TaxTMI 
TaxTMI 
TaxTMI 
2024 (3) TMI 133
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....t the accused persons on the basis of information received from FIR No. 13/2019 dated- 13.11.2019 registered by the ACB, Jamshedpur. 3. Subsequently the Final Report has been filed by the investigating agency bearing no. 01/2020 dated- 11.01.2020 under Section 120-B and 201 IPC and under Section 7 (b) of the P.C. Act, 1988 against the accused persons, namely, Alok Ranjan and Suresh Prasad Verma. 4. Further, in course of search proceeding conducted in relation to the instant case at different places under Section 17 PML Act to investigate the role of the accused persons and their close associates, it is found that part of the proceeds of crime acquired in the form of commission/bribe in lieu of allotment of tenders by the accused Veerendra Kumar Ram, a public servant. The said bribe money was getting routed by a Delhi based CA Mukesh Mittal to the bank accounts of family members of Veerendra Kumar Ram with the help of bank accounts of Mukesh Mittal's employees/relatives. 5. It is also ascertained that Veerendra Kumar Ram used to give cash to Mukesh Mittal who with the help of other entry providers used to take entries in the bank accounts of his employees and relatives and th....
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....petitioner namely, Tara Chand, is an employee of C.A., namely, Mukesh Mittal, save and except there is no allegation said to be committed so as to attract the penal offence under PML Act, 2002. (iii) Learned counsel for the petitioner in order to demonstrate the fact that no offence has been committed has placed the material collected in course of inquiry based upon the ECIR which has been submitted before the competent court of jurisdiction. (iv) It has also been alleged that petitioner opened the bank account by forging documents in the name of fictitious persons and even if this allegation is taken to be true then also no case is made out against the petitioner as because it should come under the ambit of money laundering and it is necessary that the person should knowingly assist or knowingly in a part or is actually involved in any process or activity connected with proceeds of crime. (v) However, this petitioner has never opened the bank account by forging documents and none of the transactions from the alleged bank accounts which were opened at Delhi was under the knowledge of this petitioner nor the petitioner had any knowledge regarding the existence of the said bank....
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....pon the judgments rendered by the Hon'ble Apex Court in the case of Vijay Madan Lal Choudhary and others Vs. Union of India and others 2022 SCC online SC 929 and Rohit Tondon Vs. Directorate of Enforcement (2018) 11 SCC 46. 14. Learned counsel for the respondent-Enforcement Directorate, based upon the aforesaid grounds, has submitted that it is not a fit case where the prayer for bail is to be allowed taking into consideration his involvement in dealing with the proceeds of crime of Veerandra Kumar Ram as an associate of Chartered Accountant namely Mukesh Mittal. Analysis of the submissions made on behalf of parties: 15. Heard the learned counsel for the parties, gone across the pleading available on record as also the finding recorded by learned court. 16. This Court, before appreciating the argument advanced on behalf of the parties, deems it fit and proper to discuss herein some of the provision of law as contained under the Act, 2002 with its object and intent. 17. The Act was enacted to address the urgent need to have a comprehensive legislation inter alia for preventing money- laundering, attachment of proceeds of crime, adjudication and confiscation thereof including ve....
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....ples, enunciated in 1989, outlined basic policies and procedures that banks should follow in order to assist the law enforcement agencies in tackling the problem of money-laundering. (c) the Financial Action Task Force established at the summit of seven major industrial nations, held in Paris from 14th to 16th July, 1989, to examine the problem of money-laundering has made forty recommendations, which provide the foundation material for comprehensive legislation to combat the problem of money-laundering. The recommendations were classified under various heads. Some of the important heads are- (i) declaration of laundering of monies carried through serious crimes a criminal offence; (ii) to work out modalities of disclosure by financial institutions regarding reportable transactions; (iii) confiscation of the proceeds of crime; (iv) declaring money-laundering to be an extraditable offence; and (v) promoting international co-operation in investigation of money-laundering. (d) the Political Declaration and Global Programme of Action adopted by United Nations General Assembly by its Resolution No. S-17/2 of 23rd February, 1990, inter alia, calls upon the member States to ....
