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Sanjay Raghunath Agarwal vs The Directorate of Enforcement

Criminal Appeal · 2023 INSC 408Decided 20 Apr 2023
Criminal Appeal No. 1198 of 2023
V. Ramasubramanian · Pankaj Mithal

Background

A company, Farmax India Limited, alleged that the appellant and others had helped it raise about USD 71 million through GDRs but diverted most of the funds through fraud and forged signatures. A police FIR over this was filed in 2013, but no final chargesheet was ever filed in it even nine years later. Based on a related SEBI order finding fraud in the GDR issue, the Enforcement Directorate (ED) separately registered a money-laundering case and arrested the appellant, a chartered accountant, in September 2022. He had been in jail for about seven months by the time of this appeal, seeking bail.

Decision Breakdown

The Court examined the specific role attributed to the appellant in the ED's own prosecution complaint and found it described him mainly as a coordinator/intermediary who used his professional expertise to facilitate the GDR transactions, while noting he had been in custody for a long period without the underlying (predicate) criminal case even reaching a chargesheet stage after nine years, and that the original complainant in that case had himself been denied further custody by a court when the ED tried to arrest him too. Weighing these facts, the Court found the case for the appellant's continued strict, indefinite incarceration under the tough PMLA bail conditions was not justified, and granted him bail, but to address the ED's concern that he might flee the country, it directed him to surrender his passport and to compulsorily attend every hearing of the ED's prosecution complaint.

Lesson Learnt

Bail under PMLA's strict twin conditions can still be granted where prolonged pre-trial detention (here, with the predicate offence uninvestigated for nine years) makes continued custody disproportionate, provided the court imposes safeguards, like passport surrender and mandatory court attendance, against flight risk.

Official source (sci.gov.in)View Judgment (PDF)

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