TMI Blog2023 (4) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... elation to a scheduled offence. It was further held that the process or activity can be in any form be it one of concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so. Therefore, involvement in any one such process or activity connected with the proceeds of crime would constitute offence of money-laundering. Thus, this offence has nothing to do with the criminal activity relating to a scheduled offence except that the proceeds of crime derived or obtained as a result of that crime - The intention of the legislature in enacting the PMLA is that money laundering poses a serious threat not only to the financial systems of countries but also to their integrity and sovereignty and, therefore, the legislature thought it fit to provide a comprehensive legislation for this purpose. Thus the courts while dealing with matters under PMLA have to take into account the object and purpose of legislation. The statements made under Section 50 of PMLA have been held to be an admissible piece of evidence. The term admissible evidence means that such evidence can be considered by the court at the time of apprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of CBI case bearing FIR No. RC-AC-1-2017-A-0005 dated 24.08.2017. 2. The bail application filed by the petitioner Satyender Kumar Jain was rejected by the learned Special Judge (P.C. Act) (CBI) -23 (MPs/MLAs cases) vide a detailed order dated 17.11.2022 having regard to the mandatory twin conditions u/s 45 of the PMLA. The Ld. Special Judge prima facie opined that the applicant/accused Satyendar Kumar Jain was involved in concealing proceeds of crime by giving cash to Kolkata-based entry operators and thereafter, bringing the cash into the companies namely, M/s. Manglayatan Developers/Projects Pvt.Ltd., M/s. Akinchan Developers Pvt. Ltd. and M/s.Paryas Infosolutions Pvt. Ltd. against sale of shares to project that the income of these three companies was untainted. It was held by the Ld. Special Court, PMLA that apart from that, accused Satyendar Kumar Jain has also used the same modus operandi to convert his proceeds of crime of Rs.15,00,000/- by receiving accommodation entries from Kolkata-based entry operators in his company M/s. J.J. Ideal Estate Pvt. Ltd. It was held that the applicant/accused Satyendar Kumar Jain had knowingly done such an activity to mask tracing of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge sheet against the above-mentioned accused persons wherein it was alleged that the accused Satyendar Kumar Jain was found to be in possession of assets to the tune of Rs.1,47,60,497.67/- (i.e. 217.20 % of the income) disproportionate to his known source of income, which he could not explain satisfactorily. The applicant/accused Satyendar Kumar Jain was alleged to have committed an offence under Section 13 (2) r/w 13 (1) (e) of the P.C. Act and it was further alleged by the CBI that Smt. Poonam Jain w/o Satyendar Kumar Jain and other business associates of Satyendar Kumar Jain namely Sh. Ajit Prasad Jain, Sh. Sunil Kumar Jain, Sh. Vaibhav Jain and Sh. Ankush Jain abetted Satyendar Kumar Jain in the commission of acquisition of disproportionate assets and thus committed the offence punishable under Section 109 IPC r/w 13 (1) (e) of the PC Act. 5. An investigation was initiated under the provisions of the PMLA after recording ECIR bearing ECIR/HQ/14/2017 dated 30.08.2017 as the offences under Sections 13 (2) r/w 13 (1) (e) of PC Act are scheduled offences under the PMLA. It was alleged that during the check period from 14.02.2015 to 31.05.2017, four companies, M/s Akinchan Deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bank accounts of the aforesaid companies and cash totaling Rs.4,65,99,635/- was paid to them. The petitioner Satyendar Kumar Jain allegedly received accommodation entries of Rs. 15,00,000/- in his company J.J. Ideal Estate Pvt. Ltd. during the year 2015-16 from Kolkata based entry operators by paying cash amounts of Rs. 15,00,000/- and commission of Rs. 16,800/-. Allegedly, the petitioner laundered the proceeds of crime acquired through disproportionate assets through a complex web of transactions in the companies controlled by him. It was alleged that the petitioner committed the offence of money laundering as defined under Section 3 of PMLA by actually acquiring, possessing, concealing and using the proceeds of crime to the tune of Rs.4,81,16,435/- and projecting and claiming the same as untainted. In the complaint the ED has alleged that the petitioners Vaibhav Jain and Ankush Jain are also involved in knowingly assisting Satyendar Kumar Jain by making separate and independent declarations under IDS 2016 for declaring undisclosed income of Rs. 8.26 crore for the period from 2010-11 to 2015-16 in order to protect Sh. Satyendar Kumar Jain. It is alleged that Vaibhav Jain and Ank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the complaint filed by the ED. 8. Petitioner Satyendar Kumar Jain submitted that no proceeds of crime were found from the petitioner Satyendar Kumar Jain during the