/2023 INSC 0125/
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 534 OF 2023
(@SLP (Crl) No. 8260/2021)
The Directorate of Enforcement       …Appellant(s)
Versus
M. Gopal Reddy & Anr.    …Respondent(s)
J U D G M E N T
M.R. SHAH, J.
1. Feeling   aggrieved   and   dissatisfied   with   the   impugned
judgment  and order  dated 02.03.2021 passed  by  the  High
Court   of   Telangana   at   Hyderabad   in   Criminal   Petition   No.
1148/2021, by which, the High Court has allowed the said
bail   application   and   has   granted   the   anticipatory   bail   in
favour   of   respondent   No.   1   herein   and   has   directed   to
release him on bail in the event of his arrest in connection
with F. No. ECIR/HYZO/36/2020 dated 15.12.2020 on the
file   of   the   Assistant   Director,   Enforcement   Directorate
(hereinafter   referred   to   as   the   ED),   Government   of   India,
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Hyderabad,   which   was   registered   for   the   offence   of   money
laundering   under   Section   3   of   the   Prevention   of   Money
Laundering   Act,   2002   (hereinafter   referred   to   as   the   Act,
2002) and punishable under Section 4 of the said Act, the
Directorate   of   Enforcement   has   preferred   the   present
appeal.      
2. A   FIR   was   registered   by   Economic   Offences   Wing   (EOW),
Bhopal vide FIR No. 12/2019 dated 10.04.2019 wherein 20
persons/companies   were   named   as   suspected   in   the   said
scam.   M/s   Max   Mantena   Micro   JV,   Hyderabad   was   one
among them. 
2.1 As   per   the   FIR,   the   Government   of   Madhya   Pradesh   e­
Procurement   Portal   was   being   run   by   MPSEDC.   M/s
Antares   Systems   Limited,   Bangalore   and   M/s   Tata
Consultancy Services (TCS) were given the contract for the
period   of   5   years   for   the   maintenance   &   operation   of   the
said   portal.   Some   of   the   officials   of   MPSEDC   in   collusion
with   the   companies   entrusted   with   maintenance   and
testing   of   the   portals   namely   M/s   Osmo   IT   Solutions   and
M/s   Antares   Systems   Ltd,   illegally   accessed   the   e­Tender
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portal and rigged the bidding process to suit a few private
bidders for huge amounts of bribe considerations.  
2.2 As   per   the   investigating   agency,   the   preliminary
investigation   by   the   Police   established   that   various   e­
tenders   were   illegally   accessed   and   bids   of   a   few
companies   were   manipulated   to   illegally   make   the   bids   of
those concerns as the lowest one. 
2.3 Apart   from   tenders   mentioned   in   the   first   preliminary
charge sheet filed by  the EOW Bhopal namely  No. 91, 93,
94   (Water   Resource   Dept);   2   tenders   vide   Nos.   49985   &
49982   of   PWD;   Tender   no   49813,   Tender   No.   786   of
MPRDC;   and   Tenders   vide   Nos.   10030   &   10044,   it   was
suspected   that   many   other   tenders   have   also   been
tampered   using   the   same   modus   operandi.   M/s   Mantena
Group   of   Companies,   Hyderabad,   was   suspected   to   be   a
major   beneficiary   of   this   e­tender   scam.   As   per   the   EOW
charge sheet, a joint venture of the Mantena Group known
as M/s Max Mantena Micro JV is the direct beneficiary of a
tampered e­tender No. 10030 worth Rs. 1020 Crore.
2.4 According   to   the   investigating   agency,   the   investigation
into   the   said   FIR   for   the   offences   under   Sections   120B,
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420, 471 IPC and Section 7 r/w Section 13(2) of Prevention
of Corruption (PC) Act is going on and the said offences are
scheduled   offences   under   the   Act,   2002.   The   ED   has
initiated   money   laundering   investigation   in   File   No.
ECIR/HYZO/36/2020. 
 
2.5 According to the ED, in order to gather evidence, a search
operation   was   conducted   under   the   provisions   of   Section
17(1)   of   PMLA,   2002.   Accordingly,   18   premises   were
searched   including   the   residences   of   the   promoters   and
offices   of   M/s   Mantena   Constructions   Ltd,   M/s   Anteras
Pvt   Ltd,   M/s   Osmo   IT   Solutions   Pvt   Ltd,   M/s   Arni   Infra,
etc. a good amount of incriminating documents and digital
devices   have   been   seized   and   are   being   examined   for
evidence. It  is  clear  from  the  ED  investigation   done  so  far
that   a   systematic   conspiracy   has   been   planned   and
executed   by   a   number   of   infrastructure   companies   based
at Hyderabad in collusion with a few Government officials
and   IT   management   companies   to   illegally   win   e­tenders.
