Unequivocally accepting the submission made by the Directorate of Enforcement (ED), a Division Bench of the Supreme Court of Justices Sanjiv Khanna and SVN Bhatti rejected the bail application filed by Delhi Deputy Chief Minister Manish Sisodia in a case pertaining to the Prevention of Money Laundering Act (PMLA).
The Court denied bail to Sisodia on the finding that ₹338 crore earned by wholesale distributors against the excess 7% commission/fee within a span of 10 months is a ‘proceed of crime’ under Section 3 of PMLA and an offence of bribery to a public servant under Section 7 of the Prevention of Corruption Act.
Court failed to apply Mohan Lal’s test
While hearing the bail plea, the Court put several important legal questions to the ED in order to establish the real/active connection of Sisodia with the proceeds of crime. Justice Khanna had asked the ED whether there was any proof or indication to actively connect Sisodia. Moreover, the Court noted that a policy may be changed to generate money following pressure from a particular lobby, but provisions of the PMLA would be attracted only after the proceeds of a crime - in this case bribery - were given or paid.
However, in the judgment, the Court did not address any possibility of whether the ₹338 crore in question was paid to Sisodia as a bribe or if he is in possession (actual or constructive) of such amount. It denied him bail on the basis that the transfer of ₹338 crore was tentatively established.
Additionally, during the oral hearings, the Court remarked that generation of money does not make an offence under Section 3 of PMLA, and it needs to be shown that Sisodia is involved in a process or activity actually connected with the proceeds of crime. Interestingly, the Court in para 13 of the judgment doubted the correctness of the contention raised by the ED that the “generation” of proceeds of crime or “use” of the proceeds of crime itself amounts to possession of proceeds of crime, as the position is still unclear and not free from doubt in light of the Vijay Madanlal Choudhary case. Further, the Court noted that the ED's contention that ‘generation’ amounts to possession and the expression ‘possession’ includes constructive possession, for which reliance is placed upon Mohan Lal v. State of Rajasthan, is not assured.
It is worthwhile to mention that in para 15 of the judgment, the Court, while explaining the expression “possession” in light of Mohal Lal, observed that the stand of the ED as to the constructive possession will be satisfied only if the dominion and control criteria is satisfied. Strikingly, the Court, while applying Mohal Lal’s test of possession, recognised that there is a lack of clarity on the involvement of Sisodia in the transfer of ₹45 crore to the Aam Aadmi Party (AAP) for the Goa Elections, but failed to apply the same test with respect to power and dominion of Sisodia over ₹338 crore earned by wholesale distributors.
Moreover, as noted by the Court in para 13, generation of money itself can’t be termed as proceeds of crime. In this light, how was generation of ₹338 crore termed as proceeds of crime? The position is still unclear as per Vijay Madanlal Choudhary.
Indefinite incarceration impinges upon personal liberty
In para 26 of the judgment, the Court showed concerns over the long incarceration suffered by Sisodia. While making a reference to P Chidambaram v. Directorate of Enforcement, it noted that even if the offence committed is a grave economic offence, bail need not be denied. Moreover, in Vijay Madanlal, the Court had held that arrest infringes the fundamental right of the accused to speedy trial, which is considered as a facet of the right to life under Article 21 of the Constitution. After carefully reading the judgment, it can be reasonably ascertained that the aforesaid observations rendered by the Court are apparently contradictory to its decision to deny bail to Sisodia.
The Court has accepted that it is concerned about the prolonged incarceration of Sisodia since February 2023. The trial has not begun, there is no direct and real evidence produced by the ED to show the real/active connection of Sisodia to the proceeds of crime, and there is no evidence showing the involvement of Sisodia, except the statement made by the approver Dinesh Arora, which is generally considered a weak piece of evidence as per Ravinder Singh v. State of Haryana. In light of all this, what made the Supreme Court deny bail to Sisodia?
Conclusion
It is a settled position of law that while hearing a bail plea, a court shall not enter into a mini-trial, and it is incumbent upon the court to carefully examine the material evidence, if any, placed on record by the prosecution. It can be reasonably concluded that the Court itself seemed to be in a confused state of mind. While during a hearing, it lambasted the ED for failing to produce any proof showing the involvement of Sisodia in the possession of the alleged proceeds of crime, but suddenly it appears in the judgment that the transfer of ₹338 crore was tentatively established. This is perhaps further negated by the Court in para 13, where it noted that it is unclear whether generation of ‘proceeds of crime’ itself amounts to possession or not.
Yash Mittal is a lawyer, writer and academician. He can be reached at mittalyash401@gmail.com.
Disclaimer: The views and opinions expressed in this article are those of the author's and do not necessarily reflect the views of Bar & Bench.