2023 (7) TMI 1311 - HC - Money Laundering

Money laundering bail denied over excise policy conspiracy allegations involving kickbacks and deliberate loopholes

ABHISHEK BOINPALLY Versus DIRECTORATE OF ENFORCEMENT

The Delhi HC dismissed a bail application in a money laundering case involving alleged conspiracy to frame an excise policy for illegal gains. The court ... Seeking grant of Bail - Money Laundering - existence of proof of identification of proceeds of crime or not - absence of transcripts to alleged transfer of Rs. 30 crores - Section 45 of PMLA - HELD THAT:- It is settled proposition Section 45 PMLA do not impose an absolute restraint on the grant of bail and the court at this stage is to prima facie consider whether applying the standard of broad probabilities the material against the applicant would result in conviction. It is also a settled proposition that at this stage the Court is only required to examine the matter to find out whether the accused was possessed of the requisite mens rea. It is also no longer res integra that the court is not required to record a positive finding that the accused had not committed the offence under the Act. It is also a settled proposition that the court at this stage is not required to weigh the evidence meticulously. The bare reading of Section 3 of PMLA would make it clear if a person is 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. Therefore, it is not necessary to attribute section 3 of the PMLA that the alleged person must have acquired or in possession of the proceeds of the crime. If a person has actually been involved in any process or activity connected with the proceeds of crime, it would be sufficient to prosecute him under Section 3 of PMLA. The present case is very peculiar in nature and may not have any parallel factual matrix. In brief, the allegations in the predicate offence is that the conspiracy was hatched between the political head and certain persons which included an individual allegedly representing the government with the manufacturer, liquor wholesaler and retailer. The conspiracy allegedly was hatched to introduce a new excise policy to benefit certain individuals who had given advance kickbacks to the AAP. The present case arises out of an alleged conspiracy wherein the government framed an excise policy with a malafide intention to recoup the kickbacks received in advance from certain individuals and to further generate the ill money from the liquor trade. There are witnesses and witnesses on record to show that certain outsiders were actively participating from the stage of drafting and formulation of the policy - The allegation regarding generating of the emails in support of the excise policy also raises the red flag that everything was being done in a transparent and bonafide manner. It is correct that the case of ED is based on the statements under Section 50 PMLA cannot be taken as gospel truth but at the same, the court has to take into account the probabilities and the legislative intent behind enacting Section 50 PMLA. The bare perusal of Section 50 makes it clear that these are deemed to be judicial proceedings. There are consequences for making a false statement or not complying to the summons under Section 50 of PMLA as provided under Section 63 of the PMLA. Thus, statements under Section 50 PMLA cannot be brushed aside. This court at this stage cannot go into the probative value of the witnesses nor can it meticulously examine those facts. It is settled position that the statement recorded under Section 50 of PMLA is admissible evidence though the evidentiary value of the same is to be seen after the trial. However, at this stage, the court cannot ignore the statements under Section 50 PMLA which the statue provides to have been recorded as part of the judicial proceedings. In such cases of conspiracy, the present case is of peculiar nature where Excise policy was formed with illobjective of illegal earning money through illegal means - the accused person in the present case acting in furtherance of the conspiracy circumvented the policy and got framed the policy in such a manner to continuously generate and channel illegal funds. The allegations are that deliberate loopholes were left to facilitate illegal and criminal activities. It is also pertinent to mention here that investigation has revealed that 65% stake was given to South Group in Indo Spirits to make it a mechanism for continuous generation and channelisation of Proceeds of Crime. Taking into account the seriousness and gravity of the allegations and credible material on record, the bail application along with pending application stands dismissed. Issues Involved:1. Alleged Conspiracy and Irregularities in Framing and Implementation of Excise Policy.2. Role and Involvement of the Petitioner in the Conspiracy.3. Admissibility and Credibility of Evidence under PMLA.4. Application of Section 45 of PMLA and Conditions for Grant of Bail.Summary:1. Alleged Conspiracy and Irregularities in Framing and Implementation of Excise Policy:The case involves an FIR registered by CBI against several individuals, including a high-ranking government official, for irregularities in the framing and implementation of the excise policy of GNCTD of Delhi for the year 2021-22. The FIR alleges that certain public servants recommended and took decisions pertaining to the excise policy without the approval of the competent authority, intending to extend undue favors to licensees post-tender. The CBI filed a chargesheet covering six accused persons, including the petitioner, alleging a conspiracy to get undue benefits by circumventing policy provisions. The Enforcement Directorate (ED) initiated an investigation under PMLA, revealing that the excise policy was created to generate and channel illegal funds to certain political leaders.2. Role and Involvement of the Petitioner in the Conspiracy:The petitioner, Abhishek Boinpally, is alleged to be a key person involved in the conspiracy, representing the South Group and facilitating the payment of a Rs. 100 crore kickback to Vijay Nair. The ED's investigation revealed that the petitioner attended several meetings with co-conspirators and was involved in managing retail zones used to recoup the kickbacks. The petitioner admitted in his statements to running retail zones for Sarath Reddy and attending meetings with other accused persons. The ED's case is supported by statements under Section 50 of PMLA, hotel records, and financial transactions indicating the flow of money connected to the proceeds of crime.3. Admissibility and Credibility of Evidence under PMLA:The court acknowledged that statements recorded under Section 50 of PMLA are admissible as evidence, though their evidentiary value is to be assessed during the trial. The court noted that the statements of co-accused and public servants, despite being challenged by the defense, cannot be disregarded at this stage. The court emphasized that the involvement of third parties in formulating and drafting the excise policy indicates mens rea and cannot be ignored.4. Application of Section 45 of PMLA and Conditions for Grant of Bail:Section 45 of PMLA imposes twin conditions for granting bail: the Public Prosecutor must be given an opportunity to oppose the application, and the court must be satisfied that there are reasonable grounds for believing that the accused is not guilty and is not likely to commit any offense while on bail. The court held that the petitioner failed to fulfill these conditions, given the seriousness and gravity of the allegations and the credible material on record. The court found that the petitioner's involvement in the conspiracy and money laundering was evident from the flow of money and his interactions with other accused persons.Conclusion:The court dismissed the bail application, concluding that the petitioner played an active role in the conspiracy and money laundering, and there were no reasonable grounds to believe that he was not guilty of the offense. The court emphasized the need to balance personal liberty with the right of society at large, particularly in cases involving economic offenses with deep-rooted conspiracies.