raids and house-search conducted on 25.08.2017, 30.05.2018 and 06.06.2022. Petitioner Satyendar Kumar Jain has stated in his bail application that none of the lands were purchased in the name of the petitioner or his family members nor had he signed any conveyance deeds of three companies during the check periods. It was submitted that during the check period no property was purchased by M/s Prayas Infosolution Pvt. Ltd. or M/s Mangalayatan Projects Pvt. Ltd. It was stated only one property was purchased during the check period by M/s Akinchan Developers Pvt. Ltd., however the same was not in the name of petitioner Satyendar Kumar Jain or his family member. It has been submitted that MOU dated 28.03.2010 has wrongly been rejected by the learned Special Judge. Petitioner Satyendar Kumar Jain has stated that he had been complying with the summons issued by various authorities from time to time. Further, the petitioner Satyendar Kumar Jain has deep roots in the society and is a second-time sitting Member of Legislative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carceration of the petitioner pending further proceedings and Trial is not justified in law. 11. Ld. Senior Counsel has submitted that even as per admitted documents, the petitioner Satyendar Kumar Jain and his family had never owned 1/3rd share in the three companies and it has been submitted that the petitioner retired as Director from three companies in the year 2013 and share holding was also transferred to his wife in the year 2013 itself. Ld. Senior Counsel submitted that even if as per documents of CBI and ED, the shareholding of the applicant s wife is 19.06% in M/s Akinchan Developers Pvt. Ltd., 1.50% in M/s Paryas Infosolutions Pvt. Ltd. and 10.43% in M/s Manglayatan Developers/Projects Pvt.Ltd. It has been submitted, without prejudice to the above raised contentions, that even if the said amount is assumed to be notionally attributed to the applicant, his wife s share would only come to Rs.59,32,122/- which is less than a crore and therefore the petitioner is entitled to bail under the proviso to Section 45 PMLA. 12. Ld. Senior Counsel has submitted that even as per the complaint of the ED, the shares which were bought by Kolkata based shell companies were ultimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt held that at this stage, the court is not to determine the guilt of the accused but to only assess the matter on broad probabilities. Ld. Senior Counsel has further relied upon Prakash Industries Ltd. Anr. vs. Union of India 2022 SCC OnLine 2087 wherein it was inter held that ED stands empowered under the PMLA to inquire offences relating to money laundering and it has no jurisdiction to investigate or to enquire into an offence other than that which comprised in Section 3 of the PMLA. 14. Mr.Hariharan, Ld. Senior Counsel has relied upon the statement of Mr.J.P.Mohta recorded under Section 50 of PMLA on 14.11.2019 (RUD-50 @ 2104-2170) wherein he has stated that regarding the companies jointly held by Satyendar Kumar Jain, Sunil Kumar Jain and Vaibhav Jain any one of them talked about their companies namely Akinchan Developers Pvt. Ltd., Paryas lnfosolution Pvt. Ltd., Indo Metalimpex Pvt. Ltd. and Mangalayatan Projects Pvt. Ltd. and that was final for all. It was stated that the witness Jivendar Mishra has also stated that he has not personally met Satyendar Kumar Jain and had talked to him in 2010 over phone in the office of his friend Rajender Bansal. 15. Ld. Seni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Vijay Madanlal Choudhary and others (supra) inter alia held that it cannot be said that the conditions provided under Section 45 of 2002 Act impose absolute restraint on the grant of bail. It was stated that discretion vests in the Court which is not arbitrary or irrational but judicial, guided by the principles of law as provided under Section 45 of the 2002 Act. Reliance has also been placed on Ranjitsing Brahmajeetsing Sharma (2005) 5 SCC 294 . Reliance has also been placed on Bineesh Kodiyeri vs Directorate of Enforcement (2021) SCC OnLine Kar 14786 , in which it was inter alia held that there is no bar for granting bail to an accused when he is accused of committing the economic offence and it depends on facts and circumstances of each case. 19. Ld. Senior Counsel has further placed reliance on P. Chidambaram vs. Directorate of Enforcement (2020) 13 SCC 79 wherein it has been inter alia held that the underlining conclusion is that irrespective of the nature and gravity of charge, the precedent of another case alone will not be the basis for either grant or refusal of bail though it may have a bearing on principle. It was further inter alia held that ultim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cants submits that Section 2(1)(u) of PMLA provides for a restricted definition of Proceeds of Crime by linking it to a scheduled offence. It has been submitted that the offence of disproportionate assets is period-specific and not incident-specific as held in the case of Yogendra Kumar Jaiswal Ors. v. State of Bihar Ors. (supra). He submits that case for disproportionate asset gets accomplished only after the end of the check period and it is on that day it can be said the 'Proceeds of Crime' are generated. 