TaxTMI 
TaxTMI 
2024 (5) TMI 569
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....r short 'IPC') and under Section 13 (2) read with Section 13 (1) (d) of Prevention of Corruption Act, 1988 (for short 'PC Act'). 2. The aforesaid FIR was registered by the CBI on a complaint of Shri Mukesh Dhingra, Deputy General Manager, Stressed Asset Management Branch II, State Bank of India, alleging that M/s Shree Bankey Bihari Exports Ltd. (hereinafter referred to 'SBBEL') a public limited company promoted by Shri Amar Chand Gupta, was engaged in processing of agro commodities i.e., Gram Dal, Wheat Products, Besan etc. It was alleged that M/s SBBEL had availed credit facilities of Rs. 625 Crore from the consortium of 7 lenders with SBI as a lead lender and on account of irregular payment of the said loan, same was classified as Non-Performing Asset ('NPA') on 27.02.2017. It is alleged that thereafter, on conduct of forensic audit, the said loan was declared as fraud on account of fudging of balance sheets, diversion of funds and related party transactions. It was further alleged that M/s SBBEL and its director have caused a wrongful loss to the tune of Rs. 604.81 Crore. It was further alleged that accused company and its directors were involved in bogus transactions relati....
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.... employee acting in the capacity of field boy carrying out the instructions of director of M/s SBBEL namely, Mr. Amar Chand Gupta. It was argued that beneficiary of the alleged transactions were the directors of the said company and the present applicant was not a beneficiary. It is further submitted that the applicant, even as per the case of the prosecution, was not a Key Managerial Person (KMP) in the said company. It was submitted that the complaint in the present complaint stands filed, charges have not been framed and the trial is likely to take considerable period of time, therefore, the applicant may be released on bail. 6. It was further submitted that the material on which the prosecution relies upon are the statements made by witnesses which are not reliable as the same suffer from practice of being identical to the extent that the cut, copy, paste technique has been used to array the applicant as an accused. It was argued that in the statement of the applicant wherein references have been made towards paper firms are identical to the extent of being cut, copy, paste; thus, casting aspersions over the veracity of the statements. It was further submitted that similarly....
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....e of Maharashtra. (2017) 9 SCC 714; xix. Shri Pradeep Koneru v. Directorate of Enforcement & Anr., Order dated 23.08.2019 passed by Division Bench of this Court in W.P. (Crl.) No. 2353/2019; xx. Satish Babu Sana v. Directorate of Enforcement &Anr., Order dated 23.08.2019 passed by Division Bench of this Court in W.P. (Crl.) No. 2903/2019; xxi. Gurdev Singh v. Directorate of Enforcement, Order dated 25.01.2024 in SLP (Crl.) No. 16688/2023; xxii. Sanjay Jain v. Enforcement Directorate, BAIL APPLN. 3807/2022 decided on 07.03.2024 by Co-ordinate of Bench of this Court. SUBMISSIONS ON BEHALF OF DIRECTORATE OF ENFORCEMENT/RESPONDENT 8. Learned Special Counsel for Directorate of Enforcement (for short 'ED') has submitted that the applicant has not been able to satisfy the twin test as laid down in Section 45 of the PMLA. It is submitted that public money of more than Rs. 604.81 Crore have been siphoned off by the accused company M/s SBBEL. It was submitted that the present applicant who is the nephew of accused Amar Chand Gupta (A-2) has played a vital role in the entire conspiracy. It was submitted that the present applicant was proprietor of ent....
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....t had used the cheques of these paper entities to purchase jewelleries in the name of his wife, son, brother-in-law and mother-in-law. It was further submitted that so far as the fact that the applicant has been made an approver in the other FIR filed by the CBI, the same would have no bearing in the present PMLA complaint. 10. Learned Special Counsel for the ED has been placed reliance on the following judgments: - A. Section 3 of the Prevention of Money Laundering Act, 2002: Definition of the 'Money-Laundering' i. Vijay Madanlal Choudhary & Ors. v. Union of India &Ors., 2022 SCC Online SC 929; (Paras 263-284) ii. V. Balaji v. Karthik Desari & Anr., 2023 SCC Online SC 645 (Para 100) iii. Anoop Bartaria vs. Dy. Director of Enforcement Directorate & Anr. SLP (Crl.) No. 2397-98/2019 (Paras 27-28) B. Twin Conditions for the Grant of Bail in PMLA Cases i. Vijay Madanlal Choudhary & Ors. v. Union of India & Ors., 2022 SCC Online SC 929;(Paras 371-421); ii. Satyendar Kumar Jain v. Directorate of Enforcement, in BAIL APPLN. 3590/2022 decided on 06.04.2023 by a Coordinate Bench of this Court: 2023:DHC:2380; iii. The Asstt. Dire....
