TMI Blog2021 (12) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... nt or to withstand the loss in the business or for undergoing surgery etc., appears to be not probable and the transfer of the amount even though appears to be unusual as the same are not said to have disclosed while filing income tax returns, the same cannot be the sole basis for recording the finding the guilt of the petitioner at this stage. Even though the statements given by the petitioner under Section 50(3) of PMLA is admissible in evidence, the veracity of such statements will have to be judged at the time of trial and a conclusion cannot be drawn at this stage that the money transferred between accused Nos. 1 4 are the proceeds of crime as contended by the prosecution. Section 19 of PMLA deals with the power to arrest the accused by the Director or other officer authorized in this behalf. Such power to arrest could be exercised only on the basis of the material with a reason to believe that such person is guilty of an offence punishable under PMLA - Section 439 of Cr.P.C., deals with special power of High Court or the Court of Sessions regarding bail. Even though, this section is general provision under Cr.P.C., Section 65 of PMLA enables the provisions of Cr.P.C., t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d were suspected to be involved in commission of the offences under Section 22 and 27(A) of NDPS Act. There are prima facie materials to constitute the offence of money laundering under Section 3, punishable under Section 4 of PMLA. Therefore, the Directorate of Enforcement (ED) has registered the enforcement case information report (ECIR) No. BGZO/32/2020 on 09.09.2020 and the complaint is filed before the learned Sessions Judge, which is now pending in Spl. C.C. No. 3/2021 before the XXXII Additional City Civil and Sessions Court of Bengaluru (CCH. 34) (hereinafter referred to as the Trial Court for short). 3. It is the contention of the prosecution that accused No. 1 is the drug dealer who was in possession of commercial quantity of MDMA pills. Accused Nos. 2 and 3 were also found in possession of the contraband exceeding the permissible limit and they were apprehended, as they were involved in drug business. It is stated that these accused have committed scheduled offence, generated proceeds of crime by collecting money from their customers in exchange for supply of illegal Narcotic Drugs, Psychotropic Substances, Controlled Substances and Conveyances. 4. It is stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tician. He came in contact with accused No. 1 during 2015, through a common friend. The petitioner paid around ₹ 3,00,000/- in cash over a period of three years and thereafter invested amount of around ₹ 40,00,000/- in his Restaurant Hayaat. Out of this amount, around ₹ 25,00,000/- was transferred through SBI bank account and the remaining ₹ 10,00,000/- was paid through cash. Hayaat Restaurant is the proprietary concern belonging to accused No. 1, but he had never filed income tax returns. It is revealed that petitioner had paid ₹ 3,00,000/- in cash to accused No. 1 as loan, out of which only ₹ 75,000/- was repaid. The petitioner again invested in service apartment business by name Royal Suits Hotel and Apartments to the tune of ₹ 7,00,000/-, which was transferred to the account of the restaurant maintained with IndusInd bank and IDBI bank. Accused No. 1 during investigation has stated that he got ₹ 30,00,000/- from the petitioner without interest, on the condition to return the same within 12 months, but he could not return the amount as agreed. It is also revealed that petitioner used to give ₹ 1-2 lakhs per month to run Hayaa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioner is not having any criminal antecedents. The charge sheet in the form of complaint has already been filed and almost all the witnesses are the public servants. The statements of the petitioner is already recorded. The documents relating to financial transactions have already been collected. The evidence in the form of documents and the witnesses who are public servants cannot be tampered with. Detention of the petitioner in the custody is not required for any other purpose except to ensure his presence before the court during trial. 