is not guilty of such offence and that
ii. He is not likely to commit any offence, while on bail.
F
25. In the present case, accused has failed to satisjy this court
that he is not guilty of alleged offence punishable under
section 3 of PMLA. He has not been able to discharge the
burden as contemplated under section 24 of the Act.
26. Accused is alleged to have been found involved in a white
collar crime. The alleged offence was committed by accused G
in conspiracy with other co-accused persons in a well planned
and thoughtfal manner. It has been observed in a catena of
decisions by Hon' ble Superior Courts that economic offences
constitute a class apart and need to be visited with a different
approach in the matter of bail. The economic offence having H
166 SUPREME COURT REPORTS [2017] 13 S.C.R.

A deep rooted conspiracies and involving huge loss of' public.
fimdi needs to be viewed seriously and c:onsidered as grave
o.flences affecting the economy of the co1111t1:v as a whole
and thereby posing serious threat to the financial health of
the coun/ly. "
(emphasis supplied)
B
6. Having fonned that opinion and noticing that the investigation
was at the initial and crucial stage and that the source offunds of proceeds
of crime was yet to be ascertained till then and that the recovery of
balance proceeds of crime was in the process, the question of enlarging
the appellant on bail does not arise, more so, when there was every
c possibility that he 1111ay tamper with the evidence and influence the material
prosecution witnesses. Accordingly, the bail application was rejected by
the Sessions Court vide judgment and order dated 7ili January, 2017.
7. Aggrieved, the appellant approached the High Court of Delhi
by way of bail application under Section 439 of the Cr.P.C. read with
D Section 45 of the Act of2002. The High Court independently analysed
all the contentions raised by the appellant and after adverting to the
relevant materials, rejected the application for grant ofbail preferred by
the appellant. The High Court found that the Act of 2002 does not
prescribe that the Enforcement Directorate is debarred from conducting
investigation in relation to the offences under Sections 3 & 4 of the Act
E
of2002 unless the Crime Branch concludes its investigation in relation
to FIR No.205/2016 or was to file charge-sheet for commission of
scheduled offence. Further, the proceedings under the Act of2002 are
distinct from the proceedings relating to scheduled offence and both the
investigations can continue independently. The High Court then noted
F that Section 44 of the Act of2002 is an enabling provision, to have a joint
trial in such a situation to avoid conflicting and multiple opinions of the
Courts. But proceeded to hold that the said possibility would arise only
when the charge-sheet is filed after completion of investigation in relation
to FIR No.205/2016 and the case is committed to the concerned Court.
The High Court held that Section 44 of the Act of2002 does not envisage
G
a joint investigation but is a provision stipulating that the trial of offence
under Section 3/4 of the Act of2002 and any scheduled offence connected
to the offence under that section may be tried only by the Special Court
constituted for the area in which the offence has been committed. While
considering the merits of the allegations against the appellant, in particular,
H
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE 167
[A.M. KHANWILKAR, J.]

the materials on record, the High Court analysed the same in the following A
words:
"14. Jn FIR No.20512016 allegations are that Raj Kumar
Goel; Ashish Kumar, Bank Manager, Kotak Mahindra Bank,
K. GMarg Branch and others conspired for illegal conversion
of demonetized currency notes into monetized currency by B
way of depositing cash in various accounts of the firms and
subsequently getting Demand Drafts issued in fictitious
names. It is further alleged in the said FIR that accused therein
opened bank accounts in the name of 'Group of Companies'
in Kotak Mahindra Bank. In ECJR No.18, transactions
statements of accounts were collected pertaining to these c
'Group of Companies' from Kotak Mahindra Bank and it
emerged that from 15.11.2016 to 19.11.2016, there was huge
cash deposit to the tune of '31.75 crores by Raj Kumar Goel
and his associates. It was also found that the Demand Drafts
amounting to '38 crores were issued in fictitious names during D
that period. It cannot be said at this stage that offences
referred in FIR No.20512016 and the ECIR No.18 have. no
nexus.
15. Prosecution rmder Section 45 of PMLA for commission
of offence under Section 3 punishable under Section 4 of E
PMLA has already been initiated by ED in the Special Court.
By an order dated 25.02.2017, learned Addi. Sessions Judge
I Special Court (PMLA) has taken cognizance against Roh it
Tandon (present petitioner), Ashish Kumar and Raj Kumar
Goel. Dinesh Bhola and Kamal Jain have also been summoned
to face trial under Section 4 of PMLA. Raj Kumar Goel and F
Ashish Kumar continue to be in custody in the said
proceedings.
16. On perusal of the complaint lodged under Section 45
PMLA, it reveals that serious and grave allegations have been
leveled against the petitioner and others. The a/legations are G
categorical and specific; definite role has been assigned to
each accused. It is alleged that during the period from
15.11.2016 to 19.11.2016, huge cash to the tune of '31.75
crores was deposited in eight bank accounts in Kotak
H
168 SUPREME COURT REPORTS [2017] 13 S.C.R.

