Read Judgement: BIMAL KUMAR JAIN and NARESH JAIN vs. DIRECTORATE OF ENFORCEMENT

LE Staff

New Delhi, August 17, 2021: The Delhi High Court has ruled that simply because the complainant and investigating officer are same, the trial is not vitiated and the accused is not entitled to acquittal under the Prevention of Money Laundering Act (PMLA)

While refusing to grant bail to the petitioners, a Single Bench of Justice Yogesh Khanna observed that presumption lies in favour of constitutionality of amended section 45(1) of PMLA as it has not been struck down. 

The High Court cited the decision of the Supreme Court Constitution bench in Mukesh Singh vs. State (NCT) of Delhi [2020 (10) SCC 120]:

In a case where the informant himself is the investigator, by that itself cannot be said that the investigation is vitiated on the ground of bias or the like factor. The question of bias or prejudice would depend upon the facts and circumstances of each case. Therefore, merely because the informant is the investigator, by that itself the investigation would not suffer the vice of unfairness or bias and therefore on the sole ground that informant is the investigator, the accused is not entitled to acquittal. The matter has to be decided on a case-to-case basis,” the Apex Court had said in the above mentioned judgement, the HC noted.

Going by the background of the case, the Respondent had commenced enquiry under FEMA, 2019 and searches were carried out at various places against both Petitioners. Subsequently, the Enforcement Directorate (ED) registered FIR with the Economic Offences Wing (EOW) Cell for Scheduled Offences under PMLA. 

Eventually, both Petitioners were arrested and they filed applications for bail, contending that while being arrested, procedure u/s 19 PMLA was not followed. 

As per the petitioners, ED could not be both complainant and Investigating Officer at same time and effect of declaration of twin conditions u/s 45 of PMLA had been declared unconstitutional and ultra vires. 

The High Court after going through the records, opined that as arrest of accused Bimal Jain was in execution of non-bailable warrants (NBWs), provision u/s 19 of PMLA could not be adhered to. 

The fact that the complaint was filed by ED arraying Petitioner Bimal Jain as accused No. 2 prima facie showed there were reasons to believe the person was guilty of offence punishable under PMLA, as complaint was filed only against a person presumed to be guilty, added the Court. 

Justice Khanna made it clear that merely because informant himself was investigator, investigation could not be held as vitiated on the ground of bias or unfairness, and perhaps, the accused cannot claim entitlement to acquittal simply on this ground. 

Justice Khanna found that after declaration of Sec 45 of PMLA as unconstitutional and violative of Articles 14 & 21 of the Constitution by the Supreme Court, the Legislature cured the defects and made amendment to sec. 45(1). 

Merely because the entire section was not re-enacted would be of no consequence as the provision even after being declared unconstitutional, did not get repealed or wiped out from the statute book but only became unenforceable. Hence, once Parliament stepped in and cured the defect pointed out by a Constitutional Court, the defect appeared to be cured and presumption of constitutionality must apply to such provision, added Justice Khanna. 

Lastly, the Court noted that as per gathered evidence, Petitioner Bimal Jain was found in possession of proceeds of crime up to Rs. 35,78,53,638/- and Petitioner Naresh Jain had done Hawala operation of Rs. 11,800 Crores in 104 foreign entities. 

Therefore, opining that both Petitioners were involved in various criminal cases in India and abroad and that there was an apprehension that they would flee from the country to evade trial in case they were enlarged on bail, the High Court dismissed the petition and denied enlargement on bail. 

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