TaxTMI 
TaxTMI 
2024 (9) TMI 1551
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....t the registration of FIRs bearing No. 14/2021 dated 18.05.2021, No. 1/2021 dated 18.05.2021, and No. 19/2021 dated 20.05.2021 by the Uttarakhand Police for the commission of offences under Section 420 of the IPC and under Sections 66C & 66D of the IT Act. It was also informed that FIR No. 141/2021 dated 29.05.2021 was registered by the Special Cell, Delhi Police, against unknown persons for the commission of offences under Sections 419, 420, 468, 471, 34, and 120-B of the IPC and Section 66D of the IT Act. FIR No. 8/2021 dated 01.06.2021 was registered for the commission of offences under Section 420 of the IPC and Section 66D of the IT Act by the CID, Cybercrime PS, Karnataka State Police, regarding similar cases of cheating and fraud nationwide, amounting to approximately Rs. 250-300 crores. 3. The preliminary investigation revealed that this was a case of large-scale money laundering, wherein public money was looted through apps such as Power Bank App, Tesla Power Bank App, Ezplan, etc., by luring people with the promise of doubling their money in a short period. Initially, the public received 10-15% of the deposited amount as interest; however, after some time, they stopped....
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.... for imports, import logistics, and in the form of cryptocurrencies. 5. During the course of the investigation, the ICICI Bank accounts of M/s. Diyabati Technology Pvt Ltd (Account No. 244605500362), M/s. Maojaza Technologies Private Ltd (Account No. 244605500407), and M/s. Sumyth Technologies Private Ltd (Account No. 244605500408) (first-layer shell entities) were analyzed. This analysis revealed that substantial funds received in these accounts were subsequently transferred to various other bank accounts, including the IndusInd Bank accounts of M/s. Akash Corporation (Account No. 259023954406) and M/s. Haresh Corporation (Account No. 201004377970) (second-layer entities). The ED's investigation also uncovered that these funds were further layered and laundered through additional accounts, including the ICICI Bank account of M/s. Sagar Diamonds Ltd. (Account No. 123805005479) and the IndusInd Bank account of M/s. Patel Rushabh & Co. (Account No. 201007176105) (third-layer entities). It was submitted that M/s. Sagar Diamonds Ltd. further transferred these funds either to its own SBI account (Account No. 039392347980) for outward remittances under the guise of imports or to the I....
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....d obtained a three-year work visa for the UAE, allowing him to travel frequently to Dubai under the guise of employment as a Sales Executive at Gems Star Trading FZE, based in Ajman, UAE. Furthermore, it was found that M/s. Sagar Diamonds Ltd. had made outward remittances of approximately Rs. 12 crores during May 2021 to Gems Star Trading FZE under the pretext of payments for diamond imports, indicating the respondent's involvement in transactions executed abroad. 8. The respondent was arrested on 19.09.2022 at 23.40 hours at New Delhi. 9. Vide the impugned order dated 19.10.2022, learned Sessions Judge after noting the submissions of the parties and the relevant laws, admitted the respondent on bail on the following terms; A. There is no reference in the response/reply of the ED regarding any connection of respondent or his company with shell companies like M/s. Diyabati Technology Pvt Ltd, M/s. Maojaza Technology Pvt Ltd, M/s. Sumyth Technologies Pvt Ltd, etc. (first layer entities). B. There is no evidence shown on the record reflecting any connection of respondent with M/s. Akash Corporation, M/s. Haresh Corporation, M/s. Balaji Traders, M/s. Dynamic....
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....monds Ltd and Bank account statements of M/s. Akash Corporation, M/s. Patel Rushabh & Co., M/s. Haresh Corporation, M/s. RHC Global Exports Pvt Ltd and M/s. Sagar Diamonds Ltd, it is noticed that M/s. Sagar Diamonds Ltd has received funds to the tune of approx. Rs.160 crores from M/s. Akash Corporation, M/s. Haresh Corporation and M/s. Patel Rushabh & Co. during the scam period i.e. from November, 2020 to June, 2021 and therefore the observation of he learned Trial Court that there is no material on the record to connect the "fourth layer entities" concerning to the respondent with the first and second layer entitites is wrong on the face of it. In this regard ED has also submitted that M/s. RHC Global Exports Pvt Ltd has shown purchases of approx. Rs.40.20 crores from M/s. Akash Corporation during the period from November, 2020 to March, 2021. (ii) The bail is also liable to the cancelled as the respondent in his statements recorded u/s 50 of the PMLA, falsely stated that he does not know any Mr. Akash Panchal (M/s. Akash Corporation), Mr. Rushabh Patel (M/s. Patel Rushabh & Co.) and Mr. Haresh Panchal (M/s. Haresh Corporation) whereas the whatsapp chats of Mr.Saurin Shah....