24. Learned counsel submitted that ED can investigate only the money laundering offence and not the scheduled offence. Therefore, the present case is beyond the scope of the investigation of ED. Reliance in this regard has been placed on the judgement of the co-ordinate Bench of this Court dated 24.01.2023 in W(C) No. 13361/2018 titled M/S Prakash Industries Limited vs Union Of India. Learned counsel also submitted that the learned Special Judge has committed an error by making presumptions for dividing the alleged Proceeds of Crime by three in contravention of the settled law in this respect. In a disproportionate assets case, shareholding in the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Satyender Jain was to provide for architectural planning, designing, construction, management, and supervision of the projects on a predetermined fee of 2.5% of the cost of the project. He submits that the MOU provides the circumstance to substantiate the aspect that the investments made in the Company were made by the first party. 28. The learned Counsel for the applicants submits that the learned Special Court erred in holding that the companies were not doing any business. He submits that all these four companies were to be used for the purpose of developing projects after the land pooling policy of DDA got notified. In the present case, the learned counsel submits that the Company was engaged in the process of purchasing land for it to be developed at a later stage. He also submitted that the Company got its revenue either from share capital or from loans advanced to it or by making profits from the functions it performs. 29. Learned Counsel for the applicants submits that IDS was filed in an individual capacity by the applicants and the same is being misconstrued as having been made on behalf of the Company as its Director. He submits the statement made by Sh. J.P. Moh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of J.P.Mohta recorded under Section 50 of PMLA (RUD No.15) regarding shareholding patterns. The details of Directorships of each of the persons downloaded from website of Ministry of Corporate Affairs has also been filed. Learned counsel has also filed Financial Statements (Balance Sheets and Audit Reports) of Mangalayatan Projects Pvt. Ltd., Akinchan Developers Pvt. Ltd., Paryas lnfosolution Pvt. Ltd. and Indo Metalimpex Pvt. Ltd. Dr.Sushil Kumar Gupta has also placed on record the statement recorded under Section 50 of PMLA of Jagdish Prasad Mohta, Vaibhav Jain, Ankush Jain, Rajender Bansal, Jivendra Mishra, Abhishek Chokhani, Manish Sureka and Babloo Pathak. 32. Lastly, it has been submitted that the Applicants also qualify the triple test as the applicants have deep roots in society and are not a flight risk. He submits that since the Complaint has already been filed and the records are before the court, the question of tampering with them does not arise nor there is any chance of influencing the witnesses. Learned Counsel submits that the allegations made against the Applicants are not at all sustainable. (E) Submissions on behalf of E.D. 33. Mr.S.V.Raju, lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed Vaibhav Jain, Sh. JP Mohta, the auditor in all these companies, Sh. Babloo Pathak the employee of JP Mohta, Sh. Rajender Bansal, Sh. Jivendra Mishra, Sh. Abhishek Chokhani and Sh. Manish Surekha entry providers and the statements of the investors clearly indicate that Satyender Kumar Jain continued to have de facto control over the four companies both prior to July 2013 and even after his ostensible formal exit from these companies. 36. Further, it has been submitted that the principle of corporate personality loses its sanctity when the shareholders are family members and companies are closely held and when the shareholders and directors themselves by their conduct and statement do not maintain the legal sanctity of distinct shareholding. In this case, it has been submitted that Sh. Satyender Jain though not the legal owner/director or shareholder in the companies on paper was in fact the beneficial owner of the said companies. Reference has been made to the statement of Mrs. Poonam Jain and statements of Mr. Pankul Aggarwal, Sh. Sunil Kumar Jain as well as Ajit Prasad Jain. 37. It has also been submitted that the Supreme Court in a catena of judgments has held that wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain owns up to the fact that the money deposited as tax by Vaibhav and Ankush Jain was in fact his money paid as tax using which he seeks to discharge his debt or tax liability to the department. 