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TMI Blog2023 (12) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... this common order. 3. Briefly, the case of Enforcement Directorate (ED) is that M/s. Taksheel Solutions Limited (for short "TSL") Company made various mis-statements and failed to disclose information in the offer document. The Securities and Exchange Board of India (for short "SEBI") inquired and conducted preliminary investigation. Thereafter, an ad-interim ex-parte order dated 28.12.2011 was filed against TSL and its Management. Consequently, SEBI passed a levying order dated 30.06.2014 levying penalty of Rs. 76,00,00,000/- against 16 different entities which were involved, for various violations under the SEBI Act. The said adjudication order was challenged by most of the entities. The SEBI Appellate Tribunal (for short "SAT") remanded the case back to the adjudicating authority since opportunity was not given and the orders were passed ex-parte. 4. In the preliminary investigation conducted by SEBI it was found that one Pavan Kumar Kuchana (A2)-MD & CEO of TSL company and others, created different entities showing them as vendors of TSL in the USA and siphoned off Initial Public Offering (for short "IPO") proceeds to create an impression of business transactions for softwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission was also paid to both A1 and A2. The remaining amounts were also siphoned off to offshore entities which are under the control of A1. Out of the IPO proceeds, Rs.18 crores was used for the expenses of TSL and also for payments to various vendors. However, the said payments to vendors were found to be bogus. The said circular movement of funds in between TSL and its clients which were in fact created by A2 and shown as entities in the USA, resulted in inflation of revenue and the corresponding profitability. 10. The said criminal acts committed by the petitioners and A2, attracts the offence under Section 3 of PML Act. 11. On the basis of the said information during the course of investigation the Enforcement Directorate effected the arrest of these petitioners and also A2 on 11.10.2023 and grounds of arrest was also served. 12. The Special Court for PMLA remanded the petitioners to judicial custody by a detailed order dated 12/13.10.2023. Thereafter, the petitioners and also A2 were given to ED custody. 13. During investigation, the Enforcement Directorate has identified the entities and persons who have received the ICD amount. 14. Sri T. Niranjan Reddy, learned Sen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entities namely i) M/s. Asia Rich Ventures Limited, Singapore ii) M/s. East Fortune Industries Limited, Hong Kong iii) M/s. KTP Exports Limited, Singapore. The said companies were shell companies utilized and provided by Angandias to transfer the money and the amounts were utilized to transfer the funds. 18. Learned Senior Counsel further submits that immediately after remand, the petitioner filed a statement retracting the version in the section 50 statement. A retracted statement cannot form basis to arrest the accused. He relied on the Judgments of Honourable Supreme Court in; i) Vijay Madanlal Choudhary v. Union of India and others 2022 SCC OnLine SC 929 ii) V. Senthil Balaji v. The State represented by Assistant Director and others 2023 SCC OnLine SC 934 iii) Pankaj Bansal v. Union of India and others 2023 SCC OnLine SC 1244 Learned Counsel relied on the Judgments rendered by this Court in; i) Khagesh Kachiwal v. Directorate of Enforcement in Crl. P. No. 6354 of 2022 dt. 08.08.2022 ii) Pradeep Kumar and others v. Assistant Director, Directorate of Enforcement in WP. No. 35434 of 2022 dated 06.07.2023 iii) Venkatram Reddy v. Union of India WP. No. 19163 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h and there is no indication by the Enforcement Directorate that the material available is enough to prima facie conclude that A3 was guilty. The arrest itself is illegal since the petitioner-A3 was kept in custody after issuance of section 50 notice and there after arrested without basis. 22. Learned Counsel for A3 relied on the very same Judgments relied on by the learned counsel for A1. 23. Sri B. Narasimha Sharma, learned Assistant Solicitor General appearing for Enforcement Directorate would submit that the procedure laid down under the PML Act, 2002 was scrupulously followed. From the scheme of the act it is evident that Enforcement Directorate can register cases once it is found that criminal offences under the schedule were committed. Further, the investigation can go on against the persons who are involved in generating the said criminal proceeds and also the persons who subsequently handled the crime proceeds. It is necessary that prima facie case is made out to the satisfaction of the authorities. The grounds of arrest and the remand report clearly indicate the modus operandi adopted by the accused in generating crime proceeds. Without there being any kind of business, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 5 SCC 266 viii) The State of Maharashtra and others v. Tasneem Rizwan Siddiquee (2018) 9 SCC 745 ix) Naranjan Singh Nathawan v. The State of Punjab (1952) 1 SCC 11 x) B.Ramachandra Rao v. The State of Orissa and others (1972) 3 SCC 256 xi) Tarun Kumar v. Assistant Director, Directorate of Enforcement Criminal Appeal No. of 2023 (SLP (Crl.) No.9431 of 2023). 