TMI Blog2024 (3) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of Neeraj Mittal used to collect cash from Ram Parkash Bhatia, which was actually the proceeds of crime of Veerendra Kumar Ram. It has come on record that credit transaction of Rs 122 crores approximately have taken place from the said four bank accounts of Tara Chand and thus same amount was used for routing of funds - Thus, prima-facie, the involvement of the present petitioner in illegal routing of proceeds of crime cannot be denied as he played the vital role in this organized structure/process of illegal routing of proceeds of crime of accused Veerendra Kumar Ram. Scope of section 45 of the PML Act 2002 - HELD THAT:- Section 45 (ii) of the PMLA Act, 2002 provides twin test. First reason to believe is to be there for the purpose of reaching to the conclusion that there is no prima facie case and second condition is that the accused is not likely to commit any offence while on bail - It is, thus, evident by taking into consideration the provision of Section 19(1), 45(1), 45(2) of PML Act that the conditions provided therein are required to be considered while granting the benefit of regular bail in exercise of power conferred under Section 438 or 439 of Cr.P.C., apart from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation has been filed under Section 439 read with Section 440 of the Code of Criminal Procedure, 1973 praying for grant of bail in ECIR Case No.2 of 2023 (A) arising out of ECIR-RNZO/16/2020 dated 17.09.2020 registered for the offence under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 with Schedule Offence under Sections 120B of the Indian Penal Code and 7(b) of the Prevention of Corruption (Amendment) Act, 2018, pending in the court of learned Additional Judicial Commissioner-VIII-cum-Special Judge, PML Act, Ranchi. Facts of the case 2. The prosecution case in brief is that the investigation under the Prevention of Money Laundering Act, 2002 was initiated by recording the ECIR/RNSZO/16/2020 dated- 17.09.2020 against the accused persons on the basis of information received from FIR No. 13/2019 dated- 13.11.2019 registered by the ACB, Jamshedpur. 3. Subsequently the Final Report has been filed by the investigating agency bearing no. 01/2020 dated- 11.01.2020 under Section 120-B and 201 IPC and under Section 7 (b) of the P.C. Act, 1988 against the accused persons, namely, Alok Ranjan and Suresh Prasad Verma. 4. Further, in course of search proceeding conducted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nection with aforementioned case the present petitioner was arrested by the E.D. on 25.06.2023. Accordingly, the present petitioner preferred Misc. Cri. Application No. 2942 of 2023 for grant of bail but the same was rejected vide order dated 18.10.2023 passed by the court of, learned Additional Judicial Commissioner- XVIII-cum-Special Judge, PML Act, Ranchi. 10. Hence the present petition has been filed. Argument advanced by learned counsel for the petitioner: 11. Mr. Nilesh Kumar learned counsel for the petitioner has argued inter alia on the following grounds: (i) It has been contended that there is no allegation said to be committed so as to attract the offence under Section under Section 3 of the PML Act. (ii) The petitioner namely, Tara Chand, is an employee of C.A., namely, Mukesh Mittal, save and except there is no allegation said to be committed so as to attract the penal offence under PML Act, 2002. (iii) Learned counsel for the petitioner in order to demonstrate the fact that no offence has been committed has placed the material collected in course of inquiry based upon the ECIR which has been submitted before the competent court of jurisdiction. (iv) It has also been al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate has referred the imputation as has come against the petitioner in the supplementary prosecution complaint dated 20.08.2023 which has been appended with the paper book wherein it is alleged that the accused Tara Chand (petitioner) disclosed during investigation that three bank accounts were opened by him impersonating himself as Sachin Gupta in the name of three proprietorship firms by forging documents on the instruction of co-accused Neeraj Mittal, who also used to operate the bank accounts. Further, no business has been found to be existing in the name of above three proprietorship firms at the address provided to the bank. (iv) In support of his contention, the learned counsel has also relied upon the judgments rendered by the Hon ble Apex Court in the case of Vijay Madan Lal Choudhary and others Vs. Union of India and others 2022 SCC online SC 929 and Rohit Tondon Vs. Directorate of Enforcement (2018) 11 SCC 46. 14. Learned counsel for the respondent-Enforcement Directorate, based upon the aforesaid grounds, has submitted that it is not a fit case where the prayer for bail is to be allowed taking into consideration his involvement in dealing with the proceeds of crime of Ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porated them in the said Bill along with some other desired changes. STATEMENT OF OBJECTS AND REASONS It is being realised, world over, that money-laundering poses a serious threat not only to the financial systems of countries, but also to their integrity and sovereignty. Some of the initiatives taken by the international community to obviate such threat are outlined below: (a) the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, to which India is a party, calls for prevention of laundering of proceeds of drug crimes and other connected activities and confiscation of proceeds derived from such offence. (b) the Basle Statement of Principles, enunciated in 1989, outlined basic policies and procedures that banks should follow in order to assist the law enforcement agencies in tackling the problem of money-laundering. (c) the Financial Action Task Force established at the summit of seven major industrial nations, held in Paris from 14th to 16th July, 1989, to examine the problem of money-laundering has made forty recommendations, which provide the foundation material for comprehensive legislation to combat the problem of money-laundering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad. 21. In the explanation it has been referred that for the removal of doubts, it is hereby clarified that proceeds of crime include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. The aforesaid explanation has been inserted in the statute book by way of Act 23 of 2019. 