TaxTMI 
TaxTMI 
2026 (7) TMI 656
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....tion 411 of Indian Penal Code, 1860 and Section 21 of Mines and Minerals (Development and Regulation) Act, 1957. (Status: Closure report submitted and accepted by Ld. Court on 16.11.2022) b) FIR No. 5/2018 dated 4.1.2018 at P.S. Haroli, District Una (H.P.) under Sections 34, 406 and 420 of Indian Penal Code, 1860 and Section 22 of Mines and Minerals (Development and Regulation) Act, 1957. (Status: Closure report submitted and accepted by Ld. Court on 25.6.2019) c) FIR No. 12/2018 dated 5.1.2018 at P.S. Una Sadar, District Una (H.P.) under Sections 120-B & 420 of Indian Penal Code, 1860, Section 21 of Mines and Minerals (Development and Regulation) Act, 1957 and Section 194 of Motor Vehicles Act, 1988. (Status: Closure report submitted and accepted by Ld. Court on 17.1.2023). d) FIR No. 229/2018 dated 17.5.2018 at P.S. Una Sadar, District Una (H.P.) under Sections 120-B & 420 of Indian Penal Code, 1860 and Section 21 of Mines and Minerals (Development and Regulation) Act, 1957. (Status: Closure report submitted in court on 9.8.2018 and accepted by Ld. Court on 22.6.2019). e) FIR No 120/2023 dated 28.8.2023 at P.S. Gagret, District Una (H.P.) under....
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....Crusher purchased another stone crusher namely Garhwal Stone Crusher located in Saharanpur (U.P.) for consideration of Rs. 4.70 crore in 2023-24. Out of Rs. 4.70 Crore, Rs 1.60 Crore was paid in cash generated from sale of illegal mine and minerals/sand of Jai Maa Jwala Stone Crusher. Therefore, proceeds of crime generated from sale of illegally mined and crushed riverbed material were alienated by investing in new stone crusher in another State (Uttar Pradesh) to project the tainted fund as untainted. 7.A search action dated 26.9.2024 was carried out at official premises of Garhwal Stone Crusher at Tehsil Behat, District Saharanpur (U.P.). During course of search, it is revealed that Garhwal Stone Crusher was also involved in illegal purchase and sale of illegally mined riverbed mineral in the basin of Yamuna riverbed. Therefore, offence of illegal mining/purchase - sale of illegally mined material subsequent laundering proceeds continued from river basin of Beas to river basin of Yamuna. 8.Further, search proceeding also revealed that State GST department on 20.6.2024 has seized excess river bed material to the tune of Rs. 62.14 lakh at the official premises of Garhwal Ston....
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.... a) The Garhwal Stone Crusher was purchased by Gian Chand and applicant for consideration of Rs. 4.70 crore, out of aforesaid amount, an amount of Rs. 1.80 crore was generated and intermingled with Rs. 2.9 crore of bank deposit. Out of said amount of Rs. 1.80 crore Rs. 1.60, was generated by Jai Maa Jwala Stone Crusher from sale of illegal mined riverbed mineral in riverbed of Beas (Himanchal Pradesh). b) Garhwal Stone Crusher is involved in acquisition/purchase and sale of illegal mined rivedbed minerals. c) The GST department had seized the minerals worth Rs. 62.14 lakhs, however, the aforesaid seized minerals were sold illegally without any permission of GST department. d) M/s Star Mines has sold illegally mined river bed material of 143552 quintals (value of Rs. 21,53,280) to Garhwal Stone Crusher. 13.As per Table No. 6 of complaint (of Directorate of Enforcement before court concerned), the property of Shri Gian Chand was seized by Enforcement Directorate including residence, cash, time deposit, current account of M/s Jai Maa Jwala Stone Crusher. The said Table No.6 does not disclose that any property of applicant has been seized by Enforcement Di....
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....f said Rs. 55,33,380/- Rs. 31,50,000/- were deposited in Bank accounts of Jai Maa Jawala Stone Crusher. He has further stated that he has not observed any considerable cash movement which could enable Gian Chand to acquire/purchase Garhwal Stone Crusher by paying Rs. 1.6 crore in cash. From the aforesaid it is concluded that the purchase price of Garhwal Stone Crusher was deposited by Gian Chand from the sale of illegally mined minerals by Jai Maa Jawala Stone Crusher. f) From the statement of Vijay Kumar, accountant of Gian Chand, it is revealed that Jai Maa Jawala Stone Crusher received an amount of Rs. 33,53,710/- from sale of illegally crushed material for the period from 21.4.2024 to 27.4.2024. 16.In respect of Garwhal Stone Crusher, statement of applicant was recorded where it is stated that Rs. 1.60 crore was paid by Gian Chand and Rs. 20 lakh was paid by applicant for purchase of Garwhal Stone Crusher. Further, prosecution alleges that applicant did not provide documentary evidence with regard to source from which Rs. 20 lakh was paid. Garhwal Stone Crusher was involved in sale and purchase of illegally mined material. 17.The complainant (Enforcement Director....
