TaxTMI 
TaxTMI 
2024 (4) TMI 1381
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....;) and upon perusal thereof for grant of regular bail to the petitioner in PMLA case arising out of ECIR CDZO-1/01/2022 dated 06.01.2022 under Sections 3 and 4 of the PMLA. 2. Learned senior counsel has filed written arguments which are taken on record subject to all just exceptions. Further, submissions made by learned senior counsel for the petitioner are as follows:- 2 (a). That the arrest of the petitioner was carried out in flagrant violation of the mandatory provisions outlined in Section 19 of the PMLA. Given the absence of any incriminating material in the possession of the Investigating Officer indicating the petitioner's guilt under Section 4 of the PMLA, there was no legal basis for his arrest. Upon scrutiny of the Grounds of Arrest (Annexure P-10), it is evident that the Arresting Officer lacked any substantial material to conclude the guilt of the petitioner of an offence under Section 4 of the PMLA. Instead, the "reasons to believe" as recorded in the Grounds of Arrest are founded merely on the subjective views and beliefs of the Investigating Officer, rather than any cogent evidence pointing towards the guilt of the petitioner. 2 (b). That....
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....were used to obtain loans from a consortium of banks. 2 (e) (iv). That the petitioner wilfully omitted to report the diversion layering and siphoning off, of proceeds of crime through Parabolic Group Companies and various shell entities in his audit reports. 2 (f). That the aforestated accusations are devoid of any merit and are based on a deliberate misunderstanding of the role and responsibilities of the CA/statutory auditor. When acting as a statutory auditor of a company, the CA is tasked with auditing the accounts of the company based on information and material provided by the management and other officials of the company; audit report is subsequently prepared by the CA/statutory auditor who is obligated to express a true and fair view of the status of the company based on the provided information and documents. In the present case, the petitioner thus, just fulfilled his duty. Furthermore, being just a statutory auditor, the petitioner, was not involved in the day to day operations of the accused company nor did he have any control over them. Therefore, the notion that he, as a statutory auditor, assisted in the generation of proceeds of crime simply by pro....
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....tely quashed by this Court, then the question of any offence under the PMLA; in other words if the foundation is removed, the super structure would necessarily collapse. However, if the prayer for quashing is declined, then respondent No.2-ED would be free to proceed further. Therefore, even the proceedings under the PMLA should remain stayed awaiting the final outcome of the aforementioned writ petition. Consequently, during such a period, prolonged incarceration of the petitioner would be futile and he deserves to be granted the concession of bail. In support, learned senior counsel has placed reliance upon Vijay Madanlal Choudhary and others Vs. Union of India : 2022 SCC Online SC 929; B. Shanmugam Vs. Karthik Dasari, Deputy Director of Enforcement : 2022 SCC Online Mad 4417; Mantri Developers Pvt. Ltd. and others Vs. Directorate of Enforcement and another (Writ Petition No.20713/2022 decided on 14.12.2022) and WP(Crl) No.9/2024 titled as 'Anil Kumar Aggarwal Vs. Enforcement Directorate through its Assistant Director, Jammu' decided on 15.03.2024 (J&K HC). 2 (k). That despite the fact that vide order dated 07.12.2023 the arrest of the principal accused has been ....
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.... petitioner by highlighting the grave and serious allegations against him of facilitating a financial fraud amounting to Rs.1626.7 crores, however, the respondent-CBI has acknowledged that the name of the petitioner does not figure in the column of the names of the accused/suspected persons as also that the proceedings related to the predicate offence have been stayed vide order dated 26.02.2024 passed in CWP-3210-2022. 4. Learned counsel for respondent No.2-ED has filed written submissions which are taken on record subject to all just exceptions. Further, submissions made by learned counsel for respondent No.2-ED :- 4 (a). That the petitioner was duly arrested by the Arresting Officer in accordance with law, with no violation of Section 19 of the PMLA in the instant case; the guilt of the petitioner is evident from the material collected by the Arresting Officer, indicating his active involvement in concealing fund diversions and other deliberate shortcomings in the audit reports. The grounds for suspecting the guilt of the petitioner were duly recorded in the Grounds of Arrest, which in turn were promptly provided to the petitioner. At the time of the arresting a p....
