1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPEALLATE JURISDICTION CRIMINAL APPLICATION NO. 3360 OF 2009 AND CRIMINAL APPLICATION 3338 OF 2009 Om Prakash Nogaja Umesh Badrinarayan Bangur ........Applicants versus 1. K. Nageshwar Rao. 2. The State of Maharashtra .......Respondents. Mr. V.R. Manohar Sr. counsel a/w Amit Desai, Tushar V. Shah & Nirmala K.Vyas adv. for the Applicant in 3360/09. Mr. Shirish Gupte Sr. counsel with Ravi Gurnani & Ms. Rachaetu R. Dhuru & T.E. Kantawala for applicant in 3338/09. Mr. Rajeev Awasti & Mr. Shahaji R. Shinde adv. for the Respondent no.1. Mrs. P.P. Shinde APP for the State. CORAM: A. P. DESHPANDE, J. DATED : 10th August, 2009. P.C.: 1 Both the applicants have moved separate bail applications under section 439 of Cr.P.C. 1973. One Omprakash Nogaja who is applicant in Application No.3360/09 is the Managing Director of M/s. OPM International Private Limited which is a private limited company registered under the provisions of the Companies Act. The applicant in Application No.3338/09 2 by name Umesh Badrinarayan Bangur is a Chartered Accountant and is a Professional Director of the said company. The applicants are charged with commission of offence punishable under section 4 of the Prevention of Money Laundering Act 2002 r/w Section 120-B of the Indian Penal Code. The Act has come into force with effect from st July 2005. The application moved by the present applicants for bail having been rejected by the Principal Judge, the present applications are filed. 2 The present proceedings under the Prevention of Money Laundering Act are preceded by filing the N.D.P.S. Special Case No. 192/2006 on 08.12.2006 under Section 29(8)(c) and 21 of the N.D.P.S. Act. The Special Court trying the N.D.P.S. Case passed an order to release the Applicants on bail for the offences under the N.D.P.S. Act. After considering the matter on merits an order to enlarge the Applicants on bail was passed. The Intelligence Officer, Narcotic Control Bureau approached the High Court for cancellation of bail of the Applicants under Section 439(2) of the Code of Criminal Procedure. The High Court during the pendency of proceedings kept the order granting bail in abeyance by not allowing the release of Applicants. Aggrieved by the said order passed by the High Court keeping the order of bail in abeyance, the Special Leave Petition (Criminal Appeal No.984-87/2008) was filed in the Supreme Court. The Supreme Court by its order dated 30.05.2008 directed that the Applicants herein to be enlarged on bail subject to imposition of certain conditions. The Applicants have been directed to attend the Intelligence, Narcotic Control Bureau 3 every alternate day till the matter is disposed of by the High Court. It can, thus, be seen that the order granting bail passed by the Special Judge under the N.D.P.S. Act holds the field. While releasing the Applicants on bail the Special Court has recorded the satisfaction under Section 37 of the N.D.P.S. Act to the effect that the Court is satisfied that there are reasonable grounds for believing that the Applicants are not guilty of the offences and they are not likely to commit any offence while on bail. 3 Section 3 of the Prevention of Money Laundering Act, 2002 reads thus: “3. Offence of money-laundering:- Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money laundering.” Whereas the proceeds of crime has been defined in Section 2(u) of the Act and the same reads thus: “Proceeds of crime” means any property derived or 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;” 4 It is thus clear from the reading of section 3 in the light of the definition of proceeds of crime in section 2(u) of he Act, that 4 the property or money derived as a result of criminal activity relating to a scheduled offence is called proceeds of crime and whosoever is involved in such an activity connected with it and project it as untainted money is guilty of offence of Money Laundering. In the scheduled of offence in part -A paragraph 2 offence under the Narcotic Drugs and Psychotropic Substances Act are set out. The present applicants are charged for commission of offence under the Narcotic Drugs and Psychotropic Substances Act for illegal import of cocaine, as stated herein above. According to the Respondents, the applicants have derived or obtained certain property (money) as a result of the criminal activity relating to a scheduled offence under the Narcotic Drugs and Psychotropic Substances act and thus are charged for commission of offence under section 3 of the Prevention of Money Laundering Act. 5 In the above fact situation, the applications moved by the present applicants for seeking bail in regard to the offence of Money Laundering, are rejected by recording a contrary satisfaction under section 45 of the Prevention of Money Laundering Act. The Special Court has observed that there are no reasonable grounds for believing that the applicants are not guilty of the offences. The Special court has also not recorded satisfaction that the applicants if released on bail, are not likely to commit any offence. 