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.... considered as proceeds of crime. The prosecution has further failed to identify any proceeds of crime in respect of applicant in Uttar Pradesh. One First Information Report was registered on 7th November 2024 in Uttar Pradesh, in the aforesaid also no proceeds of crime have been identified. The applicant has been in jail for about 18 months (since 18.11.2024) and as such is entitled for being enlarged on bail. In case applicant is released on bail, he will not misuse the liberty of bail and will cooperate in the trial. 19.Learned counsel for Enforcement Directorate has opposed the bail application and submitted that the applicant along with other person were engaged in illegal mining activities at Himachal Pradesh in respect of which six First Information Reports being schedule offence were lodged at Himachal Pradesh. It is further submitted that the income generated from illegal mining activities at Himachal Pradesh were used for purchase of Garhwal Stone Crusher at Uttar Pradesh. It is further submitted that proceeds of crime have been detailed in paragraph 5 of the complaint. It is further submitted that Garhwal Stone Crusher was also involved in purchase and sale of illegal....
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....e or property must be as a result of criminal activity relating to schedule offence. As per section 2(y) of PMLA, Act, 2002, schedule offence is specified under Part A of Schedule to PMLA Act, 2002 or offences specified under Part B of Schedule if the total value involved in such offences is thirty lakh rupees or more. In this respect Section 2(y) of PMLA Act, 2002 is quoted hereinbelow :- "scheduled offence" means-- (i) the offences specified under Part A of the Schedule; or (ii) the offences specified under Part B of the Schedule if the total value involved in such offences is thirty lakh rupees or more" 23.Further, the term "property" is defined under Section 2(v) of PMLA Act, 2002 means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located. 24.In the present case, as per prosecution, initially schedule offence are six First Information Reports (detailed provided hereinabove) lodged in Himanchal Pradesh. The said First Information Reports pertains to illegal mining ....
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.... investigating agency arising out of FIR No 5/2018. e) In respect of two First Information Reports being FIR No.7/2023 and FIR No.120/2023 lodged at Himachal Pradesh, the cancellation report has been filed by investigation agency before the court concerned on 12.11.2024 and 30.11.2024, respectively. The complaint of Enforcement Directorate rest upon these FIRs being one of schedule offences. The effect of cancellation report is that no schedule offence was found by investigating agency arising out of two FIRs. 25.The opposite party has lodged ECIR/HQ/1/2024 dated 2.7.2024 (under PMLA Act, 2002) after abovementioned four cancellation reports in schedule offence was accepted by the court concerned. Therefore, foundation of ECIR being schedule offence was not in existence on the date when the ECIR was registered. Further, other two above-mentioned First Information Report (schedule offence), cancellation report has been submitted by investigation officer. It has not been disclosed by opposite party that any material evidence was found against applicant in respect of schedule offence registered at Himachal Pradesh. 26.It is prosecution case that Jai Maa Jwala Stone Crush....
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....e Crusher itself is a proceed of crime arising out of schedule offence committed at Himachal Pradesh. 29.It is to be seen that once the schedule offence arising out of six First Information Reports at Himachal Pradesh have culminated in filing of cancellation report and four cancellation reports have been accepted by the court and before this Court no independent material by opposite party has been shown in respect of any schedule offence at Himachal Pradesh, it cannot be said that Garhwal Stone Crusher is proceed of crime arising out of schedule offence. It is admitted case of Enforcement Directorate that in respect of six First Information Reports lodged at Himachal Pradesh, cancellation reports have been submitted by investigating agencies in the aforesaid schedule offence. Out of aforesaid six cancellation reports, four cancellation reports have been accepted by courts at Himanchal Pradesh. 30.The opposite party also alleges that in Garhwal Stone Crusher, accused Gian Chand is having 75% shares whereas applicant is having 9% share and other accused persons, namely, Sanjay Sharma and Dharmendra are having 8% share each. Garhwal Stone Crusher was purchased for consideration....
