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Monday, August 20, 2012

Bail: Allegations against respondent no.1 that he had huge amount of unaccounted money, that documents recovered from his premises contained instructions issued by him for transfer of various amounts to different persons from the bank accounts held by him outside India and the said monies were the proceeds of crime and by depositing the same in his bank accounts, respondent no.1 had attempted to project the same as untainted money - Further allegation that the said amount ran into billions of dollars; that respondent no.1 had obtained at least three passports in his name by submitting false documents, making false statements and by suppressing the fact that he already had a passport; that Income Tax Department had for the Assessment Years 2001-02 to 2007-08 assessed his total income as Rs.110,412,68,85303/- - Investigations also revealed that he sold a diamond from the collection of Nizam of Hyderabad and routed the proceeds through his account in Bank in Switzerland to a Bank in United Kingdom - High Court allowed bail application of respondent no.1 - On appeal, held: There was no attempt on part of respondent no.1 to disclose the source of the large sums of money handled by him - The allegations may not ultimately be established, but the burden of proof that the said monies were not the proceeds of crime and were not tainted shifted to respondent no.1 u/s.24 of PML Act - The amount lying in the Swiss bank was not explained by respondent no.1 - He was also not able to establish that the sum of Rs.110,412,68,85303/- were neither proceeds of crime nor tainted property - Manner in which he procured three different passports in his name after his original passport was directed to be deposited in court also lend support to apprehension that if released on bail, he may abscond - Bail granted to Respondent no.1 cancelled - Prevention of Money Laundering Act, 2002 - s.4 - FEMA - Code of Criminal Procedure, 1973 - s.439. Bail - Application for cancellation of bail, and appeal against order granting bail - Distinction between. State of U.P. v. Amarmani Tripathi (2005) 8 SCC 21: 2005 (3) Suppl. SCR 454 - relied on. Sanjay Dutt v. State through CBI, Bombay (II) (1994) 5 SCC 410: 1994 (3) Suppl. SCR 263; Uday Mohanlal Acharya v. State of Maharashtra (2001) 5 SCC 453: 2001 (2) SCR 878 - referred to. Case Law Reference: 1994 (3) Suppl. SCR 263 referred to Para 17 2001 (2) SCR 878 referred to Para 17 2005 (3) Suppl. SCR 454 relied on Para 27 CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 1883 of 2011. From the Judgment & Order dated 12.8.2011 of the High Court of Bombay i Criminal Bail Appliction No. 994 of 2011. A. Mariarputham, Rajiv Nanda, Revati Mohite, T.A. Khan, Anirudh Sharma, Anando Mukherjee, Harsh Parekh and B. Krishna Prasad for the Appellant. Ishwari Prasad A. Bagaria, Vijay Bhaskar Reddy, Santosh Paul, Uma Ishwari Bagaria, Arti Singh, Arvind Gupta, Mohita Bagati, Kamal Nijhawan and Asha Gopalan Nair for the Respondents.


                                            REPORTABLE




              IN THE SUPREME COURT OF INDIA



             CRIMINAL APPELLATE JURISDICTION



          CRIMINAL APPEAL NO.1883      OF 2011

      (Arising out of SLP(Crl.) No.6114 OF 2011)





Union of India                            ...    Appellant





                     Vs.





Hassan Ali Khan & Anr.                    ...    Respondents





                         O R D E R





ALTAMAS KABIR, J.




1.    Leave granted.





2.    The   Special   Leave   Petition   out   of   which   this



Appeal   arises   has   been   filed   against   the   judgment


                                       2




and   final   order   dated   12th  August,   2011,   passed   by



the   Bombay   High   Court   in   Crl.   Bail   Application



No.994 of 2011, whereby the High Court granted bail



to   the   Respondent   No.1,   Hassan   Ali   Khan,   in



connection   with   Special   Case   No.1   of   2011,   wherein



the Respondent No.1 is the Accused No.1.





