Karnataka HC directs to grant bail for offence u/s 4 of PMLA on Execution of Personal bond [Read Order]

Dr. B.K. Nagarajappa, the accused was registered by the Additional Directorate, Directorate of Enforcement, Bengaluru, for the offence punishable under Section 4 of the Prevention of Money Laundering Act, 2002 ('PML Act') pending before the Court of Principal City Civil & Sessions Judge, Bengaluru is before this Court under Section 483 of BNSS, 2023 seeking regular bail.

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The petitioner was working as a General Manager of the Karnataka Bhovi Development Corporation ('Corporation') for the period between 05.04.2021 to 01.07.2022. FIR was registered before the various Police Stations in the State

against the management and employees of the Corporation alleging that there was misappropriation of funds belonging to the Corporation and particulars of the said FIRs.

The respondent subsequently initiated proceedings under Section 19 of the PML Act and ECIR/BGZO/05/2025 was registered against three persons for the offence punishable under Section 4 of the PML Act and the petitioner herein is arraigned as accused no.2 in the said case.

It is alleged that, aforesaid four FIRs were registered for the offences punishable under Section 420 and 120B of IPC etc., which are the scheduled offences and utilising the proceeds of the crime, properties were derived/obtained by the accused, which amounted to offence punishable under Section 4 of the PML Act.

The petitioner was arrested in the present case on 05.04.2025 and subsequently he was remanded to

judicial custody. The bail application filed by the petitioner before the jurisdictional sessions Court was rejected on

28.05.2025.

Counsel for the petitioner having reiterated the grounds urged in the petition submitted that charge sheet has not been filed till date in the criminal cases registered for the predicate offences. The petitioner was the person, who initially had submitted a complaint to the Chief Minister of the Karnataka State about the fraud and misappropriation of funds committed by the officials of the Corporation. The complaint by the petitioner was much prior to the registration of the aforesaid 4 FIRs for predicate offence.

During the course of investigation, no material has been recovered from the petitioner which would prima-facie make out the alleged offence against him. The properties, which have been attached in the present case were purchased by the petitioner, much prior to he taking charge as a General Manager in the Corporation.

The court submitted that, except the confession statement of the co-accused in the criminal case registered for predicate offences, there is no other material collected against the petitioner in the present case. Investigation of the case is already completed and final report/complaint has been filed before the jurisdictional Court by the respondent. Accordingly, he prays to allow the petition.

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Per contra, counsel appearing for the respondent referring to Section 3 of the PML Act submitted that the petitioner is an accused in the FIR registered for predicate offences and the proceeds of crime have been directly or indirectly utilised by the petitioner for purchase of properties and therefore a prima-facie case under the provisions of PML Act is made out against him.

It was submitted that the statement recorded under Section 17 of the PML Act and audio evidence clearly establishes a case of money laundering against the petitioner, which is punishable under Section 4 of the PML Act. He submitted that in view of the rigor under Section 45 of the PML Act since there is prima-facie case against the petitioner, his bail application is liable to be rejected.

Though in the statement of co-accused in cases registered for predicate offences, it is stated that, the petitioner was a party to the predicate offences no material has been collected by the Investigating Officer, which would corroborate the said allegation made against the petitioner and in the absence of any corroborative evidence, the confession statement of the co-accused alone cannot be a basis to arrive at a prima-facie conclusion that, the prosecution has made out a case against the petitioner for the alleged offence under the PML Act.

The Courts while considering bail application in a case registered under the provisions of PML Act is required to place its view based on the probability of the basis and reasonable guilt during investigation. Under Section 45 of PML Act, the words used are "reasonable grounds for believing" and therefore, the Court is only required to see whether there is a prima-facie case made against the accused.

After completing investigation, no substantive piece of evidence is filed, which would prima-facie establish the guilt of money laundering against the petitioner. Undisputedly, in the cases registered for the predicate offences, investigation is not completed. Insofar as the present case is concerned the prosecution has cited 54 witnesses and cognizance of the alleged offences is not yet taken. The maximum punishment for the alleged offences is imprisonment for a period of seven years.

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A single bench of Justice S Vishwajith Shetty directed to be enlarged on bail in ECIR/BGZO/05/2025 registered by the Additional Directorate, Directorate of Enforcement, Bengaluru, for the offence punishable under Section 4 of the Prevention of Money Laundering Act, 2002, pending before the Court of Principal City Civil & Sessions Judge, Bengaluru, subject to conditions.

The petitioner shall execute a personal bond for a sum of Rs.1,00,000 (Rupees One Lakh only) with two sureties for the likesum, to the satisfaction of the jurisdictional Court. The petitioner shall appear regularly on all the dates of hearing before the Trial Court unless the Trial Court exempts his appearance for valid reasons. The petitioner shall not directly or indirectly threaten or tamper with the prosecution witnesses. The petitioner shall not involve in similar offences in future.

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