GAUTAM KUNDU versus MANOJ KUMAR ASSISTANT DIRECTOR,  EASTERN REGION, DIRECTORATE OF ENFORCEMENT(PREVENTION OF MONEY LAUNDERING ACT) GOVT. OF INDIA
[2015] 15 S.C.R. 499, Supreme Court of India, 2015
Outcome: Dismissed (Dismissed)
Segment: Facts
[2015] 15 S.C.R. 499 
GAUTAM KUNDU 
v. 
MANOJ KUMAR ASSISTANT DIRECTOR, 
EASTERN REGION, DIRECTORATE OF ENFORCEMENT 
A 
(PREVENTION OF MONEY LAUNDERING ACT) 
B 
GOVT. OF INDIA 
(Criminal Appeal No. 1706 of2015) 
DECEMBER 16, 2015 
[PINAKI CHANDRA GHOSE AND R. K. AGRAWAL, JJ.] 
C 
Bail -
Prosecution u/s. 4 of Prevention of Money 
Laundering Act, 2002 (PMLA) - Proceedings u/s. 24 of 
Securities and Exchange Board of India Act, 1992 (SEBI Act) 
pending - Bail application u/s. 439 Cr.P. C. - Rejected by 
High Court on the ground that there was no order holding D 
that no offence was made out u/s. 24 against the applicant-
Held: In view of s. 5 of Cr.P. C. and non-obstante clause of s. 
45 of PMLA, PMLA being a special statute will prevail over 
the general provisions of Cr.P.C. in case of any conflict -
The conditions for grant of bail enumerated in s. 45 of PMLA 
E 
have overriding effect on the provisions of s. 439 Cr.P. C.- u/ 
s. 24 of SEBI Act, unless the contrary is proved the Authority/ 
Court shall presume that proceeds of crime are involved in 
money laundering - In the facts and circumstances of the 
case, High Court rightly refused the· bail - Code of Criminal F 
Procedure, 1973 - s. 439- Prevention of Money Laundering 
Act, 2002 - s. 4 - Securities and Exchange Board of India 
Act, 2002 - s. 24. 
Dismissing the appeal, the Court 
HELD 1. The Prevention of Money Laundering Act, 
2002 (PMLA) deals with the offence of money laundering 
and the Parliament has enacted
this law as per 
commitment of the country to the United Nations General 
499 
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SUPREME COURT REPORTS 
[2015] 15 S.C.R. 
A Assembly. PMLA is a special statute enacted by the 
. Parliament for dealing with money laundering. Section 
5 of the Code of Criminal Procedure, 1973 clearly lays 
down that the provisions of the Code of Criminal 
Procedure will not affect any special statute or any local 
B law. In other words, the provisions of any special statute 
will prevail over the general provisions of the Code of 
Criminal Procedure in case of any conflict. [Para 28) [515-
A-C] 
2. Section 45 of the PMLA starts with a non-obstante 
C clause which indicates that the provisions laid down in 
Section 45 of the PM LA will have overriding effect on the 
general provisions of the Code of Criminal Procedure in 
case of conflict between them. Section 45 of the PMLA 
imposes following two conditions for grant of bail to any 
D person accused of an offence punishable for a term of 
imprisonment of more than three years under Part-A of 
the Schedule of the PMLA: (i) That the prosecutor must 
be given an opportunity to oppose the application for 
bail; and (ii) That the Court must be satisfied that there 
E are reasonable grounds for believing that the accused 
person is not guilty of such offence and that he is not 
likely to commit any offence while on bail. [Para 29] [515-
D-E] 
3. The conditions specified under Section 45 of the 
F PMLA are mandatory and need to be complied with 
which is further strengthened by the provisions of 
Section 65 and also Section
71 of the PMLA. PMLA has 
an overriding effect and the provisions of Cr.P.C. would 
apply only if they are not inconsistent with the provisions 
G of this Act. Therefore, the conditions enumerated in 
Section 45 of PMLA will have to be complied with even 
in respect of an application for bail made under Section 
439 of Cr.P.C. That coupled with the provisions of Section 
· 24 of Securities and Exchange Board of India Act, 1992 
H provides that unless the contrary is proved, the Authority
GAUTAM KUNDU v. MANOJ KUMARASSISTANT 
501 
DIRECTOR 
or the Court shall presume that proceeds of crime are A 
involved in money laundering and the burden to prove 
that the proceeds of crime are not involved, lies on the 
appellant. [Para 30] [515-H; 516·A·B] 
4. There is no doubt that the conditions laid down 
under Section 45 of the PMLA, would bind the High Court 8 
as the provisions of special law having overriding effect 
on the provisions of Section 439 of Cr.P.C. for grant of 
bail to any person accused of committing offence 
punishable under Section 4 of the PMLA, even when the 
application for bail is considered under Section 439 of C 
Cr.P.C. [Para 33] [518-G] 
Subrata Chattoraj v. Union of India and Ors. 2014 
(6) SCR 783 : (2014) 8 sec 768; Y.S. Jagan 
Mohan Reddy v. Central Bureau of Investigation 
0 
(2013) 7 SCC 439; Union of India v. Hassan Ali 
Khan 2011 (11) SCR 778: (2011) 10 sec 235-
referred to. 
