Vijay Mallya, Nirav Modi & Mehul Choksi Fled India Because Investigating Agencies Didn't Arrest Them On Time: Mumbai Court

A Special PMLA Court in Mumbai recently remarked that fugitives in economic offences such as Nirav Modi, Vijay Mallya, and Mehul Choksi were able to flee India because the investigating agencies failed to arrest them at a proper time.

Special Judge MG Deshpande on May 29, 2024, while addressing the objection raised by the Enforcement Directorate to an application filed by an accused seeking permission to travel abroad, observed :

“Ld. SPP Mr. Sunil Gonsalves vehemently argued that if such application is allowed, it will give rise to the situation like Nirav Modi, Vijay Mallya, Mehul Chokshi etc. I thoughtfully examined this argument and felt it necessary to note that all these persons fled because of the failure of the Investigating Agencies concerned in not arresting them at proper time.”

The court also called out ED for often failing to arrest the accused under section 19 of the Prevention of Money Laundering Act, and then expecting the court to do its work by preventing accused from travelling abroad.

“It is simply because it is the ED who basically allows such person to be scotfree without any apprehensions of his travelling abroad, tampering and hampering evidence, flight risk, apprehension of dealing with POC and assisting the said process etc. But for the first time when such person appears before the Court all such contentions and objections astonishingly crop up before the Court. So, this Court has repeatedly taken firm stand that, the Court cannot do what the ED basically failed to do.”

The court granted permission to accused Vyomesh Shah to travel abroad during and until the conclusion of the trial in a money laundering case.

Shah had filed an application seeking the deletion of a bail condition that restricted his travel abroad.

The Enforcement Directorate (ED) opposed the application, raising objections related to the review of a previous order, the absence of any requirement for the application, the possibility of tampering with evidence, and the risk of the accused fleeing from the jurisdiction.

Shah's counsels relied on the recent judgment of the Supreme Court in Tarsem Lal v. Directorate of Enforcement Jalandhar Zonal Office. They argued that as the Managing Director of Hub Town Ltd., Vyomesh Shah's business responsibilities required him to frequently travel abroad to explore new markets, find customers, and secure finances and investments.

The court noted that in previous cases, the ED had failed to arrest accused persons under Section 19 of the PMLA, merely issuing summons to them but later objected to their release when they appeared before the court. The court emphasized that it cannot impose conditions on accused individuals who have not been arrested under Section 19 and have appeared before the court in response to summons.

The court, after examining the provisions of Section 19 and Section 45 of the PMLA, has earlier formed the view that if the ED did not arrest an individual under Section 19, they cannot be taken into judicial custody when they appear before the court in response to summons. The court highlighted that it has consistently held that if the ED has not arrested an individual under Section 19, their appearance should be entertained as per Section 88 of the CrPC, and they should be released on a personal bond.

Special Judge Deshpande said that this approach has been consistently followed by the court, and it now receives support from the recent judgment of the Supreme Court in the case of Tarsem Lal v. Directorate of Enforcement Jalandhar Zonal Office.

Accused Vyomesh Shah was never arrested by the ED under Section 19 of the PMLA. He appeared before the court in response to the summons and applied for his release, which was heavily opposed by the ED.

However, the court justified his appearance based on the guidelines laid down in a previous case. The ED did not challenge this order before the High Court, and it became final and absolute, the judge said.

The ED's objections and contentions against Vyomesh Shah's application to modify the bail condition are legally impermissible since they did not arrest him under Section 19, the court held.

The court opined that if the order passed by the court creates hurdles in the liberty and fundamental rights of the accused, it can modify the order.

The court questioned ED's failure to arrest Shah if it was apprehensive about flight risks and other objections raised in its response to Shah's application.

The court rejected ED's argument that allowing the application will lead to situations like Nirav Modi, Vijay Mallya, and Mehul Choksi. It noted that those individuals fled due to the failure of the investigating agencies to arrest them at the appropriate time.

In contrast, Vyomesh Shah voluntarily appeared before the court and was not arrested by the ED under Section 19. Therefore, his case cannot be equated with those high-profile cases, the court said.

The court highlighted that many accused individuals involved in ED cases, who were not arrested under Section 19, have to frequently apply to the court for permission to travel abroad. The court pointed out that while it cannot pass orders without hearing the ED, ED's objections regarding flight risk and evidence tampering lose weight if it did not find it necessary to arrest the accused under Section 19.

The court noted that the trial of the PMLA case must be conducted simultaneously with the trial of the case related to the scheduled offense. In this case, the case related to the scheduled offense was pending in Jammu & Kashmir, and until the court directed the ED, no steps were taken to commit the case to PMLA Court, the court highlighted.

The court highlighted that the trial's start and conclusion cannot be anticipated, especially considering the extraordinary volume of each case. The court addressed hardship faced by accused individuals who have to repeatedly apply for permission to travel abroad. It noted that the court should not create a situation where individuals like Vyomesh Shah cannot continue their travel to new destinations simply because of the court's permission restrictions.

The court concluded that if its previous order creates hurdles in the liberty and fundamental rights of the accused, it can modify the order. The court held that the objections raised by the ED do not hold substance.

The court highlighted that Shah is a frequent traveler for his profession, often visiting multiple countries. It noted the short time span between his travels, which makes it difficult for him to return to India, seek permission, and continue his travel to new destinations.

To address this, the court modified its previous order and allowed Vyomesh Shah to travel abroad without any impediment. However, it imposed additional conditions to safeguard the objections raised by the ED, including informing the ED of travel schedules, continuing any cash security deposited for previous travels, and undertaking to appear in court for every date or filing an exemption application, and ensuring the progress of the trial is not affected by the accused's absence.