The Bombay High Court has denied real estate developer Sanjay Chhabria's request for default bail in the Yes Bank money laundering case. The court's decision is based on the recognition that money laundering entails complex procedures to transform illegally-acquired funds into legitimate assets, necessitating thorough investigation.

On October 9, a single judge, Justice M S Karnik, rejected Chhabriaa's request for default bail. The basis for this decision was that although the Enforcement Directorate (ED) had filed its prosecution complaint against him within the required 60-day timeframe, it had also requested the special court's authorization to continue further investigation in the case.

The Enforcement Directorate (ED) argued that while the investigation into Chhabriaa was finished, the overall investigation into the case itself was still ongoing.

In its ruling, the high court concurred with the Enforcement Directorate's perspective, noting that money laundering offenses encompass numerous interlinked transactions, necessitating a thorough investigation. The court further recognized that the ED was conducting an extensive and meticulous inquiry into an economic offense in this particular case.

The order stated, "The accused unquestionably possesses the right to a fair trial, which is an aspect of the right to life and personal liberty as guaranteed by Article 21 of the Constitution of India. Similarly, it is also the responsibility of the respondent, the Enforcement Directorate, to conduct a thorough and exhaustive investigation with regard to the offense."

The court clarified, "Money laundering pertains to the procedure of transforming unlawfully acquired funds to give the appearance of legality, with the intent of concealing their illegal origins. The ultimate objective of money laundering is to incorporate illicit funds into the legitimate financial system, rendering it difficult for authorities to trace and confiscate the proceeds."

Justice Karnik explained that money laundering encompasses complex procedures intended to obscure the source of funds obtained illegally. He further noted that the complexity of a money laundering case depends on the intricacy and sophistication of the techniques employed to conceal the illicit funds.

The High Court, in its order, stated, "Complex money laundering cases, like the one under consideration, involve multiple tiers of transactions. Such cases typically entail elaborate strategies and methods designed to establish multiple layers of concealment, thereby presenting a challenge for investigators to uncover the genuine nature of the illicit funds."

According to the Enforcement Directorate (ED), Chhabriaa was allegedly a key figure in diverting funds that were unlawfully obtained by Yes Bank's founder, Rana Kapoor, and Dewan Housing Finance Limited (DHFL) promoter, Kapil Wadhwan.

Justice Karnik noted that ongoing investigations were being conducted in relation to the broader offense of money laundering in the case.

The High Court made it clear that there were no restrictions on the respondent (Enforcement Directorate) to continue their investigation in the case, allowing them to gather additional evidence, whether in the form of witness statements or documentary evidence, against any individuals implicated in the offense for which the complaint had been filed.

Chhabriaa's lawyer, Vibhav Krishna, argued that because the investigation in the case had not concluded even after 60 days since Chhabria's arrest, the accused should be entitled to the relief of default bail.

Chhabriaa was apprehended by the Enforcement Directorate (ED) on June 7, 2022, in relation to the Yes Bank-DHFL money laundering case. Subsequently, on August 4, 2022, the ED filed its prosecution complaint or chargesheet in the case.

Krishna contended that the ED had submitted the complaint without finishing its investigation, possibly with the intent to thwart the unquestionable right that had accrued in favor of the accused to seek default bail. He informed the court that Chhabriaa had been granted default bail in the Central Bureau of Investigation's (CBI) corruption case linked to the same offense by the Supreme Court in April of the current year.

Chhabriaa applied to the High Court for bail in the Enforcement Directorate's (ED) case after his request had been turned down by a special court in August of the previous year.

Additional Solicitor General Devang Vyas opposed the bail plea and contended that the investigation concerning Chhabriaa had been finalized, but the overall investigation into the entire case was still ongoing.