Karnataka High Court grants bail to Madhukar G Angur in ₹107 crore money laundering case

The Karnataka High Court recently granted bail to Madhukar G Angur, the ex Chancellor of Alliance University in a money laundering case of ₹107 crore [Dr. Madhukar G Angur v. Enforcement of Directorate]..Angus, who stands accused of duping students and their parents into depositing money as fees into illegal bank account, was granted bail by single-judge Justice V Srishananda. "On perusal of the materials on record, since the Directorate of Enforcement has already seized necessary documents and also taken control over the assets of the petitioner, apprehension of the prosecution that release of the accused may result in continuation of the money laundering, in the considered opinion of this court is not available in the case on hand. Therefore, this court is of the considered opinion that the petitioner has made out a case for grant of bail.".The High Court also determined the question of law that a provisional attachment order, or initiating proceedings before the Adjudicating Authority under the Prevention of Money Laundering Act (PMLA) does not mean that the investigation by the Enforcement Directorate (ED) has been completed. Furthermore, it was held that a PMLA accused is not entitled to grant of bail under Section 439 (special powers of High Court or Court of Session regarding bail) of the Code of Criminal Procedure (CrPC) as Section 45 (offences to be cognizable and non-bailable) of PMLA limits the application of the provisions of the CrPC, and the twin conditions of bail under Section 45 of PMLA will apply in such cases. .In this case, the ED had alleged that Angur siphoned approximately ₹107 crores by sending emails to students and parents to directing them to deposit tuition fees in illegally opened bank accounts. Even after he had been dismissed from the post of Chancellor, he continued to collect money from students and thereby engaged in money laundering.In 2016 and 2017, a number of first information reports (FIRs) were lodged against the petitioner and he was charged under the provisions of the PMLA.The ED issued a provisional attachment under Section 5(1) (attachment of property involved in money-laundering) of PMLA, and a complaint was filed. While the matter was before the adjudicating authority, the petitioner filed an explanation under Section 8 (adjudication) of PMLA.The petitioner was arrested on January 7, 2022 under Section 19 (power to arrest) of PMLA, produced before the Special Court and remanded to judicial custody. He sought bail, which was denied by the Special Court, after which he approached the High Court seeking bail..The Court noted that there is no time limit for filing a complaint or a final report under Section 45 (offences to be cognizable and non-bailable) of PMLA. However, a person cannot be arrested and kept in custody eternally on the pretext of there being no time limit under the Act. Further, Section 167 (procedure when investigation cannot be completed in twenty-four hours) of the Code of Criminal Procedure (CrPC) provides that if the investigating agency fails to file a final report within 60 days or 90 days, depending on the maximum punishment in the penal statute, the person has the right to be released immediately. The cap of 60 days is applicable in respect of an arrest under the PMLA, the Court held, observing that the maximum punishment is seven years and the minimum is three years: "Therefore, even though there is no specific time limit prescribed under the Act for filing complaint/final report as contemplated under Section 45 of the Act, whenever a person is arrested by the Directorate of Enforcement under the provisions by resorting to the powers vested in it under Section 19 of the Act, the Directorate of Enforcement is expected to file a complaint/final report within 60 days from the date of arrest. In the event of failure to do so, indefeasible right is definitely to accrue to an accused under the Act.".An investigation was carried out, based on which the ED passed an order under Section 5(1) of PMLA provisionally attaching the assets of the petitioner. It was argued on behalf of the petitioner that this provisional attachment indicated that investigation had been completed. .The Court noted that according to the scheme of PMLA and the investigation powers of the ED, provisional attachment cannot be termed as completion of investigation. Further, since the final report had been filed by the ED within a period of 60 days, he would not be entitled to statutory bail."... the attachment of the property and its confirmation though is part of the same investigation, it is not for the purpose of filing a complaint under Section 45 of the Act and it is for the purpose of attachment of the property. Therefore, for all practical purposes, the investigation would not be complete so as to make available a right to the petitioner for statutory bail under Section 167(2) of CrPC.".The Court then considered whether the petitioner was entitled to bail under Section 439 of the CrPC. The application of CrPC is limited as Section 45 of PMLA has a non obstante clause, the court noted, and deals with grant of bail only to a person under the age of sixteen years, a woman, someone who is sick or infirm, or a person accused of money-laundering a sum of less than one crore rupees. .Further, Section 45(1) of PMLA provides that before a court grants bail to an accused person an opportunity must be provided to the prosecutor to oppose the application, and the court must be satisfied that there are reasonable grounds to believe that the accused did not commit the offence and is not likely to commit it while on bail. "The language employed in Section 45(1) of the Act is in the form of twin conditions akin to the language employed by the legislature under Section 37 of the NDPS Act." The court also said the special powers vested in this court under Section 439 CrPC cannot be exercised in the case of an accused facing trial under the provisions of the said Act, like any other accused who has been charged under the provisions of the IPC. "Having regard to the language employed in Section 45(2), there is an embargo on the powers of this court to exercise the special powers vested in this court under Section 439 CrPC," the High Court opined. .The Court further said that the wordings used in Section 45 of the PMLA is in the form of casting a reversed burden on the accused. "In the light of legal principles enunciated in the judgements.... and taking note of the fact that the Directorate of Enforcement has already collected necessary materials to form an opinion that the petitioner is prima facie guilty of the offences alleged against him, is only for the purpose of effecting the arrest under Section 19 of the Act," the court further noted. Pertinently, the Court held that once an accused is granted bail by a Judicial Magistrate or Sessions Court with respect to predicate offences, he is ipso fact entitle to bail for offences under PMLA. In the present case, the accused had been enlarged on bail with respect to predicate offences..The Court thus allowed the petition and granted bail to Angur, on a personal bond of ₹10 lakh with two sureties, and directions to mark his attendance before the ED once a month, to appear before the Special Court on all hearings, and to not tamper with prosecution witnesses or leave the jurisdiction of Bengaluru district without prior permission. .Senior Advocate Kiran S Javali, with Advocates Ashima Mandla, Mandakini Singh, Shivaji M represented the petitioner, Advocate Prasanna Kumar represented the ED and Advocate Shyam Sundar appeared for the complainant. .[Read Order]