[Release of PMLA accused after discharge in predicate offence] Approach HC bench dealing with bail matters: Bombay High Court to ED

The Bombay High Court today held that the challenge by the Enforcement Directorate (ED) to the order of a Special Court temporarily releasing two accused in a money laundering case after their discharge from the predicate offence ought to be challenged before the High Court bench dealing with bail matters..Justice PD Naik observed that since the order of the lower court contained provisions of bail and surety bond, it was essentially an order that ought to be challenged before a bench of the High Court hearing bail cases. While doing so, the Court referred to its order of June 10 passed this year in the plea filed by former Maharashtra Cabinet Minister Nawab Malik..The present case assumes significance in light of the observations made by the Supreme Court in its recent judgment upholding the validity of provisions of the Prevention of Money Laundering Act (PMLA).In its judgment, the apex court had held that acquittal or discharge in the predicate offence or quashing of such offence will lead to acquittal or discharge in the offence of money laundering as well..In the present case, the accused were booked by the Aurangabad City Police in 2020 based on a first information report (FIR) registered against them for cheating and criminal breach of trust under the Indian Penal Code.Based on the FIR, the ED registered an Enforcement Case Information Report (ECIR) under the PMLA based on the FIR.After a few months, a closure report was filed before the concerned magistrate, which was accepted in February 2021.The ED had arrested the accused in January 2021 and after initial custody, they were remanded to judicial custody which was extended from time to time. The accused moved the Special PMLA Court opposing the extension of their judicial custody. The Special Court posted the matter for final hearing on the application, and in the meantime, directed the immediate release of the accused noting that the investigation into the predicate offence against them had been closed..The ED approached the Bombay High Court on Wednesday challenging the interim release of the accused from custody.Justice Bharati Dangre refused to list the plea for urgent relief, opining that it was appropriate for the trial court to hear the application entirely first.Post this, the ED informed Justice Dangre that since the lower court order essentially granted release on the ground of illegal detention, the agency deemed it appropriate to seek quashing of the same by way of a writ..Accordingly, they approached Justice Naik's court with a writ under Section 482 seeking quashing of the lower court order.The ED also challenged an order of August 10 wherein the Special Court held that if the accused causes delay in hearing of his application, it would direct him to surrender to custody..Appearing for one of the accused, Advocate Vijay Aggarwal raised a preliminary objection to Justice Naik hearing the application. He argued that since circulation to the plea had been refused by one single-judge of the High Court, ED had changed the nature of the application in order to mention the same before another single-judge. This was forum shopping, according to him..Meanwhile, Senior Advocate Aabad Ponda cited the order passed in Nawab Malik's case to compare the same with the present order of the PMLA court under challenge. He stated that since the release was directed along with furnishing of surety or bail bond, the same ought to be challenged before a bench hearing bail matters. .The primary contention of ED counsel Hiten Venegaokar was that the order was blatantly illegal, and was required to be set aside. Hence, the agency had approached the High Court under Section 482 of the Code of Criminal Procedure. Venegaokar contended that if the special judge held that he had no jurisdiction in the matter, he could not have passed any order on custody of the accused. If the judge had directed for release of the accused on the ground that any further custody would be illegal, he caused further confusion by imposing conditions of furnishing surety, as that implied that bail was granted, which was possible only if custody was legal. He asked Justice Naik to strike down the observations made by the Special Court on its jurisdiction and thereafter direct the judge to hear the application afresh..The Court, however, was disinclined to accept Venegaokar's contention and directed the agency to instead approach the bench hearing bail assignment. .Incidentally, both the accused have also approached the Special Court seeking their discharge from the PMLA case through their lawyer Rahul Agarwal. The Court has asked ED to respond to the same by tomorrow.