TaxTMI 
TaxTMI 
2024 (2) TMI 912
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....o. ECIR/RNSZO/16/2020 was recorded on 17.09.2020 based on the FIR bearing No. 13/2019 dated 13.11.2019, registered by ACB Jamshedpur, under section 7(a) of the Prevention of Corruption Act, (amended as on 2018) and Chargesheet dated 11.01.2020 filed by ACB against (i) Suresh Prasad Verma and Alok Ranjan under section 7 (b) of PC Act, 2018 and u/s 120B & 201 of IPC for investigation of offence under the provisions of the PMLA, 2002 as Sections 120B of IPC, 1860 and 7 (b) of PC Act, 2018 are scheduled offences under Part-A, Paragraph 1 of the Prevention of Money Laundering Act (PMLA), 2002. During the course of investigation on Veerendra Kumar Ram and his close associates, several searches were conducted at various places across India and it was found that part of the Proceeds of crime acquired in the form of taking commission/bribe in lieu of allotment of tenders by Veerendra Kumar Ram, Chief Engineer in Rural work Department, Jharkhand was getting routed by a Delhi based CA Mukesh Mittal (Present Petitioner) to the bank accounts of family members of Veerendra Kumar Ram with the help of bank accounts of Mukesh Mittal's employees/relatives. It is also alleged th....
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....been completed based upon the charge sheet submitted, as such, the stage of Section 19(1) has already crossed and hence, there is no need of taking the petitioner in custody and in that view of the matter, the prayer of the petitioner for grant of pre-arrest bail ought to have been allowed. iv. Since the ECIR has already been submitted after conclusion of the preliminary enquiry and as such, now there is no occasion for the Enforcement Directorate to have an opportunity to make opposition for grant of pre-arrest bail as required under Section 45(1)(i)(ii) of the Act, 2002. v. The reference of the judgment rendered by the Hon'ble Apex Court in Satender Kumar Antil vs. CBI and Anr., (2022) 10 SCC 51 has also been made on the background of the fact that when the petitioner has already cooperated in the investigation based upon which the ECIR has been prepared and submitted to the concerned court then why the arrest of the petitioner at such a stage. 4. So far as the issue on merit is concerned, the ground has been taken that the petitioner has been taken into custody in connection with the first information report instituted within the territorial jurisdiction....
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.... 19(1) speaks by conferring power and jurisdiction to arrest the person concerned who has been directly or indirectly found to be involved in predicate offence. 11. There is no reference of any stage under Section 19(1) of the Act, 2002 rather only reference of arrest is there giving therein the requirement to be fulfilled before arresting the person who has been found to be involved in the predicate offence. 12. The argument so far as it relates to the provision of Section 45(1)(i)(ii) whereby and whereunder the opportunity is to be given to the Enforcement Directorate before granting the benefit of regular or pre-arrest bail, the same cannot be said to be washed away merely because the ECIR has been submitted rather the aforesaid provision makes it explicit that before passing order by the court, either by allowing the prayer for regular bail or anticipatory bail, the opportunity to make opposition is to be given to the Enforcement Directorate and if the competent court has reason to believe that the allegation what has been levelled is prima facie untrue then the said prayer can be allowed. 13. The submission has been made that the twin condition for bail under Section ....
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....ensive legislation. This is evident from the introduction and Statement of Objects and Reasons accompanying the Bill which became the 2002 Act. The same reads thus: "INTRODUCTION Money-laundering poses a serious threat not only to the financial systems of countries, but also to their integrity and sovereignty. To obviate such threats international community has taken some initiatives. It has been felt that to prevent money-laundering and connected activities a comprehensive legislation is urgently needed. To achieve this objective the Prevention of Money-laundering Bill, 1998 was introduced in the Parliament. The Bill was referred to the Standing Committee on Finance, which presented its report on 4th March, 1999 to the Lok Sabha. The Central Government broadly accepted the recommendation of the Standing Committee and incorporated them in the said Bill along with some other desired changes. STATEMENT OF OBJECTS AND REASONS It is being realised, world over, that money-laundering poses a serious threat not only to the financial systems of countries, but also to their integrity and sovereignty. Some of the initiatives taken by the international community ....
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.... connected with the proceeds of crime. 20. It needs to refer herein the definition of "proceeds of crime" as provided under Section 2(1)(u) of the Act, 2002 which reads as under: "2(u) "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property 3[or where such property is taken or held outside the country, then the property equivalent in value held within the country] 4[or abroad]; [Explanation.-For the removal of doubts, it is hereby clarified that "proceeds of crime" include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence;]" 21. It is evident from the aforesaid provision by which the "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equ....