A Mahindra Bank in the accounts of the 'Group of Companies'.
It gives details of Demand Drafts issued during 15.11.2016
to 19.11.2016 from eight bank accounts in the name of Sunil
Kumar, Dinesh Kumar, Abhilasha Dubey, Madan Kumar.
Madan Saini, Satya Narain Dagdi and Seema Bai on various
dates. Most of the Demand Drafts issued have since been
B
recovered. Its detail finds mention in Table No.2 given in the
complaint.
17. During arguments, specific query was raised and the
learned Senior Counsel for the petitioner was asked as to, to
whom the money deposited in the various accounts belonged
c Learned Senior Counsel for the petitioner was fair enough to
admit tllat the whole money belonged to the petitioner. When
enquired as to from which 'source', huge chsh was procured,
there was no clear response to it. Again, learned Senior
Counsel for the petitioner was asked as to how the cash
D belongillg to the petitioner happened to be deposited in various
accounts of the 'Group of Companies' which were not owned
by the petitioner and what was its purpose. It was further
enquired as to why the Demand Drafts were got issued in the
names of the persons referred above and what was its specific
purpose; Learned Senior Counsel for the petitioner avoided
E to answer these queries stating that the defence ofthe petitioner
could not be disclosed at this juncture to impact his case during
trial. Apparently, no plausible explanation has been offered
as to what forced the petitioner to deposit the old currency to
the tune of '31. 75 crores in eight accounts of the different
F 'Group of Companies' in Kotak Mahindra Bank during the
short period from 15.11.2016 to 19.11.2016. There was no
explanation as to why the Demand Drafts for the said amount
were got issued in the name of sham people whose identity
was not known. The purpose of all this exercise seemingly
was to deposit the cash (old currency) first, get the Demand
G Drafts issued in fictitious names and obtain monetized
currency by cancelling them subsequently. The petitioner also
did not place on record any document whatsoever to show as
to from which legal source, the cash was procured to deposit
in the bank accounts of strangers. I find no substance in the
H
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE 169
[A.M. KHANWILKAR, J.]

petitioner's plea that petitioner's only liability was to pay A
income tax on the unaccounted money I income. In my
considered view. mere payment of tax on the unaccounted
money fi·om any 'source · whatever would not convert it into
'legal· money. Needless to say, huge deposit was a sinister
attempt I strategy by the petitioner and others to convert the
B
'old currency· into new one to frustrate the Demonetization
Policy primarily meant to unearth black money.
18. Allegations against the petitioner are not without
substance. The prosecution has recorded statements of the
petitioner on various dates and that of Dinesh Bhola. Ashish
Kumar (Branch Manager. Kotak Mahindra Bank). Raj Kumar c
Goel, Kamal Jain (petitioner :s Chartered Accountant), Vimal
Negi. Jivan Singh and Vanm Tandon under Section 50 PMLA
on various dates. There statements have evidentiary value
under Section 50 PMLA. Prima facie, the version given by
them is in consonance with the prosecution case. The D
prosecution has further relied ll[JOn Call Data Records, CCTV
footage, Account Trend Analysis. "
(emphasis supplied)
8. The High Court opined that keeping in mind the rigors of Section
45 of the Act of 2002 for the release of the accused charged under Part E
A of the Schedule, on bail, coupled with the antecedents of the appellant
of being involved in other similar crime registered as FIR No.19712016.
for offence under Section 420, 409, 188, 120B of IPC dated 14'h
December, 2016 by Crime Branch and ECIR No.14/DZ/JI/2016
registered on l61h December, 2016 by Enforcement Directorate for F
offences under Sections 3/4 of the Act of 2002. Further, during a raid
conductedjoin! 1 ~· hy the Crime Branch and Income Tax Department on
JOili December. 2016 at around 10.00 P.M. at the office premises of the
appellant, currency of Rs.13.62 Crore was recovered including new
currency in the denomination ofRs.2000/- amounting to Rs.2.62 Crore.
In addition, the appellant had surrenc~red Rs.128 Crore during the raid G
conducted by the Income Tax Department on 6/8 October, 2016 in his
office and residential premises. No reliable and credible documents
were forthcoming from the appellant about the source from where he
had obtained such a huge quantity of cash. The possibility of the same
H
170 SUPREME COURT REPORTS [2017] 13 S.C.R.

A being proceeds of crime cannot be ruled out. Hence, it noted that the
question of granting bail did not arise, taking into consideration the serious
allegations against the appellant and other facts including severity of the
punishment prescribed by law. Accordingly, the bail application of the
appellant came lo be rejected. As a consequence, the pending application
which was considered along with the bail application was also disposed
B
of by the impugned judgment and order dated 5th May, 2017 passed by
the High Court.,
9. We have heard Mr. Mukul Rohatgi, learned senior counsel
appearing for the appellant and Mr. Tushar Mehta, learned Additional
Solicitor General for the Union of India. They have also filed written
C submissions.
10. Before we analyse the rival submissions, for the completion
of record, we must mention that after the impugned judgment, the Crime
Branch filed th~ charge-sheet before the appropriate Court in relation to
FIR No.205/2016 on 24'h June, 2017. Similarly, the Enforcement
D Directorate has filed supplementary complaint CC No. 700/2017 in relation
to ECIR 18/2016, which refers to further material gathered during the
investigation, indicating the complicity of the concerned accused in the
crime for offence punishable under Section 3 of the Act of 2002. A
comprehensive supplementary complaint has been filed before the District
E and Sessions Judge, Saket, New Delhi (Designated Court under the
Prevention of Money-Laundering Act, 2002) on 2"" August, 2017.
11. Before this supplementary complaint was filed, the appellant
preferred second bail application in the present case before the High
Court of Delhi at New Delhi, being Bail Application No.136112017. This
F application was filed on 12"' July, 2017. Along with the said bail application
the appellant filed an application being Criminal M.A. No.1293 of2017
for directing his interim release in connection with ECIRIDZ/W2016 on
the assertion !hat his mother was seriously ill and required immediate
medical attention because of the injuries suffered by her on 2o•h June,
2017. The said interim release application was allowed on 1O'" August,
G 2017. Notably, the appellant was advised to withdraw the regular (second)
Bail Application No.1361/2017. The learned Single Judge of the High
Court by order dated !Olh August, 2017 acceded to the prayer so made
by the appellant. The order passed by the learned Single Judge of the
High Court reads thus:
H
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE 171
[A.M. KHANWILKAR, J.]

