TMI Blog2023 (5) TMI 1198X X X X Extracts X X X X X X X X Extracts X X X X ..... the gravity of the offence is required to be taken into account. The gravity of the offence is gathered from the attendant facts and circumstances of the case. It is a settled proposition that economic offences fall within the category of 'grave offences' - The money laundering not only is a threat to the financial health of the country but it may also adversely impact its integrity and sovereignty. Moreover, the act of money laundering can even lead to the collapse of the economic system. Whether the person whose role has been found later knew that the money which he has been dealing with is a proceed of crime? - HELD THAT:- The court understands that this is very difficult for the department to find direct evidence regarding this. But at the same time, despite the twin conditions, the court cannot return any finding merely on the basis of inferences and presumptions. It is a settled proposition that at the stage of bail, the court is only required to see a prima facie case and is not required to look into the test of guilt. The court is required to maintain a delicate balance between the judgment of acquittal and conviction and an order granting bail before comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ures and/or surgeries as and when advised. It has been stated that the petitioner is suffering from numbness of limbs which is a precursor to possible paralysis which requires urgent medical attention. Thus, taking into account the facts and circumstances, the petitioner is admitted to bail on furnishing a personal bond in the sum of Rs. 25,00,000/- with two sureties of the like amount to the satisfaction of the trial court, subject to the conditions imposed. Bail application allowed. - BAIL APPLN. 1762/2022, CRL.M.(BAIL) 182/2023, CRL.M.A. 11556/2022 & CRL.M.A. 10022/2023 - - - Dated:- 29-5-2023 - HON'BLE MR. JUSTICE DINESH KUMAR SHARMA For the Petitioner Through: Mr. Sidharth Aggarwal, Sr. Adv. with Mr. Arjun Dewan, Mr. Shahryar Khan and Ms. Arshiya Ghosh, Advocates Respondent Through: Mr. Zoheb Hossain, Spl. Counsel for ED with Mr. Vivek Gurnani and Mr. Baibav, Advocates JUDGMENT DINESH KUMAR SHARMA, J: 1. Briefly stated, the case of the directorate of enforcement is that Naresh Jain along with his brother Bimal Jain and other accomplices hatched a criminal conspiracy to cause loss to the exchequer and banks by indulging in illegal foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different stages. 2. Shri Vijay Agarwal in lieu of development of land parcels held by M/s Graphic Buildcon into a residential project by the name of Empire Wildflower, by acquiring shares of Graphic Buildcon worth around Rs. 18 Crores from Naresh Jain/ Bimal Jain at throwaway prices and by availing loans and advances from unknown entities had actively participated in the scheme of Money Laundering including the placement, layering and integration of the proceeds of crime into the financial system. 3. Sh. Vijay Agarwal, a real estate developer based at Indore had been instrumental in the placement, concealment, use and layering of the POC generated by Shri Naresh Jain and his associates. The alleged role played by Shri Vijay Agarwal in the entire scheme of laundering of money by Sh. Naresh Jain is as follows:- (i.) MOU entered into by Shri Vijay Agarwal with Bimal Jain and allotment of 50% shares of Graphic Buildcon (belonging to Naresh Jain) to Shri. Vijay Agarwal at throwaway prices without any agreement and also without any valuation of shares:- The acquisition of shares of Graphic Buildcon by Naresh Jain / Bimal Jain was followed by Shri Vijay Agarwal enteri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommosales Pvt. Ltd., again without any agreement and none of the directors / promoters of the said entities were known to Shri Agarwal. 5. Sh. Agarwal had also in his statements admitted that the funds so received had been used to repay the outstanding loans of his companies. 6. In addition to the above, a list of entities forwarded to Shri Agarwal by Vikas Singh on whatsapp had been recovered during investigation which is a list of shell entities all controlled and managed by Naresh Jain his associates and the said entities had been used for providing proceeds of Crime generated / laundered by Naresh Jain to Vijay Agarwal. 7. Most of the above entities forwarding the proceeds of crime to Shri. Agarwal were shell entities. The said fact is borne out of improper addresses submitted by Swaraj Overseas and Moksha Enterprises both of which had advanced amounts of Rs 4.62 Crores and Rs. 5.90 crores respectively to RC Warehousing, which were virtually non-existent, mentioned by these companies statutory forms / returns and the audit reports. 