AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 627
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.... year 2018 and 2021 and primarily all the FIRs were lodged under Sections 406, 409, 419, 420, 467, 468, 471, 504, 506 and 120-B IPC. The ECIR has arraigned Smt. Sashibala, Abhishek Kumar Singh, Udhaw Singh and Durga Prasad as the accused. The instant bail application has been moved by the applicant Udhaw Singh. 3. It is primarily stated that a company under the name and style of M/s Shine City is the prime accused alongwith its director in the predicate offence namely Rashid Naseem, Asif Naseem, Mohd. Jaseem Khan, Javed Iqbal and other persons who are alleged to have cheated innocent citizens by alluring them to invest in the M/s Shine City in terms of various lucrative schemes and all such persons have been duped and defrauded by the M/s Shine City and its directors and persons in control of the company. 4. As far as the present applicant is concerned, in the ECIR, it has been alleged that the firms of the present applicant, namely, Baseera Niwas Pvt. Ltd, Ekanga Infrastructure Pvt. Ltd, Hariom Construction, Yash Enterprises, A. K. Enterprises and Baseera Construction are involved in dealing with Proceeds of Crime which were generated by M/s Shine City and its directors. ....
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....ife for the purposes of construction of flats. This company had raised residential apartments in Lakshmanpur, Shivpur and Varanasi. Out of the twenty flats constructed, twelve were owned by the applicant and the remaining eight were sold out to Shailendra Singh, Chotan Singh and Chunna Rai. 12. In so far as the money received from the investors is concerned, the same was returned upon the sale of the flats and all flats owner have been given the possession by the year 2020. 13. He further explained that the other firm Ekanga Infrastructure Pvt. Ltd. was taken over by him in the year 2019 alongwith his wife and the said company possessed two properties, one a commercial property purchased in the year 2019 near Saheed Path, Lucknow which generates Rs. 50,000/- per month as rental income and the other property was purchased in the year 2020 in Lucknow which was purchased from M/s Shine City. 14. His third firm Hariom construction was established in the year 2016 and it is a proprietorship firm of the applicant and its deals with supply of construction goods and most of the supply was made to M/s Shine City. His other firm Yash Enterprises was again established in the year 201....
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....ey was paid by M/s Shine City to the agriculturists in their account and no money in this regard has come into the accounts of the applicant. 20. It is also urged that since M/s Shine City was procuring large tracts of land for its development, the applicant was required to construct boundary wall to secure the said land purchased by the company M/s Shine City and the applicant was paid for this work. Certain tracts of land was uneven and in order to level the same, the applicant procured and provided soil, which was sold to M/s Shine City. 21. It is thus urged that the applicant who is in legitimate business had offered his business services for which he has been paid commission, cost of material supplied and cost towards construction of boundary wall and other ancillary work and as such other than that the applicant had no deal with M/s Shine City. The applicant has paid his taxes and he has also been involved in other construction work such as construction of apartments which have been sold out from where he also earned, hence it cannot be said that the money in the hands of the applicant are the proceeds of crime rather it is his business earnings. 22. It is also urged....
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....ion and he has submitted that during investigation ample material was unearthed which clearly indicated that the applicant was directly involved in process of money laundering. 27. It is further urged that the offence of money laundering does not necessarily require that the applicant must be named accused in the predicate offence. Even if at all, the applicant is not named in the FIR lodged in context with the predicate offence but language of Section 3 of the PMLA is such that even if the applicant falls foul of the said section, he can be proceeded under the PMLA. 28. It has further been urged that during investigation it was found that large amount of money has been transferred into the various accounts of the applicant under the head of commission, ranging between 5 to 12 % which is said to have been paid which is exorbitantly high whereas in such real estate business generally the brokerage commission do not exceed 3%. 29. It has also been stated that there was not enough material or justification which could prima facie establish the justification and nexus between large amount of money said to have been received by the applicant, from M/s Shine City, with the suppl....
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....es specified under Part-B of the Schedule if the total value involved in such offences is [one crore rupees] or more; or (iii) the offences specified under Part C of the Schedule;] 35. The offence of money laundering has been defined in Section 3 while the punishment for money laundering has been provided in Section 4 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 [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) ac....
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....nt authorised in writing in this behalf by the Central Government by a general or a special order made in this behalf by that Government. [(1A) Notwithstanding anything contained in the Code of Criminal Procedure, 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 limitation under the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force on granting of bail. [Explanation- For the removal of doubts, it is clarified that the expression "Offences to be cognizable and non- bailable" shall mean and shall be deemed to have always meant that all offences under this Act shall be cognizable offences and non-bailable offences notwithstanding anything to the contrary contained in the Code of Criminal Procedure, 1973 (2 of 1974), and accordingly the officers authorised under this Act are empowered to arrest an accused without warran....
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....hat he is not likely to commit any offence while on bail. 30. The conditions specified under Section 45 of PMLA are mandatory and needs 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.PC. 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 Cr.PC. would apply only if they are not inconsistent with the provisions of this Act. 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 Cr.PC. 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." (emphasis supplied) 20. In ....
