Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 534 OF 2023
(@SLP (Crl) No. 8260/2021)
The Directorate of Enforcement …Appellant(s)
Versus
M. Gopal Reddy & Anr. …Respondent(s)
J U D G M E N T
M.R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned
judgment and order dated 02.03.2021 passed by the High
Court of Telangana at Hyderabad in Criminal Petition No.
1148/2021, by which, the High Court has allowed the said
bail application and has granted the anticipatory bail in
favour of respondent No. 1 herein and has directed to
release him on bail in the event of his arrest in connection
with F. No. ECIR/HYZO/36/2020 dated 15.12.2020 on the
Signature Not Verified
Digitally signed by R
Natarajan
Date: 2023.02.28
14:12:46 IST
Reason:
file of the Assistant Director, Enforcement Directorate
(hereinafter referred to as the ED), Government of India,
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Hyderabad, which was registered for the offence of money
laundering under Section 3 of the Prevention of Money
Laundering Act, 2002 (hereinafter referred to as the Act,
2002) and punishable under Section 4 of the said Act, the
Directorate of Enforcement has preferred the present
appeal.
2. A FIR was registered by Economic Offences Wing (EOW),
Bhopal vide FIR No. 12/2019 dated 10.04.2019 wherein 20
persons/companies were named as suspected in the said
scam. M/s Max Mantena Micro JV, Hyderabad was one
among them.
2.1 As per the FIR, the Government of Madhya Pradesh e
Procurement Portal was being run by MPSEDC. M/s
Antares Systems Limited, Bangalore and M/s Tata
Consultancy Services (TCS) were given the contract for the
period of 5 years for the maintenance & operation of the
said portal. Some of the officials of MPSEDC in collusion
with the companies entrusted with maintenance and
testing of the portals namely M/s Osmo IT Solutions and
M/s Antares Systems Ltd, illegally accessed the eTender
2
portal and rigged the bidding process to suit a few private
bidders for huge amounts of bribe considerations.
2.2 As per the investigating agency, the preliminary
investigation by the Police established that various e
tenders were illegally accessed and bids of a few
companies were manipulated to illegally make the bids of
those concerns as the lowest one.
2.3 Apart from tenders mentioned in the first preliminary
charge sheet filed by the EOW Bhopal namely No. 91, 93,
94 (Water Resource Dept); 2 tenders vide Nos. 49985 &
49982 of PWD; Tender no 49813, Tender No. 786 of
MPRDC; and Tenders vide Nos. 10030 & 10044, it was
suspected that many other tenders have also been
tampered using the same modus operandi. M/s Mantena
Group of Companies, Hyderabad, was suspected to be a
major beneficiary of this etender scam. As per the EOW
charge sheet, a joint venture of the Mantena Group known
as M/s Max Mantena Micro JV is the direct beneficiary of a
tampered etender No. 10030 worth Rs. 1020 Crore.
2.4 According to the investigating agency, the investigation
into the said FIR for the offences under Sections 120B,
3
420, 471 IPC and Section 7 r/w Section 13(2) of Prevention
of Corruption (PC) Act is going on and the said offences are
scheduled offences under the Act, 2002. The ED has
initiated money laundering investigation in File No.
ECIR/HYZO/36/2020.
2.5 According to the ED, in order to gather evidence, a search
operation was conducted under the provisions of Section
17(1) of PMLA, 2002. Accordingly, 18 premises were
searched including the residences of the promoters and
offices of M/s Mantena Constructions Ltd, M/s Anteras
Pvt Ltd, M/s Osmo IT Solutions Pvt Ltd, M/s Arni Infra,
etc. a good amount of incriminating documents and digital
devices have been seized and are being examined for
evidence. It is clear from the ED investigation done so far
that a systematic conspiracy has been planned and
executed by a number of infrastructure companies based
at Hyderabad in collusion with a few Government officials
and IT management companies to illegally win etenders.
Further large amounts of bribes running into crore(s) of
rupees have exchanged hands using hawala channels. The
public funds meant for development activities have been
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diverted and siphoned off for personal illegal enrichment
and for making illegal bribe payments. The appellant
department has recovered fund trail evidence and
generation of black money through bogus and overbilling
by the infra companies.
2.6 That respondent No. 1 herein who at the relevant time was
the Additional Chief Secretary in the Water Resources
Department in the State of Madhya Pradesh, was
summoned by the ED to explain the sudden spurt in the
allocation of tenders to M/s Mantena Construction during
his stint in the State of MP.
2.7 That apprehending his arrest in connection with ED case
for the scheduled offence under the Act, 2002, respondent
No. 1 herein approached the High Court by way of present
anticipatory bail application under Section 438 Cr.PC.
