1

IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
SPECIAL LEAVE PETITION [CRL.] NO.6898-6897 OF 2017
IN THE MATTER OF
Rohit Tandon

…Petitioner
Versus

Directorate of Enforcement

…Respondents

Brief Submissions by Tushar Mehta, ASGI
1.

The present SLP against the rejection of bail in a Prevention of Money
Laundering Act [PMLA] case deserves to be considered in the following
undisputed factual scenario:
(a)

This is not a bail where parameters of Section

439 CrPC will apply.

The rigours of section 45 PMLA are

undisputedly applicable.
(b)

The validity of section 45 PMLA is not in question

and as such any submission qua the validity are beyond
the scope of the captioned SLP.
(c)

In a PMLA offence, the Enforcement Directorate

is required to show something more than just prima facie
case and thereafter the burden shifts on the accused.
(d)

Though there is a clear, categorical and cogent

evidence for money laundering of more than Rs.51 crores
[unearth so far], the petitioner refused to discharge his
obligation.

The Hon'ble High Court, very carefully gave

him an opportunity to explain the source of his money.
The answer of the accused is recorded in the impugned
order as under:
“17. During arguments, specific query was
raised and the learned Senior Counsel for the
petitioner was asked as to, to whom the money
deposited in the various accounts belonged.
Learned Senior Counsel for the petitioner was fair

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enough to admit that the whole money belonged
to the petitioner. When enquired as to from
which ‘source’, huge cash was procured,
there was no clear response to it. Again,
learned Senior Counsel for the petitioner was
asked as to how the cash belonging to the
petitioner happened to be deposited in various
accounts of the ‘Group of Companies’ which were
not owned by the petitioner and what was its
purpose. It was further enquired as to why the
Demand Drafts were got issued in the names of
the persons referred above and what was its
specific purpose. Learned Senior Counsel for
the petitioner avoided to answer these
queries stating that the defence of the
petitioner could not be disclosed at this
juncture to impact his case during trial.”
(e)

The

amount

of

Rs.128

crores

was

recovered from the petitioner’s residence during the
income tax raid which is recorded in para 22 of the
impugned order. Para 22 of the said impugned order
reads as under:“22. Antecedents of the petitioner are also
to be noted. Undisputedly, the petitioner along
with others is also involved in case FIR
No.197/2016
registered
under
Section
420/409/188/120B IPC on 14.12.2016 BAIL
APPLN. 119/2017 Page 18 of 18 by Crime Branch
and ECIR No.14/DZ-II/2016 registered on
16.12.2016 by ED for the offences under Sections
3/4 PMLA. It is alleged that on 10.12.2016 at
around 10.00 p.m., raid was conducted by Crime
Branch and Income Tax Department at the
petitioner’s office premises jointly. It is alleged
that during the said raid Rs 13.62 crores were
recovered which included Rs 2.62 of new
currency in the Rs 2000 denomination. Record
reveals that during 06/08.10.2016, there was
also income tax raid in the office and
residential premises of the petitioner. In the
said raid, the petitioner had surrendered
about Rs 128 crores which related to past
investment in his company.”
Modus Operandi
2.

During the investigation, it has come on record by way cogent
evidence that a very ingenuine mechanism of money laundering was
undertaken by the petitioner who is otherwise an Advocate.

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3.

The following facts, though part of the investigation and pleaded on
Affidavit by the respondent are not disputed:
8. That, it transpired in the PMLA investigation
that the modus operandi involved in money
laundering was that first, the illegitimate
demonetized currency of Rohit Tandon would be
deposited in bank accounts of dummy shell firms
during November, 2016 controlled and operated
by Raj Kumar Goel in connivance with bank
official and other private persons on the huge
commission basis. Thereafter, Demand Drafts in
fictitious names would be issued to be
cancelled later. As per the plans, once such
Demand Drafts would be cancelled and money
would have been credited back into the
respective bank accounts, the same would be
withdrawn through cheques, thus achieving the
conversion of illegitmate demonetized currency
into the monetized currency through the misuse
of banking channels.
9. That, huge case deposits in 08 accounts of
Kotak Mahindra Bank were identified during
November, 2016, post demonetization policy
announcement (after 8.11.2016) and it revealed
that Demand Drafts (DDs) of huge amounts were
issued in fictitious names like Sunil Kumar,
Dinesh Kumar, Madan Kumar, Madan Saini, Satya
Narayan Dagdi, Seema bai and Abhilasha Dube.
The criminal act of money laundering was
executed during 15.11.2016 – 19.11.2016
through 08 accounts in Kotak Mahindra Bank, KG
Marg Branch. The details of the transactions are
mentioned in Table 1, Table 2 and Table 3
For ready reference of this Hon'ble court the relevant
portion of the Counter Affidavit filed by the Respondent showing
the modus operandi of the petitioner is annexed herewith and
marked as Annexure “A”. Since it could not be read before the
Hon'ble Court inextenso due to paucity of time.

