TaxTMI 
TaxTMI 
2025 (1) TMI 1449
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...., 420, 468, 471 read with 120B and 34 of the Indian Penal Code, 1860 (hereinafter "IPC"). 2. The brief facts that led to the filing of the instant application are that on 12th March, 2024, FIR No. 59/2024 was registered at Police Station - Crime Branch, Delhi under Sections 274, 275, 276, 420, 468, 471 read with 120B and 34 of the IPC, based on a complaint by SI Gulab Singh. The complaint alleged the involvement of several accused persons in the procurement, manufacturing and sale of spurious anti-cancer medicines. 3. In the said FIR, it has been alleged that the primary accused, namely Viphil Jain and Suraj Shat, in collusion with their several associates, were engaged in the illegal procurement of empty vials and raw materials of anti-cancer drugs such as Keytruda and Opdyta. These counterfeit drugs were allegedly manufactured and distributed in the market to unsuspecting cancer patients. 4. Pursuant to the information received, the police formed six teams to conduct simultaneous raids across Delhi-NCR on 11th March, 2024. During the raid at Flat No. 1101, Block-2, Eleventh Floor, CSP Units, DLF Capital Greens, Moti Nagar, New Delhi, the accused persons were allegedly ca....
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....as the first supplementary prosecution complaint. 9. The applicant then filed a bail application seeking grant of regular bail, however, vide order dated 4th October, 2024, the said bail application was dismissed by the learned Court below. Hence, the present bail application. 10. Learned counsel appearing on behalf of the applicant submitted that the arrest of the applicant was unwarranted and conducted in violation of Section 19 of the PMLA, which requires 'easons to believe' before an arrest. 11. It is submitted that there was no material evidence to justify his arrest and that the grounds of arrest were merely a mechanical reproduction of statutory language without specific allegations. It is also submitted that he had cooperated with the investigation by responding to all summons and providing the necessary documents, and thus, there was no necessity for his custodial interrogation. 12. It is submitted that there is no direct evidence linking the applicant to the alleged 'proceeds of crime'. It is submitted that the applicant is a mere investor in M/s Delhi Medical Hub and was not involved in its day-to-day operations. It is submitted that the respondent relies pri....
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....afety, thus justifying stringent legal action. 21. It is submitted that the applicant was not merely an investor in M/s Delhi Medical Hub but was actively involved in the financial management of the firm. It is submitted that the applicant knowingly facilitated transactions involving the proceeds of crime generated through the illegal trade of counterfeit medicines. 22. It is submitted that there is sufficient material evidence, including financial records, electronic data and statements of co-accused persons, to establish the applicant's role in the laundering of illicit proceeds. It is submitted that the financial trail indicates the applicant's complicity in concealing and projecting 'proceeds of crime' as legitimate. 23. It is submitted that the applicant's conduct, such as transactions made via hawala channels and in third-party accounts indicates his direct involvement in the generation and layering of proceeds of crime, thereby falling squarely within the ambit of Section 3 of the PMLA. 24. It is submitted that the applicant has not satisfied the twin conditions under Section 45 of the PMLA, which requires demonstrating/proving that he is not guilty of the offenc....
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....re not sufficient to justify his arrest. Lastly, the applicant is exempted from the twin conditions of bail under Section 45 of the PMLA. However, even if it is assumed for the sake of arguments that he is not exempted under the proviso, the applicant satisfies the twin conditions prescribed under the aforesaid provision. 32. Learned counsel for the applicant has contended that the applicant's arrest was not conducted in compliance with the provisions of Section 19 of the PMLA which requires 'easons to believe' before making an arrest. It has been further argued that the statements made by co-accused Akshay Kumar under Section 50 of the PMLA form the sole basis for the applicant's arrest which are not sufficient to justify the applicant's arrest. 33. The question before this court is whether the applicant's arrest was carried out in adherence to the statutory requirements under Section 19 of the PMLA which mandates that the authorized officer must have 'eason to believe' based on material evidence before arresting an individual accused of money laundering. The said provision reads as under: "Section 19. Power to arrest (1) If the Director, Deputy Director, A....