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....ey laundering has been defined under Section 3 of the Act, 2002 which reads as under: "3. Offence of money-laundering.-Whosoever 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 shall be guilty of offence of money-laundering. [Explanation.- For the removal of doubts, it is hereby clarified that,- (i) a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely:- (a) concealment; or (b) possession; or (c) acquisition; or (d) use; or (e) projecting as untainted property; or (f) claiming as untainted property, in any manner whatsoever; (ii) the process or activity connected with proceeds of crime is a continuing activity and con....
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....sons so summoned shall be bound to attend in person or through authorised agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required. (4) Every proceeding under sub-sections (2) and (3) shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860). (5) Subject to any rules made in this behalf by the Central Government, any officer referred to in sub-section (2) may impound and retain in his custody for such period, as he thinks fit, any records produced before him in any proceedings under this Act: Provided that an Assistant Director or a Deputy Director shall not- (a) impound any records without recording his reasons for so doing; or (b) retain in his custody any such records for a period exceeding three months, without obtaining the previous approval of the [Joint Director]." 31. The various provisions of the Act, 2002 alongwith interpretation of the definition of "proceeds of crime" has been dealt with by the Hon'ble Apex Court in t....
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.... are under an obligation to give due regard to the international conventions and norms for construing the domestic laws, more so, when there is no inconsistency between them and there is a void in domestic law. This view has been restated in Githa Hariharan, as also in People's Union for Civil Liberties, and National Legal Services Authority v. Union of India." 33. The implication of Section 50 has also been taken into consideration. Relevant paragraph, i.e., paragraphs-422, 424, 425, 431, 434 reads as under: "422. The validity of this provision has been challenged on the ground of being violative of Articles 20(3) and 21 of the Constitution. For, it allows the authorised officer under the 2002 Act to summon any person and record his statement during the course of investigation. Further, the provision mandates that the person should disclose true and correct facts known to his personal knowledge in connection with the subject matter of investigation. The person is also obliged to sign the statement so given with the threat of being punished for the falsity or incorrectness thereof in terms of Section 63 of the 2002 Act. Before we proceed to analyse the matter furthe....
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....ainst himself. This position is well-established. The Constitution Bench of this Court in M.P. Sharma had dealt with a similar challenge wherein warrants to obtain documents required for investigation were issued by the Magistrate being violative of Article 20(3) of the Constitution. This Court opined that the guarantee in Article 20(3) is against "testimonial compulsion" and is not limited to oral evidence. Not only that, it gets triggered if the person is compelled to be a witness against himself, which may not happen merely because of issuance of summons for giving oral evidence or producing documents. Further, to be a witness is nothing more than to furnish evidence and such evidence can be furnished by different modes. The Court went on to observe as follows: "Broadly stated the guarantee in article 20(3) is against "testimonial compulsion". It is suggested that this is confined to the oral evidence of a person standing his trial for an offence when called to the witness-stand. We can see no reason to confine the content of the constitutional guarantee to this barely literal import. So to limit it would be to rob the guarantee of its substantial purpose and to miss th....
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.... presented before the Adjudicating Authority. It is not necessarily for initiating a prosecution against the noticee as such. The power entrusted to the designated officials under this Act, though couched as investigation in real sense, is to undertake inquiry to ascertain relevant facts to facilitate initiation of or pursuing with an action regarding proceeds of crime, if the situation so warrants and for being presented before the Adjudicating Authority. It is a different matter that the information and evidence so collated during the inquiry made, may disclose commission of offence of money-laundering and the involvement of the person, who has been summoned for making disclosures pursuant to the summons issued by the Authority. At this stage, there would be no formal document indicative of likelihood of involvement of such person as an accused of offence of money- laundering. If the statement made by him reveals the offence of money- laundering or the existence of proceeds of crime, that becomes actionable under the Act itself. To put it differently, at the stage of recording of statement for the purpose of inquiring into the relevant facts in connection with the property being ....
