2017 (5) TMI 312 - HC - Money Laundering

Court Denies Bail, Emphasizes PMLA Conditions Override Cr.P.C.

The court dismissed the bail application, citing serious allegations against the petitioner, the severity of potential punishment, and lack of a credible ... Regular bail under Section 439 Cr.P.C. seeked in case registered under Sections 3 & 4 of Prevention of Money Laundering Act, 2002 - Held that:- Antecedents of the petitioner are also to be noted. Undisputedly, the petitioner along with others is also involved in case FIR No.197/2016 registered under Section 420/409/188/120B IPC on 14.12.2016 by Crime Branch and ECIR No.14/DZ-II/2016 registered on 16.12.2016 by ED for the offences under Sections 3/4 PMLA. It is alleged that on 10.12.2016 at around 10.00 p.m., raid was conducted by Crime Branch and Income Tax Department at the petitioner’s office premises jointly. It is alleged that during the said raid ₹ 13.62 crores were recovered which included ₹ 2.62 of new currency in the ₹ 2000 denomination. Record reveals that during 06/08.10.2016, there was also income tax raid in the office and residential premises of the petitioner. In the said raid, the petitioner had surrendered about ₹ 128 crores which related to past investment in his company. It is to be ascertained as to, to whom the huge cash recovered in the present proceedings belonged as there is no reliable or credible document on record to infer if the petitioner has obtained it from any legal / legitimate sources. Possibility of it to be ‘proceeds of crime’ can’t be ruled out.Taking into consideration the serious allegations against the petitioner and other factors including severity of the punishment prescribed in law, find no sufficient ground to grant bail to the petitioner. Bail application dismissed. Issues Involved:1. Regular bail under Section 439 Cr.P.C.2. Applicability of Sections 3 & 4 of the Prevention of Money Laundering Act, 2002 (PMLA).3. Jurisdiction of the Enforcement Directorate (ED).4. Violation of Demonetization Policy.5. The role of the petitioner and others in the alleged money laundering activities.6. Evidentiary value of statements recorded under Section 50 PMLA.7. Conditions for bail under Section 45 of PMLA.Detailed Analysis:1. Regular Bail under Section 439 Cr.P.C.The petitioner sought regular bail under Section 439 Cr.P.C. in a case registered under Sections 3 & 4 of the PMLA. The petitioner argued that he had been in custody since 28.12.2016 and had joined the investigation on various dates. He contended that his arrest was premature as the offences alleged in FIR No.205/2016 had not been prima facie established, no charge-sheet had been filed, and the investigation was still at a preliminary stage.2. Applicability of Sections 3 & 4 of PMLAThe petitioner argued that Sections 3 & 4 of PMLA were not attracted as the 'scheduled offences' required to be proven before invoking PMLA provisions. The petitioner contended that an individual could only be arraigned under PMLA if 'scheduled offences' were committed and proceeds from such offences were laundered. The petitioner also argued that no trial under Sections 3 & 4 of PMLA could proceed without a charge-sheet being filed in the case emanating from FIR No.205/2016.3. Jurisdiction of the Enforcement Directorate (ED)The petitioner argued that the ED had no jurisdiction to investigate the case as only the Delhi Police was competent to do so. The petitioner contended that the role of the ED as an investigating agency comes into play only when a 'scheduled offence' is prima facie made out and 'proceeds of crime' have been identified and used to launder money.4. Violation of Demonetization PolicyThe petitioner argued that the allegations in FIR No.205/2016 and the ECIR/18 did not constitute a violation of the Demonetization Policy. The petitioner contended that the acts of depositing cash and preparing Demand Drafts, which were never encashed, were permissible under Sections 2(iii) and 2(vii) of the Demonetization Policy. The petitioner further argued that the ED had no jurisdiction to investigate the case as the appropriate authority was the Income Tax Department.5. The Role of the Petitioner and Others in the Alleged Money Laundering ActivitiesThe Addl. Solicitor General argued that the petitioner was the mastermind and beneficiary of the entire transactions. The investigation revealed that from 15.11.2016 to 19.11.2016, there was a huge cash deposit of Rs. 31.75 crores by Raj Kumar Goel and his associates, and Demand Drafts amounting to Rs. 38 crores were issued in fictitious names. The investigation also revealed that the petitioner and his associates were involved in a deep-rooted racket to convert demonetized currency into monetized currency.6. Evidentiary Value of Statements Recorded under Section 50 PMLAThe Addl. Solicitor General argued that the statements recorded under Section 50 PMLA have evidentiary value. The statements of various individuals confirmed that the money in old currency pertained to the petitioner and the conspiracy was executed on his instructions.7. Conditions for Bail under Section 45 of PMLAThe court noted that Section 45 of PMLA puts stringent conditions for the release of an accused charged under part A of the Schedule on bail. These conditions have an overriding effect over the general provisions of Cr.P.C. The court also noted that the petitioner was involved in other cases of similar nature and had a history of large cash recoveries in past raids.Conclusion:The court dismissed the bail application, finding no sufficient ground to grant bail to the petitioner. The court noted the serious allegations against the petitioner, the severity of the punishment prescribed in law, and the lack of a credible explanation for the source of the huge cash deposits. The court also observed that the proceedings under PMLA are distinct from the proceedings of the 'scheduled offence' and are not dependent on the outcome of the investigation conducted in the 'scheduled offences'. The court emphasized that the conditions specified in Section 45 of the PMLA are mandatory and need to be complied with.