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2016 (1) TMI 907 - GUJARAT HIGH COURT

2016 (1) TMI 907 - GUJARAT HIGH COURT - TMI - Applicants have prayed to release them on bail - offence punishable under Sections 3 read with Section 4 of the PMLA read with Section 120B of the Indian Penal Code - Held that:- . It appears that the applicants were involved in cricket betting and was setting the accounts with respect of the money generated out of cricket betting. It is an admitted position that cricket betting is not a scheduled offence and hence the money generated out of cricket .....

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with those SIM Cards. - Even for the sake of argument if we believe that the contents of Case No.85 of 2015 are correct, then also what emerges out of the scheduled offences are the SIM Cards. That what was derived or obtained directly or indirectly were the SIM Cards, and as far as the usage of the SIM Cards are concerned, it is a separate offence and the same is not relied upon by the Enforcement Directorate. - It is true that in the case of Ankush Bansal, whose bail order forms part o .....

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45 of the PMLA shows that when the Courts are satisfied that there is a reasonable ground of believing that when the applicant is not guilty of such offence and that he is not likely to commit any offence while on bail, he can be granted bail. Since, in the present condition there are no proceeds of crime existing hence Section 3 of the PMLA does not arise. - In view of above observation, I am of the opinion that present both the applications require consideration. Hence, both the applicati .....

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n of Money Laundering Act, 2002 (herein after referred to as PMLA). The applicants have prayed to release them on bail, in connection with PMLA case file No.ECIR/03/AMZO/2015 filed by respondent authority (ED) appointed under the PMLA for the offence punishable under Sections 3 read with Section 4 of the PMLA read with Section 120B of the Indian Penal Code. The said complaint has been registered as PMLA case No.8/2015. 2. After service of the process in present applications to this Court, the re .....

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ssociates and A2 Kiran Mala premises rented farm house owned by Jitendra Shah and taken on rent in the name of driver Nagji Rabari situated at village Sikandarpur at Vadodara was raied and searched on 19th March, 2015 under Section 37 of the Foreign Exchange Management Act (FEMA), 1999 which resulted into recovery as well as seizure of incriminating documents, articles and digital records etc. 4. The accused were indulging in the acts of cricket betting at that time. The E.D. also seized literat .....

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e FIR for State against the accused, which was registered as C.R.No.II222 of 2015 registered on 21.03.2015, under Section 4 and 5 of the Prevention of Gambling Act against 16 accused persons. It is the case of prosecution that, all 16 accused persons were arrested on 21.03.2015 by officers of S.O.G (Special Operation Group) and they were produced on the same day before the learned Judicial Magistrate, First Class, Vadodara City and Police asked for remand of 7 days, which was rejected by the lea .....

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d (including the petitioners herein) under Section 120(B), 418, 419, 420, 467, 471 of Indian Penal Code. 7. According to E.D., aforesaid offences under the Indian Penal Code are scheduled offences as mentioned in Section 2(1)(y) of P.M.L. Act, 2002, therefore, a separate case was registered by Ahmedabad Zonal Office of E.D. against the accused under case file No.ECIR/03/AMZO/2015 dated 26.03.2015 for the purpose of identifying properties/assetsas defined under Section 2(1) (u) of P.M.L. Act, 200 .....

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.04.2015, none of the accused were found present, but documents were seized from the place of co-accused-Chirag Parikh (not the present petitioner). It is further the case of E.D. that, several summons of appearance were issued under P.M.L. Act, but the accused did not turn up. Therefore, the complainant-E.D. filed Criminal Misc. Application No.565 of 2015 before the Designated Court, under P.M.L. Act, 2002 on 09.04.2015 and the learned Designated Judge, Ahmedabad Rural by his order dated 10.04. .....

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that, on an application of the E.D., the Desognated Court issued transfer warrants and the learned Judicial Magistrate First Class, Vadodara City 3rd Court handed over custody of the present petitioners to the E.D. on 22.04.2015. Thus, the petitioners came to be arrested by E.D. in connection with the present E.D. offence on 22.04.2015. 10. From the perusal of the record, it appears on 23.01.2015, E.D. produced the petitioner before the learned Special Designated Judge under P.M.L., Ahmedabad Ru .....

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l before this Hon'ble Court directly, and therefore, this Hon'ble Court vide order dated 08.06.2015 permitted the petitioners to withdraw the petition with a liberty and permission to file the bail application firstly before the Lower Court. 12. Thereafter, the petitioners have preferred Misc. Criminal Applications before the learned Designated Special Judge on 10.06.2015 and the same was fixed for hearing. Meanwhile, on 15.06.2015, after a thorough investigation, a detailed complaint al .....