6 According to the Respondents/Complainant, the proceeds of crime generated in respect of the scheduled offence constitute the property in the present case. It is the case of the Respondents that the Company has received a sum of Rs. 5 7,57,26,879/- in the guise of purchase of the shares of the said Company from Mrs.Madhubala Maheshwari and Mrs.Nirmala Biyani. The said two persons are said to be related to the Applicants. It is also the case of the Complainant that the Applicant/Umesh Bangur who is the Professional Director of M/s O.P.M.International Pvt.Ltd. was found in possession of the blank cheques of Rajendra Prasad Modani who is resident of Bangkok and relative of the accused and on inquiry being made it is revealed that he is only an employee and he holds NRE account. Through the said account, the proceeds of crime are being transferred to the individuals and firms. 7 Per contra, according to the Applicants, some of the amounts contributed by Mrs.Madhubala Maheshwari are prior to the coming in force of the Prevention of Money Laundering Act i.e. prior to 01.07.2005 and thus, cannot constitute the proceeds of crime. It is also contended that purchase of shares of the Company by Mrs.Madhubala Maheshwari and Mrs.Nirmala Biyani is a bonafide business transaction. 8 Be that as it may, having regard to the fact that two courts have recorded a contrary satisfaction, one under section 37 of the N.D.P.S. Act and the other under section 45 of the Prevention of Money Laundering Act, it is necessary to examine the scheme of the Prevention of Money Laundering Act in some details, with a view to ascertain as to whether recording of a contrary satisfaction under section 45 of the Money Laundering Act is possible by the Judge considering the bail application, after a 6 positive satisfaction is recorded under section 37 of the N.D.P.S. Act. According to the learned Senior Counsel Shri V.R. Manohar and Mr. Shrirish Gupte, appearing for the applicants, an offence under the Prevention o Money Laundering Act is wholly depended upon the commission of a scheduled offence and hence the scheduled offence would constitute the principle offence whereas the offence under the Prevention of Money Laundering act would be incidental thereto. Unless and until the accused is convicted for commission of a scheduled offence, he cannot be convicted for offence punishable under section 4 of the Act and hence, when satisfaction is already recorded under section 37 of the N.D.P.S. Act dealing with the scheduled offence resulting in grant of bail, no contrary satisfaction could be recorded under section 45 of the Money Laundering Act. It is only when proceeds of crime are derived as a result of criminal activity relating to scheduled offence and when those proceeds are put to any process or activity and projected as untainted property an offence under section 3 would be committed. It is reiterated that conviction in relation to a scheduled offence is sine-qua non for conviction for an offence punishable under section 4 of the Act. To bring home the point, reliance is ably placed on the definition of proceeds of crime finding place in section 2(u). Under the Money Laundering Act two fold objects are sought to be achieved, (1) to provide for an offence of money laundering and for its punishment and (2) attachment and confiscation of the property derived or obtained on account of criminal activity relating to the scheduled offence. 7 Chapter III which deals with attachment, and confiscation of the property provides for the mechanism for adjudication and section 8(3) specifically provide that the attachment or retention of the seized property shall continue during pendency of the proceeding relating to any scheduled offence before the court and shall become final after the guilt of the person is proved in the trial court and order of such trial court becomes final. It can thus be seen that the properties attached or retained on seizure, would attend finality only after the guilt of the person is proved for commission of a scheduled offence and not otherwise. Sub section (5) and (6) of section 8 clinches the issue. The same reads thus: 8(5) Where on conclusion of a trial for any scheduled offence, the person concerned is acquitted, the attachment of the property or retention of the seized property or record under sub section (3) and net income, if any, shall cease to have effect. (6) Where the attachment of any property or retention of the seized property or record becomes final under clause (b) of section (3), the adjudicating authority shall, after giving an opportunity of being heard to the person concerned, make an order confiscating such property. 