Without considering the rigour/bar under Section 45 of
the Act, 2002 and observing that as per the decision of this
Court in the case of Nikesh Tarachand Shah Vs. Unoin of
, the provisions of
India and Anr.; (2018) 11 SCC 1
Section 45 of the Act, 2002 do not apply to Section 438
Cr.PC proceedings, the High Court has allowed the
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anticipatory bail application and has directed that in case
of his arrest in connection with ED case he be released on
bail.
2.8 Feeling aggrieved and dissatisfied with the impugned
judgment and order passed by the High Court granting
anticipatory bail to respondent No. 1 in ED case, the
Directorate of Enforcement (ED) has preferred the present
appeal.
3. Shri K. M. Nataraj, learned ASG, appearing on behalf of the
ED – appellant has vehemently submitted that in the facts
and circumstances of the case, the High Court has
committed a very serious error in allowing the anticipatory
bail application and granting anticipatory bail to
respondent No. 1 in connection with ED case under the
Act, 2002.
3.1 It is submitted that as such the High Court has materially
erred in observing that the provisions of Section 45 of the
Act, 2002 shall not be applicable to Section 438 Cr.PC
proceedings. It is submitted that for that the High Court
has erred in relying upon the decision of this Court in the
case of Nikesh Tarachand Shah (supra) . It is submitted
6
that subsequently in the case of The Asst. Director
Enforcement Directorate Vs. Dr. V.C. Mohan (2022 SCC
this
OnLine SC 452) (Criminal Appeal No. 21/2022),
Court has clarified that it is the wrong reading of the
decision in the case of Nikesh Tarachand Shah (supra)
that the provisions of Section 45 of the Act, 2002 shall not
be applicable to the anticipatory bail proceedings. It is
submitted that in the case of Dr. V.C. Mohan (supra) it is
specifically observed and held by this Court that Section
45 of the Act, 2002 shall be applicable with respect to the
offences under the Act, 2002 and the rigour of Section 45
of the Act, 2002 shall get triggered – although the
application is under Section 438 of Cr.PC. It is submitted
that therefore, the impugned judgment and order passed
by the High Court is just contrary to the decision of this
Court in the case of Dr. V.C. Mohan (supra) .
3.2 It is further submitted by Shri K.M. Nataraj, learned ASG
appearing on behalf of the ED that even otherwise while
granting the anticipatory bail the High Court has not
properly appreciated and/or considered the seriousness of
7
the offences which are scheduled offences under the Act,
2002. It is submitted that the High Court has considered
the anticipatory bail application, as if, the High Court was
dealing with the prayer for anticipatory bail in connection
with the ordinary offences under IPC.
3.3 It is further vehemently submitted by learned ASG that
during investigation, the ED investigation has established
that there is a nexus between Srinivas Raju Mantena and
respondent No. 1 herein and the same needs to be
investigated in detail.
3.4 It is submitted that the ED had gathered material which
indicates nexus between respondent No. 1 and Srinivas
Raju Mantena, who is found to have committed the
offences of money laundering. It is submitted that
respondent No. 1 was summoned by ED but instead of
appearing before the IO, he filed a criminal petition before
the High Court and obtained the interim relief. It is
submitted that he appeared before the ED and his
statement was recorded under Section 50 of the Act, 2002.
It is submitted that however on both the occasions he was
8
totally evasive and noncooperative and therefore, his
custodial interrogation is required.
3.5 It is further submitted by learned ASG that during the
investigation the ED has found that respondent No. 1 had
availed and enjoyed free trips in last one year alone on the
luxury plane of Mantena on multiple occasions. It is
submitted that during investigation it has been found that
respondent No. 1 had also availed other patronages from
Srinivas Raju Mantena like sponsoring foreign exchange
through Hawala Channels for his son.
3.6 It is submitted that while granting anticipatory bail to
respondent No. 1 the High Court has not considered the
nature of allegations and seriousness of offences alleged
against respondent No. 1 who at the relevant time was
working as an Additional Chief Secretary.
3.7 Making the above submissions and relying upon above
decision as well as the decision of this Court in the case of
P. Chidambaram Vs. Directorate of Enforcement;
as well as the decision in the case of
(2019) 9 SCC 24 Y.S.
Jagan Mohan Reddy Vs. CBI; (2013) 7 SCC 439 , it is
9
prayed to allow the present appeal and quash and set
aside the impugned judgment and order passed by the
High Court.
4. Present appeal is vehemently opposed by Shri Vijay
Agarwal, learned counsel appearing on behalf of
respondent No. 1 herein.
