TaxTMI 
TaxTMI 
2017 (9) TMI 1268
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....to that an investigation was conducted by the SFIO and on 31.03.2016 an investigation report under Section 241 of the Companies Act, 1956 was filled. Thereafter, on the basis of the aforesaid investigation report, on 29.11.2016 a Criminal Complaint No. 57463 of 2016 was filed by the SFIO against various accused persons (including the petitioners herein) for violation of the provisions under Sections 233/628 read with 211/240 (3) of the Companies Act and under Sections 420/468/477-A/120-B IPC before the Court of learned Additional Chief Metropolitan Magistrate (Central) Special Acts, Tis Hazari Courts, Delhi. 3. Subsequently, on 11.02.2017 the respondent/department on the basis of the aforesaid complaint registered a case ECIR/01/DLZO-II/2017, under Sections 3 & 4 of Prevention of Money Laundering Act, 2002 against the accused persons (including the petitioners herein). It is alleged in the said complaint that during the period of 2004 to 2010 the accused persons/petitioners entered into a criminal conspiracy for the object of providing accommodation entries to the various beneficiary companies with an aim of converting their unaccounted money through legitimate transactions by cha....
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....J dismissed the bail application of the petitioners. 6. Thereafter, on 18.05.2017 the respondent/department through its Assistant Director filed a complaint under Section 45 of Prevention of Money Laundering Act, 2002 for commission of offences of money laundering as defined under Section 3 and punishable under Section 4 of Prevention of Money Laundering Act, 2002 against the petitioners. 7. The present petitioners, i.e. (1) Virendra Jain and (2) Surendra Kumar Jain, have filed the present applications assailing various actions taken by the respondent/department in arresting the petitioners and calling them to appear before them without following the mandate of law as well as procedure established by law in violation of their Fundamental Rights as guaranteed under Article 21 of the Constitution of India. 8. The learned senior counsel appearing on behalf of the petitioners submits that the matter, inter alia, originated from an Income Tax raid conducted on 14.09.2010 leading to passing of an Assessment Order dated 28.03.2013 by the Income Tax Assessing Officer. The Assessment Order was challenged before the CIT (Appeals) and subsequently before the Income Tax Appellate Tribunal. ....
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....tted that mere filing of a complaint does not necessarily lead to an inference that either a cognizance has been taken or the offence has seen the light of the day as understood in ordinary legal parlance. 12. The learned senior counsel for the petitioners has further submitted that since the prosecution complaint stands filed, no useful purpose would be served by further incarceration of the petitioners in custody and they would be deprived of contesting their following cases:- a) Proceedings before the Income Tax Authority pursuant to the remand ordered by the CIT Appeals, wherein, the directions have been issued that petitioners should be given adequate opportunity and confronted with all material/evidence/statements; b) Contest the present case before the Trial Court, wherein, Prosecution Complaint has since been filed; c) Proceedings before the Adjudicating Authority in seisin of complaint filed by the respondent under Section 5(5) PMLA for attachment of their immovable property. 13. The learned senior counsel for the petitioners has further submitted that petitioners' conduct in cooperating with the investigation is undisputed and they have deep roots in society and the ....
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....he petitioners had filed a petition for amalgamation of the two companies before this Hon'ble Court and in those proceedings a report was submitted by the Registrar of Companies who had stated that there were certain anomalies in the functioning of the companies. The Ministry of Corporate Affairs thereafter initiated an investigation by SFIO under Section 241 of the Companies Act on 28.10.2013. The SFIO submitted investigation report to the Ministry of Corporate Affairs on 31.03.2016 and thereafter on 30.05.2016 the Ministry of Corporate Affairs granted sanction directing the SFIO to file a criminal complaint against the petitioners. On 29.11.2016 criminal complaint against 31 accused persons including the petitioners were filed under Sections 233/628 read with 211 and 240 (3) of the Companies Act, 1956 and Sections 420/468/477-A/120-B IPC and that criminal complaint remained pending and no cognizance was taken by the concerned Metropolitan Magistrate till 6th June, 2017. Without cognizance having been taken in the criminal complaint on 11th February, 2017, the present respondent/complainant lodged an ECIR for offences under Sections 3/4 of PMLA relying on the said criminal complai....
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.... the said case the Division Bench of Punjab and Haryana High Court had issued a certificate of appeal under Article 134 of the Constitution of India and an appeal was filed before the Hon'ble Supreme Court. The Hon'ble Supreme Court vide order dated 12.08.2016 while dismissing the said appeal clearly held that the judgment of the High Court is correct. Therefore, the issue of applicability of twin limitations now stands accorded approval by the Hon'ble Supreme Court, even if the applicability of twin limitations under Section 45 of PMLA are presumed to be applicable. There is no bar to grant bail as it is only a reasonable satisfaction that this Court is required to accord as to whether a case for bail is made out or not. In this context, the reliance is placed on the judgment of the Hon'ble Supreme Court in case Ranjitsing Brahmjeetsing Sharma vs. State of Maharashtra And Another; 2005 5 SCC 294 and two judgments of Bombay High Court in Anil Babulal Chokhra vs. Directorate of Enforcement, Mumbai & Anr.; Bail Appl. No. 1581/2017 dated 04.08.2017 as well in Kailash Aggarwal vs. The Enforcement Directorate Mumbai & Anr.; Bail Appl. No. 174/2017 dated 28.02.2017. 18. The learned ....
