2023 (12) TMI 1289 - HC - Money Laundering

Bail denied in money laundering case as court cannot determine proceeds under Rs 1 crore without detailed fact-finding under Section 45 PMLA

SADANAND GANGARAM KADAM Versus DIRECTORATE OF ENFORCEMENT, THE STATE OF MAHARASHTRA

The Bombay HC dismissed a bail application in a money laundering case involving land purchase through alleged illegal building permissions. The applicant ... Money Laundering - predicate offence - forgery - purchase of the land by Shri Anil Parab from Mr. Sathe - allegations are that by exerting pressure building permissions are illegally obtained - applicability of rigours of Section 45 of the PMLA - HELD THAT:- There are no substance in the submission of the learned senior advocate Shri Desai that the accusations in the present case of money laundering involve a sum of less than Rs. 1 Crore for enabling the applicant to claim the benefit of the first proviso to section 45 of the PMLA. It is for this reason that the estimation of proceeds of crime as set out in the complaint is reproduced hereinbefore. Though learned senior advocate Shri Desai was at pains to point out that the accusations of money laundering against the applicant are for a sum of less than one crore rupees, having regard to the materials in the complaint, it is opined that arriving at this conclusion will entail a detailed fact-finding exercise which may not be permissible at the stage of considering the bail application. No doubt, the challenge to the order passed by the revisional Court quashing the process is pending in this Court but the order of the revisional Court has not been stayed. The applicant can not, therefore, be deprived of the fruits of the order passed by the revisional Court merely because the Writ Petition challenging the revisional Court’s order is pending in this Court. It is always open for the respondent to take such steps in accordance with law in case the MoEF succeeds in the Writ Petition. It is the submission that the act of registering FIR No. 177 of 2022 is malafide action on the part of the respondent. A reading of the MoEF complaint and the FIR No. 177 of 2022 indicates that though the property may be the same but the allegations made are in different context on the basis of the complaint filed by the separate entities. It is not possible to render a finding of malafide at this stage. No doubt this Court while considering twin test of Section 45 of the PMLA has to consider the broad probabilities of the case, however, having regard to the nature of the accusations and the materials on record, it is not possible to record a satisfaction that there are reasonable grounds for believing that the applicant is not guilty of such offence - application dismissed. Issues Involved:1. Legitimacy of the inclusion of offences under FIR No. 177 of 2022 as predicate offences without a separate ECIR.2. The validity of the private complaint filed by MoEF and its implications on the PMLA case.3. The applicability of the proviso to Section 45(1) of PMLA regarding the amount involved in money laundering.4. Compliance with Section 19 of PMLA concerning the arrest procedure.5. The existence of predicate offences for invoking PMLA provisions.Summary:1. Inclusion of Offences under FIR No. 177 of 2022:The applicant contended that the inclusion of offences under FIR No. 177 of 2022 as predicate offences without registering a separate ECIR is impermissible. The court noted that the ECIR was based on the MoEF complaint and included allegations from FIR No. 177 of 2022. The court held that the absence of a separate ECIR does not render the complaint inconsequential, referencing the Supreme Court's decision in Vijay Madanlal Chaudhary, which states that ECIR is not a statutory document and its absence does not impede the inquiry or investigation.2. Validity of MoEF Complaint:The MoEF complaint, alleging violations of the EP Act and IPC offences, was treated as a predicate offence. However, the Sessions Court quashed the process issued on the MoEF complaint, and the order was not stayed. The court agreed with the applicant that there is no predicate offence regarding the MoEF complaint, but noted that the challenge to the revisional court's order is pending.3. Applicability of Proviso to Section 45(1) of PMLA:The applicant argued that the amount involved in money laundering is less than one crore rupees, invoking the proviso to Section 45(1) of PMLA. The court, however, noted that the estimation of proceeds of crime, as set out in the complaint, amounts to Rs. 10,20,38,000. The court held that determining the exact amount would require a detailed fact-finding exercise, which is not permissible at the bail stage.4. Compliance with Section 19 of PMLA:The applicant contended that the arrest procedure under Section 19 of PMLA was not followed. The court examined the arrest memo and found that the grounds of arrest were explicitly read and explained to the applicant, and the applicant acknowledged understanding the reasons for the arrest. The court concluded that due process was followed, and the requirements of Section 19 were met.5. Existence of Predicate Offences:The court emphasized that the existence of a scheduled offence and proceeds of crime is a sine qua non for an offence under Section 3 of PMLA. The court noted that FIR No. 177 of 2022, which includes scheduled offences under IPC, is still active and not quashed. The court held that the applicant could be prosecuted under PMLA as long as the scheduled offence exists, even if the applicant is not named in the scheduled offence.Conclusion:The court rejected the bail application, concluding that the applicant did not satisfy the twin conditions under Section 45 of PMLA, and there were no reasonable grounds to believe that the applicant is not guilty of the offence. The court emphasized the broad probabilities of the case and the nature of accusations, stating that the applicant's involvement in the alleged money laundering activities was sufficiently established.