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....ein by taking into consideration the explanation as inserted by way of Act 23 of 2019 under the definition of the "proceeds of crime" as contained under Section 2(1)(u), whereby and whereunder, it has been clarified for the purpose of removal of doubts that, the "proceeds of crime" include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence, meaning thereby, the words "any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence" will come under the fold of the proceeds of crime. 36. So far as the purport of Section 45(1)(i)(ii) is concerned, the aforesaid provision starts from the non-obstante clause that notwithstanding anything contained in the Code of Criminal Procedure, 1973, no person accused of an offence under this Act shall be released on bail or on his own bond unless - (i) the Public Prosecutor has been given a opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes t....
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....oman or is sick or infirm, [or is accused either on his own or along with other co-accused of money-laundering a sum of less than one crore rupees], 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. [(1A) Notwithstanding anything contained in the Criminal Procedure Code, 1973 (2 of 1974), or any other provision of this Act, no police officer shall investigate into an offence under this Act unless specifically authorised, by the Central Government by a general or special order, and, subject to such conditions as may be prescribed.] (2) The limitation on granting of bail specified in [***] sub-section (1) is in addition to the limitations under the Criminal Procedure Code, 1973 (2 of 1974) or any other law for the time being in force on granting of bail. ....
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....ed observation in the context of lack of legislative power. In the process of reasoning, it did advert to the exposition in Behram Khurshid Pesikaka and Deep Chand7 including American jurisprudence expounded in Cooley on Constitutional Limitations and Norton v. Shelby County." 38. Subsequently, the Hon'ble Apex Court in the case of Tarun Kumar vs. Assistant Director Directorate of Enforcement, (2023) SCC OnLine SC 1486 by taking into consideration the law laid down by the Larger Bench of the Hon'ble Apex Court in Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors.(supra), the law has been laid down that since the conditions specified under Section 45 are mandatory, they need to be complied with. The Court is required to be satisfied that there are reasonable grounds for believing that the accused is not guilty of such offence and he is not likely to commit any offence while on bail. It has further been observed that as per the statutory presumption permitted under Section 24 of the Act, the Court or the Authority is entitled to presume unless the contrary is proved, that in any proceedings relating to proceeds of crime under the Act, in the case of a person charged ....
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....and credible evidence indicative of involvement of the person concerned in any process or activity connected with the proceeds of crime, action under the Act can be taken forward for attachment and confiscation of proceeds of crime and until vesting thereof in the Central Government, such process initiated would be a standalone process. So far as the issue of grant of bail under Section 45 of the Act, 2002 is concerned, as has been referred hereinabove, at paragraph-412 of the judgment rendered in Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors.(supra) it has been held therein by making observation that whatever form the relief is couched including the nature of proceedings, be it under Section 438 of the 1973 Code or for that matter, by invoking the jurisdiction of the Constitutional Court, the underlying principles and rigors of Section 45 of the 2002 must come into play and without exception ought to be reckoned to uphold the objectives of the 2002 Act, which is a special legislation providing for stringent regulatory measures for combating the menace of money-laundering. 41. The Hon'ble Apex Court in the case of Gautam Kundu vs. Directorate of Enforcement (Pr....
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....n the appellant." 42. The Hon'ble Apex Court in the case of Tarun Kumar vs. Assistant Director Directorate of Enforcement (supra) has again reiterated the implication of Sections 45 and the principle of parity at paragraphs-17 and 18. The issue of parity has been considered by the Hon'ble Apex Court at paragraph-18 by making observation therein that parity is not the law. While applying the principle of parity, the Court is required to focus upon the role attached to the accused whose application is under consideration. For ready reference, paragraph-17 and 18 read as under: "17. As well settled by now, the conditions specified under Section 45 are mandatory. They need to be complied with. The Court is required to be satisfied that there are reasonable grounds for believing that the accused is not guilty of such offence and he is not likely to commit any offence while on bail. It is needless to say that as per the statutory presumption permitted under Section 24 of the Act, the Court or the Authority is entitled to presume unless the contrary is proved, that in any proceedings relating to proceeds of crime under the Act, in the case of a person charged with the offence ....
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.... the Act, 2002, this Court, is proceeding to answer the legal grounds as has been raised on behalf of the learned counsel for the petitioner. 44. The first ground is that the ECIR has already been submitted, the case has been converted into a complaint case and hence, at this stage, the public prosecutor appearing for the Enforcement Directorate cannot have jurisdiction to make opposition. According to the learned counsel for the petitioner such conferment of right upon the Enforcement Directorate is at the stage of seeking bail under Section 19(1) and now the complaint has already been registered in which the summons has been issued and now in it in between the Court and the accused person, hence, the Enforcement Directorate has got no occasion to make opposition in the light of the provision of Section 45(1)(i)(ii) of the Act, 2002. The second ground has been taken that the stage of Section 19(1) has already been expired the moment the ECIR has been submitted before the concerned court and the ground has been that since there is cooperation of the petitioner in course of conducting the preliminary enquiry converted into the ECIR, as such, at this stage his incarceration wil....