Further   large   amounts   of   bribes   running   into   crore(s)   of
rupees have exchanged hands using hawala channels. The
public   funds   meant   for   development   activities   have   been
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diverted   and   siphoned   off   for   personal   illegal   enrichment
and   for   making   illegal   bribe   payments.   The   appellant
department   has   recovered   fund   trail   evidence   and
generation  of black money  through  bogus and over­billing
by the infra companies.
2.6 That respondent No. 1 herein who at the relevant time was
the   Additional   Chief   Secretary   in   the   Water   Resources
Department   in   the   State   of   Madhya   Pradesh,   was
summoned   by   the   ED   to   explain   the   sudden   spurt   in   the
allocation of tenders to M/s Mantena Construction during
his stint in the State of MP. 
2.7 That   apprehending   his   arrest   in   connection   with   ED   case
for the scheduled offence under the Act, 2002, respondent
No. 1 herein approached the High Court by way of present
anticipatory   bail   application   under   Section   438   Cr.PC.
Without   considering   the   rigour/bar   under   Section   45   of
the Act, 2002 and observing that as per the decision of this
Court in the case of  Nikesh Tarachand Shah Vs. Unoin of
India   and   Anr.;   (2018)   11   SCC   1 ,   the   provisions   of
Section   45   of   the   Act,   2002   do   not   apply   to   Section   438
Cr.PC   proceedings,   the   High   Court   has   allowed   the
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anticipatory bail application and has directed that in case
of his arrest in connection with ED case he be released on
bail. 
2.8 Feeling   aggrieved   and   dissatisfied   with   the   impugned
judgment   and   order   passed   by   the   High   Court   granting
anticipatory   bail   to   respondent   No.   1   in   ED   case,   the
Directorate of Enforcement (ED) has preferred the present
appeal. 
3. Shri K. M. Nataraj, learned ASG, appearing on behalf of the
ED – appellant has vehemently submitted that in the facts
and   circumstances   of   the   case,   the   High   Court   has
committed a very serious error in allowing the anticipatory
bail   application   and   granting   anticipatory   bail   to
respondent   No.   1   in   connection   with   ED   case   under   the
Act, 2002. 
3.1 It is submitted that as such the High Court has materially
erred in observing that the provisions of Section 45 of the
Act,   2002   shall   not   be   applicable   to   Section   438   Cr.PC
proceedings.   It   is   submitted   that   for   that   the   High   Court
has erred in relying upon the decision of this Court in the
case   of   Nikesh   Tarachand   Shah   (supra) .   It   is   submitted
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that   subsequently   in   the   case   of   The   Asst.   Director
Enforcement Directorate Vs. Dr. V.C. Mohan (2022 SCC
OnLine   SC   452)   ­   (Criminal   Appeal   No.   21/2022),   this
Court   has   clarified   that   it   is   the   wrong   reading   of   the
decision   in   the   case   of   Nikesh   Tarachand   Shah   (supra)
that the provisions of Section 45 of the Act, 2002 shall not
be   applicable   to   the   anticipatory   bail   proceedings.   It   is
submitted that in the case of   Dr. V.C. Mohan (supra)   it is
specifically   observed   and   held   by   this   Court   that   Section
45 of the Act, 2002 shall be applicable with respect to the
offences under the Act, 2002 and the rigour of Section 45
of   the   Act,   2002   shall   get   triggered   –   although   the
application is  under   Section  438 of  Cr.PC. It is submitted
that   therefore,   the   impugned   judgment   and   order   passed
by   the   High   Court   is   just   contrary   to   the   decision   of   this
Court in the case of  Dr. V.C. Mohan (supra) . 
3.2 It  is   further  submitted  by   Shri   K.M.  Nataraj,  learned  ASG
appearing   on   behalf   of   the   ED   that   even   otherwise   while
granting   the   anticipatory   bail   the   High   Court   has   not
properly appreciated and/or considered the seriousness of
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the   offences   which   are   scheduled   offences   under   the   Act,
2002.   It   is   submitted   that   the   High   Court   has   considered
the anticipatory bail application, as if, the High Court was
dealing  with  the prayer  for  anticipatory  bail in  connection
with the ordinary offences under IPC. 
3.3 It   is   further   vehemently   submitted   by   learned   ASG   that
during   investigation,   the   ED   investigation   has   established
that there is a nexus between Srinivas Raju Mantena and
respondent   No.   1   herein   and   the   same   needs   to   be
investigated in detail. 