41. Learned ASG submitted that the entire scheme of IDS deceleration by Sh. Vaibhav Jain and Sh. Ankur Jain was done to shield Satyender Jain and his family members and to assume the entire liability upon themselves to give it a color of tax evasion simplicity rather than the criminal activity relating to the disproportionate asset and money laundering. This can be seen from the fact that the amount of Rs. 16.50 crore received as accommodation entry admittedly had been split between Sh. Ankush Jain and Vaibhav Jain down in the middle without even acknowledging the fact that there were several other shareholders and disregarding the corporate personality of these companies. Learned ASG submitted that even in the statement dated 30.06.2022 recorded under Section 50 of PMLA Vaibhav Jain has stated that he had asked J.P. Mohta to appoint him director in the three accused companies and that Mohta advised that it can be done with backdated documents to which Vaibhav Jain consented. Learned AS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was appointed by Satyender Jain as statutory auditor of companies and therefore, was intimately involved in the affairs of these. His statements establish beyond doubt that the Applicant was involved in the transfer of Cash to Kolkata-based companies. Further, Supreme Court in the case of Rohit Tondon v. Directorate of Enforcement (2018) 11 SCC 46 inter alia has held that section 50 statements are an important piece of evidence which can be relied upon to reject bail. 46. Learned ASG submits that the entire schedule to the PMLA including the insertion of the Prevention of Corruption Act has been approved by the Hon'ble Supreme Court in the judgement of the Vijay Madanlal Chaudhary v. UOI Ors. (supra) as well as Ranjitsing Brahmajeetsing Sharma (2005) 5 SCC 294. 47. It has been submitted that the plea of the accused that the basis of Section 13(1)(e) of PC Act being the factum of possession of disproportionate assets and the same factum of possession if taken to constitute the offence of Money Laundering would amount to double jeopardy and violation of Article 20(2) is premature. Learned ASG submits that at this stage the accused has neither been punished under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or his accomplices namely Vaibhav Jain and Ankush Jain, and of threatening jail authorities and government officials. 51. It has been submitted that E.D. s apprehension regarding accused Satyender Jain abusing his position and the statements of witnesses namely Rajinder Bansal and Jivendra Mishra both dated 06.06.2022, has been further corroborated by the report of the Superintendent, Jail No. 7 that accused Satyender Jain threatened public servants (working as well as retired) of dire consequences upon his release. 52. Learned ASG also submits a person is liable to be released on bail under PMLA if he satisfies the twin conditions prescribed under Section 45 PMLA- (1) a finding by the court that the accused is not guilty of the offence of Money Laundering and (2) that he not likely to commit any offence while on bail. However, in the present case, the twin conditions are not being satisfied and therefore, the application for grant of bail is liable to be dismissed. 53. Mr.S.V.Raju, learned ASG being assisted by Mr.Zoheb Hossain, learned counsel on behalf of the Directorate of Enforcement, in addition to his submissions on facts has submitted that merely because the charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e offence he is charged with. 55. Learned ASG has submitted that in Vijay Madanlal Choudhary and others (supra) it was inter alia held that the process envisaged by Section 50 of the PMLA is in the nature of an inquiry against the proceeds of crime and is not investigation in strict sense of the term for initiating prosecution and the Authorities referred to in Section 48 of the PMLA are not police officers as such. Learned ASG has also relied upon Rohit Tandon vs. Directorate of Enforcement (2018) 11 SCC 46 wherein it was inter alia held that the statement recorded by ED are admissible in evidence in view of Section 50 of PMLA. 56. In respect of plea taken by Mr.Satyender Kumar Jain that he was neither a stake-holder nor managing/controlling the five companies namely, Mangalayatan Projects Pvt. Ltd., Akinchan Developers Pvt. Ltd., Paryas lnfosolution Pvt. Ltd. and Indo Metalimpex Pvt. Ltd. therefore, no criminality can be attributed to him and ED has proceeded against him only on the notional basis. Learned ASG has submitted that this plea has only been raised to mislead and misguide the investigating agencies and therefore in such cases veil can be lifted. Reliance ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g) it as untainted property. Thus, if we read the definition minutely, it is necessary that a person must be directly/indirectly involved and such person should be taken as involved if he is connected in any manner with the proceeds of crime including its (i) concealment, (ii) possession, (iii) acquisition (iv) use, (v) projecting and (vi) claiming. Thus handling the proceeds of crime in any manner as stated above constitutes the offence of money laundering. An explanation has been added by the Finance Act, 2019 only for the removal of doubts. 62. Section 3 (ii) of PMLA provides that 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. Bare perusal of the definition of beneficial owner as provided under Section 2 (1) (fa) of the Act makes it clear that it includes a person who exercises ultimate effective control over a juridical person. 