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....ons of the Delhi High Court in Moin Akhtar Qureshi (supra) and the Bombay High Court in Chhagan Chandrakant Bhujbal (supra), which hold to the contrary, do not lay down the correct law. In the case on hand, the admitted position is that the ED's Investigating Officer merely read out or permitted reading of the grounds of arrest of the appellants and left it at that, which is also disputed by the appellants. As this form of communication is not found to be adequate to fulfil compliance with the mandate of Article 22(1) of the Constitution and Section 19(1) of the Act of 2002, we have no hesitation in holding that their arrest was not in keeping with the provisions of Section 19(1) of the Act of 2002. Further, as already noted supra, the clandestine conduct of the ED in proceeding against the appellants, by recording the second ECIR immediately after they secured interim protection in relation to the first ECIR, does not commend acceptance as it reeks of arbitrary exercise of power. In effect, the arrest of the appellants and, in consequence, their remand to the custody of the ED and, thereafter, to judicial custody, cannot be sustained." Subsequently, in the case of Ram Kisho....
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....to be looked into for the purpose of granting the said benefit. 48. It has been settled by Hon'ble Apex Court time and again in its various pronouncements that the powers under Section 438 Cr.P.C., is in extra- ordinary character and must be exercised sparingly in exceptional cases only and therefore, the anticipatory bail can be granted only in exceptional circumstances where the court is prima facie of the view that the applicant has falsely been implicated in the crime, as grant of anticipatory bail to some extent, is interference in the sphere of investigation of an offence and hence, the court must be cautious while exercising such powers. 49. It is also settled connotation of law that the grant or refusal of the application should necessarily depend on the facts and circumstance of each case and there is no hard and fast rule and no inflexible principles governing such exercise by the Court. 50. It is pertinent to mention here that the law on grant of anticipatory bail has been summed up by the Hon'ble Apex Court in Siddharam Satlinappa Mhetre vs. state of Maharashtra & Ors. reported in (2011)1 SCC 694 after due deliberation on the parameters as evolved by the Consti....
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....because overimplication in the cases is a matter of common knowledge and concern; (viii) While considering the prayer for grant of anticipatory bail, a balance has to be struck between two factors, namely, no prejudice should be caused to the free, fair and full investigation and there should be prevention of harassment, humiliation and unjustified detention of the accused; (ix) The court to consider reasonable apprehension of tampering of the witness or apprehension of threat to the complainant; (x) Frivolity in prosecution should always be considered and it is only the element of genuineness that shall have to be considered in the matter of grant of bail and in the event of there being some doubt as to the genuineness of the prosecution, in the normal course of events, the accused is entitled to an order of bail. 114. These are some of the factors which should be taken into consideration while deciding the anticipatory bail applications. These factors are by no means exhaustive but they are only illustrative in nature because it is difficult to clearly visualise all situations and circumstances in which a person may pray for anticipatory bail. ....
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....o when the allegations are grave in nature." 53. It is, evident by taking into consideration the provision of Section 19(1), 45(1), 45(2), the conditions which are required to be considered while granting the benefit of regular bail in exercise of power conferred under Section 438 or 439 of Cr.P.C., i.e., pre-arrest bail apart from the twin conditions which has been provided under Section 45(1) of the Act, 2002, the conditions or the requirement which has been followed while granting the bail under Section 439 or 438, as the case may be. Therefore, this Court is of the view that since there is no bifurcation of the stages under Section 19(1) that after submission of the ECIR, the authority seizes its power to arrest rather the same depends upon the nature of gravity of the offence as per the general principle. So far as the contention that the public prosecutor appearing for the Enforcement Directorate has got no occasion to make opposition once the ECIR has been prepared and submitted to the Court but this Court, after going through the provision of Section 45(1), is of the view that there is no reference to that effect that once the ECIR has been submitted the public prosec....