5. The High Court has called for all the relevant 
papers and duly taken note of that and thereafter after E 
satisfying its conscience, refused the bail. Therefore, the 
High Court has not committed any wrong in refusing bail 
in the given circumstances. [Para 38] [521-C] 
Afcons Infrastructure l:.td. v. Cherian Verkey 
Construction Co. (P) Ltd. 2010 (8) SCR 1053 : 
(2010) 8 SCC 24; Gurudevatta VKSSS Maryadit 
v. State of Maharashtra 2001 (2) SCR 654: (2001) 
4 SCC 534; Visitor, AMU v. K.S. Misra 2007 (9) 
SCR 763 : (2007) 8 SCC 593; State of Madhya 
Pradesh v.
Baldeo Prasad 1961 (1) SCR 970; 
Harakchand Ratanchand Banthia & Ors. v. Union 
of India & Ors. 1970 (1) SCR 479: (1969) 2 SCC 
166; A.K. Roy & Ors. v. Union of India & Ors. 
(1982) SCR 272- referred to. 
F 
G 
H

502 
A 
B 
c 
D 
E 
F 
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SUPREME COURT REPORTS 
[2015) 15S.C.R. 
Case Law Reference 
2010 (8) SCR 1053 
referred to 
Para 18 
2001 (2) SCR 654 
referred to 
Para 19 
2007 (9) SCR 763 
referred to 
Para 19 
1961 (1) SCR 970 
referred to 
Para 21 
1970 (1) SCR 479 
referred to 
Para 21 
(1982) SCR 272 
referred to 
Para 21 
2014 (6) SCR 783 
referred to 
Para 34 
(2013) 1 sec 439 
referred to 
Para 36 
2011 (11) SCR 778 
referred to 
Para 36 
CRIMINAL APPELLATE JURISDICTION: Criminal 
Appeal No. 1706 of 2015. 
From the Judgment and Order dated 21.07.2015 of the 
High Court of Calcutta in CRM No. 6285 of 2015. 
Gopal Subramanium and K. V. Viswanathan, Sr. Advs., 
Zoheb Hossain, Ms.Adeeba Mujahid,Abhijit P. Medh,Advs. 
for the Appellant. 
Ranjit Kumar, SG, Ms. Binu Tamta, Amal Chitale, Rajiv 
Singh (for B. K. Prasad), Dr. Shamsuddin and Manoj Singh 
(for B. K. Prasad), Advs. for the Respondent. 
The Judgment of the Court was delivered by 
PINAKI CHANDRA GHOSE, J. 1. Leave granted. 
2. This appeal, by special leave, is directed against the 
judgment and order dated 21st July, 2015 passed by the High 
Court of Calcutta in CRM No.6285 of 2015, whereby the High
GAUTAM KUNDU v. MANOJ KUMARASSISTANT 
503 
DIRECTOR [PINAKI CHANDRA GHOSE, J.] 
Court has rejected appellant's application for bail under A 
Section 439 of the Code of Criminal Procedure, 1973. The 
appellant was arrested on 25.03.2015 in relation to an offence 
alleged to have been committed under Section 3 of the 
· Prevention of Money Laundering Act, 2002, (hereinafter 
referred to as "PMLA"). 
B 
3. The appellant is the Chairman of Rose Valley Real 
Estate Construction Ltd. (hereinafter referred to as the "Rose 
Valley"), a public company incorporated in the year 1999 and 
registered under the Companies Act~ 1956. Certain non-
convertible debentures were issued by the Rose Valley by C 
'private placement method.' No advertisements etc. were 
issued to the public. The said debentures were issued to the 
employees of the Company and to their friends and associates 
after fulfilling the formalities for private placement of 
debentures. Thus, the appellant collected money by issuing D 
secured debentures by way of private placement in compliance 
with the guidelines issued by the. Securities and Exchange 
Board of India from time to time. 
4. On 26.03.2013, the Adjudicating Officer, SEBI, passed 
E 
an order imposing a penalty of Rs.1 crore upon the Rose Valley 
for violation of the provisions of Sections 11 (C) of the Securities 
and Exchange Board of India Act, 1992 (hereafter referred to 
as the SEBI Act) which was reduced to Rs.10 lakhs by the 
Securities Appellate
Tribunal, Mumbai. A letter was issued on 
F 
26.06.2013 by the Securities and Exchange Board of India 
("SEBI") to the appellant Rose Valley informing the appellant 
about the offences alleged to have been committed by it under 
the Companies Act, SEBI Act & Regulations, and Section 405 
of the Indian Penal Code. The appeal filed by the appellant G 
before the Securities Appellate Tribunal was allowed on 
12.12.2013, holding that the appellant Company has repaid 
all the money collected from the investors. It was further held 
by the Securities Appellate Tribunal that there are no grounds 
for violation of Section 11 (C)(3) of the SEBI Act. 
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SUPREME COURT REPORTS 
[2015] 15 S.C.R. 
A 
5. On the basis of the aforementioned letter dated 
26.06.2013 issued by SEBI, the respondent filed a report 
being ECIR No.KIZ0/02/2014 dated 27.02.2014, alleging 
commission of offence by the Rose Valley and its officers, 
punishable under Section 24 of the SEBI Act. Thereafter, 
B search and seizure was conducted at the offices of the Rose 
Valley. 
6. A complaint was filed by the respondent authorities, 
being C/14214 of 2013, alleging that the Rose Valley 
transferred the money raised by issue of debentures from the 
C account of one company to that of another company. It is also 
alleged that the money collected by issuing the debentures for 
the purpose of one business has been invested in some other 
business. The proceedings under Section 24 of the SEBI Act 
has been challenged in the High Court by way of revision and 
D the said revision is pending for hearing and further proceeding 
of the complaint case, being C/14214 of 2013, has been 
stayed by the High Court. The High Court also directed the 
respondent not to take any coercive measure against the 
E 
appellant. 
