AI Drafter 
TaxTMI 
TaxTMI 
2025 (5) TMI 655
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.... read with Sections 406, 409, 420 of the Indian Penal Code, 1860, (for short, 'IPC'), and Section 13 (2) read with Section 13 (1) (d) of the Prevention of Corruption Act, 1988, (for short, 'PC Act'), registered with CBI, ACB, Chandigarh. Factual Background 2. The present ECIR arises out of FIR/RC being RCCHG2020A0021 which was registered with CBI on a complaint filed by the then Chief Manager of Punjab National Bank, Hindu College Branch, Sonipat, Haryana, against M/s Sunstar Overseas Ltd. (for short, 'accused company') and its directors. As per the said FIR, accounts of 5 banks, namely, PNB, ICICI Bank, IDBI Bank and State Bank of India were declared NPAs (Non-Performing Assets). It was alleged that the accused company had availed various credit facilities from 'Consortium of 9 lender Banks' [Punjab National Bank; Corporation Bank; City Union Bank; Karur Vysya Bank; Karnataka Bank; Canara Bank; ICICI Bank; IDBI Bank; and State Bank of Patiala] and had diverted/siphoned off the said loan amount, thereby, failing to repay the said loan amounts to the banks. It was also alleged that the accused company had also violated terms and conditions of the loan agreements in respect of ....
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..... In view of the aforesaid facts, investigation was undertaken by ED/respondent through which it was revealed that the accused company through its directors/promoters was indulged in generation of proceeds of crime to the tune of Rs. 539 Crores approximately. It was further revealed that groups of firms/companies [M/s Star Global Multi Ventures Pvt. Ltd./SGMV and M/s. Star Rice Land Pvt. Ltd./SRLP] were created as fictitious debtor of the accused company for the sole purpose of generation of 'proceeds of crime' by diversion/siphoning off of rice stocks procured out of loan availed from the aforesaid consortium. It was further revealed that the said entities were owned and controlled by ex-directors, promoters of the accused company and were diverting 'proceeds of crime' to a NBFC, namely, Kalptaru Fincap Ltd., (Kalptaru), through layers of ARCs (Asset Reconstruction Companies). It had further emerged that dummy entities, i.e., M/s Shivakriti Agro Ltd., Shivakriti, allegedly owned and controlled by ex-directors and promoters of the accused company, was used as mode for diversion of stocks of rice from the accused company and its fictitious debtor company (SGMV), as noted hereinabove....
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..../s SOL as a consultant (sales) even after he left M/s SOL in July, 2017 and got paid at par with his last salary. 10.19.2 That it is further revealed that Paramjeet got his yes-man and friend Rohit Dogra appointed as a dummy director of M/s. Shiva Kriti Fashion Pvt. Ltd. (later renamed as Shivakrit Agro Pvt Ltd). Paramjeet then got himself appointed as Chief Operations Officer (COO) of this company in November, 2017 by authority and signatures of Rohit Dogra as director. He later on acquired its 100% shareholding and directorship and he is the current director and shareholder of M/s Shivakriti Agro Pvt. Ltd. As revealed by Paramjeet, Rohit Dogra as well as the auditor, Rakesh Kumar Gulati in their recorded statements U/s 50 of PMLA, even before becoming Director / shareholder in Shivakriti Agro, Paramjeet used to direct the then dummy Director, Rohit Dogra. It is also revealed that Paramjeet had been handling plants of M/s Sunstar Overseas at Bahalgarh, Sonepat and Amritsar through M/s Shivakriti Agro Pvt. Ltd. since Shivakriti Agro Pvt. Ltd. had Job Work Agreement with Sunstar Overseas Ltd. w.e.f. Nov, 2017 itself. It is also discovered from the statement recorded U/s 50 ....