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was arrested by the Enforcement Directorate on 21.04.2015 and ever since then the present petitioner/applicant is in judicial custody except for the period for which interim bail was granted to him by this Hon ble Court from time to time. B) That the Criminal Miscellaneous Application No.9197 of 2015 for seeking a regular bail was filed by the applicant, however, the same was withdrawn on 08.06.2015. That pursuant to the withdrawal of the petition the Enforcement Directorate has filed a complain .....

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ring No.IInd C.R.No.222 of 2015 under the provisions of Section 4 and 5 of the Gambling Act, and Section 65 and 66 of the Information and Technology Act, 2000. D) That it was during the course of investigation of the case IInd C.R.No.222 of 2015 that it was found that about 39 SIM cards were procured by the persons involved in the case IInd C.R.No.222 of 2015 on the basis of false and forged documents, pursuant to a second FIR bearing No.I CR No.85 of 2015 was registered. E) That during the sear .....

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R/03/AMZO/2015 was registered by the Enforcement Directorate and thereby the investigation started. F) That it is important to see here that, in the complaint No.8 filed by the respondent No.2 on 15.06.20156 is silent about the IInd C.R. i.e. CR No.222 of 2015, even the written submissions filed by the respondent No.2 does not speak/specify about Case No.222 of 2015 filed against the present applicant pursuant to the search conducted by the Enforcement Directorate on 19.03.2015 under Section 37 .....

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volvement of 16 accused persons in cricket betting and the said case was registered under the Gambling Act and the Information and Technology Act, 2000. I) That a bare perusal of the above mentioned facts and circumstances shows that there has been registration of two different FIRS pertaining to two different conspiracies and both the FIRs did not have any connection with each other and both were with respect o separate offences. It is worthwhile to mention here though the name of the present a .....

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n 37 of the FEMA,1999. A bare perusal of all the statements just show that the applicant herein has been involved in cricket betting for the last for days in the partnership with Smt. Kiran Mala and Shri. Dharmendra Singh in Shreeji Corporation and Shreeji Buildcon, purchase of various properties by Shreeji Buildcon and Shreeji Corporation, is having the knowledge that Ganesh Patel, Kiran Mala are bookies engaged in cricket betting for the last 15 years, existence of a firm in the name and style .....

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d against applicants. Mr. Panchal has further drawn attention from the coordinate bench of this Court who has granted bail of two co-accused in Criminal Misc. Application (For regular bail) No. 18711 of 2015 and 14446 of 2015. 14. As per the case of prosecution and complaint filed by E.D. is to the effect that A1 to A4 carried out illegally online cricket betting racket using mobile phones and sim cards which were obtained by forging signatures of different persons belonging to different areas u .....

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also handed and dealt with proceeds of crime. It is the case of E.D. that furthermore for swift running of racket, accused also procure mater log in I.D. for Maruti Ahmedabad. It is the case of E.D. that aforesaid offences were committed by the accused in collusion and in conspiracy with each other, wherein each accused has played different role. 15. After aforesaid filing of written complaint, the petitioners have filed Misc. Criminal Application before the learned Special Court and the learne .....

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iled reply filed by the complainant E.D. The Court has at the same time also considered the arguments advanced by both the sides. 16. It is submitted by learned Senior Counsel J.M.Panchal and learned Senior Counsel Mr.Sumit Shah for applicants that, investigation qua the present petitioners are over. All the material is already collected. Even remand of the present petitioners was also obtained. Their custodial interrogation is now no more required by the E.D. Mr. Panchal and Mr. Shah have submi .....

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argesheet submitted by the Police in Indian Penal Code offences against the accused and has argued that M/s. Maruti Ahmedabad is projected as oral partnership firm. Learned counsels have also argued that there cannot be any oral partnership firm. Mr. Panchal has also submitted that, there is no material to show that M/s Maruti Ahmedabad is in existence. 18. Learned counsels have also argued that, merely, because the petitioners are a friend of Accused No.1 and 2, he is falsely involved in the pr .....

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he applicants have also argued that, in the opinion of Police Cricket Betting activity was carried out by accused nos1 & 2 (who are kingpins) with Foreign Punters through Mobile numbers of different witnesses by projecting before Foreign Bookies that such mobile numbers were belonging to the Company formed by accused persons and thereby, the accused persons have committed the offence of criminal breach of trust and cheating etc. 20. Learned counsels have also placed reliance on the remand re .....