· 
7. Vide its order dated 18.06.2014, SEBI directed the 
appellant Rose Valley to refund the money to the customers of 
the Ashirbad Scheme. This order was challenged before the 
Securities Appellate Tribunal by way of Appeal No.233 of 2014. 
F On 19.06.2014, a Show Cause Notice under Section 8(1) of 
the PMLA was served upon Rose Valley and its
officials. Rose 
Valley filed a writ petition before the High Court of Calcutta 
challenging the said Show Cause Notice. The said writ petition 
was dismissed by the learned Single Judge of the High Court. 
G Thereafter, the matter was taken in appeal before the Division 
Bench of the Calcutta High Court, being AST No.345 of 2014. 
The Division Bench of the High Court dismissed the said 
appeal and directed the appellant Rose Valley to appear before 
the Adjudicating Authority under Section 8 of the PMLA and 
H
GAUTAM KUNDU v. MANOJ KUMARASSISTANT 
505 
DIRECTOR [PINAKI CHANDRA GHOSE, J.] 
directed the Adjudicating Authority to decide the preliminary A 
objections as may be raised by the Rose Valley, including the 
applicability of the PMLA as also the validity of the search and 
seizure against Rose Valley. It was further directed that the 
Adjudicating Authority should pass a reasoned order in the 
matter and communicate the same to the appellant Rose Valley 
B 
within two days from the date of passing such order. 
8. A complaint was filed by the respondent on April 2, 
2015, in the Court of learned Chief Judge, City Sessions Court 
at Kolkata, against the appellant under Section 4 of PMLA, 
though no offence is made out against the appellant under C 
Section 3 of the PMLA. The said complaint has been 
registered as ML Case No.3 of 2015. Despite having fully 
cooperated with the investigation, the appellant was arrested 
on 25.03.2015 on suspicion of having committed an offence 
punishable under the provisions of the PMLA and is detained 
D 
in custody since then. 
9. While the appellant was in custody, his father expired 
on 06.04.2015 upon which he moved an application before 
the High Court of Calcutta for interim bail to perform the rituals 
E 
for his deceased father. The High Court vide its order 
08.04.2015, directed release of the appellant on provisional 
bail for two weeks on the conditions mentioned in the said 
order. On completion of the period of provisional bail,
the 
appellant duly surrendered before the Court of learned Chief 
F 
Judge, City Sessions Court at Kolkata. 
10. On 06.07 .2015, the appellant filed a fresh bail 
application under Section 439 of the Code of Criminal 
Procedure before the High Court of Calcutta, being CRM 
No.6285 of 2015. Vide impugned judgment and order the High G 
Court has rejected the said application of the appellant holding 
that no order has yet been passed by any competent Court of · 
law that no offence is made out against the appellant under 
Section 24 of the SEBI Act. It is pertinent to mention here that 
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SUPREME COURT REPORTS 
[2015] 15 S.C.R. 
A 
a criminal revision praying for quashing of the proceedings 
initiated against the appellant under Section 24 of the SEBI 
Act is still pending for decision before the High Court. 
11 . Aggrieved by the rejection of the bail application filed 
under Section 439 of the Code of Criminal Procedure, the 
B appellant has approached this Court through this appeal by 
special leave. 
12. We have heard Mr. Gopal Subramanium, learned 
senior counsel appearing for the appellant and also Mr. Ranjit 
c Kumar, learned Solicitor General for India. For proper 
appreciation of submission made by learned counsel 
appearing for the parties, it would be necessary to consider 
the authorities cited on behalf of the both parties. 
13. Mr. Gopal Subramanium, learned senior counsel 
D appearing for the appellant submitted that there is no offence 
made out under PMLA against the appellant as Section 24 of 
the SEBI Act is not a separate scheduled offence under the 
PMLA. Section 12A read with Section 24 of SEBI Act is the 
scheduled offence under the PMLA since 2009. Neither the 
E complaint filed by SEBI nor the complaint filed by the 
respondent (which is based entirely on SEBI complaint) 
prosecutes the appellant for violation of Section 12A read with 
Section 24 of the SEBI Act. 
14. According to learned senior counsel for the appellant, 
F Section 24 of the SEBI Act was printed separately in the 
Schedule of PMLA for the first time vide PMLA
(Amendment) 
Act, 2012 w.e.f. 15.02.2013, which is clearly an inadvertent 
typographical error. The description of offence given under 
paragraph 11 of the Schedule to PMLA for Section 24 of the 
G SEBI Act reads as "acquisition of securities or control", which 
is different from the description given to the Section under the 
SEBI Act, which describes the Section as "Offences". Rather 
the heading "acquisition of securities or control" is part of the 
heading of Section 12A read with Section 24 which is the 
H
GAUTAM KUNDU v. MANOJ KU MAR ASSISTANT 
507 
DIRECTOR [PINAKI CHANDRA GHOSE, J.] 
scheduled offence. The relevant extract of the Schedule to the A 
PMLA, as it stood after the 2009 Amendment, is as follows: 
Paragraph 8 - The Securities and Exchange 
Board of India Act, 1992 (15of1992) 
12A read with 
Prohibition 
of 
manipulative 
and 
B 
deceptive devices, insider trading 
Section 24 
and 
substantial 
acquisition 
of 
securities or control 
The relevant extract of the Schedule to the PMLA as it stands C 
today after the Amendment Act of 2012 w.e.f. 15.02.2013 is 
as follows: 
Paragraph 11 -The Securities and Exchange 
Board of India Act, 1992 (15of1992) 
0 
12A read with 
Prohibition 
of 
manipulative 
and 
Section 24 
deceptive devices, insider trading and 
substantial. 