3.    The   allegation   against   the   Respondent   No.1   and



the   other   accused   is   that   they   have   committed   an



offence   punishable   under   Section   4   of   the



Prevention         of         Money         Laundering         Act,         2002,



hereinafter referred to as `the PML Act'.  The said



case   has   been   registered   on   the   basis   of   a



complaint filed by the Deputy Director, Directorate



of   Enforcement,   Ministry   of   Finance,   Department   of



Revenue,  Government  of  India,  on  8th  January,  2007,



on the basis of Enforcement Case Information Report



No.02/MZO/07   based   on   certain   information   and



documents   received   from   the   Income   Tax   Department.


                               3




On the said date, the Income Tax Department carried



out a search in the premises owned and/or possessed



by  the  Respondent  No.1  and  a  sum  of  Rs.88,05,000/-



in cash was found in his residence at Peddar Road,



Mumbai,   and   was   seized.   A   number   of   imported



watches   and   some   jewellery   were   also   found   and



seized during the search.





4.    The   search   also   revealed   that   the   Respondent



No.1   had   purchased   an   expensive   car,   worth   about



Rs.60   lakhs,   from   one   Anil   Shankar   of   Bangalore



through   one   Sheshadari   and   that   he   had   paid   till



then   a   sum   of   Rs.46   lakhs   towards   purchase   of   the



said car.  It also appears that the documents which



were   recovered   by   the   Income   Tax   Department



contained   several   transfer   instructions   said   to



have   been   issued   by   the   Respondent   No.1   for



transfer   of   various   amounts   to   different   persons



from   the   bank   accounts   held   by   him   outside   India.


                                        4




The  said  amounts  forming  the  subject  matter  of  the



instructions issued by the Respondent No.1 ran into



billions   of   dollars.   The   Income   Tax   Department



assessed   the   total   income   of   the   Respondent   No.1



for   the   Assessment   Years   2001-02,   2006-07   and



2007-08   as   Rs.110,412,68,85,303/-.   Furthermore,



during   the   investigation,   the   Directorate   of



Enforcement   also   obtained   a   document   said   to   have



been   signed   by   the   Respondent   No.1   on   29th  June,



2003, which was notarized by one Mr. Nicolas Ronald



Rathbone   Smith,   Notary   Public   of   London,   on   30th



June, 2003.





5.     Further,   an   investigation   was   conducted   under



the         Foreign         Exchange         Management         Act,         1999,



hereafter referred to as `FEMA'. Show-cause notices



were   issued   to   the   Respondent   No.1   for   alleged



violation of Sections 3A and 4 of FEMA for dealing



in   and   acquiring   and   holding   foreign   exchange   to


                                           5




the   extent   of   US$   80,004,53,000,   equivalent   to



Rs.36,000   crores   approximately   in   Indian   currency,



in  his  account  with  the  Union  Bank  of  Switzerland,



AG, Zurich, Switzerland.





6.      Inquiries   also   revealed   that   Shri   Hassan   Ali



Khan   had   obtained   at   least   three   Passports   in   his



name   by   submitting   false   documents,   making   false



statements   and   by   suppressing   the   fact   that   he



already had a Passport.   In addition to the above,



it   was   also   indicated   that   investigations   had



revealed   that   he   had   sold   a   diamond   from   the



collection of the Nizam of Hyderabad and had routed



the   sale   proceeds   through   his   account   in   Sarasin



Bank in Basel, Switzerland, to the Barclays Bank in



the United Kingdom.