"BAIL APPLN. 136112017 A
The petitioner has prayed for bail in connection with ECIR/
18/DZil/2016/AD registered under Section 3 & 4 of
Prevention .of Money Laundering Act, 2002.
Simultaneously an application has been filed seeking interim B
bail on the ground of illness of the mother ~f the petitioner
who has recently suffered a fracture in the neck.
Mr. Mukul Rohatgi, learned Sr. Advocate seeks permission
to withdraw the regular bail application on the observation of
the bench that the earlier bail application was rejected only c
on 5th of May, 2017. However he presses the interim bail
application.
Accordingly the regular bail application is dismissed as
withdrawn.
D
Crl.M.A.No.129312017 (application for interim bail)
It has been submitted on behalf of the petitioner that he is the
only son of his mother who has suffered a fall and has got a
fracture in her neck. The sister of the petitioner is stationed
abroad. The petitioner has a son who is of young age. The E
petitioner has also drawn the attention of this Court to the
medical report which indicates that a plaster has been put on
the fracture but she has been suffering from acute pain.
It has been further submitted that the charge sheet in the main
case has been submitted and that the petitioner has remained F
in jail for more than seven months by now.
Opposing the aforesaid prayer for grant of interim bail. Mr.
Mahajan, learned Sr. Standing Counsel submits that this is a
case ofserious fiscal impropriety ofgreat magnitude and there
is a possibility of the petitioner tampering with evidence if he G
comes out from the jail even for a short period. No definite
reasons, however, have been assigned by Mr.Mahajan, for
such ii presumption that the petitioner would tamper with the
evidence specially when charge sheet in the main case has
already been submitted.
H
172 SUPREME COURT REPORTS [2017] 13 S.C.R.

A Mr.Rohtr:igi. learned senior counsel has drawn the attention
of this Court to the fact that whenever the petitioner was
summoned to answer to the Queries, he had visited the office
of the ED and in the past, had never tried to evade the process
of investigation.
B Taking into account the aforesaid facts. special~v the period
of incarceration of the petitioner. submission of the charge
sheet in the main case and the illness of the mother of the
petitioner. this Court is inclined to grant interim bail to the
petitioner for a period of 3 weeks.
c Let the petitioner be released on interim bail for the period of
3 weeks, to be counted from the date of his release, on his
furnishing a bond in the sum of Rs. 25,0001- with two sureties
of the like amount to the satisfaction of special court.
However it is made clear that the petitioner shall not tamper
D with the evidence or commit any act which would be
prejudicial to the prosecution side. Should anything of that
kind be reported. this Court would consider the desirability
of withdrawing/cancelling the interim bail.
The petitioner shall not. unnecessary, seek extension of the
E interim bail granted to him. It is also specified that the
petitioner shall not leave the country under any circumstances
whatsoever. Should the petitioner intend to go out of the
territorial confines of NCR of Delhi, permission would be
required to be taken from the Special Court. The petitioner
F shall also deposit his passport before the Special court while
furnishing his bonds.
Application is disposed of accordingly.
Dasti."
G (emphasis supplied)

12. It is relevant to note that the aforementioned order for interim
release of the appellant was confirmed by this Court on 12"' August,
2017.

H
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE 173
[A.M. KHANWlLKAR, J.]

13. The appellant was thereafter advised to file the present appeals A
to assail the judgment and order dated 5ili May, 2017 passed by the High
Court of Delhi at New Delhi in Bail Application No.119 of 2017 and
Criminal M.B. No.121 of2017. The special leave petitions were filed on
l 8lli August, 2017. During the pendency of these special leave petitions,
the appellant was advised to also file a writ petition under Article 32 of B
the Constitution of India to challenge the validity of the provisions of the
Act of2002. The same was filed on 23"' August, 2017, being Writ Petition
(Civil) No.121 of2017. The reliefs claimed in the said writ petition read
thus:
"PRAER
c
(i) Issue a writ of mandamus or any other appropriate writ,
order or direction declaring that the conditions/limitations
contained in Section 45(1) of Prevention of Money
Laundering Act. 2002 (Act 15 of 2003) to the extent that it
imposes rigors/restrictions in the grant of bail in any offence
punishable upto 7 years under the provisions of Prevention D
of Money Laundering Act. 2002 (Act 15 of 2003) as
unreasonable, arbitrary and unconstitutional being violative
of the fundamental rights of the Petitioner guaranteed and
''''''"prot~i:i/d
,, ... .. .;mder. Articles 14 and 21 of the Constitution of
.~-
" "1iidia:· ·. . , .
,•

