The Supreme Court held that an incriminatory statement made by an accused under Section 50 of the PMLA while in custody, and under investigation by the same agency, is inadmissible in another money laundering case in which his arrest is not yet shown.

In that context, the Bench of Justice BR Gavai and Justice KV Viswanathan said that, "when an accused is in custody under PMLA irrespective of the case for which he is under custody, any statement under Section 50 PMLA to the same Investigating Agency is inadmissible against the maker. The reason being that the person in custody pursuant to the proceeding investigated by the same Investigating Agency is not a person who can be considered as one operating with a free mind. It will be extremely unsafe to render such statements admissible against the maker, as such a course of action would be contrary to all canons of fair play and justice."

The appellant challenged the judgment dated March 22, 2024, by the High Court of Jharkhand at Ranchi, which dismissed his bail application in connection with ECIR Case No. 5 of 2023 under the Prevention of Money Laundering Act (PMLA). This case stemmed from an earlier FIR registered on September 8, 2022, under various sections of the Indian Penal Code (IPC) for offenses including fraud and forgery, although the appellant was not initially named as an accused.

The allegations centred on the fraudulent acquisition of one acre of land in Ranchi, where several accused, including Rajesh Rai, Imtiaz Ahmad, and others, were implicated in forging documents and selling the property to various parties. The appellant was accused of conspiring with these individuals and benefiting from the proceeds of the crime through transactions involving the firm Jamini Enterprises, which was alleged to be under his control.

The investigation revealed that forged documents were used to transfer the property, with payments being funneled through various bank accounts, eventually leading to the appellant's alleged involvement. The appellant had been in custody since August 11, 2023, and his previous bail application was rejected by the Special Judge. His subsequent appeal to the High Court was also denied, leading him to challenge the decision.

Before the Apex Court, one of the issues raised was: When a person is in judicial custody/custody in another case investigated by the same Investigating Agency, whether the statements recorded (in this case, the statements dated 03.08.2023, 04.08.2023, 11.08.2023) for a new case in which his arrest is not yet shown, and which are claimed to contain incriminating material against the maker, would be admissible under Section 50?

The Court held: "In the facts of the present case, we hold that the statement of the appellant if to be considered as incriminating against the maker, will be hit by Section 25 of the Evidence Act since he has given the statement whilst in judicial custody, pursuant to another proceeding instituted by the same Investigating Agency. Taken as he was from the judicial custody to record the statement, it will be a travesty of justice to render the statement admissible against the appellant.. The appellant accused cannot be told that after all while giving this statement:- "you were wearing a hat captioned 'ECIR 5/2023' and not the hat captioned 'ECIR 4/2022' "."

The Supreme Court allowed the appeal and quashed the impugned order. It directed the release of the appellant upon furnishing bail bonds of ₹5 lakh with two sureties of the same amount.

Cause Title: Prem Prakash vs Union of India Through Directorate of Enforcement (Neutral Citation: 2024 INSC 637)

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Supreme CourtJustice BR GavaiJustice KV ViswanathanPMLA

Ananya Soni