Supreme Court Orders Release Of Ex-Bhushan Steel MD Neeraj Singal In PMLA Case, Says ED Violated Law On Arrest

The Supreme Court today ordered the release of former Managing Director of Bhushan Steel Limited-Neeraj Singal in a money laundering case. The order was passed citing Singal's long incarceration of about 16 months and the unlikelihood of completion of trial in a short span.

A bench of Justices Sanjiv Khanna and Sanjay Kumar was hearing Singal's challenge to his arrest and dismissal of bail by the Delhi High Court. He was arrested by the Enforcement Directorate on June 9 last year, for alleged involvement in a bank fraud case coupled with the offence of money laundering.

Senior Advocates Kapil Sibal and Dr. Abhishek Manu Singhvi appeared for Singal and argued that he has been in custody for about 16 months. It was further submitted that Singal's case was covered by the Pankaj Bansal judgment.

At the outset, Justice Khanna expressed that in economic offences, a line has to be drawn somewhere. "You can't shake up the economy, shake up confidence of the market...". However, the judge acknowledged that Singal had a strong case insofar as grounds of arrest were not supplied.

At this point, the senior counsels appearing for Singal drew the court's attention to the fact that Singal got bail from the High Court in the predicate offence. When Additional Solicitor General SV Raju pointed to the amount allegedly involved, ie Rs.46000 crores, Justice Khanna said,

"There is no doubt about that. Sixteen months he has been inside, no? We are concerned with non-grant of reasons. By this time, normally one would expect trial to be over within 2-3 years in these matters. It's already been 16 months. I don't think trial would have even started".

Justice Khanna further expressed reservations about Singal's re-arrest and remarked that statutory provisions were not complied with. "I don't know whether you can re-arrest him. I will be very frank. I am not very sure on that. I will not like to pronounce on that", the judge said.

It was also commented that rule of law entails compliance with constitutional provisions.

Justice Kumar (who was part of the bench that delivered the Pankaj Bansal judgment) added, "this is clearly covered by Pankaj Bansal, Mr Raju. You are aware how that 'henceforth' came to be introduced into that judgment. You made a mention before Justice Bopanna that the old cases should not be opened on that ground. That was why that word was added. In cases where the challenge is already pending, you can't say it was already a concluded case. This case was pending".

Before dictating the order, Justice Khanna also stated, "For people who have been in for 16-17-18 months, there is no chance of trial proceeding. There is a violation of law as far as his arrest is concerned. We follow the principles of rule of law".

Ultimately, Singal was ordered to be released on terms and conditions to be imposed by the trial Court. Additionally, some conditions were imposed by the Supreme Court, which are as follows:

(1) Appellant will comply with requirement of Section 438(2) CrPC;

(2) Appellant will make available one telephone number on which he can be contacted by the officers of ED to ascertain his whereabouts and presence;

(3) Appellant will surrender his passport and not leave India without permission of the Court.

The court also clarified that in case there is violation of the terms and conditions of release, it would be open for the prosecution to seek recall of its order before the trial Court.

Before the Supreme Court, Singal argued that no grounds of arrests were given to him and thus the law laid down in the Pankaj Bansal case was violated. Notice was issued on the plea on June 25.

Background

As per allegations, Singhal caused a public loss of more than Rs. 46,000 Crores. It is ED's case that in connivance with other accused persons/business entities, Singal knowingly resorted to the illegitimate acquisition of loan funds in the name of BSL & other group companies, and indulged in the laundering of proceeds of crime through a complex web of more than 150 companies having a common core i.e. ownership and control of Neeraj Singal and Bharat Bhushan.

The High Court had dismissed Singal's plea against arrest and seeking bail, noting that at the time of his arrest, oral communication of the grounds of arrest took place and it was proper compliance of the provisions of Section 19(1) of the PMLA. The High Court further considered that the 'grounds of arrest' shown to Singal at the time of his arrest ran into three pages which were signed by two independent witnesses, thereby lending credence to the same.

Case Title: NEERAJ SINGAL Versus DIRECTORATE OF ENFORCEMENT, Diary No. 15175-2024