Section 24 
Acquisition of securities or control 
E 
15. The learned senior counsel for the appellant submitted 
that if the offences prescribed against the sections in 
paragraph 11 in both the rows are read together, the same will 
appear as the heading of Section 12A of the SEBI Act. A 
conjoint reading of two rows under paragraph 11 of Part A of F 
the Schedule would show that the same is in substance a 
reproduction of paragraph 8 of Part B of the Schedule of PMLA. 
as was prevailing prior to the amendment effected on 
15.02.2013 and therefore, the position remains unchanged. G 
Section 12A of the SEBI Act is as follows: 
"Prohibition of manipulative and deceptive 
devices, insider trading and
substantial 
acquisition of securities or control. 
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B 
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SUPREME COURT REPORTS 
[2015] 15 S.C.R. 
12A. No person shall directly or indirectly-
(a) use or employ, in connection with the issue, 
purchase or sale of any securities listed or proposed 
to be listed on a recognized stock exchange, any 
manipulative or deceptive device or contrivance in 
contravention of the provisions of this Act or the rules 
or the regulations made thereunder; 
(b) employ any device, scheme or artifice to defraud 
in 1.;onnection with issue or dealing in securities 
which are listed or proposed to be listed on a 
recognized stock exchange; 
(c) engage in any act, practice, course of business 
which operates or would operate as fraud or deceit 
upon any person, in connection with the issue, 
dealing .in securities which are listed qr proposed 
to be listed on a recognized stock exchange, in 
contravention of the provisions of this Act or the rules 
or the regulations made thereunder; 
( d) engage in insider trading; 
(e) deal in securities while in possession of material 
or non-public information or communicate such 
material or non-public information to any other 
person, in a manner which ·is in contravention of 
the provisions of this Act or the rules or the 
regulations made thereunder; 
(f) acquire control of any company or securities 
more than the percentage of equity share capital 
of a company whose securities are listed or 
proposed to be listed on a recognized stock 
exchange in contravention of the regulations
made 
under this Act." 
Section 24 of the SEBI Act reads as follows: 
"24. Offences. - (1) Without prejudice to any award 
of penalty by the Adjudicating Officer under this Act,
GAUTAM KUNDU v. MANOJ KUMARASSISTANT 
DIRECTOR [PINAKI CHANDRA GHOSE, J.] 
if any person contravenes or attempts to contravene 
or abets the contravention of the provisions of this 
Act or of any rules or regulations made thereunder, 
he shall be punishable with imprisonment for a term 
which may extend to ten years, or with fine, which 
may extend to twenty-five crore rupees or with both. 
(2) If any person fails to pay the penalty imposed 
by the Adjudicating Officer or fails to comply with 
any of his directions or orders, he shall be 
punishable with imprisonment for a term which shall 
not be less than one month, but which may extend 
to ten years or with fine, which may extend to twenty-
five crore rupees or with both." 
509 
A 
B 
c 
16. According to the learned senior counsel for the 
appellant, the fact that no new offence was meant to be added 0 
byway of the 2012 amendment, is clear from a plain reading 
of the "Statement of Objects and Reasons" to the Amendment 
of 2012, as well as the "Notes on Clauses" on the Amendment 
Act, 2012 and from a comparison of the Schedules of PMLA 
of 2009 and amended PMLA of 2012. It is submitted by the 
E 
learned senior counsel for the· appellant that the respondent is 
wrongly reading Section 24 of SEBI Act simplicitor as a 
separate schedul~d offence, whereas Section 24 is a general 
penal provision for violation of any and every provisions of the 
SEBI Act or any ru.les or regulations made thereunder. 
· 
17. It was further
submitted by the learned senior counsel 
appearing for the appellant that if the intent of the legislature 
·was to incorporate Section 24 of SEBI Act alone as an offence, 
F 
in that event, there would have been no necessity to incorporate 
"12A read with Section 24" inasmuch as Section 24 of the G 
SEBI Act prescribes that all violations of provisions of SEBI 
Act would be punishable in terms of Section 24 of the SEBI 
Act, 1992. Had that been the intention of the legislature, the 
legislature would have mentioned either "offences and 
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SUPREME COURT REPORTS 
[2015] 15 S.C.R. 
A 
penalties under SEBI Act, 1992" or only Section 24 and the 
heading thereof, as scheduled offence. There was or could be 
no necessity to specify section 12A separately if the legislature 
intended to incorporate Section 24 as a separate scheduled 
offence. 
B 
18. Further, the Enforcement Directorate's own document 
titled "FAQs" on their website mentions the Schedule to PMLA 
which treats Section 12A r/w Section 24 of the SEBI Act as a 
scheduled offence and not Section 24 alone. Similarly, the 
Schedule to PMLA on the website of the Ministry of Finance-
C 
Financial Intelligence Unit also mentions S.12A r/w 24 of the 
SEBI Act as the scheduled offence and not Section 24 alone. 
This reflects the authority/government's own understanding of 
the Schedule. Thus, it can be safely said that the printing of 
Section 24 of SEBI Act separately under the Schedule to the 
D PMLA is vide an inadvertent typographical error that has crept 
into the legislation as is apparent from the marginal note therein. 
