TaxTMI 
TaxTMI 
2022 (3) TMI 232
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....that one M/s Aman Hospitality Pvt. Ltd. (hereinafter, referred to as 'AHPL'), a group entity of Ambience Group which was founded by the applicant, purchased a plot of commercial land at Shahdara in an open auction held by the DDA on 03.03.2006 for the purpose of construction and development of a hotel. Upon technical evaluation, the cost of the hotel project was estimated as Rs. 867 crores, in which promoters' contribution was fixed @ Rs. 287 crores and Term loan @ Rs. 580 crores. Based on this estimate, AHPL approached J&K Bank, Ansal Plaza Branch through the applicant, with a proposal dated 12.03.2009 for sanction of loan of Rs. 75 crores and BG facility of Rs. 15 crores towards financial closure. Later, the development strategy was changed and it was decided that a luxury hotel would be constructed instead of two hotels of lower categories. The step having resulted in cost escalation, the feasibility of the project, the cost and the source of finance were re-assessed by PNB Investment Services Ltd., and the loan amount was worked out @ Rs. 810 crores and promoter's contribution was fixed @ Rs. 462 crores. The total project cost was estimated as Rs. 1272 crores. In due course,....
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....mbience Group companies and for meeting expenses of the applicant, his family and his friends. 6. The applicant joined investigation between 31.07.2020 and 28.07.2021. On 28.07.2021, he was arrested in the present case and remained in custody of the respondent till 07.08.2021. Thereafter, he was remanded to judicial custody. His first application seeking regular bail was dismissed by the Sessions Court on 10.09.2021, subsequent to which the prosecution complaint came to be filed on 24.09.2021. The applicant preferred another bail application, urging that the filing of the complaint by the respondent constituted a material change in circumstance. However, his second bail application was also dismissed by the Sessions Court on 27.10.2021. Proceedings before the Special Court 7. Vide order dated 10.09.2021, passed in respect of the first bail application of the applicant, it was noted by the Special Court that in January 2018, the applicant/accused had attempted to settle the total outstanding liability of about Rs. 783.96 crores towards the principal amount for a paltry sum of Rs. 286.95 crores and the same showed his intent to embezzle public money. It was further observed ....
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.... turnkey contractor, to entities who had given financial assistance to AHPL/APL for the construction of the hotel. Besides, the loan was disbursed over a long period of time and lenders, engineers visited the site time and again to inspect the progress of the project. It has further been alleged that funds were siphoned off for making FDs and for diversion of materials to other projects, and the same constituted 'proceeds of crime', but the averment to the effect is also misplaced. The terms and conditions of the loan sanctioned to AHPL required the company to first invest equivalent/higher amount in the project and only then the loan amounts were to be disbursed. Accordingly, even prior to the disbursal of the loan amount, the promoters had invested Rs. 267.33 crores, which fact was duly acknowledged at the time of sanction. Thereafter, the amount sanctioned to AHPL was utilized in the construction of the hotel, which has 480 rooms with 10 lacs square feet covering area with 30,000 square feet banquet area, and is completely functional since its inauguration. The completion of the hotel project and its being completely functional indicate that there has been no diversion ....
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....rt on the ground that there was no change in circumstance but the dismissal was erroneous, inasmuch as after dismissal of the first bail application, the ED had filed the prosecution complaint and the same constituted a material change in circumstance. (J) Establishing of an offence under PMLA involves three tests - the commission of an act, the said act resulting in proceeds of crime, and the projection of the proceeds of crime as untainted. These core ingredients being cumulative, conjunctive and consequential in nature, and the respondent having failed to show generation of any 'proceeds of crime' as defined under Section 2(1)(u) PMLA, offence under Section 3 PMLA is not made out. As a necessary corollary, the burden of proof would have fallen on the applicant only if the allegations had been established or had any basis. (K) Economic offences cannot be classified separately in matters of bail. In fact, it is the length of the punishment that should form a guiding factor. (L) The charge sheet in the scheduled offence, which entails punishment upto life imprisonment, came to be filed before the concerned Court without seeking arrest of the applicant. Th....
