2025 (5) TMI 2106 - HC - Money Laundering

Seeking grant of regular bail - Money Laundering - proceeds of crime - illegal online betting platform Sky-exchange operated under the umbrella of the Mahadev Online Book syndicate - statement recorded under Section 50 of PMLA-2002 - HELD THAT - In the case of Satish Jaggi Vs. State of Chhattisgarh 2007 (4) TMI 775 - SUPREME COURT the Hon ble Supreme Court has held that at the stage of granting of bail the Court can only go into the question of prima facie case established for granting bail it cannot go into the question of credibility and reliability of witnesses put up by the prosecution. The question of credibility and reliability of prosecution witnesses can only be tested during trial. In the present case the applicant was interrogated on 23.01.2025 in which he disclosed the entire details of the transaction. From the digital device seized from Govind Kedia the user ID of the present applicant was extracted which proved that the applicant was involved in illegal operation of Sky-exchange. In his statement the applicant admitted that he was having the said user ID of Sky- exchange betting platform and used to play illegal bets on Sky- exchange through Govind Kedia. From the investigation it also reveals that the bank account of the present applicant received huge credits from various entities of his brother Sanjay Fogla which was shown as loan but from the statement of his brother Sanjay Fogla it reveals that it was not the true transaction of loan but fraudulently shown as loan in the balance sheet and was against cash provided by the present applicant. From the statement of Bineet Agarwal and Pawan Marodia also the involvement of the present applicant is disclosed. From the mobile phone of the son of the applicant a huge transaction is detected which also the evidence of involvement of the applicant with the offence in question. From the material collected during the investigation the involvement of the present applicant clearly appears that he knowingly engaged in receiving proceeds of crime. It is found from the material produced in the present case it is not acceptable that the present applicant did not know about the transactions that the amount utilized by him are not the proceeds of crime. Denial by the accused itself is not sufficient to consider prima facie that there is no mens rea of the applicant for the said offence under the PMLA-2002. It cannot be said that there is no involvement of the applicant in the offence in question. Considering the role of the applicant in the ensuing money laundering case of proceeds of crime it is found that there is sufficient evidence collected by the ED/respondent to prima facie show the involvement of the applicant in the offence of money laundering as defined under Section 3 of the PMLA 2002. It is an organized crime having various facets of its complexion therefore further considering the provisions of Section 45 of the PMLA 2002 this Court is satisfied that there is reasonable ground for believing that the applicant is involved in the offence and he is likely to commit any other offence while on bail it is not inclined to release the applicant on bail. Conclusion - The bail application is rejected as the Court is satisfied that there are reasonable grounds for believing the applicant s involvement in money laundering under PMLA-2002 and he is likely to commit further offences if released on bail. The present bail application filed by the applicant-Sandeep Fogla is rejected.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the applicant is entitled to regular bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023, given his arrest under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 (PMLA-2002).

- Whether the applicant's involvement in the offence of money laundering, specifically in connection with the illegal online betting platform "Sky-exchange" operated under the umbrella of the "Mahadev Online Book" syndicate, is prima facie established.

- Whether the statement recorded under Section 50 of PMLA-2002 against the applicant is admissible and sufficient to implicate him.

- Whether the applicant's alleged transactions and association with other accused persons, including the handling of proceeds of crime and layering of illegal funds, constitute sufficient grounds for his continued detention.

- Whether the applicant's claim of absence of mens rea, lack of direct involvement in the predicate offence, and reliance on co-accused bail orders justify his release.

- The applicability of the proviso to Section 45 of PMLA-2002 regarding the threshold amount of proceeds of crime and its impact on bail eligibility.

- The relevance and weight of electronic evidence and statements under the Evidence Act and PMLA in the context of bail.

- The balance between the applicant's fundamental rights under Article 21 of the Constitution and the State's interest in safeguarding the economy from grave economic offences.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Prima facie involvement of the applicant in money laundering under PMLA-2002

Relevant legal framework includes Sections 3 and 4 of PMLA-2002 defining the offence and punishment for money laundering, and Section 2(1)(u) defining "proceeds of crime". The Court also referred to Section 45 of PMLA-2002 which requires "reasonable grounds for believing" the accused's involvement for bail considerations.

