Citing SC guidelines, Mumbai court grants bail to two in money laundering case in absence of scheduled offence

As per the provisions of the PMLA, a prior First Information Report (scheduled offence) is a requisite for the ED to initiate action against the person involved with the process or activity.
Supreme Court (Photo | EPS)
Supreme Court (Photo | EPS)

MUMBAI: A special court here on Monday granted interim bail to two persons, arrested by the Enforcement Directorate (ED) for alleged money laundering, noting the duo was discharged from the "predicate" (scheduled) offence which led to the ED case.

The order comes following the guidelines laid down by the Supreme Court last month specifying that a case under the Prevention of Money Laundering Act (PMLA) cannot continue if there is no scheduled offence and hence the special court has no jurisdiction to extend the judicial custody of the persons arrested under the Act.

As per the provisions of the PMLA, a prior First Information Report (scheduled offence) is a requisite for the ED to initiate action against the person involved with the process or activity.

The special PMLA court on Monday granted bail to Babulal Verma and Kamalkishor Gupta, arrested by the ED based on a case registered against them by the Aurangabad Police in Maharashtra.

The duo has been in judicial custody since January 2021.

Recently, the Aurangabad police filed a closure report in their case (scheduled offence) which was accepted by the court and the duo was discharged.

As per the SC's ruling, if a person is discharged or acquitted in the predicate offence then there can be no offence of money laundering against him.

Relying on this ruling, the duo's advocates Vijay Aggarwal and Rahul Aggarwal filed a plea in the special court in Mumbai challenging the remand applications of the ED and seeking interim relief by way of bail.

The lawyers argued that pursuant to the SC's ruling and the fact that the accused persons have been discharged from the scheduled offence, keeping them in jail in the PMLA case would amount to illegal detention.

Special PMLA Judge M G Deshpande while granting interim bail to Verma and Gupta directed the ED to file its reply affidavit to the plea challenging the remand application.

ED's advocate Hiten Venegaonkar opposed the interim bail and argued that the court has taken cognizance of the charge sheet filed by the ED in the present case and can hence extend the judicial custody.

The court, however, noted that the admitted position as of date is that the closure report (submitted by the police in the scheduled offence) has been accepted by the competent court.

"The Supreme Court recently laid down guidelines for matters under the PMLA Act and these guidelines are very important and there is an elaborate discussion on the fate of the act in the absence of a scheduled offence," Judge Deshpande said.

Referring to the ruling of the apex court, the court said, "It is crystal clear that if there is no scheduled/ predicate offence, the PMLA case cannot continue."

"The PMLA court cannot have jurisdiction to continue a PMLA case in the absence of a case relating to the scheduled offence. The guidelines of the Supreme Court are very clear. This court has no jurisdiction to extend judicial custody of the accused under PMLA when there is no scheduled offence," he added.

If the court continues judicial custody of both the accused then there will be a serious complication in respect of the illegal detention of both accused, and to avoid the same, it is necessary to pass a clear interim order pending the hearing of the main applications, the judge said.

The court directed that both the accused be released forthwith till the next date on executing a personal bond of Rs 5,00,000.

The duo shall not leave the city without the court's permission, it said.

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