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....ook by way of Act 23 of 2019. 22. It is, thus, evident that the reason for giving explanation under Section 2(1)(u) is by way of clarification to the effect that whether as per the substantive provision of Section 2(1)(u), the 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 but by way of explanation the proceeds of crime has been given broader implication by including 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. 23. The "property" has been defined under Section 2(1)(v) which means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located. 24. The schedule has been defined under Section 2(1)(x) which means schedule to the Prevention of Money Laundering Act, 20....
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.... acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering. 28. It is further evident that the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever. 29. The punishment for money laundering has been provided under Section 4 of the Act, 2002. 30. Section 50 of the Act, 2002 confers power upon the authorities regarding summons, production of documents and to give evidence. For ready reference, Section 50 of the Act, 2002 is quoted as under: "50. Powers of authorities regarding summons, production of documents and to give evidence, etc.- (1) The Director shall, for the purposes of section 13, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:- (a) discovery and inspection; (b) enforcing the attendance of any person, including an....
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....ch is indicative of reference made to the different process or activity connected with the proceeds of crime. Thus, the principal provision (as also the Explanation) predicates that if a person is found to be directly or indirectly involved in any process or activity connected with the proceeds of crime must be held guilty of offence of money-laundering. If the interpretation set forth by the petitioners was to be accepted, it would follow that it is only upon projecting or claiming the property in question as untainted property, the offence would be complete. This would undermine the efficacy of the legislative intent behind Section 3 of the Act and also will be in disregard of the view expressed by the FATF in connection with the occurrence of the word "and" preceding the expression "projecting or claiming" therein. This Court in Pratap Singh v. State of Jharkhand, enunciated that the international treaties, covenants and conventions although may not be a part of municipal law, the same be referred to and followed by the Courts having regard to the fact that India is a party to the said treaties. This Court went on to observe that the Constitution of India and other ongoing statu....
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....d not otherwise. 425. Indeed, sub-section (2) of Section 50 enables the Director, Additional Director, Joint Director, Deputy Director or Assistant Director to issue summon to any person whose attendance he considers necessary for giving evidence or to produce any records during the course of any investigation or proceeding under this Act. We have already highlighted the width of expression "proceeding" in the earlier part of this judgment and held that it applies to proceeding before the Adjudicating Authority or the Special Court, as the case may be. Nevertheless, sub-section (2) empowers the authorised officials to issue summon to any person. We fail to understand as to how Article 20(3) would come into play in respect of process of recording statement pursuant to such summon which is only for the purpose of collecting information or evidence in respect of proceeding under this Act. Indeed, the person so summoned, is bound to attend in person or through authorised agent and to state truth upon any subject concerning which he is being examined or is expected to make statement and produce documents as may be required by virtue of sub-section (3) of Section 50 of the 2002 Act. Th....
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.... a guide to the connotation of the word "witness", which must be understood in its natural sense, i.e., as referring to a person who furnishes evidence. Indeed, every positive volitional act which furnishes evidence is testimony, and testimonial compulsion connotes coercion which procures the positive volitional evidentiary acts of the person, as opposed to the negative attitude of silence or submission on his part. Nor is there any reason to think that the protection in respect of the evidence so procured is confined to what transpires at the trial in the court room. The phrase used in article 20(3) is "to be a witness" and not to "appear as a witness". It follows that the protection afforded to an accused in so far as it is related to the phrase "to be a witness" is not merely in respect of testimonial compulsion in the court room but may well extend to compelled testimony previously obtained from him. It is available therefore to a person against whom a formal accusation relating to the commission of an offence has been levelled which in the normal course may result in prosecution. Whether it is available to other persons in other situations does not call for decision in this ca....
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....nce Act may come into play to urge that the same being in the nature of confession, shall not be proved against him. Further, it would not preclude the prosecution from proceeding against such a person including for consequences under Section 63 of the 2002 Act on the basis of other tangible material to indicate the falsity of his claim. That would be a matter of rule of evidence. 434. It is, thus, clear that the power invested in the officials is one for conducting inquiry into the matters relevant for ascertaining existence of proceeds of crime and the involvement of persons in the process or activity connected therewith so as to initiate appropriate action against such person including of seizure, attachment and confiscation of the property eventually vesting in the Central Government." 33. It is evident from the observation so made as above that the purposes and objects of the 2002 Act for which it has been enacted, is not limited to punishment for offence of money-laundering, but also to provide measures for prevention of money-laundering. It is also to provide for attachment of proceeds of crime, which are likely to be concealed, transferred or dealt with in any manner whi....