Statement of Witnesses and other Evidences making out a
strong case for rejection of trial

4.

Unlike statements under section 161 CrPC, the statement of witness in
PMLA offences are admissible in evidence under section 50 PMLA. The

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statement of approximately ____ witnesses were recorded which are
admissible in evidence and are considered by the Hon'ble High Court.
These statements make out a cast iron case of commission of serious
money laundering offence by the petitioner.
5.

The investigation has also gathered cogent and substantial evidence in
the form of call data records, CCTV footage, account trend
analysis etc.
Modus Operandi

6.

It revealed that from 15.11.2016 to 19.11.2016 there was huge cash
deposit of Rs 31.75 crores by Raj Kumar Goel and his associates and
incoming RTGS was to the tune of Rs 6.86 crores. Demand Drafts
amounting to Rs 38 crores were issued in fictitious names i.e. Sunil
Kumar, Dinesh Kumar, Abhilasha Dubey, Madan Kumar, Madan Saini,
Satya Narain Dagdi and Seema Bai. Total cash (demonetized currency
of Rs 31.75 crores) was deposited in eight accounts of Kotak Mahindra
Bank during 15.11.2016 to 19.11.2016 with RTGS inwards to the tune
of Rs 6.86 crores. During the said period, 75 Demand Drafts to the
tune of Rs 39.64 crores were issued from the said accounts; out of
which three demand drafts of Rs 1.11 crores were cancelled. Demand
Drafts issued from Kotak Mahindra Bank amounting to Rs 34.88 crores
were recovered. Demand drafts amounting to Rs 3.12 crores all dated
15.11.2016 issued by ICICI bank and Bank of Baroda have also been
recovered. The funds actually pertaining to the petitioner were
carefully distanced away from him through a calibrated planning. The
collection of cash (demonetized currency) was used to be done
through meetings at different dates with the petitioner and his
associates Ashish Kumar, Dinesh Bhola and Raj Kumar during
14.11.2016 to 19.11.2016. The demonetized cash used to be taken
over by Ashish Kumar and Raj Kumar Goel and others. Demand Drafts
were used to be handed over by Ashish Kumar to Dinesh Bhola. Raj
Kumar Goel used to bring such cash and deposit the same with Kotak
Mahindra Bank with active assistance of Ashish Kumar, Branch
Manager as is evident from CCTV footage of the bank. It is further
urged that on 14.11.2016 Ashish Kumar visited petitioner’s office at R89 GK-I where he took from Dinesh Bhola about Rs 1.5 crores as token
of advance to start the work. The other transactions were done twice

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in T and T farmhouse (Petitioner’s farm house); two times in a street
adjacent to the farm house and the last transaction in the petitioner’s
office at R-89, GK-I. In all these transactions, Dinesh Bhola acting on
petitioner’s instructions handed over the demonetized cash to Ashish
Kumar and others. It is further urged that the properties involved in
money laundering totaling about Rs 41.65 crores have surfaced during
investigation so far and these have been attached vide Attachment
Order No.03/2017 dated 13.02.2017.
Investigation with regard to more huge amount is still
going on.
Judicial Pronouncements
7.