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ailed complaint filed by E.D. In the submission of both the counsels, if those statements of accused as well as witnesses are taken into account at their face value, no involvement of the petitioners are revealed. For that purpose, my attention was also invited to relevant part of the complaint, which is thereon record. 21. It has also been argued that, statement of accused as well as witnesses show that everything was handled and managed by A1 and A2. Ld counsels for both the applicants have su .....

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f the accused persons were to do betting, which would constitute a gambling offence which, the petitioners are already arrested and granted remand by the competent Court. As per the submission of both the applicants that, petitioners are not involved in forging of any sim card or any other document. According to both the counsels, the activity of cricket betting is not covered under the scheduled offence as defined in Section 2(1)(y). Ld counsels have also at the same time argued that, sim card .....

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on bail. Ld counsels have also relied on Section 3 of P.M.L. Act and argued that, basic ingredients of the offences are not made out against the present petitioner. Both the Ld. counsels have also submitted that, no incriminating material is found from the house of both present petitioners. It is further argued by the counsels that, no monetary loss is caused to mobile provider company and no liability of any person is created by using mobile sim cards. It has also been submitted that, there is .....

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on is equally vehemently opposed by Ms. Trusha Patel, Standing Central Government Counsel for the department. As per the submission of Ms. Patel, accused are involved in the offences from the very beginning. Ms. Patel has submitted that, there is huge scam of 'Hawala Racket' running into crores of rupees in the game of cricket netting. In the submission of Ms. Patel, from farm house different material is recovered and seized, which shows that the present petitioner along with the other a .....

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sed to show that the present case falls under Section 3 of P.M.L. Act. Ms. Patel has also relied on Section 24 of P.M.L. Act to show that, burden of proof is on accused persons to prove that money received by them are untainted and has argued that unless the Court is satisfied that there are reasonable grounds for believing that accused persons are not guilty of such offences and that the accused is not likely to commit any offence while on bail. That Court would release the accused on bail. In .....

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ed bail, Ms. Patel in alternate has submitted that even otherwise considering the gravity of the offence and the maximum punishment provided under the PMLA Act, for bail is concerned, Court may not use its powers under Section 439 of Code. Ms. Patel has also relied upon the judgment order of the coordinate bench of this Court passed in Criminal Mis Application (Regular Bail) No.17000 of 2014 (Afroz Fatta Case) and also submitted that Section 45 of the PMLA Act is also required to be considered. .....

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upp. (4) SCC 663. Ms. Patel has further drawn attention from the provision of Section 17, Section 27, Section 24 and 50 and argued that statements of present applicants-accused and other co-accused are produced on record and per their confessional statements they have admitted that criminal act committed by them, so statements are admissible in eye of law. 26. For the ready reference and to appreciate the documents advanced by learned counsels for respective parties certain provisions of the PML .....

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oney-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine which may extend to five lakh rupees: Provided that where the proceeds of crime involved in money laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of this Section shall have effect as if for the words "which may extend to seven years", the words " .....

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ot; means- i) the offences specified under Part A of the Schedule; or ii) the offences specified under Part B of the Schedule if the total value involved in such offences is thirty lakh rupees or more; or iii)the offences specified under Part C of the Schedule;" Section 17 reads under (1) Where the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section,] on the basis of information in his possession, has reason to believe (the .....

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e or aircraft where he has reason to suspect that such records or proceeds of crime are kept; (b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where the keys thereof are not available; (c) seize any record or property found as a result of such search; (d) place marks of identification on such record or 4[property, if required or] make or cause to be made extracts or copies therefrom; (e) make a note or an invent .....

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ed to a Magistrate under section 157 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person, authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be. . 22 The Prevention of Money-laundering Act, 2002 of the Code of Criminal Procedure, 1973, (2 of 1974) or a complaint has been filed by a person, authorised to investigate the offence mentioned in the Sche .....

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o may be authorised by the Central Government, by notification, for this purpose.] 1[(1A) Where it is not practicable to seize such record or property, the officer authorised under subsection (1), may make an order to freeze such property whereupon the property shall not be transferred or otherwise dealt with, except with the prior permission of the officer making such order, and a copy of such order shall be served on the person concerned: Provided that if, at any time before its confiscation u .....

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ority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed. (3) Where an authority, upon information obtained during survey under section 16, is satisfied that any evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence: Provided that no .....

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Adjudicating Authority. Section 23 reads as under. 23. Presumption in interconnected transactions.-Where money laundering involves two or more interconnected transactions and one or more such transactions is or are proved to be involved in money-laundering, then for the purposes of adjudication or confiscation 1[under section 8 or for the trial of the money-laundering offence, it shall unless otherwise proved to the satisfaction of the Adjudicating Authority or the Special Court], be presumed t .....