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....uthorised under this Act are empowered to arrest an accused without warrant, subject to the fulfillment of conditions under section 19 and subject to the conditions enshrined under this section." 35. Having examined the statutory framework governing the power of arrest under Section 19 of the PMLA, this Court shall now proceed to consider the judicial precedents that have interpreted and applied these provisions in various factual contexts. 36. In Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1, the Hon'ble Supreme Court had made the following observations: "208. Section 19 of the 2002 Act postulates the manner in which arrest of person involved in money laundering can be effected. Sub-section (1) of Section 19 envisages that the Director, Deputy Director, Assistant Director, or any other officer authorised in this behalf by the Central Government, if has material in his possession giving rise to reason to believe that any person has been guilty of an offence punishable under the 2002 Act, he may arrest such person. Besides the power being invested in high-ranking officials, Section 19 provides for inbuilt safeguards to be adhered to by the authorised off....
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.... inconsistent with the provisions of PMLA in respect of arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings thereunder. It was noted that Section 19 PMLA prescribes the manner in which the arrest of a person involved in money laundering can be effected. It was observed that such power was vested in high-ranking officials and that apart, Section 19 PMLA provided inbuilt safeguards to be adhered to by the authorised officers, such as, of recording reasons for the belief regarding involvement of the person in the offence of money laundering and, further, such reasons have to be recorded in writing and while effecting arrest, the grounds of arrest are to be informed to that person." 39. The inference drawn from the above judicial pronouncements is that Section 19 of the PMLA imposes procedural safeguards on the arresting authority, thereby, ensuring that arrests are not made arbitrarily but are based on well-founded reasons which are also recorded in writing. The decisions quoted in the foregoing paragraphs reaffirm that compliance with these procedural requirements is mandatory, and any deviation from the prescribed framework c....
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....se of Cancer Medicine. *** Further Akshay Kumar admitted that you both took all financial and business decision mutually and you both have control over business of anti-cancer medicines in Ws Delhi Medicine Hub. That whatsapp chats between Neeraj Chauhan and you, Rajesh Kumar, revealed that you, Rajesh Kumar demanded sealed and unsealed Keytruda injection from Neeraj Chauhan. You, Rajesh Kumar through his firm i.e. M/s Delhi Medicine Hub further sold these anti-cancer medicines in open market including Hospital/s. Further, it is to mention that money for the purchase of such spurious anti-cancer medicines was transferred from the bank accounts of M/s Delhi Medicine Hub to the accounts of family members of Viphil Jain, Suraj Shat, Tushar Chauhan and others. *** *** That further, it is revealed that you, Rajesh Kumar and Akshay Kumar had sold anti-cancer medicines procured from Neeraj Chauhan and others in open market and payments were received in the bank account of M/s Delhi Medicine. *** *** That, you, Rajesh Kumar was associated in running a fake anti-cancer medicine syndicate and involved to sell th....
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.... The relevant portion of various statements recorded under Section 50 of the PMLA is as under: "..Statement of Shri Akshay Kumar S/o Shri 1\ilaman Ram Sharma Rio 599, Burail, Sector-45, Chandigarh-160047; having DOB: 30.09.1985: mobile no 6239172836 and 9855003814, Email id: [email protected], Aged-39 years, recorded before the Assistant Director, Enforcement Directorate u/s 50 of PMLA, 2002 on 23.05.2024, In response to the summon no. PMLA/Summon/DLZO2 /2024/2496 dated 27.03.2024 and in compliance of order dated 22.05.2024 passed by Hon'ble Special PMLA, Court, Tis Hazari-West; I, Akshay Kumar S/o Shri Maman Ram Sharma presently residing at 1094, 2nd Floor, Sector-39B, Chandigarh; has appeared before Shri Praveen Kumar, Assistant Director, Directorate of Enforcement, Delhi Zonal Office-II, New Delhi on 23.05.2024, to tender my statement u/s 50 of PMLA, 2002. I have been explained the provisions of section 50 of PMLA, 2002 and I understand that I have to give my true and correct statement. I have been explained that my statement can be used as evidence against me or any other person in the proceedings under the PMLA, 2002. I understand that giving fals....
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....h 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]." 50. A careful reading of the provision reveals that the authorities empowered under Section 50 of the PMLA possess the authority to enforce discovery and inspection, compel the attendance of individuals, examine them on oath, require the production....
