2025 (7) TMI 933 - HC - Money Laundering

Money Laundering - scheduled offences - prima facie case against the petitioner - proceeds of crime is acquired in the form of commission/bribe in lieu of allotment of tenders - burden of prove - compliance with conditions enumerated in Section 45 of PMLA or not - statements admissible as evidences or not - Principles of parity - HELD THAT - The petitioner is an influential person being Cabinet Minister in the State of Jharkhand and the evidence collected during investigation by the agency broadly speaks that the co-accused Veerandra Kumar Ram used to collect commission in terms of allocation of tender and execution of work and the said commission/fixed share of 1.35% was distributed among his seniors and politicians and the said commission is also collected by co-accused Sanjeev Kumar Lal P.S. of the present petitioner through certain persons. It has also been submitted that during the investigation it has been ascertained that the entire collection and distribution of commission was taken care of by the assistant engineers posted at the Rural Development Special Division and Rural Works Department. Further it was also found that the share of the petitioner who was the Minister was 1.35% of the allocated tender amount and also in one of the instances it was found that the petitioner had received his share of commission of Rs. 3 Crore which was sent by one Assistant Engineer in September 2022 which was facilitated by one of his close persons. Further during statement made under Section 50 of PMLA 2002 and in one of the instances Veerendra Kumar Ram disclosed that crores of the commission were handed over to the co-accused Sanjeev Kumar Lal Personal Secretary of the present petitioner in September 2022. It has also come that co-accused Jahangir Alam was assisting Sanjeev Kumar Lal and was hoarding the said commission on the instruction of Sanjeev Kumar Lal and the said Sanjeev Kumar Lal takes care of the collection of commission and Jahangir Alam collected the same at the instruction of Sanjeev Kumar Lal who in turn was doing so on behalf of the present petitioner. This Court thinks it fit to revisit the scope of Section 45 of the PML Act 2002. As discussed in preceding paragraphs that Section 45 of the PMLA Act 2002 provides twin test. First reason to believe is to be there for the purpose of reaching to the conclusion that there is no prima facie case and second condition is that the accused is not likely to commit any offence while on bail - taking into consideration the provision of Sections 19(1) 45(1) and 45(2) of PML Act that the conditions provided therein are required to be considered while granting the benefit of regular bail in exercise of power conferred under statute apart from the twin conditions which has been provided under Section 45(1) of the Act 2002. Section 45 of the PMLA turns the principle of bail is the rule and jail is the exception on its head. The power of the Court to grant bail is further conditioned upon the satisfaction of the twin conditions prescribed under Section 45(1) (i) and (ii) PMLA. While undertaking this exercise the Court is required to take a prima facie view on the basis of materials collected during investigation. The expression used in Section 45 of PMLA are reasonable grounds for believing which means that the Court has to find from a prima facie view of the materials collected during investigation that there are reasonable grounds to believe that the accused has not committed the offence and that there is no likelihood of him committing an offence while on bail - This Court based upon the imputation as has been discovered in course of investigation is of the view that what has been argued on behalf of the petitioner that proceeds cannot be said to be proceeds of crime is not fit to be acceptable because as would appear from the preceding paragraphs money which has been alleged to be obtained by the petitioner/accused has been routed through his Private Secretary Sanjeev Kumar Lal. Further at the stage of recording statements during enquiry it cannot be construed as an investigation for prosecution. The process envisaged under Section 50 of PMLA is in the nature of an inquiry against the proceeds of crime and it is not an investigation and the authorities who are recording the statements are not police officers and therefore these statements can be relied upon as admissible piece of evidence before the Court. The summons proceedings and recording of statements under PMLA are given the status of judicial proceedings under Section 50(4) of PMLA - The statements that were recorded from the witnesses during the investigation have been dealt with in prosecution complaint and many of the statements clearly implicate the petitioner. Therefore the statements that have been recorded from the witnesses and which has been relied upon is also a strong material that prima facie establishes the offence of money laundering against the present petitioner. Principles of parity - HELD THAT - This Court is adverting to the facts of instant case to decide the issue of parity in the backdrop of aforesaid settled legal ratio and as such thinks it fit to discuss herein distinguishable facts in the case of present petitioner to that of the case of co-accused persons who have been granted bail - This Court in order to verify the issue of principle of parity has gone through the order by which co-accused have been enlarged on the bail and found that there is allegation upon the said co-accused persons that they have worked as a pawn in their individual capacity in the alleged commission of crime and further the Hon ble Apex Court prima-facie has not found their direct involvement in the alleged offence but herein the close associate of the petitioner namely Sanjiv Kumar Lal who was personal secretary of the present petitioner has taken the tainted money fixed as percentage or as cut in lieu of the award of contract in the department concerned. Applying the principle of parity this Court is of the view as per the judgment rendered by the Hon ble Apex Court rendered in Tarun Kumar 2023 (11) TMI 904 - SUPREME COURT that the benefit of parity is to be given if the facts/involvement of the petitioner is identical to the persons with whom parity is being claimed but that is not the case herein - This Court on the basis of the discussion with respect to the involvement of the petitioner vis- -vis the other co-accused person is of the view that the case of the petitioner is quite distinguishable to that of the case of the co-accused persons therefore is of the considered view that it is not a fit case for applying the principle of parity. This Court is of the prima-facie view that there is no reason to believe by this Court that the petitioner is not involved in managing the money said to be proceeds of crime - This Court while considering the prayer for regular bail has taken into consideration that though this Court is not sitting in appeal on the order passed by learned trial court but only for the purpose of considering the view which has been taken by learned court while rejecting the prayer for bail this Court is also in agreement with the said view based upon the material surfaced in course of investigation. This Court is of the opinion that the petitioner has miserably failed to satisfy this Court that there are reasonable grounds for believing that he is not guilty of the alleged offences. On the contrary there is sufficient material collected by the respondent-ED to show that he is prima facie guilty of the alleged offences - since the petitioner has failed to make out a special case to exercise the power to grant bail and considering the facts and parameters necessary to be considered for adjudication of bail this Court does not find any exceptional ground to exercise its discretionary jurisdiction to grant bail. Application dismissed.