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....erseas Ltd. and COO/director/shareholder/controller of M/s. Shivakriti Agro Pvt. Ltd. is one of the key persons who has played a key role and facilitated the transfer of 'proceeds of crime' through sham transactions of M/s Shivakriti Agro Pvt. Ltd. with M/s. Sunstar Overseas Ltd., Star Global Multi Ventures Pvt. Ltd. and other companies/ firms, discussed in preceding paras. He has also knowingly assisted in diversion and concealment of proceeds of crime from M/s. Purshotam Profiles Pvt. Ltd. to M/s. Umaiza Infracon LLP. Hence, he knowingly became party and actually involved in the processes and activities connected with the proceeds of crime, including its concealment, diversion, possession, acquisition, use and projecting it as untainted property and hence, he is guilty of committing the offence of money-laundering, in terms of Section 3 read with Section 70 of the PMLA, 2002 and hence, punishable U/s 4 of the said Act." Submissions on behalf of the Applicant 7. Learned Senior Counsel appearing on behalf of the applicant has submitted that latter was an employee of the accused company and had left the said company much prior to the initiation of CIRP proceedings against the ....
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....d merely arrested the present applicant only on the basis of suspicion and unsubstantiated conjectures which is contrary to the provisions of Section 19 of the PMLA. Reliance has been placed on Prabir Purakayastha v. State NCT of Delhi 2024 INSC 414 and Arvind Kejriwal v. ED 2024 INSC 512, in support of this contention. The relevant portion of Prabir Purakayastha (supra) judgment reads as under: - "29. Hence, we have no hesitation in reiterating that the requirement to communicate the grounds of arrest or the grounds of detention in writing to a person arrested in connection with an offence or a person placed under preventive detention as provided under Articles 22 (1) and 22 (5) of the Constitution of India is sacrosanct and cannot be breached under any situation. Non-compliance of this constitutional requirement and statutory mandate would lead to the custody or the detention being rendered illegal, as the case may be. *** *** *** 46. Now, coming to the aspect as to whether the grounds of arrest were actually conveyed to the appellant in writing before he was remanded to the custody of the investigating officer. *** *** *** 48. It may ....
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....rial whatsoever. 10. It is further submitted that the Facility Agreement in the present case is pending adjudication before an Arbitral Tribunal and any opinion by the respondent/ED regarding the same cannot be absolute as the same can be prejudicial to the case pending before the learned Arbitral Tribunal. Also, that CIRP proceedings against the accused company has been allowed and the respondent, which is an investigating agency, cannot sit in appeal to the findings of the learned NCLT. 11. Learned Senior Counsel has further submitted that the entire case of the respondent/ED against the present applicant is based on the disclosure statements recorded under Section 50 of the PMLA of the other co-accused persons and the said statements, in absence of any corroborative evidence, cannot be relied upon in order to give a finding of prima facie guilt for the arrest of the applicant. It is submitted that the said statements in itself are not admissible in evidence. Reliance has been placed on Sanjay Jain v. ED 2024 SCC OnLine Del 1656 and Vijay Madanlal Choudhary & Ors. v. Union of India & Ors. 2022 SCC OnLine SC 929, in support of this contention. 12. Learned Senior Counsel h....
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....eping the applicant under prolonged incarceration will not serve any purpose. Reliance has also been placed on Pankaj Kumar Tiwari & Anr. v. Enforcement Directorate 2024: DHC:8280, in support of this contention. 15. Learned Senior Counsel has further placed reliance on the following judgments in support of the present application: - i) Prakash Industries v. Union of India 2023 SCC OnLine Del 336,; ii) Ramkripal Meena v. ED 2024 SCC OnLine SC 2276, iii) Prem Prakash v. Union of India through Directorate of Enforcement (2024) 9 SCC 787: 2024 SCC OnLine SC 2270, iv) Manish Sisodia v. ED 2024 SCC OnLine SC 1920, Submissions on behalf of the Respondent/Directorate Of Enforcement 16. Learned Senior Counsel for the respondent/ED has submitted that the present applicant is prima facie guilty of commission of offence of money laundering and has not been able to satisfy the twin conditions provided under Section 45 of the PMLA. He submitted that the applicant has not been able to show that how the rigors of Section 45 of the PMLA are not applicable as the learned Special Court while rejecting the bail application filed by the applicant had recorde....