7.    Based         on         the         aforesaid         material,         the



Directorate   of   Enforcement,   Mumbai   Zonal   Office,



arrested   the   Respondent   No.1   on   7th  March,   2011,


                              6




and, thereafter, he was produced before the Special



Judge,   PMLA,   Mumbai,   on   8th  March,   2011,   and   was



remanded   in   custody.   Subsequently,   by   an   order



dated   11th  March,   2011,   the   Special   Judge,   PMLA,



rejected   the   prayer   made   on   behalf   of   the



Directorate   of   Enforcement   for   remand   of   the



Respondent  No.1  to  its  custody  and  released  him  on



bail.     However,   since   a   Public   Interest   Litigation



was  pending  in  this  Court  in  which  the  Directorate



of Enforcement was required to file a status report



in   respect   of   the   investigations   carried   out   in



connection   with   the   case,   the   fact   that   the



Respondent   No.1   had   been   released   on   bail   was



brought to the notice of this Court and this Court



stayed   the   operation   of   the   bail   order   and



authorized   the   detention   of   the   Respondent   No.1   in



custody, initially for a period of four days.   The



Union   of   India   thereupon   filed   Special   Leave



Petition   (Crl.)   No.2455   of   2011   and   upon   observing


                               7




that   the   material   made   available   on   record   prima



facie discloses the commission of an offence by the



Respondent   No.1   punishable   under   the   provisions   of



the PML Act, this Court vide order dated 29th March,



2011, disposed of the appeal as well as the Special



Leave   Petition   and   set   aside   the   order   dated   11th



March,   2011,   of   the   Special   Judge,   PMLA,   Mumbai,



and directed that the Respondent No.1 be taken into



custody.        Thereafter,   the   Respondent   No.1   was



remanded   into   custody   from   time   to   time   and   the



complaint   came   to   be   filed   on   6th  May,   2011.   A



further   prayer   for   bail   was   thereafter   made   on



behalf of the Respondent No.1 on 1st July, 2011, but



the  same  was  dismissed  by  the  Special  Judge,  PMLA,



Mumbai, on the same day.  





8.    The   said   order   of   the   Special   Judge,   PMLA,



Mumbai,   rejecting   the   Respondent   No.1's   prayer   for



bail was challenged before the Bombay High Court in


                                      8




Bail Application No.994 dated 2nd  July, 2011.   After



a   contested   hearing,   the   Bombay   High   Court   by   its



order   dated   12th  August,   2011,   granted   bail   to   the



Respondent   No.1   and   the   said   order   is   the   subject



matter of the present proceedings before this Court.





9.    Learned  Additional Solicitor  General, Mr.  Haren



P.   Raval,   appearing   for   the   Union   of   India,



submitted   that   the   High   Court   failed   to   appreciate



the   astronomical   amounts   of   foreign   exchange   dealt



with by the Respondent No.1, for which there was no



accounting   and   in   respect   whereof   the   Income   Tax



Department   had   for   the   Assessment   years   2001-02   to



2007-08         assessed         the            total           income                as



Rs.110,412,68,85,303/-.               The            learned         ASG         also



submitted   that   transfer   of   the   huge   sums   from   one



bank   to   another   was   one   of   the   methods   adopted   by



persons   involved   in   money-laundering   to   cover   the



trail   of   the   monies   which   were   the   proceeds   of


                              9




crime. The learned ASG contended that the large sums



of unaccounted money, with which the Respondent No.1



had   been   dealing,   attracted   the   attention   of   the



Revenue   Department   and   on   investigation   conducted



under   the   Foreign   Exchange   Management   Act,   1959,



(FEMA),   show   cause   notices   were   issued   to   the



Respondent No.1 for alleged violation of Sections 3A



and   4   thereof   for   acquiring   and   holding   foreign



exchange and dealing with the same to the extent of



US$ 80,004,53,000, equivalent to Rs.36,000/- crores,



approximately,   in   Indian   currency,   in   his   account



with   the   Union   Bank   of   Switzerland,   AG,   Zurich,



Switzerland.





10. Mr.   Raval   submitted   that   the   Respondent   No.1,



Shri   Hassan   Ali   Khan,   used   the   different   passports



which he had acquired by submitting false documents,



to open bank accounts in foreign countries to engage



in   the   laundering   of   tainted   money   which   brought


                               10




such   transactions   squarely   within   the   scope   and



ambit of Section 3 of the PML Act, 2002.   Mr. Raval



submitted   that   Section   3   of   the   aforesaid   Act   by



itself   was   an   offence   since   it   provides   that   any



person   directly   or   indirectly   attempting   to   indulge



in or knowingly assisting or knowingly being a party



or   actually   involved   in   any   process   or   activity



connected with the proceeds of crime and projecting



it   as   untainted   property,   would   be   guilty   of   the



offence   of   money-laundering.           The   learned   ASG



submitted that the key expressions used in Section 3



are   "proceeds   of   crime"   and   "projecting   it   as   an



untainted   property".     In   other   words,   in   order   to



prove   an   offence   of   money-laundering,   it   has   to   be



established   that   the   monies   involved   are   the



proceeds   of   crime   and   having   full   knowledge   of   the



same, the person concerned projects it as untainted



property.     The   process   undertaken   in   doing   so,



amounts to be offence of money-laundering.