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....urt at the stage of considering the application for grant of bail, shall consider the question from the angle as to whether the accused was possessed of the requisite mens rea. The Court is not required to record a positive finding that the accused had not committed an offence under the Act. The Court ought to maintain a delicate balance between a judgment of acquittal and conviction and an order granting bail much before commencement of trial. The duty of the Court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. Further, the Court is required to record a finding as to the possibility of the accused committing a crime which is an offence under the Act after grant of bail. 31. Suffice it to observe that the appellant has not succeeded in persuading us about the inapplicability of the threshold stipulation under Section 45 of the Act. In the facts of the present case, we are in agreement with the view taken by the Sessions Court and by the High Court. We have independently examined the materials relied upon by the prosecution and also noted the inexplicable silence or reluctance of the appellant in discl....
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.... offence is that these persons must be knowingly or actually involved in any process or activity connected with proceeds of crime and "proceeds of crime" is defined under the Act, by Section 2 (1) (u) thereof, to mean any property derived or obtained directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence (which is referred to in our judgment as the predicate offence). Thus, whosever is involved as aforesaid, in a process or activity connected with "proceeds of crime" as defined, which would include concealing, possessing, acquiring or using such property, would be guilty of the offence, provided such persons also project or claim such property as untainted property. Section 3, therefore, contains all the aforesaid ingredients, and before somebody can be adjudged as guilty under the said provision, the said person must not only be involved in any process or activity connected with proceeds of crime, but must also project or claim it as being untainted property." 40. In Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929 the Apex Court has held as under:- "269. From the bare language of Section 3 of the 2002 A....
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....enge will have to be tested on its own merits and not in reference to the reasons weighed with this Court in declaring the provision, (as it existed at the relevant time), applicable only to offences punishable for a term of imprisonment of more than three years under Part A of the Schedule to the 2002 Act. Now, the provision (Section 45) including twin conditions would apply to the offence(s) under the 2002 Act itself. The provision post 2018 amendment, is in the nature of no bail in relation to the offence of money-laundering unless the twin conditions are fulfilled. The twin conditions are that there are reasonable grounds for believing that the accused is not guilty of offence of money-laundering and that he is not likely to commit any offence while on bail. Considering the purposes and objects of the legislation in the form of 2002 Act and the background in which it had been enacted owing to the commitment made to the international bodies and on their recommendations, it is plainly clear that it is a special legislation to deal with the subject of money-laundering activities having transnational impact on the financial systems including sovereignty and integrity of the countri....
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....equired to record a finding as to the possibility of his committing a crime after grant of bail. However, such an offence in futuro must be an offence under the Act and not any other offence. Since it is difficult to predict the future conduct of an accused, the court must necessarily consider this aspect of the matter having regard to the antecedents of the accused, his propensities and the nature and manner in which he is alleged to have committed the offence. 45. It is, furthermore, trite that for the purpose of considering an application for grant of bail, although detailed reasons are not necessary to be assigned, the order granting bail must demonstrate application of mind at least in serious cases as to why the applicant has been granted or denied the privilege of bail. 46. The duty of the court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. However, while dealing with a special statute like MCOCA having regard to the provisions contained in sub-section (4) of Section 21 of the Act, the court may have to probe into the matter deeper so as to enable it to arrive at a finding that the ma....
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....uled offence. The offence of money laundering is not dependent or linked to the date on which the scheduled offence or predicate offence has been committed. The relevant date is the date on which the person indulges in the process or activity connected with the proceeds of crime. Thus, the involvement of the person in any of the criminal activities like concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so, would constitute the offence of money laundering under Section 3 of the Act. ---------******--------******------****** 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....
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....e language of Section 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 ....
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.... the proceeds of the 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. ---------******--------******------****** 31. While we reject the first and second submissions canvassed by the learned senior counsel appearing for the appellant, the third submission must be upheld. Our conclusions are: a. 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; b. Even if an accused shown in the complaint under the PMLA is not an accused in the scheduled offence, he will ben....
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....ly noticing the stand of the Enforcement Directorate who has alleged that the extent of work and supply made by the applicant in context with the money paid by M/s Shine City to the applicant in his firms are not as per prudent business practices. 44. In light of the above, the thrust of the submission of the learned counsel for the applicant that the applicant is a bona fide business man who just had pure business transaction with M/s Shine City and he received money for the work done and supplies made which cannot be taken as a commission of offence or as being involved in money laundering. 45. At this stage, it will be relevant to refer to Section 2 (1) (u) which defines the phrase 'proceeds of crime' and it clearly indicates that any person who derives any property or obtains, directly or indirectly as a result of a criminal activity would be treated as proceeds of crime. The word 'property' as defined in Section 2 (1) (v) includes both movable and immovable property as also tangible or intangible, corporeal or incorporeal and includes deeds and instruments evidencing title or interest indicates that it is a wholesome inclusive definition. 46. The offen....
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....ven though the applicant was called for recording his statements and the applicant gave his statements on eight dates, this only demonstrates that the applicant on being called had appeared to give his statement but it in no way is an explanation for prime facie lending sufficiency to his statements regarding the movement of funds from M/s Shine City into the accounts of the applicant and his firms. 51. It may be right to say that the amount in the accounts of the applicant and his firm was derived from the business transaction and the business relations of the applicant and his firms with M/s Shine City but despite taking the same at its face value, yet there is no explanation as to how the applicant was engaged to enter into deal with the farmers to procure land for and on behalf of the company M/s Shine City. From the perusal of the letter of engagement, filed as annexure no. 2, apparently does not bare any date nor it refers to any resolution by the Board of Directors approving the engagement of the applicant and conferring powers on the applicant to negotiate on behalf of the company M/s Shine City. 52. The company M/s Shine City admittedly has not executed any power of ....