New Delhi: A special PMLA court in Mumbai Wednesday granted bail to former Yes Bank CEO Rana Kapoor in a money laundering case, noting that he had already undergone “73 per cent of his sentence, while the case against him had not even proceeded by a millimetre”.
Kapoor was first arrested in March 2020 by the Enforcement Directorate (ED) on money laundering charges under the Prevention of Money Laundering Act (PMLA), and was subsequently charged in other loan fraud cases being probed by the ED and the Central Bureau of Investigation (CBI).
The minimum punishment for money laundering imposed under the PMLA is for three years, which may extend to seven years.
During the hearing, the court hauled up the investigating agencies for Kapoor’s “selective” arrest and their lackadaisical attitude to the investigation.
“ED simply opposes bail applications heavily, but never takes any active step in proceeding with trials…,” special judge M.G. Deshpande noted, while allowing the bail plea of Kapoor who will, however, stay in jail as he is incarcerated in connection with other offences as well.
The ED is investigating money laundering charges against the Yes Bank founder in connection with six loans amounting to Rs 200 crore, which the bank gave to realty company HDIL through Mack Star Marketing Private Limited.
Kapoor had filed a bail application stating that no charge sheet was filed by the CBI in a predicate offence (a crime that is a component of a more serious crime) and his name was not mentioned in the FIR relating to the offence.
“Undue incarceration of the applicant (Kapoor) for two years, two months and three days, without trial, was the price he has paid only on account of the purported gravity, magnitude and different nature of the economic offences,” the judge said. “All this is shocking.”
Commenting on the role of the CBI, the judge observed that even after the court’s insistence to know the status of its probe against Kapoor, the only communication from the agency was a one-liner stating that “the investigation was still pending”.
“Is it lawfully permissible to allow the CBI to consume seven years (‘outer limit of the punishment’) for filing the final report without any progress report and till then suspend the right of under-trial prisoner for an expeditious trial? This is serious,” the court said.
The special judge noted that since a charge sheet was not filed in the predicate offence, there was no FIR against Kapoor and it was a fit case for grant of bail.
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‘ED not committing cases to PMLA court’
The court noted that “in this long period of undue incarceration, both the CBI and the ED had never taken any care to follow the true spirit of Section 44(1)(c) of the PML Act”.
Under Section 44 (1) (c) of the Act, there has to be a “simultaneous” but separate trial of a money laundering case and the “predicate” offence at the special PMLA court itself.
The ED is required to “commit” or transfer the predicate offence to the special court, otherwise the trial cannot begin.
“The way in which the ED has been dealing with this case and (was) even not aware of the said mandate until prevailed upon the court to give repeated directions. If the same continues, the trial will never begin and the conclusion thereof will be only a dream,” the court said.
“On the contrary, rather than honouring and following the mandate of Section 44(1) (c) scrupulously, the ED appears to have sabotaged the same.”
The court further noted that without committing the offence, the ED was filing “draft charges” while “pretending that it was ready for trial, when it was not so”.
The ED is in effect not filing a regular charge sheet, but draft charges for “reasons best known to them”, the judge pointed out.
The court referred to more than 11 other PMLA cases where the accused were undertrial prisoners and no active step was taken by the ED to pursue trial.
‘Violation of accused’s right to fair trial’
The special court noted that this was not the first time that such an event (delayed investigation and charge sheet) has taken place.
In the Wadhawan Brothers case, bail was granted by the Bombay High Court because of the ED’s failure to file the charge sheet in time, it pointed out.
In the absence of “genuine and remarkable” period of investigation, the contention that the investigation is still continuing cannot be accepted, the court said.
“If the court accepts such modus operandi of both agencies in extending undue incarceration of the applicant to uncertain extent, that will amount to putting a premium on such illegal acts,” it added.
It further acknowledged that the trial in a PMLA case is “exceptionally gigantic, colossal” due to large amount of evidence required to be examined, adding that agencies like the ED and CBI should be “careful, vigilant, and punctual” to conclude the trial in the earliest possible timeframe.
Undertrial incarceration without a charge sheet is a violation of the accused’s right to fair trial, the judge observed.
The court also said “it is high time to think (about) this situation seriously, because maximum PMLA cases are in Mumbai Designated Special Court and since inception of this Designated Special PMLA Court, none of them has reached conclusion”.
“If the ED, which is under legal obligation but not following the true spirit of Section 44(1) (c) of the PML Act, then who will comply the same?” the court asked.
In recent times, the ED has emerged as a powerful agency against financial crime, dealing with high-profile cases with far-reaching political and legal ramifications. Over the years, the agency has looked into cases involving Congress leaders Sonia and Rahul Gandhi, AAP leader Satyendar Jain, Shiv Sena’s Sanjay Raut, among others.
The special PMLA court’s criticism of the ED also comes at a time when the Supreme Court has upheld its powers relating to arrest, attachment of property involved in money laundering, search and seizure under the PMLA that were challenged by multiple petitioners.
Akshat Jain is a student at the National Law University, Delhi, and an intern with ThePrint.
(Edited by Nida Fatima Siddiqui)
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