                                11





11. In this connection, the learned ASG referred to



Section   2(u)   of   the   PML   Act,   which   describes



"proceeds of crime" to mean any property derived or



obtained, directly or indirectly by any person as a



result of criminal activity relating to a scheduled



offence   or   the   value   of   any   such   property.     He,



thereafter, referred to the definition of "scheduled



offence"   in   Section   2(y)   of   the   above   Act   to   mean



(i)   the   offences   specified   under   Part   A   of   the



Schedule; or (ii) the offences specified under Part



B   of   the   Schedule   if   the   total   value   involved   in



such offences amounted to Rs.30 lakhs or more.  





12. The   learned   ASG   submitted   that   the   enormous



sums   of   money   held   by   Shri   Hassan   Ali   Khan   in



foreign   accounts   in   Switzerland,   United   Kingdom   and



Indonesia   and   the   transactions   in   respect   thereof,



prima   facie   indicated   the   involvement   of   the



Respondent   No.1   in   dealing   with   proceeds   of   crime


                                 12




and projecting the same as untainted property, which



was sufficient to attract the provisions of Section



3   of   the   PML   Act,   2002.     The   learned   ASG   submitted



that   under   Section   24   of   the   aforesaid   Act,   when   a



person   is   accused   of   having   committed   an   offence



under   Section   3,   the   burden   of   proving   that   the



monies   involved   were   neither   proceeds   of   crime   nor



untainted property, is on the accused. It was urged



that   once   a   definite   allegation   had   been   made



against   Shri   Hassan   Ali   Khan   on   the   basis   of



documents   seized,   that   the   monies   in   his   various



accounts   were   the   proceeds   of   crime,   the   burden   of



proving   that   the   money   involved   was   neither   the



proceeds of crime nor untainted, shifted to him and



it was upto him to prove the contrary.   The learned



ASG   submitted   that   Shri   Hassan   Ali   Khan   had   failed



to   discharge   the   said   burden   and   hence   the   large



sums   of   money   in   the   several   accounts   of   the



Respondent No.1 would have to be treated as tainted


                              13




property,   until   proved   otherwise.     The   learned   ASG



submitted that the Respondent No.1 had himself made



certain statements which were recorded under Section



50 of the PML Act, parts whereof were not hit by the



provisions of Section 27 of the Indian Evidence Act.





13.    The learned ASG also referred to the provisions



of   Section   45   of   the   aforesaid   Act   which   make



offences   under   the   said   Act   cognizable   and   non-



bailable and also provides that notwithstanding the



provisions   of   the   Code   of   Criminal   Procedure,   no



person  accused  of  an  offence  punishable  for  a  term



of imprisonment of more than three years under Part



A of the Schedule to the Act, is to be released on



bail   or   on   his   own   bond,   unless   the   Public



Prosecutor   has   been   given   an   opportunity   to   oppose



the   application   for   such   release   and   where   the



Public   Prosecutor   opposes   the   application,   the



Court   is   satisfied   that   there   are   reasonable


                                 14




grounds   for   believing   that   the   accused   is   not



guilty of such offence and that he is not likely to



commit   any   offence   while   on   bail.   The   learned   ASG



submitted   that   an   exception   had   been   made   for



persons   under   the   age   of   16   years   or   a   woman   or   a



person who is sick or infirm.