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....e proceeds of crime through deceptive means, further routed through various companies including shell companies to obtain additional loans from banks. 4 (e). That the prosecution complaint delineates the commission of the alleged offence by the petitioner under Section 4 of the PMLA, implying that due to the gravity of the crime committed, the petitioner is not entitled to any relief. 4 (f). That the petitioner has also failed to satisfy the mandatory criteria laid down in Section 45 of the PMLA as he could not prima facie prove his innocence in the alleged offences or that he was unlikely not to commit any offence while on bail. Moreover, in view of the investigation still underway in the present case, and the high probability and risk of tampering with evidence, precludes him from being eligible for the grant of bail, especially at this juncture. 4 (g). That the medical condition of the petitioner does not qualify for relief under proviso to Section 45 of the PMLA as his ailments, as confirmed by a Medical Board from PGIMER, Chandigarh do not pose life threatening risk. The jail authorities are providing him with adequate medical care, and his condition....
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.... Directorate : 2023 SCC OnLine Del 1547. 4 (m). That the wife of the petitioner admittedly is undergoing treatment for cancer, however, the petitioner cannot be granted bail on the said ground as she is being taken care of by the doctors and her family members. Findings of this Court 5. I have heard learned counsel for the parties and perused the relevant material on record. 6. The petitioner initially sought the concession of bail on medical grounds stating that he was a 74 year old man suffering from various life threatening diseases, necessitating constant medical attention and monitoring that he purportedly lacked access to, within the confines of the jail. Learned senior counsel for the petitioner argued that given the severity of the following "life threatening diseases", the case of the petitioner qualified for bail under the proviso to Section 45 of the PMLA:- Sr. No. Diseases 1. Cervical Compressive Myelopath 2. NAFLD (Non-Alcoholic Fatty Liver Disease) 3. Subclinical Hypothyroidism 4. Hashimoto's Thyroiditis. 5. Senile Gynecomastia 6. Accelerated Hypertension 7. Grade II Prostatomegaly 7. Taking note....
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....y of the petitioner done in the presence of one of his family members. In compliance of the above order, angiography was carried upon the petitioner. The doctors' opinion affirmed that the petitioner's coronary arteries showed insignificant blockage and his echo cardiography displayed normal heart function. Underlying insignificant heart condition, diagnosed through angiography, was deemed manageable with medication and did not require any surgical intervention. The relevant portion of the report of the Medical Board is reproduced hereinbelow:- "........He is known case of diabetes mellitus and hypertension. Invasive coronary angiography performed on 4th March 2024 showed insignificant blockage of coronary arteries (Detailed report and angiography CD give to the patient), which needs the medical treatment and does not require any operation like angioplasty or bypass surgery. His echocardiography showed normal heart functions. He has been discharged on 5th March 2024 in satisfactory condition. The underlying, insignificant heart disease as diagnosed by angiography is not life threatening at present and to be managed with medicines which has been prescribed to him." ....
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....ctly involved in criminal activities and process related to money laundering, including generation, acquisition, possession, and proceeds of crime. Substantial documentary evidence was collected during investigation and searches conducted under Section 17 of the PMLA. Therefore, the Grounds of Arrest (Annexure P-10) provided a comprehensive overview of the case and the accusations against the petitioner, and the belief regarding the petitioner's guilt was founded on the material collected during the course of investigation. The law does not mandate the Arresting Officer to enumerate such material in possession in the Grounds of Arrest or furnish a copy thereof to the arrestee. The necessity for the petitioner's arrest is further evident from the Grounds of Arrest, wherein it was categorically stated that his custody was required to trace the money trail and locate the entire proceeds of crime concealed through various channels, within the petitioner's exclusive knowledge. Moreover, there was a foreseeable risk of proceeds of crime and evidence being tampered with or transferred. Additionally, it is a matter of record that the petitioner neither appeared nor participated....