This Hon'ble court in the case of Gautam Kundu v. Directorate of
Enforcement (Prevention of Money-Laundering Act), reported in
(2015) 16 SCC 1 held as under:-

“30. The conditions specified under Section 45 of
PMLA are mandatory and need to be complied with,
which is further strengthened by the provisions of
Section 65 and also Section 71 of PMLA. Section 65
requires that the provisions of CrPC shall apply insofar as
they are not inconsistent with the provisions of this Act and
Section 71 provides that the provisions of 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
CrPC 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 of an application for
bail made under Section 439 CrPC. 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.
34. We note that admittedly the complaint is filed against
the appellant on the allegations of committing the offence
punishable under Section 4 of 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 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 is made out

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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 the SEBI Act is still pending for hearing
before the High Court. We have noted that Section 45
of 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 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 sick or infirm.
Therefore, there is no doubt that the conditions laid down
under Section 45-A of 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 PMLA, even when the
application for bail is considered under Section 439 of the
Code of Criminal Procedure.
35. We have further noted the directions given by this
Court in Subrata Chattoraj v. Union of India [Subrata
Chattoraj v. Union of India, (2014) 8 SCC 768 : (2014) 6 SCC
(Cri) 116] , in particular to para 35.4.
In Union of India v. Hassan Ali Khan [Union of
India v. Hassan Ali Khan, (2011) 10 SCC 235 : (2012)
1 SCC (Cri) 256] , 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 burden 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 Janata Jha v. Directorate of
Enforcement [Janata Jha v. Directorate of Enforcement,
Criminal Misc. Case No. 114 of 2011, decided on 16-122013 (Ori)] . 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 PMLA, in
particular.
38. 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

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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 Managers 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
[Goutam Kundu v. Manoj Kumar, 2015 SCC OnLine Cal
6545]
as
follows:
(Manoj
Kumar
case [Goutam
Kundu v. Manoj Kumar, 2015 SCC OnLine Cal 6545] , SCC
OnLine Cal para 11)
“11. By making a pragmatic approach to the provision
of Section 45(1) of the PML 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.”
39. 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 to interfere with the impugned order [Goutam
Kunduv. Manoj Kumar, 2015 SCC OnLine Cal 6545] so
passed by the High Court and the bail, as prayed before us,
challenging the said order is refused. Consequently, the
appeal is dismissed.
8.

The judgment rendered by this Hon'ble court in Gautam Kundu case
(Supra), has been followed by this Hon’ble Court in its judgment dated
21.07.2017 in Union of India v. Varinder Singh @ Raja (Crl.
Appeal 1223/2017), wherein this Hon’ble Court was pleased to set
aside an order granting bail on account of non-compliance with the
conditions under Section 45 of the PMLA. The relevant portion of the
said judgment reads as under:“The High Court has not complied with the
requirement of Section 45 of the Prevention of

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Money Laundering Act, 2002 ( in short 'the PMLA').
While granting bail, the High Court has failed to
comply with the requirement of condition (ii)of
Section 45 of the PMLA. This Court in Gautam Kundu vs.
Directorate of Enforcement (Prevention of Money 2
Laundering Act), Government of India through Manoj
Kumar, Assistant Director, Eastern Region [(2015)16 SCC 1]
has laid down thus:…..
It is the case where the appellant is not only involved in the
PMLA but also in the Narcotic 6 Drugs and Psychotropic
Substances Act, 1985 (in short 'the NDPS Act'). Without
complying with the requirements of Section 45 of the
PMLA, the High Court should not have granted the
bail. As such the impugned order is set aside. The
respondents be arrested forthwith.
9.

Similarly

this

Hon'ble

court

in

the

case

of

Pradeep

Kumar

Nirankarnath Sharma V. Directorate Of Enforcement SLP (Crl)
No. 3351 of 2015 , vide its order dated __________ was pleased to
dismissing the SLP thereby upholding the order dated 13.04.2015
passed by the Hon'ble Gujarat High Court in CRMA 4415, whereby, the
Hon'ble High Court was pleased to refuse grant of bail for not arriving
at the satisfaction contemplated under section 45 of the PMLA Act.
The relevant portion of the order passed by the Hon'ble High Court of
Gujarat , dated 13.04.2015 in CRMA 4415 of 2015, is quoted
hereinbelow for ready reference:“6.1 Having heard learned advocates for the respective
parties, the first aspect which needs to be addressed by
this Court is, as to what are the parameters which need to
be kept in view by this Court while considering this
application. In this regard, reference needs to be made to
Section 45 of the PML Act, 2002 which reads as under.
“45 Offences to be cognizable and non bailable.[1] Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), 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 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

