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Money Laundering - Case Laws
Showing 21 to 40 of 1549 Records
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2024 (4) TMI 76 - DELHI HIGH COURT
Money Laundering - Scheduled offences - whether the Non-Bailable Warrants (NBW) issued against the petitioner are liable to be quashed? - HELD THAT:- As recorded in order dated 05.12.2023, the petitioner had not appeared before the learned Trial Court. However, the exemption application filed on behalf of the petitioner was allowed for that day only by the link Court which was hearing the matters on the said day. An exemption application was again preferred by the petitioner on 05.01.2024, and the same was dismissed by the learned Trial Court considering his previous conduct of repeated absence from the Court and also the fact that he was not on bail in this case. The learned Trial Court had also directed the petitioner to appear physically on the next date of hearing failing which NBW would be issued against him - Despite there being clear directions for the petitioner to appear physically before the learned Trial Court, another exemption application on his behalf was filed on 02.02.2024, which was dismissed by the learned Trial Court with the observations that there was repeated physical absence of the petitioner before the Court, despite giving assurance/ undertaking to do so, on previous various dates, and thus, there were no grounds to allow the exemption application as he was not even on bail in this case, and also considering the fact that no relief had been granted to the petitioner/accused by this Court in the connected CBI case.
The learned Trial Court had dismissed the exemption application filed on behalf of petitioner and had observed that Bailable Warrants were not being issued against the petitioner, and an opportunity was being afforded to him, but with a clarification that his failure to appear physically on the next date of hearing would lead to issuance of NBW against him. On 11.08.2023, 19.09.2023, 05.12.2023, though he was allowed to appear virtually by the learned Trial Court, it was observed that the same was allowed only for one occasion and he had to appear physically before the Court - Having taken note of the orders passed by the learned Trial Court on 31.05.2023, 19.07.2023, 11.08.2023, 19.09.2023, 05.12.2023, 05.01.2024, 02.02.2024, this Court is of the opinion that despite the fact that the petitioner had not obtained bail from the learned Trial Court after cognizance had been taken and summons had been issued against him, the learned Trial Court was lenient with the petitioner on several occasions by not issuing warrants against him, though he was not appearing physically before the Court despite repeated directions in this regard by the learned Trial Court.
In this Court’s opinion, what can be readily discerned from the records of the case and the orders passed by the learned Trial Court is that the petitioner had been afforded several opportunities by the learned Trial Court, to appear before it physically and repeated warnings had been issued that his failure to appear before the Court would lead to issuance of coercive process i.e. NBW. It is only thereafter that the learned Trial Court was left with no other option but to issue NBW against the petitioner. It is also relevant to note that the learned Trial Court had also considered in its previous orders, the conduct of the petitioner during the course of investigation i.e. his non-appearance before the investigating officer despite five summons being served upon him, the fact that complaint under Section 174 of IPC had been filed already against him by the prosecuting agency, and also the fact that NBWs had been issued against him in the connected CBI case and relief had been denied to the petitioner by this Court also in the CBI case as he had failed to return to India despite giving undertakings on numerous occasions.
This Court is of the opinion that the impugned order dated 02.02.2024 suffers from no illegality or infirmity insofar as it has directed issuance of Non-Bailable Warrants against the present petitioner - the present bail application alongwith pending application stands dismissed.
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2024 (4) TMI 75 - BOMBAY HIGH COURT
Maintainability of petition - availability of alternative remedy of appeal - Money Laundering - scheduled offences - main contention raised by the petitioner was that he did not have a proper opportunity to place before the adjudicating authority certain documents which were at the relevant time not in his possession - HELD THAT:- If one goes through the scheme of the PMLA, sub-Section 1 of Section 26 provides for the filing of an appeal by any person aggrieved by an order made by the adjudicating authority, under the Act, before the Appellate Tribunal constituted under Section 25 therein. This appeal is to be filed within 45 days from the date of receipt of the copy of the order. The proviso to Section 3 of Section 26 empowers the Appellate Tribunal to condone the delay beyond the period of limitation of 45 days.
Thus, the scheme of the Act provides for two appeals, i.e. first to the Appellate Tribunal and the second appeal, both on law and on fact, to this Court. Looking to the scheme of the Act, where the second appeal is before the very Court where the petitioner has now chosen to invoke its power under Article 227, it would be inappropriate for this Court to exercise its writ powers under Article 227 of the Constitution, when the second appeal is to the very same Court.
Considering the fact that the petitioner has approached this Court within a period of 45 days limitation under Section 27 of the PMLA, it would be appropriate for the Appellate Tribunal before whom the petitioner may now file an appeal to consider this fact and exercise its jurisdiction to condone the delay in terms of the proviso to sub-Section 3 of Section 26 favourably. The petitioner makes a statement that he would file an appeal before the Appellate forum within the period of four weeks from today - The Appellate forum may also consider the additional documents to which reference has been made in paragraph 3 of this order whilst disposing of the appeal. Needless to state that these documents may be considered only after the respondents file their say to the application that the petitioner would move along with his appeal memo on that count.
The petition shall stand dismissed as not maintainable in view of the alternate and equally efficacious remedy available of an appeal in terms of Section 26 of the PMLA.
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2024 (4) TMI 38 - MADRAS HIGH COURT
Seeking grant of bail - money laundering - proceeds of crime - misappropriation of credit facilities extended by the banks for personal gain - creation of shell companies - main allegation of the respondent is that the petitioner, in his capacity as Managing Director of Surana Power Ltd., had presented a project for construction of 25 MW electric plant at Raichur in Karnataka and in this regard had sought loan from a consortium of Banks. It is seen from the records that more than 1,300 crores had been sanctioned - HELD THAT:- It is the specific case of the respondent that towards the said project the said contracts were granted to other companies which were under the direct control of the petitioner. This allegation is denied by the petitioner. But that allegation is a matter of evidence. But it has to be noted that the allegation that those companies were under the direct control of the petitioner is a very serious allegations, since any contract issued has to be done only by a transparent policy being issued.