27. Learned Assistant Solicitor General argued that custody and arrest are not synonymous. The presence of Enforcement Directorate officials during the search and seizure cannot be said to be arbitrary. Once the competent Court passes an order remanding the accused, the legality or otherwise of the arrest would become immaterial, since the Court takes note of the material that is produced by the prosecution and applies its mind to decide whether to send the person produced, to judicial custody or police custody. 28. The learned Assistant Solicitor General had passed a sealed cover stating that it contained incriminating documents collected during the course of investigation. Firstly, this Court has not sought for any information in a sealed cover or asked to provide documents to ascertain any factual claims by the En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s recorded on 22.09.2023, 23.09.2023, 25.09.2023 and finally on 11.10.2023 under Section 50 clause 2 and 3 of the PML Act, 2002. As already stated, these petitioners A1 and A3 were investigated and statements recorded on 10/11.10.2023 and thereafter, the petitioners and A2 were remanded to judicial custody. During the course of recording statement of A2 and investigating into the matter, the Enforcement Directorate was informed by A2 that these petitioners were allegedly involved in the transactions and on their instructions to inflate the revenue of TSL, the alleged circular movement of money was done. A1 had prepared the road map towards IPO and instructed to open paper based companies in the USA for rotation of funds. Further, the amount of Rs. 30.50 crores was transferred to the entities operated by A1. Several details of acts committed by these petitioners was revealed during the statements of A2. The information given by A2 is at para-9 of the remand report. The details are from para-9(a) to 9(t) of the remand report. The statement of A3 is at para-11(i) to 11(xxi). The information given by A1 is at para-12(i) to 12(xiv) and para-14(i) to 14(xii). It is abundantly clear that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing new which had come to the knowledge of the Enforcement Directorate authorities pursuant to the examination of the petitioners-A1 & A3, which information they did not have at the instance of A2. It is not the case that after the examination of petitioners-A1 & A3 any new facts were discovered or had collected any new documents which were not known when A2 was examined. 38. The Enforcement Directorate is a premier Investigating Agency which has been given the powers to investigate serious economic offences under the PML Act, 2002. There is any amount of responsibility while discharging their duties and not to adopt any such methods affecting the rights of accused. The narration in the remand report and the grounds of arrest, it is mentioned that what all information was gathered from A2 was accepted by the petitioners. The statement appears to be more in the form of confession of the facts already known to Officers. 39. The Honourable Supreme Court in Pankaj Bansal v. Union of India and others 2023 SCC OnLine SC 1244 held at para-21 that the Enforcement Directorate is expected to be transparent and conform to pristine standards of fair play in action. The Enforcement Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld fall under the category of "grave offence" and in such circumstance while considering the application for bail in such matters, the Court will have to deal with the same, being sensitive to the nature of allegation made against the accused. One of the circumstances to consider the gravity of the offence is also the term of sentence that is prescribed for the offence the accused is alleged to have committed. Such consideration with regard to the gravity of offence is a factor which is in addition to the triple test or the tripod test that would be normally applied. In that regard what is also to be kept in perspective is that even if the allegation is one of grave economic offence, it is not a rule that bail should be denied in every case since there is no such bar created in the relevant enactment passed by the legislature nor does the bail jurisprudence provide so. Therefore, 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. But ultimately the consideration will have to be on case-to-case basis on the facts i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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