Supreme Court Grants Bail in Money Laundering Case Citing Delay: V. Senthil Balaji vs. Directorate of Enforcement (26 September 2024)

Introduction

Date of the Judgment: 26 September 2024
Citation: 2024 INSC 739
Judges: Abhay S. Oka, J., Augustine George Masih, J. (Bench of two judges)

Can an accused be kept in jail indefinitely if the trial is not progressing? The Supreme Court of India recently addressed this crucial question in a case concerning the Prevention of Money Laundering Act, 2002 (PMLA). The court considered whether the stringent bail conditions under the PMLA could justify prolonged detention when a speedy trial seems unlikely.

The Supreme Court, in this judgment, granted bail to V. Senthil Balaji, who had been incarcerated for over 15 months in connection with a money laundering case. The bench, comprising Justices Abhay S. Oka and Augustine George Masih, emphasized the importance of the right to a speedy trial as a fundamental right under Article 21 of the Constitution.

Case Background

V. Senthil Balaji, the appellant, served as the Transport Minister in the Government of Tamil Nadu between 2011 and 2016. The primary allegation against him is that he collected large sums of money by promising jobs in the Transport Department, in collusion with his personal assistant and brother. This led to the registration of three First Information Reports (FIRs) against him and others.

The FIRs include:

• FIR No. 441 of 2015, dated 29th October 2015 (CC Nos. 22 and 24 of 2021)
• FIR No. 298 of 2017, registered on 9th September 2017 (CC No. 19 of 2020)
• FIR No. 344, dated 13th August 2018 (CC No. 25 of 2020)

The offences alleged in these FIRs are primarily under Sections 120B, 419, 420, 467, and 471 of the Indian Penal Code, 1860 and Sections 7, 12, 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. These offences are considered scheduled offences under Section 2(y) of the PMLA.

Based on these scheduled offences, the Enforcement Directorate (ED) registered an Enforcement Case Information Report (ECIR) bearing ECIR No. MDSZO/21/2021 on 29th July 2021, alleging money laundering under Section 3 of the PMLA, punishable under Section 4 of the PMLA.

The appellant was arrested on 14th June 2023 in connection with the ECIR and was remanded to judicial custody. A complaint was filed on 12th August 2023, and cognizance was taken by the Special Court under the PMLA.

Timeline:

Arguments

The appellant’s counsel argued that the Enforcement Directorate (ED) was relying on material collected by other investigating agencies related to the scheduled offences. They pointed out discrepancies in the evidence, particularly regarding a file named “CS AC” allegedly found on a pen drive seized from the appellant’s premises. The Tamil Nadu Forensic Science Laboratory (TNFSL) report indicated that the file “CS AC” was not found, but a file named “csac.xlsx” was present.

The appellant’s counsel also contended that a cash deposit of Rs. 1.34 crores in the appellant’s bank account represented income from his remuneration as a Member of the Legislative Assembly (MLA) and agricultural income. Additionally, they argued that all relevant evidence had been seized, and statements under Section 50 of the PMLA had been recorded. The appellant had been incarcerated for more than 14 months, and the trials for the predicate offences had not even commenced. They argued that the trial under PMLA cannot be decided until the trial of the scheduled offences is concluded.

The counsel relied on the Supreme Court’s decision in Manish Sisodia v. Directorate of Enforcement, emphasizing the right to a speedy trial. They also cited Union of India v. K.A. Najeeb, arguing that prolonged incarceration without a trial violates fundamental rights.

The ED, represented by the Solicitor General of India, argued that there was no discrepancy in the file name “CS AC,” as “.xlsx” is merely a file extension. They asserted that a printout of the file, certified by the Special MPMLA Court, was relied upon in the complaint. The ED also disputed the appellant’s claims regarding the source of the cash deposit, stating that MLA salaries are directly credited to bank accounts and that the appellant’s agricultural income was insufficient to justify the deposit.

The ED presented additional evidence, including a file named “AC1.xlsx,” to demonstrate the appellant’s involvement in the job racket. They claimed that at least Rs. 38 crores were collected from candidates. The ED argued that the twin conditions under clause (ii) of sub-section (1) of Section 45 of the PMLA had not been satisfied.

