2022 (3) TMI 1552 - HC - Money Laundering

Money Laundering - diversion of proceeds of crime - predicate offence - application of Section 45 (1) of the PMLA, 2002 for considering the bail petition - whether the arrest of the petitioner under PMLA is uncalled? - HELD THAT - In T. SUBRAMANIAN, S. RAJESWARI VERSUS THE ASSISTANT DIRECTOR, DIRECTORATE OF ENFORCEMENT, MADURAI 2021 (12) TMI 42 - MADRAS HIGH COURT , when a similar plea that initiating action under PMLA is premature, when there is no concluded proceedings in the predicate offence raised, this Court had the privilege of sharing Division Bench judgment considered in detail, the effect of the pending or nonpending of proceedings in predicate offence qua prosecution under PMLA and held that In such circumstances, the petitioners are expected to produce documents sought by the authorities and satisfy them that they are not involved in any act of moneylaundering. Instead, under false pretext that the properties are likely to be provisionally attached before filing of final report in the predicate offence, the writ petitions are filed. The above logic squarely applies to the facts of the case in hand and this answers the first limb of the petitioners submission. This Court has no second view on the Principle of Law on precedent, as put forth by the Learned Additional Solicitor General, Section 45(1) of PMLA as it stands today after amendment ought to be applied when bail petition is considered in case of offences involving Proceeds of Crime above Rs.1 crore. This section which impose additional condition for grant of bail apart from the condition contain in the Code of Criminal Procedure or any other law in force. During the investigation, the respondent/complainant has asked the petitioner to furnish bank account statements of the offshore Companies involved in this transaction, original invoices raised by the Indonesian Coal Miners to his Dubai based entities, Books of Accounts of his foreign entities located in Mauritius and British Virgin Islands (BVI). The petitioner reluctant to part away those crucial documents and had given evasive reply. Having refused and reluctant to handover these documents which are essential to ascertain whether the money laundered the manner in which the investigation so far reveals, mere physical presence at Respondent Office will not tantamount to cooperation to investigation - It is the discretion and prerogative of the investigating agency, to choose the mode and they need no advice neither from the Court nor from the accused. To collect those documents, the confinement of the petitioner in prison is inevitable, else he may secret away the documents, taking advantage of his liberty. This petitioner who is a Non-Resident Indian widely connected with other parts of the World and not inclined to cooperative with the investigation in its true sense is not entitled for bail. The ramification of the alleged crime runs to several hundred crores. Several persons in and out side India are connected in the crime. The documents connected with the Shell Companies floated by him in other countries are to be collected - Petition dismissed.

Summary

Issues Involved:
1. Legitimacy of arrest under the Prevention of Money Laundering Act (PMLA).
2. Compliance with procedural requirements for arrest under PMLA.
3. Petitioner's cooperation with the investigation.
4. Petitioner's right to bail under Section 45 of PMLA.
5. Petitioner's alleged flight risk and potential to tamper with evidence.

Issue-wise Detailed Analysis:

1. Legitimacy of Arrest under PMLA:
The petitioner was arrested for alleged offences under Section 3 of the PMLA, which involves money laundering. The Directorate of Revenue Intelligence (DRI) and Central Bureau of Investigation (CBI) had already initiated investigations into the import of coal with artificially inflated values, which led to the suspicion that the petitioner was involved in money laundering. The Enforcement Directorate (ED) commenced its investigation based on these inputs and registered an Enforcement Case Information Report (ECIR). The petitioner was accused of being in possession of Rs. 487 crores, suspected to be proceeds of crime.

2. Compliance with Procedural Requirements for Arrest under PMLA:
The petitioner argued that his arrest was unwarranted as there was no conclusive adjudication of the predicate offence. He cited the need for a finding that he had concealed or possessed proceeds of crime to justify prosecution under PMLA. However, the court noted that the authorities need not wait for the conclusion of proceedings under the predicate offence to initiate action under PMLA. The explanation to Section 44(1)(d) of PMLA clarifies that the jurisdiction of the Special Court is not dependent on orders passed in respect of the scheduled offence.

3. Petitioner's Cooperation with the Investigation:
The petitioner claimed to have cooperated fully with the investigation, appearing before the respondent multiple times and providing necessary documents. However, the respondent countered that the cooperation was partial and selective, with the petitioner refusing to provide crucial documents related to his companies in Dubai. The court acknowledged that while the petitioner has a constitutional right to silence, this right carries an "adverse inference" tag, especially under Section 63 of PMLA, which penalizes withholding known information.

4. Petitioner's Right to Bail under Section 45 of PMLA:
The petitioner argued that the amended Section 45 of PMLA, which imposes additional conditions for granting bail, is unconstitutional and under challenge before the Supreme Court. He contended that only the triple test laid in Section 437 of Cr.P.C should apply. However, the court referred to a Division Bench judgment which upheld the validity of the amended Section 45, stating that as long as it is not struck down, it remains in force. The court emphasized that for offences involving proceeds of crime above Rs. 1 crore, the stringent conditions of Section 45 must be applied.

5. Petitioner's Alleged Flight Risk and Potential to Tamper with Evidence:
The respondent expressed concerns that the petitioner, being an NRI with strong connections abroad, posed a flight risk and could tamper with evidence if released on bail. The court noted that the petitioner’s sporadic appearances for investigation and his refusal to provide crucial documents indicated a lack of true cooperation. Given the gravity of the alleged crime, involving several hundred crores and multiple international connections, the court deemed it necessary to keep the petitioner in custody to prevent potential tampering with evidence.

Conclusion:
The court dismissed the bail petition, emphasizing that the arrest under PMLA was justified and necessary given the circumstances. The petitioner’s partial cooperation, potential flight risk, and the gravity of the alleged offences warranted his continued detention to ensure the integrity of the ongoing investigation. The court upheld the application of Section 45 of PMLA, reinforcing the stringent conditions for granting bail in cases involving significant proceeds of crime.