Shell companies - HELD THAT:- A detailed list has been given in the counter affidavit about the various shell companies which are alleged to have been incorporated by this petitioner - It is also seen that though it is contended that two forensic audits had been conducted and no irregularity had been found, third audit was conducted over the affairs of the companies and the report is not to the advantage of the petitioner. All these aspects require deep investigation.
In the instant case, the allegation against the petitioner with respect to diversion and misappropriation of funds is that SPL had borrowed funds of Rs. 1,4945.76 crores and had not even started the 2 X 210 MW power plant at Raichur in Karanataka. The account was also declared as NPA. It is also seen that for construction, SPL had awarded sub-contracts to entities which were, according to the respondent, controlled by the petitioner. Further very specifically shell companies were incorporated and there was only paper transaction reflecting the turn over. The amounts diverted back to the companies showing them as contribution of the petitioner. All these are series allegations.
It is thus seen that the petitioner will have to satisfy two conditions for grant of bail namely, that there are reasonable grounds that the petitioner would be held not guilty and that there must also be a trust that the petitioner would not indulged in similar activities in future. Unfortunately, the petitioner had not satisfied either of the two conditions.
Petition dismissed.
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2024 (4) TMI 37 - MADRAS HIGH COURT
Validity of ECIR proceedings- money laundering - Predicate offence - criminal conspiracy in the commission of offence relating to allotment of housing plots under Government Discretionary Quota - HELD THAT:- The impugned ECIR proceedings has been recorded against the petitioner showing him as a suspected person, based on the complaint which culminated into C.C.No.14 of 2019, which was quashed by the above referred order. Though a detailed counter has been filed, the averments may not have relevance in view of the admitted fact that the proceedings in the predicate offence has been quashed and in view of the settled position of law.
This Court has, in similar cases, expressed its view that the proceedings under the PMLA 2002 cannot proceed further, once the FIR/Final Report relating to the predicate offence is quashed. The law is well settled by the larger Bench of the Hon'ble Supreme Court in the case of VIJAY MADANLAL CHOUDHARY & ORS. VERSUS UNION OF INDIA & ORS. [2022 (7) TMI 1316 - SUPREME COURT] wherein it was held 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.
This Court is of the view that in view of the quashing of the proceedings against the petitioner in the predicate offence, the impugned proceedings cannot be sustained. Hence, the Criminal Original Petition stands allowed.
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2024 (4) TMI 27 - MADRAS HIGH COURT
Money Laundering - Validity of acquittal of accused - Dismissal of the Complaint - falsification of accounts, forgery and cheating - misusing the password and manipulating the data - HELD THAT:- This Court is conscious of the fact that an appeal against acquittal cannot be interfered unless and until the reasoning given by the trial Court suffers serious legal infirmity or factual error. If the views expressed are reasonably possible, even if another view is possible, the appellate Court need not interfere. It is well settled principle of law that an order of acquittal should not be disturbed, unless it is perverse or bereft of reasoning or contrary to the evidence on record. Even, if an alternate view is probable/possible, the view of the trial Court, which has acquitted, cannot be substituted by this Court with the alternate possible view to reverse the order of acquittal.
In this case, unfortunately, the complainant had proceeded on a presumption that the crime investigated by CBI had generated proceeds of crime and further leading to acquisition of property. Without placing material evidence, either about the crime or about the proceeds from that crime, the complainant cannot succeed. That is the reason why, the trial Court has specifically pointed out that without proving the fundamental fact, which is necessary to invoke the provisions of the PMLA, the complainant cannot succeed. This Court totally agrees with this view.
It is also found that the appellant / complainant had not made any attempt to invoke Section 44(1) of the PMLA as explained under the Statute. Since the predicate offence has also been pending in the same Court, the appellant / complainant ought to have asked for simultaneous trial in both the cases to avoid conflicting verdict and to avoid omission in marshalling evidence. For the reasons best known, they had allowed the PMLA case to proceed first and while doing so, also failed to place all the material documents though available to substantiate the fundamental requirement to proceed under the PMLA.
This Court is of the view that the criminal appeal is liable to be dismissed without any interference of the finding of the trial Court - Appeal dismissed.
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2024 (4) TMI 26 - MADRAS HIGH COURT
Money Laundering - proceeds of crime - Predicate/scheduled offence - offences punishable under Sections 3, 4 and 8 (5) of PMLA - HELD THAT:- It is an admitted fact that the trial in the predicate offence (scheduled offence) had concluded. The trial Court has convicting three of the accused in this case. Their appeal is pending. The Hon'ble Supreme Court has held that the accused in the PMLA case need not necessarily be an accused in the schedule offence case. It is the proceeds of crime, which must be common to both cases and not the offenders. The predicate offence might have committed prior to the PMLA Act came into force or after the act introduced. Since money laundering is a process involving many stages like:- (a) Placement (which is to move the funds from direct association of the crime); (b) Layering (which is disguising the trail to foil pursuit); and (c) Integration (which is making the money available to the criminal from what seem to be legitimate sources), the prosecution under PMLA can be initiated at any time.
Section 3 and the Explanation (ii) to Section 3 of the PMLA is interpreted by the Hon'ble Supreme Court as, 'money laundering as defined under Section 3 has a wider reach and captures every process and activity, direct or indirect, in dealing with the proceeds of crime and is not limited to the happening of the final act of integration or tainted property in the formal economy. The Explanation inserted to Section 3 by way of amendment of 2019 does not expand the purport of Section 3, but is only clarificatory in nature. So it include 'every' process or activity indulged into by anyone.'
This Court is of the view that the petitions to quash does not carry any merit to sustain - these Criminal Original Petitions are dismissed.
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2024 (3) TMI 1233 - JHARKHAND HIGH COURT
Seeking grant of regular bail - Money Laundering - Scheduled Offences - proceeds of crime - illegal transfer of the land - creation of fabricated documents - twin condition as per section 45 of PMLA satisfied or not - grounds of parity - HELD THAT:- The Hon’ble Apex Court in Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors. [2022 (7) TMI 1316 - SUPREME COURT] has been held that the Authority under the 2002 Act, is to prosecute a person for offence of money-laundering only if it has “reason to believe”, which is required to be recorded that the person is in possession of “proceeds of crime”. Only if that belief is further supported by tangible and credible evidence indicative of involvement of the person concerned in any process or activity connected with the proceeds of crime, action under the Act can be taken forward for attachment and confiscation of proceeds of crime and until vesting thereof in the Central Government, such process initiated would be a standalone process.