 9

under the age of sixteen years, or is a woman or is
sick or infirm, 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, [1973 (2 of 1974], or any
other provision of this Act, no police officer shall
investigate into an offence under this Act unless
specifically authorized, 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.”
6.2 In view of the above provision, this Court need to
arrive at the satisfaction that (i) there are
reasonable grounds for believing that the applicant
is not guilty of the offence, he is charged with, and
further that (ii) he is not likely to commit any offence
while on bail.
….
6.4 So far the first stipulation, that this Court need to arrive
at the satisfaction that, there are reasonable grounds for
believing that the applicant is not guilty of the offence he is
charged with, is concerned, for that purpose (i) the material
on record, and (ii) the material with the Investigating
Agency which is made available to this Court for perusal,
need to be considered. Having done so, it is recorded
that, this Court is not in a position to record such
satisfaction. It is further noted that, while doing so,
it is kept in view that the word ‘reasonable’ needs to
be understood and interpreted reasonably and not
that acquittal needs to be recorded at this stage.
6.5 Since this Court is unable to record the first
satisfaction as contemplated under Section 45(1)(ii)
of the PML Act, it would be immaterial as to whether
the applicant meets with the second requirement, as
noted in para: 6.3 above. There is no dispute that, both
the stipulations need to be met with and if any one is
missing, it would not be permissible to release the applicant
even on regular bail, while the present one is the case of
anticipatory bail. At this juncture, reference is also required

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to be made to the decision of the Division Bench of this
Court in the case of Rakesh Manekchand Kothari (supra).
Relevant portion of Para : 10.12 and 10.13 thereof reads as
under.
“10.12 A bare perusal of section 45 of the PML Act
reveals that it is pertaining to offences to be
cognizable and non-bailable and begins with nonobstinate clause “notwithstanding anything contained
in the Code of Criminal Procedure, 1973” and
mandates that no person accused of offence
punishable for term of imprisonment for more than 3
years under Part A of the Schedule shall be released
on bail or on his own bond unless; [i] the Public
Prosecutor has been given opportunity to oppose the
application for such release; and [ii] Where the Public
Prosecutor opposes such application, the court has to
satisfy about existence of reasonable grounds for
believing that such accused person is not guilty of
such offences and that he is not likely to commit such
offences while on bail. The above two conditions are
of course subject to two unnumbered provisos viz.
that a person under the age of sixteen years or is a
women or is sick or infirm, may be released on bail, if
the special court so directs and further that Special
Court shall not take cognizance of any offence
punishable under section 4 except upon a complaint
in writing made by authorized person. Thus, when the
situation arises about legality and validity of the
complaint whether filed by the authorized officers /
authorities or not can be considered at the time of
taking cognizance of offence under PML Act by the
Special Court. However, limitations of granting of bail
specified in sub-section (1) is in addition to the
limitation under the Code of Criminal Procedure, 1973
or any other law time being in force for grant of bail.
10.13 Thus, if the accused person succeeds in
satisfying the designated court / special court for
believing that reasonable grounds exist that the
accused person is not guilty of such offence and while
on bail he is not likely to commit any offence in spite
of opposition by the public prosecutor, no restriction is
put upon orders of Special Court to release such
accused person on bail. -----”
(emphasis by this Court)
6.6 As noted in para:6.4 above, in the present case,
this Court is not in a position to record satisfaction
to the effect that, there are reasonable grounds for
believing that the applicant is not guilty of the
offence, he is charged with. In absence of such
satisfaction, in view of above observations of the
Division Bench of this Court, this application needs
to be dismissed.”