It is an accepted principle of interpretation of statutes that 
where an inadvertent grammatical or other error has palpably 
crept into the legislation, the Court is at liberty to disregard the 
E error in applying the statute. (Afcons Infrastructure Ltd. v. 
Cherian Verkey Construction Co. {P) Ltd., (2010) 8 SCC 
24). 
19. Learned senior counsel for the appellant further 
F 
submitted that the description given to the offence under
Section 24 of SEBI Act, in the Schedule to PMLA is "acquisition 
of securities or control", and even if Section 24 is treated as a 
separate scheduled offence, the words used in the description 
have to be given meaning to and its application has to be 
restricted to the offence described under it in the Schedule. 
G The learned senior counsel for the appellant further submitted 
that this Court has held in numerous judgments that the Court 
should give meaning to each and every word used by the 
legislature and it is not a sound principle of construction to 
brush aside words in a statute as being inapposite surplus, if 
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GAUTAM KUNDU v. MANOJ KUMARASSISTANT 
511 
DIRECTOR [PINAKI CHANDRA GHOSE, J.) 
they can have a proper application in circumstances A 
conceivable within the contemplation of the statute. [See: 
Gurudevatta VKSSS Maryadit v. State of Maharashtra, 
(2001) 4 SCC 534 at para 26). It has also been held by this 
Court that "the courts always presume that the legislature 
inserted every part thereof for a purpose and the legislative 
B 
intent is that every part of the statute should have effect. The 
legislature is deemed not to waste its words or to say anything 
in vain and a construction which attributes redundancy to the 
legislature will not be accepted except for compelling reasons." 
{Visitor, AMU v. K.S. Misra, (2007) 8 SCC 593, at para 13)). C 
20. Therefore, learned senior counsel for the appellant 
submitted, the words "acquisition of securities or control", 
appearing next to Section 24 of the SEBI Act in the Schedule 
to the PMLA must be given due meaning and construed to 
mean that only that extent of the offence which pertains to D 
""acquisition of securities or control" is a punishable offence 
under PMLA and not any other violation under the SEBI Act. 
21. It was further submitted by the learned senior counsel 
for the appellant that Section 24 alone cannot by itself be a 
E 
scheduled offence under the PMLA since it does not 
enumerate a specific offence rather it is the nature of a "catch-
all" penal provision, which imposes punishment for any 
contravention
of the SEBI Act, Rules or Regulations and does 
not precisely define or specify any offence in particular. Inclusion 
F 
of Section 24 as a separate offence would be a violation of 
the basic principle of criminal jurisprudence that 'criminal law 
has to be clear and unambiguous.' It has been held by this 
Court in numerous judgments that criminal law ought to be 
absolutely clear, specific and not vague, failing which it would G 
suffer from arbitrariness. [Ref: (i) State of Madhya Pradesh 
v. Baldeo Prasad, (1961) 1 SCR 970; (ii) Harakchand 
Ratanchand Banthia & Ors. v. Union of/ndia & Ors., (1969) 
2 SCC 166; and (iii) A.K. Roy & Ors. v. Union of India & 
Ors., (1982) SCR 272). 
. 
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[2015] 15S.C.R. 
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22. It was alternatively submitted by the learned senior 
counsel appearing for the appellant that assuming if Section 
24 simplicitor is treated as a scheduled offence, it was 
introduced vide PMLA (Amendment) Act, 2012, w.e.f. 
15.02.2013 i.e. much after the offences were alleged to have 
B been committed and bar against ex-post facto laws under 
Article 20(1) would be attracted. Section 2(u) of PMLA defines 
"proceeds of crime" and states that it must be as a result of 
criminal activity relating to a scheduled offence. Under Section 
3 of the PMLA, in order for the offence of money laundering to 
c be triggered, it must be established at the threshold that the 
"proceeds of crime" was as a result of criminal activity relating 
to a scheduled offence on the date such crime was committed. 
He submitted that the offences are alleged to have been 
committed between the years 2001 and 2007. The offence 
o under Section 12A r/w Section 24 of SEBI Act became 
scheduled offence only by way of the Prevention of Money 
Laundering (Amendment) Act, 2009 w.e.f. 01.06.2009, much 
after the alleged commission of crime and the appellant is 
admittedly not accused of violation of Section 12A r/w Section 
E 24 of the SEBIAct. 
23. Mr. Ranjit Kumar, learned Solicitor General appearing 
on behalf of the respondent, on the other hand, submitted that 
Rose Valley Group of Companies floated as many as 27 
companies although two out of them, i.e.
Rose Valley Real 
F Estate Construction Ltd. ("Rose Valley'') and Rose Valley Hotels 
Entertainment Ltd. were the front runners to allure the investors 
to invest in (i)Ashirbad Scheme, (ii)Time Share Scheme, and 
(iii) Debenture Scheme, promising high returns to the investors 
and the funds so collected from the public at large were 
G subsequently laundered in associated companies. Rose 
Valley made a public issue of debentures without filing any 
offer document in violation of Section 56 of the Companies 
Act, 1956, nor did it file statement in lieu of prospectus as 
claimed by it. On the basis of the information/documents 
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GAUTAM KUNDU v. MANOJ KUMARASSISTANT 
513 
DIRECTOR [PINAKI CHANDRA GHOSE, J.] 
received from SEBI, the respondent filed a complaint in the A 
Court of Chief Metropolitan Magistrate at Calcutta for 
Scheduled Offence 1.1nder Section 24 of the SEBI Act. The 
respondent conducted searches of the premises of the Rose 
Valley Group on 22.05.2014 and 23.05.2014, resulting into 
seizure of incriminating documents and Indian currency of B 
Rs.37 .07 lacs. The respondent's action of search and seizure 
was challenged by the appellant by filing a writ petition before 
the High Court of Calcutta which was dismissed on 7.7.2014. 
