TMI Blog2020 (12) TMI 1128X X X X Extracts X X X X X X X X Extracts X X X X ..... ney laundering. Section 5 of the Cr.P.C. clearly lays down that the provisions of Cr.P.C. will not affect any special statute or any local law. In other words, the provisions of the special statute will prevail over the general provisions of the Cr.P.C. in case of any conflict - The economic crime of such scale and magnitude are carefully and meticulously planned and executed. It is well settled that economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. While granting bail, the court has to keep in mind the nature of accusations, magnitude and gravity of offence and nature of evidence in support of the accusations. The object of PMLA is to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering. Section 44 of the PMLA confers jurisdiction on special court to deal with the offences under PMLA. Section 45 of the PMLA makes the offence of money laundering cognizable and nonbailable notwithstanding anything contained in Code of criminal Procedure, 1973. Money laundering is a serious economic offence and serious threat to the national economy and national interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approached the National Consumer Dispute Redressal Commission by way of filing complaints. In the meantime, one of the financial institutions, who had advanced loan to the group of companies filed Company Petition No. (IB)-121(PB)/2017 before the National Company Law Tribunal (for short, the NCLT ), which triggered the Corporate Insolvency Resolution Process in the matter of M/s Amrapali Silicon City Private Limited. The NCLT appointed the Interim Resolution Professional (in short, the IRP'). Moratorium was declared thereby restricting the institution of any suits against the corporate debtor including execution of any judgment, decree or order. 4. Since the proceedings before the NCLT had direct bearing on the flat/home buyers, who had booked flats/homes with the Companies, a few petitions under Article 32 of the Constitution of India, with thousands of intervention applications were filed before the Supreme Court. The Supreme Court, looking at the plight, distress and gigantic fraud played with the flat/home buyers by the accused, including the present accused-applicant, entertained the petitions filed under Article 32 of the Constitution of India, leading petition be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a shell company known as GauriSuta Infrastructures Pvt. Ltd. in which Ashish Jain and Vivek Mittal were the Directors. Both these Directors were close relatives of the present accused applicant. 8. The Supreme Court recorded a finding that Auditors had not sent all files and, he sent only one file till 24th October, 2018 to the Forensic Auditors despite the order passed by it and, therefore, the Supreme Court warned that in case the documents were not handed over, the same would be viewed seriously and the accused would be likely to be punished suitably. The Supreme Court granted last opportunity to the accused-applicant to hand over the requisite documents to the Forensic Auditors and, directed him to comply with the requisition made by the Forensic Auditors. 9. Ashish Jain and Vivek Mittal were Directors of three other sham companies . ₹ 242.38 Crores had been handed over to these four companies in which Ashish Jain and Vivek Mittal were Directors. Vivek Mittal was nephew of the present accused-applicant and Ashish Jain was his employee. The Supreme Court in paragraph-5 of its order dated 26th October, 2018, in respect of conduct of the accusedapplicant, ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is a patent and blatant fraud which appears to have been played, the way in which the money has been transacted and creation of companies has taken place in connivance with the CFO, statutory auditors. It was also pointed out that there are various related companies in which money has been transferred. We restrain all monetary transactions out of bank accounts or any kind of alienation of the property held by the related group of companies where the money has been siphoned and has been used for the creation of the assets. Any transfer made in any manner shall be illegal, void and inoperative. 20. It is also necessary in order to find out the actual amount invested in building activities, out of the funds collected. It also appears that certain companies were created only for the purpose of purchasing raw materials. Whether actual transactions of purchase have taken place is required to be ascertained. Let all the vouchers of the purchase, Bills, orders, etc., which are in possession of Amrapali Group of Companies and the estimates of various raw materials for each and every building without which construction of a building is not possible to be undertaken to be positiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 5,619.47 Crores had been diverted and, the present accusedapplicant, blindly signed the accounts and, he along with Chander Wadhwa, CFO, was involved in manipulation of accounts. He received the payment on account of professional charges in the name of the companies in which his relatives were Directors and, he did not disclose this fact in the audited financial statements. A sum of ₹ 52.07 Crores was adjusted on account of professional fees due and to be paid on account of Audit fees. Further, a sum of ₹ 16.36 Crores was also adjusted against a flat in Amrapali Princely Estate on account of Professional fees due and to be paid on account of Audit fees. He, along with other accused, including CFO, had created 27 additional shell companies, whose share capital was mostly subscribed in cash and, transfer of shares was also in cash leaving no audit trail. The home-buyers funds to the extent of ₹ 5,619.47 Crores had been diverted. It was further held by the Supreme Court that the present accused-applicant, who was Statutory Auditor, did not report his interest and disclose about his relatives and junior employee as Directors and share-holders. Rudraksha Infracity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith as sternly as possible so as to make it exemplary one, that such fraudulent actions do not recur in future, in real-estate business in India. 15. In view of the open and brazen fraud played by promoters, auditors etc., of the Companies with the flat/home buyers, the Supreme Court directed the Central Government and Government of Uttar Pradesh to take appropriate steps on time bound basis to ensure that home/flat buyers, who had been cheated in similar fashion, should be provided houses by laying down appropriate road map. 16. The Supreme Court had noted the conduct of the accusedapplicant in para 147 of the aforesaid order dated 23.07.2019 and held that no accounts were prepared from the years 2015-2018 and, money withdrawn was diverted during the said period. The Statutory Auditor, accused-applicant failed in his duty and was a part of fraudulent activities as found in the Forensic Report. The Supreme Court had directed the Enforcement Directorate to make investigation in accordance with law and submit reports quarterly to the Court as money laundering aspect was also to be looked into by concerned authorities. The Supreme Court had approved the report of the Forensic Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ritwik Rai, learned counsels for the accused-applicants and Mr. Shiv P. Shukla, learned counsel appearing for Directorate of Enforcement. 