This court has “reason to believe” that prima-facie the involvement of the present petitioner is fully substantiated by the tangible and credible evidences which is indicative of involvement of the present petitioner in activity connected with the proceeds of crime.
The conditions enumerated in Section 45 of P.M.L.A. will have to be complied with even in respect of an application for bail made under Section 439 CrPC. That coupled with the provisions of Section 24 provides that unless the contrary is proved, the authority or the Court shall presume that proceeds of crime are involved in money-laundering and the burden to prove that the proceeds of crime are not involved, lies on the appellant.
The “offence of money-laundering” means whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering and the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever - on the basis of the discussion made the contention of the learned counsel for the petitioner that even if the entire ECIR will be taken into consideration, no offence will be said to be committed so as to attract the ingredients of Sections 3 & 4 of the P.M.L. Act, 2002, is totally misplaced in the light of accusation as mention in prosecution complaint dated 01.09.2023.
Ground of parity - HELD THAT:- Law is well settled that the principle of parity is to be applied if the case of the fact is exactly to be similar then only the principle of parity in the matter of passing order is to be passed but if there is difference in between the facts then the principle of parity is not to be applied - It is further settled connotation of law that Court cannot exercise its powers in a capricious manner and has to consider the totality of circumstances before granting bail and by only simple saying that another accused has been granted bail is not sufficient to determine whether a case for the grant of bail on the basis of parity has been established.
The Hon’ble Apex Court in Tarun Kumar Vs. Assistant Director Directorate of Enforcement [2023 (11) TMI 904 - SUPREME COURT], where it has been held that parity is not the law and while applying the principle of parity, the Court is required to focus upon the role attached to the accused whose application is under consideration - It has further been held in the said judgment that the principle of parity is to be applied in the matter of bail but equally it has been laid down therein that there cannot be any negative equality, meaning thereby, that if a co-accused person has been granted bail without consideration of the factual aspect or on the ground said to be not proper, then, merely because the co-accused person has been directed to be released on bail, the same will not attract the principle of parity on the principle that Article 14 envisages positive equality and not negative equality.
On comparative assessment of the allegation as per the material collected in course of investigation as referred hereinabove, it is evident that against the said Bishnu Kumar Agarwala, the allegation of purchase of the land in question has been alleged and further allegation against him is that he is involved in the activities connected with the acquisition, possession, concealment and use of the proceeds of crime and claiming and projecting the proceeds of crime as untainted property.
The twin condition as provided under Section 45(1) of the Act, 2002 is not being fulfilled so as to grant the privilege of bail to the present petitioner - Even on the ground of parity as per the discussion made hereinabove, the same on the basis of the role/involvement of the present petitioner in the commission of crime in comparison to that of the said Bishnu Kumar Agarwala, is quite different.
Having regard to the facts and circumstances, as have been analyzed hereinabove as also taking into consideration the statements made in the counter affidavit, the applicant is failed to make out a prima-facie case for exercise of power to grant bail, hence, this Court does not find any exceptional ground to exercise its discretionary jurisdiction under Section 439 of the Code of Criminal Procedure to grant bail - this Court is of the view that the bail application is liable to be rejected.
Bail application dismissed.
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2024 (3) TMI 1181 - SC ORDER
Legality of arrest and consequential payment of compensation - HELD THAT:- Earlier order records that the issue of legality and validity of the arrest of the appellants as well as the other questions will be gone into in these appeals.
The said questions need not be decided in these appeals. Therefore, legal contentions arising in these appeals are left open to be decided in appropriate cases.
Appeal disposed off.
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2024 (3) TMI 1138 - JAMMU AND KASHMIR AND LADAKH HIGH COURT
Invocation of jurisdiction of this Court under Section 482 of the Cr.P.C - cognizance of offences on basis of supplementary complaint filed by the respondent against the petitioner second time - petitioner has challenged the impugned order primarily on the ground that it was not open to the learned Special Judge to take cognizance of the offences second time and to issue process against the petitioner, who was already facing prosecution before the Special Judge in the first complaint filed by the respondent against him before the said Court.
Whether the supplementary complaint could have been filed by the respondent against the petitioner and co-accused in respect of the same occurrence, which is subject matter of the initial complaint? - HELD THAT:- Section 173 (8) of Code of Criminal Procedure, 1973, which authorises the Police to conduct further investigation into an offence even after challan has been produced before the Court is, therefore, applicable to the investigation of cases under PMLA. This view finds further strength from the provisions contained in Clause (ii) of the Explanation to sub section (1) of Section 44 of PMLA, which provides that the complaint would include any subsequent complaint in respect of further investigation that may be conducted to bring any further evidence, oral or documentary against any accused person involved in respect of the offence for which complaint has already been filed, whether named in the original complaint or not - there is no manner to doubt in holding that a supplementary complaint can certainly be filed by the respondent-Enforcement Directorate against an accused, who is already facing prosecution for offence under Section 3 of the PMLA before the Special Judge.
The irresistible conclusion that can be drawn is that once the power of investigation is vested in an agency and further investigation is carried out by the said agency in order to place on record material collected during further investigation, it is open to the said investigating agency to file a supplementary complaint.
Whether the learned Special Judge was justified in taking cognizance of offence on the second occasion and issue process against the petitioner on the basis of the supplementary complaint? - HELD THAT:- In the case of CREF FINANCE LTD. VERSUS SHREE SHANTHI HOMES PVT. LTD. & ANR. [2005 (8) TMI 664 - SUPREME COURT], the Supreme Court has held that once the Magistrate applies his judicial mind with reference to the commission of an offence, the cognizance is taken at that very moment - it is clear that taking of cognizance would mean application of mind by the Magistrate/Court to the offence alleged to have been committed. It is also clear that cognizance is to be taken of the offence and not of the offender.
