The Delhi high court recently granted bail to a Chartered accountant who had accusations of Money laundering under the Prevention of Money Laundering Act 2002. The court's decision was based on the determination that the accusation against the petitioner did not involve actions outside the scope of his professional duties as a chartered accountant. 

The High Court arrived at this conclusion while examining a petition that contested a previous order, wherein the bail application had been rejected by the Special Judge primarily because the petitioner had not satisfied the requirements of Section 45 of the PMLA. The Trial court had also asserted that the petitioner played an active role in aiding co-accused individuals in the process of converting illicitly obtained funds into legitimate ones, implicating him in money laundering activities.

Justice Dinesh Kumar Sharma, presiding over the Bench, made the following observation: “It is a settled proposition that at the stage of consideration of the bail even under PMLA the court has only to see the preponderance of probability. The court at this stage is not required to record the positive finding of acquittal. Such findings can be recorded only after recording and appreciation of the evidence by the trial court”.

In this case, the petitioner, who is a practicing chartered accountant, explained that he had initially met one of the co-accused, Mr. Anubrata Mondal, as part of his professional work. Starting from the financial year 2017-2018, he provided professional services such as income computation and income tax return filing for Mr. Mondal and his family members, including Ms. Sukanya Mondol. As an auditor, the petitioner had legal obligations to audit and submit reports under Section 145 of the Companies Act, 2013, and Section 44AB of the Income Tax Act, 1961, for tax audit purposes.

The petitioner applied for bail, emphasizing that if he was not released on bail, he would be unable to fulfill the required audit reports. This non-compliance would not only result in the permanent loss of his clients but also severely damage his professional career.

The Enforcement Directorate (ED) opposed this bail application, alleging that their investigation had revealed the petitioner's involvement in managing the finances of the co-accused and their family members concerning the proceeds of illegal activities linked to cross-border cattle smuggling.

Upon reviewing the submissions, the Bench made reference to the case of Vijay Madanlal Chaudhary & Ors. v. Union of India & Ors. [SLP (Criminal) 4634 of 2014]. In doing so, it underscored that when evaluating bail applications, the primary focus of the court should be on whether the accused possessed the necessary mens rea (criminal intent) for the alleged offense. The court is not obligated to make a conclusive determination regarding the guilt or innocence of the accused under the relevant Act. 

The Bench noted, "It is an admitted fact that the petitioner in this case served as the chartered accountant for Anubrata Mondal. According to the Enforcement Directorate (ED), the petitioner played a crucial role in presenting illicit funds as legitimate. The petitioner's apparent role primarily involved the filing of income tax returns."

The Bench further explained that a professional, like a chartered accountant, typically carries out their duties based on the instructions of their client. However, whether the professional has exceeded their professional responsibilities is a matter that needs to be assessed and scrutinized during the trial proceedings.

The Bench further clarified that the accusation against the current petitioner does not pertain to actions that are completely unrelated to the field of chartered accountancy, meaning that he did not engage in activities beyond the scope of his profession. Therefore, the petitioner's argument that he acted based on the information and records provided to him cannot be summarily dismissed at this stage of the proceedings.

As a result of its considerations, the High Court granted bail to the petitioner. The petitioner was required to provide a personal bond in the amount of Rs. 5 lakhs and a surety of a similar amount, to the satisfaction of the trial court. This bail was granted subject to certain terms and conditions.

Case: Manish Kothari v. Director of Enforcement Ministry of Finance Dept. of revenue headquarter investigation unit, BAIL APPLN. 2341/2023.