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It is respectfully submitted that this Hon'ble court in an SLP filed
against the aforesaid order, after calling and perusing the records of
the case and after hearing the parties at length was pleased to
dismiss the SLP and uphold the order of the Hon'ble Gujarat High
Court recording its dissatisfaction to the effect that there were
reasonable grounds to believe that the petitioner was not guilty of
the offence. The relevant order passed by this Hon'ble Court in SLP
(Crl) No. 3351 of 2015 are quoted hereinbelow for ready reference
of this Hon'ble Court:Order dated 24.04.2015
“The respondent is directed to produce the original
records for the perusal of this Court on the next date of
hearing.”
Order dated 06.07.2015
“Learned counsel for the respondent seeks time to file
counter affidavit as also to produce the original record for
the perusal of this Court.”
Order dated 22.07.2016
“Mr. K.T.S. Tulsi, learned Senior Counsel appearing for the
petitioner started his arguments at 3.45 p.m and was on
his legs when the Court rose for the day leaving the
matter as part-heard. List on Monday, the 25th July,
2016 at 2.00 p.m. as part-heard”
“The record brought to Court today shall be kept
available for consideration of the Court on the next
date of hearing.”
Order dated 29.07.2016
“Mr. K.T.S. Tulsi, learned senior counsel appearing on behalf of
the petitioner has handed over a short affidavit dated 27th July,
2016 on behalf of the petitioner. We have perused the
aforesaid affidavit dated 27th July, 2016. The same be
taken on record.
Heard learned counsel for the parties at length.
The special leave petition is dismissed.
Interim order, if any, stands vacated.
As a sequel to the above, all the pending applications stand
disposed of.”

10.

Furthermore, in the following judgments this Hon'ble court has
interpreted sections pari materia to section 37 of PMLA Act. In the case
of The State of Maharashtra Vs. Vishwanath Maranna Shetty
reported in (2012) 10 SCC 561, this Hon'ble court was pleased to
interpret pari materia Section 21 of the MCOCA Act to hold as under:-

 12

13. In the earlier part of our judgment, we
extracted Section 21(4) of MCOCA which bars the Court
from releasing the accused of an offence punishable under
the said Act subject to the conditions prescribed in Clauses
(a) and (b) therein. We are of the view that Subsection (4)
of Section 21 mandates
that
it
is
incumbent on the part of the Court before granting
of bail to any person accused of an offence
punishable under MCOCA that there are reasonable
grounds for believing that he is not guilty of such
offence and he is not likely to commit any offence
while on bail.
.......................
20. Though the High Court has adverted to all the above mentioned aspects and finding that all those aspects have
to be considered during the trial and even after finding that
"it cannot be said that there are no reasonable grounds for
believing that the applicant (Respondent herein) has not
committed an offence punishable under the MCOCA", on an
erroneous view, granted him bail which runs contrary
to Section21(4) of MCOCA.
21. While dealing with a special statute like MCOCA, having
regard to the provisions contained in Sub-section (4)
of Section 21 of this Act, the Court may have to probe into
the matter deeper so as to enable it to arrive at a finding
that the materials collected against the accused during the
investigation may not justify a judgment of conviction.
Similarly, the Court will be required to record a finding as to
the possibility of his committing a crime after grant of bail.
What would further be necessary on the part of the
Court is to see the culpability of the accused and his
involvement in the commission of an organized crime
either directly or indirectly. The Court at the time of
considering the application for grant of bail shall consider
the question from the angle as to whether he was
possessed of the requisite mens rea. In view of the above,
we also reiterate that when a prosecution is for offence(s)
under a special statute and that statute contains specific
provisions for dealing with matters arising there under,
these provisions cannot be ignored while dealing with such
an application. Since the Respondent has been charged
with offence under MCOCA, while dealing with his
application for grant of bail, in addition to the broad
principles to be applied in prosecution for the offences
under the Indian Penal Code, the relevant provision in the
said statute, namely, Sub-section (4) of Section 21 has to
be kept in mind. It is also further made clear that a bare
reading of the non obstante clause in Sub-section (4)
of Section 21 of MCOCA that the power to grant bail to a
person accused of having committed offence under the said
Act is not only subject to the limitations imposed
under Section 439 of the Code of Criminal Procedure, 1973
but also subject to the restrictions placed by Clauses (a)
and (b) of Sub-section (4) of Section 21. Apart from giving