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....that doctrine of merger applies and in view of Gorav Kathuria (supra) twin limitations of Section 45 of PMLA will not apply. Regarding merits, it is submitted that the respondent/Enforcement Directorate has indulged in a gross abuse of the process of law. 20. It is further submitted that as per accusations the petitioners have received commission to the tune of about Rs. 1,11,00,000/- for the purpose of converting unaccounted money of Rs. 62.20 crore pertaining to M/s Jagat Projects Limited. There is absolutely no offence that unaccounted cash was either found from the premises of the petitioners through the raids conducted by Income Tax Department, SFIO or the respondent/Enforcement Directorate. The companies of the petitioners which have invested into the shares of M/s Jagat Projects Limited, no cash transaction has been made therein. At the relevant time when the shares were purchased there was no bar under the Companies Act for the payment of any premium. All this matter is sub-judice before various forums and it will be a matter of adjudication as to whether the petitioners have actually received the amount of Rs. 1,11,00,000/- as commission. The case of the petitioners is th....
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....sted by M/s Jagat Projects Ltd. into their sister concern M/s Divine Infracon Pvt. Ltd. for construction of Hotel, (now managed by Radisson Blu) at Plot No. 4, Sector-13, Dwarka, New Delhi. 23. The learned ASG has further submitted that Jain Brothers have received funds of Rs. 62.20 Crore in advance from M/s Jagat Projects Ltd. through Rajesh Aggarwal, Chartered Accountant and placed the funds, pertaining to M/s Jagat Projects Ltd., from the accounts of various firms into the account of M/s Tulika Securities Pvt. Ltd. for layering and then these funds were transferred to 26 companies for final investment into M/s Jagat Projects Ltd. He has further submitted that for the entire process of receiving funds pertaining to M/s Jagat Projects Ltd., in the accounts of various firms and from there into the account of M/s Tulika Securities Pvt. Ltd. for layering and then transferring to the accounts of their 26 companies for final investment into M/s Jagat Projects Ltd., the petitioners, i.e. (1) Virendra Jain and (2) Surendra Kumar Jain (Jain Brothers), have received commission to the tune of Rs. 1,11,96,000/- through their companies for converting unaccounted money of Rs. 62.20 Crore belo....
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....n to the tune of Rs. 1,11,96,000/- through their companies for converting unaccounted money of Rs. 62.20 Crore belonging to M/s Jagat Projects Ltd. into their share capital/premium. Thus, the petitioners have directly attempted to indulge and knowingly assisted an actually involved in the process of concealment, possession, acquisitions, use and projecting it as untainted property, and thereby they have committed an offence of money laundering. 25. The learned ASG on behalf of the respondent has submitted that at the very outset it becomes essential in the context of this matter to appreciate the parameters of grant or refusal of bail as envisaged under Section 45 of PMLA, 2002. It is noteworthy that Section 45 of PMLA entails with rigours before another decision is taken as to grant or refusal of bail. Rigours are that before a person can be considered to be released on bail. Public prosecutor has to be given an opportunity to oppose the application and if public prosecutor opposes the application then the Court will have to be satisfied that there are reasonable grounds for believing that the petitioner is not guilty of the offence of Money Laundering and that he is not likely t....
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....ent in Gautam Kundu (supra) was still the good law, so far as the question regarding limitations prescribed in Section 45 (1) of PMLA are concerned, in the said judgment, it has also been noticed that in Gorav Kathuria (supra), Union of India was neither present and hence could not be heard and more so, said judgment could not be taken as a binding precedent because the judgment itself was contrary to the law laid down by the Hon'ble Supreme Court in Gautam Kundu (supra). The respondent/department would further urge that the above view of the Karnataka High Court has been followed by several other High Courts as would be clear from the judgment of Pradeep Nirankarnath Sharma vs. Directorate of Enforcement; MANU/GJ/1110/2017. 28. It is, therefore, clear from the conjoint reading of the above judgment that listing of the schedule offence in Part-A by virtue of amendment in 2013 is not at all the relevant factor for deciding a bail application under Section 45 of PMLA and does not in any manner dilute or eclipse the twin rigours of Section 45 of PMLA which expect the Court considering the bail application to come to a satisfaction to the fact that there are reasonable grounds for....