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....ed to be visited with a different approach in the matter of bail. The ED has placed reliance on the following judgments; State of Gujarat v. Mohanlal Jitamalji Porwal, (1987) 2 SCC 364], Anil Kumar Yadav v. State (NCT of Delhi),(2018) 12 SCC 129 Sunil Dahiya v. State (Govt. of NCT of Delhi), 2016 SCC OnLine Del 5566. 10. It is pertinent to mention here that after filing of the bail applications, certain orders came to be passed by this Bench regarding the modification of the terms and conditions of the bail. However, it is not disputed that the respondent has not violated any condition of the bail. 11. The respondent in its counter affidavit denied all the averments and submitted that well reasoned order for bail has been passed. It has been submitted that the respondent had appeared the ED as and when summoned and illegally arrested on 19.09.2022. The respondent submitted that even after grant of bail he had appeared as and when directed by the ED. The respondent submitted that the present petition is devoid of any substance or spirit but merely a browbeating, harassing and intimidating tactics with the sole motive and aim being to coerce, compel a....
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.... money was received in the account of M/s RHC Global Exports Pvt. Ltd. from M/s Sagar Diamonds Ltd. in respect of the sale transaction of rough diamonds in the normal course of business and the respondent has no involvement with any activity arising out of the scheduled offence. It has further been submitted that subsequently, co accused Vaibhav Dipak Shah was admitted to anticipatory bail on 15.112022. Respondent submitted that Mr. Vaibhav Dipak Shah has already deposited an amount of Rs.7.10 Crore which was alleged proceeds of crime. In support of his submissions, learned counsel for the respondent has relied upon the following judgments; i. Dolat Ram v. State of Haryana, (1995) 1 SCC 349; ii. Abdul Basit v. Mohd. Abdul Kadir Chaudhary, (2014) 10 SCC 754; iii. Myakala Dharmarajam v. State of Telangana, (2020) 2 SCC 74; iv. Air Customs Versus Shail Anand and Another 2022 SCC OnLine Del 114. 15. The respondent submitted that there are no supervening circumstances for cancelling of the bail nor is there any allegation that the respondent has misused or interfered in the course of the investigation. There is also no any allegation of tampering w....
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....d. The ED also alleged that an MOU for a property deal, executed by some individuals, including the respondent, on 24.05.2021, establishes that Mr. Akash Panchal was in contact with the respondent. Therefore, the respondent's claim of not knowing Mr. Akash Panchal is false. It was also stated that Mr. Akash Panchal was in regular contact with Mr. Vaibhav Dipak Shah. The ED alleged that documents revealed that the funds arranged by Mr. Akash Panchal from his group entities were involved in a scheme to transfer funds into the bank accounts of M/s Sagar Diamonds Ltd. 19. The documents including transactions of Rs 5.65 crores with M/s Sagar Diamonds Ltd. In the rejoinder, ED also explained the statement made by Mr. Saurin Shah regarding engaging him in various activities by Mr. Vaibhav Dipak Shah. 20. In the rejoinder, the ED brought to the notice of the Courts to the following submissions/facts pertinent to the issue at hand: a) SDL Directors were in contact of Akash Panchal, however, he neither produced Akash Panchal during investigation as committed by Rahil Chovatia in his statement on 13.07.2022 nor provided present whereabouts of Akash Panchal. b) Lega....
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....at the order granting bail by the learned Sessions Judge is unjustified, illegal, and perverse, and therefore liable to be set aside. The learned counsel argued that bail can be canceled if it is wholly unjustified, patently illegal, or perverse. In support of this submission, reliance was placed on Puran v. Rambilas (2001) 6 SCC 338, wherein it was inter alia held that the rejection of bail at the initial stage and the cancellation of already granted bail should be considered differently, requiring very cogent circumstances for cancellation. Grounds for canceling bail include interference with justice, evasion, or abuse of the bail concession, although these are not exhaustive. Additionally, a perverse order granting bail in a heinous crime without reasons can be grounds for cancellation. The concept of canceling bail due to an unjustified or illegal order differs from canceling bail due to misconduct or new facts, as clarified in Gurcharan Singh v. State (Delhi Admn.) (1978) 1 SCC 118 under Section 439(2), the focus should be on whether the bail order had serious infirmities, justifying High Court interference in the interest of justice. 22. Learned Special Counsel submitted t....
