TaxTMI 
TaxTMI 
2026 (8) TMI 1221
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.... brief facts of the case of the prosecution are as follows : (a) On the basis of 3 FIRs/complaints lodged by State Bank of India and erstwhile Corporation Bank (now Union Bank of India), it is alleged that PCH Group companies through their Directors Shri Balvinder Singh and Smt. Baljit Kaur, in criminal conspiracy with others obtained bank loans and cheated the bank by siphoning of the loan amounts. The accounts of the Directors were reported as fraud and they have inflated value of the stocks while submitting the stock statements. The Directors also availed various credit facilities by submitting false statements, they conspired with the other accused and diverted the credit to various fictitious companies which were floated by them and co-conspirators. Thus, there was alleged to be a loss of Rs.19.77 Crore to the bank. The Director Sri Balvinder Singh also tried to create a fabricated evidence that the name reflected in RBI defaulters' list was not him, which was verified to be wrong. The accused diverted and siphoned off the loan funds through shell and fictitious companies, rotated the funds through multiple bank accounts and utilised the same for personal enrichment, ....
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.... crore and Smt. Baljit Kaur received Rs.11.42 crore through such shell companies, falsely projected as unsecured loans. (f) The investigation further revealed that diverted loan funds were used for acquisition of immovable properties in the personal names of Shri Balvinder Singh and Smt. Baljit Kaur and the same was offered as collateral security for the purpose of renewal of credit facilities from Andhra Bank. Several properties were identified as proceeds of crime within the meaning of Section 2(1)(u) of the PMLA or properties of equivalent value, leading to issuance of a Provisional Attachment Order No.10 of 2022, dated 06.04.2022 where by 11 properties worth Rs.6,18,51,000/- were attached under Section 5(1) of the PMLA. It is settled law that the PMLA is a standalone enactment and the offence of money laundering is independent of the outcome of the scheduled offence. (g) The material on record clearly establishes that the accused knowingly indulged in and assisted the process of money laundering involving proceeds of crime amounting to a huge amount of Rs.747.59 crore altogether including principal outstanding, interest outstanding. A substantial portion of th....
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....failed to implicate the respective bank Branch Managers, who were responsible for verifying the genuineness of documents and accounts before sanctioning the loans. The charges rely solely on statements of individuals and conjecture, without demonstrating any active role or benefit to the petitioners. Both the petitioners have been subjected to physical and mental hardship and their professional and business reputations are at stake. For all these reasons, the charge sheet insofar as it relates to Accused Nos. 9 and 16 is liable to be quashed. (a) The learned counsel for the petitioners, to substantiate their case, relied upon the decisions rendered by the Hon'ble Supreme Court in Satish Mehra Vs. State (NCT of Delhi) and another [(2012) 13 Supreme Court Cases 614] and the Madras High Court in Murali Krishna Chakrala Vs. the Deputy Director, Directorate of Enforcement (PMLA) Ministry of Finance, Department of Revenue [2022 1 LW (3846)] The learned counsel contended that criminal proceedings cannot be allowed to continue on mere conjecture, surmises, or uncorroborated allegations and that the specific, direct involvement of the accused must be demonstrated. Since the petitio....
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....cy is competent to gather evidence and the petitioners' participation in the layering or integration of proceeds of crime, even indirectly, constitutes sufficient grounds for prosecution. (c) He further contended that the contentions regarding nonimplication of bank officials are irrelevant. The accused themselves misused the banking system and orchestrated the diversion of funds. Money laundering is a grave, systemic economic offence, recognized by the Supreme Court as an aggravated crime demanding stringent deterrent measures as held in Vijay Madanlal Choudhary and others Vs. Union of India [2022 SCC OnLine SC 929] and P. Chidambaram Vs. Directorate of Enforcement [AIR 2019 Supreme Court 4198] as well as Sushila Agarwal Vs. State of NCT of Delhi [AIR 2020 SC 831] Under Section 24 of the PMLA, the proceeds involved are presumed to be proceeds of crime until contrary is proved, shifting the burden squarely onto the petitioners. Cognizance of the case by the trial Court, confirms the existence of a prima facie case and the petitioners cannot seek pretrial quashing merely on the basis of conjecture. In view of the above, the petition is liable to be dismissed at the threshol....
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....vities, it is wholly inconceivable that they would have received only a nominal commission, particularly when the respondents themselves allege that the proceeds of crime are to the tune of Rs.747.59 crore. These circumstances clearly demonstrate that the petitioners neither actively participated in the commission of the alleged offence nor had any role in the generation or enjoyment of the alleged proceeds of crime. They were only mere agents, who worked for commission. In such circumstances, this Court is not persuaded by the submissions advanced on behalf of the respondent/ED. (d) Under Sections 3 and 4 of the PMLA, criminal liability can arise only upon proof of knowing participation, control, possession, projection or actual enjoyment of proceeds of crime. Mere facilitation, professional association, or intermediary coordination, absent cogent material demonstrating culpable intent and direct involvement, does not satisfy the statutory ingredients of the offence. (e) The Hon'ble Supreme Court, in Satish Mehra Vs. State (NCT of Delhi) (supra) held as under : "A Criminal trial cannot be allowed to assume the character of a fishing and roving enquiry. I....
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....h that the petitioners are beneficiaries of the proceeds of crime. (h) A holistic consideration of the record further reveals that the allegations against Manoj Baser and Om Prakash Sharma rest exclusively on uncorroborated statements of co-accused recorded under Section 50 of the PMLA, without any independent documentary, or electronic evidence establishing a prior meeting of minds, control over funds, ownership or operation of accounts, or enjoyment of proceeds of crime. Further, neither of them have participated in the predicate offence, nor is any act attributed to them that fulfils the essential ingredients of criminal conspiracy or money laundering, namely possession, concealment, projection, or use of "proceeds of crime". The alleged roles, even if taken at their highest, remain peripheral and facilitative, unsupported by money trail, recovery, attachment, or proof of mens rea. (i) The Supreme Court has consistently emphasized that offences under the Prevention of Money Laundering Act, 2002 (PMLA) are inherently "parasitic", in that they cannot stand independently without concrete involvement of the accused in the underlying financial transactions. The Cour....
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....lso did not procure any material to elicit that the petitioners are neither the introducers of the main accused in opening the bank accounts nor they have signed in any of those documents for such introduction. None of the bank officials have been examined and their statements were not recorded. It is in that view of the matter, without there being any iota of evidence, purely relying upon the statements of the petitioners, who deposed against each other, recorded under Section 50 of PMLA, subjecting the petitioners for criminal prosecution is unsustainable in law. The Hon'ble Supreme Court, in Vijay Madanlal Choudhary (3rd supra) held as under : "The process envisaged by Section 50 PMLA is in the nature of an inquiry against the proceeds of crime and is not "investigation" in strict sense of terms for initiating prosecution and the authorities under PMLA (referred to in Section 48) are not police officers as such." (m) The law is well settled that the confession of a co-accused under Section 50 of PMLA is not a substantive piece of evidence without there being any corroboration. The same cannot form basis to implicate or rope-in others as accused in a cr....