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.... the PMLA and the fact that the present applicant has been granted status of approver in the chargesheet filed with respect to scheduled/predicate offence, the same would be relevant for the purpose of present bail application. It is pointed out that during the pendency of the present bail application, the applicant's application to become an approver has been allowed by the learned Special Judge in the predicate offence of the present ECIR. It is further submitted in the other predicate offences, the applicant has been granted anticipatory bail. It is submitted that jewellery as claimed by the prosecution in the complaint is worth about Rs. 1 Lakh. It is further submitted that the respondent in their complaint itself have made distinct category of accused and the present applicant has been cited as A-42. Attention of this Court was drawn to paras no. 10.20, 10.21 and 10.22 of the complaint filed by the ED, to reflect that Amit Kansal, brother of the present applicant, who was working as Chief Accountant in M/s SBBEL, has been charge-sheeted without arrest. Similarly, Naresh Kumar Punia and Sanjiv Kumar, both working as accountants in M/s SBBEL, despite giving inculpatory statem....
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....lies to a trial before a Court of Session. Explanation.-For the removal of doubts, it is clarified that,- (i) the jurisdiction of the Special Court while dealing with the offence under this Act, during investigation, enquiry or trial under this Act, shall not be dependent upon any orders passed in respect of the scheduled offence, and the trial of both sets of offences by the same court shall not be construed as joint trial;" It is pointed out that trial of the scheduled offence as well as the trial under the PMLA will not be construed as a joint trial and he further relies upon para 19 of the judgment of the Hon'ble Supreme Court in Kathi Kalu Oghad (supra). 13. Reliance was also placed on judgment of learned Single-Judge of Allahabad High Court in Mohan Lal Rathi v. Union of India Thru. Directorate Of Enforcement, 2023:AHC-LKO:59826, wherein it has been recorded as under: - "56. Grant of pardon under Section 306 Cr.P.C. would not fall within the purview of the words 'finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the scheduled offence against him' used by the Hon'ble Suprem....
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.... recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum. For, the expression "derived or obtained" is indicative of criminal activity relating to a scheduled offence already accomplished. Similarly, in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the criminal case (scheduled offence) against him/her, there can be no action for money-laundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence. This interpretation alone can be countenanced on the basis of the provisions of the 2002 Act, in particular Section 2(1)(u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of definition clause "proceeds of crime", as it obtains as of now." 17. The Hon'ble Supreme in Pavana Dibbur (supra) was adjudicating upon an issue wherein t....
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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 sub-section (1) of Section 3 of the PMLA. 18. In a given case, 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 the scheduled offence are quashed in its entirety, the scheduled offence will not exist, and therefore, no one can be prosecuted for the offence punishable under Section 3 of the PMLA as there will not be any proceeds of crime. Thus, in such a case, the accused against whom the complaint under Section 3 of the PMLA is filed will benefit from the scheduled offence ending by acquittal or....
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.... in those proceedings cannot be used for the purposes of present proceedings under the PMLA. Even in the scheduled/predicate offence the status of the present applicant remains as a witness subject to his full and complete disclosure in terms of the Section 308 of the CrPC. This Court agrees with the judgment given by the learned Single-Judge of Allahabad High Court in Mohan Lal Rathi (supra), that the grant of pardon would bring an accused in the category of witness however, the same, as pointed out hereinabove, is subject to certain conditions enshrined under Sections 306 and 307 of the CrPC and cannot be considered as absolute absolvement in the predicate offence. 20. As pointed out hereinabove, the Hon'ble Supreme Court in Pavana Dibbur (supra) held that offence under Section 3 of the PMLA can be committed by a person who otherwise has initially not been named as an accused for the scheduled/predicate offence. It was further observed that if the prosecution in the scheduled offence ends in acquittal of all or discharge of all accused persons then, the scheduled offence will no longer exist and thus, no one can be prosecuted for the offence under Section 3 of PMLA as there wi....
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....ons provided under Section 45 of the 2002 Act, though restrict the right of the accused to grant of bail, but it cannot be said that the conditions provided under Section 45 impose absolute restraint on the grant of bail. The discretion vests in the Court which is not arbitrary or irrational but judicial, guided by the principles of law as provided under Section 45 of the 2002 Act. While dealing with a similar provision prescribing twin conditions in MCOCA, this Court in Ranjitsing Brahmajeetsing Sharma, held as under: "44. The wording of Section 21(4), in our opinion, does not lead to the conclusion that the court must arrive at a positive finding that the applicant for bail has not committed an offence under the Act. If such a construction is placed, the court intending to grant bail must arrive at a finding that the applicant has not committed such an offence. In such an event, it will be impossible for the prosecution to obtain a judgment of conviction of the applicant. Such cannot be the intention of the legislature. Section 21(4) of MCOCA, therefore, must be construed reasonably. It must be so construed that the court is able to maintain a delicate balance between a ....