24. He further submitted that the investigation conducted 
by the respondent revealed that Rose Valley illegally and C 
fraudulently collected public money from the general public in 
the State of West Bengal, Assam, Tripura and Odisha, 
amounting to Rs.12363.63 crores (approx). In addition to this, 
Rose Valley illegally and fraudulently collected public funds from 
the States of Karnataka, Bihar, Maharashtra, Jharkhand, Uttar D 
Pradesh, Delhi, Madhya Pradesh, amounting to more than 
Rs.3120.97 crores (approx). Therefore, the funds of Rs.12.82 
crores collected from the general public under the garb of 
Debenture Schemes is a tip of the iceberg. 
25. Mr. Ranjit Kumar, learned Solicitor General further E 
submitted that the "scheduled offences" and "offence of money 
laundering" are mutually exclusive and independent of each 
other. Section 3 of the PMLA
deals with the offence of money 
laundering punishable under Section 4 of the said Act, whereas 
F 
the 'Schedule' to PMLA involving offences under 28 
paragraphs enable the respondent to conduct the investigation 
for the collection of evidence relating to offence of money 
laundering. In the present CdSe, tt1e respondent filed the 
complaint under Section 45 of PMLA and cognizance of the G 
same has been taken by the Special Court on 02.04.2015 
under Section 44(1 )(b) of PMLA. He further submitted thatthe 
complaint filed by SEBI has nothing to do with the merits of the 
present case and the High Court stayed the proceedings of 
the SEBI cvmplaint on the ground that the CMM had no 
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[2015] 15 S.C.R. 
A 
authority to take cognizance of the offence as the latest 
amendment in Section 26 of SEBI Act makes the offence triable 
by the Court of Sessions. 
26. The learned Solicitor General submitted that Section 
45 of PMLA refers only to the term 'Special Court' and therefore 
B 
has to be given restricted meaning. According to him, PMLA 
is a 'Special Law' applicable to the subject of money 
laundering, and deals with economic offenders and white collar 
criminals. The object of PMLA is to prevent money-laundering 
and to provide for confiscation of property derived from, or 
C involved in, money-laundering. To enable the scheme of the 
Act, reliance was placed on various provisions of the PMLA. 
He further submitted that Section 44 of the PMLA only confers 
jurisdiction on the Special Court to deal with offences under 
the PMLA. Section 45 of PMLA makes the offence of money 
D laundering cognizable and non-bailable and also provides that 
notwithstanding the provisions of Criminal Procedure Code, 
1973, no person accused of an offence punishable for a term 
of imprisonment of more than three years under Part A of the 
Schedule shall be released on bail or on his own bond, unless 
E the Public Prosecutor has been given an opportunity1o oppose 
the application for such release. 
27. The learned Solicitor General lastly submitted that 
'money laundering' being an economic offence poses a 
F 
serious threat to the National Economy
and National Interest 
and committed with cool calculation and deliberate design with 
the motive of personal gain regardless of the consequences 
to the society. Hence, for Money Launderers 'jail is the rule 
and bail is an exception, which finds support from many 
G landmark judgments of this Court. 
H 
28. Before dealing with the application for bail on merit, 
it is to be considered whether the provisions of Section 45 of 
the PMLA are binding on the High Court while considering the 
application for bail under Section 439 of the Code of Criminal
GAUTAM KUNDU v. MANOJ KUMARASSISTANT 
515 
DIRECTOR [PINAKI CHANDRA GHOSE, J.] 
Procedure. There is no doubt that PMLA deals with the offence A 
of money laundering and the Parliament has enacted this law 
as per commitment of the country to the United Nations 
General Assembly. PMLAis a special statute enacted by the 
Parliament for dealing with money laundering. Section 5 of 
the Code of Criminal Procedure, 1973 clearly lays down that B 
the provisions of the Code of Criminal Procedure will not affect 
any special statute or any local law. in other words, the 
provisions of any special statute will prevail over the general 
provisions of the Code of Criminal Procedure in case of any 
conflict. 
C 
29. Section 45 of the PMLA starts with a non obstante 
clause which indicates that the provisions laid down in Section 
45 of the PMLA will have overriding effect on the general 
provisions of the Code of Criminal Procedure in case of conflict 
between them. Section 45 of the PMLA imposes following two D 
conditions for grant of bail to any person accused of an offence 
punishable for a term of imprisonment of more than three years 
under Part-A of the Schedule of the PMLA: (i) That the 
prosecutor must be given an opportunity to oppose the 
application for bail; and (ii) That the Court must be satisfied 
E 
that there are reasonable grounds for believing that the 
accused person is not guilty of such offence and that he is not 
likely to commit any offence while on bail. 
30.