14.    Referring to Part A of the Schedule to the PML



Act,   the   learned   ASG   submitted   that   the   same   had



been   divided   into   paragraphs   1   and   2.              While



paragraph   1   deals   with   offences   under   the   Indian



Penal   Code   under   Sections   121   and   121-A   thereof,



paragraph   2   deals   with   offences   under   the   Narcotic



Drugs   &   Psychotropic   Substances   Act,   1985.     The



learned ASG submitted that, on the other hand, Para



B   is   divided   into   five   paragraphs.   Paragraph   1



deals   with   offences   under   the   Indian   Penal   Code,



while   paragraph   2   deals   with   offences   under   the



Arms   Act,   1959.     Paragraph   3   deals   with   offences


                             15




under   the   Wild   Life   (Protection)   Act,   1972,



paragraph   4   deals   with   offences   under   the   Immoral



Traffic   (Prevention)   Act,   1956,   and   paragraph   5



deals   with   offences   under   the   Prevention   of



Corruption   Act,   1988.     The   learned   ASG   submitted



that the facts of the case attracted the provisions



of paragraph 1 of Part A of the Schedule, since the



money   acquired   by   Shri   Hassan   Ali   Khan,   besides



being the proceeds of crime, is also connected with



transactions   involving   the   international   arms



dealer,   Adnan   Khashoggi.   The   learned   ASG   submitted



that   the   same   became   evident   from   the   notarized



document which had been obtained by the Directorate



of   Enforcement   during   the   course   of   investigation



which had been signed by the Respondent No.1 on 29th



June,  2003,  at  London  and  notarized  by  Mr.  Nicolas



Ronald   Rathbone   Smith,   Notary   Public   of   London,



England, on 30th  June, 2003.   It was also submitted



that the said document certified the genuineness of


                               16




the   signature   of   the   Respondent   No.1   and   also



mentioned   his   Indian   Passport   No.   Z-1069986.     The



learned   ASG   further   contended   that   the   said



notarized   document   also   referred   to   Dr.   Peter



Wielly, who was a link between Mr. Adnan Khashoggi,



and   one   Mr.   Retro   Hartmann   on   whose   introduction



the   Respondent   No.1   opened   an   account   at   UBS,



Singapore,   and   was   also   linked   with   Mr.   Kashinath



Tapuriah.     The   learned   ASG   submitted   that   there



were other materials to show the involvement of Dr.



Wielly   in   the   various   transactions   of   the



Respondent No.1, Hassan Ali Khan.





15.    Further   submissions   on   behalf   of   the   Appellant



were   advanced   by   Mr.   A.   Mariarputham,   learned



Senior   Advocate,   who   referred   to   the   purported



theft   of   the   jewellery   of   the   Nizam   of   Hyderabad



and the sale of the same by the Respondent No.1, on


                               17




account   whereof   US$   700,000   had   been   deposited   by



the Respondent No.1 in the Barclays Bank in London.





16.    Mr.   Mariarpurtham   then   submitted   that   although



the   High   Court   had   relied   on   the   provisions   of



Section   167(2)   Cr.P.C.   in   granting   bail   to   the



Respondent   No.1,   the   said   provisions   were   not



attracted   to   the   facts   of   this   case   since   charge



sheet   had   already   been   filed   within   the   statutory



period   and   the   High   Court   could   not,   therefore,



have   granted   statutory   bail   to   the   Respondent   No.1



on the ground that it had been submitted on behalf



of the Appellant that it would still take some time



for   the   Appellant   to   commence   the   trial.     Mr.



Mariarputham   submitted   that   while   the   Respondent



No.1   had   been   arrested   on   7th  March,   2011   and   had



been produced before the Special Judge and remanded



to custody on 8th  March, 2011, the charge sheet had



been   filed   on   6th  May,   2011   within   the   prescribed


                                     18




period of 60 days.   It was submitted that the High



Court   had   wrongly   interpreted   the   provisions   of



Section   167(2)   Cr.P.C.   in   granting   bail   to   the



Respondent No.1.





17.    In   support   of   his   submissions,   the   learned



counsel referred to the Constitution Bench decision



of this Court in Sanjay Dutt Vs. State through CBI,



Bombay (II) [(1994) 5 SCC 410], wherein it was held



that   the   indefeasible   right   of   an   accused   to   be



released  on  bail  by  virtue  of  Section  20(4)(bb)  of



the         Terrorist         and          Disruptive         Activities



(Prevention)   Act,   1987,   was   enforceable   only   prior



to the filing of the challan and it did not survive



or   remain   enforceable   on   the   challan   being   filed,



if   not   already   availed   of.     Their   Lordships   held



further   that   if   the   right   to   grant   of   statutory



bail   had   not   been   enforced   till   the   filing   of   the



challan,   then   there   was   no   question   of   its


                              19




enforcement thereafter, since it stood extinguished



the   moment   the   challan   was   filed   because   Section



167(2)   Cr.P.C.   ceased   to   have   any   application.