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....gro had started purchasing paddy rice from December 2017, i.e., after joining of the present applicant, for utilisation of assets of the accused company and this diversion of funds was with a view to undermine the entire legal process as well as the right of the creditors' who had advanced loans to the accused company. 19. Learned Senior Counsel for the respondent/ED has drawn attention of this Court towards the statement of the present applicant under Section 50 of the PMLA on 18.01.2014, wherein he had stated that after leaving the accused company, he continued to provide services in the said company as consultant, sales and was paid at par with his last salary. It is pointed out that the salaries of the accused company were also paid via Shivakriti Agro and Broadway Distribution Pvt. Ltd., as the said entities were paying the accused company for the work done by the said entities by virtue of the Job Work Agreements. It is submitted that after the present applicant had joined Shivakriti Agro as its director and shareholder, it had transferred a sum of Rs. 146 Crores during October 2019 to March 2020 to Umaiza. It is further pointed out that the entire capital and infrastructu....
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....nly disclose cognizable offences but also highlight a pattern of conduct that requires a thorough investigation. The procedural irregularities in the fraud classification process do not ipso facto vitiate the criminal investigation unless it is shown that the FIR is malicious or lacks a legal foundation altogether. There may be an overlap in the two issues, however, both are yet separate and distinct for the purpose of the investigation in the impugned FIR/RC. The Supreme Court in the case of Indian Oil Corp.10 observed that the mere fact that a complaint relates to a commercial transaction, for which a civil remedy has been availed, is not by itself a ground to quash the criminal proceedings. The Court has to apply its mind to see whether the allegations make out a prima facie criminal offence or not. In the present case, as has been observed above, the bare perusal of the impugned FIR/RC, on a prima facie basis discloses the ingredients of cognizable offences under Section 120-B and 420 of the IPC. 16. Therefore, the impugned FIR/RC which originates from the account being declared as 'fraud', can still sustain notwithstanding the account classification being set ....
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....ween the M/s Sunstar Overseas Pvt. Ltd. and M/s Shivakriti Agro Ltd. permitting the latter to utilize the plants and machinery for sale, which was used for diversion of funds misappropriated by the former. The said funds were further diverted to Umaiza and same were used finally to acquire the control of the accused company by way of facility agreement with M/s Shivakriti on the condition that on failure to repay, the share of the corporate debtor, i.e., M/s Sunstar Overseas Pvt. Ltd., will be acquired by M/s Shivakriti. It is on the basis of aforesaid loan, the resolution plan was passed by NCLT in favour of the aforesaid Umaiza. 25. The entire case of the prosecution is that the accused company had misappropriated the funds availed through loan from the consortium of banks, and thereafter, diverted the same into different entities and used Umaiza to acquire the control of said company again through resolution plan, which was passed by NCLT. It is, thus, alleged that the entire process of NCLT was misused and that the present applicant was the key member in the entire conspiracy. 26. The predicate offence was registered with CBI by way of FIR No. RCCHG2020A0021 on 31.12.2020....
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....at "bail is the rule, and jail is the exception." These stringent provisions regarding the grant of bail, such as Section 45 (1) (iii) of the PMLA, cannot become a tool which can be used to incarcerate the accused without trial for an unreasonably long time. 26. There are a series of decisions of this Court starting from the decision in the case of K.A. Najeeb (2021) 3 SCC 713, which hold that such stringent provisions for the grant of bail do not take away the power of Constitutional Courts to grant bail on the grounds of violation of Part III of the Constitution of India. We have already referred to paragraph 17 of the said decision, which lays down that the rigours of such provisions will melt down where there is no likelihood of trial being completed in a reasonable time and the period of incarceration already undergone has exceeded a substantial part of the prescribed sentence. One of the reasons is that if, because of such provisions, incarceration of an undertrial accused is continued for an unreasonably long time, the provisions may be exposed to the vice of being violative of Article 21 of the Constitution of India. 27. Under the Statutes like PMLA, the m....