22. It is, thus, evident that the reason for giving explanation under Section 2(1)(u) is by way of clarification to the effect that whether as per the substantive provision of Section 2(1)(u), the property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country but by way of explanation the proceeds of crime has been given broader implication by incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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.] 27. It is evident from the aforesaid provision that offence of money-laundering means whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering. 28. It is further evident 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. 29. The punishment for money laundering has been provided under Section 4 of the Act, 2002. 30. Section 50 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein the Bench comprising of Three Hon ble Judges of the Hon ble Supreme Court have decided the issue by taking into consideration the object and intent of the Act, 2002. 31. The interpretation of the condition which is to be fulfilled while arresting the person involved in the predicate offence has been made as would appear from paragraph 265. For ready reference, relevant paragraphs is being referred as under: 265. To put it differently, the section as it stood prior to 2019 had itself incorporated the expression including , which is indicative of reference made to the different process or activity connected with the proceeds of crime. Thus, the principal provision (as also the Explanation) predicates that if a person is found to be directly or indirectly involved in any process or activity connected with the proceeds of crime must be held guilty of offence of money-laundering. If the interpretation set forth by the petitioners was to be accepted, it would follow that it is only upon projecting or claiming the property in question as untainted property, the offence would be complete. This would undermine the efficacy of the legislative intent behind Section 3 of the Act and also w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1908 Code while trying a suit in respect of matters specified in sub-section (1). This is in reference to Section 13 of the 2002 Act dealing with powers of Director to impose fine in respect of acts of commission and omission by the banking companies, financial institutions and intermediaries. From the setting in which Section 50 has been placed and the expanse of empowering the Director with same powers as are vested in a civil Court for the purposes of imposing fine under Section 13, is obviously very specific and not otherwise. 425. Indeed, sub-section (2) of Section 50 enables the Director, Additional Director, Joint Director, Deputy Director or Assistant Director to issue summon to any person whose attendance he considers necessary for giving evidence or to produce any records during the course of any investigation or proceeding under this Act. We have already highlighted the width of expression proceeding in the earlier part of this judgment and held that it applies to proceeding before the Adjudicating Authority or the Special Court, as the case may be. Nevertheless, sub-section (2) empowers the authorised officials to issue summon to any person. We fail to understand a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible gestures as in the case of a dumb witness (See section 119 of the Evidence Act) or the like. To be a witness is nothing more than to furnish evidence , and such evidence can be furnished through the lips or by production of a thing or of a document or in other modes. So far as production of documents is concerned, no doubt Section 139 of the Evidence Act says that a person producing a document on summons is not a witness. But that section is meant to regulate the right of cross examination. It is not a guide to the connotation of the word witness , which must be understood in its natural sense, i.e., as referring to a person who furnishes evidence. Indeed, every positive volitional act which furnishes evidence is testimony, and testimonial compulsion connotes coercion which procures the positive volitional evidentiary acts of the person, as opposed to the negative attitude of silence or submission on his part. Nor is there any reason to think that the protection in respect of the evidence so procured is confined to what transpires at the trial in the court room. The phrase used in article 20(3) is to be a witness and not to appear as a witness . It follows that the protection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, after further inquiry on the basis of other material and evidence, the involvement of such person (noticee) is revealed, the authorised officials can certainly proceed against him for his acts of commission or omission. In such a situation, at the stage of issue of summons, the person cannot claim protection under Article 20(3) of the Constitution. However, if his/her statement is recorded after a formal arrest by the ED official, the consequences of Article 20(3) or Section 25 of the Evidence Act may come into play to urge that the same being in the nature of confession, shall not be proved against him. Further, it would not preclude the prosecution from proceeding against such a person including for consequences under Section 63 of the 2002 Act on the basis of other tangible material to indicate the falsity of his claim. That would be a matter of rule of evidence. 