2021 (1) TMI 1107 - DSC - Money Laundering

Seeking seven days custody of both the accused for their interrogation - money laundering - proceeds of crime - diversion of funds - schedule offence under Section 420 of IPC - HELD THAT - No doubt udner Section 17(1)(f) of PMLA on 26.01.2021 the statement of accused Babulal Varma came to be recorded by ED and also questions pertaining to ₹ 410 crores obtained from Yes Bank was also put forth including non-constructions of tenements. But the facts remain to be answered that when these two persons are now arrested and produced before this Court, who not only obtained SRA scheme for construction, but mortgaged it and now even without making construction of the Rehab scheme at Wadala and Antop Hill they have diverted ₹ 410 crores, which was obtained as a loan from Yes Bank, after mortgaging FSI and after construction of rehabilitating building. The proceeds of crime diverted out of criminal activities in view of schedule offence under Section 420 of IPC has been used and parked by the accused and thus, projected them as untainted. In such circumstances, complaint came to be registered and it needs to be investigated in detail. If it is not investigated definitely diversion of funds, for the purpose of which it was obtained was not carried out and thereafter, obtaining loan of ₹ 3,155/- crores out of said loan ₹ 2,755 crores was disbursed. Out of the same ₹ 1800 crores is outstanding and same has turned NPA. Hence entire factual aspects of this money laundering after registration of FIR is within exclusive knowledge of both the accused and all these crucial facts, which are in their domain has to be exploded to being unearth deeply and direct involvement of M/s Omkar Realtors Developers Pvt. Ltd. It appears active conspiracy in the case. Even both the accused form 25.01.2021 assisting the investigation and came to be arrested on 27.01.2021. Therefore, further investigation by ED has to be carried out for which their presence along with ED officials pertaining to this ECIR is necessary. Both the accused i.e Babulal Varma and Kamalkishore Gupta, remanded in the custody of ED for further interrogation till 30.01.2021 - application allowed.

Summary

Issues:
1. Custody sought by ED for interrogation of accused under PMLA.
2. Allegations of diversion of funds from Yes Bank loan.
3. Dispute regarding the need for further custodial interrogation.

Analysis:
1. The Enforcement Directorate (ED) sought custody of two accused individuals for interrogation related to an offense under Sections 406, 420, 34 of the Indian Penal Code (IPC) and the Prevention of Money Laundering Act (PMLA). The accused were arrested following investigations into the diversion of funds from a loan obtained from Yes Bank. The ED argued that custodial interrogation was necessary to uncover the trail of funds and establish the involvement of the accused in money laundering activities.

2. The ED alleged that the accused diverted approximately ?410 crores from the loan meant for construction projects to other uses, without fulfilling the intended purposes. The accused were accused of siphoning off funds to related parties and non-business transactions, indicating a larger conspiracy involving group companies. The ED highlighted discrepancies in the utilization of funds and the failure to complete construction projects as per the loan agreement, leading to the initiation of proceedings under the PMLA.

3. The defense counsel representing the accused objected to the ED's request for further custodial interrogation, arguing that the initial investigation only pertained to a scheduled offense under Section 420 of the IPC. They contended that the ED did not have the authority to conduct detailed interrogation beyond the scope of the registered FIR. The defense emphasized that the accused had already been detained and interrogated prior to their appearance in court, with their premises raided and documents seized, negating the need for additional custodial interrogation.

4. After considering the submissions from both sides, the court acknowledged the ED's efforts to investigate the diversion of funds and money laundering activities involving the accused. The court noted that the accused had obtained a substantial loan from Yes Bank, which was allegedly misappropriated for unauthorized purposes. Emphasizing the need to unravel the financial transactions and establish the complicity of the accused and related entities, the court granted custody of the accused to the ED for further interrogation till a specified date, citing the necessity to unearth the entire money trail and gather additional evidence for the ongoing investigation.

In conclusion, the judgment granted custody of the accused to the ED for further interrogation in connection with the financial irregularities and alleged money laundering activities, highlighting the importance of uncovering the trail of funds and establishing the involvement of the accused in the illicit diversion of funds from the loan obtained from Yes Bank.