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....anything to the contrary contained in the Code of Criminal Procedure, 1973, and accordingly the officers authorised under this Act are empowered to arrest an accused without warrant, subject to the fulfilment of conditions under section 19 and subject to the conditions enshrined under this section. 38. The fact about the implication of Section 45 has been interpreted by the Hon'ble Apex Court in Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors.(supra) at paragraphs-372-374. 39. For ready reference, the said paragraphs are being referred as under: "372. Section 45 has been amended vide Act 20 of 2005, Act 13 of 2018 and Finance (No. 2) Act, 2019. The provision as it obtained prior to 23.11.2017 read somewhat differently. The constitutional validity of Sub-section (1) of Section 45, as it stood then, was considered in Nikesh Tarachand Shah. This Court declared Section 45(1) of the 2002 Act, as it stood then, insofar as it imposed two further conditions for release on bail, to be unconstitutional being violative of Articles 14 and 21 of the Constitution. The two conditions which have been mentioned as twin conditions are: (i) that there are reasonable grounds for belie....
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....olved in money laundering. Such conditions enumerated in Section 45 of PML Act will have to be complied with even in respect of an application for bail made under Section 439 Cr. P.C. in view of the overriding effect given to the PML Act over the other law for the time being in force, under Section 71 of the PML Act. 41. For ready reference, paragraph-17 of the said judgment is quoted 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 17 A.B.A. No. 10671 of 2023 crime under the Act, in the case of a person charged with the offence of money laundering under Section 3, such proceeds of crime are involved in money laundering. Such conditions enumerated in Section 45 of PML Act will have to be com....
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....h Manoj Kumar, Assistant Director, Eastern Region, (2015) 16 SCC 1 has been pleased to hold at paragraph - 30 that the conditions specified under Section 45 of PMLA are mandatory and need to be complied with, which is further strengthened by the provisions of Section 65 and also Section 71 of PMLA. Section 65 requires that the provisions of Cr.P.C shall apply insofar as they are not inconsistent with the provisions of this Act and Section 71 provides that the provisions of PMLA shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. PMLA has an overriding effect and the provisions of CrPC would apply only if they are not inconsistent with the provisions of this Act. 45. Therefore, the conditions enumerated in Section 45 of PMLA will have to be complied with even in respect of an application for bail made under Section 439 CrPC. That coupled with the provisions of Section 24 provides that unless the contrary is proved, the authority or the Court shall presume that proceeds of crime are involved in money-laundering and the burden to prove that the proceeds of crime are not involved, lies on the appellant. F....
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....d has already been dealt by this Court while rejecting the Anticipatory Bail Application of Mukesh Mittal vide order dated 16.02.2024. 50. Now adverting in to fact of the instant case and the allegation leveled against the present petitioner which according to learned counsel for the petitioner is being said that the same cannot be said to attract the ingredient of Section 3 of PMLA 2022 while on the other hand, the learned counsel appearing for the ED has submitted by referring to various paragraphs of prosecution complaint that the offence is very much available attracting the offence under provision of PML Act. 51. This Court, in order to appreciate the rival submission, is of the view that various paragraphs of supplementary prosecution complaint upon which the reliance has been placed on behalf of both the parties, needs to be referred herein so as to come to the conclusion as to whether the parameter as fixed under Section 45(ii) of the PMLA is being fulfilled in order to reach to the conclusion that it is a fit case where regular bail is to be granted or not. Relevant paragraphs of supplementary prosecution complaint are quoted herein : "5.4.2 identification of the sourc....
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....d such shell firms have been formed only to accommodate banking transactions to launder proceeds of crime in the guise of business transactions. (viii) Further search u/s 17 of PMLA was conducted at the residence of Tara Chand and it was found that Tara Chand has been impersonating himself as Sachin Gupta and his statement was recorded on 21.02.2023, wherein he stated that he has opened the aforesaid three proprietary firms and subsequently their bank accounts viz(i) Shri Khatushyam Traders (079205500560), (ii) Anil Kumar Govind Ram Traders and (082705001671) (iii) Om Traders 072405001740) were opened by forging documents such as Aadhar and PAN cards, and he stated that such bank accounts are being operated by Neeraj Mittal (accused Number- 7) . Tara Chand (Accused Number 6) has disclosed that photos in all the three PAN/AADHAR cards are his own and also stated that such hank accounts were opened for providing accommodation entries into the bank accounts of those who give cash, and such work is done in lieu of commission. Details of such forged documents and finding of the investigation thereof has been discussed in detail in Prosecution complaint filed before this Hon'ble co....
