TaxTMI 
TaxTMI 
2023 (2) TMI 398
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....legraphy Act, and Sections 69B/72/72A of the Information Technology Act (IT Act), and Sections 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act (PC Act). 3. The Applicant has been in custody since 14.07.2022 in relation to the present ECIR. 4. The applicant and other persons have been alleged to have illegally intercepted / monitored telephone calls of employees of the National Stock Exchange Ltd. (hereinafter "NSE"). It is stated that illegal tapping of phone calls of NSE employees was conducted under the guise of an agreement between NSE and M/s ISEC Services Private Limited (hereinafter "ISEC"). 5. To conduct Periodic Study Of Cyber Vulnerabilities, a payment of approximately Rs. 4.54 crores was made by NSE to ISEC for the work between 01.01.2009 to 13.02.2017. 6. It has been alleged that ISEC monitored / intercepted the calls of 4 MTNL PRI lines, each having capacity of 30 telephone connections used by the employees of NSE. 7. It is also alleged that ISEC submitted the transcripts of conversations to top management of NSE during 01.01.2009 to 13.02.2017. The applicant was the Deputy Managing Director (hereinafter "DMD") of the NSE till 2010, J....
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....ork. It was in fact Ravi Narain who had decided to utilise the services of Sanjay Pandey and his company, viz. ISEC Services Pvt. Ltd., and not the applicant. 11.3. Ms. John, learned senior counsel states that a perusal of the statements of Ravi Narain and Sanjay Pandey reveal that in 2009 it was Ravi Narain, who was the Managing Director and at the helm of affairs at NSE, who approved the proposal submitted by ISEC Services Pvt. Ltd. and directed the Applicant, the then Deputy Managing Director to implement his instructions. This goes to show that the Applicant has been wrongly named as an accused in the case as her role is similar to that of Ravi Varanasi and Mahesh Haldipur, who were also tasked with the implementation of the instructions given by Ravi Narain. 11.4. The learned senior counsel states that the scheduled offences against the applicant are under Section 120-B/420 IPC, Section 72 of the IT Act, 2000 and 13(2) r/w 13(1)(d) of PC Act, 1988. She further states that in the facts of the present case none of the ingredients of the aforesaid Sections are attracted. 11.5. As regards Section 420 IPC is concerned, Ms. John, learned senior counsel has....
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....here is no illegal gain or benefit obtained by the applicant. It is not the case that the applicant has received any kickbacks from the fee of Rs. 4.54 crores given to M/s ISEC Services Private Limited. She states that the applicant has not unjustly enriched herself. 11.11. The learned senior counsel submits that the Delhi High Court in its order dated 15.04.2010 passed in Writ Petition (CIVIL) No. 4748 of 2007 held NSE to be a public authority under the RTI Act. The said order has been stayed by the Division Bench of the Delhi High Court in LPA No. 315 of 2010 vide order dated 04.05.2010 and stay was made absolute on 21.08.2012. Thus, it is the NSE's own case that NSE is not a public authority. 11.12. Lastly, it is the submission of the learned senior counsel for the applicant that the Proviso of Section 45 PMLA will apply to the applicant being a woman. 11.13. She draws an analogy with Section 437 of the CrPC to state that an exception is carved out for a woman and even in cases such as Section 302 IPC, a woman is entitled to bail. 11.14. It is submitted that the applicant is in custody since 14.07.2022. The charge sheet has already been filed ....
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.... more persons agree to do, or cause to be done,- (1) an illegal act, or (2) an act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy: Provided that no agreement except an agreement to commit an offence shall amount to a criminal conspiracy unless some act besides the agreement is done by one or more parties to such agreement in pursuance thereof. Explanation.- It is immaterial whether the illegal act is the ultimate object of such agreement, or is merely incidental to that object." 12.3. He states that the definition of 120A IPC reveals that the agreement between two or more persons to do an illegal act is the most important ingredient for the offence of conspiracy. The illegal act may or may not be committed pursuant to the agreement but the very agreement is an offence and the conspiracy to commit an illegal act is itself a standalone scheduled offence which in the present case was a conspiracy to record and tap telephone lines that violates the Telegraph Act. 12.4. He argues that it is not necessary that the object of the conspiracy should be achieved. Failing to execute the conspira....
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....ials in conspiracy with M/s ISEC tried to secure access to information without consent of the person concerned and disclosed such information to higher officials of NSE thereby violating section 72 of the IT Act which is a scheduled offence under PMLA. 12.9. He has further relied upon the statement of Mr. Subramanium Iyer, in charge of the supplier of the equipment who categorically stated: "Q6. What is the function of this equipment supplied by you to iSec Services Private Limited and installed at NSE Office at Bandra Kuria Complex, Mumbai? Ans 6. It records all incoming and outgoing calls of all Primary Rate Interface (PRI) lines which are connected to the Voice logging System. Q7. In what manner were these PRI lines connected to the Voice Logging System? Ans7. The PRI lines coming from the service provider were split into two lines with the help of a splitter. Out of these two lines, one went to the EPABX system of NSE and the other line went to the Voice logging system." 12.10. He states that Section 25(b) of the Indian Telegraph Act which reads as under: "25. Intentionally damaging or tampering with telegraphs.-If ....