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....l Court in recording its finding of the guilt or acquittal during trial which is based on the evidence adduced during the trial. As explained by this Court in Nimmagadda Prasad, the words used in Section 45 of the 2002 Act are "reasonable grounds for believing" which means the Court has to see only if there is a genuine case against the accused and the prosecution is not required to prove the charge beyond reasonable doubt." (emphasis supplied) 22. As noted hereinabove, the Hon'ble Supreme Court in Vijay Madanlal Choudhary (supra) has held that the Court at the stage of grant of bail is expected to consider the issue as to whether the accused had requisite 'mens rea'. It was further observed by the Hon'ble Supreme Court that the Court is not required to record a positive finding that the accused has not committed an offence under the Act. In other words, the Court at the stage of bail can examine the case on the basis of broad probabilities and can give a finding on the basis of material on record for the purposes of bail. 23. The Coordinate Benches of this Court in Vijay Agrawal (supra) and Sanjay Jain (supra) have taken a similar view. 24. The primary material against....
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....aid company. The case of the prosecution qua the present applicant as recorded in the complaint in paragraph no. 11.5 is as under: - "Sanjay Kansal is the proprietor of M/s Munshi Ram & Sons and M/s Kansal Enterprises. He has knowingly assisted in the crime of money laundering by accommodating bogus sale and paper purchase from M/s SBBEL through his firms. It has transpired that M/s Munshi Ram & Sons had accommodated bogus sale to the tune of Rs. 9,40,67,750/-. The firm M/s Kansal Enterprises had accommodated bogus sale to the tune of Rs. 10,02,55,323/- and paper purchase to the tune of Rs. 3,25,63,820/-. Investigation has further revealed that he in connivance with his maternal uncle Shri Amar Chand Gupta had opened bank accounts of several paper entities. He was also associated with maintaining day to day transactions for the paper entities under the garb of fake sale and purchase. He has also used cheques of various paper entities to purchase jewelleries in the name of his wife, son, brother-in-law and mother in law. He has knowingly assisted in the crime of money laundering by diverting and siphoning off the funds of Cash Credit Limit provided by the bank. Thus there a....
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....ietors of the paper entities, have given the statement that all these transactions were being done on commission basis of 50 paise per quintal (out of Re. 1 per quintal) with some entities and on a fixed commission on monthly basis ranging between Rs. 7,000/- to Rs. 20,000/- with other entities. In the statements relied upon by prosecution, applicant has stated that all the actions taken by him were on the instructions of Shri Amar Chand Gupta and others and nowhere has it been stated that he was privy to the alleged objective behind the sham transactions. In other words, whether the applicant had the requisite knowledge that the transactions in which he is involved relates to proceeds of crime cannot be presumed at this stage. So far as the transactions from the applicant's sister concerns are concerned, the same are similar to that of other paper entities and their proprietors who are either being arrayed as co-accused without arrest or cited as witnesses. As pointed out hereinabove, taking these statements into consideration, the applicant is stated to have made these aforesaid transactions through his concerns on commission basis. The applicant like the other persons also alleg....
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....ster concerns of the said company where the appellant, therein, was either a shareholder or a director. It was further observed that the appellant, therein, was a beneficiary of the proceeds of crime. As pointed out hereinabove, applicant herein, admittedly, was neither holding any Key Managerial Position in the company, M/s SBBEL, nor any other executive post. As per the statements relied upon by the prosecution, the applicant was a field boy and was working on the instructions of the co-accused namely, Shri Amar Chand Gupta, Shri Ram Lal Gupta, Shri Raj Kumar Gupta. It is also matter of record that no property belonging to the applicant has been attached by way of attachment or otherwise, which can be shown as being obtained out of proceeds of crime. 30. It is a matter of record that similarly placed accused persons who have been arrayed as an accused have not been arrested. By way of illustration role assigned to the accused Nos. A-46, Amit Kansal, brother of the present applicant and Naresh Kumar, A-47, accountant at M/s SBBEL, is reproduced as under:- "Name of the Accused 46. Shri Amit Kansal S/o Late Shri Laxman Das Kansal R/o House No. A-1/63B, Keshav Puram, Delhi -....
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....the petitioner. Reference in this regard may be had to the judgment of this Court in Dr. Bindu Rana vs. Serious Fraud Investigation Office in BAIL APPLN. 3643/2022 dated 20.01.2023, wherein it was held as under: "45. The fact is that the complaint has been filed by the SFIO without feeling the need of any custody of the 53 out of 55 accused persons. The main accused even as per the SFIO has not been arrested, being protected by the order passed by this Court in Writ Petition (Criminal) No. 1242 of 2022. The said writ petition was filed by accused namely 'Vinod Kumar Dandona' and others including the main accused 'Shantanu Prakash' seeking quashing of the order dated 17.08.2018 passed by the MCA under Section 212(1)(c) of the Companies Act, which led to the start of investigation into the affairs of ESL. 46. The coordinate bench of this court, considering the facts of the case, by its order dated 26.05.2022, had directed SFIO not to take any coercive steps against the petitioners therein, which includes the main accused 'Shantanu Prakash'. 47. From the perusal of the complaint, it is apparent that even in relation to the charges whi....