Reference was also made to the decision of a Three



Judge  Bench  of  this  Court  in  Uday  Mohanlal  Acharya



Vs.     State   of   Maharashtra     [(2001)   5   SCC   453],



wherein the scope of Section 167(2) Cr.P.C. and the



proviso   thereto   fell   for   consideration   and   it   was



the   majority   view   that   an   accused   had   an



indefeasible   right   to   be   released   on   bail   when



investigation is not completed within the specified



period   and   that   for   availing   of   such   right   the



accused   was   only   required   to   file   an   application



before   the   Magistrate   seeking   release   on   bail



alleging  that  no  challan  had  been  filed  within  the



period   prescribed   and   if   he   was   prepared   to   offer



bail   on   being   directed   by   the   Magistrate,   the



Magistrate   was   under   an   obligation   to   dispose   of



the said application and even if in the meantime a


                               20




charge-sheet had been filed, the right to statutory



bail   would   not   be   affected.   It   was,   however,



clarified   that   if   despite   the   direction   to   furnish



bail, the accused failed to do so, his right to be



released on bail would stand extinguished.





18.    It   was,   therefore,   submitted   that   the   Bombay



High  Court  had  granted  bail  to  the  Respondent  No.1



on   an   incorrect   interpretation   of   the   law   and   the



said   order   granting   bail   was,   therefore,   liable   to



be set aside.





19.    Appearing   for   the   Respondent   No.1,   Hassan   Ali



Khan,   learned   counsel,   Shri   Ishwari   Prasad   A.



Bagaria,   firstly   contended   that   an   offence   which



did   not   form   part   of   the   scheduled   offences



referred to in Section 45 of the PML Act would not



attract   the   provisions   of   Section   3   of   the   said



Act.  It was submitted that whatever be the amounts



involved   and   even   if   the   same   had   been   unlawfully


                                   21




procured,   the   same   might   attract   the   provisions   of



the   Income   Tax   Act   or   FEMA,   but   that   would   not



satisfy   the   two   ingredients   of   Section   3   which



entails  that  not  only  should  the  money  in  question



be the proceeds of crime, but the same had also to



be   projected   as   untainted   property.     Mr.   Bagaria



submitted   that   in   the   instant   case   all   that   has



been   disclosed   against   the   Respondent   No.1   is   that



he dealt with large sums of money, even in foreign



exchange   and   operated   bank   accounts   from   different



countries,   which   in   itself   would   not   indicate   that



the  monies  in  question  were  the  proceeds  of  crime.



Mr. Bagaria also submitted that at no stage has it



been   shown   that   the   said   amounts   lying   in   the



accounts of the Respondent No.1 in Switzerland, the



United   Kingdom   and   Indonesia   had   been   projected   as



untainted   money.              Furthermore,   as   far   as   the



allegation   regarding   the   theft   of   the   Nizam's



jewellery         is         concerned,         except         for         mere


                                22




allegations,   there   was   no   material   in   support   of



such submission in the face of the case made out by



the   Respondent   No.1   that   he   had   brokered   the   sale



of some portions of the jewellery for which he had



received   a   commission   of   US$30,000   which   he   had



spent in Dubai.





20.    Mr.   Bagaria   submitted   that   in   the   complaint,



reference  had  been  made  in  paragraph  13  thereof  to



"scheduled   offences"   which   have   been   set   out   in



sub-paragraphs   13.1   to   13.5.     Mr.   Bagaria   pointed



out   that   the   offences   indicated   related   to   alleged



offences   under   the   provisions   of   the   Indian   Penal



Code,   the   Passport   Act,   1967   and   the   Antiquities



and   Art   Treasures   Act,   1972,   which   do   not   come



either   under   Part   A   or   Part   B   of   the   Schedule   to



the   PML   Act,   2002,   except   for   the   offences   under



the   Indian   Penal   Code,   the   sections   whereof,   which



have   been   included   in   paragraph   1   of   Part   B,   are


                                23




not   attracted   to   the   facts   of   this   case.     Mr.