 13

an opportunity to the prosecutor to oppose the application
for such release, the other twin conditions, viz., (i) the
satisfaction of the Court that there are reasonable grounds
for believing that the accused is not guilty of the alleged
offence; and (ii) that he is not likely to commit any offence
while on bail, have to be satisfied. The satisfaction
contemplated in Clauses (a) and (b) of Subsection (4) ofSection 21 regarding the accused being
not guilty, has to be based on "reasonable grounds".
Though the expression "reasonable grounds" has not been
defined in the Act, it is presumed that it is something more
than prima facie grounds. We reiterate that recording of
satisfaction on both the aspects mentioned in
Clauses (a) and (b) of Sub-section (4) of Section 21 is
sine qua non for granting bail under MCOCA.
22. The analysis of the relevant provisions of the
MCOCA, similar provision in the NDPS Act and the
principles laid down in both the decisions show that
substantial probable cause for believing that the
accused is not guilty of the offence for which he is
charged must be satisfied. Further, a reasonable belief
provided points to existence of such facts and
circumstances as are sufficient to justify the satisfaction
that the accused is not guilty of the alleged offence. We
have already highlighted the materials placed in the case
on hand and we hold that the High Court has not satisfied
the twin tests as mentioned above while granting bail.
23. In our opinion, the impugned order having been passed
ignoring the mandatory requirements of Section 21(4) of
MCOCA, cannot be sustained. Accordingly, the impugned
order of the High Court dated 10.08.2011 in Criminal Bail
Application No. 872 of 2011 granting bail to the Respondent
is set aside and the order of the special Judge dated
07.05.2011 in M.C.O. Special Case No. 10 of 2010 is
restored. In view of the same, the Respondent is directed to
surrender before the Special Court within a period of two
weeks from the date of passing of this order, failing which,
the special Court is directed to take appropriate steps for
his arrest.
11.

Similarly in the case of Chenna Boyanna Krishna Yadav v. State of
Maharashtra

and

Anr.

Reported

in

(

2007

)

1

SCC

242,

2007CriLJ782, this Hon'ble court was pleased to hold as under:- .
It is plain from a bare reading of the non- obstante clause
that the power to grant bail by the High Court or Court of
Sessions is not only subject to the limitations imposed
by Section 439 of the Code but is also subject to the
limitations placed by Section 21(4) of MCOCA. Apart from
the grant of opportunity to the Public Prosecutor, the other
twin conditions are: the satisfaction of the court that
there are reasonable grounds for believing that the

 14

accused is not guilty of the alleged offence and that
he is not likely to commit any offence while on bail.
The conditions are cumulative and not alternative.
The satisfaction contemplated regarding the accused being
not guilty has to be based on reasonable grounds. The
expression "reasonable grounds" means something more
than prima facie grounds. It contemplates substantial
probable causes for believing that the accused is not guilty
of the alleged offence. The reasonable belief contemplated
in the provisions requires existence of such facts and
circumstances as are sufficient in themselves to justify
satisfaction that the accused is not guilty of the alleged
offence. Thus, recording of findings under the said provision
is a sine qua non for granting bail under MCOCA.
12.

Furthermore in the case of Ranjitsing Brahmajeetsing Sharma vs.
State of Maharashtra and Anr. Reported in ( 2005 ) 5 SCC 294, this
Hon'ble court was pleased to hold as under:46. Presumption of innocence is a human right.
[See Narendra
Singh
and
Anr. v. State
of
M.P. MANU/SC/0341/2004 : 2004CriLJ2842 , para 31]
Article 21 in view of its expansive meaning not only
protects life and liberty but also envisages a fair procedure.
Liberty of a person should not ordinarily be interfered with
unless there exist cogent grounds therefore. Sub-Section
(4) of Section 21 must be interpreted keeping in view the
aforementioned salutary principles. Giving an opportunity
to the public prosecutor to oppose an application for
release of an accused appears to be reasonable restriction
but Clause (b) of Sub-section (4) of Section 31 must be
given a proper meaning.
47. Does this statute require that before a person is
released on bail, the court, albeit prima facie, must come to
the conclusion that he is not guilty of such offence? Is it
necessary for the Court to record such a finding? Would
there be any machinery available to the Court to ascertain
that once the accused is enlarged on bail, he would not
commit any offence whatsoever?
48. Such findings are required to be recorded only
for the purpose of arriving at an objective finding on
the basis of materials on records only for grant of
bail and for no other purpose .