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....ted for the reason that on 11.02.2017, the Court had not taken cognizance on the complaint filed by SFIO under the schedule offence the same is also incorrect because there is no requirement in law that for initiating an inquiry or investigation under PMLA the Court should have taken cognizance of the schedule offence. It is clear from the reading of the Section 19 of the Act that the factum of taking or not taking the cognizance of schedule offence is irrelevant and immaterial for the purposes of reason to believe under Section 19 for making arrest. The schedule offence has relevance only to the extent that for initiating inquiry under PMLA thereto either be an FIR under schedule offence or a complaint under schedule offence. The registration of FIR or the filing of complaint is only a trigger point for starting investigation under PMLA and in the entire Act it is nowhere mandatory that the authorities concerned with PMLA investigation should wait till such time cognizance of schedule offence is taken by the concerned Court. 31. The learned counsel for the respondent/department would therefore urge that none of the submissions made for grant of bail hold good because the investig....
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.... Ltd. failed to explain the payment of Rs. 1,16,46,000/- Crore @ 1.80% on the total accommodation entries of Rs. 64.70 Crore made to the petitioners for securing accommodation entries has been an unexplained expenses incurred during the assessment year 2009-10. The allegations qua against the present petitioners are that (1) Virendra Jain and (2) Surendra Kumar Jain (Jain Brothers) are involved in activities of laundering of money for clients having unaccounted cash and were providing the facility through skilled persons Chartered Accountant, Rajesh Aggarwal to make the unaccounted cash to white money and M/s Jagat Projects Ltd. succeeded in doing so to the tune of Rs. 64.70 Crore in the form of legitimate transaction through illegal act by way of share subscription by various companies controlled by Jain Brothers (petitioners herein) to avoid the income tax liabilities and obtained consequential payment of Rs. 1,16,40,000/- Crore @ 1.80% on the total accommodation entries of Rs. 64.70 Crore. The said illegal activity is the schedule offence under the Prevention of Money Laundering Act, 2002. 34. The modus operandi adopted by the petitioners as per the counter affidavit filed by t....
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....62.20 Crore in the share capital of M/s Jagat Projects Ltd. @ premium of Rs. 390/- per share of Rs. 10/- each share. It further reveals that the said 26 companies which made investment in share capital of M/s Jagat Projects Ltd. through Rajesh Aggarwal, Chartered Accountant, got profit of approximately 1.50% by way of fund which was sent by Rajesh Aggarwal, Chartered Accountant to the petitioner's group companies for investment in M/s Jagat Projects Ltd. The profit received from Rajesh Aggarwal on behalf of M/s Jagat Projects Ltd. has gone up to Rs. 1,11,96,000/-. 37. Further, it is revealed that out of the 95 companies which were managed and controlled by the petitioner-Surendera Kumar Jain and his brother Virendra Jain, 17 companies are registered at 3198/15, 4th Floor, Gali No-1, Sangatrahsna, Paharganj, New Delhi-110055 and 24 persons who are directors in these 17 companies are having the same residential address. Further, 11 companies are registered at 209, Bhanot Plaza-II, 3 DB Gupta Road, Paharganj, New Delhi-110055 and 15 persons who are directors in these 11 companies have the same residential address. The premises 3198/15, 4th Floor, Gali No-1, Sangatrahsna, Pahargan....
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.... the financial health of the country. 35. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations." (emphasis supplied) 42. The Apex Court in Gautam Kundu v. Manoj Kumar, Assistant Director, Eastern Region Directorate of Enforcement (Prevention of Money Laundering Act) Government of India reported in AIR 2016 SCC 106 while dealing with an SLP, wherein an application for bail under Section 439 Cr.P.C. was rejected by the High Court, on merit has made the following observations:- "28. Before dealing with the application for bail on merit, it is to be considered whether the provisions of Section 45 of the PMLA are binding on the High Court while considering the application for bail under Section 439 of the Code of Criminal Procedure. There is no doubt that PMLA deals wit....
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....ndering and the burden to prove that the proceeds of crime are not involved, lies on the Appellant." 33.......... We have noted that Section 45 of the PMLA will have overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them. As mentioned earlier, Section 45 of the PMLA imposes two conditions for grant of bail, specified under the said Act. We have not missed the proviso to Section 45 of the said Act which indicates that the legislature has carved out an exception for grant of bail by a Special Court when any person is under the age of 16 years or is a woman or is a sick or infirm. Therefore, there is no doubt that the conditions laid down Under Section 45A of the PMLA, would bind the High Court as the provisions of special law having overriding effect on the provisions of Section 439 of the Code of Criminal Procedure for grant of bail to any person accused of committing offence punishable Under Section 4 of the PMLA, even when the application for bail is considered Under Section 439 of the Code of Criminal Procedure." (emphasis supplied) 43. In the instant petitions the petitioners, i.e. (1) Virendra Jain and (2) Suren....