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....tatute would be self-defeating. The court is entitled to ascertain the intention of the legislature to remove the ambiguity by construing the provision of the statute as a whole keeping in view what was the mischief when the statute was enacted and to remove which the legislature enacted the statute. This rule of construction is so universally accepted that it need not be supported by precedents. Adopting this rule of construction, whenever a question of construction arises upon ambiguity or where two views are possible of a provision, it would be the duty of the court to adopt that construction which would advance the object underlying the Act namely, to make effective provision for the prevention of bribery and corruption and at any rate not defeat it." Further, in the case of Dr. (Major) Meeta Sahai vs. State of Bihar and Ors., (2019) 20 SCC 17, it has been held as observed at paragraph-20 which reads as under: "20. It is a settled canon of statutory interpretation that as a first step, the courts ought to interpret the text of the provision and construct it literally. Provisions in a statute must be read in their original grammatical meaning to give its words a comm....
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....7 as under: "..... it is a normal rule of consideration that when a statute vests certain power in an authority to be exercised in a particular manner then the said authority has to exercise it only in the manner provided in the statute itself " Likewise, in the case of State of Jharkhand & Ors. vs. Ambay Cements & Anr., reported in (2005) 1 SCC 368, wherein, it has been held at paragraph 26 as under: "it is the cardinal rule of interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. It is [15] also settled rule of interpretation that where a statute is penal in character, it must be strictly construed and followed." 58. Therefore, this Court is of the view that what has been contended on behalf of the learned counsel for the petitioner that the moment the ECIR has been submitted, the public prosecutor will have no occasion to make opposition, is having no substance. 59. This Court, after discussing the aforesaid legal issues, is of the view that the case is to be tested on the basis of the ground that the fulfilment of twin conditions as provided under Secti....
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....Mittal (Accused Number 5) and such bank account was operated by Mukesh Mittal only. Search u/s 17 of PMLA was also conducted at Reena Pal and Vijay Pal's residence wherein Reena Pal in her statement recorded u/s 17 of PMLA denied having knowledge of any firm existing in her name or any bank account operating in the name of such firm. She simply stated that her husband Vijay Pal used to handle all her financial dealings. Further, business operations in the name of RK Investment and Consultancy could not be traced during the field inquiry. Search operation u/s 17 of PMLA was conducted at the residential premises of Rakesh Kumar Kedia, and he in his statement recorded u/s 17 of PMLA revealed that his bank account is being controlled by his relative Mukesh Mittal and he does not know about any firm existing in his name. Rakesh Kumar Kedia's proprietorship firm, M/s RK Investments and Consultancy has bank account number 2577214000002 being maintained in Canara Bank, and in its account opening form, Mukesh Mittal's mobile number, 7011929771 is found to be registered, which indicates that the high- value online banking transfers which were carried through this account were act....
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....010412 with Canara Bank, it is seen that a payment of Rs 5 lakhs has been made to Hridya Nand Tiwari on 05.04.2019. (v) During further investigation, the statement of Hirdya Nand Tiwari (Accused Number 10) was recorded u/s 50 of PMLA 2002 on 11.07.2023 and 12.07.2023, wherein he inter alia stated that he started working in M. Mittal & Co. in February 2010 and became a partner with 10% shareholding since March 2010. He left M. Mittal & Co. in March 2020. He further stated that he introduced his friend Ajeet Singh and Veerendra Kumar Ram to Mukesh Mittal in the year 2014 to file income tax returns and to arrange RTGS entries against the cash amount of Veerendra Kumar Ram. He stated that he knows Veerendra Kumar Ram through his close friend Ajeet Singh. Ajeet Singh had told him that Veerendra Kumar Ram is his uncle and works as an engineer in Jharkhand. He also stated that Mukesh Mittal, made RTGS entries in respect of Veerendra Kumar Ram as per his requirement after a meeting held amongst them and the commission for providing entries was decided at 1.5%. He also stated that Mukesh Mittal along with his father late Babu Lal Mittal used to operate the bank account of M/s R P I....
