Union of India vs. Hassan Ali Khan & Anr.
The Special Leave Petition had been filed against the judgment and final order passed by the Bombay High Court in a bail application 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 was the Accused No.1.
The allegation against the Respondent No.1 and the other accused was that they had committed an offence punishable under Section 4 of the Prevention of Money Laundering Act, 2002 (‘the PML Act’). The said case had 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 the basis of Enforcement Case Information Report No.02/MZO/07 based on certain information and documents received from the Income Tax Department. The Income Tax Department had 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/-.
An investigation was also conducted under the Foreign Exchange Management Act, 1999, (‘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 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. 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.
The Directorate of Enforcement, Mumbai Zonal Office, arrested the Respondent No.1 on 7th March, 2011, 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 the Supreme 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 the Supreme Court and it 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 filed a Special Leave Petition and the Supreme 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, but the same was dismissed by the Special Judge, PMLA, Mumbai, on the same day. 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 which granted bail to the Respondent No.1.
After considering 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, the Supreme Court observed that the case had to be treated a little differently from other cases of similar nature. Allegations had been made that the 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 High Court had 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. Though having a foreign bank account and also having sizeable amounts of money deposited therein did not ipso facto indicate the commission of an offence under the PML Act, 2002. However, when there were other surrounding circumstances which revealed that there were doubts about the origin of the accounts and the monies deposited therein, the same principles would not apply. Taking a different view of the circumstances which were peculiar to the case, the Supreme Court allowed the appeal and set aside the judgment and order of the High Court impugned in the appeal and cancelled the bail granted to the Respondent No.1.