TaxTMI 
TaxTMI 
2025 (12) TMI 645
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....ten submissions presented by the respective Counsel. 3. Based on an F.I.R. bearing No. 295 of 2024, dated 07/11/2024 under Sections 318 (4) 338, 340 (2) of BNS, 2023, registered with Malegaon Chawani Police Station, Nashik, Respondent No. 1 has registered the said ECIR bearing No. ECIR/MBZO-II/20/2024 on 11/11/2024. 3.1 Said F.I.R. No. 295 of 2024 was registered on the complaint filed by Jayesh Lotan Misal, wherein it is stated that one Seraj Ahmed Mohammad Harun Memon had collected the documents of identity from the informant, his brother Ganesh Misal and some other persons in the guise of giving them a financial benefit, .i.e., a job in APMC, Malegaon. Said Seraj Ahmed and his accomplices then used those documents to establish shell entities. Further, certain bank accounts were opened in NAMCO Bank, Malegaon, Nashik in the name of such shell entities. It is alleged that, in addition, Seraj Ahmed acquired new SIM Cards in the name of the informant and others and linked the SIM Cards with those bank accounts for the purpose of taking control and to operate those bank accounts. Later on, the said bank accounts were used to carry financial transactions including circular transa....
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....to whom they had also handed over all the documents, i.e., cheque book, debit cards and passbook, etc. of the said accounts. The said bank accounts were opened under the APMC scheme as instructed by the offenders. It is alleged that Ritesh Shah, present applicant (Accused No.4) and Sharifmiya Amirmiya Shaikh were actively involved in the aforesaid banking transactions and the three were working for Mehmood Abdul Samad Bhagad @ Challenger King, on whose instructions the said APMC bank accounts of the shell entities were actually opened; subsequently huge amount was collected in those accounts and it was followed by the withdrawal, as above. 3.5 Investigation revealed that the applicant and his accomplices tried to escape from India. Therefore, the Applicant and Sharifmiya Amirmiya Shaikh were arrested on 02/01/2025. Their statement came to be recorded under Section 50 of PMLA. Therein, the applicant and Sharifmiya Shaikh confessed that they alongwith their associates were actively involved in establishing the aforesaid shell companies on the instructions of Mr. Mehmood Bhagad @ Chalenger King and that, they have received commission in cash from said Mehmood Bhagad against withdra....
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.... e) Considering the material on record, even the offences under Sections 338 and 340 (2) BNS are not made out in this case. Because, the documents with the help of which the bank accounts were opened, were genuine documents, belonging to real and identifiable individuals. Said individuals had provided their documents in a hope of getting employment, as promised. To support this submission, reliance is placed on Mohammed, Ibrahim and Ors. vs. State of Bihar and Anr. 2009 (8) SCC 751, therein, in paragraph 14 it is observed and held as under: "14. An analysis of Section 464 of the Penal Code shows that it divides false documents into three categories: 1. The first is where a person dishonestly or fraudulently makes or executes a document with the intention of causing it to be believed that such document was made or executed by some other person, or by the authority of some other person, by whom or by whose authority he knows it was not made or executed. 2. The second is where a person dishonestly or fraudulently, by cancellation or otherwise, alters a document in any material part, without lawful authority, after it has been made or executed by either....
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....tly, by any person "as a result of" criminal activity "relating to" a scheduled offence [mentioned in Section 2(1)(y) read with Schedule to the Act] or the value of any such property. Vide the Finance Act, 2015, it further included such property (being proceeds of crime) which is taken or held outside the country, then the property equivalent in value held within the country and by further amendment vide Act 13 of 2018, it also added property which is abroad. By further amendment vide Finance (No. 2) Act, 2019, Explanation has been added which is obviously a clarificatory amendment. That is evident from the plain language of the inserted Explanation itself. The fact that it also includes any property which may, directly or indirectly, be derived as a result of any criminal activity relatable to scheduled offence does not transcend beyond the original provision. In that, the word "relating to" (associated with/has to do with) used in the main provision is a present participle of word "relate" and the word "relatable" is only an adjective. The thrust of the original provision itself is to indicate that any property is derived or obtained, directly or indirectly, as a result of ....
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....h proceeds of crime by way of any process or activity constitutes offence of money laundering under Section 3 PMLA. 107. Be it noted that the definition clause includes any property derived or obtained "indirectly" as well. This would include property derived or obtained from the sale proceeds or in a given case in lieu of or in exchange of the "property" which had been directly derived or obtained as a result of criminal activity relating to a scheduled offence. In the context of the Explanation added in 2019 to the definition of the expression "proceeds of crime", it would inevitably include other property which may not have been derived or obtained as a result of any criminal activity relatable to the scheduled offence. As noticed from the definition, it essentially refers to "any property" including abroad derived or obtained directly or indirectly. The Explanation added in 2019 in no way travels beyond that intent of tracking and reaching up to the property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence. Therefore, the Explanation is in the nature of clarification and not to increase the width of the main de....