55. The wording of Section 21(4), in our opinion, does not
lead to the conclusion that the Court must arrive at a
positive finding that the applicant for bail has not
committed an offence under the Act. If such a construction
is placed, the court intending to grant bail must arrive at a
finding that the applicant has not committed such an

 15

offence. In such an event, it will be impossible for the
prosecution to obtain a judgment of conviction of the
applicant. Such cannot be the intention of the Legislature.
Section 21(4) of MCOCA, therefore, must be construed
reasonably. It must be so construed that the Court is able to
maintain a delicate balance between a judgment of
acquittal and conviction and an order granting bail much
before commencement of trial. Similarly, the Court will be
required to record a finding as to the possibility of his
committing a crime after grant of bail. However, such an
offence in future must be an offence under the Act and not
any other offence. Since it is difficult to predict the future
conduct of an accused, the court must necessarily consider
this aspect of the matter having regard to the antecedents
of the accused, his propensities and the nature and manner
in which he is alleged to have committed the offence.
56. It is, furthermore, trite that for the purpose of
considering an application for grant of bail, although
detailed reasons are not necessary to be assigned, the
order granting bail must demonstrate application of mind at
least in serious cases as to why the applicant has been
granted or denied the privilege of bail.
57. The duty of the court at this stage is not to weigh the
evidence meticulously but to arrive at a finding on the basis
of broad probabilities. However, while dealing with a
special statute like MCOCA having regard to the
provisions
contained
in
Sub-section
(4)
of
Section 21 of the Act, the Court may have to probe
into the matter deeper so as to enable it to arrive at
a finding that the materials collected against the
accused during the investigation may not justify a
judgment of conviction. The findings recorded by the
Court while granting or refusing bail undoubtedly would be
tentative in nature, which may not have any bearing on the
merit of the case and the trial court would, thus, be free to
decide the case on the basis of evidence adduced at the
trial, without in any manner being prejudiced thereby.
13.

Similarly in so far as interpretation of pari-materia Section 21 of the
NDPS Act is concerned this Hon'ble court in the case of Union of
India v. Rattan Mallik Alias Habul reported in (2009) 2 SCC 624,
was pleased to hold as under:12. It is plain from a bare reading of the non obstante
clause in Section 37 of the NDPS Act and Sub-section (2)
thereof that the power to grant bail to a person accused of
having committed offence under the NDPS Act is not only
subject to the limitations imposed Under Section 439 of the
Code of Criminal Procedure, 1973, it is also subject to the
restrictions placed by Clause (b) of Sub-section (1)
of Section 37 of the NDPS Act. Apart from giving an
opportunity to the Public Prosecutor to oppose the

 16

application for such release, the other twin
conditions viz. (i) the satisfaction of the court that
there are reasonable grounds for believing that the
accused is not guilty of the alleged offence; and (ii)
that he is not likely to commit any offence while on
bail, have to be satisfied. It is manifest that the
conditions are cumulative and not alternative. The
satisfaction contemplated regarding the accused being not
guilty, has to be based on "reasonable grounds".
13. The expression "reasonable grounds" has not been
defined in the said Act but means something more than
prima facie grounds. It connotes substantial probable
causes for believing that the accused is not guilty of the
offence he is charged with. The reasonable belief
contemplated in turn, points to existence of such facts and
circumstances as are sufficient in themselves to justify
satisfaction that the accused is not guilty of the alleged
offence (vide Union of India v. Shiv Shanker Kesari). Thus,
recording of satisfaction on both the aspects, noted
above, is sine qua non for granting of bail under the
NDPS Act.
14. We may, however, hasten to add that while considering
an application for bail with reference to Section 37 of the
NDPS Act, the court is not called upon to record a finding of
"not guilty". At this stage, it is neither necessary nor
desirable to weigh the evidence meticulously to arrive at a
positive finding as to whether or not the accused has
committed offence under the NDPS Act. What is to be
seen is whether there is reasonable ground for
believing that the accused is not guilty of the
offence(s) he is charged with and further that he is
not likely to commit an offence under the said Act
while on bail. The satisfaction of the court about the
existence of the said twin conditions is for a limited
purpose and is confined to the question of releasing
the accused on bail.

14.