. E
.;\'·.'i -,,; r. ·,•1:.
,1 \;,\\().i),Jn-.the plterna/ive to prayer (i) above. issue a writ of
'·"'"'· m,and_q111us 1:1r.. a!ly. qther appropriate writ. order or direction
, :,;;.\ li,eP4irig cjpwn:the;~·cope and ambit of Section 45(!) of the
,,,.,""[!.r.eyeri/iow,of Money Laundering Act. 2002 (Act 15 of 2003).
11 ., ;,,,s.o.(hqt<!_he rigqrs.in grant ofbai/ are not applicable in the F
case of the Petitioner, where the alleged scheduled offences
in (C No. 41 of 2017 arising out of charge-sheet No. 1 dated
''-'\ ''24:o6.2!Jf1'f;led b}'the Crime Branch, New Delhi alleging
em•·· 'co'ihlitiH'io~ ·ojoffen'des under Sections 42011881109/120BI
««\ :..']'4'-IPC'and'Settion· 12· of the Prevention of Corruption Act,
"'''\mil'98B'(nbne of which were under Part A of the Schedule prior G
to the Prevention of Money Laundering (Amendment) Act,
''"'"2QO•,(Act 2, of 201$) andformed part of Part B of the
. !$chedule;
q\ 1 ~ P. :•i\',-, , .· ''"' .-\'.'.
'\i• . •' ·y·.
H
174 SUPREME COURT REPORTS [2017) 13 S.C.R.

A (iii) bsue a writ of mandamus or any other appropriate writ,
order or direction declaring the continued incarceration of
the Petitioner since 28.12.2016 in ECIR/18/DZ-1112016/AD
dated 26.I 2.2016 under Section 314 of the Prevention of
Money Laundering Act, 2002 is illegal, unconstitutional and
in violation of the fundamental right of the Petitioner
B
guaranteed and protected under Article 21 of the
Constitution of India;
(iv) issue a writ of mandamus or any other appropriate writ,
order or direction in the nature of mandamus declaring that
the offences under the Prevention of Money Laundering Act,
c 2002 (Act 15 of 2003) pursuant to the Prevention of Money
Laundenlng (Amendment) Act, 2005 (Act 20 of 2005) which
came int@ force w.ef 01.07.2005 are non-cognizable offences
and ther~fore, it is mandatory to comply with the provisions
of Sections I 55, I 77(1) and 172 of the Code of Criminal
D Procedure, 1973 and declare that the law laid down by the
Division Bench of the Hon 'ble Delhi High Court in its
judgment dated 27.4.2016 (reported in 2016 SCC Online
Delhi 2493) and by the Hon 'ble Gujarat High Court in Rakesh
Manekchand Kothari vs. Union of India [Special Criminal
Application (Habeas Corpus) No. 424712015] decided on
E
03.08.2015 holding that the offences under Section 3 of the
Prevention of Money Laudnering Act, 2002 punishable
under Section 4 thereof is a non-cognizable offence is good
law and the contrary view taken by the Hon 'ble Bombay High
Court in its judgment dated 14.12.20 I 6 in Ch hag an
F Chandrakant Bhujbal vs. Union of India & Ors. is bad in
la11
1
;

(v) lay down guidelines for compliance by all Courts for
grant of bail in proceedings arising out of and concerning
the Prevention of Money Laundering Act, 2002 by
G expounding the scope of Section 439 of the Code of Criminal
Procedure, 1973;
(vi) Issue rule nisi in terms of Prayers (i) to (v) above; and
(vii) And/or puss any other or further orders which Your
Lordships muy deem .fit and proper in the interest of justice.
H
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE 175
[A.M. KHANWILKAR, J.]

14. The aforementioned writ petition was listed together with the A
appeals on 30"' October, 2017. During oral arguments, however, the
counsel appearing for the appellant, in all fairness, stated that the grounds
urged 1n the said writ petition need not be considered at this stage and
that the appeals preferred against the impugned judgment and order
dated S" May, 2017 be examined on the basis of the prevailing statutory B
provisions, including the rigors of Section 45 of the Act of2002. In other
words, the challenge to the impugned judgment will have to be considered
as per the prevailing-provisions and not with reference to the challenge
regarding the validity thereof.
15. Reverting to the first contention of the appellant, that the
reasons which weighed with the learned Single Judge of the High Court C
• while directing interim release of the appellant, would apply proprio
vigore for considering the regular bail. In that, the learned Single Judge
vi de order dated 1O" August, 2017 noted the following circumstances:
i) Petitioner never tried to evade the investigation;
D
ii) The period of incarceration (7 y, months);
iii) Submission of charge-sheet in the main case on 24/6/17;
iv) Illness of the mother of the Petitioner;
v) No definite reasons assigned by the Counsel for the E
Respondent to substantiate allegation that Petitioner would
tamper with evidence especially when charge-sheet in the
main case has been submitted.
16. The argument though attractive at the first blush deserves to
be rejected. In our opinion, the order dated 10th August, 2017 passed by
F
the High Court directing interim release of the appellant was primarily
on account of the illness of his mother. No more and no less. The other
observations in the said order will have no bearing on the merits of the
controversy and required to be reckoned whilst considering the prayer
for grant of regular bail. For that, the appellant must succeed in
overcoming the threshold of the rigors of Section 45 of the Act of2002. G
Indubitably, the appellant having withdrawn the regular (second) bail
application, the consideration of prayer for grant ofinterim release could
not have been taken forward. Besides, in the backdrop of the opinion
recorded by the Co-ordinate Bench of the High Court (in its decision
dated 5"' May, 2017) whilst considering the application for grant ofregular
H
176 SUPREME COURT REPORTS [2017] 13 S.C.R.