434. It is, thus, clear that the power invested in the officials is one for conducting inquiry into the matters relevant for ascertaining existence of proceeds of crime and the involvement of persons in the process or activity connected therewith so as to initiate appropriate action against such person including of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Code of Criminal Procedure, 1973 or any other law for the time being in force on granting of bail. 37. The explanation is also there as under sub-section (2) thereof which is for the purpose of removal of doubts. A clarification has been inserted that the expression Offences to be cognizable and non-bailable shall mean and shall be deemed to have always meant that all offences under this Act shall be cognizable offences and non-bailable offences notwithstanding anything to the contrary contained in the Code of Criminal Procedure, 1973, and accordingly the officers authorised under this Act are empowered to arrest an accused without warrant, subject to the fulfilment of conditions under section 19 and subject to the conditions enshrined under this section. 38. The fact about the implication of Section 45 has been interpreted by the Hon ble Apex Court in Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors.(supra) at paragraphs-372-374. 39. For ready reference, the said paragraphs are being referred as under: 372. Section 45 has been amended vide Act 20 of 2005, Act 13 of 2018 and Finance (No. 2) Act, 2019. The provision as it obtained prior to 23.11.2017 read somew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used is not guilty of such offence and he is not likely to commit any offence while on bail. It has further been observed that as per the statutory presumption permitted under Section 24 of the Act, the Court or the Authority is entitled to presume unless the contrary is proved, that in any proceedings relating to proceeds of crime under the Act, in the case of a person charged with the offence of money laundering under Section 3, such proceeds of crime are involved in money laundering. Such conditions enumerated in Section 45 of PML Act will have to be complied with even in respect of an application for bail made under Section 439 Cr. P.C. in view of the overriding effect given to the PML Act over the other law for the time being in force, under Section 71 of the PML Act. 41. For ready reference, paragraph-17 of the said judgment is quoted as under: 17. As well settled by now, the conditions specified under Section 45 are mandatory. They need to be complied with. The Court is required to be satisfied that there are reasonable grounds for believing that the accused is not guilty of such offence and he is not likely to commit any offence while on bail. It is needless to say that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itutional Court, the underlying principles and rigors of Section 45 of the 2002 must come into play and without exception ought to be reckoned to uphold the objectives of the 2002 Act, which is a special legislation providing for stringent regulatory measures for combating the menace of money-laundering. 44. The Hon ble Apex Court in the case of Gautam Kundu vs. Directorate of Enforcement (Prevention of Money-Laundering Act), Government of India through Manoj Kumar, Assistant Director, Eastern Region, (2015) 16 SCC 1 has been pleased to hold at paragraph - 30 that the conditions specified under Section 45 of PMLA are mandatory and need to be complied with, which is further strengthened by the provisions of Section 65 and also Section 71 of PMLA. Section 65 requires that the provisions of Cr.P.C shall apply insofar as they are not inconsistent with the provisions of this Act and Section 71 provides that the provisions of PMLA shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. PMLA has an overriding effect and the provisions of CrPC would apply only if they are not inconsistent with the provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tage, the public prosecutor appearing for the Enforcement Directorate cannot have jurisdiction to make opposition. Further the stage of Section 19(1) has already been expired the moment the ECIR has been submitted before the concerned court and since there is cooperation of the petitioner in course of conducting the preliminary enquiry converted into the ECIR, as such, at this stage his incarceration will be irrelevant. 49. The aforesaid ground has already been dealt by this Court while rejecting the Anticipatory Bail Application of Mukesh Mittal vide order dated 16.02.2024. 50. Now adverting in to fact of the instant case and the allegation leveled against the present petitioner which according to learned counsel for the petitioner is being said that the same cannot be said to attract the ingredient of Section 3 of PMLA 2022 while on the other hand, the learned counsel appearing for the ED has submitted by referring to various paragraphs of prosecution complaint that the offence is very much available attracting the offence under provision of PML Act. 51. This Court, in order to appreciate the rival submission, is of the view that various paragraphs of supplementary prosecution co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in the name of three proprietorship firms or in the name of their proprietor Sachin Gupta, at the addresses provided to the bank. Business operation of M/s Oyecool Technologies (Prop. Harish Yadav) too found to be non-existence at the given address. Therefore, the absence of any business addresses or its business operation makes it established that the firms were only running on paper, i.e. shell companies (Firms) and such shell firms have been formed only to accommodate banking transactions to launder proceeds of crime in the guise of business transactions. (viii) Further search u/s 17 of PMLA was conducted at the residence of Tara Chand and it was found that Tara Chand has been impersonating himself as Sachin Gupta and his statement was recorded on 21.02.2023, wherein he stated that he has opened the aforesaid three proprietary firms and subsequently their bank accounts viz(i) Shri Khatushyam Traders (079205500560), (ii) Anil Kumar Govind Ram Traders and (082705001671) (iii) Om Traders 072405001740) were opened by forging documents such as Aadhar and PAN cards, and he stated that such bank accounts are being operated by Neeraj Mittal (accused Number- 7) . Tara Chand (Accused N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sachin