Whether a Magistrate can take cognizance of an offence more than once upon filing of supplementary challan/supplementary complaint? - HELD THAT:- It is well settled that cognizance of an offence/offences can be taken only once. If cognizance of the offences has been taken by a Court/ Magistrate, the same cannot be taken again for the second time.
The cognizance of the offences under Sections 3/4 of the PMLA was taken by the Special Judge on 16.07.2018 when the initial complaint was filed by the respondent against the petitioner and the co-accused in the year 2018, therefore, upon filing of the supplementary complaint by the respondent in respect of the same offence against the petitioner and the co-accused, the learned Special Judge could not have taken the cognizance of the offences once again and issued process the petitioner and the co-accused, who were already facing prosecution before the learned Special Judge - Upon filing of supplementary complaint, the only course left to the learned Special Judge was to take on record the said supplementary complaint and proceed ahead with the prosecution of the petitioner and the co-accused, who are already facing prosecution before the learned Special Judge on the basis of initial complaint.
The impugned order passed by the learned Special Judge is set aside, with a direction to pass fresh order in the manner indicated hereinbefore and to proceed ahead in the matter in accordance with the law - Appeal allowed.
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2024 (3) TMI 1137 - JAMMU AND KASHMIR AND LADAKH HIGH COURT
Grant of Bail - Money Laundering - predicate offence - invocation of jurisdiction of this Court under Article 226 of the Constitution of India read with section 482 of the Code of Criminal Procedure (Cr.P.C.) - bank loan fraud - HELD THAT:- It is an admitted fact that the petitioner has invoked the jurisdiction of the High Court of Punjab and Haryana for challenging the proceedings initiated against him under PMLA and he has also challenged the summons issued by the respondent against him. In the instant case, the petitioner has challenged the action of the respondent leading to his arrest as also the order of learned Special Judge designated PMLA, Jammu, whereby he has been remanded to custody of the respondent. Both these events viz., arrest of petitioner and his remand to custody of the respondent have taken place within the territorial jurisdiction of this Court, therefore, the petitioner has rightly approached this Court by invoking the jurisdiction of this Court under Section 226 of the Constitution read with Section 482 of the Cr.P.C. for challenging the aforesaid actions.
The question whether the High Court of Punjab and Haryana has jurisdiction to entertain the challenge to the proceedings initiated by the respondent against the petitioner and co-accused will have to be determined by that Court. It would not be appropriate for this Court to render any opinion on this issue in the present proceedings - Merely because grounds of challenge raised before this Court are identical to the grounds of challenge raised by the petitioner in the petition filed by him before the High Court of Punjab and Haryana, does not disentitle him from invoking the jurisdiction of this Court. The preliminary objection of the learned DSGI to the maintainability of this petition, prima facie, appears to be untenable.
Though offences under PMLA are stand alone offences, yet their origin is the Scheduled offences. Once the Scheduled offence ceases to exist or is extinguished, an accused cannot be proceeded against in respect of offences under PMLA. It is for this reason that the Supreme Court has, in Vijay Mandanlal Choudhary’s case [2022 (7) TMI 1316 - SUPREME COURT] clearly laid down that if a person is finally discharged/acquitted of the scheduled offences or a criminal case against him is quashed, there cannot be any offence of money laundering against him. As an obvious corollary to this is that once investigation in FIR relating to predicate scheduled offences is stayed, the proceedings in the said FIR would get eclipsed. The same will definitely have a bearing upon the offences of money laundering as the said offences owe their origin to the predicate offences. Therefore, the said offences would also stand eclipsed till such time the stay of investigation is in operation.
In Sudhamani Dorai’s case [2018 (10) TMI 330 - MADRAS HIGH COURT], a Single Judge of Madras High Court has observed that stay of predicate offence is not a ground for preventing Directorate of Enforcement from proceeding under PMLA.
In the instant case, the Case Diary that has been produced by the learned DSGI would reveal that the grounds of arrest have been furnished to the petitioner immediately after his arrest. However, a perusal of the impugned Order of Remand passed by the Special Judge, PMLA reveals that it is nowhere recorded in the said order as to whether or not the grounds of arrest have been furnished to the petitioner - The learned Judge has not even recorded a finding as to whether or not she has perused the grounds of arrest so as to ascertain whether the ED had recorded reasons to believe that the petitioner was guilty of an offence under PMLA and whether or not there was proper compliance with the mandate of Section 19 of the PMLA.
This Court is of prima facie view that the impugned order dated 07.02.2024 passed by the learned Special Judge, PMLA smacks of non application of mind.
The petitioner has been able to carve out a case for grant of interim relief. Accordingly, the petitioner is directed to be released from custody in the subject ECIR, subject to fulfilment of conditions imposed - bail application allowed.
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2024 (3) TMI 926 - KARNATAKA HIGH COURT
Money Laundering - scheduled offences - cognizance of offence - issuance of summons without conducting an enquiry as prescribed under Section 202 of Cr.PC - petitioner not charged with the predicate offence, still be prosecuted for the offence under the PMLA Act or not - sufficient evidence to establish that the petitioner - accused No. 7.
Is it permissible to take cognizance and issue summons without conducting an enquiry as prescribed under Section 202 of Cr.PC? - HELD THAT:- Upon examination of Clause (b) to Sub-Section 1 of Section 44, it is evident that the Special Court, irrespective of the provisions in the Code of Criminal Procedure, possesses the authority to take cognizance of an offence under Section 3 without being committed to trial. In the present case, the complaint was lodged by the respondent, an authorized Officer, and the Special Court can take cognizance without resorting Section 202 of Cr.PC, thus, the argument presented by the learned Senior Counsel for the petitioner, asserting that the issuance of summons violated Section 202 of Cr.PC is untenable.
Can the petitioner, who is not charged with the predicate offence, still be prosecuted for the offence under the PMLA Act? - HELD THAT:- In the present case, the scheduled offences are under investigation by the jurisdictional police. Therefore, the petitioner can be subjected to prosecution under the PMLA, if it can be established that the petitioner has prima facie committed an offence under Section 3 of the PMLA.