4.1 It is vehemently submitted by learned counsel appearing
on behalf of respondent No. 1 that in the facts and
circumstances of the case the High Court has not
committed any error in granting anticipatory bail to
respondent No. 1.
4.2 It is vehemently submitted that in the present case so far
as the main FIR is concerned, the other accused have been
acquitted/discharged. It is submitted that as held by this
Court in the catena of decision that if the person is finally
discharged/acquitted of the scheduled offence or the
criminal case against him is quashed by the Court of
competent jurisdiction, there can be no offence of money
laundering against him or any one claiming such property
being the property linked to stated scheduled offence
through him.
10
4.3 It is further submitted that in the present case even
respondent No. 1 was not named in the FIR for the
scheduled offence(s).
4.4 It is further submitted that the offence under the Act, 2002
is dependent on predicate offence which would be ordinary
law including the provisions of the IPC. It submitted that
therefore, as other accused persons have been
acquitted/discharged for the predicate offence/schedule
offence there is no question of any offence by respondent
No. 1 under the Act, 2002/money laundering.
4.5 It is further submitted by learned counsel appearing on
behalf of respondent No. 1 that while granting the
anticipatory bail the High Court has followed the decision
of this Court in the case of Nikesh Tarachand Shah
, the law which was prevalent at the relevant time.
(supra)
4.6 It is submitted that the prospective overruling of the said
decision by this Court in the case of Dr. V.C. Mohan
(supra) therefore, cannot be pressed into service while
challenging the impugned judgment and order passed by
11
the High Court granting anticipatory bail relying upon the
decision/law prevalent at the relevant time.
4.7 It is further submitted by learned counsel appearing on
behalf of respondent No. 1 that in the present case cogent
reasons have been given by the High Court while granting
anticipatory bail to respondent No. 1 and considering the
fact that respondent No. 1 has cooperated in the
investigation and appeared twice earlier before the IO/ED,
the impugned judgment and order passed by the High
Court granting anticipatory bail may not be interfered with
by this Court.
5. We have heard learned counsel appearing on behalf of the
respective parties at length. At the outset, it is required to
be noted that respondent No. 1 is apprehending his arrest
in connection with the complaint/case by the ED for the
offence of money laundering under Section 3 of the
Prevention of Money Laundering Act, 2002 and punishable
under Section 4 of the said Act. An enquiry/investigation is
going on against respondent No. 1 for the scheduled
offence in connection with FIR No. 12/2019. Once the
enquiry/investigation against respondent No. 1 is going on
12
for the offence under the Act, 2002, the rigour of Section
45 of the Act, 2002 would be attracted. Section 45 of the
Act, 2002 reads as under:
“ 45. Offences to be cognizable and nonbailable .—
(1) [Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), no person
accused of an offence [under this Act] shall be released
on bail or on his own bond unless—]
( i ) the Public Prosecutor has been given an
opportunity to oppose the application for such
release; and
( ii ) where the Public Prosecutor opposes the
application, the court is satisfied that there are
reasonable grounds for believing that he is not
guilty of such offence and that he is not likely to
commit any offence while on bail:
Provided that a person, who, is under the age of
sixteen years, or is a woman or is sick or infirm [or is
accused either on his own or along with other co
accused of moneylaundering a sum of less than one
crore rupees], may be released on bail, if the Special
Court so directs:
Provided further that the Special Court shall not
take cognizance of any offence punishable under
Section 4 except upon a complaint in writing made by
—
( i ) the Director; or
( ii ) any officer of the Central Government or a
State Government authorised in writing in this
behalf by the Central Government by a general or
special order made in this behalf by that
Government.
[(1A) Notwithstanding anything contained in the
Code of Criminal Procedure, 1973 (2 of 1974), or any
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other provision of this Act, no police officer shall
investigate into an offence under this Act unless
specifically authorised, by the Central Government by
a general or special order, and, subject to such
conditions as may be prescribed.]
(2) The limitation on granting of bail specified in [*
] subsection (1) is in addition to the limitations
under the Code of Criminal Procedure, 1973 (2 of
1974) or any other law for the time being in force on
granting of bail.”