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....l Bureau of Investigation reported as 2007 SCC OnLine Del 450, Babu Singh and Others v. State of U.P. reported as (1978) 1 SCC 579, Laxman Irappa Hatti and another v. State of Maharashtra reported as 2004 SCC OnLine Bom 599, Mahima v. State of Maharashtra reported as 2015 SCC OnLine Bom 6161, Sri Mohammed Nalpad Haris v. State of Karnataka by Cubbon Park Police Station reported as 2018 SCC OnLine Kar 1034, Mohan Raikwar v. State of M.P. reported as 1999 SCC OnLine MP 104, Gayatri Devi v. State & Ors. reported as 2011 SCC OnLine Del 4061, Nisha Arya v. The State (NCT of Delhi) reported as 2016 SCC OnLine Del 4533, Mrs. Shivani Rajiv Saxena v. Directorate of Enforcement & Anr. reported as 2017 SCC OnLine Del 10452, Munawar v. State of Maharashtra and Others reported as (2021) 3 SCC 712, H.B. Chaturvedi v. C.B.I. reported as 2010 SCC OnLine Del 2155, Directorate of Enforcement v. Gagan Dhawan reported as 2019 SCC OnLine Del 9521, Awanish Kumar Mishra v. State reported as 2021 SCC OnLine Del 4786, Suresh Kalmadi v. CBI reported as 2012 SCC OnLine Del 361, Mahesh Kumar & Ors v. Central Bureau of Investigation reported as 2013 SCC OnLine Del 3903, Raneef (Supra), Shameet Mukherjee v. Sta....
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....f the Finance Bill, 2018, which reads as under :- "(e) in section 45, in sub-section (1), -- (i) for the words "punishable for a term of imprisonment of more than three years under Part A of the Schedule", the words "under this Act" shall be substituted; (ii) in the proviso, after the words "sick and infirm,", the words "or is accused either on his own or along with other co-accused of moneylaundering a sum of less than one crore rupees" shall be inserted;" It was urged that by virtue of the Finance Act, 2018, the only amendment made in Section 45(1) PMLA is that the term "punishable for a term of imprisonment of more than three years under Part A of the Schedule" has been substituted with the term "under this Act" and the same does not result in revival of the twin conditions. (Q) Reliance was placed on the decisions in Sameer Magan Bhujbal v. Assistant Director, Directorate of Enforcement and Others reported as 2019 SCC OnLine Bom 7574, Dr. Vinod Bhandari v. Asstt. Director reported as 2018 SCC OnLine MP 1559, Okram Ibobi Singh v. Directorate of Enforcement with its Headquarter at New Delhi through the Director of Enforcement reported ....
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....33 crores upto 31.03.2009 towards the twin hotel project, out of which Rs. 189.76 crores were spent on land and site development and Rs. 65.78 crores were spent on cost of building and furnishing, Furniture and interior, P&M, Fixed Assets etc. He further drew attention of the Court to the complaint filed in the present case, wherein it has been stated that an amount of Rs. 267.33 crores has been spent by the applicant from his own pocket and Rs. 593 crores have been contributed by the applicant's family and friends. Reference was made by the learned Senior Counsel to the recent decision of the Punjab and Haryana High Court in Sukhpal Singh Khaira v. Assistant Director, Enforcement Directorate, CRM-M No. 51885/2021. Contentions made on behalf of the respondent/ED 11. Per contra, Mr. Zoheb Hossain, learned Special Counsel appearing for the respondent, vehemently opposed the bail application and made the following submissions:- (A) AHPL, a private limited company of which the applicant is the promoter/Director, took a loan of Rs. 810 crores and Bank Guarantee facility of Rs. 60 crores from a consortium of banks, led by J&K Bank, in respect of the project in question. Th....
