Legal Brief: Incriminatory Statement given by PMLA accused in custody is inadmissible in another money laundering case.
Case Name: Prem Prakash v. Union of India
Court: Hon’ble Supreme Court of India
Date of Judgment: 28.09.2024
By: Aakanksha Bhatia
Facts
- Prem Prakash (the appellant) challenges a High Court judgment denying him bail in connection with ECIR Case No. 5 of 2023. This case involved alleged violations of Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 (PMLA).
- The case stemmed from a predicate offense (Sadar P.S. Case No. 399 of 2022) involving offences punishable under Section 406, 420, 467, 468, 447, 504, 506, 341 and 34 of Indian Penal Code, 1860. The appellant was not initially named as an accused in either the predicate offense or the
- The Enforcement Directorate alleges that the appellant conspired with several others to acquire the proceeds of crime in the form of land. They allege that he used his connections to facilitate the land’s sale to another accused, Bishnu Kumar Agarwal, and that a portion of the proceeds was transferred to a firm allegedly beneficially owned by the
- The prosecution based their case on statements recorded under Section 50 of the PMLA from the appellant and other accused individuals, along with call detail records. The appellant was in custody for a different ECIR case (No. 4 of 2022) when his statements related to ECIR No. 5 of 2023 were
Issues
- Admissibility of the Appellant’s Statements: Can statements given by an individual under Section 50 of the PMLA, while they are in judicial custody for a different case investigated by the same agency, be admitted as evidence against them in the new case?
- Sufficiency of Evidence for Money Laundering: Did the prosecution present enough evidence to establish a prima facie case of money laundering against the appellant, particularly considering the nature of the statements given by co-accused individuals?
- Applicability of Section 45 of PMLA: Given the arguments about the evidence, did the appellant meet the twin conditions for bail under Section 45 of the PMLA, demonstrating that there are reasonable grounds to believe they are not guilty and are unlikely to commit offenses if released?
Judgment
The Hon’ble Supreme Court of India allowed the appeal, setting aside the High Court’s judgment and ordering the release of the appellant on bail, subject to certain conditions.
Legal Analysis
- Statements Under Section 50 While in Custody for a Different Case: The Court determined that admitting the appellant’s statements, if they were to be considered incriminating, would violate Section 25 of the Evidence Act. This was because the statements were given while he was in judicial custody for a different case investigated by the same
- The Court reasoned that a person in such a situation cannot be considered to be acting with a free mind and admitting the statements would be unfair and unjust. This holding was supported by analyzing the structure of Section 50 and referring to various precedents, including:
- Vijay Madanlal Choudhary v. Union of India: This case established that while PMLA authorities are not police officers, the protection of Section 25 of the Evidence Act might apply in specific situations, which should be assessed on a case-by-case
- Rajaram Jaiswal State of Bihar: This judgment offered a test to determine if an officer can be considered a “police officer” for Section 25 purposes, focusing on whether their powers could facilitate obtaining a confession.
- Nandini Satpathy P.L. Dani: The Court drew on the concept of “compelled testimony” outlined in this case, emphasizing that pressure from investigators, even if subtle, can render a statement inadmissible.
- Re Elukuri Seshapani Chetti: This Madras High Court case supported the principle that a confession made to police investigating one crime is inadmissible in a different crime, aligning with the Court’s view on Section 50
- Statements of Co-Accused: The Court held that statements made by co- accused individuals against the appellant cannot be considered substantive This is consistent with the principle outlined in Kashmira Singh v. State of Madhya Pradesh, stating that such confessions can only be used to support other evidence, not as primary evidence for conviction.
- Sufficiency of Evidence and Section 45 PMLA: After analysing the statements and other materials presented, the Court found that the prosecution failed to establish a prima facie case of money laundering against the The Court was not convinced that the appellant was involved
in the forgery or had knowledge of it. Further, the order granting bail to Bishnu Kumar Agarwal, considered a potential beneficiary of the alleged scheme, had attained finality.
- Given these findings, the Court concluded that the appellant met the twin conditions for bail under Section 45 of the PMLA. There were reasonable grounds to believe the appellant was not guilty, and the Court was satisfied they were unlikely to commit further offenses while on bail. The Court also considered the appellant’s year-long custody and the lack of trial commencement in reaching this.
Conclusion
The Supreme Court’s decision highlights the importance of procedural safeguards in PMLA cases, especially concerning the admissibility of statements obtained during custody. The Court emphasized that while Section 45 of the PMLA sets conditions for bail, the constitutional right to liberty under Article 21 remains paramount. The judgment underscores that detention should not amount to punishment without trial, particularly when the prosecution fails to establish a strong prima facie case.