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....Veerendra Kumar Ram and finally Rs. 18 lakhs remained with Mukesh Mittal. Further, out of Rs. 4.59 crores credited into the bank accounts of Genda Ram, Rs. 04 lakhs were also transferred to the bank account of M. Mittal and Co. from the bank account 127000628767 of Genda Ram on 19.01.2023. Hence, Mukesh Mittal alone got Rs. 22 lakhs from Veerendra Kumar Ram which is actually the proceeds of crime. 5.5.4 Vijay Pal, an employee of Mukesh Mittal, in his statement dated 29.02.2023 recorded u/s 50 of PMLA stated that he helped Veerendra Kumar Ram to open two bank accounts in the name of Genda Ram and he also helped to open bank accounts of Rakesh Kumar @ Rakesh Kumar Kedia and one bank account of Manish. He also stated that after confirmation of RTGS transactions made in the bank account of Rakesh Kumar, Neha Shrestha and Manish from the end of Ram Parkash Bhatia, he used to further credit the amount in the bank account of Genda Ram. 5.5.5 Thus, Mukesh Mittal got Rs. 14 lakhs from the deal of Rs. 9.4 crores and Rs. 22 lakhs from the deal of Rs. 4.59 crores. Further, summarising the statements of Hirdya Nand Tiwari, Mukesh Mittal and his associates, it is established th....
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....r bank accounts of Tara Chand, for V.K. Ram & his family members and from these four bank accounts, a of total Rs. 122 crores were routed. Therefore, for rest of POC having amount of Rs. 118.48 crores (122-3.52), presumption under section 23 of PMLA is applicable. 11. CONDUCT OF ACCUSED :- 11.1 Accused Number 5 (Mukesh Mittal): During the course of search proceedings, conducted by the Directorate of Enforcement on 21.02.2023 at the residential premises of the accused person, Shri Mukesh Mittal showed non-cooperation, by not divulging the facts about 9.31 crore which are the Proceeds of Crime acquired by Veerendra Kumar Ram. He also opened bank accounts in the name of Genda Ram by creating forged Rent agreement between himself and Genda Ram, to use the same as address proof for opening of bank account. He also asked his employee Vijay Pal to opened bank accounts in the name of dummy entities viz R K Investment & Consultancy & RP Investment & consultancy, accounts of which were use for laundering of PoC of V.K.Ram. Thus he is in habit of forgery and using such act for laundering of money." 61. It is evident from the aforesaid material which has ....
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.... the petitioner who with the help of other entry provider used to take entries in the bank accounts of his employees and relatives and then such fund was transferred by him into the bank accounts of the co-accused Rajkumari (wife of Veerendra Kumar Ram) and Genda Ram (father of Veerendra Kumar Ram). Further, it is also revealed that some bank accounts opened (at Delhi) on the basis of forged documents were also being used in such routing of funds. 63. As per the para 5.2 of the prosecution complaint various records, documents, digital devices, cash, jewellery, vehicles were recovered and seized during course of search conducted on 21.02.2023. The case record depicts that it was the petitioner who assisted the prime accused, Veerendra Kumar Ram, in the commission of the offence of money laundering with the help of his employees by depositing the crime proceeds in different bank accounts opened by fake names or companies, and later on the transfer of money to the prime accused in the bank accounts of his relatives to remove the taint. The material collected by the Enforcement Directorate had also not been rebutted, which prima facie reflected the involvement of the petitioner in t....
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....l information and also the materials which might have been concealed. Success in such interrogation would elude if the accused knows that he is protected by the order of the court. Grant of anticipatory bail, particularly in economic offences would definitely hamper the effective investigation. Having regard to the materials said to have been collected by the respondent Enforcement Directorate and considering the stage of the investigation, we are of the view that it is not a fit case to grant anticipatory bail. 84. In a case of money-laundering where it involves many stages of "placement", "layering i.e. funds moved to other institutions to conceal origin" and "interrogation i.e. funds used to acquire various assets", it requires systematic and analysed investigation which would be of great advantage. As held in Anil Sharma, success in such interrogation would elude if the accused knows that he is protected by a pre-arrest bail order. Section 438 CrPC is to be invoked only in exceptional cases where the case alleged is frivolous or groundless. In the case in hand, there are allegations of laundering the proceeds of the crime. The Enforcement Directorate claims to have cer....
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....t of the appellant not being shown as an accused in the predicate offence by taking into consideration the Section 3 of the Act, 2002. 68. The Hon'ble Apex Court by interpreting the provision of Section 3 of the Act, 2002 has come out with the finding that on a plain reading of Section 3, unless proceeds of crime exist, there cannot be any money laundering offence. Based upon the definition Clause (u) of sub-section (1) of Section 2 of the Act 2002 which defines "proceeds of crime", the Hon'ble Apex Court at paragraph-12 has been pleased to observe that clause (v) of sub-section (1) of Section 2 of PMLA defines "property" to mean any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible. To constitute any property as proceeds of crime, it must be derived or obtained directly or indirectly by any person as a result of criminal activity relating to a scheduled offence. The explanation clarifies that the proceeds of crime include property, not only derived or obtained from scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relat....