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authorities regarding summons, production of documents and to give evidence, etc.-(1) The Director shall, for the purposes of section 13, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:- (a) discovery and inspection; (b) enforcing the attendance of any person, including any officer of a 1[reporting entity], and examining him on oath; (c) compelling the production of records; .....

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end in person or through authorised agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required. (4) Every proceeding under subsections (2) and (3) shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code, 1860 (45 of 1860). (5) Subject to any rules made in this behalf by the Central Government, any offic .....

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nt in connection of reply of argument of Ms. Patel that in the case of Unlawful Activities Prevention Act, 1967 Section 2(g) of the said Act defines proceeds of terrorism as all kinds of properties which have been derived or obtained from commission of have been acquired from funds traceable to a terrorist act, irrespective of person in whose name such proceeds are standing or in whose possession they are found, also gives a very restricted meaning to the word proceeds of terrorism as related to .....

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a King of Phrygia and they traced the line of their Kings to the Dardanus. Further, derived has been defined as to draw or receive or obtain as from a source or origin or by regular transmission . Thus in the light of the above it can be inferred that since in the present case the scheduled offence is cheating, forgery and criminal conspiracy for the procurement of SIM Cards on the basis of false and forged documents hence there is no proceeds of the crime in the present case which is related to .....

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he reason for such belief to be recorded in writing) that any person (i) has committed any act which constitutes money-laundering, or (ii) is in possession of any proceeds of crime involved in money-laundering, or (iii) is in possession of any records relating to money-laundering, 2 [or] 3[(iv) is in possession of any property related to crime] then, subject to the rules made in this behalf, before the Adjudicating Authority. That the portion shows bold, clearly that the PMLA Act itself distingu .....

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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 . Hence, the main fulcrum of the offence in the present case is proceeds of the crime and since in the present case there are no proceeds of crime . Hence there is no offence u .....

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horse . 29. I have carefully perused provision of section 17, section 23, 24, 25 and section 50 and its applicability under PMLA Act and also perused various judgments cited by both the parties. I have also perused all statements of the accused produced by respondent No.2. It appears that the applicants were involved in cricket betting and was setting the accounts with respect of the money generated out of cricket betting. It is an admitted position that cricket betting is not a scheduled offen .....

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here at the time of search he has nothing to do with those SIM Cards. I have minutely perused contention of the FIR No.222 of 2015 where the name of the applicant does not figure. Even for the sake of argument if we believe that the contents of Case No.85 of 2015 are correct, then also what emerges out of the scheduled offences are the SIM Cards. That what was derived or obtained directly or indirectly were the SIM Cards, and as far as the usage of the SIM Cards are concerned, it is a separate o .....

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ch under the PMLA are made out against the applicant, hence, the applicability f Section 45 of the PMLA does not arise. A bare perusal of Section 45 of the PMLA shows that when the Courts are satisfied that there is a reasonable ground of believing that when the applicant is not guilty of such offence and that he is not likely to commit any offence while on bail, he can be granted bail. Since, in the present condition there are no proceeds of crime existing hence Section 3 of the PMLA does not a .....

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cedure Code, 1973, it is true that word (proceeds of crime) as defined in Act has a restrictive and narrow meaning under Section 105A of CR.P.C meaning of proceeds of crime and in a result of criminal Acts related to schedule offence. The Hon ble Supreme Court while giving the meaning to the word derived from in various provisions of the Income Tax Act has given it a very narrow and restrictive meaning. That the Hon ble Supreme Court, in the case of Liberty India Versus CIT (2009) 9 SCC 329 has .....

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he overall discussion made as above it is established prima facie that scheduled offences cheating, forgery and criminal conspiracy for the procurement of SIM Cards on the basis of false and forged documents, there is no proceeds of the crime in present case with related to the commission of scheduled offences. Learned counsel Ms. Patel who has cited bail order of Afzal Fattas case in which coordinate bench of this court has declined bail, but Hon ble Supreme Court has released him on interim ba .....

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ule offence under PMLA, the rigors would be applicable and otherwise such case can be considered according to the Criminal Procedure Code. Hon'ble Supreme Court has decided case of Sanjay Chandra Versus CBI reported in (2012) I SCC page 40 and Gurucharan Singh and Ors Versus State reported in (1978) I SCC 118 and Arnesh Kumar Vs State of Bihar and Ors (2014) 8 SCC 273 and Ranjit Singh Brahmajit Singh Sharma Vs State of Maharashtra and Ors (2005) 5 SCC 294. In view of observation made by Hon& .....

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