11. Learned Senior Counsel further submitted that even on merits, the prosecution has not made out any grounds against the petitioner to constitute an offence under the special enactment. Even though it is contended that petitioner is financing the illegal drug business and projecting the proceeds of crime as the income from his business, there is absolutely no material to substantiate the same. There is no recovery of any incriminating material at the instance of the petitioner. There is nothing to suggest that petitioner had proceeds of crime. Even though it is contended that he is financing accused No. 1 for drug business and in turn re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt without taking into consideration these facts and circumstances proceeded to reject the bail application filed before it. 13. Learned Senior Counsel further submitted that twin conditions under Section 45(1)( of the PMLA was struck down as a whole by the Hon'ble Apex Court in the case of (2018) 11 SCC 1 Nikesh Tarachand Shah Vs. Union of India and another. Even though there is anamendment to the Act, the constitutionality of the revival of the twin conditions is pending consideration before the Hon'ble Apex Court. Even otherwise, the twin conditions suggested under Section 45 of the PMLA, is satisfied in the present case. The materials placed before the court do not suggest that the petitioner is held to be guilty or that he is likely to commit the offence while on bail. Therefore, there are reasonable grounds for granting bail as the accused is not guilty of such offence and he is not likely to commit any offence while on bail. Therefore, the petitioner is entitled to be enlarged on bail in the interest of justice. 14. Learned Senior Counsel placed reliance on the decision of the Hon'ble Apex Court in the case of (2020) 13 SCC 791 P. Chidambaram vs. Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Coordinate Bench of this court considered the standard of guilt under Section 19 of the PMLA. But in the present case, he is seeking bail as of right as his detention in custody is not required for any purpose and there is no bar to enlarge him on bail. Learned counsel for the petitioner contended that, the High Court of Delhi in D.K. Shivakumar Vs. Directorate of Enforcement1 vide its order dated 17.10.2019 specifically held that petition under Section 439 of Cr.P.C. is maintainable when the accused is said to have committed the offence under PMLA, by virtue of Section 65 of PMLA which provides that the provisions of Cr.P.C., shall apply insofar as they are not inconsistence with the provisions of PMLA with regard to arrest, seizure, attachment, confiscation, investigation, prosecution and all other proceedings under the Act. 19. Learned Senior Counsel further submitted that even though initially it is contended that petitioner is involved in commission of scheduled offence, after investigation he is not named as an accused by NCB which makes the position clear that petitioner is not at all involved in commission of the offence under NDPS Act. Even though several grounds a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eleased on bail. The objects and reasons with which the PMLA was enacted is to be taken into consideration while appreciating the contention taken by the Senior counsel for the petitioner that since the petitioner is not arrayed as an accused under the provision of NDPS Act, he cannot be accused of committing any of the offence under PMLA Act. Such contention taken by the petitioner is without any basis and it is not the spirit of law. Hence the same is to be rejected. 22. Learned ASG further submitted that even though Section 45(1)( of PMLA was struck down by the Hon'ble Apex Court in Nikesh Tarachand Shah (supra) as the same is held to be violative of Articles 14 and 21 of the Constitution of India and thus, unconstitutional. But however, Sub-Section (2) of Section 45 of PMLA was never struck down by the Hon'ble Apex Court. Moreover by Act 13/2018, Section 45(1)( is amended with effect from 19.04.2018 by substituting the words punishable for a term of imprisonment of more than three years under Part-A of the schedule with the words 'under this Act'. The amendment brought to the PMLA was in accordance with the opinion expressed by the Hon'ble Apex Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of law i.e., Section 45 of PMLA. The general principles of bail i.e., bail is a rule and jail is a explanation cannot be made applicable in the present case. 27. Learned ASG submits that the averments made in the complaint, statements of the accused, affidavits filed by the officials of the enforcement directorate clearly disclose that there are sufficient materials to contend that the accused committed the offence of money laundering. The voluminous documents that were collected by the Investigating Officer clearly disclose that there are shady transactions under which huge amounts were deposited, transferred and withdrawn. There is no proper explanation for any of these transactions. The details of the cash so deposited as highlighted in the complaint is over 6.00 crores in different banks such as IDBI, HDFC, SBI and Federal Bank. But no such transactions were disclosed in the Income Tax Returns, when the same has been filed before the Department of Income Tax. There is huge and unexplained difference between the cash deposited and the income declared. There are such glaring transactions to connect accused No. 1 to his drug peddling business who had money transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned ASG further submitted that materials that are placed before the Court disclose prima facie, that the petitioner has earned proceeds of crime. Since there is huge transaction between the accused, it is an economic offence given rise to invoking of the provisions under PMLA. Even though, the complaint is already filed, the nature of the offence alleged against the petitioner do not entitled him to be released on bail. The Hon'ble Apex Court in P. Chidambaram (supra) referring to its earlier judgment in Y.S. Jagan Mohan Reddy Vs. CBI (2013) 7 SCC 439 specifically held that economic offences constitute a clause apart and need to be visited with a different approach in the matter of bail. It is also observe that economic offences having deep rooted conspiracies and involving huge loss of public funds, need to be viewed seriously and considered as grave offence affecting theeconomy of the country as a whole and thereby posing serious threat to the financial health of the country. When such is the situation in the present case as a whole, the petitioner is not entitled for grant of bail. 32. Lastly, learned ASG submitted that even though an attempt is made by the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is pertinent to note that, under Section 27A of NDPS Act financing either directly or indirectly any such activities or harboring any person engaged in such activity is a punishable offence. But however, it is the contention of the prosecution that the petitioner is being prosecuted only for the offence under Section 3 punishable under Section 4 of PMLA and it is not necessary that the petitioner shall be indulged in commission of any of the scheduled offences as defined under PMLA. The prosecution is required to substantiate its contention that even though the petitioner has not committed any offence under any of the provisions under NDPS Act, and is indulged in money laundering as defined under Section 3 which is punishable under Section 4 of the PMLA. 37. Section 5 of PMLA authorizes either the Director or the Deputy Director authorized by the Director to attach the property involved in money laundering. But in the present case, admittedly there is no attachment or confiscation of any property owned by the petitioner. 38. As per the complaint filed by the ED, the allegations against accused No. 1 is that, he is indulged in deep rooted drug trafficking and networking in Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the service apartment business in the name and style of Royal Suits Hotel and Apartments, and an amount to the tune of ₹ 7.00 lakhs, was transferred to the account of restaurant with IndusInd Bank. He also said to have stated that, he got ₹ 30.00 lakhs from the petitioner without any interest on the condition to return the same within a period of 12 months. But as the business had not flourished, he could not return the amount. However, the petitioner used to give ₹ 1-2 lakhs per month to run the Hotel Hayaat Restaurant, but still the business could not be improved. It is also stated by accused No. 1 that he and petitioner were planning to sell the restaurant during March, 2020 and they stayed in Royal Suits. But due to COVID-19 and the resultant lockdown, they could not sell the restaurant. Neither he paid the rent from October 2019 to the owner of the building nor the security deposit of ₹ 6.50 lakhs was returned. Accused No. 1 said to have stated that about ₹ 50.00 to 60.00 lakhs was invested by the petitioner to run the business in Hayaat Restaurant and Royal Suits and also for personal use. But accused No. 1 had not repay the said amount due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 lakh to the bank account of accused No. 1 in IndusInd Bank. It is stated that while filing income tax returns, the loans that were granted in favour of accused No. 1 were not shown. However, he stated that these informations were given to the Chartered Accountant, but he had not checked the income tax returns filed by the Chartered Accountant. The petitioner also said to have stated that one Arun S., who is the friend of the petitioner and also one of the partners at Old Coffee House Restaurant, had transferred approximately ₹ 25.00 lakhs to the account of Accused No. 4 during June-2017 to July-2018. As he is involved in brokerage, vehicle arrangements, catering, selling of mobile numbers, procurement of fish vegetables and the said amount was deposited by the said Arun S. into his account with HDFC Bank. It is also stated that about ₹ 21.60 lakh was deposited during the year 2014-15 on different dates in different branches as the same was from out of his earnings. As per the WhatsApp chats retrieved by NCB, accused No. 1 used to inform the driver of the petitioner by name Anikuttan to collect the money in cash in Kerala and to deposit the same in the bank account m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecording the finding the guilt of the petitioner at this stage. Even though the statements given by the petitioner under Section 50(3) of PMLA is admissible in evidence, the veracity of such statements will have to be judged at the time of trial and a conclusion cannot be drawn at this stage that the money transferred between accused Nos. 1 4 are the proceeds of crime as contended by the prosecution. It is for the prosecution to lead evidence in support of the documents and the statements relied on by it and to corroborate the same by examining the witnesses. When the petitioner is not an accused for committing any of the offences under NDPS Act including one under Section 27A of the NDPS Act, it is for the prosecution to prove that the petitioner was indulged in financing the drug business of accused No. 1, he was having active connivance in committing the offence, getting the profits from the illegal business of drug and bringing the proceeds of crime to the main stream and thereby committed the offence under Section 3, punishable under Section 4 of PMLA. 47. At this stage, the information collected from the petitioner and from the co-accused under various statements recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cused is not guilty of such offence. The discussions held above with reference to the materials that are placed before the Court disclose that even though serious allegations are made against the petitioner for having accumulated the proceeds of crime by financing the drug business which was undertaken by accused No. 1 and even though voluminous documents are placed before the Court to substantiate the said fact, the same are not sufficient to form an opinion at this stage, that there are reasonable grounds for believing that the accused is guilty of such offence. I am conscious of the fact that it is not a stage to give a finding as to whether, the accused is guilty are not. It is only a subjective satisfaction of the Court about reasonable grounds for believing that he is not guilty of such offence. It is for the prosecution to place materials before the Court and to lead evidence to substantiate its contention for the purpose of seeking conviction of the petitioner. But for the present, the discussions held above disclose that there is strong suspicion regarding commission of the offence under Section 3 punishable under Section 4 of PMLA as he is receiving proceeds of crime from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garding bail. Even though, this section is general provision under Cr.P.C., Section 65 of PMLA enables the provisions of Cr.P.C., to apply to the offences under the Act insofar as they are not inconsistent with the provisions of the Act with regard to arrest, search seizure, attachment, confiscation, investigation, prosecution and all other proceedings under PMLA. Admittedly, there are no other provisions under PMLA which is inconsistent with Section 439 of Cr.P.C. Therefore, filing of the petition by the petitioner under Section 439 of Cr.P.C. cannot be find fault with. 55. One more contention raised by the learned ASG is with regard to the seriousness of the offence committed by the petitioner. It is contended that since the offence committed by the petitioner is an economic offence, the petitioner is not entitled for bail. Admittedly, there is no bar for granting bail to an accused when he is accused of committing the economic offence. It depends on facts and circumstances of each case, but however, if the offence committed by the accused is an economic offence, which is grave in nature, which itself disentitles the accused for getting released on bail, definitely such accu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r may flee from justice, may tamper with the prosecution witnesses, may commit similar offence while on bail, could be taken care of by imposing suitable conditions. Hence, I answer the above point in the affirmative and proceed to pass the following: ORDER The petition is allowed. The petitioner is ordered to be enlarged on bail in Enforcement Case Information Report (ECIR) in ECIR/BGZO/32/2020 of the respondent-Directorate of Enforcement, Bengaluru, pending on he file XXXIV Additional City Civil and Sessions Judge and Special Judges for CB and PMLA Cases, Bengaluru, on obtaining the bond in a sum of ₹ 5,00,000/- (Rupees Five Lakhs only) with two sureties for the likesum to the satisfaction of the jurisdictional Court, subject to the following conditions: a) The petitioner shall not commit similar offences. b) The petitioner shall not threaten or tamper with the prosecution witnesses. c) The petitioner shall appear before the Investigating Officer and the Court as and when required. d) The petitioner shall not leave India, without prior permission of the Trial Court, till further orders. If in case, the petitioner violates any of the conditions as sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