Does the investigation under the PMLA Act provide sufficient evidence to establish that the petitioner - accused No. 7 has prima facie committed the offence alleged? - HELD THAT:- There is no evidence to suggest that the petitioner, who is a payment gateway, had knowledge that the funds transferred to the merchant IDs of accused No. 5 were derived from criminal activity related to a scheduled offence, nor did they knowingly assist accused No. 5 in concealing or transferring illicit proceeds as clean money. Even if we accept the statements from the Director of accused No. 5 and the employee of accused No. 7, at most, it indicates that accused No. 7 was negligent in setting up the merchant IDs in the name of accused No. 5. Intent is essential to constitute an offense under Section 3 of the PMLA. Therefore, the commission amount earned by accused No. 7 cannot be deemed a result of facilitating the illegal money-lending business of accused No. 5, as there is no evidence to establish that accused No. 7 had the intention to commit the crime under Section 3 of the PMLA - When there is no prima facie material to substantiate that the Accused No. 7 knowingly facilitated the transfer of proceeds of the crime, no presumption can be drawn that the Petitioner was involved in money laundering as stated under Section 24, and the burden is on Petitioner to prove otherwise.
The complaint averments does not apparently satisfy the essential elements to constitute the offences alleged against the Petitioner, and, therefore the continuation of the criminal proceedings will be an abuse of the process of the law - Petition allowed.
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2024 (3) TMI 862 - SUPREME COURT
Grant of bail - money laundering - proceeds of crime - scheduled/predicate offences - hatching the criminal conspiracy and conceptualizing the idea of accommodation entries against cash - whether the appellants have been able to satisfy the twin conditions laid down in Section 45 of the PMLA? - HELD THAT:- It is confined to deal with the bare minimum facts necessary for the purpose of deciding whether the appellants have been able to satisfy the twin conditions laid down in Section 45 of the PMLA, that is (i) there are reasonable grounds for believing that the persons accused of the offence under the PMLA is not guilty of such offence; and (ii) that he is not likely to commit any offence while on bail.
In GAUTAM KUNDU VERSUS MANOJ KUMAR, ASSISTANT DIRECTOR, EASTERN REGION, DIRECTORATE OF ENFORCEMENT (PREVENTION OF MONEY LAUNDERING ACT) GOVT. OF INDIA [2015 (12) TMI 1133 - SUPREME COURT], while holding that the conditions specified under Section 45 of PMLA are mandatory, it was observed the conditions enumerated in Section 45 of PMLA will have to be complied with even in respect of an application for bail made under Section 439 CrPC. That coupled with the provisions of Section 24 provides that unless the contrary is proved, the authority or the Court shall presume that proceeds of crime are involved in money-laundering and the burden to prove that the proceeds of crime are not involved, lies on the appellant.
The offence of money laundering as contemplated in Section 3 of the PMLA has been elaborately dealt with by the three Judge Bench in VIJAY MADANLAL CHOUDHARY & ORS. VERSUS UNION OF INDIA & ORS. [2022 (7) TMI 1316 - SUPREME COURT], in which it has been observed that Section 3 has a wider reach. The offence as defined captures every process and activity in dealing with the proceeds of crime, directly or indirectly, and is not limited to the happening of the final act of integration of tainted property in the formal economy to constitute an act of money laundering. Of course, the authority of the Authorised Officer under the Act to prosecute any person for the offence of money laundering gets triggered only if there exists proceeds of crime within the meaning of Section 2(1)(u) of the Act and further it is involved in any process or activity - The property must qualify the definition of “Proceeds of Crime” under Section 2(1)(u) of the Act. As observed, in all or whole of the crime property linked to scheduled offence need not be regarded as proceeds of crime, but all properties qualifying the definition of “Proceeds of Crime” under Section 2(1)(u) will necessarily be the crime properties.
In the instant case, it has been found during the course of investigation from the statements of witnesses recorded under Section 50 that the appellant Satyendar Jain and his family directly or indirectly were owning/controlling the companies - M/s. Akinchan Developers Pvt. Ltd., M/s. Paryas Infosolution Pvt. Ltd., M/s. Indo Metalimpex Pvt. Ltd. and M/s. Mangalayatan Projects Pvt. Ltd. He was the conceptualizer, initiator and supervisor of the accommodation entries totalling to Rs.4.81 Crores approximately, which were received from the Kolkata based entry operators in the Bank accounts of the said four companies - also, the witnesses had clearly stated that Satyendar Kumar Jain was the conceptualizer, initiator, fund provider and supervisor for the entire operation to procure the accommodation, share capital/premium entries. Though, the shareholding patterns of the said four companies are quite intricate, they do show that Mr. Satyendar Kumar Jain through his family was controlling the said companies directly or indirectly and that Mr. Satyendar Kumar Jain was the “beneficial owner” within the definition of Section 2(1) (fa) of PMLA.
There remains no shadow of doubt that the appellant- Satyendar Kumar Jain had conceptualized idea of accommodation entries against cash and was responsible for the accommodation entries totalling to Rs. 4.81 crores (approx.) received through the Kolkata based entry operators in the bank accounts of the four companies i.e. M/s. Akinchan Developers Pvt. Ltd., M/s. Paryas Infosolution Pvt. Ltd., M/s. Indo Metalimpex Pvt. Ltd. and M/s. Mangalayatan Projects Pvt. Ltd., by paying cash and the said companies were controlled and owned by him and his family. Though it is true that a company is a separate legal entity from its shareholders and directors, the lifting of corporate veil is permissible when such corporate structures have been used for committing fraud or economic offences or have been used as a facade or a sham for carrying out illegal activities.
The appellants have miserably failed to satisfy us that there are reasonable grounds for believing that they are not guilty of the alleged offences. On the contrary, there is sufficient material collected by the respondent-ED to show that they are prima facie guilty of the alleged offences - it is not possible to hold that appellants had complied with the twin mandatory conditions laid down in Section 45 of PMLA. The High Court also in the impugned judgment after discussing the material on record had prima facie found the appellants guilty of the alleged offences under the PMLA, which judgment does not suffer from any illegality or infirmity.
Appeal dismissed.
