2023 (6) TMI 650 - HC - Money Laundering

Woman Granted Bail Under PMLA Exception Due to Gender; Court Finds No Flight Risk or Evidence Tampering Concerns.

The HC granted bail to the applicant, a woman, under the proviso to Section 45(1) PMLA, exempting her from the twin conditions for bail due to her gender. ... Proviso to Section 45(1) of PMLA - relaxation for a woman - Mens rea in offence of money laundering under Section 3 PMLA - Triple test for grant of bail (flight risk, tampering with evidence, influencing witnesses) - Broad probabilities test at bail stage - appraisal of prima facie case - Reliability and limited weight of statements under Section 50 PMLA at bail stageProviso to Section 45(1) of PMLA - relaxation for a woman - Article 15(3) - special provision for women - Whether the proviso to Section 45(1) PMLA applies to the applicant by virtue of her being a woman. - HELD THAT: - The Court held that the proviso to Section 45(1) of the PMLA, which carves out a relaxation for persons 'below sixteen years of age; a woman; or one who is sick or infirm', is rooted in the legislative competence under Article 15(3) and must be given a liberal, non subdivided reading. The Court rejected the respondent's attempt to create ad hoc sub categories of women based on education, occupation or social status, holding that such sub classification lacks intelligible differentia and would violate Article 14. Prior coordinate decisions treating the proviso as an exception were followed; once an accused falls within the proviso by being a woman, the twin conditions of Section 45(1) need not be applied to her. The applicant therefore falls within the proviso to Section 45(1) PMLA, although she must still satisfy the judicially recognised triple test for grant of bail. [Paras 24, 28, 30, 31, 32]The proviso to Section 45(1) PMLA applies to the applicant as a woman and the twin conditions of Section 45(1) do not apply to her.Mens rea in offence of money laundering under Section 3 PMLA - Broad probabilities test at bail stage - Whether, on the materials before the Court, the applicant prima facie possessed the requisite mens rea for the offence of money laundering and could be denied bail on merits. - HELD THAT: - The Court emphasised that mens rea is an essential ingredient of the offence under Section 3 PMLA and that at the bail stage the court is to examine broad probabilities rather than weigh evidence minutely. The respondent's material (transactional records and Section 50 statements) did not conclusively establish that the applicant knew funds were proceeds of crime. The applicant furnished prima facie reasonable explanations for each transaction relied upon by the prosecution (nominee/paper directorships, absence of managerial control, returns of certain amounts, explanation for personal receipts as professional fees or rent, lack of link to certain companies). The Court observed pick and choose prosecution aspects and gaps in the material, and held that knowledge imputable solely by virtue of being the wife of a principal accused or by holding fleeting directorships was not sufficient to deny bail. Hence, on broad probabilities the applicant had a good prima facie case that she did not knowingly handle proceeds of crime. [Paras 52, 53, 54, 55, 56]Prima facie the applicant has made out a reasonable case that she did not possess the requisite mens rea for money laundering; the prosecution materials do not negate her prima facie defence on broad probabilities.Reliability and limited weight of statements under Section 50 PMLA at bail stage - Admissibility of public reports/newspaper clippings at bail stage - Whether the allegations linking the applicant to the Trikar Group and to laundering through offshore entities establish a prima facie case against her. - HELD THAT: - The Court analysed the prosecution reliance on the Pandora Papers, a newspaper report, and Section 50 statements of various witnesses concerning the Trikar Group. It noted significant inconsistencies between statements of Indrajit Zaveri, Anuj Malik and Pranav Kumar and observed that the common thread indicated Trikar was largely driven by Mr. Sanjay Chandra. The Court declined to place heavy reliance on Section 50 statements or on newspaper material at the bail stage and held that the statements require reconciliation and confrontation at trial. There was nothing on record establishing the applicant's active control or day to day management of the offshore entities prior to 2017; the transfer of shareholding in 2017 on instructions of Mr. Sanjay Chandra did not, by itself, make her prima facie guilty of laundering during the earlier period. Accordingly, the Trikar related allegations did not, on the present material, make out a prima facie case against the applicant. [Paras 66, 67, 68, 69, 70]Material linking the applicant to Trikar and offshore laundering is inconsistent and insufficient on broad probabilities to establish a prima facie case against her at the bail stage.Triple test for grant of bail (flight risk, tampering with evidence, influencing witnesses) - Imposition of stringent bail conditions - Whether the applicant satisfies the triple test and whether bail should be granted subject to conditions. - HELD THAT: - The Court examined the three limbs: (i) flight risk - earlier denial of interim relief by the Supreme Court was noted but subsequent orders and the Sessions Court's view, the applicant's international travel history, deposition of passport with ED and undertaking to renounce foreign citizenship allayed flight risk