Summary

The core legal questions considered in this judgment include:

1. Whether the petitioner is prima facie guilty of the offence of money laundering under Section 3 of the Prevention of Money Laundering Act, 2002 (PMLA), based on the evidence and statements recorded under Section 50 of the PMLA.

2. Whether the petitioner has satisfied the twin conditions under Section 45(1) of the PMLA for grant of bail, namely, that there are reasonable grounds for believing that he is not guilty of the offence and that he is not likely to commit any offence while on bail.

3. The applicability and interpretation of key provisions of the PMLA, including the definitions of "proceeds of crime" (Section 2(1)(u)), the offence of money laundering (Section 3), and the powers and evidentiary value of statements recorded under Section 50.

4. The scope and effect of the statutory presumption under Section 24 of the PMLA regarding involvement of proceeds of crime in money laundering.

5. The relevance and applicability of the principle of parity in bail applications, particularly in comparison with co-accused persons who have been granted bail.

6. The consideration of the nature and gravity of economic offences, especially money laundering, in the context of bail applications.

7. The procedural correctness and sufficiency of "reason to believe" for arrest under Section 19 of the PMLA, including compliance with judicial precedents.

Issue-wise Detailed Analysis:

1. Prima Facie Guilt under Section 3 of PMLA:

The Court examined the prosecution complaint, which detailed the modus operandi of commission collection from contractors against tenders floated by various departments under the petitioner's ministerial portfolio. The complaint and investigation revealed a syndicate involving departmental engineers, the petitioner's personal secretary Sanjeev Kumar Lal, and associates such as Jahangir Alam, who collected and concealed large sums of cash as proceeds of crime.

Statements recorded under Section 50 of the PMLA by multiple accused and witnesses consistently stated a fixed 3% commission on tender values, with 1.35% share attributed to the petitioner, collected through his PS. Cash seizures totaling over Rs. 37 crore from premises linked to the syndicate, along with incriminating documents such as diaries and coded notes referencing the petitioner's share, corroborated these statements.

The Court relied on authoritative interpretations of Section 3 of the PMLA, including the explanation that money laundering includes any process or activity connected with proceeds of crime such as concealment, possession, acquisition, or use. It held that the offence is a continuing activity and does not require proof of the entire money trail or final integration of tainted property.

Competing arguments by the petitioner, including denial of direct receipt of commission and absence of recovery from his premises, were rejected on the basis that involvement through agents and concealment suffices under the Act. The Court emphasized that the statements under Section 50 are admissible evidence and form a formidable case against the petitioner.

Conclusion: The Court found sufficient prima facie material to believe that the petitioner is involved in money laundering as defined under Section 3 of the PMLA.

2. Compliance with Section 45 of PMLA and Bail Conditions:

The Court analyzed the mandatory twin conditions under Section 45(1) of the PMLA for grant of bail: (i) reasonable grounds to believe that the accused is not guilty, and (ii) the accused is not likely to commit an offence while on bail.

Relying on recent Supreme Court judgments, the Court underscored that these conditions are to be strictly complied with, even when bail is sought under the CrPC, due to the overriding effect of the PMLA.