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....aching up to the property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence." i) It is therefore follows that, in the case on hand, no offence under Section 3 of the PMLA is made out. Consequently, no proceedings under the said Act can be sustained. Any attempt by the prosecution to stretch the definition of "proceeds of crime" beyond the legislative contours authoritatively settled by the Supreme Court, must fail. j) Without prejudice to the aforesaid submission, he submitted that the applicant has no involvement whatsoever in any of the offences alleged in the FIR. Said allegations are entirely not supported by material evidence and rest on conjecture rather than factual foundation. k) The applicant has never visited any bank branch in which the accounts of the alleged shell entities were maintained for the purpose of making withdrawals, deposits or any other banking transaction. He has also never visited any ATM centre for the purpose of withdrawing the funds from such accounts. The enforcement directorate has not produced any ATM, receipt, CCTV footage, withdrawal slip, bank, transaction, recor....
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....ority amounts were withdrawn in cash. A couple of bank entries also surfaced during the course of the investigation which indicate that certain monies were credited in the bank account of the present applicant from one of the shell company's bank account. She submits that, originally, this offence was registered with the local police station. Later on, finding clue of an offence of the PMLA, the aforesaid ECIR came to be registered and accordingly the special case was filed. She submits that there is ample material to attract the predicate offences under BNS 2023, which led to the registration the offences under the PMLA. She submitted that the money withdrawn from the shell companies' bank accounts are likely to be used in criminal activities against the Nation. Therefore, the ATS has registered a separate offence. There is more than sufficient material against the applicant showing his involvement in the acts of opening of the bank accounts and withdrawing the crime proceeds out of it. Therefore, the trial Court rejected his prayer for bail. There is no change in the circumstances. Hence, bail be refused. 6. I have considered these submissions and the cited reported cases. The....
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....18 (4) Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine." Section 335. Making a false document.-A person is said to make a false document or false electronic record- (A) Who dishonestly or fraudulently- (i) makes, signs, seals or executes a document or part of a document; (ii) makes or transmits any electronic record or part of any electronic record; (iii) affixes any electronic signature on any electronic record; (iv) makes any mark denoting the execution of a document or the authenticity of the electronic signature, with the intention of causing it to be believed that such document or part of document, electronic record or electronic signature was made, signed, sealed, executed, transmitted or affixed by or by the authority of a person by whom or by whose author....
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....r an acquittance or receipt for the delivery of any movable property or valuable security, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine. 340. Forged document or electronic record and using it as genuine.-(1) A false document or electronic record made wholly or in part by forgery is designated a forged document or electronic record. (2) Whoever fraudulently or dishonestly uses as genuine any document or electronic record which he knows or has reason to believe to be a forged document or electronic record, shall be punished in the same manner as if he had forged such document or electronic record. 7. As defined in Section 2 (u) of the PMLA, "proceeds of crime" means any property derived or obtained directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country [or abroad]; [Explanation.-For the removal of doubts, it is hereby clarified that "proceeds....
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....plicant knowingly participated in the criminal activities to help the main accused for laundering of the money, for pecuniary benefit. As alleged, the money which was originally deposited in the bank accounts of the shell companies was accumulated through illegal business and online gambling/betting. Section 2 (v) of the PMLA defines the word 'property' which means any property or asset and includes intangible property. Bank accounts are intangible property because they represent a right to receive money rather than a physical object. To support this conclusion it is apt to refer the decision in State of Maharashtra vs. Tapas D. Neogy (1999) 7 SCC 685, therein, in paragraph 12, it is held by the Apex Court that the bank account of the accused or any of his relations is "property" within the meaning of Section 102 of Cr.P.C. and police officer in course of investigation can seize or prohibit the operation of the said account if such assets have direct links with the commission of the offence. In the case on hand, first, the accused persons deceived the individual victims of the crime, then made them to open their bank accounts and lastly, caused them to allow the accused to take ....
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.... the main accused. The fraudulent transactions also deceived the bank/s. This act is completely covered by the provisions of Section 318 (4), 338 and 340(2) of BNS. 11. Penal liability for any crime/offence arises on the basis of the related criminal act or omission and the end result of it. Considering the facts and circumstances of the case on hand, it appears that, if these individuals were not deceived and not made to give their documents of identity, with their informed consent for opening of the bank accounts in the names of shell companies and handing over the signed cheque books, the original money allegedly generated by way of an illegal business and/or online gambling/betting could not have been credited in the bank accounts of the shell companies nor its withdrawal was possible. In other words, association of the money gained by way of illegal business and/or online gambling/betting with the bank accounts of the shell companies opened by cheating and showing that money as that of the innocent individuals, was integral part of the entire scheme of this crime. Otherwise deriving or obtainment of said money with the help of false valuable security was not possible. Al....