concerns; (ii) tampering with evidence - documents are largely in ED custody and there was no material showing interference with evidence; (iii) influencing witnesses - WhatsApp chats did not disclose monetary or managerial instructions and could be consistent with communications permitted during jail visits; there was no direct material of witness tampering. Considering the applicant falls within the proviso to Section 45(1), the Court held she must satisfy the triple test which can be addressed by stringent conditions. Consequently, bail was allowed on furnishing bond and on specific conditions including surrender of foreign passport, renunciation of foreign citizenship within prescribed time, restrictions on travel, cooperation with investigation, and non contact with witnesses. [Paras 81, 82, 83, 84, 85]The applicant does not, on the present material, fail the triple test; bail is granted subject to stringent conditions including personal bond, surrender/renunciation of foreign citizenship/passport, non departure, cooperation with investigation and non interference with witnesses or evidence.Final Conclusion: The Court held that the proviso to Section 45(1) PMLA applies to the applicant as a woman; on broad probabilities the prosecution has not established requisite mens rea or a prima facie case against her in respect of the alleged laundering (including Trikar related allegations); the applicant did not satisfy the triple test concerns such as flight risk or tampering in a manner warranting continued custody; accordingly bail was allowed subject to specified stringent conditions. Issues Involved:1. Applicability of Section 45 PMLA and its proviso for granting bail to a woman.2. Merits of the case and the applicant's involvement in money laundering.3. Satisfaction of the triple test for granting bail: flight risk, tampering with evidence, and influencing witnesses.Summary:Applicability of Section 45 PMLA:1. Proviso to Section 45 PMLA: The court examined whether the proviso to Section 45(1) of the PMLA, which provides relaxation for women, minors, and infirm persons, applies to the applicant. It was noted that the proviso is based on Article 15(3) of the Constitution, allowing special provisions for women and children.2. Interpretation of 'Woman': The court emphasized that the PMLA does not define 'woman' and that the intent of the Constitution and the PMLA is not to classify women based on education, occupation, or social standing. The court rejected the respondent's argument that the applicant's status as a well-educated businesswoman should exclude her from the proviso's benefits.3. Precedents: The court referred to previous judgments, including Devki Nandan Garg v. Directorate of Enforcement and Komal Chadha v. SFIO, which supported the view that the proviso to Section 45(1) PMLA provides relaxation for women without further sub-classification.4. Conclusion: The court concluded that the applicant, being a woman, falls within the proviso to Section 45(1) PMLA, exempting her from the twin conditions for bail under this section.Merits of the Case:1. Mens Rea: The court noted that mens rea (criminal intent) is crucial for the offense of money laundering under Section 3 PMLA. The court found that the applicant's knowledge of dealing with proceeds of crime could only be determined after evidence is led.2. Role in Companies: The court found that the applicant's involvement in Prakausali and Mayfair was limited and that she was not involved in the day-to-day affairs or key managerial decisions. The court also noted that other family members who were directors in these companies were not named as accused.3. Specific Allegations: The court addressed various allegations, including the transfer of Rs. 107.4 crores, Rs. 43.7 crores, Rs. 7 crores, and other amounts. The court found that the applicant provided prima facie reasonable explanations for these transactions, and her involvement in these transactions could only be ascertained after a full trial.4. Trikar Group: The court noted that the Trikar Group was primarily managed by Sanjay Chandra and others, and the applicant's involvement was limited to being a nominee director from 2017 onwards. The court found inconsistencies in the statements of witnesses regarding the applicant's role in the Trikar Group.Satisfaction of the Triple Test:1. Flight Risk: The court considered the applicant's citizenship of the Dominican Republic and her travel history. The court noted that the applicant had traveled in and out of India multiple times and had not attempted to flee. The applicant's passport was already with the ED, and she expressed willingness to renounce her Dominican Republic citizenship as a bail condition.2. Tampering with Evidence: The court found no evidence that the applicant tampered with evidence or influenced witnesses. All relevant documents were already in the custody of the ED.3. Influencing Witnesses: The court found no incriminating evidence in the WhatsApp messages between the applicant and her husband, Sanjay Chandra. The court noted that the applicant was not involved in any criminal activity during her custody and that the trial was yet to commence.Conclusion:The court granted bail to the applicant, subject to several conditions, including furnishing a personal bond, surrendering her Dominican Republic passport, not leaving the country, and not tampering with evidence or influencing witnesses. The court emphasized that these observations were for the purpose of deciding the bail application and would not affect the merits of the case.