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2024 (3) TMI 861 - ALLAHABAD HIGH COURT
Money Laundering - Validity of framing of charges - dealing in skin and organs of prohibited animals - proceeds of crime - scheduled offence - It is submitted that the trial court has failed to consider that in fact no proceeds of crime has been generated from the goods allegedly seized from the premises of the applicants - HELD THAT:- The allegations against the applicants are to tune that they were indulged in dealing with the skin and organs of prohibited animals from before the year 2007 and the same is punishable under various provisions of the Wildlife Act and the Indian Forest Act. It is also alleged that applicants have parked proceeds of crime earned by them in the bank-account of their mother, which has been used by her in purchasing two properties. Sudden inflation in income tax returns of Smt. Zaibunnisha is also highlighted in order to substantiate the allegations of money laundering. It is also the case of the Enforcement Directorate that these properties were earned after enactment of PMLA.
The whole case of the applicants rests on presumption that the valuation of the certain articles seized from the houses of applicants has not been properly done and as per the definition of property contained in section 2(y) of the PMLA, the offence, if is committed, pertaining to the value of more than 30 Lakh, the applicants only in that condition may be prosecuted under PMLA, and at the relevant time, the offence under Wildlife Act was falling under Chapter ‘B’ of Schedule appended with PMLA.
Much emphasis has been given on the fact that the valuation of the seized articles is based on a website run by an NGO. However, allegations are also to tune that apart from seized articles the proceeds of crime has also been used for purchase of some properties by mother of the applicants. Thus, it is not the seized articles alone whose valuation is to be seen. Moreover, when there is no known mode of assessing the value of seized articles as they could not be sold in open market legally, the value of these articles may be what these articles may fetch anywhere may be taken as the market value of the same and it is why the emphasis has been given in section 2(zb) on market value - The applicants have not declared in their application as to on what basis they are claiming the value of proceeds of crime less than 30 Lakh. Thus, what is the market value of the articles seized from the premises of the applicants is a disputed question of fact which could only be adjudicated by the trial court, during the course of trial.
Similarly, if the income tax returns filed by the mother of the applicants has not been disputed, the same may not be the sole ground of the discharge of applicants. Law leans in favour of trial and an accused could only be discharged if there is no prima facie case available against him. At the stage of discharge or framing of charge the trial court was only required to sift the material sent with the complaint in order to assess whether there is a prima facie case against the applicants and meticulous exercise of appreciating evidence or material, in order to assess the probative value of the evidence collected by the prosecution, was not required.
This application moved by the applicants under section 482 CrPC is dismissed.
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2024 (3) TMI 759 - SC ORDER
Money Laundering - Scheduled offence - Legal jugglery - framing of charges - Acquittal form predicate offence - it was held by High Court that The view as taken by the Trial Court in this matter had been a justified view of the matter and the High Court was not right in setting aside the discharge order despite the fact that the accused No. 1 had already been acquitted in relation to the scheduled offence and the present appellants were not accused of any scheduled offence - HELD THAT:- There is no reason to interfere with the impugned order. In the event, the order of acquittal against the accused in the predicate offence is overturned, the petitioner-Directorate of Enforcement are permitted to apply for revival of these Special Leave Petitions.
SLP dismissed.
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2024 (3) TMI 695 - DELHI HIGH COURT
Money laundering - written complaint filed by Bank of Baroda based on EY audit alleging that the company along with others including the petitioner committed bank fraud to the tune of Rs. 57.29 crores - petitioner is aggrieved by continuance of ED investigation conducted by the respondent under Section 120B read with Section 420 IPC, Section 13(2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988 against M/s Technovaa Plastic Industries Private Limited (Company) and others, wherein petitioner is named as accused No. 3 - HELD THAT:- The summons issued by ED cannot be quashed merely because the relevant documents required for purpose of investigation or confrontation to the petitioner, have not been specified in the summons. It needs to be kept in perspective that under the scheme of PMLA, 2002 upon identification of existence of property being proceeds of crime, the Competent Authority is to inquire into relevant aspects in relation to such property and take necessary measures in this regard as per provisions of PMLA, 2002. Since ECIR in an internal document created by Department before initiation of prosecution against persons involved with process or activity connected with proceeds of crime, it is not necessary to reveal the evidence collected by the ED at this stage in the summons forwarded to the petitioner.
Petitioner is yet to be absolved of scheduled offence by way of discharge, acquittal or quashing and as such protection orders cannot be issued in favour of petitioner ignoring the mandate under Section 45 of PMLA, 2002 for grant of bail. Further the summoning in exercise of statutory powers cannot be stalled merely on mere apprehension that petitioner may be arrested and prosecuted on basis of summons issued after registration of ECIR, in proceedings initiated by ED. In the facts and circumstances, no grounds for interim relief are made out at this stage.
It may be clarified that no observations have been made on merits or demerits of the proceedings initiated by Enforcement of Directorate at this stage, and the questions are left open to be considered in the light of investigation by ED.
Application disposed off.
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2024 (3) TMI 645 - SC ORDER
Quashing of summons dismissed - whether Section 120-B IPC is a standalone scheduled offence for invocation of provisions under the Prevention of Money Laundering Act, 2002? - HELD THAT:- The High Court, vide the impugned judgment, has held that Section 120-B IPC is a standalone scheduled offence on the basis of which provisions of PMLA can be invoked - the reasons assigned by the High Court in the impugned judgment cannot be sustained.
Appeal allowed.
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2024 (3) TMI 644 - CHHATTISGARH HIGH COURT
Seeking grant of anticipatory bail - Money Laundering - applicant though not named in the FIR, prosecution complaint filed by the Income Tax Department nor named in the ECIR submitted by the Enforcement Directorate, can be involved in the commission of offence under the PMLA or not - twin conditions for grant of bail under Section 45 of the PMLA, 2002 are available on record to release the applicant by granting anticipatory bail or not.
