2025 (7) TMI 157 - HC - Money Laundering

Seeking grant of anticipatory bail under Section 482 of Bharatiya Nagrik Suraksha Sanhita 2023 - Money Laundering - predicate offence - import of photosensitive semiconductor devices - failure to take proper steps for service through the Ministry of Home Affairs and failed to attach requisite documents for service in Hong Kong as per protocol - failre to rebut presumption - HELD THAT - It is not disputed that the predicate FIR registered by the Economic Offences Wing Delhi Police discloses the commission of cognizable and scheduled offences under the PMLA involving the use of forged Form 15CBs to remit sums exceeding Rs. 300 Crores abroad. Though the applicant is not named in the predicate FIR the Directorate of Enforcement in exercise of its powers under Section 3 read with Section 70 of the PMLA has attributed a portion of the said proceeds to the applicant s company. In terms of Section 24 of the PMLA a statutory presumption arises once it is shown that a person is in possession of property linked with a scheduled offence. It is for the applicant to rebut the presumption by demonstrating that such proceeds are untainted. At this stage no material has been placed on record to displace the statutory presumption. The reliance placed by the applicant on Vijay Madanlal Choudhary v. Union of India 2022 (7) TMI 1316 - SUPREME COURT (LB) is misplaced as the decision does not exempt foreign recipients from scrutiny merely by asserting contractual legitimacy in the face of strong allegations of layered money laundering. The applicant s conduct during the investigation is materially relevant to the exercise of discretion under Section 438 Cr. PC. It is on record that the applicant was intercepted at the Amritsar International Airport on 27.01.2025 and served with a summons under Section 50 of the PMLA to appear the following day. He failed to appear and continued to ignore subsequent summons dated 06.02.2025 25.02.2025 and 03.04.2025 on vague grounds relating to his father s illness without substantiating such claims or offering any concrete mechanism for cooperation. In Virbhadra Singh v. ED 2017 (7) TMI 109 - DELHI HIGH COURT this Court held that failure to comply with Section 50 summons is a serious breach and may warrant coercive steps. Law laid down in Tarsem Lal s case is applicable to an accused named in prosecution complaint. Here by contrast the present applicant has not been arrayed as an accused and investigation qua him is still stated to be pending the applicant has failed to appear despite multiple statutory summons and is now seeking anticipatory bail to evade arrest. In State v. Anil Sharma 1997 (9) TMI 626 - SUPREME COURT the Supreme Court underscored the necessity of custodial interrogation in white-collar crimes noting that anticipatory bail at an early stage can frustrate meaningful investigation. The apprehension expressed by the Enforcement Directorate that the applicant poses a flight risk is not without merit. The applicant is a permanent resident of Hong Kong and has no known fixed assets or ties in India. His interception at the airport was not a voluntary surrender but an incidental occurrence. In Directorate of Enforcement v. M. Gopal Reddy 2023 (2) TMI 1045 - SUPREME COURT the Court held that anticipatory bail ought not be granted where the accused is residing abroad evading investigation and lacks a demonstrable intention to submit to jurisdiction. The applicant s conduct fits this description. This Court is of the considered view that custodial interrogation may be warranted to ascertain the applicant s role in facilitating or benefiting from the alleged money laundering operation. Premature grant of bail would impede investigation and compromise the statutory objectives of the PMLA. In the present case the applicant has failed to rebut the statutory presumption under Section 24 of the PMLA or discharge the burden mandated under Section 45. His non-appearance in response to summons and evasion of investigation reflect a lack of bona fides and do not inspire confidence in his willingness to cooperate with the authorities - The record shows that the applicant had earlier approached the Sessions Court under Section 482 of the BNSS 2023 and the same was dismissed on 27.03.2025 inter alia on the ground that there were no reasonable grounds to believe that he was not guilty of the offence of money laundering. Notably there is no denial on the applicant s part regarding the receipt of summons yet he consistently failed to appear and evaded the process of law on untenable pretexts. Having regard to the totality of the circumstances including the applicant s evasive conduct the material on record indicating receipt of laundered funds by entity controlled by him the failure to meet the statutory threshold under Section 45 of the PMLA and the need for custodial interrogation this Court finds no justifiable reason to exercise its discretion in favour of the applicant. Further the criminal proceedings against the applicant s company are still at an initial stage and any pre-arrest protection at this juncture would risk impeding the investigation qua the applicant. The application for anticipatory bail is dismissed.

Summary

The core legal questions considered by the Court include: (i) whether the applicant, as the sole director of a foreign company allegedly involved in receipt of proceeds of crime, is entitled to anticipatory bail under the Prevention of Money Laundering Act, 2002 (PMLA); (ii) the applicability and satisfaction of the twin conditions prescribed under Section 45 of the PMLA for grant of anticipatory bail; (iii) the effect of the applicant's non-compliance with summons issued under Section 50 of the PMLA on his entitlement to bail; (iv) the relevance and impact of vicarious liability under Section 70 of the PMLA in the context of the applicant's personal culpability; (v) the applicability of precedents relating to anticipatory bail in economic offences, particularly in cases involving foreign entities and transnational money laundering; and (vi) whether custodial interrogation is warranted to further the investigation and prevent obstruction of justice.

