2016 (1) TMI 907 - HC - Money Laundering

Applicants have prayed to release them on bail - offence punishable under Sections 3 read with Section 4 of the PMLA read with Section 120B of the Indian Penal Code - Held that - . It appears that the applicants were involved in cricket betting and was setting the accounts with respect of the money generated out of cricket betting. It is an admitted position that cricket betting is not a scheduled offence and hence the money generated out of cricket betting does not come within the purview of the definition of proceeds of crime. In the present case, the scheduled offences are cheating and forgery and the conspiracy to commit the same with an object of procuring SIM Cards on the basis of false and forged documents. All the SIM Cards in the present case were recovered during the search conducted on the 19.03.2015 under Section 37 of the FEMA, 1999 and since the applicant herein was not present there at the time of search he has nothing to do with those SIM Cards. Even for the sake of argument if we believe that the contents of Case No.85 of 2015 are correct, then also what emerges out of the scheduled offences are the SIM Cards. That what was derived or obtained directly or indirectly were the SIM Cards, and as far as the usage of the SIM Cards are concerned, it is a separate offence and the same is not relied upon by the Enforcement Directorate. It is true that in the case of Ankush Bansal, whose bail order forms part of the bail application, this Hon ble Court while admitting the bail in para No.10 have observed that money generated from cricket betting are not proceeds of crime. If this is the situation, then without there being any proceeds of crime the offences under Section 3 of PMLA is not made out against the present applicant herein and since no offence as such under the PMLA are made out against the applicant, hence, the applicability of Section 45 of the PMLA does not arise. A bare perusal of Section 45 of the PMLA shows that when the Courts are satisfied that there is a reasonable ground of believing that when the applicant is not guilty of such offence and that he is not likely to commit any offence while on bail, he can be granted bail. Since, in the present condition there are no proceeds of crime existing hence Section 3 of the PMLA does not arise. In view of above observation, I am of the opinion that present both the applications require consideration. Hence, both the applications are allowed and the applicants are ordered to be released on bail.

Issues Involved:
1. Application for bail under Section 439 of the Code of Criminal Procedure, 1973, read with Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA).
2. Allegations of involvement in a "Hawala Racket" related to online international cricket betting.
3. Seizure of incriminating documents and digital records during the investigation.
4. Arrest and remand of accused under various sections of the Indian Penal Code (IPC) and the Prevention of Gambling Act.
5. Application of PMLA to the alleged offenses and the definition of "proceeds of crime."
6. Arguments for and against the bail application, including the relevance of scheduled offenses under PMLA.
7. Court's consideration of the evidence, legal provisions, and precedents.

Issue-wise Detailed Analysis:

1. Application for Bail under Section 439 of CrPC and Section 45 of PMLA:
The applicants sought bail under Section 439 of the Code of Criminal Procedure, 1973, read with Section 45 of the Prevention of Money Laundering Act, 2002. The prosecution opposed the bail application, presenting documents and evidence collected during the investigation.

2. Allegations of Involvement in a "Hawala Racket" Related to Online International Cricket Betting:
The prosecution alleged that the accused were involved in a large-scale "Hawala Racket" through online international cricket betting on the UK-based website "Betfair.com." The accused were said to have operated from a rented farmhouse in Vadodara, leading to the seizure of incriminating documents and digital records.

3. Seizure of Incriminating Documents and Digital Records During the Investigation:
During a raid on March 19, 2015, under Section 37 of the Foreign Exchange Management Act (FEMA), 1999, the Enforcement Directorate (ED) seized incriminating documents, articles, and digital records. The investigation revealed the accused's involvement in cricket betting and the use of forged documents to obtain SIM cards.

4. Arrest and Remand of Accused Under Various Sections of IPC and Prevention of Gambling Act:
The accused were arrested and remanded under Sections 4 and 5 of the Prevention of Gambling Act and various sections of the IPC, including 120B, 418, 419, 420, 467, and 471. The accused were initially granted bail by the Judicial Magistrate, First Class, Vadodara City, but were later arrested by the ED.

5. Application of PMLA to the Alleged Offenses and Definition of "Proceeds of Crime":
The ED argued that the offenses under the IPC were scheduled offenses under Section 2(1)(y) of PMLA, justifying a separate case under PMLA to identify and locate the "proceeds of crime" as defined under Section 2(1)(u) of PMLA. The investigation aimed to ascertain the accused's involvement in money laundering and the use of proceeds from cricket betting.

6. Arguments for and Against the Bail Application:
The applicants' counsel argued that the investigation was complete, and the accused's custodial interrogation was no longer required. They contended that the allegations were vague and general, and there was no material evidence showing the accused's involvement in possessing or acquiring proceeds of crime. The prosecution, represented by Ms. Trusha Patel, argued that the accused were actively involved in the illegal activities and the proceeds of crime were utilized and invested in properties.

7. Court's Consideration of Evidence, Legal Provisions, and Precedents:
The court reviewed the entire complaint, accompanying documents, and arguments from both sides. It considered the provisions of Sections 3, 4, 17, 23, 24, and 50 of PMLA, along with relevant judgments. The court noted that cricket betting is not a scheduled offense under PMLA, and the money generated from cricket betting does not constitute proceeds of crime. The court also referenced the bail order in the case of Ankush Bansal, where it was observed that money from cricket betting is not proceeds of crime.

Conclusion:
The court allowed the bail applications, ordering the release of the applicants on bail with specific conditions, including not tampering with evidence, surrendering passports, and marking presence with the ED office. The court emphasized that there was no direct evidence linking the accused to proceeds of crime under PMLA, and thus, the applicability of Section 45 of PMLA did not arise. The court also rejected the request for a stay of the order by the prosecution.

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