9 Perusal of the above extracted provisions clearly reveal that only on conclusion of a trial for any scheduled offence, when a person is acquitted the attachment of the property or retention of 8 the seized property and net income if any shall cease to have effect and where the attachment of any property or retention of the seized property becomes final under clause (b) of sub section (3), meaning thereby in the event of conviction, the adjudicating authority shall make an order confiscating such property. Conjoint reading of sub section 5 and 6 of section 8 leaves no room of doubt that in the event of acquittal, the attachment and retention of the seized property ceases to have effect and in the event of conviction, the order of confiscation ought to follow. Sub section (9) declares that where the confiscation order is passed under sub section (6) of section 8, all the rights and title in such property shall vest absolutely in the Central Government free from all encumbrances. It is as such clear prima facie that under the scheme of the act, the penal provisions get attracted only in the event of conviction of a person on proof of commission of a scheduled offence and not otherwise. 10 According to the learned counsel for the respondents, it is possible to secure conviction of a person for an offence under section 3 of the Act even if that person is acquitted of ‘a scheduled offence’ with which he is charged. To me this does not appear to be logical. It is only when property is derived or obtained as a result of criminal activity relating to `a scheduled offence’, then and then alone the offence under section 3 could be committed by indulging in any process or activity connected with the proceeds of crime and by projecting it as untainted property. Thus, the offence under section 3 deals with the activity after the commission of a 9 scheduled offence wherein proceeds of crime are generated. Unless and until proceeds of crime are generated, as a result of criminal activity, relating to a scheduled offence section 3 cannot operate. Section 3 is an extended arm or a further limb of offence over and in addition to a scheduled offence. Prima facie this being the scheme of the Act, I am of the view that when a court records a satisfaction under section 37 of he N.D.P.S. Act (a scheduled offence) that it is satisfied that there are reasonable grounds for believing that the applicant is not guilty of such offence and that he is not likely to commit any offence while on bail, no contrary satisfaction is capable of being recorded under section 45 of the Prevention of Money Laundering Act, for the obvious reason that if a scheduled offence (principle offence) cannot be prima facie seen to have been committed by the applicant, which is a condition precedent for commission of offence under section 3, contrary satisfaction cannot be recorded under section 45. To put it more boldly it can be said that when satisfaction is recorded under section 37 in favour of applicant that there are reasonable grounds for believing that he is not guilty of such offence then obviously it cannot be said that though the applicant is prima facie not guilty of a scheduled offence, he could still be guilty of an offence punishable under section 4 of the Prevention of Money Laundering Act, prima facie. As set out herein above and with a risk of repetition, it is stated that the applicants are released on bail for a scheduled offence under the N.D.P.S. Act by recording a favourable satisfaction and hence logically no contrary satisfaction can be 10 recorded in exercise of powers under section 45 of the Prevention of Money Laundering Act. It will not be out of place to mention at this stage that the present applicant in Application No.3360/09 was granted bail under the N.D.P.S. Act after a period of about two years in custody whereas the applicant in other Application No. 3338/09 was released on bail after being in custody for a period of about one year. The provisions dealing with grant of bail in so far as it relates to recording of satisfaction are concerned they are identical in both the acts viz. Section 37 of the N.D.P.S. Act and Section 45 of the Prevention of Money Laundering Act. Reference to a Supreme Court judgment in relation to an identical provision in regard to the satisfaction for grant of bail which finds place in Maharashtra Control of Organized Crime Act 1999, in case of Ranjitsingh Sharma Vs. State of Maharashtra reported in AIR 2005 S.C. 2277 is very relevant. Observations made in paragraphs 46 to 49 are reproduced herein below:- “46. Presumption of innocence is a human right. [See Narendra Singh and another v. State of M.P., (2004) 10 SCC 699, para 31]. Article 21 in view of its expansive meaning not only protects life and liberty but also envisages a fair procedure. Liberty of a person should not ordinarily be interfered with unless there exist cogent grounds therefor. Sub-section (4) of Section 21 must be interpreted keeping in view the aforementioned salutary principles. Giving an opportunity to the public prosecutor to oppose an application for release of an accused appears 11 to be reasonable restriction but Clause (b) of sub-section (4) of Section 31 must be given a proper meaning. 