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.... on the basis of which the lender Banks continued to issue fresh loans or enhance existing limits granted to PDL. Some of the major questionable transactions which were not commented upon/ pointed out by S.K. Bansal in the Audit Reports are as below: - * PDL had showed debt of Rs. 63 Crores towards CMSL. However, the debt was written off in the year 2013-14 without offering any reasonable rationale. It is also pertinent to note here that PDL had filed a civil suit against CMSL for the recovery of Rs. 2.65 Crores only and agreed to settle for payment of Rs. 2.40 Crores and there was no note from Statutory auditor as to when Rs. 63 Crores were receivables from CMSL and as to why suit for only Rs. 2.65 Crore was filed. * It was within the knowledge of Statutory Auditor that PNG was non-functional and did not had the capacity to offer corporate guarantee to PDL. However, the auditor in his audit report for FY 2019-20 reported that PNG had stood as Corporate Guarantor for PDL to the extent of Rs. 943.75 Crores. * Devaluation of Stock of Work In Progress (WIP) of PDL- While the Stock of WIP was reported at Rs. 302.21 Crores on 31.03.2015, it dramatical....
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.... In this regard, the board of Directors in the meeting held on 10.08.2013 has approved the enhancement of Authorized Share Capital of the company from 62 Crores to 72 Crores divided into 7,20,000/- equity shares of Rs. 10 each. On perusal of the Balance Sheet of F.Y. 2012-13, 2013-14 & 2014-15 of PDL, it has been found that there is no increase in the Share capital of the Company which is as follows:- * Share capital in the F.Y. 2012-13 was Rs. 61.89 Crores * Share capital in the F.Y 2013-14 was Rs. 61.89 Crore. * Share capital in the F.Y 2014-15 was Rs. 61.89 Crore. The Statutory Auditor of the company has never informed in the forthcoming Financial Years that the company has not induced capital through share application money. iii. On the behest of State Bank of India, Stock Audit of PDL was conducted by Independent Auditor M/s. Parveen Singia & Associates, Chartered Accountants wherein the said Auditor has pointed out certain observations/ discrepancies and on the basis of which, the State Bank of India has reduced the Drawing power of Cash Credit Loan by Rs. 50 Crores. The accused (S.K Bansal) Statutory Auditor of PDL had n....
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....Surjeet Kumar Bansal had indulged in generation, layering, acquisition, concealment and utilization of proceeds of crime by his active involvement in the criminal activities related to the scheduled offences defined u/s 2(1)(x) & 2(1)(y) of PMLA and; thus, committed the offence of money laundering as defined u/s 3 of PMLA which is punishable u/s 4 of PMLA." 14. Upon careful examination of the above allegations against the petitioner, it is evident at first glance that he was prima facie actively involved in the crime in question. As the statutory director of the accused company, the petitioner and his firm failed to red flag the huge diversion and siphoning off, of funds. Instead he purportedly aided the accused company in obtaining loans by issuing certificates that did not accurately depict its financial status. Allegedly, these certificates and audit reports misrepresented the true financial position and were intentionally issued by the petitioner to facilitate loan procurement by the accused company. It is the specific case of respondent No.2-ED that without these certificates, the banks would not have extended loans of such magnitude to the accused company. The petitioner h....
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....efore, a stay on criminal proceedings in the FIR initiated by respondent No.1-CBI would not extend to the proceedings for offences under PMLA, and they would have to await the outcome of the writ petition independently. 16. Furthermore, in the case of Sikandar Singh's case (supra) a Division Bench of this Court while relying upon Dr. Manik Bhattacharya's case (supra) concluded that Enforcement Directorate is not bound by the protective orders passed in FIRs of scheduled offences. Hence, in the light of the ratio of law laid down by Hon'ble Supreme the Court and a Division bench of this Court, the case laws relied upon by the learned senior counsel for the petitioner on this issue would not advance his cause, and this Court respectfully would disagree with those judgments. 17. A prayer has also been made by learned senior counsel for the petitioner for taking a compassionate view by extending the concession of regular bail to the petitioner since his wife is suffering from carcinoma of breast and is scheduled for mastectomy on 28.03.2024 in Bombay, therefore, the presence of the petitioner would be required for her care. Learned senior counsel for the petitioner ha....