Already Undergone Minimum Sentence In Prison Without Trial: PMLA Court Grants Bail To Yes Bank Founder Rana Kapoor

A Special Court under the Prevention of Money Laundering Act (PMLA) has granted bail to Yes Bank founder Rana Kapoor invoking section 436A of the Criminal Procedure Code – which talks about an under-trial having undergone half of the maximum imprisonment possible.

Special PMLA judge M G Deshpande, while granting bail to Kapoor, observed, “Till date the applicant (A1) has undergone custody for 3 years 9 months 13 days, which is more than a half of the prescribed maximum sentence and also more than the minimum punishment of 3 years. But it has to be noted that while suffering such undue incarceration, the applicant (A1) has already undergone the minimum sentence without trial. As on today he (A1) is deemed to have been convicted with more than the period of minimum punishment, that too without framing charge and without trial.”

The judge made that observation after noting that the offenses for which Rana was being prosecuted involved section 3 of PMLA for which the punishment provided under section 4 of the Act was a minimum of 3 years and maximum of 7 years. Rana, 66, was arrested on March 8, 2020, in connection with a Rs 5,050-crore money laundering case registered by the Enforcement Directorate (ED).

He is alleged to have misused his position as the MD & CEO of Yes Bank to gain undue financial benefit for himself, his family members, and associates by involving himself in bribery, corruption, and money laundering activities. He will continue to remain in prison as he is yet to secure bail in a related case being investigated by the Central Bureau of Investigation. Kapoor's wife and daughter and DHFL promoters Kapil and Dheeraj Wadhawan are co-accused in the money laundering case.

The ED opposed the bail application citing the previous rejection of Kapoor's bail application on merit and argued that unless Kapoor satisfies the rigors of twin conditions under Sec.45(1) of the PML Act, he is not even entitled to claim any right under Sec.436-A of Cr.P.C. The agency sought the rejection of his application.

Citing the Supreme Court judgment in the case of Vijay Madanlal Choudhary and others Vs. Union of India and others, [2022] Judge M G Deshpande observed that any accused whose bail application is rejected on merits is not completely debarred from making an application under Sec.436A Cr.P.C. when he is not being tried as expeditiously as possible, particularly from the point of maximum punishment provided for the offence.

The court also rejected the argument by Special Public Prosecutor Sunil Gonsalves on the rigors of stringent conditions under section 45(1) of the PMLA. The court observed that undue incarceration for 3 years 9 months 13 days is “nothing but deemed conviction and sentence for an offence which has not been charged, tried on the basis of evidence and by giving an opportunity of final arguments.”

“Therefore, this prolonged undue incarceration generally militates against the most precious fundamental right guaranteed under Article 21 of the Constitution, and in such a situation the conditional liberty must override the statutory embargo created under the Statute as held by the Hon'ble Supreme Court in the case of Ravi Prakash Vs. State of Odisha (2023 SCC OnLine SC 1109). Therefore, in the present case it has to be held that the applicant (A1) has satisfied the rigors of twin conditions under Sec.45(1) of the PML Act,” the judge ruled.

On the issue of delay in starting the trial, the court took note of a total of 207 dates starting from May 23, 2020 (when the prosecution complaint was filed) up to September 26, 2023 (on which date Kapoor filed the current application) and held that Kapoor cannot be responsible for the delay.

The court observed, “It is material to note that right from the beginning, during the aforesaid period of bail applications till date the applicant (A1) never initiated any proceeding to protract the trial nor has he restricted ED's proceedings before this Court on the reason of pendency of his above referred bail applications. Even ED has nowhere contended that bail applications preferred by the applicant (A1) are causing them delay in conducting their further investigation as per Explanation (ii) to Sec.44(1) of the PML Act. So, pendency of the applicant's (A1) bail applications was/is never the reason for ED in not beginning the trial.”

On the issue of further investigation and draft charges being presented to the court, the judge observed that though the ED had filed draft charges against the accused, it is yet to file a purshis indicating competition for further investigations.

“Whether the ED had finished their investigation, they would have filed Purshis and intimated this fact in the background of their clause in every Prosecution Complaint as “further investigation is in progress”. Though ED has pretended to file draft charge, the same has no bearing unless and until they file a Purshis informing the Court that further investigation undertaken by them as mentioned in the last subsequent Prosecution Complaint, is finally finished. Therefore, filing of draft charge does not represent true and genuine intention of ED that their bonafides are clear. The applicant (A1) is the first person arrested in this case when he was not arrested by CBI, who were investigating the Scheduled Offences,” the court observed.

Accordingly, the Court determined the bail amount to be Rs 3 lakh with one or more sureties of the same amount and imposed further conditions on him to ensure that he did not interfere with the investigation or render it infructous. 

Appearances – Sr Adv Aabad Ponda along with Rahul Agarwal i/b Agarwal & Dhanuka Legal

Case Title - Rana Raj Kapoor vs Directorate of Enforcement

Click Here To Read/Download Judgment