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.... Gupta and one bank account of Tara Chand to the bank accounts of Rakesh Kumar Kedia, Manish and Neha Shrestha. He also stated that the mobile numbers linked with the bank account of Tara Chand (675705602113) was in the possession of Tara Chand himself and he used to get OTP from him whenever required. (Xiii) ---search was conducted at the residence of Harish Yadav (Accused-9) at D-7/276 2nd floor, sector-6 Rohini Delhi on 21.02.2023 and his statement was recorded on the same day wherein he stated that he transferred the said amount of Rs. 10 lakhs (which is proceeds of crime of V.K. Ram) into the bank secount 127000890839 of Manish (son of driver of Mukesh Mittal) on the instructions of Tara Chand and in return, he received a commission of Rs. 2,000/. He also stated that he transferred such funds without having any business. He also stated that Tara Chand and Sachin Gupta are the same persons and he has known Tara Chand since 2013. He also stated that Tara Chand had introduced him to Neeraj Mittal who was involved in providing entries. It is also stated by Neeraj Mittal that he did not have knowledge of transfer of this Rs. 10 lakha from proprietorship of Harish Yadav, Thus the ....
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....ts were actually operated by Neeraj Mittal with the help of Petitioner and Harish Yadav. 56. It transpires that the present petitioner Tara Chand opened bank accounts by forging documents i.e. Aadhar and PAN Cards in the name of fictitious person and these bank accounts were utilized for providing accommodation entries which after routing in some bank accounts reached to the bank accounts of co-accused Genda Ram. Further, it is also ascertained that some bank accounts opened (at Delhi) on the basis of forged documents was also being used in routing of funds. 57. The accused Tara Chand (petitioner) disclosed during investigation that three bank accounts were opened by him impersonating himself as Sachin Gupta in the name of three proprietorship firms by forging documents on the instruction of co-accused Neeraj Mittal, who also used to operate the bank accounts. Further, no business has been found to be existing in the name of above three proprietorship firms at the address provided to the bank. It is also stated that the accused Tara Chand is close associate of accused Harish Yadav and he also used to operate the above-said three bank accounts at the instruction of co-accused Neer....
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....lace from the said four bank accounts of Tara Chand and thus same amount was used for routing of funds, as also discussed above. 62. Thus, prima-facie, the involvement of the present petitioner in illegal routing of proceeds of crime cannot be denied as he played the vital role in this organized structure/process of illegal routing of proceeds of crime of accused Veerendra Kumar Ram. 63. Now in the light of aforesaid discussion at this juncture this Court thinks fit to revisit the scope of section 45 of the PML Act 2002. As discussed in preceding paragraphs that Section 45 (ii) of the PMLA Act, 2002 provides twin test. First 'reason to believe' is to be there for the purpose of reaching to the conclusion that there is no prima facie case and second condition is that the accused is not likely to commit any offence while on bail. 64. Sub-section (1)(ii) of Section 45 of the Act, 2002, provides that if 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, meaning thereby, the parameter which is to be followed by the con....
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....any such property will also be the proceeds of crime. 70. At paragraph-14 of the aforesaid judgment, it has observed by referring the decision rendered by the Hon'ble Apex Court in Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors.(supra) that the condition precedent for the existence of proceeds of crime is the existence of a scheduled offence. At paragraph-15 the finding has been given therein that on plain reading of Section 3 of the Act, 2002, an offence under Section 3 can be said to be committed after a scheduled offence is committed. By giving an example, it has been clarified that if a person who is unconnected with the scheduled offence, knowingly assists the concealment of the proceeds of crime or knowingly assists the use of proceeds of crime, in that case, he can be held guilty of committing an offence under Section 3 of the PMLA. 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. 71. This Court, based upon the imputation as has been discovered in course of investigation, is of the view that what has been argued on behalf of the petiti....