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...."investigation" in strict sense of the term for initiating prosecution; and the authorities referred to in Section 48 PMLA are not the police officers as held in Vijay Madanlal [Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1]. 22. It has been specifically laid down in the said decision that the statements recorded by the authorities under Section 50 PMLA are not hit by Article 20 (3) or Article 21 of the Constitution, rather such statements recorded by the authority in the course of inquiry are deemed to be the judicial proceedings in terms of Section 50 (4), and are admissible in evidence, whereas the statements made by any person to a police officer in the course of an investigation under Ch. XII of the Code could not be used for any purpose, except for the purpose stated in the proviso to Section 162 of the Code. In view of such glaring inconsistencies between Section 50 PMLA and Sections 160/161CrPC, the provisions of Section 50 PMLA would prevail in terms of Section 71 read with Section 65 thereof." 55. In light of the foregoing judicial pronouncements, it is evident that statements recorded under Section 50 of the PMLA hold evidentiary value and are a....
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....ta, which indicate the applicant's active role in the alleged money laundering activities. 61. By virtue of Section 24 of the PMLA, the respondent is not required to conclusively establish the applicant's guilt at the pre-trial stage, rather, the applicant must demonstrate that the proceeds of crime attributed to him are not linked to money laundering. In the absence of any rebuttal by the applicant, the presumption under Section 24 of the PMLA stands in favor of the respondent, thereby, justifying his continued detention. 62. With regard to the above, this Court has referred to the judgment of the Hon'ble Supreme Court in Prem Prakash v. Enforcement Directorate, (2024) 9 SCC 787, wherein, the following observations were made: "In Vijay Madanlal Choudhary [Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1] dealing with Section 24 PMLA, the three-Judge Bench held as under : (SCC pp. 229-31, paras 237 & 239-40) "237. Be that as it may, we may now proceed to decipher the purport of Section 24 of the 2002 Act. In the first place, it must be noticed that the legal presumption in either case is about the involvement of proceeds of crime in money-launde....
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....leading evidence within his personal knowledge [Sarbananda Sonowal v. Union of India, (2005) 5 SCC 665]. 240. Such onus also flows from the purport of Section 106 of the Evidence Act. Whereby, he must rebut the legal presumption in the manner he chooses to do and as is permissible in law, including by replying under Section 313 of the 1973 Code or even by cross-examining prosecution witnesses. The person would get enough opportunity in the proceeding before the authority or the court, as the case may be. He may be able to discharge his burden by showing that he is not involved in any process or activity connected with the proceeds of crime. In any case, in terms of Section 114 of the Evidence Act, it is open to the court to presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct, and public and private business, in their relation to the facts of the particular case. Considering the above, the provision under consideration [Section 24 (a)] by no standards can be said to be unreasonable much less manifestly arbitrary and unconstitutional." 63. In light of the principles enunciated by....
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...., the onus shifts to the applicant to rebut the presumption that the proceeds of crime were not involved in money laundering. The applicant, however, has failed to provide any credible evidence to rebut this presumption. Mere denial of involvement or assertion of being an investor in the firm without day-to-day operational control is insufficient to discharge the burden imposed by the statute. 68. Furthermore, as clarified by the Hon'ble Supreme Court in various judgments, the presumption under Section 24 (a) of the PMLA does not operate conclusively and allows the accused an opportunity to rebut the same through cross-examination, production of evidence, or explanations under Section 313 of the CrPC. In the absence of any such rebuttal, the presumption stands in favor of the respondent, and the applicant's continued detention is justified under the PMLA. 69. Therefore, it is observed by this Court that the respondent had sufficient material in its possession, including financial records, digital evidence, and the applicant's communications, to establish a valid 'reason to believe' that the applicant was guilty of the offence of money laundering. The procedural sa....
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....ail, 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 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 limitations 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 mean....