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....n/monitoring of telephone calls much prior to 2009. She was part of the decision making process at NSE wherein it was decided to engage M/s. ISEC Services Private Limited for the said work from 01.01.2009. Admittedly, she was one who engaged with Mr. Sanjay Pandey for the said work and issued instructions to her subordinates namely Sh. Ravi Varanasi and Sh. Mahesh Haldipur to coordinate with Sh. Sanjay Pandey for the said work. It was she who had instructed Mr. Ravi Varanasi to receive the call monitoring reports from ISEC Services Private Limited and to brief her if anything significant was noticed. It is a proven fact that she was deeply and fully involved in monitoring/interception/recording of telephone calls of NSE employees and its nomenclature as 'Periodic Study of Cyber Vulnerabilities'. It was she who along with Sh. Ravi Narain had participated in the discussions with Mr. Sanjay Pandey on behalf of NSE regarding monitoring/ interception/recording of telephone calls of NSE employees and also the decision to term* as Cyber Vulnerability Studies. The work order dated 03.06.2009 was issued as per instructions. She had issued, instructions to Sh. Ravi Varanasi to forward the pr....
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....pplicant. 12.18. Rs. 4,54,00,000/-, the fee received from January 2009 to February 2017 are therefore proceeds of crime, as they were pursuant to an illegal act/ activity. He submits that all approvals were processed through the applicant and given by her when she was the MD. 12.19. The erstwhile M.D., Mr. Ravi Narain in his Section 50 statement has stated that the operational and day to day functioning was monitored by the applicant. 12.20. The tapping of the conversations of the employees were co-terminus with the Applicant holding key position as JMD/MD in NSE. 12.21. In December 2016, the applicant retired and the contract with ISEC was not renewed after 13.02.2017. 12.22. He states that the offence is money-laundering is non-bailable and cognizable. He states the Hon'ble Supreme Court in Vijay Madanlal Choudhary (supra) has observed as under: "406. It was urged that the scheduled offence in a given case may be a non-cognizable offence and yet rigors of Section 45 of the 2002 Act would result in denial of bail even to such accused. This argument is founded on clear misunderstanding of the scheme of the 2002 Act. As we have r....
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....at rigours of Section 45(1)(ii) of PMLA will not be applicable to the categories of persons, as mentioned in the proviso. In case it is held that conditions as laid in Section 45(1)(ii) shall also be attracted in respect of the persons, as notified in the proviso, in my opinion, proviso will be rendered nugatory, in as much as, an accused will otherwise be entitled to be released if he satisfies the condition laid down in section 45(1)(ii).However, in my view, the discretion as envisaged in the proviso has to be applied depending upon the special circumstances attending to such categories of person and not as a matter of Thumb rule that all such categories of persons shall necessarily be granted bail." ANALYSIS: 13. I have heard learned counsel for the parties. 14. In the present case, for the purpose of this bail application, I am only to decide prima-facie whether the scheduled offences are made out against the Applicant. 15. The scheduled offences alleged against the applicant are: • Section 72 of the IT Act • Section 120-B of IPC read with section 420 of IPC • Section 13(2) read with section 13(1)(d) of the PC Act 16. Sectio....
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....ver, the key words in section 72 IT Act state that the person who secures access to electronic record, book, register, correspondence, information, document or other material has to be in pursuance of powers conferred under the Act or rules and regulations made thereunder." 20. The contract between NSE and M/s ISEC permitted recording of conversations. Recording or tapping of phone calls sans consent of the concerned persons is an offence punishable under the Indian Telegraph Act and Indian Wireless Telegraphy Act. However, the same are not scheduled offences. Thus, invocation of section 72 of the IT Act is misplaced in the present case. 21. The ED has vehemently argued that section 120B of IPC is a standalone scheduled offence. However, the pleadings and case set up by the ED is to the contrary. A bare perusal of the FIR, Prosecution Complaint as well as the Remand Applications make it evident that section 120B IPC has not been invoked as an independent standalone scheduled offence as the same is read with section 420/409 IPC. Section 409 IPC is not a scheduled offence. 22. The Remand Application dated 14.07.2022 reads as under: "3. That Sections 120B r/w 420 of ....