The conditions specified under Section 45 of the 
F 
PMLA are mandatory and needs to be complied with which is 
further strengthened by the provisions of Section 65 and also 
Section 71 ofthe PMLA. Section 65 requires that the provisions 
of Cr.P.C. shall apply in so far as they are not inconsistent with 
the provisions of this Act and Section 71 provides that the 
G 
provisions of the PMLA shall have overriding effect 
notwithstanding anything inconsistent therewith contained in 
any other law for the time being in force. PMLA has an 
overriding effect and the provisions of Cr.P.C. would apply only 
if they are not inconsistent with the provisions of this Act. H
516 
SUPREME COURT REPORTS 
[2015] 15 S.C.R. 
A 
Therefore, the conditions enumerated in Section 45 of PMLA 
will have to be complied with even in respect of.an application 
for bail made under Section 439 of Cr.P.C. That coupled with 
the provisions of Section 24 provides that unless the contrary 
is proved, the Authority or the Court shall presume that 
B proceeds of crime are involved in money laundering and the 
burden to prove t~at the proceeds of crime are not involved, 
lies on the appellant. 
31. It was submitted on behalf of the appellant that Section 
12A read with Section 24 of the SEBI Act does not include 
C Section 24 of the said Act as a scheduled offence but it is only 
Section 12A which is to be construed as a scheduled offence 
as the description of offence against Section 24 of the SEBI 
Act mentioned under paragraph 11 of the Schedule to PMLA 
is part of Section 12A of the said Act. In this context it was 
D submitted by the learned Solicitor General that PMLA being a 
Special Statute cannot be given restricted meaning while 
interpreting its provisions including the Schedule which is an 
integral part of this Act. PMLA has been enacted by the 
Parliament as per commitment of the country to the United 
E Nations and having global dimensions and cannot be confined 
to national boundaries of our country. Moreover, its legislative 
intent has to be gathered from the plain reading of the language 
used in the provisions of the Act and the Schedule appended
thereunder. Hence, there is no ambiguity that Section 24 of 
F 
the SEBI Act is a scheduled offence under Paragraph 11 of 
the Schedule. The fact remains that Section 24 of the SEBI 
Act is inclusive in nature and also includes Section 12A within 
its ambit and scope. Further, on perusal of various offences 
listed in the Schedule in 28 Paragraphs, it could be seen that 
G only penal provisions of the Statutes have been incorporated 
in the Schedule. There is no denying the fact that Section 24 
of the SEBI Act is a penal provision of inclusive nature and 
thus it clearly reflects the legislative intent of a scheduled 
offence under PMLA. Admittedly, the complaint was filed by 
H
GAUTAM KUNDU v. MANOJ KU MAR ASSISTANT 
517 
DIRECTOR [PINAKI CHANDRA GHOSE, J.] 
SEBI against the appellant on the allegation of committing 
A 
offence punishable under Section 4 of PMLA. The complaint 
reveals that SEBI received a letter from the Ministry of 
Corporate Affairs, Office of the Registrar of Companies 
("ROC"), West Bengal, with reference to Rose Valley in which 
the ROC had.stated that Rose Valley has repeatedly issued 
B 
debentures in the years 2001-2002, 2004-2005, 2005-2006 
and 2007 -2008 to more than 49 persons in each financial year 
without filing offer documents with either the ROC or the SEBI 
and requested SEBI to investigate into the matter. From the 
information provided by ROC, it was observed that Rose Valley c 
had raised a total sum of Rs.1282.225 lakhs from 2585 persons 
by issuing secured debentures to the general public without 
complying with the norms related to IPO of securities as per 
first provision to Section 67(3) of the Companies Act, 1956. 
Rose Valley by making public issue of debentures during the o 
period between 2001-2002 to 2007-2008, without complying 
with the public issue norms, violated the provisions of erstwhile 
SEBI (Disclosure and Investor Protection) Guidelines, 2000 
and the provisions of Section 117(A) of the Companies Act, 
1956 and other provisions of SEBI Act which is a Scheduled 
E 
Offence under PMLA. 
32. We have heard the learned counsel for the parties. 
At this stage we refrained ourselves from deciding
the 
questions tried to be raised at this stage since it is nothing but 
a bail application. We cannot forget that this case is relating 
F 
to "Money Laundering" which we f~el is a serious threat to the 
national economy and national interest. We cannot brush aside 
the fact that the schemes have been prepared in a calculative 
manner with a deliberative design and motive of personal gain, 
regardless of the consequence to the members of the society. G 
33. With regard to the questions raised by Mr. Gopal 
Subramanium, learned senior counsel appearing on behalf of 
the appellant, at this stage, we do not think that we should 
H
518 
SUPREME COURT REPORTS 
[2015] 15 S.C.R. 
A 
answer or deal with the same in view of the fact that the matter 
is pending before a Division Bench of the High Court in writ 
jurisdiction, as has been pointed out before us. Hence, any 
observation or remarks made by us may cause prejudice to 
the case of both the sides. Therefore, we feel that it would be 
B 
proper for us only to deal with the matter concerning bail. We 
note that admittedly the complaint is filed against the appellant 
on the all~gations of committing the offence punishable under 
Section 4 of the PMLA. The contention raised on behalf of the 
appellant that no offence under Section 24 of the SEBI Act is 
c made out against the appellant, which is a scheduled offence 
under the PMLA, needs to be considered from the materials 
collected during the investigation by the respondents. There 
is no order as yet passed by a competent court of law, holding 
that no offence is made out against the appellant under Section 
D 24 of the SEBI Act and it would be noteworthy that a criminai 
revision praying for quashing the proceedings initiated against 
the appellant under Section 24 of SEBI Act is still pending for 
hearing before the High Court. We have noted that Section 45 
of the PMLA will have overriding effect on the general 
E 
provisions of the Code of Criminal Procedure in case of conflict 
between them. As mentioned earlier, Section 45 of the PMLA 
imposes two conditions for grant of bail, specified under
the 
said Act. We have not missed the proviso to Section 45 of the 
said Act which indicates that the legislature has carved out an 
F 
exception for grant of bail by a Special Court when any person 
is under the age of 16 years or is a woman or is a sick or 
infirm. Therefore, there is no doubt that the conditions laid down 
under Section 45A of the PMLA, would bind the High Court as 
the provisions of special law having overriding effect on the 
G provisions of Section 439 of the Code of Criminal Procedure 
for grant of bail to any person accused of committing offence 
punishable under Section 4 of the PMLA, even when the 
application for bail is considered under Section 439 of the 
Code of Criminal Procedure. 