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....he two entities were controlled by the applicant, as the directors/owners/individuals therein were either his relatives or employees of the Ambience Group companies. The amounts received by the two entities were again transferred to the credit of other companies of Ambience Group, and ultimately diverted for purposes other than implementation of the hotel project, such as for settling loans of Ambience Group companies and for making fixed deposits. Till date, Rs. 155.29 crores have been detected as having been diverted. (F) Investigation has revealed that besides diversion of money, the accused also engaged in diversion of materials to other project sites of Ambience Group. As the payments towards said materials were recorded in the expenses book of AHPL for its hotel project at Shahdara, the diversion amounted to generation of 'proceeds of crime' as defined under Section 2(1)(u) read with Section 3(1)(v) PMLA. With respect to the allegation of diversion of materials, reliance was placed on the statements recorded under Section 50 PMLA of vendors, including M/s JK Cement Ltd., M/s JK Lakshmi Cement, M/s Shree Cement Ltd., M/s KL Rathi Steel, M/s RGTL Industries Lt....
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....nt made in the provision by virtue of Finance Act, 2018, has held:- "49. ...Undoubtedly, the Legislature has power and competence to amend the provisions of the Act. Unless the amended provision is struck down by the Courts, it cannot be watered down. Since after the amendment the entire complexion of section 45 has been changed, we are not in agreement with the contention that the entire section has to be re-enacted by way of amendment after decision in the case of Nikesh Shah (Supra). Therefore, in our opinion, the twin conditions would revive and operate by virtue of Amendment Act, which is on date in force. In view of that, we answer the reference by stating that the twin conditions in section 45(1) of the 2002 Act, which was declared unconstitutional by the judgment of the Apex Court in Nikesh T.Shah Vs. Union of India (2018) 11 SCC 1, stand revived in view of the Legislative intervention vide Amendment Act 13 of 2018." It was also urged that placing of reliance on various Single-Bench decisions of the High Courts in connection with the issue is of no use to the applicant, considering the decision rendered by a Division Bench in Ajay Kumar (Supra) and the rec....
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....ted that no evidence has been placed on record to show that the applicant was in any way connected with said transfer. In fact, the transfer took place in routine manner. Thereafter, the enhanced sum was sanctioned in favor of AHPL because it had achieved financial closure and the project had progressed manifold. In this regard, he also placed reliance on the statement recorded under Section 50 PMLA of Sh. Yasaduq Ahmad Dar, Vice President (C&CB Department), Corporate Headquarters, Srinagar, who stated that both loan proposals, one submitted by Ms. Rajni Saraf and the other by Sh. Rakesh Karyal, were processed by him and in connection therewith, there was no pressure. 13. I have heard learned counsels for the parties at length and have also gone through the written submissions as well as the rejoinder submissions which have been placed on record on their behalf. Analysis 14. Article 21 of the Constitution of India guarantees a right to personal liberty to every person, and thus, there is no gainsaying that bail is the rule and jail an exception. Before proceeding to analyze the facts of the present case and bearing this principle in mind, I deem it expedient to first recap....
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....C 286, it was noted that while deciding the question of bail, Courts must strike a balance between the interest of the society in general and the right of an accused to personal liberty. While stressing on the importance of achieving said balance, the Supreme Court held:- "15. There is no denying the fact that the liberty of an individual is precious and is to be zealously protected by the courts. Nonetheless, such a protection cannot be absolute in every situation. The valuable right of liberty of an individual and the interest of the society in general has to be balanced. Liberty of a person accused of an offence would depend upon the exigencies of the case. It is possible that in a given situation, the collective interest of the community may outweigh the right of personal liberty of the individual concerned. In this context, the following observations of this Court in Shahzad Hasan Khan v. Ishtiaq Hasan Khan are quite apposite : (SCC p. 691, para 6) "6. ... Liberty is to be secured through process of law, which is administered keeping in mind the interests of the accused, the near and dear of the victim who lost his life and who feel helpless and believe that ....
