2023 (7) TMI 1025 - HC - Money Laundering

Grant of Regular Bail - money laundering - proceeds of crime - predicate offence/scheduled offences - acquittal of the accused - recording of statements under Section 50 of the PMLA 2002 - HELD THAT - Considering the judgment of High Court of Karnataka in case of LAXMIKANTH TIWARI VERSUS STATE OF KARNATAKA BY CHIEF SECRETARY STATE OF KARNATAKA BY KADUGODI POLICE STATION PAKKIRESH BADAMI S/O KR BADAMI 2022 (11) TMI 1381 - KARNATAKA HIGH COURT wherein Hon ble High Court of Karnataka has categorically recorded its finding that no case has been registered against the petitioner in Crime No. 129/2022 and prosecution initiated any proceeding based upon this crime number and the petitioner is not an accused in Crime No. 129/2022 as such offence took place at Bengaluru in Crime No. 129/2022 cannot be predicated offence for registering case under PMLA 2002 by the ED at Chhattisgarh wherein the applicant along with co-accused Suryakant Tiwari and others are being charged for involving in a money laundering case and the present applicant has been arrested in money laundering case along with co-accused therefore even if it is presumed (not accepting it in absence of any better material on record or order from the competent court) that no predicate offence has been levelled therefore the applicant is entitled to get bail under PMLA 2002 is not acceptable and deserves to be rejected and also considering the case diary and other material placed on record which prima facie shows involvement of the applicant in crime in question therefore considering entirety of the matter this Court is of the opinion that the applicant is unable to satisfy twin conditions for grant of bail under Section 45 of the PMLA 2002 as such it is not a fit case for grant of bail to the applicant. The bail application filed under Section 439 of the Cr.P.C. is liable to be and is hereby rejected.

Summary

Issues Involved:
1. Application for regular bail under Section 439 of the Code of Criminal Procedure, 1973.
2. Allegations under the Prevention of Money Laundering Act, 2002 (PMLA, 2002).
3. Role of the applicant in the alleged criminal activities.
4. Legal arguments for and against the bail application.
5. Judicial precedents and legal standards for granting bail under PMLA, 2002.

Summary:

1. Application for Regular Bail:
The applicant filed the first bail application under Section 439 of the Code of Criminal Procedure, 1973, seeking regular bail after being arrested on 13.10.2022 in connection with Crime No. ECIR/RPZO/09/2022 for offences under Sections 3 & 4 of the PMLA, 2002.

2. Allegations under PMLA, 2002:
The prosecution alleged that during a search and seizure action under Section 132 of the Income Tax Act on 30.06.2022, incriminating materials were found leading to a complaint and subsequent investigation by the Enforcement Directorate (ED). The applicant was implicated in handling proceeds of crime (PoC) as per instructions from the main accused, Suryakant Tiwari, involving illegal levy collection on coal and unaccounted cash movements.

3. Role of the Applicant:
The applicant allegedly handled PoC, parked illegal cash at his residence, and facilitated its movement. He admitted to using his family's names for accommodation entries and layering illegal cash to acquire landed assets. Diaries seized revealed direct transactions worth Rs. 26 crore in his name, and properties were purchased using PoC, thus implicating him under Section 3 of the PMLA, 2002, punishable under Section 4.

4. Legal Arguments for Bail:
The applicant's counsel argued that the investigation was complete, the applicant had cooperated, and there was no further requirement for custody. The counsel cited several judicial precedents to support the bail application, emphasizing the lack of evidence for conspiracy and the completion of the investigation.

5. Legal Arguments Against Bail:
The respondent's counsel opposed the bail, highlighting that the applicant was not an accused in the predicate offence in Crime No. 129/2022 and that the investigation was ongoing. The counsel argued that the applicant's involvement in money laundering was evident, and granting bail would undermine the investigation's integrity.

Judicial Precedents and Legal Standards:
The court considered various judgments, including those from the Supreme Court and High Courts, emphasizing the rigorous standards under Section 45 of the PMLA, 2002, for granting bail. The court noted that the applicant had not reversed the burden of proof and dislodged the prosecution's case, a mandatory requirement under Section 45.

Judgment:
The court concluded that the applicant failed to satisfy the twin conditions for bail under Section 45 of the PMLA, 2002. The bail application was rejected, with the court emphasizing that its observations would not influence the trial's outcome.