We have noted that 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. 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 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 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.
Print Page
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1706 OF 2015
(Arising out of SLP(Crl.) No.6701 of 2015)
GAUTAM KUNDU … APPELLANT(S)
:VERSUS:
MANOJ KUMAR,
Citation;2016 CRLJ 666
Dated;December 16, 2015.
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
Court has rejected appellant's application for bail under
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 thePage 2
2
Prevention of Money Laundering Act, 2002, (hereinafter
referred to as "PMLA").
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
'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
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
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 lakhsPage 3
3
by the Securities Appellate Tribunal, Mumbai. A letter was
issued on 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 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.
5. On the basis of the aforementioned letter dated
26.06.2013 issued by SEBI, the respondent filed a report
being ECIR No.KIZO/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,
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 ValleyPage 4
4
transferred the money raised by issue of debentures from the
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
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
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. 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 thePage 5
5
High Court. 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 directed the Adjudicating Authority
to decide the preliminary 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 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
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 onPage 6
6
suspicion of having committed an offence punishable under
the provisions of the PMLA and is detained 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
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
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
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 mentionPage 7
7
here that 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
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
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
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 thePage 8
8
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,
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
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
scheduled offence. The relevant extract of the Schedule to thePage 9
9
PMLA, as it stood after the 2009 Amendment, is as follows:
Paragraph 8 - The Securities and Exchange Board of India
Act, 1992 (15 of 1992)
12A read with
Section 24
Prohibition of manipulative and
deceptive devices, insider trading
and substantial acquisition of
securities or control
The relevant extract of the Schedule to the PMLA as it stands
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 (15 of 1992)
12A read with
Section 24
Prohibition of manipulative and
deceptive devices, insider trading
and substantial.
Section 24 Acquisition of securities or control
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
the Schedule would show that the same is in substance aPage 10
10
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.
Section 12A of the SEBI Act is as follows:
"Prohibition of manipulative and deceptive devices,
insider trading and substantial acquisition of securities or
control.
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
connection 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 or 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 whosePage 11
11
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, 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."
16. According to the learned senior counsel for the appellant,
the fact that no new offence was meant to be added by way 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
learned senior counsel for the appellant that the respondent is
wrongly reading Section 24 of SEBI Act simplicitor as aPage 12
12
separate scheduled offence, whereas Section 24 is a general
penal provision for violation of any and every provisions of the
SEBI Act or any rules 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,
in that event, there would have been no necessity to
incorporate "12A read with Section 24" inasmuch as Section
24 of the 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
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.
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 aPage 13
13
scheduled offence and not Section 24 alone. Similarly, the
Schedule to PMLA on the website of the Ministry of
Finance-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 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 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
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 thePage 14
14
description have to be given meaning to and its application
has to be restricted to the offence described under it in the
Schedule. 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 they can have a proper application in
circumstances 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 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)].Page 15
15
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
""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 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 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.' ItPage 16
16
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 suffer
from arbitrariness. [Ref: (i) S t a t e o f M ad h y a
P r ad e s h v . B a l d e o P r a s a d , ( 1 9 6 1 ) 1 SC R 970 ;
( ii ) H a r a k c h a n d R a t a n c h a n d Banthia & Ors. v.
Union of India & Ors., (1969) 2 SCC 166; and (iii)
A.K. Roy & Ors. v. Union of India & Ors., (1982)
SCR 272].
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 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, inPage 17
17
order for the offence of money laundering to 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 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 24
of the SEBI Act.
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 Estate
Construction Ltd. ("Rose Valley") and Rose Valley HotelsPage 18
18
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
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 received
from SEBI, the respondent filed a complaint in the
Court of Chief Metropolitan Magistrate at Calcutta for
Scheduled Offence under 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 Rs.37.07 lacs. The
respondent's action of search and seizure was
challenged by the appellant by filing a writ petitionPage 19
19
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 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 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 submitted that the "scheduled offences" and
"offence of money laundering" are mutually exclusivePage 20
20
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
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 case, the
respondent filed the complaint under Section 45 of
PMLA and cognizance of the same has been taken
by the Special Court on 02.04.2015 under Section
44(1)(b) of PMLA. He further submitted that the
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 complaint on the
ground that the CMM had no 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 'SpecialPage 21
21
Court' and therefore 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 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 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, unlessPage 22
22
the Public Prosecutor has been given an opportunity
to oppose the application for such release.
27. The learned Solicitor General lastly submitted
that 'money laundering' being an economic offence
poses a 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 landmark
judgments of this Court.
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 Procedure.
There is no doubt that PMLA deals with the offence
of money laundering and the Parliament has enacted
this law as per commitment of the country to thePage 23
23
United Nations General 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 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.
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
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 applicationPage 24
24
for bail; and (ii) That the Court must be satisfied
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
PMLA are mandatory and needs to be complied
with which is further strengthened by the
provisions of Section 65 and also Section 71 of the
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 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.
Therefore, the conditions enumerated in Section 45 of
PMLA will have to be complied with even in respect ofPage 25
25
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 proceeds of
crime are involved in money laundering and the
burden to prove that the proceeds of crime are not
involved, lies on the appellant.
1 31 . It was submitted on behalf of the appellant
that Section 12A read with Section 24 of the SEBI
Act does not include 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 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 hasPage 26
26
been enacted by the Parliament as per commitment
of the country to the United 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 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 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.Page 27
27
Admittedly, the complaint was filed by SEBI
against the appellant on the allegation of
committing 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 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 r e q u e s t e d S E B I t o i n v e s t i g a t e i n t o
t h e m a t t e r . F r o m t h e information provided by
ROC, it was observed that Rose Valley had raised a
total sum of Rs.1282.225 lakhs from 2585
persons by i s s u i n g s ec u r e d de b e n t u r e s t o t h e
g e n e r a l p ub l i c w i t h o u t complying with the
norms related to IPO of securities as per first
provision to Section 67(3) of the Companies Act,Page 28
28
1956. Rose Valley by making public issue of
debentures during the 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 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 to “Money Laundering” which we
feel 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. Page 29
29
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 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
proper for us only to deal with the matter concerning
bail. We note that admittedly the complaint is filed
against the appellant on the allegations 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 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 isPage 30
30
made out against the appellant under Section 24 of the
SEBI Act and it would be noteworthy that a criminal
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 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 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 provisions of Section 439 of the Code of Criminal
Procedure for grant of bail to any person accused ofPage 31
31
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.
34. We have further noted the directions given by this Court
in Subrata Chattoraj v. Union of India and Ors., (2014) 8
SCC 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 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.
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
Act is made out against the appellant, which is a scheduledPage 32
32
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
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
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.
Hassan Ali Khan, (2011) 10 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 be established, but having been made, the burdenPage 33
33
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 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 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
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
Accounts of Rose Valley and statements of Regional ManagersPage 34
34
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
stated as follows:
“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
myself to grant bail to the petitioner at this stage.
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
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 toPage 35
35
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.
………………………………J
(Pinaki Chandra Ghose)
………………………………J
(R.K. Agrawal)
New Delhi;
December 16, 2015.
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