63. In the case of Vijay Madanlal Choudhary and others vs. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a held in Vijay Madanlal Choudhary and others (supra) as under : 388. .Such twin conditions in the concerned provisions have been tested from time to time and have stood the challenge of the constitutional validity thereof. The successive decisions of this Court dealing with analogous provision have stated that the Court at the stage of considering the application for grant of bail, is expected to consider the question from the angle as to whether the accused was possessed of the requisite mens rea. The Court is not required to record a positive finding that the accused had not committed an offence under the Act. The Court ought to maintain a delicate balance between a judgment of acquittal and conviction and an order granting bail much before commencement of trial. The duty of the Court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. Further, the Court is required to record a finding as to the possibility of the accused committing a crime which is an offence under the Act after grant of bail. 65. Section 50 (1) confers certain power upon the Director for the purpose of Section 13 of the PMLA as are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the facts nor it can examine probative value of the witnesses. The twin conditions under Section 45 of the PMLA provide that bail can be granted only if (i) the Public Prosecutor has been given an opportunity to oppose the application (ii) the court is satisfied that there are reasonable grounds for believing that accused is not guilty of such offence and (iii) the accused is not likely to commit any offence while on bail. Section 45 (ii) of PMLA specifically provides that limitation on granting of bail in sub-section (i) is in addition to the limitations under the Cr.P.C. or any other law for the time being in force on grant of bail. This court is conscious of the fact that though there are limitations on the grant of bail, but it does not mean that in the cases under PMLA, the accused cannot be released on bail. In order to grant bail there has to be substantial probable cause for first believing that accused is not guilty of offence. 69. The Court in view of these twin conditions has to arrive at a conclusion that whether the facts and circumstances are sufficient in themselves to justify satisfaction that accused is not guilty of the offence. It is a settled proposition t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bansal who was in the business of providing accommodation entries against cash. This meeting was attended by Sh.J.P.Mohta, Sh.Rajender Bansal, Sh.Satyender Kumar Jain, Sh. Vaibhav Jain and his employee Mr.Babloo. In the meeting it was discussed/decided that Mr. Rajender Bansal will provide accommodation entries through subscription of shares in their companies against cash payment to be made by Satyender Kumar Jain and his associates i.e. Vaibhav Jain etc. 72. In the statements recorded on 21.07.2020 and 24.07.2020, Mr.Pankul Aggarwal stated that in M/s J.J.Ideal Estate Pvt. Ltd. though he was appointed as a Director but he did nothing except signing of documents. Mr.Pankul Aggarwal in his further statement recorded on 24.07.2020 stated that M/s J.J.Ideal Estate Pvt. Ltd. was controlled by Satyendar Kumar Jain and Ms.Poonam Jain and all the decisions were taken by Satyendar Kumar Jain and Ms.Poonam Jain and he was never informed about any business activity of the company by them. 73. Mr.Ajit Prasad Jain in his statement dated 26.09.2019 (RUD No.81 Vol.IX) under Section 50 of PMLA has stated that land purchased in Akinchan Developers Pvt. Ltd. and Indo Metalimpex Pvt. Ltd. we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 50 of PMLA cannot be examined at this stage and is a matter of trial. The petitioner Satyendar Kumar Jain is an influential person and has a potential to tamper with the evidence as indicated by his conduct during the custody. However, this court has examined the entire facts objectively in accordance with the law without being influenced by the position of the petitioner, other accused persons as well qua the witnesses but the fact remains the same that the condition under Section 439 Cr.P.C. are in addition to the twin conditions under Section 45 of PMLA. Thus, taking into account the totality of the facts, the petitioners at this stage cannot be held to have cleared the twin conditions of PMLA or the triple test. 76. The share holding patterns of M/s. Akinchan Developers Pvt.Ltd. M/s. Manglayatan Projects Pvt.Ltd. and M/s. J.J. Ideal Estate Pvt. Ltd. also shows that the petitioner Satyendar Kumar Jain or his family is controlling these companies directly or indirectly. The share pattern of these companies are quite intricate and really needs to be examined thoroughly. The testimony of Mr.Pankul Aggarwal shows the total control of Satyendar Kumar Jain on M/s. J.J. ..... 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