3.4 It   is   submitted   that   the   ED   had   gathered   material   which
indicates   nexus   between   respondent   No.   1   and   Srinivas
Raju   Mantena,   who   is   found   to   have   committed   the
offences   of   money   laundering.   It   is   submitted   that
respondent   No.   1   was   summoned   by   ED   but   instead   of
appearing before the IO, he filed a criminal petition before
the   High   Court   and   obtained   the   interim   relief.   It   is
submitted   that   he   appeared   before   the   ED   and   his
statement was recorded under Section 50 of the Act, 2002.
It is submitted that however on both the occasions he was
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totally   evasive   and   non­cooperative   and   therefore,   his
custodial interrogation is required. 
3.5 It   is   further   submitted   by   learned   ASG   that   during   the
investigation the ED has found that respondent No. 1 had
availed and enjoyed free trips in last one year alone on the
luxury   plane   of   Mantena   on   multiple   occasions.   It   is
submitted that during investigation it has been found that
respondent   No.   1   had   also   availed   other   patronages   from
Srinivas   Raju   Mantena   like   sponsoring   foreign   exchange
through Hawala Channels for his son. 
3.6 It   is   submitted   that   while   granting   anticipatory   bail   to
respondent   No.   1   the   High   Court   has   not   considered   the
nature   of   allegations   and   seriousness   of   offences   alleged
against   respondent   No.   1   who   at   the   relevant   time   was
working as an Additional Chief Secretary. 
3.7 Making   the   above   submissions   and   relying   upon   above
decision as well as the decision of this Court in the case of
P.   Chidambaram   Vs.   Directorate   of   Enforcement;
(2019) 9 SCC 24  as well as the decision in the case of  Y.S.
Jagan   Mohan   Reddy   Vs.   CBI;   (2013)   7   SCC   439 ,   it   is
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prayed   to   allow   the   present   appeal   and   quash   and   set
aside   the   impugned   judgment   and   order   passed   by   the
High Court. 
4. Present   appeal   is   vehemently   opposed   by   Shri   Vijay
Agarwal,   learned   counsel   appearing   on   behalf   of
respondent No. 1 herein. 
4.1 It   is   vehemently   submitted   by   learned   counsel   appearing
on   behalf   of   respondent   No.   1   that   in   the   facts   and
circumstances   of   the   case   the   High   Court   has   not
committed   any   error   in   granting   anticipatory   bail   to
respondent No. 1. 
4.2 It is vehemently  submitted that in the  present  case so far
as the main FIR is concerned, the other accused have been
acquitted/discharged.   It   is   submitted   that   as   held   by   this
Court in the catena of decision that if the person is finally
discharged/acquitted   of   the   scheduled   offence   or   the
criminal   case   against   him   is   quashed   by   the   Court   of
competent   jurisdiction,   there  can   be  no   offence   of  money­
laundering against him or any one claiming such property
being   the   property   linked   to   stated   scheduled   offence
through him. 
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4.3 It   is   further   submitted   that   in   the   present   case   even
respondent   No.   1   was   not   named   in   the   FIR   for   the
scheduled offence(s). 
4.4 It is further submitted that the offence under the Act, 2002
is dependent on predicate offence which would be ordinary
law   including   the   provisions   of   the   IPC.   It   submitted   that
therefore,   as   other   accused   persons   have   been
acquitted/discharged   for   the   predicate   offence/schedule
offence   there   is   no   question   of   any   offence   by   respondent
No. 1 under the Act, 2002/money laundering.  
4.5 It   is   further   submitted   by   learned   counsel   appearing   on
behalf   of   respondent   No.   1   that   while   granting   the
anticipatory  bail  the   High  Court  has  followed  the  decision
of   this   Court   in   the   case   of   Nikesh   Tarachand   Shah
(supra) , the law which was prevalent at the relevant time. 
4.6 It   is   submitted   that   the   prospective   overruling   of   the   said
decision   by   this   Court   in   the   case   of   Dr.   V.C.   Mohan
(supra)   therefore,   cannot   be   pressed   into   service   while
challenging   the   impugned   judgment   and   order   passed   by
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the High Court granting anticipatory bail   relying upon the
decision/law prevalent at the relevant time. 
4.7 It   is   further   submitted   by   learned   counsel   appearing   on
behalf of respondent No. 1 that in the present case cogent
reasons have been given by the High Court while granting
anticipatory   bail   to   respondent   No.   1   and   considering   the
fact   that   respondent   No.   1   has   cooperated   in   the
investigation and appeared twice earlier before the IO/ED,
the   impugned   judgment   and   order   passed   by   the   High
Court granting anticipatory bail may not be interfered with
by this Court. 