Regarding the entitlement to anticipatory bail under the PMLA, the Court examined the statutory framework, particularly Sections 3, 4, 24, 44, 45, and 70 of the Act. Section 3 defines the offence of money laundering, Section 4 prescribes punishment, Section 24 creates a statutory presumption of guilt upon possession of proceeds of crime, and Section 45 mandates satisfaction of twin conditions before bail is granted. Section 70 imputes vicarious liability to directors or persons in control of companies involved in money laundering. The Court noted that the PMLA creates a stringent regime for bail in economic offences, emphasizing custodial interrogation and investigation.

The Court interpreted the statutory presumption under Section 24 as a significant burden on the accused to rebut the inference that possession of property linked to scheduled offences amounts to guilt. The applicant's company was alleged to have received approximately Rs. 20.75 crores through layered transactions involving forged documentation, forming part of a larger scheme involving over Rs. 300 crores. The Court found that the applicant failed to place any material to rebut this presumption or demonstrate the legitimacy of the transactions beyond self-serving assertions supported by documentary evidence, which were contested by the Enforcement Directorate (ED).

On the applicant's non-compliance with summons issued under Section 50 of the PMLA, the Court relied on binding precedents affirming the mandatory nature of such summons and the serious consequences of evasion. The applicant was intercepted at the airport and served summons but failed to appear on multiple occasions, citing personal exigencies without adequate substantiation. The Court held that such conduct undermines the bona fides necessary for equitable relief like anticipatory bail and may justify coercive action.

The Court addressed the applicant's contention that he was implicated only vicariously as the sole director of the company and not personally liable. It held that the corporate veil could be lifted where the individual is the controlling mind and actively involved in the company's affairs, particularly in one-person companies. Reliance was placed on authoritative decisions establishing that vicarious liability under Section 70 of the PMLA is not automatic but justified on prima facie material showing control and involvement. The Court found that the applicant's role as the sole director receiving substantial funds through suspicious transactions warranted his arraignment both in representative and personal capacities.

The Court distinguished precedents cited by the applicant, such as those where accused cooperated with investigation or were named personally in complaints at the investigation stage. It emphasized that anticipatory bail is not a matter of right, especially in serious economic offences, and must be granted sparingly. The Court noted that in cases like the present, where investigation is ongoing, and the accused evades summons, custodial interrogation is necessary to prevent obstruction and ensure effective inquiry.

Regarding the applicability of Section 45 of the PMLA, the Court reiterated the twin conditions that must be satisfied before anticipatory bail can be granted: (i) reasonable grounds to believe the accused is not guilty of money laundering, and (ii) assurance that the accused will not commit any offence while on bail. The Court found that the applicant failed to discharge this burden, as no material negated the prima facie case or statutory presumption. The applicant's evasive conduct further negated any assurance against future offences.

The Court also considered the transnational nature of the offence, the scale of alleged laundering, and the use of forged documentation to facilitate illicit remittances. It held that premature bail would impede investigation and compromise the objectives of the PMLA. The Court underscored the necessity of custodial interrogation in white-collar and economic offences to unravel complex financial transactions and prevent flight risk, especially given the applicant's residence abroad and lack of substantial ties to India.

In conclusion, the Court held that the applicant was not entitled to anticipatory bail at the current stage of investigation. The statutory presumption under Section 24 remained unrebutted, the twin conditions under Section 45 were not satisfied, and the applicant's non-compliance with summons and evasive conduct weighed heavily against bail. The Court emphasized that custodial interrogation was warranted to ascertain the applicant's role and facilitate the investigation. The application for anticipatory bail was accordingly dismissed.

Significant holdings include the following verbatim excerpts and principles:

"The twin conditions under Section 45 of the PMLA are not satisfied. As clarified in SFIO v. Aditya Sarda, the Court must be satisfied that (i) there are reasonable grounds to believe the accused is not guilty of the offence, and (ii) he is not likely to commit any offence while on bail."

"In terms of Section 24 of the PMLA, a statutory presumption arises once it is shown that a person is in possession of property linked with a scheduled offence. It is for the applicant to rebut the presumption by demonstrating that such proceeds are untainted."

"The applicant's non-compliance reveals a pattern of evasion and undermines the presumption of bona fides essential for seeking equitable relief."

"The applicant is not merely a nonexecutive or nominal director, but the controlling mind of a oneperson company... the material on record prima facie justifies his arraignment both in representative and personal capacities under Sections 3 and 70 of the PMLA."

"Anticipatory bail in economic offences should be granted only in exceptional cases... custodial interrogation may be warranted to ascertain the applicant's role in facilitating or benefiting from the alleged money laundering operation."

"Premature grant of bail would impede investigation and compromise the statutory objectives of the PMLA."

"The applicant's conduct, marked by sustained non-cooperation despite issuance of repeated notices, weighs heavily against the grant of prearrest protection."

"Having regard to the totality of the circumstances... this Court finds no justifiable reason to exercise its discretion in favour of the applicant."