47. Does this statute require that before a person is released on bail, the Court, albeit prima facie, must come to the conclusion that he is not guilty of such offence? Is it necessary for the Court to record such a finding? Would there be any machinery available to the Court to ascertain that once the accused is enlarged on bail, he would not commit any offence whatsoever? 48. Such findings are required to be recorded only for the purpose of arriving at an objective finding on the basis of materials on records only for grant of bail and for no other purpose. 49. We are furthermore of the opinion that the restrictions on the power of the Court to grant bail should not be pushed too far. If the Court, having regard to the materials brought on record, is satisfied that in all probability he may not be ultimately convicted, an order granting bail may be passed. The satisfaction of the Court as regards his likelihood of not committing an offence while on bail must be construed to mean an offence under the Act and not any offence whatsoever be it a minor or major offence. If such an expansive meaning is given, even likelihood of commission of an offence under Section 279 of the Indian Penal Code may debar the Court from releasing the accused on bail. A statute, it is trite, should 12 not be interpreted in such a manner as would lead to absurdity. What would further be necessary on the part of the Court is to see the culpability of the accused and his involvement in the commission of an organised crime either directly or indirectly. The Court at the time of considering the application for grant of bail shall consider the question from the angle as to whether he was possessed of the requisite mens rea. Every little omission or commission, negligence or dereliction may not lead to a possibility of his having culpability in the matter which is not the sine qua non for attracting the provisions of MCOCA. A person in a given situation may not do that which he ought to have done. The Court may in a situation of this nature keep in mind the broad principles of law that some acts of omission and commission on the part of a public servant may attract disciplinary proceedings but may not attract a penal provision.” 11 Having regard to the scheme of the Prevention of Money Laundering Act and in the light of the observations made by the Apex Court, in the context of similar identical provision for grant of bail under MCOCA, I am of the view that the applications need to be allowed. Having regard to the satisfaction recorded by the Special Judge under section 37 of the N.D.P.S. Act in favour of the present applicants, I have no hesitation in recording similar satisfaction that there are reasonable grounds for believing that the 13 applicants are not guilty of the offence under Section 3 of the Prevention of Money Laundering Act and that the applicants are not likely to commit such offence while on bail. Needless to mention that the satisfaction is prima facie in nature and only for the purpose of decision of the bail applications. 12 In the result, I pass the following order:- (i) The Applications are allowed. (ii) The Applicants shall be released on bail on execution of the bail bonds in a sum of Rs.2 Lac each together with one or two solvent sureties in the like amount to the satisfaction of the Special Court and subject to the condition that the Applicants shall attend the office of the Respondent No.1 once a week till the completion of the trial. (iii) The Applicants’ passports which are presently with the Intelligence Officer, Narcotic Control Bureau shall not be returned to the Applicants without permission of the Court. (iv) Copy of this order be sent to the Intelligence Officer of Narcotic Control Bureau, incharge of N.D.P.S. Special Case No. 192/2006 forthwith. (v) The Applicants shall not leave Mumbai without prior permission of the Court. (vi) Applications are disposed of. (A. P. DESHPANDE, J.) 14 After pronouncement of order learned counsel appearing for the applicant requests that initially for a period of four weeks applicants be permitted to deposit cash in lieu of surety so that in the intervening period surety can be arranged. The request is reasonable. Hence the same is granted. Applicants are permitted to deposit cash amount in lieu of surety for a period of four weeks. Certified copy expedited. (A.P.DESHPANDE, J.)