 
5. We have heard learned counsel appearing on behalf of the
respective parties at length. At the outset, it is required to
be noted that respondent No. 1 is apprehending his arrest
in   connection   with   the   complaint/case   by   the   ED   for   the
offence   of   money   laundering   under   Section   3   of   the
Prevention of Money Laundering Act, 2002 and punishable
under Section 4 of the said Act. An enquiry/investigation is
going   on   against   respondent   No.   1   for   the   scheduled
offence   in   connection   with   FIR   No.   12/2019.   Once   the
enquiry/investigation against respondent No. 1 is going on
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for   the   offence   under   the   Act,   2002,   the   rigour   of   Section
45   of   the   Act,   2002   would   be   attracted.   Section   45   of   the
Act, 2002 reads as under: ­ 
“ 45. Offences to be cognizable and non­bailable .—
( 1)   [Notwithstanding   anything   contained   in   the   Code   of
Criminal   Procedure,   1973   (2   of   1974),   no   person
accused   of   an  offence   [under   this   Act]  shall   be   released
on bail or on his own bond unless—]
( i )   the   Public   Prosecutor   has   been   given   an
opportunity   to   oppose   the   application   for   such
release; and
( ii )   where   the   Public   Prosecutor   opposes   the
application,   the   court   is   satisfied   that   there   are
reasonable   grounds   for   believing   that   he   is   not
guilty of such offence and that he is not likely to
commit any offence while on bail:
Provided that a person, who, is under the age of
sixteen years, or is a woman or is sick or infirm   [or is
accused   either   on   his   own   or   along   with   other   co­
accused   of   money­laundering   a   sum   of   less   than   one
crore   rupees],   may   be   released   on   bail,   if   the   Special
Court so directs:
Provided further that the Special Court shall not
take   cognizance   of   any   offence   punishable   under
Section 4 except upon a complaint in writing made by
—
( i ) the Director; or
( ii )   any   officer   of   the   Central   Government   or   a
State   Government   authorised   in   writing   in   this
behalf by the Central Government by a general or
special   order   made   in   this   behalf   by   that
Government.
[(1­A)   Notwithstanding   anything   contained   in   the
Code   of   Criminal   Procedure,   1973   (2   of   1974),   or   any
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other   provision   of   this   Act,   no   police   officer   shall
investigate   into   an   offence   under   this   Act   unless
specifically   authorised,   by   the   Central   Government   by
a   general   or   special   order,   and,   subject   to   such
conditions as may be prescribed.]
(2) The limitation on granting of bail specified in   [*
*   *]   sub­section   (1)   is   in   addition   to   the   limitations
under   the   Code   of   Criminal   Procedure,   1973   (2   of
1974)   or   any   other   law   for   the   time   being   in   force   on
granting of bail.”
5.1 By   the   impugned   judgment   and   order,   while   granting
anticipatory   bail   the   High   Court   has   observed   that   the
provisions   of   Section   45   of   the   Act,   2002   shall   not   be
applicable   with   respect   to   the   anticipatory   bail
applications/proceedings   under   Section   438   Cr.PC.   For
which the High Court has relied upon the decision of this
Court   in   the   case   of   Nikesh   Tarachand   Shah   (supra).   In
the   case   of   Dr.   V.C.   Mohan   (supra),   this   Court   has
specifically   observed   and   held   that   it   is   the   wrong
understanding that in the case of  Nikesh Tarachand Shah
(supra)  this Court has held that the rigour of Section 45 of
the   Act,   2002   shall   not   be   applicable   to   the   application
under  Section 438 Cr. PC. In the case of   Dr.   V.C.   Mohan
(supra)   in   which   the   decision   of   this   Court   in   the   case   of
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Nikesh Tarachand Shah (supra)   was pressed into service,
it is specifically observed by this Court that it is one thing
to   say   that   Section   45   of   the   Act,   2002   to   offences   under
the   ordinary   law   would   not   get   attracted   but   once   the
prayer   for   anticipatory   bail   is   made   in   connection   with
offence under the Act, 2002, the underlying principles and
rigours   of   Section   45   of   the   Act,   must   get   triggered   –
although   the   application   is   under   Section   438   Cr.PC.
Therefore,   the   observations   made   by   the   High   Court   that
the   provisions   of   Section   45   of   the   Act,   2002   shall   not   be
applicable in connection with an application under Section
438 Cr.PC is just contrary to the decision in the case of  Dr.
V.C. Mohan (supra)  and the same is on misunderstanding
of the observations made in the case of  Nikesh Tarachand
Shah (supra).  Once the rigour under Section 45 of the Act,
2002   shall   be   applicable   the   impugned   judgment   and
order  passed   by   the   High   Court   granting  anticipatory   bail
to respondent No. 1 is unsustainable. 