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....k account of various other dummy entities i.e., second layer entities. During the period August 2020 to June 2021 (during the scam period) and finally this money was taken out of country through third/fourth layer entities in the guise of payments made in the form of imports, import logistics and in the form of crypto currencies. 25. Learned counsel further submitted that during the period 07.05.2021 to 11.05.2021, POC to the tune of Rs. 10.10 crores was transferred from the first layer entities to the bank account of M/s Akash Corporation and M/s Haresh Corporation. During the period 07.05.2021 to 11.05.2021 and this was further layered and laundered during the same period in the ICICI Bank account of M/s Sagar Diamonds Ltd. M/s Sagar Diamonds Ltd. further transferred the said funds either to its own SBI account or in the guise of for making outward remittances in the guise of import or to the IDFC Bank account and SBI account of M/s. RHC Global Exports Pvt. Ltd. M/s. RHC Global Exports Pvt. Ltd. further remitted the said POC or Rs. 10.10 crores outward during the same period remittances in the guise of imports from Hongkong and Dubai. 26. Learned counsel further submitted t....
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.... at Gems Star Trading FZE, based in Ajman, UAE. M/s Sagar Diamonds Ltd. made an outward remittance of approximately Rs. 12 crores to this entity during the relevant scam period in May 2021, under the guise of payments for diamond imports, indicating that the accused was also involved in the transactions executed abroad. 30. Learned counsel submitted that the accused was the authorized signature of M/s RHC Global Exports Pvt. Ltd. and M/s Sagar Diamonds Ltd. Learned counsel submitted that the prosecution complaint has already been filed. It has further been submitted that after grant of bail to the respondent, Mr. Akash Panchal initially, remained absconded till he was traced on 18.11.2022 at Mumbai. It has been submitted that in his statement under Section 50 of PMLA on 18.11.2022 at Mumbai Zonal Office, Mr. Akash Panchal admitted that he used to provide accommodation entries on the instructions of/to the M/s Sagar Diamonds Ltd. and M/s RHC Global Pvt. Ltd. on instructions of the respondent. Learned counsel also submitted that Mr. Akash Panchal had also admitted that he had not done any business with the first layer entities and had provided only accommodation entries. 31. Le....
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....pective import documentation. iii. Unexplained huge outstanding export balances of around Rs. 16500 crores (i.e. Rs. 7000 crores of M/s Sagar diamonds Ltd., Rs. 6500 crores of M/s Sagarempire Jewels Pvt. Ltd., Rs. 4500 Crores of M/s RHC Global Exports Pvt. Ltd.) was also noticed and same remained unexplained. iv. The analysis of ledger of accounts of M/s Sagar Diamonds Ltd. and M/s RHC Global Exports Pvt. Ltd revealed that each of the said two entities has shown export sales of more than Rs.200 crores to Mars Ind & Comm Services Ltd. during the scam period April to June 2021 against which either the payment is outstanding till date or barter import purchases of similar goods has been shown to set off the Imports & Exports in their books of account. It has further submitted that M/s Sagar Diamonds Ltd. shown total outstanding payment of Rs. 1880 crores against exports to Mars Ind & Comm Services Ltd, Hongkong as on 01.04.2021 which was increased to Rs. 5,374 crores as on 01.04.2022 and final the same was found increased to Rs. 11,684 crores as on date of search whereas M/s RHC Global Exports Pvt. Ltd had shown total outstanding payment of Rs.304 cores against expor....