Whether the applicant though not named in the FIR, prosecution complaint filed by the Income Tax Department nor named in the ECIR submitted by the Enforcement Directorate, can be involved in the commission of offence under the PMLA? - HELD THAT:- The applicant can be subjected to prosecution under the PMLA, 2002 if it can be established that the applicant has prima facie committed an offence under Section 3 of the PMLA, 2002 - From the statement recorded as reflected in the ECIR that there is evidence to suggest that the applicant had knowledge that the money he has received was derived from criminal activity related to a scheduled offence and did he knowingly assist accused Laxmikant Tiwari in concealing or transferring illicit proceeds of crime which is essential to constitute an offense under Section 3 of the PMLA, 2002. Therefore, the money obtained by the applicant is deemed to proceed of crime and as such, he has prima facie committed the crime under Section 3 of the PMLA, 2002 - Question is answered against the present applicant.
Whether the twin conditions for grant of bail under Section 45 of the PMLA, 2002 are available on record to release the applicant by granting anticipatory bail? - HELD THAT:- The material so collected by the investigation prima facie reflects that many hand written entries in the diaries, name of the present applicant exist. Thus, he was knowingly and actively obtained the proceeds of crime and committed the offence under Section 3 of the PMLA, 2002 - material collected by the Enforcement Directorate, prima facie, involvement of the applicant is reflected. The material collected by the Enforcement Directorate has not been rebutted which also prima facie reflects about involvement of the applicant. The record of the case would further demonstrate that the applicant is unable to fulfill the twin conditions which are required for grant of bail under the PMLA, 2002, is equally applicable for grant of anticipatory bail, which has not been satisfied by the present applicant - considering the fact that the applicant is unable to satisfy twin conditions of Section 45 of PMLA, 2002 for grant of anticipatory bail, the anticipatory bail cannot be granted - question also answered against the present applicant.
The bail application filed under Section 438 of the Cr.P.C. is liable to be and is hereby rejected.
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2024 (3) TMI 599 - SC ORDER
Maintainability of petition - petitioners are basically aggrieved with certain observations made in the impugned judgment and order against the State Police Machinery - HELD THAT:- The respondents fairly states that the respondents are not interested in maintaining those observations. He submits that if those observations are expunged, the respondents would have no objection.
It is not required to entertain the petition in so far as final directions given in the impugned order are concerned - SLP disposed off.
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2024 (3) TMI 598 - DELHI HIGH COURT
Seeking grant of Regular Bail - Money Laundering - proceeds of crime - predicate offence - subsidy fraud in IFFCO by opening Kisan International Trading - exchange of illegal commissions in import of raw materials and fertilizers - manipulation of sales data of fertilizers for claiming higher subsidy etc. - specific allegation against the petitioner is that he along with the co-accused acted as intermediaries who channelized the ill-gotten money through various firms and companies registered either in their names or in the names of the sons of the Managing Directors of IFFCO and IPL.
CBI's Jurisdiction to register the RC - HELD THAT:- The first submission of the learned Senior Counsel for the petitioner is that since IFFCO and IPL are no longer government entities and it is not yet clear whether the co-accused namely, P.S. Gahlaut and U.S. Awasthi are “public servants”, hence, no offence under the provisions of the Prevention of Corruption Act is made out. It was further elaborated that even an inquiry by CBI in respect of IPL was closed stating that it has no jurisdiction over IPL since it is not a public authority. The said submission cannot be gone into at this stage as a co-ordinate Bench of this Court is stated to be seized of the specific issue with regard to the jurisdiction of the CBI to register the RC, in the writ petitions filed by the co-accused - Both offences under Section 120-B and Section 420 IPC find mention in Schedule-A of the PMLA, therefore, such offences by themselves can be a predicate offence to trigger the offence of money laundering under the PMLA.
To what extent reliance could be placed on the statement under section 50 of PMLA at the stage of considering bail application - HELD THAT:- The principle that emerges from Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT] as regards the statement recorded under Section 50 of the Act is that such statements are recorded in a proceeding which is deemed to be a judicial proceeding within the meaning of Section 193 and Section 228 of the Indian Penal Code and is admissible in evidence. The said statements are to be meticulously appreciated only by the Trial Court during the course of the trial and there cannot be a mini-trial at the stage of bail. However, when the statements recorded under Section 50 of PMLA are part of the material collected during investigation, such statements can certainly be looked into at the stage of considering bail application albeit for the limited purpose of ascertaining whether there are broad probabilities, or reasons to believe, that the bail applicant is not guilty.
Whether the confessional statement of co-accused u/s 50 of PMLA can be used against other accused - HELD THAT:- It is trite that the court cannot start with the confession of the co-accused to arrive at a finding of guilt but rather after considering all other evidence placed on record and arriving at the guilt of the accused, can the court look at the statement of the co-accused to receive assurance to the conclusion of guilt - In Surinder Kumar Khanna vs. DRI [2019 (1) TMI 828 - SUPREME COURT] the Hon’ble Supreme Court tracing the law as regards the general application of a confession of a co-accused as against other accused under Section 30 of the Evidence Act, laid down that the Court cannot start with the confession of a co-accused person; it must begin with other evidence adduced by the prosecution and after it has formed its opinion with regard to the quality and effect of the said evidence, then it is permissible to turn to the confession in order to receive assurance to the conclusion of guilt which the judicial mind is about to reach on the said other evidence.
Thus, the confessional statement of a co-accused under Section 50 of the PMLA is not a substantive piece of evidence and can be used only for the purpose of corroboration in support of other evidence to lend assurance to the Court in arriving at a conclusion of guilt.
Money trail should remain unbroken to hold the petitioner guilty - HELD THAT:- For an offence of money laundering, there should be generation of proceeds of crime from the scheduled offence and the person sought to be prosecuted should be directly or indirectly involved in any process or activity connected with the said proceeds of crime. Thus, the existence of proceeds of crime is essential for initiation of prosecution under the PMLA. It is the case of the respondent/ED that the petitioner has received proceeds of crime through two routes which before reaching the petitioner passed through the hands of various individuals/entities. Thus, there are two money trails which have been referred to hereinabove. To hold the petitioner guilty there has to be an unbroken money trail i.e., generation of proceeds of crime which eventually leads to the petitioner and in case there is a break in the trail, the said break shall enure to the benefit of the petitioner.