H
GAUTAM KUNDU v. MANOJ KUMAR ASSISTANT 
519 
DIRECTOR [PINAKI CHANDRA GHOSE, J.] 
34. We have further noted the directions given by this A 
Court in Subrata Chattoraj v. Union of India and Ors., 
(2014) 8 sec 768, in particular to paragraph 35.4. 
35. We cannot brush aside the fact that the appellant 
floated as many as 27 companies to allure the investors to 
invest in their different companies on a promise of high returns 
B 
and funds were collected from the public at large which were 
subsequently laundered in associated companies of Rose 
Valley Group and were used for purchasing moveable and 
immoveable properties. 
c 
36. We do not intend to further state the other facts 
excepting the fact that admittedly the complaint was filed against 
the appellant on the allegation of committing offence punishable 
under Section 4 of the PMLA. The contention made on behalf 
of the appellant that no offence under Section 24 of the SEBI 0 
Act is made out against the appellant, which is a scheduled 
offence under the PMLA, needs to be considered from the 
material collected during the investigation and further to be 
considered by the competent court of law. We do not intend to 
express ourselves at this stage with regard to the same as it E 
may cause prejudice the case of the parties in other 
proceedings. We are sure that it is not expected at this stage 
that the guilt of the accused has to be established beyond 
reasonable doubt through evidences. We have noted that in 
Y.S.
Jagan Mohan Reddy v. Central Bureau of F 
Investigation, (2013) 7 SCC 439, this Court has observed 
that the economic offences having deep rooted conspiracies 
and involving huge loss of public funds need to be viewed 
seriously and considered as grave offences affecting the 
economy of the country as a whole and thereby posing serious 
threat to the financial health of country. In Union of India v. G 
Hassan Ali Khan, (2011) 1.0 SCC 235, this Court has laid 
down that what will be the burden of proof when attempt is 
made to project the proceeds of crime as untainted money. It 
is held in the said paragraph that allegations may not ultimately H
520 
SUPREME COURT REPORTS 
[2015] 15S.C.R. 
A 
be established, but having been made, the burden of proof 
that the monies were not the proceeds of crime and were not, 
therefore, tainted shifted on the accused persons under Section 
24 of the PML Act, 2002. The same proposition of law is 
reiterated and followed by the Orissa High Court in the 
B unreported decision of Smt. Janata Jha v. Assistant 
Director, Directorate of Enforcement (CRLMC No. 114 of 
2011 decided on December 16, 2013). Therefore, taking into 
account all these propositions of law, we feel that the 
application for bail of the appellant should be seen at this stage 
c while the appellant is involved in the economic offence, in 
general, and for the offence punishable under Section 4 of the 
PMLA, in particular. 
37. We have further noted that the High Court at the time 
of refusing the bail application, duly considered this fact and 
D further considered the statement of the Assistant General 
Manager of RBI, Kolkata, seizure list, statements of directors 
of Rose Valley, statements of officer bearers of Rose Valley, 
statements of debenture trustees of Rose Valley, statements 
of debenture holders of Rose Valley, statements of AGM of 
E Accounts of Rose Valley anEl statements of Regional Managers 
of Rose Valley for formation of opinion whether the appellant 
is involved in the offence of money laundering and on 
consideration of the said statements and other materials 
collected during the
investigation, the High Court specifically 
F stated as follows: 
G 
H 
"By making a pragmatic approach to the provision 
of Section 45(1) of the P.M.L. Act and on 
consideration of the antecedents of the petitioner 
in collection of money from open market for issuing 
secured debentures in violation of the guidelines 
of SEBI and on further consideration of the manner 
of keeping accounts of Rose Valley, I am unable to 
hold that the petitioner is not likely to commit any 
offence while on bail. As a result, I cannot persuade

GAUTAM KUNDU v. MANOJ KUMARASSISTANT 
521 
DIRECTOR [PINAKI CHANDRA GHOSE, J.] 
myself to grant bail to the petitioner at this stage. 
A 
So, prayer for bail is rejected. The application is 
dismissed." 
38. In these circumstances, we do not find that the High 
Court has exercised its discretion capriciously or arbitrarily in 
the facts and circumstances of this case. We further note that B 
the High Court has called for all the relevant papers and duly 
taken note of that and thereafter after satisfying its conscience, 
refused the bail. Therefore, we do not find that the High Court 
has committed any wrong in refusing bail in the given 
circumstances. Accordingly, we do not find any reason to C 
interfere with the impugned order so passed by the High Court 
and the bail, as prayed before us, challenging the said order 
is refused. Consequently the appeal is dismissed. 
Kalpana K. Tripathy 
Appeal dismissed.