This is one of the most significant recent judgements that have helped shape the evolving landscape of the law to prevent money laundering in India. Decided by the Allahabad High Court, it pertains to the alleged siphoning of funds, fraud and forgery from the National Rural Health Mission (NRHM) in the state of Uttar Pradesh.
M/s Jagran Solution was established in the year of 2005 as a unit of Jagran Prakashan Ltd (JPL). Jagran Solution’s business activities consisted of brand activation, meeting incentives conferences and events, retail etc. The applicant Govind Prakash Pandey joined Jagran solution in 2007 as a Senior Accounts Manager and was working as the business head of the Jagran solution. As per his official duties, the applicant undertook business development and client servicing for Jagran Solutions.
The Director General, Family Welfare, UP, published an advertisement seeking private bidders to operate Mobile Medical Units (MMUs) in selected districts of Uttar Pradesh for a period of three years. Jagran Solutions submitted a proposal for providing MMUs in all 15 districts as advertised in the request for proposal. The financial proposal submitted by Jagran Solutions quoted a composite price (Capital Expenditure plus Recurring Expenditure) of INR 1,36,97,098 as the cost per MMU. The financial proposals of Jagran Solutions were approved, and the Firm entered into four different agreements with the Director General of Family Welfare.
There was a complaint filed reporting certain discrepancies in the issue relating to the accounts of NRHM, the matter was referred to the Central Bureau of Investigation, which registered a preliminary enquiry on November 19, 2011. In relation to the preliminary enquiry the CBI registered an FIR on February 5, 2012 against M/s Jagran Solution under Section 420 of the Indian Penal Code,1860, Section 13(2) r/w Section 13(1)(d) of the Prevention of corruption Act, 1988. Subsequently on April 14, 2012 the Enforcement Directorate registered an Enforcement Case Information Report. In the given order on August 28, 2015 the court observed that the applicant had fully cooperated with the proceedings of the court and is not likely to tamper with the evidence. The court directed the applicant to deposit Rs.4,89,00,000, which was the alleged misappropriated amount.
The Directorate of Enforcement registered an ECIR on December 5, 2022 nearly after a decade from registering the initial ECIR. The Directorate of Enforcement on December 5, 2022 filed a prosecution complaint under Section 44 r/w Section 45 of the Prevention of Money Laundering Act, 2002 against Govind Prakash Pandey and Jagran Prakashan Limited. The judge took note of the prosecution’s complaint on December 17, 2022 and subsequently issued summons to the applicant for appearance before the Court.
Issue: Was the arrest of the Applicant Govind Prakash Pandey by the Enforcement Directorate and the subsequent rejection of his ad interim and regular bail application unwarranted even after his compliance with the investigation?
Contentions
Learned Senior Advocate Jaideep Narain Mathur submitted that the applicant has been in judicial custody since January 10, 2023 which has been admitted in the counter affidavit. Senior Advocate JN Mathur also submitted that despite the summons not being served, the accused was aware of the dates and appeared in the court on the said date and was taken in the custody on the same date (10.01.23).
According to Senior Advocate JN Mathur, the court granted bail to the applicant in the main case stating the applicant has never disobeyed the law and has taken part in the investigation dutifully. The direction states that the applicant deposited a sum of Rs.4.89 Crore in 2015. The petitioner had cooperated with the Enforcement Directorate’s investigation. He has been invited twice to record his statement under Section 50 of the PMLA and he has done so. The arrest of the applicant for Section 19 of the PMLA was not done by the ED because they were of the opinion that arresting him during investigation was unfit as he was cooperative. The applicant was summoned by the learned trial court without any complaint or any document related to the complaint being furnished to him by the investigation agency.
Subsequently while denying bail to the accused the court was of the opinion that due to the twin condition under section 45 of the Prevention of Money Laundering Act not being met the accused could be enlarged on bail at this stage. The learned senior advocate submitted that the applicant has agreed to participate fully in legal processes and to strictly adhere to the terms and conditions of any order granting him bail without using privileges given by any bail order he may receive or failing, hence Section 45 of the PMLA should not be applied.
Judgement
The Allahabad High Court observed that once the accused fully co-operated in the investigation and voluntarily appeared before the trial court in response to the summons, there was no need for the agency to arrest him. Court said that the bail applications of such accused on appearance may be heard without the accused being taken in physical custody or by granting them interim bail till the application is decided. Court referred to the decisions of the Supreme Court in the cases of Aman Preet Singh vs Central Bureau of Investigation and Satender Kumar Antil vs CBI wherein the Apex court stated that it is unnecessary that every person should be arrested in each situation, but the relevant facts and circumstances should be considered before interfering with an accused person’s freedom.
In the current scenario, it was not necessary to arrest the respondent upon his appearance in court pursuant to the summons since he has never disobeyed the law, he was compliant with the investigation, and despite the fact that he has presented himself twice before the ED for recording a statement the investigation agency has not considered arresting him under Section 19 of the PMLA.
Despite the summons issued under Section 50 of the PMLA, there was no request of the ED before the learned trial court to the effect that arrest of the present applicant is warranted.
Therefore, Court noted that it is evident that such custody of the accused in the present case was taken without following the precedents clearly set out by the Supreme Court in the above cases. Hence, the bail application was allowed.
Authors: Aditya Ojha & Archie Kaushal