5.1 By the impugned judgment and order, while granting
anticipatory bail the High Court has observed that the
provisions of Section 45 of the Act, 2002 shall not be
applicable with respect to the anticipatory bail
applications/proceedings under Section 438 Cr.PC. For
which the High Court has relied upon the decision of this
Court in the case of Nikesh Tarachand Shah (supra). In
the case of this Court has
Dr. V.C. Mohan (supra),
specifically observed and held that it is the wrong
understanding that in the case of Nikesh Tarachand Shah
(supra) this Court has held that the rigour of Section 45 of
the Act, 2002 shall not be applicable to the application
under Section 438 Cr. PC. In the case of Dr. V.C. Mohan
in which the decision of this Court in the case of
(supra)
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Nikesh Tarachand Shah (supra) was pressed into service,
it is specifically observed by this Court that it is one thing
to say that Section 45 of the Act, 2002 to offences under
the ordinary law would not get attracted but once the
prayer for anticipatory bail is made in connection with
offence under the Act, 2002, the underlying principles and
rigours of Section 45 of the Act, must get triggered –
although the application is under Section 438 Cr.PC.
Therefore, the observations made by the High Court that
the provisions of Section 45 of the Act, 2002 shall not be
applicable in connection with an application under Section
438 Cr.PC is just contrary to the decision in the case of Dr.
V.C. Mohan (supra) and the same is on misunderstanding
of the observations made in the case of
Nikesh Tarachand
Shah (supra). Once the rigour under Section 45 of the Act,
2002 shall be applicable the impugned judgment and
order passed by the High Court granting anticipatory bail
to respondent No. 1 is unsustainable.
6. Even otherwise on merits also, the impugned judgment
and order passed by the High Court granting anticipatory
15
bail to respondent No. 1 is erroneous and unsustainable.
While granting the anticipatory bail to respondent No. 1 the
High Court has not at all considered the nature of
allegations and seriousness of the offences alleged of
money laundering and the offence(s) under the Act, 2002.
Looking to the nature of allegations, it can be said that the
same can be said to be very serious allegations of money
laundering which are required to be investigated
thoroughly. As per the investigating agency, they have
collected some material connecting respondent No. 1
having taken undue advantage from Srinivas Raju
Mantena. From the impugned judgment and order passed
by the High Court, it appears that the High Court has
considered the matter, as if, it was dealing with the prayer
for anticipatory bail in connection with the ordinary offence
under IPC.
6.1 Now so far as the submissions on behalf of respondent No.
1 that respondent No. 1 was not named in the FIR with
respect to the scheduled offence and that the other
accused are discharged/acquitted is concerned, merely
because other accused are acquitted, it cannot be a
16
ground not to continue the investigation against
respondent No. 1. An enquiry/investigation is going on
against respondent No. 1 with respect to the scheduled
offences. Therefore, the enquiry/investigation itself is
sufficient at this stage.
6.2 While granting the anticipatory bail, what is weighed with
the High Court and what is observed by the High Court is
as under:
“A careful reading of the aforesaid legal position and in
the light of the circumstances of the case on hand, which
st
clearly indicates that the 1 respondent has a doubt
regarding the involvement of the petitioner in commission
of the crime and he is being summoned for disclosure and
in case of his nondisclosure of any material, on the
st
pretext of noncooperation, the 1 respondent may
proceed to arrest him. The petitioner is a retired employee
aged about 60 years and is a permanent resident of
Hyderabad, Further, major part of the investigation has
been completed with respect to the incriminating
documents and digital devices, which have already been
seized. Hence, there may not be a chance of tampering
with the investigation at this stage, because as rightly
pointed out by the learned Senior Counsel for the
petitioner that a criminal case has already been filed
against the other accused and the same is pending before
the Special Court at Bhopal.”
6.3
From the aforesaid, it can be seen that the High Court has
not at all considered the nature of allegations and the
seriousness of the offences alleged against respondent No.
1. As per the catena of decision of this Court, more
particularly, observed in the case of P. Chidambaram
17
(supra) in case of economic offences, which are having an
impact on the society, the Court must be very slow in
exercising the discretion under Section 438 of Cr.PC.
7. Considering the overall facts and circumstances of the case
and the reasoning given by the High Court and as observed
hereinabove, the rigour of Section 45 of the Act, 2002 shall
be applicable even with respect to the application under
Section 438 Cr.PC and therefore, the impugned judgment
and order passed by the High Court granting anticipatory
bail to respondent No. 1 herein in connection with F. No.
ECIR/HYZO/36/2020 dated 15.12.2020 is unsustainable.
Consequently, the impugned judgment and order passed
by the High Court granting anticipatory bail to respondent
No. 1 is hereby quashed and set aside. Respondent No. 1
be dealt with in accordance with law. However, it is
observed and made clear that after respondent No. 1 is
arrested, if he files any regular bail application, the same
be considered in accordance with law and on its own
merits and considering the material collected during
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enquiry/investigation of the case. Present appeal is
accordingly allowed. No costs.
………………………………….J.
[M.R. SHAH]
NEW DELHI; ………………………………….J.
FEBRUARY 24, 2023 [C.T. RAVIKUMAR]
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