Bagaria   submitted   that   as   a   result,   none   of   the



offences   mentioned   as   scheduled   offences   in   the



charge-sheet   were   covered   by   the   Schedule   to   the



PML   Act,   2002,   and   could   at   best   be   treated   as



offences   under   the   Indian   Penal   Code,   the   Passport



Act   and   the   Antiquities   and   Art   Treasures   Act,



1972.  On the question of the alleged absconsion of



the Respondent No.1, Mr. Bagaria submitted that the



said   Respondent   had   not   gone   to   Singapore   on   his



own   volition,   but   had   there   been   taken   by   one



Amalendu   Kumar   Pandey   and   Shri   Tapuriah.     Shri



Pandey   was   subsequently   made   a   witness   and   Shri



Tapuriah   was   made   a   co-accused   with   the   Respondent



No.1.





21.    Mr.   Bagaria   also   contended   that   once   bail   had



been granted, even if the special leave petition is



maintainable,   the   power   to   cancel   grant   of   such


                                    24




bail   lies   with   the   High   Court   or   the   Court   of



Sessions         under         Section         439(2)         Cr.P.C.         and,



consequently,   all   the   principles   laid   down   by   this



Court   relating   to   cancellation   of   bail,   would   have



to   be   considered   before   the   order   granting   bail



could   be   cancelled.     Mr.   Bagaria   submitted   that



even  though  the  offences  were  alleged  to  have  been



committed by the Respondent No.1 as far back as in



the   year   2007,   till   he   was   arrested   on   7th  May,



2011,   there   had   been   no   allegation   that   he   had   in



any   manner   interfered   with   the   investigation   or



tampered   with   any   of   the   witnesses.     Mr.   Bagaria



submitted   that   even   the   apprehension   expressed   on



behalf   of   the   appellant   that   there   was   a



possibility   of   the   Respondent   No.1   absconding   to   a



foreign   country   on   being   released   on   bail,   was



without   any   basis,   since   such   attempts,   if   at   all



made,   could   be   secured   by   taking   recourse   to



various   measures.     Mr.   Bagaria   submitted   that   such


                               25




a submission could not be the reason for cancelling



the   bail   which   had   already   been   granted   to   the



Respondent No.1.





22.    Mr.   Bagaria   submitted   that   in   the   absence   of



any   provisions   in   the   PML   Act   that   the   provision



thereof   would   have   retrospective   effect,   the



provisions   of   the   PML   Act   could   not   also   be   made



applicable   to   the   Respondent   No.1.     Mr.   Bagaria



submitted   that   once   it   is   accepted   that   the   PML



Act,  2002,  would  not  apply  to  the  Respondent  No.1,



the provisions of Section 45 thereof would also not



apply   to   the   Respondent's   case   and   his   further



detention would be unlawful.  Mr. Bagaria concluded



on   the   note   that,   in   any   event,   the   PML   Act   had



been   introduced   in   the   Lok   Sabha   on   4th  August,



1998,   and   all   the   offences   alleged   to   have   been



committed   by   the   Respondent   No.1,   were   long   prior



to the said date.


                              26




23.    Having   carefully   considered   the   submissions



made   on   behalf   of   the   respective   parties   and   the



enormous amounts of money which the Respondent No.1



had been handling through his various bank accounts



and   the   contents   of   the   note   signed   by   the



Respondent   No.1   and   notarized   in   London,   this   case



has   to   be   treated   a   little   differently   from   other



cases of similar nature. It is true that at present



there is only a nebulous link between the huge sums



of   money   handled   by   the   Respondent   No.1   and   any



arms   deal   or   intended   arms   deals,   there   is   no



attempt   on   the   part   of   the   Respondent   No.1   to



disclose   the   source   of   the   large   sums   of   money



handled by him.   There is no denying the fact that



allegations   have   been   made   that   the   said   monies



were   the   proceeds   of   crime   and   by   depositing   the



same  in  his  bank  accounts,  the  Respondent  No.1  had



attempted   to   project   the   same   as   untainted   money.



The   said   allegations   may   not   ultimately   be


                                          27




established,   but   having   been   made,   the   burden   of



proof that the said monies were not the proceeds of



crime   and   were   not,   therefore,   tainted   shifted   to



the   Respondent   No.1   under   Section   24   of   the   PML



Act,   2002.     For   the   sake   of   reference,   Section   24



is extracted hereinbelow :-





       "24. Burden   of   proof.  -   When   a   person   is

       accused   of   having   committed   the   offence

       under   Section   3,   the   burden   of   proving

       that   proceeds   of   crime   are   in   tainted

       property shall be on the accused."