6. Even   otherwise   on   merits   also,   the   impugned   judgment
and   order   passed   by   the   High   Court   granting   anticipatory
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bail   to   respondent   No.   1   is   erroneous   and   unsustainable.
While granting the anticipatory bail to respondent No. 1 the
High   Court   has   not   at   all   considered   the   nature   of
allegations   and   seriousness   of   the   offences   alleged   of
money   laundering   and   the   offence(s)   under   the   Act,   2002.
Looking to the nature of allegations, it can be said that the
same   can   be   said   to   be   very   serious   allegations   of   money
laundering   which   are   required   to   be   investigated
thoroughly.   As   per   the   investigating   agency,   they   have
collected   some   material   connecting   respondent   No.   1
having   taken   undue   advantage   from   Srinivas   Raju
Mantena.   From   the   impugned   judgment   and   order   passed
by   the   High   Court,   it   appears   that   the   High   Court   has
considered the matter, as if, it was dealing with the prayer
for anticipatory bail in connection with the ordinary offence
under IPC. 
6.1 Now so far as the submissions on behalf of respondent No.
1   that   respondent   No.   1   was   not   named   in   the   FIR   with
respect   to   the   scheduled   offence   and   that   the   other
accused   are   discharged/acquitted   is   concerned,   merely
because   other   accused   are   acquitted,   it   cannot   be   a
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ground   not   to   continue   the   investigation   against
respondent   No.   1.   An   enquiry/investigation   is   going   on
against   respondent   No.   1   with   respect   to   the   scheduled
offences.   Therefore,   the   enquiry/investigation   itself   is
sufficient at this stage. 
6.2 While granting  the anticipatory  bail, what  is weighed with
the High Court and what is observed by the High Court is
as under: ­
“A   careful   reading   of   the   aforesaid   legal   position   and   in
the light of the circumstances of the case on hand, which
clearly   indicates   that   the   1 st
  respondent   has   a   doubt
regarding the involvement of the petitioner in commission
of the crime and he is being summoned for disclosure and
in   case   of   his   non­disclosure   of   any   material,   on   the
pretext   of   non­co­operation,   the   1 st
  respondent   may
proceed to arrest him. The petitioner is a retired employee
aged   about   60   years   and   is   a   permanent   resident   of
Hyderabad,   Further,   major   part   of   the   investigation   has
been   completed   with   respect   to   the   incriminating
documents   and   digital   devices,   which   have   already   been
seized.   Hence,   there   may   not   be   a   chance   of   tampering
with   the   investigation   at   this   stage,   because   as   rightly
pointed   out   by   the   learned   Senior   Counsel   for   the
petitioner   that   a   criminal   case   has   already   been   filed
against the other accused and the same is pending before
the Special Court at Bhopal.”
6.3 From the aforesaid, it can be seen that the High Court has
not   at   all   considered   the   nature   of   allegations   and   the
seriousness of the offences alleged against respondent No.
1.   As   per   the   catena   of   decision   of   this   Court,   more
particularly,   observed   in   the   case   of   P.   Chidambaram
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(supra)   in case of economic offences, which are having  an
impact   on   the   society,   the   Court   must   be   very   slow   in
exercising the discretion under Section 438 of Cr.PC. 
7. Considering the overall facts and circumstances of the case
and the reasoning given by the High Court and as observed
hereinabove, the rigour of Section 45 of the Act, 2002 shall
be   applicable   even   with   respect   to   the   application   under
Section   438   Cr.PC   and   therefore,   the   impugned   judgment
and   order   passed   by   the   High   Court   granting   anticipatory
bail   to   respondent   No.   1   herein   in   connection   with   F.   No.
ECIR/HYZO/36/2020   dated   15.12.2020   is   unsustainable.
Consequently,   the   impugned   judgment   and   order   passed
by the High Court granting anticipatory bail to respondent
No.   1   is   hereby   quashed   and   set   aside.   Respondent   No.   1
be   dealt   with   in   accordance   with   law.   However,   it   is
observed   and   made   clear   that   after   respondent   No.   1   is
arrested,   if   he   files   any   regular   bail   application,   the   same
be   considered   in   accordance   with   law   and   on   its   own
merits   and   considering   the   material   collected   during
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enquiry/investigation   of   the   case.   Present   appeal   is
accordingly allowed. No costs.                 
………………………………….J.
[M.R. SHAH]
NEW DELHI; ………………………………….J.
FEBRUARY 24, 2022 [C.T. RAVIKUMAR]
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