A bail, which was affter filing of the initial complaint CC No. 700/2017 (on
23'" February, 2017), was binding until reversed or a different view could
be taken because of changed circumstances. Suffice it to observe that
indulgence shown to the appellant in terms of order dated l O'h August,
2017 will be of no avail. In that, the facts such as the appellant never
tried to evade the investigation or that he has suffered incarceration for
B
over 7Yz months or that the charge-sheet has been filed in the predicate
offence registered under FIR No.205/2016 or the factum of illness of
the mother of the appellant or the observation that no definite reason has
been assigned by the respondents for substantiating the allegation that
the appellant would tamper with the evidence, may become relevant
c only ifthe threshold stipulation envisaged under Section 45 of the Act of
2002 was to be fulfilled. The said provision reads thus:
"45. Offences to be cognizable and non-bailable.-(1)
Notwithstanding anything contained in the Code of Criminal
Procedure, 1973 (2of1974), no person accused of an offence
D 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 ojVn bond unless-
(i) the Pu/J,/ic Prosecutor has been given an opportunity to
oppose the application for such release; and
E (ii) where the Public Prosecutor opposes the application. the
court is satisfied that there are reasonable grounds for
believing that he is not guilty of such offence and that he is
not likely to commit any offence while on bail:
Provided that a person who is under the age of sixteen years
F or is a woman or is sick or infirm, may be released on bail, if
the Special Court so directs:
Provided fi1rther that the Special Court shall not take
cognizance of any offence punishable under section 4 except
upon a complaint in writing made by-
G
(i) the Director; or
(ii) any officer of the Central Government or a State
Government authorised in writing in this behalf by the Central
Government by a general or a special order made in this behalf
by that Government.
H
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE 177
[A.M. KHANWILKAR, J.)

(I A) Notwithstanding anything contained in the Code of A
Criminal Procedure, 1973 (2 of 1974), or any other provision
of this Act, no police officer shall investigate into an offence
under this Act unless specifically authorised, by the Central
Government by a general or special order, and, subject to
such conditions as may be prescribed.
B
(2) The limitation on granting of bail specified in sub-section
(1) is in addition to the limitations under the Code of Criminal
Procedure, 1973 (2 of 1974) or any other law for the time
being in force on granting of bail. "
(emphasis supplied) c
The sweep of Section 45 of the Act of 2002 is no more res
intergra. In a recent decision of this Court in the case of Gautam Kundu
Vs. Directorate of Enforcement (Prevention of Money-Laundering
Act), Government ofIndia, 1 this Court has had an occasion to examine
it in paragraphs 28-30. It will be useful to advert to paragraphs 28 to 30 D
of this decision which read thus:
"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 E
Criminal Procedure. There is no doubt that 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 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 F
lays down that 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. G
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
1
(201s) 16 sec l H
178 SUPREME COURT REPORTS [2017] 13 S.C.R.

A conflict between them. Section 45 of the PMLA imposes
following two conditions for grant ofbail 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
B oppose the application for bail; and
(ii) That the Court must be satisfied that there are reasonable
grounds for believing that the accused person is not guilty of
such offtnce and that he is not .likely to commit any offence
while on bail.
c 30 . The conditions specified under Section 45 of the PMLA
are mandatory and needs to be complied with which is further
strengthened by the provisions of Section 65 and also Section
71 of the PMLA. Section 65 requires that the provisions of
Cr.P. C. shall apply in sofaras they are not inconsistent with
D the provisions of this Act and Section 71 provides that the
provisions of the PMLA shall have overriding effect
notwithstanding anything inconsistent therewith contained in
any other law for the time being in force. P MLA has an
overriding effect and the provisions of Cr.P. C. would apply
only if they are not inconsistent with the provisions of this
E 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 provides that unless
the contrary is proved, the Authority or the Court shall presume
F that proceeds of crime are involved in money laundering and
the burden to prove that the proceeds ofcrime are not involved,
lies on the appellant. "
(emphasis supplied)
17. In paragraph 34, this Court reiterated as follows:
G
34. "xxi: xi:x xxx We have noted that 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.
As mentioned earlier, Section 45 of the P MLA imposes two
conditions for grant of bail, specified under the said Act. We
H
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE 179
[A.M. KHANWILKAR, J.]

have not missed the proviso to Section 45 of the said Act which A
indicates that the legislature has carved out an 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 45-A of the PMLA, would bind the High Court
B
as the provisions of special law having overriding effect on
the provisions of Section 439 of the Code of Criminal Proce-
dure for grant of bail to any person accused of committing
offence punishable under Section 4 of the PMLA, even when.
the applicalion for bail is considered under Section 439 of
the Code of Criminal Procedure. " c
The decisions of this Court in the case of Subrata Chattoraj Vs.
Union of India, 1 Y.S. Jagan Mohan Reddy Vs. CBI 3, and Union of
India Vs. Hassan Ali Khan ' have been noticed in the aforesaid
decision.
18. The consistent view taken by this Court is that economic D
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 the country. Further, when attempt
is made to project the proceeds of crime as untainted money and also E
that the allegations may not ultimately be established, but having been
made, the burden of proof that the monies were not the proceeds of
crime and were not, therefore, tainted shifts on the accused persons
under Section 24 of the Act of 2002.
19. It is not necessary to multiply the authorities on the sweep of F
Section 45 of the Act of 2002 which, as aforementioned, is no more res
integra. The decision in the case of Ranjitsing Brahmajeetsing
Sharma Vs. State of Maharashtra and Anr. .' and State of
Maharashtra Vs. Vishwanath Maranna Shelly, 6 dealt with an
analogous provision in the Maharashtra Control of Organised Crime Act,
1999. It has been expounded that the Court at the stage of considering G

'(2014) s sec 768
'(2013) 1sec439
'(2011) 10 sec 235
'(2005) 5 sec 294
'(2012) lO sec 561
H
180 SUPREME COURT REPORTS [2017] 13 S.C.R.