Also in the case of Union of India vs Niyazuddin Sk & Anr reported
in 2017 SCC OnLine SC 862, this Hon'ble court while interpreting
section 37 of the NDPS Act held as under:5. Shri Ranjit Kumar, learned Solicitor General, inviting our
reference to Section37 of the NDPS Act submits that there
is no consideration by the High Court on the special
conditions
referred
to
in Section 37 of
the NDPS Act. Section 37reads as under:—
“……………”

 17

6. Learned counsel for the respondents submits that this is
not a case covered under Section 37 of the NDPS Act. It is
certainly a matter to be addressed by the High Court.
7. Section 37 of the NDPS Act contains special provisions
with regard to grant of bail in respect of certain offences
enumerated under the said Section. They are :—
(1) In the case of a person accused of an offence
punishable under Section 19,
(2) Under Section 24,
(3) Under Section 27A and
(4) Of offences involving commercial quantity.
8. The accusation in the present case is with regard to the
fourth factor namely, commercial quantity. Be that as it
may, once the Public Prosecutor opposes the
application for bail to a person accused of the
enumerated
offences
under Section37 of
the NDPS Act, in case, the court proposes to grant
bail to such a person, two conditions are to be
mandatorily satisfied in addition to the normal
requirements under the provisions of the Cr.P.C or
any other enactment. (1) The court must be satisfied
that there are reasonable grounds for believing that the
person is not guilty of such offence; (2) that person is not
likely to commit any offence while on bail.
9. There is no such consideration with regard to the
mandatory
requirements,
while
releasing
the
respondents on bail.
10. Hence, we are satisfied that the matter needs to be
considered afresh by the High Court. The impugned order is
set aside and the matter is remitted to the High Court for
fresh consideration. It will be open to the parties to take all
available contentions before the High Court.

Judgment in Ranjitsing Brahmajeetsing Sharma vs. State of
Maharashtra and Anr.
15.

The said judgment cannot come in the way of the respondent while
opposing the bail. The said judgment also nowhere dilutes the position
emerging from Section 45 PMLA. It merely reiterates the position that
the Court, while deciding the application of bail under section 45 PMLA,
is not expected to record “conviction” but will have to be satisfied
that the prosecution case is more than just a prima facie case.

 18

Reliance upon the judgment of Punjab and Haryana High Court
in the case of Gaurav Kathuria vs Union of India
16.

Surprisingly this was a case where an Advocate namely Gaurav
Kathuria filed a writ petition, gets a judgment against him, challenges
the same before this Hon'ble Court and concedes that the law laid
down by the High Court is a good law.

17.

During the hearing of captioned SLP, it was made specifically clear on
behalf

of

the

respondent

that

neither

the

petitioner

nor

the

Respondents are going into the case of Gaurav Kathuria [Supra].
Therefore, no reliance can be placed on the judgment of the Gaurav
Kathuria. If any reliance is to be placed by the petitioner on the said
judgment, the said judgment itself needs a detailed arguments and
possibly a probe.
Without prejudice, however, it is pointed out that the said
judgment in Gaurav Kathuria was sought to be placed before
various High Courts to help various money launderers to get bail
and all High Courts have refused to follow the said judgment.
The said judgments of different High Courts not treating case of
Gaurav Kathuria as a good law, are as under:
(i)

Crl. Mic. Application (for Regular
Bail) No.7970/17

High
Court
Gujarat

of

High
Court
Karnataka
Bengaluru

of
at

High
Court
Kerala
Ernakulam

of
at

Jignesh Kishrebhai Bajiawala vs
State of Gujarat & ors.

(ii)

Crl. Petition No.366/2017
SC Jayachandra vs Enforcement
Directorate, Bangalore

(iii)

WP[Crl.] No.333 of 2015
Kishin S. Loungani vs UOI & ors.

(iv)

Crl. Mic. Application (for Regular
Bail) No.30674/16
Pradeep Nirankarnath Sharma vs

High Court Gujarat
at Ahmedabad

 19

Directorate of Enforcement

(v)

Crl. Writ Petition No.3931/2016
Chhagan Chandrakant Bhujbal vs
Union of India & ors.

18.

High
Court
Bombay

of

At the cost of repetition it is submitted that if the said issue is required
to be gone into, it would need arguments which are never made during
the hearing of the captioned SLP.