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.... 22. From the earliest times, it was appreciated that detention in custody pending completion of trial could be a cause of great hardship. From time to time, necessity demands that some unconvicted persons should be held in custody pending trial to secure their attendance at the trial but in such cases, "necessity" is the operative test. In this country, it would be quite contrary to the concept of personal liberty enshrined in the Constitution that any person should be punished in respect of any matter, upon which, he has not been convicted or that in any circumstances, he should be deprived of his liberty upon only the belief that he will tamper with the witnesses if left at liberty, save in the most extraordinary circumstances. 23. Apart from the question of prevention being the object of refusal of bail, one must not lose sight of the fact that any imprisonment before conviction has a substantial punitive content and it would be improper for any court to refuse bail as a mark of disapproval of former conduct whether the accused has been convicted for it or not or to refuse bail to an unconvicted person for the purpose of giving him a taste of imprisonment as a ....
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.... Scam (Laloo Prasad case) this Court, taking into consideration the seriousness of the charges alleged and the maximum sentence of imprisonment that could be imposed including the fact that the appellants were in jail for a period of more than six months as on the date of passing of the order, was of the view that the further detention of the appellants as pretrial prisoners would not serve any purpose. 46. We are conscious of the fact that the accused are charged with economic offences of huge magnitude. We are also conscious of the fact that the offences alleged, if proved, may jeopardise the economy of the country. At the same time, we cannot lose sight of the fact that the investigating agency has already completed investigation and the charge-sheet is already filed before the Special Judge, CBI, New Delhi." 20. The considerations and parameters relevant to grant of bail have been restated by the Supreme Court in Y.S. Jagan Mohan Reddy (Supra), while taking special note of cases involving economic offences, in the following manner:- "34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The ec....
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....ering the same the gravity of the offence is an aspect which is required to be kept in view by the Court. The gravity for the said purpose will have to be gathered from the facts and circumstances arising in each case. Keeping in view the consequences that would befall on the society in cases of financial irregularities, it has been held that even economic offences would fall under the category of "grave offence" and in such circumstance while considering the application for bail in such matters, the Court will have to deal with the same, being sensitive to the nature of allegation made against the accused. One of the circumstances to consider the gravity of the offence is also the term of sentence that is prescribed for the offence the accused is alleged to have committed. Such consideration with regard to the gravity of offence is a factor which is in addition to the triple test or the tripod test that would be normally applied. In that regard what is also to be kept in perspective is that even if the allegation is one of grave economic offence, it is not a rule that bail should be denied in every case since there is no such bar created in the relevant enactment passed by the leg....
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....ere the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail : Provided that a person, who, is under the age of sixteen years, or is a woman or is sick or infirm, may be released on bail, if the Special Court so directs : Provided further that the Special Court shall not take cognizance of any offence punishable under Section 4 except upon a complaint in writing made by- (i) the Director; or (ii) any officer of the Central Government or a State Government authorised in writing in this behalf by the Central Government by a general or special order made in this behalf by that Government. 25. A plain reading of the provision would show that the embargo imposed by Section 45(1) PMLA on grant of bail took form of twin conditions - (i) that the Public Prosecutor shall be given an opportunity to oppose the application for release, and (ii) where the Public Prosecutor opposes such application, the Court should be satisfied that there are reasonable grounds for believing that ....
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....pra), observed thus:- "18. ...The other observations in the said order will have no bearing on the merits of the controversy and required to be reckoned whilst considering the prayer for grant of regular bail. For that, the appellant must succeed in overcoming the threshold of the rigors of Section 45 of the 2002 Act... Suffice it to observe that indulgence shown to the appellant in terms of order dated 10-8-2017 will be of no avail. In that, the facts such as the appellant never tried to evade the investigation or that he has suffered incarceration for over 7½ months or that the charge-sheet has been filed in the predicate offence registered under FIR No. 205/2016 or the factum of illness of the mother of the appellant or the observation that no definite reason has been assigned by the respondents for substantiating the allegation that the appellant would tamper with the evidence, may become relevant only if the threshold stipulation envisaged under Section 45 of the 2002 Act was to be fulfilled... xxx 21. The consistent view taken by this Court is that economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be vie....