A the application for grant of bail, shall consider the question from the
angle as to whether the accused was possessed of the requisite mens
rea. The Court is not required to record a positive finding that the accused
had not committe\l an offence under the Act. The Court ought to maintain
a delicate balance between a judgment of acquittal and conviction and
an order granting bail much before commencement of trial. The duty of
B
the Court at this stage is not to weigh the evidence meticulously but to
arrive at a finding on the basis ofbroad probabilities. Further, the Court
is required to record a finding as to the possibility of the accused
committing a crime which is an offence under the Act after grant ofbail.
In Ranjitsing B~ahmajeetsing Sharma (supra), in paragraphs 44 to
c 46 of the said decision, this Court observed thus:
"44. The wording of Section 21(4), in our opinion. does not
lead lo the conclusion that the Court must arrive at a positive
finding that the applicant for bail has not committed an offence
under the Act. If such a construction is placed, the court
D intending to grant bail must arrive at afinding that the applicant
has not committed such an offence. Jn such an event, ii will be
impossible for the prosecution to obtain a judgment of
conviction of the applicant. Such cannot be the intention of
the Legislature. Section 21(4) of MCOCA. therefore. must be
construed teasonably. It must be so construed that the Court is
E able to maintain a delicate balance between a judgment of
acquittal and conviction and an order granting bail much before
commencement of trial. Similarly, the Court will be required to
record a finding as to the possibility of his committing a crime
after grant of hail. However. such an offence in futuro must be
F
an offence under the Act and not any other offence. Since it is
difficult to predict the ji.1ture conduct of an accused. the court
must necessarily consider this aspect of the matter having
regard ro the antecedents of the accused, his propensities and
the nature and manner in which he is alleged to have committed
the offence.
G 45. Jr is, fimhermore. trite that for the purpose of considering
an application for grant of bail, although detailed reasons are
not necessary to be assigned. the order granting bail must
demonstrate application of mind at least in serious cases as to
why the applicant has been granted or denied the privilege of
hail.
H
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE 181
[A.M. KHANWILKAR, J.]

46. The duty of the court at this stage is not to weigh the A
evidence meticulously but to arrive at a finding on the basis of
broad probabilities. However, while dealing with a special statute
like MCOCA having regard to the provisions contained in Sub-
section (4) of Section 21 of the Act, the Court may have to probe
into the matter deeper so as to enable it to arrive at a finding that
B
the materials collected against the accused during the investigation
may not justify a judgment of conviction. The findings recorded by
the Court while granting or refusing bail undoubtedly would be
tentative in nature, which may not have any bearing on the merit of
the case and the trial court would, thus, be free to decide the case
on the basis of evidence adduced at the trial, without in any manner c
being prejudiced thereby. "
20. Reverting to the decision in the case of Manoranjana Sinh
Vs. Central Bureau ofInvestigation,' we hold that the same is on the
facts of that case. Even in the said decision, the Court has noted that
the grant or denial of bail is regulated to a large extent by the facts and D
circumstances of each case. In the case of Sanjay Chandra Vs. Central
Bureau of Investigation, 8 the Court was not called upon to consider
the efficacy of Section 45 of the Act of2002 which is a special enactment.
21. Keeping in mind the dictum in the aforesaid decisions, we find
no difficulty in upholding the opinion recorded by the Sessions Court as E
well as the High Court in this regard. In our opinion, both the Courts
have carefully analysed the allegations and the materials on record
indicating the complicity of the appellant in the commission of crime
punishable under Section 3/4 of the Act of 2002. The Courts have
maintained the delicate balance between the judgment of acquittal and
conviction and order granting bail before commencement of trial. The F
material on record does not commend us to take a contrary view.
22. Realizing this position, the learned counsel appearing for the
appellant would contend that even ifthe allegations against the appellant
are taken at its face value, the incriminating material recovered from the
appellant or referred to in the complaint, by no stretch of imagination, G
· would take the colour of proceeds of crime. In fact, there is no allegation
in the charge-sheet filed in the scheduled offence case or in the
prosecution complaint that the unaccounted cash deposited by the
7
(2017)5 SCC218
'(2012) 1 sec 40 H
182 SUPREME COURT REPORTS (2017] 13 S.C.R.

A appellant is as a result of criminal activity. Absent this basic ingredient,
the property derived or obtained by the appellant would not become
proceeds of crime. To examine this contention, it would be useful to
advert to Sections 3 and 4 of the Act of2002. The same read thus:
"3. Offen(:e of money-laundering.- Whosoever directly or
B indirectly attempts to indulge or knowingly assists or
knowingly is aparty or is actually involved in any process or
activity connected proceeds ofcrime including its concealment,
possession, acquisition or use and projecting or claiming it
as untainted property shall be guilty of offence of money-
laundering.
c
4. Punishment for money-laundering.- Whoever commits the
offence of money-laundering shall be punishable with
rigorous imprisonment for a term which shall not be less than
three year$ but which may extend to seven years and shall
also be liable to fine.
D
Provided that where the proceeds of crime involved in
money-laundering relates to any offence specified under
paragraph 2 of Part A of the Schedule, the provisions of this
section shaft have effect as iffor the words "which may extend
to seven years", the words "which may extend to ten years"
E had been substituted."
23. As the fulcrum of Section 3 quoted above, is expression
'proceeds ofcrimf, the dictionary clause in the form of Section 2(1 )(u)
is of some relevance. The same reads thus:
"2(l)(u) 'proceeds of crime' means any property derived or
F
obtained, directly or indirectly, by any person as a result of
criminal activity relating to a scheduled offence or the value
of any such property or where such property is taken or held
outside the country, then the property equivalent in value held
within the country; "
G
It will be useful to advert to the meaning of expression "property"
as predicated in S¢ction 2(l)(v). The same reads thus:

