Calcutta High Court says interests of thousands defrauded also important, denies bail to duo in Rs 2,862 crore ‘scam’

Findings

• While sensitive to Article 21, we note that the petitioners’ status as “proclaimed offenders” deals a decisive blow to their prayer.
• An accused who ignores judicial warrants disentitles themselves from equitable consideration.
• By systematically evading non-bailable warrants, they have demonstrated a clear propensity to circumvent the legal process, thereby failing the “tripod test“.
• The tripod test for bail in Indian law assesses three key risks before granting release: the accused’s likelihood to abscond (flight risk), tamper with evidence, and influence witnesses, alongside considering the gravity of the offense, ensuring they won’t obstruct justice if freed.
• In the face of an unaccounted deficit of nearly Rs 1,906 crore and evidence of fresh layering post-2017, we are unable to record a satisfaction that there are “reasonable grounds” to believe the accused are not guilty.
• The staggering magnitude of the siphoning affecting the life savings of thousands necessitates a stringent application of Prevention of Money Laundering Act provisions.
• Economic offenses involving public money constitute a “class apart” and must be viewed through a different judicial prism.
• In such cases, the “gravity of the offense” is a significant factor that must be weighed in the scale of justice to ensure that white-collar criminals do not treat the law with disdain.
• The primary thrust of the petitioners’ challenge that the present prosecution is hit by the bar of Article 20(2) is legally fragile.
• The protection against double jeopardy is triggered only upon the conclusion of a prior trial resulting in conviction or acquittal.
• Double jeopardy is a legal principle preventing a person from being prosecuted or punished multiple times for the same offense after a valid acquittal or conviction, ensuring fairness and finality in criminal cases by giving the prosecution only one chance
• Since the trial of the prior ECIR is still pending, the threshold for a constitutional bar remains unmet.
• The offense of money laundering under Section 3 (offence of money laundering) of the PMLA is not a frozen event but a persistent process.
• It continues as long as the accused is involved in any activity connected with the “proceeds of crime.”
• If the petitioners utilized their previous liberty to generate fresh illicit funds post-2016, such acts constitute a distinct cause of action.
• Article 20(2) is a shield for the innocent; it is not a license for prospective criminality nor does it provide an umbrella of immunity for subsequent illegalities committed during the pendency of a prior investigation.
• Article 20(2) protects against double jeopardy, stating that no person shall be prosecuted and punished for the same offence more than once.
• The petitioners’ reliance on Manish Sisodia and Arvind Kejriwal is misplaced.
• In those instances, the court considered the absence of criminal antecedents or the peculiar circumstances of a sitting public official.
• Here, the magnitude of the siphoning and the petitioners’ history of evading process necessitate custodial presence to trace the “proceeds of crime.”
• The court has discretion to release an elderly or infirm person, it is not an automatic mandate.
• Given the flight risk, the petitioner’s health can be adequately managed through comprehensive medical supervision within the custodial framework.

Decision

• Concluding that it was “not a fit case for the grant of regular bail”, the high court dismissed the petition and rejected the bail plea.
• At the same time, to safeguard the petitioners’ right to a speedy trial, the court directed the trial court to conduct proceedings on a day-to-day basis.
• The court asked the Enforcement Directorate to ensure production of witnesses without seeking unnecessary adjournments.

Background

• The petitioners are the principal directors of the Prayag Group of companies.
• They are currently in custody in a case registered by the ED under Sections 3 (offence of money laundering) and 4 (punishment for money laundering) of the PMLA.
• According to the ED, the company allegedly defrauded thousands of investors through “Time Share”, real estate and gold-based investment schemes.
• While the promoters claimed to have refunded around Rs 1,140 crore, the ED alleged that approximately Rs 1,906 crore remains untraced and constitutes “proceeds of crime” layered through shell entities.
• The ED alleged that the present prosecution concerns fresh proceeds of crime generated after 2016, even while an earlier money laundering investigation based on the same predicate offence was pending.

Arguments

• Advocate Misha Rohatgi Mohta, appearing for the petitioners, argued that the second Enforcement Case Information Report (equivalent to FIR by ED) was barred by Article 20(2) of the Constitution, which protects against double jeopardy.
• The counsel contended that the present case was a “mirror copy” of the 2016 investigation, both arising from the same CBI final report.
• Relying on recent Supreme Court precedents, including Manish Sisodia v Directorate of Enforcement and Arvind Kejriwal v Directorate of Enforcement, the petitioners argued that prolonged incarceration of over eight months, coupled with the voluminous record of 3,500 pages and 29 proposed witnesses, amounted to “pre-trial punishment”.
• The defence also mentioned the first proviso to Section 45 of the PMLA, pointing out that Basudeb Bagchi is a senior citizen suffering from diabetes and hypertension.
• Advocates Arijit Chakrabarti, Debsoumya Basak and Swati Kumari Singh, appearing for the ED opposed the bail plea and submitted that money laundering is a “continuing offence”.
• The counsel informed the court that Article 20(2) is not attracted as the earlier trial has neither resulted in conviction nor acquittal.
• The agency highlighted that the petitioners were declared proclaimed offenders after evading judicial process, demonstrating clear flight risk and disentitling them from discretionary relief.
• The ED argued that given the magnitude of the alleged fraud and the untraced deficit of Rs 1,906 crore, the court could not be satisfied that the accused were “not guilty” or unlikely to commit further offences if released.
• The agency also emphasised on the mandatory nature of the “twin conditions” under Section 45 of the PMLA.