24.    The   High   Court   having   proceeded   on   the   basis



that the attempt made by the prosecution to link up



the acquisition by the Respondent No.1 of different



Passports   with   the   operation   of   the   foreign   bank



accounts         by         the         said         Respondent,         was         not



believable,   failed   to   focus   on   the   other   parts   of



the   prosecution   case.   It   is   true   that   having   a



foreign   bank   account   and   also   having   sizeable



amounts   of   money   deposited   therein   does   not  ipso


                               28




facto  indicate   the   commission   of   an   offence   under



the   PML   Act,   2002.     However,   when   there   are   other



surrounding   circumstances   which   reveal   that   there



were   doubts   about   the   origin   of   the   accounts   and



the   monies   deposited   therein,   the   same   principles



would not apply. The deposit of US$ 700,000 in the



Barclays   Bank   account   of   the   Respondent   No.1   has



not been denied.  On the other hand, the allegation



is   that   the   said   amount   was   the   proceeds   of   the



sale  of  diamond  jewellery  which  is  alleged  to  have



been   stolen   from   the   collection   of   the   Nizam   of



Hyderabad.     In   fact,   on   behalf   of   the   Respondent



No.1   it   has   been   submitted   that   in   respect   of   the



said  deal,  the  Respondent  No.1  had  received  by  way



of   commission   a   sum   of   US$   30,000   which   he   had



spent in Dubai.





25.    Although,   at   this   stage,   we   are   also   not



prepared to accept the convoluted link attempted to


                              29




be  established  by  the  learned  ASG  with  the  opening



and   operation   of   the   bank   accounts   of   the



Respondent   No.1   in   the   Union   Bank   of   Switzerland,



AG,   Zurich,   Switzerland,   the   amounts   in   the   said



bank   account   have   not   been   sought   to   be   explained



by the Respondent No.1.   We cannot also ignore the



fact   that   the   total   income   of   the   Respondent   No.1



for   the   assessment   years   2001-02   to   2007-08   has



been   assessed   at   Rs.110,412,68,85,303/-   by   the



Income Tax Department and in terms of Section 24 of



the PML Act, the Respondent No.1 had not been able



to   establish   that   the   same   were   neither   the



proceeds   of   crime   nor   untainted   property.           In



addition to the above is the other factor involving



the   notarized   document   in   which   the   name   of   Adnan



Khashoggi figures.





26.    Lastly, the manner in which the Respondent No.1



had procured three different passports in his name,


                                      30




after   his   original   passport   was   directed   to   be



deposited,   lends   support   to   the   apprehension   that,



if   released   on   bail,   the   Respondent   No.1   may



abscond.





27.     As   far   as   Mr.   Bagaria's   submissions   regarding



Section   439(2)   Cr.P.C.   are   concerned,   we   cannot



ignore   the   distinction   between   an   application   for



cancellation   of   bail   and   an   appeal   preferred



against   an   order   granting   bail.     The   two   stand   on



different           footings.         While         the         ground         for



cancellation   of   bail   would   relate   to   post-bail



incidents, indicating misuse of the said privilege,



an   appeal   against   an   order   granting   bail   would



question   the   very   legality   of   the   order   passed.



This   difference   was   explained   by   this   Court   in



State   of   U.P.  Vs.  Amarmani   Tripathi  [(2005)   8   SCC



21].


                                31




28.    Taking   a   different   view   of   the   circumstances



which are peculiar to this case and in the light of



what  has  been  indicated  hereinabove,  we  are  of  the



view   that   the   order   of   the   High   Court   needs   to   be



interfered with.  We, accordingly, allow the appeal



and   set   aside   the   judgment   and   order   of   the   High



Court   impugned   in   this   appeal   and   cancel   the   bail



granted to the Respondent No.1.





                                      ...............................................................J.

                                   (ALTAMAS KABIR)





                                      ...............................................................J.

                                      (SURINDER SINGH NIJJAR)

NEW DELHI

DATED: 30.09.2011