Before proceeding to examine the two money trails/routes, it is required to be noticed that the first two steps viz., (i) payment of inflated prices inclusive of commission/bribe money by IFFCO/IPL to Uralkali Trading for the import of fertilizers from it, and (ii) payment of commission/bribe money by Uralkali to Rajeev Saxena, are common to both the trails/routes, therefore, apt would it be advert to the same at the outset - The two steps are Step 1: Inflation of prices and Step 2: Flow of proceeds of crime from Uralkali Trading to Rajiv Saxena.
The lack of evidence at ‘Step 1’, as well as, the conflicting stand of Rajeev Saxena in ‘Step 2’, are circumstances, which cannot be ignored altogether at this stage.
Direct route through Ratul Puri - HELD THAT:- It is the case of the respondent that thereafter the proceeds of crime were collected by one Puneet Banthia (employee of Sanjay Jain) from Ratul Puri/Rajiv Aggarwal. However, neither Rajiv Aggarwal (employee of Ratul Puri) nor Ratul Puri, has admitted to dealing with Puneet Banthia for the purpose of handing over cash to him to transport the same to the petitioner - Thus, it is only Puneet Banthia who has supported the case of the prosecution in his statement dated 10.10.2022 recorded under Section 50 of PMLA to the effect that he was asked by the petitioner to pick up some cash from the office of Moser bear and have it delivered at the office of Sh. Sanjay Jain in Defence Colony. He has also stated that he carried cash in the year 2016, whereas the transactions in Rajeev Saxena’s ledgers connected with Uralkali are up to the year 2014. In this backdrop, the contention of the learned Senior Counsel for the petitioner that even if the statement of Puneet Banthia is taken on face value, the cash carried by him has no connection with the import by IPL / IFFCO from Uralkali, cannot be said to be wholly without substance.
Indirect route through Alankit Group - HELD THAT:- It is the case of the respondent that thereafter the proceeds of crime from Rayon Trading have come to Alankit Group. At this stage, suffice it to note that Alok Aggarwal in his statement dated 28.11.2022 under Section 50 has made it clear that the money received from Rayon Trading is for genuine purposes/transaction. Therefore, Alok Kumar Aggarwal has not supported the case of the prosecution. Further, Alok Kumar Aggarwal is a co-accused in the present matter, therefore, as already noted above, his statement can only be used for the purpose of corroboration and is not a substantive piece of evidence - It is further case of the respondent that the proceeds of crime from Alankit Group to Sanjay Jain/petitioner have come through cash/bank transfer and for this purpose, the respondent has relied upon the ledger maintained by one employee of Alok/Ankit Aggarwal namely, Sunil Kumar Gupta, but said Sunil Kumar Gupta in his statement recorded under Section 50 of PMLA has admitted that he has no knowledge whether the said payment was actually made to the petitioner as he was merely noting the entries at the instructions of Alok/Ankit Aggarwal. Therefore, his statement at best is hearsay as he has not witnessed the transaction himself.
Claim of higher subsidy on inflated prices - HELD THAT:- There is no document to indicate that IFFCO / IPL are industry leaders. Assuming arguendo, that the said entities are market leaders and they could manipulate the average industry prices, but there is not an iota of evidence to demonstrate that the average industry price was actually manipulated by IFFCO and IPL. Further, in this regard the observations of this Court under the heading ‘Step 1’ may be referred to - On the other hand, it can be seen that after 01.04.2010, the “Nutrient Based Subsidy Scheme” [“NBS Scheme”] became applicable whereunder the cost of production/import price of the fertilizers has no relevance to the amount of subsidy which could be claimed by the importer. Therefore, there seems to be some merit in the contention of the learned Senior Counsel for the petitioner that post introduction of the NBS Scheme the case set up by the CBI and the Respondent itself appears to have become improbable.
Examination of the predicate offence - HELD THAT:- As this Court has prima facie observed that there is no material showing imports at inflated prices by IFFCO/IPL and consequent payment of higher subsidy and there appears to be a break in the money trails, therefore, the evidence to prove conspiracy or wrongful loss to IFFCO/IPL, its shareholder and to the Public Exchequer and the resultant wrongful gain to the petitioner, is lacking. Thus, at this stage based upon the material produced before the Court, it can be said that prima facie the predicate offence appears to be weak in nature and the petitioner is entitled to the benefit of the same.
Bail on the ground of parity - HELD THAT:- There is merit in the contention of the learned Senior Counsel for the petitioner that non-arrest of co-accused is a relevant factor which can be taken into account in addition to other surrounding factors to grant the concession of bail to the petitioner - the petitioner is also entitled to the benefit of the fact that the main accused, as well as, some other accused have not been arrested and bail has already been granted to other co-accused - On the basis of the material available on record, this Court is satisfied that there are reasonable grounds for believing that the petitioner is not guilty of the offence and that he is not likely to commit any offence while on bail.
Thus, the petitioner has made out a case for grant of regular bail. Accordingly, the petitioner is enlarged on bail subject to fulfilment of conditions imposed - bail application allowed.
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2024 (3) TMI 597 - MADHYA PRADESH HIGH COURT
Grant of anticipatory bail - Money Laundering - siphoning off of funds - sale of the properties belonging to Kalpataru Grih Nirman Society, in which, FIR has been registered against Dilip Sisodia for defrauding the society by diverting Rs. 4.89 Crores in his own personal account - HELD THAT:- Section 3 of the PMLA Act says that whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering. Therefore, the allegation in the ECIR against the applicant that he was involved in the process or activity connected with the proceed for crime and its concealment. Therefore, even if, as on today, he is not an accused in the FIR will not be a ground for anticipatory bail in view of rigor of Section 45 of the PMLA Act. At this stage, this Court cannot held that the applicant is not guilty of the offence under the PMLA Act.
In the case of Y.S. Jagan Mohan Reddy [2013 (5) TMI 896 - SUPREME COURT] the apex Court has held While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations.
Even otherwise, the warrant has been issued by the Court but the present applicant is not appearing before the Court, therefore, he is not entitled for anticipatory bail.
The applicant may surrender and apply for regular bail - Application dismissed.
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