Gupta on the instructions of Tara Chand and Neeraj Mittal. He was also found in possession of mobile numbers linked to the bank accounts of three proprietorship firms of Sachin Gupta during the course of search u/s 17 of PMLA at his premises on 21.02.2023. He further stated that he transferred the funds of Rs. 3.52 crores in multiple trenches using the bank accounts of three proprietorship firms of Sachin Gupta and one bank account of Tara Chand to the bank accounts of Rakesh Kumar Kedia, Manish and Neha Shrestha. He also stated that the mobile numbers linked with the bank account of Tara Chand (675705602113) was in the possession of Tara Chand himself and he used to get OTP from him whenever required. (Xiii) ---search was conducted at the residence of Harish Yadav (Accused-9) at D-7/276 2nd floor, sector-6 Rohini Delhi on 21.02.2023 and his statement was recorded on the same day wherein he stated that he transferred the said amount of Rs. 10 lakhs (which is proceeds of crime of V.K. Ram) into the bank secount 127000890839 of Manish (son of driver of Mukesh Mittal) on the instructions of Tara Chand and in return, he received a commission of Rs. 2,000/. He also stated that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instructions of Neeraj Mittal used to transfer it to the bank accounts of Rakesh Kumar Kedia, Manish and Neha Shrestha provided by Ram Prakash Bhatia. 55. The investigation further disclosed that the petitioner got instructions from Neeraj Mittal to provide him few bank accounts for the purpose of providing RTGS entries, after which he provided the same to Neeraj Mittal, and such bank accounts were actually operated by Neeraj Mittal with the help of Petitioner and Harish Yadav. 56. It transpires that the present petitioner Tara Chand opened bank accounts by forging documents i.e. Aadhar and PAN Cards in the name of fictitious person and these bank accounts were utilized for providing accommodation entries which after routing in some bank accounts reached to the bank accounts of co-accused Genda Ram. Further, it is also ascertained that some bank accounts opened (at Delhi) on the basis of forged documents was also being used in routing of funds. 57. The accused Tara Chand (petitioner) disclosed during investigation that three bank accounts were opened by him impersonating himself as Sachin Gupta in the name of three proprietorship firms by forging documents on the instruction of co- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigation it appears that the present petitioner was engaged in the illegal business of money transfer and providing entry, in lieu of commission and on the instructions of Neeraj Mittal used to collect cash from Ram Parkash Bhatia, which was actually the proceeds of crime of Veerendra Kumar Ram. It has come on record that credit transaction of Rs 122 crores approximately have taken place from the said four bank accounts of Tara Chand and thus same amount was used for routing of funds, as also discussed above. 62. Thus, prima-facie, the involvement of the present petitioner in illegal routing of proceeds of crime cannot be denied as he played the vital role in this organized structure/process of illegal routing of proceeds of crime of accused Veerendra Kumar Ram. 63. Now in the light of aforesaid discussion at this juncture this Court thinks fit to revisit the scope of section 45 of the PML Act 2002. As discussed in preceding paragraphs that Section 45 (ii) of the PMLA Act, 2002 provides twin test. First reason to believe is to be there for the purpose of reaching to the conclusion that there is no prima facie case and second condition is that the accused is not likely to commit any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riminal activity relating to a scheduled offence. The explanation clarifies that the proceeds of crime include property, not only derived or obtained from scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. Clause (u) also clarifies that even the value of any such property will also be the proceeds of crime. 70. At paragraph-14 of the aforesaid judgment, it has observed by referring the decision rendered by the Hon'ble Apex Court in Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors.(supra) that the condition precedent for the existence of proceeds of crime is the existence of a scheduled offence. At paragraph-15 the finding has been given therein that on plain reading of Section 3 of the Act, 2002, an offence under Section 3 can be said to be committed after a scheduled offence is committed. By giving an example, it has been clarified that if a person who is unconnected with the scheduled offence, knowingly assists the concealment of the proceeds of crime or knowingly assists the use of proceeds of crime, in that case, he can be held guilty of committi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n hand. 76. The Hon ble Apex Court in the case of Central Bureau of Investigation Vs Santosh Krnani and Another, 2023 SCC OnLine SC 427 has observed that corruption poses a serious threat to our society and must be dealt with iron hands. The relevant paragraph of the aforesaid judgment is being referred as under:- 31. The nature and gravity of the alleged offence should have been kept in mind by the High Court. Corruption poses a serious threat to our society and must be dealt with iron hands. It not only leads to abysmal loss to the public exchequer but also tramples good governance. The common man stands deprived of the benefits percolating under social welfare schemes and is the worst hit. It is aptly said, Corruption is a tree whose branches are of an unmeasurable length; they spread everywhere; and the dew that drops from thence, Hath infected some chairs and stools of authority. Hence, the need to be extra conscious. 77. This Court, in view of the aforesaid material available against the petitioner, is of the view, that in such a grave nature of offence, which is available on the face of the material, applying the principle of grant of bail wherein the principle of having pri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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