8. Sh. Ajay Sharma, the auditor of Swaraj Overseas Moksha Enterprises for F.Y. 2020-21 in his statement dated 28.04.2022 had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opening forms of the said accounts had established that Sh. Vijay Agarwal was one of the authorized signatories and therefore had deliberately suppressed the said information from the Directorate. The total credit lying in Union Bank account no. 531201010035732 was around 9.39 crores, having been received from the sale of plots of Project Wildfire, Indore. Furthermore, it is submitted that the proceeds of crime in the aforesaid bank accounts had been diverted immediately after receipt of sale proceeds. The above conduct thus shows concealment on the part of the petitioner accused and that he is likely to commit the offence if released on bail. 7. Mr. Zoheb Hossain has placed reliance upon Vijay Madanlal Choudhary Ors. vs. Union of India Ors. 2022 SCC OnLine SCC 929 and submitted that the role played by the petitioner in the offence of money laundering, makes out a prima facie case and hence he does not meet the twin conditions as imposed under Section 45 of the PMLA. Mr. Zoheb Hossain has further placed reliance upon Tahir Hussain vs. Directorate of Enforcement 2022/DHC/005093 and submitted that the proceeds of crime include property not only derived or obtained fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigating agency to join the investigation nor the investigating agency has questioned or interrogated the petitioner ever since. It has further been submitted that prior to his arrest a search was conducted on 1 September 2021 at the premises belonging to the petitioner and during search no incriminating material was recovered. Learned Counsel for the Petitioner has submitted that the Petitioner has been named as an accused in the Supplementary Prosecution Complaint which has already been filed before the court. It has further been submitted that the ECIR was registered in the year 2018. Learned counsel for the petitioner has submitted that as per the case of the Enforcement Directorate broadly three allegations have been made against the petitioner which are as follows: (i) The Petitioner was issued fresh equity of 50,000 shares in M/s Graphic Buildcon Pvt. Ltd, for a total consideration of Rs 5,00,000/- (Rupees Five Lakh only), which as per the understanding of the investigating agency, should be worth an amount of Rs. 18,00,00,000/- (Rupees Eighteen crore only), and basis such understanding the investigating agency has alleged that the Petitioner is in possession of procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the matter is that M/s Graphic Buildcon Pvt. Ltd and M/s Arrow Buildtech (land owning Companies) had purchased various pieces of land situated at village Mundla Nayta from 2005 to 2013. The petitioner was approached sometime in 2012 by M/s Graphic Buildcon Pvt. Ltd and M/s Arrow Buildtech Pvt. Ltd., for developing a residential colony over the land already owned by the aforesaid companies at village Mundla Nayta. 11. It was submitted that the petitioner agreed to develop a residential cum commercial colony over the land already acquired by the aforesaid Companies. The Applicant had paid a sum of Rs. 21,00,000 (Twenty one Lakh Rupees only) to the said companies on 04 February 2012 as a security deposit for carrying out the development work at its cost through his own Company from his own bank accounts. Mr. Sidharth Aggarwal, learned senior counsel has submitted that the payment of Rs. 21,00,000 (Twenty-one Lakh Rupees only) by the petitioner has not been disputed by the department in the Original Prosecution Complaint dated 28 October 2020 filed by the department. 12. It has further been submitted that subsequently an MoU dated 19 March 2015 was executed between the parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untenable in view of the MoU dated 19.03.2015, which categorically records that the shares were given as security. Mr. Sidharth Aggarwal, learned senior counsel submitted that it was merely a commercial transaction and the department cannot question the commercial wisdom of the parties to the agreement. 15. In respect of the second allegation of taking loans, learned senior counsel submitted that it is own case of the Respondent in the Supplementary Prosecution Complaint that out of Rs. 41,35,71,231 [Rupees Forty One Crore Thirty Five Lakh Seventy One Thousand Two Hundred and Thirty One Rupees only] an amount of Rs. 19,71,26,530/- [Rupees Nineteen Crores Seventy-One Lakh Twenty-Six Thousand Five Hundred and Thirty Rupees] remains outstanding and thus, evidently, going as per the prosecution's own case an amount of Rs. 21,64,44.701/- [Rupees Twenty-One Crore Sixty-Four Lakhs Forty Four Thousand Seven Hundred One only] has already been paid been paid besides the interest to the tune of almost Rs. 1 crore. Mr. Sidharth Aggarwal, learned senior counsel has submitted that