Union Of India vs Hassan Ali Khan And Anr

3. The allegation against the Respondent No.1 and the other accused is that they have committed an offence punishable under Section 4 of the Prevention of Money Laundering Act, 2002, hereinafter referred to as `the PML Act'. The said case has been registered on the basis of a complaint filed by the Deputy Director, Directorate of Enforcement, Ministry of Finance, Department of Revenue, Government of India, on 8th January, 2007, on the basis of Enforcement Case Information Report No.02/MZO/07 based on certain information and documents received from the Income Tax Department.

On the said date, the Income Tax Department carried out a search in the premises owned and/or possessed by the Respondent No.1 and a sum of Rs.88,05,000/-

in cash was found in his residence at Peddar Road, Mumbai, and was seized. A number of imported watches and some jewellery were also found and seized during the search.

4. The search also revealed that the Respondent No.1 had purchased an expensive car, worth about Rs.60 lakhs, from one Anil Shankar of Bangalore through one Sheshadari and that he had paid till then a sum of Rs.46 lakhs towards purchase of the said car. It also appears that the documents which were recovered by the Income Tax Department contained several transfer instructions said to have been issued by the Respondent No.1 for transfer of various amounts to different persons from the bank accounts held by him outside India.

7. Based on the aforesaid material, the Directorate of Enforcement, Mumbai Zonal Office, arrested the Respondent No.1 on 7th March, 2011, 6 and, thereafter, he was produced before the Special Judge, PMLA, Mumbai, on 8th March, 2011, and was remanded in custody. Subsequently, by an order dated 11th March, 2011, the Special Judge, PMLA, rejected the prayer made on behalf of the Directorate of Enforcement for remand of the Respondent No.1 to its custody and released him on bail. However, since a Public Interest Litigation was pending in this Court in which the Directorate of Enforcement was required to file a status report in respect of the investigations carried out in connection with the case, the fact that the Respondent No.1 had been released on bail was brought to the notice of this Court and this Court stayed the operation of the bail order and authorized the detention of the Respondent No.1 in custody, initially for a period of four days. The Union of India thereupon filed Special Leave Petition (Crl.) No.2455 of 2011 and upon observing 7 that the material made available on record prima facie discloses the commission of an offence by the Respondent No.1 punishable under the provisions of the PML Act, this Court vide order dated 29th March, 2011, disposed of the appeal as well as the Special Leave Petition and set aside the order dated 11th March, 2011, of the Special Judge, PMLA, Mumbai, and directed that the Respondent No.1 be taken into custody. Thereafter, the Respondent No.1 was remanded into custody from time to time and the complaint came to be filed on 6th May, 2011. A further prayer for bail was thereafter made on behalf of the Respondent No.1 on 1st July, 2011, but the same was dismissed by the Special Judge, PMLA, Mumbai, on the same day.

18. It was, therefore, submitted that the Bombay High Court had granted bail to the Respondent No.1 on an incorrect interpretation of the law and the said order granting bail was, therefore, liable to be set aside.

"24. Burden of proof. - When a person is accused of having committed the offence under Section 3, the burden of proving that proceeds of crime are in tainted property shall be on the accused."

25. Although, at this stage, we are also not prepared to accept the convoluted link attempted to 29 be established by the learned ASG with the opening and operation of the bank accounts of the Respondent No.1 in the Union Bank of Switzerland, AG, Zurich, Switzerland, the amounts in the said bank account have not been sought to be explained by the Respondent No.1. We cannot also ignore the fact that the total income of the Respondent No.1 for the assessment years 2001-02 to 2007-08 has been assessed at Rs.110,412,68,85,303/- by the Income Tax Department and in terms of Section 24 of the PML Act, the Respondent No.1 had not been able to establish that the same were neither the proceeds of crime nor untainted property. In addition to the above is the other factor involving the notarized document in which the name of Adnan Khashoggi figures.

26. Lastly, the manner in which the Respondent No.1 had procured three different passports in his name, 30 after his original passport was directed to be deposited, lends support to the apprehension that, if released on bail, the Respondent No.1 may abscond.

27. As far as Mr. Bagaria's submissions regarding Section 439(2) Cr.P.C. are concerned, we cannot ignore the distinction between an application for cancellation of bail and an appeal preferred against an order granting bail. The two stand on different footings. While the ground for cancellation of bail would relate to post-bail incidents, indicating misuse of the said privilege, an appeal against an order granting bail would question the very legality of the order passed.

28. Taking a different view of the circumstances which are peculiar to this case and in the light of what has been indicated hereinabove, we are of the view that the order of the High Court needs to be interfered with. We, accordingly, allow the appeal and set aside the judgment and order of the High Court impugned in this appeal and cancel the bail granted to the Respondent No.1.