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....LZ0-1/28/2022 in Enforcement Directorate, Delhi Zone-I and is under investigation in Delhi Zone-I. The LEA case of predicate offence vide RC2212022E0030 dated 07.07.2022 under Sections 120B r/w 409 & 420 of IPC, 1860, Section 20,21,24 & 26 of Indian Telegraph Act, 1885, Section 3 & 6 of Indian Wireless Telegraphy Act, 1933, Section 13(2) r/w 13(1) (d) of Prevention of Corruption Act, 1988 and Section 69B, 72 & 72A of Information Technology Act, 2000, is pending investigation with EO-III, Central Bureau of Investigation, New Delhi..." 26. In the reply filed by the ED to the bail application moved in the Trial Court, the ED continues to treat the offence under 120B to be read with the other scheduled offences. The relevant paras of the reply read as under: "c. That Sections 120B r/w 420 of IPC, Section 72 of Information Technology Act, 2000 and Section 13(2) r/w 13(1)(d) of PC Act, 1988, are covered under the definition of 'Scheduled Offences' as defined under Section 2 (1)(y) of The Prevention of Money-Laundering Act, 2002 (PMLA). As such, investigations have been initiated by the applicant under PMLA, 2002 for the offence of money-laundering as defined under Sec....
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....g: "58. The offence under section 120-B IPC (which is also a PMLA scheduled offence) is also not made out in so far as the criminal intent i.e., agreement to do an illegal act as defined under sec.120-A IPC is not established. NSE has been involved in call-recording since 1997 through other vendors such as M/s Comtel, prior to ISEC being brought into the picture to analyse recorded calls. Since call recording was being done prior to the arrival of ISEC, there is no criminal conspiracy entered into between ISEC and NSE with the intention of committing an illegal act, namely, call recording. Thus, the element of criminal intent is not made out in the present case and no offence under section 120 B read with 409 and 420 IPC is established." 32. As per the documents placed before me, it is observed that NSE was recording conversations since 1997 through other vendors and the transactions with ISEC occurred from 2009 to 2017. The Applicant was DMD of NSE till 2010 and JMD till 2013 and MD till 2016. As call recording was done by NSE prior to ISEC's involvement, it is wrong to allege that the Applicant conspired with ISEC to illegally tap and record calls. Thus, the ingredien....
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....t NSE". Since NSE was at all times aware that the scope of "Periodic Study of Cyber Vulnerabilities" includes electronic monitoring, there is no deception, fraud or dishonest inducement on the part of the Applicant. 39. Pertinently, no victim has been identified by the ED who has suffered a wrongful loss on account of deception or cheating by the Applicant. Except for a vague and bald averment that customers have been cheated, there is no mention of the names of the persons who have been cheated. Thus, the ingredients of section 420 IPC are not made out in the present case. 40. In view of the above, prima facie the ingredients of the scheduled offences under IPC viz., Section 120B read with section 420 IPC are not made out against the Applicant. 41. Section 13(1)(d) and 13(2) of PC Act (pre-amended) is reproduced below: "13. Criminal misconduct by a public servant.- (1) A public servant is said to commit the offence of criminal misconduct,- ... (d) if he,- (i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage; or (ii) by abusing his position as a public se....
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....prima facie no scheduled offences against the Applicant are established, the provisions of PMLA cannot be attracted to the present case. 47. After conclusion of arguments, I was informed that the Applicant has been granted regular bail by the Ld. Special Judge, Rouse Avenue in RC No. 2212022E0030 dated 07.07.2022 vide order dated 21.12.2022. 48. The Applicant has sought bail under section 45 PMLA. According to Section 45 PMLA, the two conditions for grant of bail are: (i) public prosecutor has to be given an opportunity to oppose bail and; (ii) there are reasonable grounds to believe that the accused is not guilty of the offence and the accused is not likely to commit any offence while on bail. 49. Addressing the second condition, the ingredients of section 3 PMLA are culled out as follows: • A person who directly or indirectly attempts to indulge or knowingly assists, or knowingly is a party, or is actually involved; • In any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property. 50. This court in Sanjay Pandey (su....
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....is not applicable to the present case as the facts of that case stand on a different footing. 54. In Shivani Saxena's (supra) case, the court was of the view that the Applicant therein was a partner/director in both the companies which were accused of money laundering. The court was of the view that they were carriers of proceeds of crime. The present case is distinguishable as I have already given a prima facie finding that the applicant is not guilty of scheduled offences. 55. In view of my findings above, I have not dealt with the argument of the Applicant being entitled to bail on account of being a woman under the proviso to section 45 PMLA. 56. Prima facie there are reasonable grounds to believe that the Applicant is not guilty of the offence and she is not likely to commit any offence while on bail. I have given an opportunity to the ED to oppose the bail application thereby satisfying the twin conditions enumerated under 45 PMLA. 57. Even though not relevant for the purpose of deciding this bail application, it is noted that Mr Ravi Narain (co-accused) has been granted bail on humanitarian grounds by Learned ASJ on 07.11.2022 in CBI vs. Ravi Narain, Bail Matter ....