by no stretch of imagination can it be said that the Applicant has committed an offence under Section 3 of P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to bail in view of proviso to Section 45 of the PMLA. Learned senior counsel has submitted that the health of the petitioner has been continuously deteriorating whilst in custody from 14.03.2022. It has further been submitted that the petitioner is patient of LBA/HTN/DM2 and suffering from various medical conditions such as Radiculopathy with HTN, post covid shortness of breath, low oxygen saturation, lower back ache and also numbness of lower limbs and has been having difficulty in doing basic daily activities. It has been submitted that the petitioner was referred to DDU Hospital on 14 July, 2022 with complaint of history of falling in bathroom with frothing from mouth and he was managed with injectable and referred to DDU Hospital in emergency. At DDU Hospital, the petitioner was examined by Senior Resident medicine at RML Hospital and was advised to review in Neurology and Medicines OPD. Learned senior counsel has submitted that on 26 July 2022 the petitioner was referred to GB Pant Cardiology and Neurology department. The neurologist at GB Pant Hospital advised the petitioner to avoid weight lifting/ bending forward and further directed the petitioner for neurosurgery evalu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. Mr. Sidharth Aggarwal, learned senior counsel has submitted that while considering the case of the accused under the proviso of Section 45 of PMLA on grounds of sickness or infirmity, it is not necessary to fulfil the twin conditions of section 45 PMLA. In this regard reliance has been placed upon Lalit Goel vs. Directorate of Enforcement, Cr.M.7039/2022 dated 08.04.2022 , Punjab and Haryana High Court. Learned senior counsel has submitted that SLP D. 9985/2022 filed against this order was dismissed by the supreme court vide order dated 11.04.2022. 20. Mr. Zoheb Hossain, learned counsel for ED has submitted that the petitioner was granted interim bail in view of the impeding medical condition. However, there is no latest document nor any Medical record that has been filed to show that the petitioner is still sick or infirm. Mr. Hossain has submitted that the in any case even to admit the petitioner to bail on the ground of sickness, he has to meet the twin conditions as provided under Section 45 PMLA. Mr. Hossain has also submitted that the medical condition as stated by learned senior counsel can be treated at the Jail hospital. Learned counsel has further submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be seen in isolation or the court is required to take a wholesome view. The court considers that there cannot be any watertight formula for the same. As in the cases of conspiracy, the case of the prosecution has to be seen as a whole. The role of an accused is to be seen along with the role of other accused persons. However, at the same time, the court cannot allow itself to be overawed by the role of other accused persons if there is no connection between the acts committed by the main accused person and the act of an accused like present petitioner whose complicity has been found later on during the investigation. The offence of money laundering can be seen as a running-goods train where the bogey keeps on adding. The question to be determined is whether the bogey which is attached knew the culpability of the bogey which had already been there. The core question is that whether the person whose role has been found later knew that the money which he has been dealing with is a proceed of crime. The court understands that this is very difficult for the department to find direct evidence regarding this. But at the same time, despite the twin conditions, the court cannot return an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision [i.e., Section 2(1) (w)]. 251. The proceeds of crime being the core of the ingredients constituting the offence of money-laundering, that expression needs to be construed strictly. In that, all properties recovered or attached by the investigating agency in connection with the criminal activity relating to a scheduled offence under the general law cannot be regarded as proceeds of crime. There may be cases where the property involved in the commission of scheduled offence attached by the investigating agency dealing with that offence, cannot be wholly or partly regarded as proceeds of crime within the meaning of Section 2(1)(w) of the 2002 Act - so long as the whole or some portion of the property has been derived or obtained by any person as a result of criminal activity relating to the stated scheduled offence. To be proceeds of crime, therefore, the property must be derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence. To put it differently, the vehicle used in