Given the prima facie evidence of the petitioner's involvement, the Court was not satisfied that reasonable grounds exist to believe the petitioner is not guilty. Further, considering the serious nature of the offence and the petitioner's influential position, the Court was not convinced that the petitioner would not commit an offence while on bail.

Conclusion: The petitioner failed to satisfy the twin conditions under Section 45(1) of the PMLA, rendering bail inappropriate.

3. Interpretation and Application of PMLA Provisions:

The Court extensively reviewed the legislative intent and international conventions underlying the PMLA, emphasizing the Act's comprehensive framework to combat money laundering and related economic offences.

It referred to the definitions of "proceeds of crime" (Section 2(1)(u)) and "offence of money laundering" (Section 3), highlighting that the Act covers direct and indirect involvement in any process connected with proceeds of crime, including concealment and possession.

The Court also discussed the evidentiary role of statements under Section 50, clarifying that such statements are judicial proceedings and admissible evidence, not restricted by protections under Article 20(3) or CrPC provisions applicable to police investigations. This was supported by Supreme Court precedents affirming the validity and weight of Section 50 statements.

Conclusion: The Court applied the PMLA provisions in a manner consistent with legislative intent and judicial precedents, supporting the prosecution's case.

4. Burden of Proof and Presumption under Section 24:

The Court examined Section 24, which creates a statutory presumption that proceeds of crime are involved in money laundering once foundational facts are established. The prosecution must first establish commission of a scheduled offence, derivation of property from that offence, and involvement of the accused in processes connected to the proceeds of crime. Thereafter, the burden shifts to the accused to rebut the presumption.

In this case, the Court found the prosecution had established the foundational facts through evidence and statements. The petitioner had not rebutted the presumption, thereby strengthening the case against him.

Conclusion: The statutory presumption under Section 24 applies, supporting continued detention.

5. Principle of Parity in Bail Applications:

The petitioner sought bail on the ground of parity, citing co-accused persons who had been granted bail by the Supreme Court. The Court noted that parity applies only when the facts and role of the accused are identical.

On examination, the Court found the petitioner's case distinguishable due to his position as minister and direct involvement through his PS in the commission syndicate, unlike other co-accused who were found to have lesser or indirect roles.

The Court reiterated that bail decisions must consider the totality of circumstances and the nature of the accused's role, not merely the fact that others received bail.

Conclusion: The principle of parity was not applicable to the petitioner's bail application.

6. Nature and Gravity of Economic Offences:

The Court emphasized that economic offences, especially money laundering and corruption, constitute a special category of grave offences requiring stringent judicial approach. Citing Supreme Court rulings, the Court noted that such offences have deep-rooted conspiracies and cause serious harm to the national economy and public interest.

The Court underscored the need to deal with corruption firmly and observed that the petitioner's alleged conduct posed a serious threat to governance and public trust.

Conclusion: The gravity of the offence militated against granting bail.

7. Validity of Arrest and Compliance with Section 19:

The petitioner contended that the arrest was invalid due to non-compliance with the "reason to believe" requirement under Section 19 of the PMLA and cited a recent Supreme Court judgment. The Court found that the arrest complied with existing judicial directions and that the "reason to believe" was recorded in writing and furnished to the petitioner before arrest, consistent with legal requirements.

The Court also noted that subsequent judicial scrutiny had not been challenged by the petitioner.

Conclusion: The arrest was valid and procedurally proper.

Significant Holdings:

"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." (Section 3, PMLA)

"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." (Explanation to Section 3, PMLA)

"The conditions specified under Section 45 of PMLA are mandatory and need to be complied with. The Court is required to be satisfied that there are reasonable grounds for believing that the accused is not guilty of such offence and he is not likely to commit any offence while on bail." (Supreme Court precedent cited)

"Statements recorded under Section 50 of the PMLA are admissible in evidence and can be relied upon to establish culpability in money laundering cases."

"The principle of parity in bail applications applies only when the facts and role of the accused are identical; mere grant of bail to co-accused does not automatically entitle another accused to bail."

"Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail, given their serious repercussions on the financial health of the country."

Final determinations:

- The petitioner is prima facie involved in the offence of money laundering under Section 3 of the PMLA.

- The petitioner failed to satisfy the twin conditions under Section 45(1) of the PMLA for grant of bail.

- The principle of parity is not applicable due to distinguishable facts and the petitioner's prominent role.

- The arrest and investigation complied with statutory and judicial requirements.

- The bail application is dismissed, with the trial court directed to proceed uninfluenced by observations made at bail stage.