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....ll. Learned senior counsel submitted that the learned Trial Court has rightly observed that no evidence has been placed reflecting any correction with the second layer entities. It has been submitted that the observations made by the learned Trial Court regarding the missing link of required knowledge "proceeds of crime" cannot be interfered. 34. Learned counsel submits that this case involves alleged money laundering to the tune of Rs. 7.10 crores, which has already been deposited by Mr. Vaibhav Dipak Shah and Mr. Akash Panchal. Counsel further submitted that the ED has now come up with exponentially higher figures, seemingly to mislead the Court. It was submitted that the transactions between M/s Sagar Diamonds Pvt. Ltd. and M/s RHC Global Pvt. Ltd. are supported by documents and are genuine transactions. Similarly, it was submitted that the transaction of Rs. 10.10 crores was made for importing goods, and during the relevant time, amounts of Rs. 507,599 were transferred to Gem Star, and Rs. 50,535,188 was transferred to M/s Jiya Impex. It was submitted that these were genuine transactions, duly documented. Learned senior counsel further submitted that there is no material on ....
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....c. The word "relating to" (associated with/has to do with) used in Section 3 indicates only that property which is derived or obtained, directly or indirectly, as a result of criminal activity concerning the scheduled offence to be regarded as proceeds of crime; d. The "proceeds of crime" being the core of the ingredients constituting the offence of money-laundering, that expression needs to be construed strictly and therefore, the property must be derived or obtained, directly or indirectly, "as a result of" criminal activity relating to a scheduled offence; e. For being regarded as proceeds of crime, the property associated with the scheduled offence must have been derived or obtained by a person "as a result of" criminal activity relating to the concerned scheduled offence; f. Action cannot be resorted to against any person for money-laundering on an assumption that the property recovered from 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....
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....stified, illegal or perverse order is absolutely different from cancelling an order of bail on the ground that the accused was misconducted himself or because of some supervening circumstances warranting such cancellation. Reliance can be placed upon Puran vs. Rambilas (2001) 6 SCC 338. Similarly in Narender K.Amin vs. State of Gujarat (2008) 13 ACC 584 it was reiterated that when irrelevant materials have been taken into consideration by the court granting order of bail, the same makes the said order vulnerable and subject to scrutiny by the appellate court. Thus, if an order of grant of bail is perverse, the same can be set at naught only by the superior court. In Ranjit Singh vs. State of M.P. (2013) 16 SCC 797 it was inter alia held that there is a distinction between the concept of setting aside an unjustified, illegal or perverse order and cancellation of an order of bail on the ground that the accused has misconducted himself or certain supervening circumstances warrant such cancellation. Thus, if the order granting bail is found to be perverse one or passed on irrelevant materials, it can be annulled by the superior court. In Mayakala Dharmarajam and others vs. State of Tel....
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....ent basis. Very cogent and overwhelming circumstances are necessary for an order directing the cancellation of the bail, already granted. Generally speaking, the grounds for cancellation of bail, broadly (illustrative and not exhaustive) are: interference or attempt to interfere with the due course of administration of justice or evasion or attempt to evade the due course of justice or abuse of the concession granted to the accused in any manner. The satisfaction of the court, on the basis of material placed on the record of the possibility of the accused absconding is yet another reason justifying the cancellation of bail. However, bail once granted should not be cancelled in a mechanical manner without considering whether any supervening circumstances have rendered it no longer conducive to a fair trial to allow the accused to retain his freedom by enjoying the concession of bail during the trial" 43. Recently, the apex court in Prem Prakash vs. Union of India through the Directorate of Enforcement SLP (Crl) no. 5614/2024 dated 28.08.2024, while considering the scope of enquiry under Section 45 of PMLA has inter alia held as under: "13. Coming back to the scope of inq....
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....nt 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 materials collected against the accused during the investigation may not justify a judg....
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....ding of the material on record. This approach ensures that the liberty of individuals accused under special laws is balanced against public interest, without a meticulous examination of evidence during the bail stage. 45. In the present case, Mr. Zoheb Hossain, learned special Counsel for ED and Mr. Vivek Gurnani learned counsel have emphatically argued that the learned trial court has not discussed the entire material on record and has made certain observations which are contrary to the facts. 46. To start with the order granting bail is only a prima facie view being expressed by the court and such observations are not taken into consideration while deciding the matter finally. Generally, any observations made at the stage of bail are not taken into account after the parties lead their evidence and the matter is appreciated by the learned trial court. The case of the ED is based on the fact that the entity of the respondent has received the funds from the first, second and third layer entities. It is to be kept in mind that even as per Vijay Madan Lal Chaudhary (supra) it has categorically been held that ingredients constituting the offence of money laundering needs to be co....