The Solicitor General also highlighted that the appellant had been a minister for a long time and continued to be an MLA, suggesting he could influence witnesses if released. They cited P. Dharamraj v. Shanmugam and others and Y. Balaji v. Karthik Desari and Another, emphasizing the court’s disapproval of compromises between bribe givers and bribe recipients.

Submissions:

Issues Framed by the Supreme Court

The Supreme Court considered the following issues:

1. Whether the appellant is entitled to bail considering the prolonged incarceration and delay in the trial of the scheduled offences and the offence under the PMLA.
2. Whether the stringent provisions of Section 45(1)(ii) of the PMLA can override the fundamental right to a speedy trial under Article 21 of the Constitution of India.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Authorities Considered by the Court:

Judgment

The Supreme Court allowed the appeal and granted bail to V. Senthil Balaji, emphasizing that the right to a speedy trial is a fundamental right under Article 21 of the Constitution. The court noted that the appellant had been incarcerated for over 15 months, and the trial was unlikely to be completed in the near future.

The court considered the argument that the appellant was influential and could tamper with evidence but addressed this by imposing stringent conditions for bail. The court also noted that the case largely depended on documentary evidence already seized by the prosecution.

The Supreme Court held that while statutes like the PMLA have stringent bail provisions, they cannot be used to justify indefinite incarceration without trial. The right to a speedy trial is a fundamental right that cannot be overridden. The court observed that the minimum sentence under PMLA is three years, and the maximum is seven years. If the trial is likely to be prolonged beyond reasonable limits, constitutional courts must consider granting bail.

The court quoted from the judgment:

• “Inordinate delay in the conclusion of the trial and the higher threshold for the grant of bail cannot go together.”
• “bail is the rule, and jail is the exception.”
• “The Constitutional Courts cannot allow provisions like Section 45(1)(ii) to become instruments in the hands of the ED to continue incarceration for a long time when there is no possibility of a trial of the scheduled offence and the PMLA offence concluding within a reasonable time.”

Key Takeaways

• ✓ Prolonged incarceration of an accused without a speedy trial can violate their fundamental rights under Article 21 of the Constitution.
• ✓ Stringent bail provisions in statutes like the PMLA cannot justify indefinite detention if the trial is unlikely to conclude within a reasonable time.
• ✓ Constitutional courts have the power to grant bail on grounds of violation of fundamental rights, notwithstanding statutory restrictions.
• ✓ The right to a speedy trial is a fundamental right that must be balanced against the need to ensure the accused’s presence at trial.
• ✓ Courts must consider the minimum and maximum sentences for the offence and the higher threshold for bail while determining whether to grant bail due to trial delays.

Directions

The Supreme Court directed that the appellant, V. Senthil Balaji, be released on bail subject to the following conditions:

1. Furnish bail bonds of Rs. 25,00,000 with two sureties of the same amount.
2. Not to contact or communicate with prosecution witnesses or victims of the scheduled offences.
3. Mark attendance every Monday and Friday at the ED office in Chennai and appear before the investigating officers of the scheduled offences on the first Saturday of every month.
4. Surrender his passport to the Special Court underthe PMLA.
5. Not to leave the country without the permission of the Special Court.

Conclusion

The Supreme Court’s decision in V. Senthil Balaji vs. Directorate of Enforcement underscores the importance of the right to a speedy trial as a fundamental aspect of personal liberty under Article 21 of the Constitution. The judgment serves as a reminder that stringent statutory provisions, such as those in the PMLA, cannot be used to justify prolonged incarceration without a trial. The court’s emphasis on balancing the need for ensuring the accused’s presence at trial with the constitutional right to a speedy trial is a significant step in ensuring justice. The decision also highlights the judiciary’s role in protecting fundamental rights, even when faced with serious allegations of financial crime. The imposition of stringent bail conditions reflects the court’s attempt to balance the appellant’s right to liberty with the need to ensure that justice is served.