The Court examined the investigation details revealing the applicant's user ID "sfhkd20" on the Sky-exchange betting platform, extracted from digital devices seized from co-accused Govind Kumar Kedia. The applicant admitted using this ID and engaging in illegal betting. Further, the applicant's bank accounts showed large credits from entities linked to his brother, fraudulently recorded as loans but admitted to be cash transactions, indicating layering of proceeds of crime.

Statements of other accused corroborated the applicant's involvement in illegal betting and money laundering activities. Analysis of the applicant's son's mobile phone revealed communication and transactions related to cash collection, indicating the applicant's instrumental role through family members.

The Court applied the law to facts by holding that the evidence prima facie establishes the applicant's knowledge and active participation in the money laundering scheme, negating the applicant's claim of ignorance or lack of mens rea.

Competing arguments about the applicant's non-involvement in the predicate offence and absence of direct evidence were rejected, as the Court emphasized that at bail stage, only prima facie material is required, not conclusive proof.

Conclusion: The applicant's prima facie involvement in money laundering is established, justifying his continued detention.

Issue 2: Admissibility and evidentiary value of the applicant's statement under Section 50 of PMLA-2002

The applicant contended that the statement under Section 50 is inadmissible as per recent Supreme Court rulings, and no other evidence connects him to the offence.

The Court acknowledged the principle that statements under Section 50 are subject to trial scrutiny but noted that such statements form part of the prima facie material for bail consideration. The Court also noted the corroborative electronic evidence and other witness statements supporting the applicant's involvement.

The Court applied the principle that bail courts do not weigh evidence meticulously but examine broad probabilities and reasonable grounds to believe involvement.

Conclusion: The Section 50 statement, along with corroborative material, is sufficient at this stage to deny bail.

Issue 3: Applicability of proviso to Section 45 of PMLA-2002 regarding threshold proceeds of crime

The applicant argued that the estimated proceeds of crime linked to him were below Rs. 1 crore, invoking the proviso to Section 45 that could favor bail.

The Court observed that the total proceeds of crime generated by the syndicate were massive (Rs. 450 crores monthly), and the applicant's role in layering and integration stages was significant. The Court held that the proviso does not absolve the applicant given the prima facie evidence of his involvement in the money laundering chain.

Conclusion: The proviso to Section 45 does not apply to the applicant's case to grant bail.

Issue 4: Reliance on co-accused bail orders and delay in trial

The applicant sought parity with a co-accused who was granted bail by the Supreme Court and highlighted the delay in framing charges as grounds for bail.

The Court distinguished the applicant's role and evidence from that of the co-accused, noting that the allegations and material against the applicant were more substantial and distinct. The Court also emphasized that delay in trial cannot override the gravity of the offence and prima facie evidence of guilt.

Conclusion: Bail granted to co-accused is not a precedent for the applicant; delay in trial is not a sufficient ground for bail in grave economic offences.

Issue 5: The nature of economic offences and public interest in bail considerations

The Court relied on Supreme Court precedents highlighting that economic offences involving large-scale conspiracies and public funds require stringent bail considerations. The Court emphasized the serious threat posed by money laundering to the national economy and interest.

The Court balanced the applicant's fundamental rights against the State's interest and concluded that the gravity of offence and prima facie evidence outweigh the applicant's right to bail at this stage.

Conclusion: The offence's seriousness militates against bail.

3. SIGNIFICANT HOLDINGS

"The Court will not weigh the evidence to find the guilt of the accused which is, of course, the work of Trial Court. The Court is only required to place its view based on probability on the basis of reasonable material collected during the investigation and the said view will not be taken into consideration by the Trial Court in recording its finding of the guilt or acquittal during trial which is based on the evidence adduced during the trial."

"Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country."

"The offence of money-laundering is committed by an individual with a deliberate design with the motive to enhance his gains, disregarding the interests of nation and society as a whole and which by no stretch of imagination can be termed as offence of trivial nature. Thus, it is in the interest of the State that law enforcement agencies should be provided with a proportionate effective mechanism so as to deal with these types of offences as the wealth of the nation is to be safeguarded from these dreaded criminals."

Final determination: The bail application is rejected as the Court is satisfied that there are reasonable grounds for believing the applicant's involvement in money laundering under PMLA-2002, and he is likely to commit further offences if released on bail. The applicant's role is distinguished from co-accused who have been granted bail, and the serious nature of the offence and evidence against him preclude bail at this stage.