2024 (11) TMI 927 - HC - Money Laundering

Regular bail denied in money laundering case involving fictitious transactions and fraudulent bank loans worth Rs.3035 crores

Siddharth Kumar Versus Enforcement Directorate

Delhi HC dismissed regular bail application in money laundering case involving financial irregularities. Petitioner allegedly participated in fictitious ... Seeking grant of regular bail - Money Laundering - proceeds of crime - financial irregularities - involvement in paper sale transaction without conducting any actual business transactions which resulted in false inflation of financials - Section 45 of PMLA - HELD THAT:- Apart from the statements of the witnesses recorded under Section 50 of PMLA, the data manifesting relationship of stock, turn over and borrowings by SBFL reflects that SBFL started taking loans from different banks with the help of inflated turn over and fictitious closing stocks. The fact that the stock worth Rs.3035.52 crores was declared as obsolete/damaged by pest without suitably accounting for the same, prima facie, reflects mala fide intention. There appears to be sufficient material on record, which reflects that the petitioner was knowingly involved in the process and also appears to be the beneficiary of the proceeds of the crime. In the facts and circumstances, there do not appear to be reasonable grounds for believing that petitioner is not guilty of offence as provided under Section 45 of PMLA. Considering the evidence on record, serious nature of economic offence whereby the public funds to the tune of Rs.3035.52 crores have been siphoned off, and the fact that application preferred on behalf of co-accused Tarun Kumar stands rejected by the Hon’ble Apex Court, this Court is of the considered opinion that the petitioner is not entitled to bail. Application is accordingly dismissed. Issues Involved:1. Application for bail under Section 439 of the Code of Criminal Procedure, 1973.2. Involvement in offenses under the Prevention of Money Laundering Act, 2002.3. Allegations of financial irregularities and money laundering by Shakti Bhog Foods Ltd. (SBFL).4. The role of the petitioner in the alleged offenses and his connection to the proceeds of crime.5. Consideration of the petitioner's custody duration and the delay in trial as grounds for bail.6. Evaluation of evidence and statements recorded under Section 50 of the PMLA.7. Comparison of the petitioner's role with co-accused individuals whose bail applications were denied or granted on different grounds.Issue-wise Detailed Analysis:1. Application for Bail under Section 439 Cr.P.C.:The petitioner sought regular bail in connection with an ECIR registered under the Prevention of Money Laundering Act, 2002. The application was considered in light of the allegations against the petitioner and the evidence presented by the Enforcement Directorate.2. Involvement in Offenses under the Prevention of Money Laundering Act, 2002:The case involved allegations against the petitioner for his role in money laundering activities as part of the operations of SBFL. The Enforcement Directorate argued that the petitioner was actively involved in illegal transactions, including diversion of loan funds and round-tripping, which led to significant financial losses for banks.3. Allegations of Financial Irregularities and Money Laundering by SBFL:The forensic audit conducted by BDO India LLP revealed several discrepancies in SBFL's financial statements. The audit report indicated that SBFL failed to discharge its loan liabilities, causing a loss of Rs. 3269.42 crores to a consortium of banks. The investigation highlighted that the petitioner and others were involved in creating a complex web of transactions to channel borrowed funds through various entities.4. The Role of the Petitioner in the Alleged Offenses and His Connection to the Proceeds of Crime:The petitioner was identified as a key figure in SBFL, holding significant positions in related companies. The Enforcement Directorate presented evidence showing the petitioner's involvement in fraudulent activities, including the creation of fake invoices and manipulation of financial records to inflate SBFL's turnover. The petitioner was alleged to have benefited from the proceeds of crime, receiving substantial remuneration and other financial gains.5. Consideration of the Petitioner's Custody Duration and Delay in Trial as Grounds for Bail:The petitioner argued that he had been in custody for over 26 months, which constituted a significant portion of the maximum punishment under Section 4 of the PMLA. He contended that the prolonged trial should be a factor in granting bail. However, the court emphasized that the seriousness of the offense and the evidence against the petitioner outweighed the consideration of custody duration.6. Evaluation of Evidence and Statements Recorded under Section 50 of the PMLA:The court examined statements from various individuals recorded under Section 50 of the PMLA, which implicated the petitioner in the alleged offenses. The statements corroborated the evidence of financial misconduct and money laundering activities orchestrated by SBFL under the petitioner's direction.7. Comparison of the Petitioner's Role with Co-accused Individuals:The court noted that the petitioner's role was more significant compared to co-accused Tarun Kumar, whose bail application was rejected by the Supreme Court. The court distinguished the petitioner's case from other co-accused who were granted bail on medical grounds or had lesser involvement in the offenses.Conclusion:The court concluded that there were no reasonable grounds to believe that the petitioner was not guilty of the offenses under the PMLA. Given the serious nature of the economic offenses and the substantial evidence against the petitioner, the application for bail was dismissed. The court emphasized that the decision did not reflect an opinion on the merits of the case, and pending applications, if any, were also disposed of.