19. Mr. Sanjay Hegde, learned Senior Advocate has submitted that the accused-applicant was only a Statutory Auditor. He had no role in undertaking the construction of projects and offering flats/homes for sale to the buyers. He had performed his duty and he had not committed any offence. He has further submitted that from the complaint filed by the Enforcement Directorate, allegations against money laundering are not proved against him. He is suffering from various ailments and, the Supreme Court vide order dated 03.11.2020 passed in S.L.P. (Crl.) No.4993 of 2020 has enlarged him on interim bail for a period of one month from the date of release on terms and conditions to the satisfaction of the trail Court and also with a direction that in case any date for surgery was fixed, he would be at liberty for further extension of bail for the period required for surgery and recovery. It is also submitted that maximum punishment provided under PMLA is 7 years. The accused-applicant has already been in jail for six months and if, he is released on bai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court's intervention and undertaking painful and strenuous exercise to secure and protect the interest of innocent home/flat buyers, the fraud played by the accused-applicant and other accused in cheating and defrauding thousands innocent home/flat buyers of their hard earned money, could not have been unearthed. The Supreme Court is monitoring the investigation. The Supreme Court had been in pain to note the conduct of the accused-applicant and other accused. They had even violated the Supreme Court orders and did not comply the directions issued on several occasions. The forensic auditors appointed by the Supreme Court had meticulously flagged the fraud and cheating by the accused-applicant and other coaccused in creating bogus and sham companies and diversion of funds of the flat buyers money and creating assets etc. 24. PMLA is a special statute enacted by Parliament for dealing with money laundering. Section 5 of the Cr.P.C. clearly lays down that the provisions of Cr.P.C. will not affect any special statute or any local law. In other words, the provisions of the special statute will prevail over the general provisions of the Cr.P.C. in case of any conflict. 25. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, inter alia, observed as under: (SCC p. 371, para 5) 5. ... The entire community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the community. A disregard for the interest of the community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even-handed manner without fear of criticism from the quarters which view white-collar crimes with a permissive eye unmindful of the damage done to the national economy and national interest. 24. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the large ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lating to property and land to the tune of ₹ 2.57 crores were recovered besides ₹ 20 lakhs in cash. In addition to this, allegedly a large number of written answer sheets of various students, letterheads and rubber stamps of several authorities, admit cards, illegal firearm, etc. were found which establishes a prima facie case against the respondent. The allegations against the respondent are very serious in nature, which are reflected from the excerpts of the case diary. We are also conscious of the fact that the offences alleged, if proved, may jeopardise the credibility of the education system of the State of Bihar. 29. Further, the aforesaid view has been reiterated in the case of Rohit Tandon vs Directorate of enforcement (2018) 11 SSC 46 . Paras 21 and 22 of the aforesaid judgement read as under:- 21. The consistent view taken by this Court is that economic offences h aving 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. Further, when attempt is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is regard, it is pertinent to refer to the following observations of this Court in Y.S. Jagan Mohan Reddy [Y.S. Jagan Mohan Reddy v. CBI, (2013) 7 SCC 439 : (2013) 3 SCC (Cri) 552] : (SCC p. 449, paras 34-35) 34. 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. 35. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations. This Court has adopted this position in several decisions, including Gautam Kundu v. Directorate of Enf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo conditions for grant of bail to any persons accused of an offence punishable for a term of imprisonment of more than three years under Part A of the Schedule to PMLA: (i) That the prosecutor must be given an opportunity to oppose the application for bail; and (ii) That the court must be satisfied that there are reasonable grounds for believing that the accused persons is not guilty of such offence and that he is not likely to commit any offence while on bail. 32. The Supreme Court in the case of Gautam Kundu Vs. Directorate of Enforcement (Prevention of Money Laundering Act), Government of India, (2015) 16 SCC 1 in paragraphs 28, 29 and 30 while dealing with the provisions of bail under Section 45 of the PMLA held as under :- 28. Before dealing with the application for bail on merit, it is to be considered whether the provisions of Section 45 of PMLA are binding on the High Court while considering the application for bail under Section 439 of the Code of Criminal Procedure. There is no doubt that PMLA deals with the offence of money-laundering and Parliament has enacted this law as per commitment of the country to the United Nations General Assembly. PMLA is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 45 of the PMLA as unconstitutional. Subsequently, Section 45 has been amended by Amendment Act 13 of 2018. The words imprisonment for a term of imprisonment of more than three years under Part A of the Schedule has been substituted with accused of an offence under this Act . Section 45 prior to Nikesh Tarachand (supra) and post Nikesh Tarachand (supra) reads as under: Section 45 - Prior to Nikesh Tarachand Shah Section 45 - Post Nikesh Tarachand Shah 45. Offences to be cognizable and nonbailable .-( 1) Notwithstanding contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence punishable for a term of imprisonment of more than three years under Part A of the Schedule shall be released on bail or on his own bond unless- 45. Offences to be cognizable and non-bailable .-(2) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence under this Act shall be released on bail or on his own bond unless- (i) the Public Prosecutor has been given an opportunity to oppose the application for such release; an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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