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....that have interpreted and applied Section 45 of the PMLA in various factual contexts. 80. The Hon'ble Supreme Court in Nikesh Tarachand Shah v. Union of India, (2018) 11 SCC 1 struck down the twin conditions as unconstitutional. However, the legislature subsequently amended the provision to cure the defects, and it has since been upheld in Vijay Madanlal Choudhary (Supra), reaffirming the strict nature of bail conditions under the PMLA. In Prem Prakash (Supra), the Hon'ble Supreme Court has also delved into the principles pertaining to bail in PMLA matters. The relevant paragraphs are as under: "Section 45 PMLA - Contours 10. Considering that the present is a bail application for the offence under Section 45 PMLA, the twin conditions mentioned thereof become relevant. Section 45 (1) PMLA reads as under: "45. Offences to be cognizable and non-bailable. - (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), 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 an opportunity to oppose the application for such release; a....
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....High Courts attempt to play safe in matters of grant of bail. The principle that bail is a rule and refusal is an exception is, at times, followed in breach. On account of non-grant of bail even in straightforward open-and-shut cases, this Court is flooded with huge number of bail petitions thereby adding to the huge pendency. It is high time that the trial courts and the High Courts should recognise the principle that "bail is rule and jail is exception." 12. All that Section 45 PMLA mentions is that certain conditions are to be satisfied. The principle that, "bail is the rule and jail is the exception" is only a paraphrasing of Article 21 of the Constitution of India, which states that no person shall be deprived of his life or personal liberty except according to the procedure established by law. Liberty of the individual is always a Rule and deprivation is the exception. Deprivation can only be by the procedure established by law, which has to be a valid and reasonable procedure. Section 45 PMLA by imposing twin conditions does not re-write this principle to mean that deprivation is the norm and liberty is the exception. As set out earlier, all that is required is that....
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..... 85. The respondent has provided a detailed representation of the modus operandi of the accused persons in the form of a graphic illustration. 86. As emphasized by the Hon'ble Supreme Court in a catena of judgments, the offence of money laundering must be viewed in the context of the entire criminal enterprise rather than in isolation with respect to individual roles. The collective nature of the operations, the financial interlinkages between the accused persons, and the fraudulent intent evidenced through sustained unlawful activity, leave no doubt that the applicant was an integral part of the broader scheme to launder proceeds of crime. At this stage, this Court has referred to the judgment of the Hon'ble Supreme Court passed in the matter of Saumya Chaurasia v. Enforcement Directorate, (2024) 6 SCC 401, wherein, the Hon'ble Court extensively discussed the working of a syndicate and how the proceeds of crime are attributable to the same along with the discretion granted to the Courts under the proviso to Section 45 of the PMLA. The relevant paragraphs of the same are as under: "..19. As stated hereinabove, the supplementary complaint was filed against the appell....
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....g by way of possession, concealment, use, acquisition and projecting the proceeds of crime as untainted property. As per the findings of the investigation, it can be inferred that Saumya Chaurasia has directly acquired "proceeds of crime" as defined under Section 2(l)(u) PMLA, 2002 to an extent of more than Rs 30 crores. ED's investigation makes it evident that although all the money of extortion on coal & iron pellet transportation was collected by the syndicate of Suryakant Tiwari, he was not the final beneficiary of this scam. He did utilise large amounts of money for purchasing benami assets, but big chunks of the money were transferred to Saumya Chaurasia, spent on political funding and transferred as per the instructions of higher powers. Mr Manish Upadhyay, a relative of Mr Suryakant Tiwari, is a close associate of both Mrs Saumya Chaurasia & Mr Suryakant Tiwari. ED investigation has established that Mr Manish Upadhyay was inserted in as an extra layer of protection for cash dealings between Mr Suryakant Tiwari and Mrs Saumya Chaurasia. He used to transport cash from Mr Suryakant Tiwari to Mrs Saumya Chaurasia. ED investigation has established ....
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....re scheme of laundering illicit funds, as uncovered by the investigation, extends far beyond the threshold of one crore rupees, and the applicant's role must be assessed in the broader context of the criminal conspiracy in which he actively participated. 90. It is evident that an entire syndicate with established network and properly defined roles exist and operates at different levels, which, when taken into consideration in entirety clearly establish that the proceeds of crime are more than Rs. 1 Crore, and thus, the proviso is not applicable in the present case. 91. Now this Court shall decide as to whether the applicant satisfies the twin conditions of bail under Section 45 of the PMLA. 92. It is well settled, as reiterated by the Hon'ble Supreme Court in Vijay Madanlal Choudhary (Supra) and Manish Sisodia v. Enforcement Directorate, 2024 SCC OnLine SC 2274, that while the stringent twin conditions under Section 45 of the PMLA restrict the right to bail, they do not impose an absolute bar. The discretion of the court in granting bail remains judicial and must be exercised in accordance with the settled legal principles. The governing principle that "bail is the rul....