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....to the accused, the Constitutional Courts can always decline to exercise jurisdiction to issue prerogative writs. An exception will also be in a case where, considering the antecedents of the accused, there is every possibility of the accused becoming a real threat to society if enlarged on bail. The jurisdiction to issue prerogative writs is always discretionary." 30. In Vijay Nair v. Directorate of Enforcement 2024 SCC OnLine SC 3597, it was observed and held as under: - "12. Here the accused is lodged in jail for a considerable period and there is little possibility of trial reaching finality in the near future. The liberty guaranteed under Article 21 of the Constitution does not get abrogated even for special statutes where the threshold twin bar is provided and such statutes, in our opinion, cannot carve out an exception to the principle of bail being the rule and jail being the exception. The cardinal principle of bail being the rule and jail being the exception will be entirely defeated if the petitioner is kept in custody as an under-trial for such a long duration. This is particularly glaring since in the event of conviction, the maximum sentence prescribed is ....
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....sed company, M/s Sunstar Overseas Pvt. Ltd., in facilitating the diversion of proceeds of crime through various entities including M/s Shivakriti Agro, and finally, acquiring the stakes of the accused company through Umaiza while it was under CIRP. It is relevant to note that the alleged main beneficiary of the proceeds of crime, Rohit Aggarwal, has not since been arrested in the present case. Even Ajay Soni, ex-director and shareholder of M/s Shivakriti Agro, has been cited as witness. 33. Reliance was placed by learned Senior Counsel on the order dated 08.07.2024 passed by the Hon'ble Supreme Court in Himansh @ Himanshu Verma (supra), wherein it was observed and held as under: - "2. We are inclined to set aside the impugned judgment on the sole ground that the mastermind of the alleged offence named Bharat Bomb has never been arrested in view of the statement made on behalf of the Directorate of Enforcement. What the appellant seeks is enlargement on bail. 3. Thus, taking note of the aforesaid fact alone, we are inclined to set aside the impugned order by granting bail to the appellant subject to the conditions that may be imposed by the designated Court. We ....
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....e grant of bail. Even an outer limit provided by the relevant law for the completion of the trial, if any, is also a factor to be considered. The extraordinary powers, as held in the case of K.A. Najeeb3, can only be exercised by the Constitutional Courts. The Judges of the Constitutional Courts have vast experience. Based on the facts on record, if the Judges conclude that there is no possibility of a trial concluding in a reasonable time, the power of granting bail can always be exercised by the Constitutional Courts on the grounds of violation of Part III of the Constitution of India notwithstanding the statutory provisions. The Constitutional Courts can always exercise its jurisdiction under Article 32 or Article 226, as the case may be. The Constitutional Courts have to bear in mind while dealing with the cases under the PMLA that, except in a few exceptional cases, the maximum sentence can be of seven years. The Constitutional Courts cannot allow provisions like Section 45 (1) (ii) to become instruments in the hands of the ED to continue incarceration for a long time when there is no possibility of a trial of the scheduled offence and the PMLA offence concluding within a reas....
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....s also matter of record that as per the reply (para 6) of the respondent/ED, investigation is still pending in the present case. It is also not the case of the respondent/ED that any money trail leading to the present applicant has been discovered or any property had been acquired by him from the alleged proceeds of crime. As noted hereinabove, the trial in the predicate/scheduled offence has not even started and is at the preliminary stage. The prosecution therein has cited 98 witnesses and the trial is not likely to be completed in a reasonable time. There are nearly 8000 documents in the predicate/scheduled offence registered with CBI and around 6000 documents in the present complaint case filed by the respondent/ED. Even as per the reply of the respondent/ED, investigation is still continuing with respect to identification and location of the remaining 'proceeds of crime' and determining the role of other persons/entities involved in the present case. The applicant is in judicial custody since 01.07.2024 and has undergone incarceration for more than 10 months. Keeping in mind the mandate of the Hon'ble Supreme Court in V. Senthil Balaji (supra), trial in the present complaint c....