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....y the Central Government by a general or special order made in this behalf by that Government." 30. Dr. Singhvi, learned Senior Counsel for the applicant, while placing reliance on the decisions of different High Courts, had submitted that the amendment made to Section 45 PMLA in 2018 does not revive the twin conditions set out in sub-clause (1). Learned Special Counsel for the respondent, on the other hand, had placed reliance on the views expressed in certain other decisions of High Courts, where discordant notes were sounded. 31. During the course of submissions, learned counsels for the parties had also informed that the issue relating to constitutional validity of the amendment made in Section 45 PMLA vide the Finance Act, 2018 as well as revival of the twin conditions thereby, alongwith other issues relating to PMLA, has already been taken up for hearing by the Supreme Court and is under active consideration. 32. At this stage, this Court deems it apposite to advert to the two recent decisions by the Supreme Court in The Directorate of Enforcement v. Parkash Gurbaxani etc., SLP(Crl.) 7666-7667/2021 and Dr. V.C. Mohan (Supra), which are briefly discussed hereunder. ....
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....ry bail is made in connection with offence under the PMLA Act, the underlying principles and rigors of Section 45 of the PMLA Act must get triggered - although the application is under Section 438 of Code of Criminal Procedure. As aforesaid, the High Court has not touched upon this aspect at all. It is urged before us by the respondent that this objection was never taken before the High Court as it is not reflected from the impugned judgment. It is not a question of taking objection but the duty of court to examine the jurisdictional facts including the mandate of Section 45 of the PMLA Act, which must be kept in mind. Accordingly, we deem it appropriate to set aside the impugned judgment and order and relegate the parties before the High Court for reconsideration of Criminal Petition No. 4134 of 2021 afresh for grant of anticipatory bail filed under Section 438 of the Code of Criminal Procedure in connection with stated PMLA offence." Notably, the above observations came to be made by the Supreme Court after granting leave in an SLP and conversion of the case into a Criminal Appeal. In consideration of the same, this Court is of the opinion that the reliance p....
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....tice can be allayed by imposing conditions and taking measures such as issuance of LOCs, etc. The statements of the witnesses having been recorded under Section 50 PMLA and the documents relevant to the investigation having been collected, the apprehensions regarding the applicant influencing witnesses and/or tampering with evidence are unfounded. The respondent has also failed to point out any instance of influencing of witnesses/tampering with evidence by the applicant during the investigation. In this backdrop, this Court is of the view that the applicant satisfies the triple test for grant of bail. 37. Though it has been urged on behalf of the respondent that further investigation in the case is pending, it is observed that an accused cannot be kept languishing in jail for long, undetermined periods, only on the ground that investigation is stated to be pending [Refer: P. Chidambaram v. Central Bureau of Investigation reported as (2020) 13 SCC 337]. 38. At the same time however, based on the categorical observations made by the Supreme Court in Dr. V.C. Mohan (Supra) and Parkash Gurbaxani (Supra), this Court reckons that the present bail application needs to be tested on ....
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....s, tax payments, making of FDs, salary and cash withdrawals for expenses of other Group companies. 43. In addition to the above, Rs. 41.56 crores out of the Term loan have been detected as having been utilized to purchase materials for the other projects of Group companies, such as - for project site of shopping mall of M/s Apex Homes Pvt. Ltd.; for project site of M/s Ambience Tower Pvt. Ltd. at Rohini and Shalimar Bagh in Delhi; for project site of M/s Ambience Project Pvt. Ltd. at Ambience Island, Nathupur, Gurgaon; for Caitrona project site in Gurgaon and for Ambience Mall, Vasant Kunj. In this regard, reliance was placed on the statements of 13 vendors recorded under Section 50 PMLA. One of the vendors, namely M/s JK Cement Ltd., has stated that Rs. 3.99 crores in total were paid by AHPL and APL to the company in the name of the hotel project at Shahdara. Out of the said sum, Rs. 1.01 crores (approx.) were paid for supplying cement material to AHPL for the hotel project at Shahdara, but the remaining payment of Rs. 2.44 crores was made for supply of cement material to the project site of APL at Ambience Islands, NH-8, Gurgaon. The other vendors have also given statements on....