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....cate that the rigors of Section 45 continue to apply. 98. The present bail application has also been filed under Section 439 of the CrPC, therefore, this Court, while considering the plea for bail, deems it necessary to evaluate the applicant's case through well-established principles governing the grant of bail under the said provision. Notwithstanding the rigors of Section 45 of the PMLA, the courts have consistently applied the 'triple test' as a guiding framework while considering bail applications under special statutes, including the PMLA. 99. The triple test, derived from Section 439 of the CrPC, consists of the various parameters. First, whether the accused is likely to abscond or evade the process of law if released on bail. Given the nature of offences under the PMLA, which often involve complex financial transactions and cross-border elements, the potential for absconding is a significant concern. Second, whether the accused, if released, is likely to influence witnesses or tamper with evidence. In money laundering cases, where the trail of proceeds of crime is intricate and dependent on multiple records and statements, the possibility of interference with ongoing ....
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....pplicant's continued detention is warranted to ensure the integrity of the investigation and prevent any potential misuse of the judicial process. 107. Having dealt with all the issues, this Court is of the view that considering the filing of the first supplementary prosecution complaint and the ongoing nature of the investigation, this Court is not satisfied that the applicant has fulfilled the twin conditions under Section 45 of PMLA. The respondent has presented sufficient material to warrant further investigation, including financial records, electronic evidence, and statements of co-accused implicating the applicant. These materials suggest an active involvement in laundering proceeds of crime and a pattern of financial transactions that need further investigation. 108. The ongoing investigation is an extensive and meticulous effort by the investigating agency to unearth a broader nexus of financial misconduct and uncover deeper layers of the alleged offence. As new evidence continues to emerge, it may further solidify the allegations against the applicant. The complexity of the financial trail and its potential societal and national ramifications require continued custo....
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....ment 2 the above said. to Muraj chauhem from bink account statement of M/s. Deltri Matisone hub, I identify the tromsactions belong Payment made to Muraj chantier from above in respect of Purchase Said bank account to of spurious anti comeer mechicines, detail as uniter, Date Debit amant Grubit amount 06-11-2023 100000 06-11-2023 10000 06-11-2023 100000 20-11-2023 300000 23-11-2923 453000 04-12-2023 450000 06-12-2023 300000 20-12-2023 300000 20-12-2023 400000 11-01-2024 500000 11-81-2824 30000 16-01- 2024 280000 16-01-2024 300000 1 11 09-02-2024 Praveen kumar 23/05/27 500000 23/15/24 Document 3 I funther state that Payment to I used to Smaj shat bank account on the make by using the sand instruction of theras sail above bank on pumal of the Statement Chauhom. account of m/s Delhi Medicine hub, I identify the tromsctions belongs to made to emaj shat Chauhem from above 8 Payment instuction of slices. said bank account in emer respect of Pinchase of spurious anti ....
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.... of spacious anti concer viz. Keytande opclyts. Perjeta, Tecently. Bevates from steeraj Chrution and medicines Tushan chanhem. 3. Please perme . bank account statement. of M/s. Delhi medisine hub bearing accomms the 0782 0500 1511 from the 29.03.2023 to martstarted with suges Bunse Payment recevic explain bink account from Limited in the 2.3.03.2024 Please sanks Ùˆ State that Ans. the above sand bank various entites/Parsons. 3 arcare fully gone through of M/s account Delhi med reine hub and I put my dated each page of the Signature on account. Braveen kumar 23/05/24 Bank Document 5 Date 07-10-2023 18-10-2023 16-12-2423 26-02-2023 Debit amount erectit amom2 315000 393000 246000 528000 I forther Commen mulizines viz. State that S Poncharel supliers anti keytmels, opely is. Perjets lamme to Shri Tinst on Teventing from Suraj chunkers and Tushar Chanham ime supplied the beruhenkisten sahib Ceye hospital S raised Bovoice in the bill aferesend hos portal ame spunters amti the b....