commission of scheduled offence may be attached as property in the concerned case (crime), it may still not be proceeds of crime within the mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or derived from the proceeds of crime even such subsequently acquired property must be regarded as tainted property and actionable under the Act. For, it would become property for the purpose of taking action under the 2002 Act which is being used in the commission of offence of money-laundering. Such purposive interpretation would be necessary to uphold the purposes and objects for enactment of 2002 Act. 253. Tersely put, it is only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. The authorities under the 2002 Act cannot resort to action against any person for money-laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum. For, the expression derived or obtained is indicative of criminal activity relating to a scheduled offense already accomplished. Similarly, in the event the person named in the criminal activity relating to a scheduled offence is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain loans from the shell companies of the co-accused persons which again allegedly amount to indulging knowingly in any process or activity connected with the proceeds of crime. The third allegation is that the proceeds of crime was laundered through M/s. R.C. Warehousing. The case of the defence is that the land was acquired from 2005 to 2013. The petitioner came into the picture only later on for the purpose of development of the land. It has not been disputed that the petitioner is a builder. It is not the case of the department that the petitioner from nowhere came into the deal or that the petitioner was not in the business of developing the colony. The department has not disputed that the petitioner has been in this business and has developed many projects. The plea of the petitioner is that the shares were taken only to secure his interest. The MoU for the same states: 13. That the developer wants security for his carrying out development and marketing work as such it has been decided that developer will be inducted as a director in the land owner companies and will also and 50% share holder at nominal value and will continue as director/ shareholder till his share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30. The jurisprudence of the bail positively lays down that a liberty of a person should not ordinarily been interfered with unless there exist cogent grounds. Despite, the twin conditions, it is not necessary that at the stage of bail, the Court has to come to the conclusion that the petitioner is not guilty for such an offence. The Court is at the stage of has to examine the case on the scale of broad probabilities. The Court at this stage is required to record an objective finding on the basis of material available on record and no other purpose. 31. In Ranjit Singh Brahamjeet Singh Sharma v. State of Maharastra (2005) 1 SCR 876 , it has inter alia held as under: 38. We are furthermore of the opinion that the restrictions on the power of the Court to grant bail should not be pushed too far. If the Court, having regard to the materials brought on record, is satisfied that in all probability he may not be ultimately convicted, an order granting bail may be passed. The satisfaction of the Court as regards his likelihood of not committing an offence while on bail must be construed to mean an offence under the Act and not any offence whatsoever be it a minor or major o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he is dealing with the tainted money cannot be brushed aside mechanically. If the liberty of an individual is concerned, the Court cannot proceed merely on the basis of assumptions and presumptions. The evidentiary value of the statement recorded under Section 50 of PMLA has to be tested at the end of the trial and not at the stage of bail. The twin conditions of Section 45 do not put an absolute restrain on the grant of bail or require a positive finding qua guilt. 36. A bare perusal of the Section 2 (u) of the Prevention of Money Laundering Act, 2005 which provides for the definition of proceeds of crime indicates that it is the property derived or obtained, directly or indirectly which relates to criminal activity relating to a scheduled offence. Similarly in order to be punished under Section 3 of PMLA, It is necessary that person dealing with the Proceed of crime must have some knowledge that it is tainted money. Though, the direct evidence in this regard may not be possible and the Court is also conscious of the fact that at this stage, the evidence cannot meticulously be examined for this purpose. At the same time, for the purpose that evidence cannot be meticulously ..... X X X X Extracts X X X X X X X X Extracts X X X X
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