"2(l)(v) "property" means any property or assets of every
description, whether corporeal or incorporeal, movable or
H
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE 183
[A.M. KHANWILKAR, J.]

immovable, tangible or intangible and includes deeds and A
instruments evidencing title to, or interest in, such property .
or assets, wherever located;
The expression 'scheduled offence' has been defined in Section
2(1)(y) of the Act of2002. The same reads thus:
B
"2(1 )(y) 'scheduled offence' means-

(i) the offences specified under Part A of the Schedule; or

(ii) the offences specified under Part B of the Schedule if the
total value involved in such offences is one crore rupees or C
more; or

(iii) the offences specified under Part C of the Schedule;"

Indisputably, the predicate offence is included in Part A in
paragraph 1 of the Schedule in the Act of 2002, in particular Sections D
420, 467, 471 and 120B ofIPC. Indeed, the expression "criminal activity"
has not been defined. By its very nature the alleged activities of the
accused referred to in the predicate offence are criminal activities. The
possession of demonetized currency in one sense, ostensibly, may appear
.to be only a facet of unaccounted money in reference to the provisions
of the Income Tax Act or other taxation laws. However, the stated E
activity allegedly indulged into by the accused named in the commission
of predicate offence is replete with mens rea. In that, the concealment,
possession, acquisition or use of the property by projecting or claiming it
as untainted property and converting the same by bank drafts, would
certainly come within the sweep of criminal activity relating to a scheduled F
offence. That would come within the meaning of Section 3 and punishable
under Section 4 of the Act, being a case of money-laundering. The
expression 'money-laundering' is defined thus:

"2(1)(p) "money-laundering" has the meaning assigned to ii
~SK~n~ G
24. The appellant then relies upon the decision in the case of
Gorav Kathuria Vs. Union ofIndia,' of the Punjab and Haryana High
Court which has taken the view that Section 45(1) of the Act of2002
'(2016 sec Online P & H 3428)
H
184 SUPREME COURT REPORTS (2017] 13 S.C.R.

A requires to be nead down to apply only to those scheduled offences
which were incl)lded prior to the amendment in 2013 in the Schedule. It
is contended tbllt the offence, in particular, under Sections 420, 467 and
471 of!PC, may not be treated as having been included in the scheduled
offences for the purpose of the Act of2002. Further, if any other view
was to be taken, the provision would be rendered ultra vires. We are in
B
agreement with the stand taken by the respondents that the appellant
cannot be permitted to raise the grounds urged in the writ petition, hearing
whereof has be¢n deferred on the request of the appellant. In other
words, the appellant should be in a position to persuade the Court that
the allegations illl the complaint and the materials on record taken at its
c face value do not constitute the offence under Section 3 read with the
schedul(' of the Act of 2002 as in force.

25. It has been brought to our notice that the decision in Gorav
Kathuria (supra) was challenged before this Court by way of Criminal
Appeal No.737of2016, which has already been dismissed on 12~ August,
D 2016. The order originally passed on the said criminal appeal reads thus:

"Though the High Court has granted certificate to appeal,
after arguing the matter for some time, learned counsel for
the petitfoner concedes that the impugned judgment of the
High Court is correct.
E
This appeal is, accordingly, dismissed "

However, that order has been subsequently revised which reads
thus:
F
"Though the High Court has granted certificate to appeal,
we have heard the learned counsel for some time and are of
the opinion that the impugned judgment of the High Court is
correct.

G This appeal is, accordingly, dismissed."

At the same time the respondents have drawn our attention to a
chart contained in their written submissions pointing out that other High
Courts have disagreed with the principle expounded in Gorav Kathuria '.Y
case. The said chart reads thus:
H
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE 185
[A.M. KHANWILKAR, J.]

(i)
- - T - ..... - - - -- .. - - - - - - - - - .. --- -
Cr!. Misc. Application (for Regular Bail)
- .. - - -- - ....
High Court of A
No.7970117 Gujarat
Jignesh Kishorebhai Baj iawa/a vs. State of
1
Gujarat & Ors.
I Manu/GJ/103512017
I
I
(ii) · Cr/. Petition No.36612017 High Court of B
' ' SC Jayachandra vs Enforcement Karnataka at I'
' I
I Directorate, Bangalore Benga/uru
I
I
',
: 2017 (349) ELT 392 KAR '