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.... (u) of sub- section (1) of Section 3 of the PMLA. For ready reference, paragraphs-12, 13, 14, 15 of the judgment rendered in the case of Pavana Dibbur vs. The Directorate of Enforcement (supra) read as under: "12. Clause (v) of subsection (1) of Section 2 of the PMLA defines "property" to mean any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible. To constitute any property as proceeds of crime, it must be derived or obtained directly or indirectly by any person as a result of criminal activity relating to a scheduled offence. The explanation clarifies that the proceeds of crime include property, not only derived or obtained from scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. Clause (u) also clarifies that even the value of any such property will also be the proceeds of crime. Thus, the existence of "proceeds of crime" is sine qua non for the offence under Section 3 of the PMLA. 13. Clause (x) of subsection (1) of Section 2 of the PMLA defines "schedule". Clause (y) there....
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....ion 3 of the 2002 Act, it is amply clear that the offence of money-laundering is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence. The process or activity can be in any form - be it one of concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so. Thus, involvement in any one of such process or activity connected with the proceeds of crime would constitute offence of money-laundering. This offence otherwise has nothing to do with the criminal activity relating to a scheduled offence - except the proceeds of crime derived or obtained as a result of that crime. 270. Needless to mention that such process or activity can be indulged in only after the property is derived or obtained as a result of criminal activity (a scheduled offence). It would be an offence of money-laundering to indulge in or to assist or being party to the process or activity connected with the proceeds of crime; and such process or activity in a given fact situation may ....
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....crime of extortion can be guilty of the offence of money laundering. Therefore, it is not necessary that a person against whom the offence under Section 3 of the PMLA is alleged must have been shown as the accused in the scheduled offence. What is held in paragraph 270 of the decision of this Court in the case of Vijay Madanlal Choudhary supports the above conclusion. The conditions precedent for attracting the offence under Section 3 of the PMLA are that there must be a scheduled offence and that there must be proceeds of crime in relation to the scheduled offence as defined in clause (u) of subsection (1) of Section 3 of the PMLA. 69. At paragraph-18 of the aforesaid judgment the Hon'ble Apex Court, on the basis of the argument advanced on behalf of the counsel based on the interpretation of the Schedule, has been pleased to note that in the case of Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors.(supra), even the validity of the Schedule was under challenge. A perusal of the said decision shows that this Court was not called upon to interpret any entry in the Schedule and, in particular, entry of Section 120B in the Schedule. The challenge to the Schedule is ....
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....ng or counterfeiting currency notes is not a part of the Schedule. At paragraph-21, it has been observed by coming to Part-B of the Schedule that it includes only one offence under Section 132 of the Customs Act, 1962. The offence under Section 132 of the Customs Act of making a false declaration, etc., becomes a scheduled offence in view of sub-clause (ii) of Clause (y) of subsection (1) of Section 2 of the PMLA only if the total value involved in the offence is Rs.1 crore or more. Part C of the Schedule provides that any offence specified in Part A having cross-border implications becomes a part of Part C. More importantly, all the offences against the property under Chapter XVII of IPC having cross-border implications become scheduled offences. As pointed out earlier, the offences punishable under Sections 379 (theft), 380 (theft in dwelling house), 403 (dishonest misappropriation of property) and 405 (criminal breach of trust) are part of Chapter XVII. Though the said offences are not included in Part A, they become scheduled offences by virtue of Part C only if they have cross-border implications. Thus, it can be said that many offences capable of generating proceeds of cri....
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.... the Schedule, and even compoundable offences form part of the Schedule. It was submitted that the offences which do not have cross-border implications have been included in the Schedule. In paragraphs 454 and 455 of the said decision, this Court held thus: "454. This Schedule has been amended by Act 21 of 2009, Act 2 of 2013, Act 22 of 2015, Act 13 of 2018 and Act 16 of 2018, thereby inserting new offences to be regarded as scheduled offence. The challenge is not on the basis of legislative competence in respect of enactment of Schedule and the amendments thereto from time to time. However, it had been urged before us that there is no consistency in the approach as it includes even minor offences as scheduled offence for the purposes of offence of money-laundering, more so even offences which have no transborder implications and are compoundable between the parties. The classification or grouping of offences for treating the same as relevant for constituting offence of money-laundering is a matter of legislative policy. The Parliament in its wisdom has regarded the property derived or obtained as a result of specified criminal activity, being an offence under the concerne....