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....ation laws. 32.The opposite party also alleges (in paragraph 5 of complaint) that Garhwal Stone Crusher have been purchased from the proceeds of crime (which has been discussed hereinabove) and further became instrumental in generating further proceeds of crime. Once it is found that Garhwal Stone Crusher is not purchased from proceeds of crime arising out of schedule offence at Himachal Pradesh (as detailed hereinabove), further generation of income by Garhwal Stone Crusher by itself may not be proceeds of crime. 33.It is further to be noted that paragraph 5 of complaint filed by opposite party discloses and identifies proceeds of crime in respect of present case. One of proceeds of crime identified in para 5 of complaint case is to the effect that during investigation, the star mines, partnership firm of Deepak Chaudhary, Bhani Karnwal and Ravinder Malik sold 143552 quintals of illegally mined minerals to Garhwal Stone Crusher. Thus, Star Mines too acquired the proceeds of crime to the tune of Rs. 21,53,280/- considering the value of illegally RBM at the rate of Rs. 15 quintal. The Star Mines used the said proceeds of crime in day-to-day affairs of Star Mines, therefore, th....
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....obtained as a result of criminal activity relating to schedule offence. As per case of Enforcement Directorate, offence in the present case is sale and purchase of illegally mined material by Garhwal Stone Crusher. The expression "property" under Section 2(v) of PMLA Act, 2002 means assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible. The sale and purchase of illegally mined material may be an offence in itself, however, the proceeds of crime are required to be identified by identification of assets obtained or derived by the criminal activity in respect of schedule offence. In paragraph 5 and 2.3(e)(i) of complaint (under PMLA Act, 2002) no property has been identified as proceeds of crime from the sale and purchase of illegal mining material by Garhwal Stone Cursher. 37.Money laundering is the process of hiding the illegal origin of money so it looks like it came from a legitimate source. Such illegal origin of money is described as proceeds of crime under PMLA Act, 2002. The "proceeds of crime" are assets derived from criminal activity relating to schedule offence. As per prosecution, in the present case one of the illeg....
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....eeds of crime arising out of schedule offence (of Garhwal Stone Crusher) should have been identified from other assets derived from legitimate means. It has not been shown that the seized assets were part of assets derived from schedule offence in Uttar Pradesh. A person may have assets derived from unknown source of income, however, that by itself cannot be presumed that the aforesaid assets are derived from schedule offence. Even otherwise no assets of applicant have been seized by Enforcement Directorate. The investigating agency has not found any schedule offence in respect of six First Information Reports lodged in Himanchal Pradesh. Further, in Uttar Pradesh no proceeds of crime has been identified in respect of applicant. Applicant not found in offence alleged to be committed in Himanchal Pradesh. 39.It is further to be noted that co-accused Gian Chand has already been enlarged on bail and investigation in present case (under PMLA Act, 2002) has been completed and complaint has been preferred by Enforcement Directorate before court concerned. It is further to be considered that punishment provided under Section 4 of PMLA Act, 2002 is not less than three years but may exte....
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.... Union of India, (1994) 6 SCC 731, para 15 : 1995 SCC (Cri) 39], it was held that undertrials cannot indefinitely be detained pending trial. Ideally, no person ought to suffer adverse consequences of his acts unless the same is established before a neutral arbiter. However, owing to the practicalities of real life where to secure an effective trial and to ameliorate the risk to society in case a potential criminal is left at large pending trial, the courts are tasked with deciding whether an individual ought to be released pending trial or not. Once it is obvious that a timely trial would not be possible and the accused has suffered incarceration for a significant period of time, the courts would ordinarily be obligated to enlarge them on bail. 17. It is thus clear to us that the presence of statutory restrictions like Section 43-D(5) of the UAPA per se does not oust the ability of the constitutional courts to grant bail on grounds of violation of Part III of the Constitution. Indeed, both the restrictions under a statute as well as the powers exercisable under constitutional jurisdiction can be well harmonised. Whereas at commencement of proceedings, the courts are expect....
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....established principle that "bail is the rule and refusal is an exception". We had further observed that the fundamental right of liberty provided under Article 21 of the Constitution is superior to the statutory restrictions." 46.In Prem Prakash Vs Union of India Through The Directorate of Enforcement, (2024) 9 SCC 787, the Hon'ble Supreme Court has held that Section 45 of PMLA Act does not restrict right of accused to grant bail. "11. In Vijay Madanlal Choudhary v. Union of India [Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1], this Court categorically held that while Section 45 PMLA restricts the right of the accused to grant of bail, it could not be said that the conditions provided under Section 45 impose absolute restraint on the grant of bail. Para 302 is extracted hereinbelow: (SCC p. 259) "302. It is important to note that the twin conditions provided under Section 45 of the 2002 Act, though restrict the right of the accused to grant of bail, but it cannot be said that the conditions provided under Section 45 impose absolute restraint on the grant of bail. The discretion vests in the court, which is not arbitrary or irrational but judicial....