I'
. (iii) WP[Crl.} No.333 of 2015 High Court of
Kish in S. Loungani vs. UOI & ors. Kera la at
(2017) 1 KHC 355 Ernakulam c
'
;
'
' (iv) Cr!. Mic. Application (for Regular Bail) High Court
/ No.30674116 Gujarat at
'
!
i Pradeep Nirankarnath Sharma vs Ahmedabad
! : Directorate of Enforcement
' : 2017(350)ELT449(GUJ) D
I '
I..... ---l-- ... -- --- -- "--·. -. -- - - . --- - --------------
I (v) I Cr/. Writ Petition No.393/12016 High Court of
I
!
: Chhagan Chandrakant Bhujha/ vs Union of Bombay
i India & Ors.
'
I 2016 sec Online Born 9983
' E
26. For the time being, it is not necessary for us to examine the
issues arising from the decision of the Punjab and Haryana High Court
or the rejection of criminal appeal by this Court against that decision.
The constitutional validity of Section 45 of the Act of2002 will have to
be examined by this Court in the writ petition on its own merits. The
summary dismissal of criminal appeal will not come in the way of F
considering the correctness of the decision of the Punjab and Haryana
High Court in view of the conflict of opinion with the other High Courts.
27. Suffice it to observe that the appellant has not succeeded in
persuading us about the inapplicability of the threshold stipulation under
Section 45 of the Act. In the facts of the present case, we are in G
agreement with the view taken by the Sessions Court and by the High
Court. We have independently examined the materials relied upon by
the prosecution and also noted the inexplicable silence or reluctance of
the appellant in disclosing the source from where such huge value of
demonetized currency and also new currency has been acquired by him. H
186 SUPREME COURT REPORTS [2017] 13 S.C.R.

A The prosecution is relying on statements of26 witnesses/accused already
recorded, out of which 7 were considered by the Delhi High Court.
These statement~ are admissible in evidence, in view of Section 50 of
the Act of 2004. The same makes out a formidable case about the
involvement oftl)e appellant in commission ofa serious offence ofmoney-
laundering. It is, therefore, not possible for us to record satisfaction that
B
there are reasonable grounds for believing that the appellant is not guilty
of such offence. Further, the Courts below have justly adverted to the
antecedents of the appellant for considering the prayer for bail and
concluded that it is not possible to hold that the appellant is not likely to
commit any offence ascribable to the Act of 2002 while on bail. Since
c the threshold stipulation predicated in Section 45 has not been overcome,
the question of considering the efficacy of other points urged by the
appellant to persuade the Court to favour the appellant with the relief of
regular bail will be of no avail. In other words, the fact that the
investigation in the predicate offence instituted in terms of FIR No.205/
2016 or that the investigation qua the appellant in the complaint CC
D
No. 700/2017 is completed; and that the proceeds of crime is already in
possession of the investigating agency and provisional attachment order
in relation thereto passed on 13'' February, 2017 has been confirmed; or
that charge-sheet has been filed in FIR No.205/2016 against the appellant
without his arrest; that the appellant has been lodged in judicial custody
E since 2"'1 January, 2017 and has not been interrogated or examined by
the Enforcement Directorate thereafter; all these will be of no
consequence.
28. It was urged on behalf of the appellant that Demonetization
Notification dated 8ili November, 2016 imposes no limit in KYC compliant
F accounts on the quantum of deposit and no restrictions on non-cash
transactions. The relevant portion of the said notification reads thus:
"(iii) there shall not be any limit on the quantity or value of
specified bank notes to be credited to the account maintained
with the bank by a person, where the specified bank notes
G are tendered; however. where compliance with extant Know
Your Customer (KYC) norms is not complete in an account.
the maximum value of specified bank notes as may he depos-
ited shall be Rs. 50. 000/-;
(vii) there shall be no restriction on the use of any non-cash
method of operating the account of a person including
H
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE 187
(A.M. KHANWILKAR, J.]

cheques, demand drafts, credit or debit cards, mobile wallets A
and electronic fund transfer mechanisms or the like;"
We fail to understand as to how this argument can be
countenanced. The fact that no limit for deposit was specified, would
not extricate the appellant from explaining the source from where such
huge amount has been acquired, possessed or used by him. The volume B
of demonetized currency recovered from the office and residential
premises of the appellant, including the bank drafts in favour of fictitious
persons and also the new currency notes for huge amount, leave no
manner of doubt that it was the outcome of some process or activity
connected with the proceeds of crime projecting the property as untainted
property. No explanation has been offered by the appellant to dispel the C
legal presumption of the property being proceeds of crime. Similarly,
the fact that the appellant has made declaration in the Income Tax Returns
and paid tax as per law does not extricate the appellant from disclosing
the source of its receipt. No provision in the taxation laws has been
brought to our notice which grants immunity to the appellant from D
prosecution for an offence of money-laundering. In other words, the
property derived or obtained by the appellant was the result of criminal
activity relating to a scheduled offence. The argument of the appellant
that there is no allegation in the charge-sheet filed in the scheduled offence
case or in the prosecution complaint that the unaccounted cash deposited
by the appellant is the result of criminal activity, will not come to the aid E
of the appellant. That will have to be negatived in light of the materials
already on record. The possession of such huge quantum of demonetized
currency and new currency in the form of Rs.2000/- notes, without
disclosing the source from where it is received and the purpose for
which it is received, the appellant has failed to dispel the legal presumptiorr F
that he was involved in money-laundering and the property was proceeds
of crime.
29. Taking overall view of the matter, therefore, we are not inclined
to interfere with the well considered opinion of the Sessions Court and
the High Court rejecting the prayer for grant of regular bail to the G
appellant. However, considering the fact that the appellant is in custody
since 28'h December, 2016 and the offence is punishable with
imprisonment for a term extending to seven years only, but not less than
three years, the Trial Court will be well advised to proceed with the trial
on day-to-day basis expeditiously. We clarify that the Trial Court must
H
188 SUPREME COURT REPORTS [2017) 13 S.C.R.

A examine the evi~ence/material brought on record during the trial on its
own merit and not be influenced by the observations in this decision
which are limited for considering the prayer for grant of regular bail.
30. Accordingly, the appeals are dismissed in the above terms.

B
Devika Gujral Appeals dismissed.