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....s 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." Section 120B of IPC provides for punishment for a criminal conspiracy which reads thus: "120B. Punishment of criminal conspiracy.- (1) Whoever is a party to a criminal conspiracy to commit an offence punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards, shall, where no express provision is made in this Code for the punishment of such a conspiracy, be punished in the same manner as if he had abetted such offence. (2) Whoever is a party to a criminal conspiracy other than a criminal conspiracy to commit an offence punishable as aforesaid shall be punished with imprisonment of either description for a term not exceeding six months, or with fine or with both." 20. Now, we turn to the Schedule to the P....
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....ified in Part A having cross-border implications becomes a part of Part C. More importantly, all the offences against the property under Chapter XVII of IPC having cross-border implications become scheduled offences. As pointed out earlier, the offences punishable under Sections 379 (theft), 380 (theft in dwelling house), 403 (dishonest misappropriation of property) and 405 (criminal breach of trust) are part of Chapter XVII. Though the said offences are not included in Part A, they become scheduled offences by virtue of Part C only if they have cross-border implications. Thus, it can be said that many offences capable of generating proceeds of crime do not form a part of the schedule. 22. The learned Additional Solicitor General argued that as Section 120B of IPC is included in Part A to the Schedule, even if the allegation is of making a criminal conspiracy to commit an offence which is not a part of the Schedule, the offence becomes a scheduled offence. As stated earlier, many offences under Chapter XVII of IPC are not included in Parts A and B. They become scheduled offences only if the same have cross-border implications. Thus, the offences of dishonest misappropriati....
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.... the object of the Act, and the intent of the Parliament. This formulation later received the approval of the Supreme Court and was called the "cardinal principle of construction"." In both Constitutional and statutory interpretation, the court is supposed to exercise discretion in determining the proper relationship between the subjective and objective purposes of the law and help the law achieve its purpose." (Emphasis added) 24. While giving effect to the legislature's intention, if two reasonable interpretations can be given to a particular provision of a penal statute, the Court should generally adopt the interpretation that avoids the imposition of penal consequences. In other words, a more lenient interpretation of the two needs to be adopted. 25. The legislative intent which can be gathered from the definition of the scheduled offence under clause (y) of sub-Section (1) of Section 2 of the PMLA is that every crime which may generate proceeds of crime need not be a scheduled offence. Therefore, only certain specific offences have been included in the Schedule. Thus, if the submissions of the learned Additional Solicitor General are accepted, th....
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.... of all the accused in the scheduled offence or discharge of all the accused in the scheduled offence. Similarly, he will get the benefit of the order of quashing the proceedings of the scheduled offence; c. The first property cannot be said to have any connection with the proceeds of the crime as the acts constituting scheduled offence were committed after the property was acquired; d. The issue of whether the appellant has used tainted money forming part of the proceeds of crime for acquiring the second property can be decided only at the time of trial; and e. The offence punishable under Section 120B of the IPC will become a scheduled offence only if the conspiracy alleged is of committing an offence which is specifically included in the Schedule." 70. This Court, in view of the judgment rendered by the Hon'ble Apex Court in Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors.(supra) and Pavana Dibbur vs. The Directorate of Enforcement (supra) wherein it is evident from paragraph-16 therefrom that if the prosecution for the scheduled offence ends in the acquittal of all the accused or discharge of all the accused or the proceedings of t....
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....an order for grant of pre-arrest bail if prima facie case is not made out. 74. The Hon'ble Apex Court in the case of Central Bureau of Investigation Vs Santosh Krnani and Another, 2023 SCC OnLine SC 427 has observed that corruption poses a serious threat to our society and must be dealt with iron hands. The relevant paragraph of the aforesaid judgment is being referred as under:- "31. The nature and gravity of the alleged offence should have been kept in mind by the High Court. Corruption poses a serious threat to our society and must be dealt with iron hands. It not only leads to abysmal loss to the public exchequer but also tramples good governance. The common man stands deprived of the benefits percolating under social welfare schemes and is the worst hit. It is aptly said, "Corruption is a tree whose branches are of an unmeasurable length; they spread everywhere; and the dew that drops from thence, Hath infected some chairs and stools of authority." Hence, the need to be extra conscious." 75. This Court, based upon the aforesaid imputation as has been discovered in course of investigation, is of the view that what has been argued on behalf of the petitioner that ....