2014 (9) TMI 1281 - SC - Money Laundering

Money Laundering - Embezzlement of huge funds from the Exchange - irregularities in the allotment of shares of NMCE to NOL, including misuse/misappropriation of Exchange funds - Misuse of Exchange funds - Illegal payments from NMCE to his family members and other - HELD THAT - It is informed that the petitioner evaded arrest from 26-4-2012 to 30-3-2013. His son, who is one of the main accused, is refusing to join investigation. The petitioner made a statement that his son will return to India to join investigation and this statement was recorded by the High Court in its order dated 30-7-2013. But till date, the assurance given to the High Court is not fulfilled. Even this Court had directed the petitioner to facilitate his son's coming back to India to join investigation, however, there is no positive response from the petitioner. His approach is evasive. There is no doubt that his purpose is to shield his son. The petitioner is, therefore, in breach of the condition imposed on him while granting provisional bail that he will cooperate with the investigating agency. The provisional bail was granted to him with the hope that the petitioner will cooperate with the Police. His conduct is to the contrary. The provisional bail, therefore, deserves to be cancelled and is accordingly cancelled. His bail bond stands cancelled. The High Court has rightly declined bail to the petitioner. In our opinion, it is not necessary to interfere with the impugned order. Therefore, the Special Leave Petition is dismissed.

Summary

Issues:
Challenging denial of bail by Gujarat High Court based on allegations of embezzlement and irregularities in a commodity exchange, involvement in criminal activities, breach of bail conditions, cooperation with investigating agencies, and failure to surrender.

Analysis:
The petitioner challenged the Gujarat High Court's denial of bail, citing allegations of embezzlement and irregularities in a commodity exchange, leading to a criminal case under various sections of the Indian Penal Code and the Prevention of Money Laundering Act. The Forward Markets Commission directed the exchange to file an FIR against the petitioner, who was the Vice-Chairman and Managing Director, based on findings of embezzlement, misuse of funds, and subversion of corporate governance. Despite multiple bail applications being rejected, the Supreme Court granted interim bail subject to stringent conditions, including cooperation with the Directorate of Enforcement's investigation.

The Supreme Court closely monitored the case's progress, noting the provisional attachment of shares and charge-sheet filings against the petitioner and his wife. However, the petitioner's son's absence hindered the investigation, prompting the Court to stress the son's cooperation. The Additional Solicitor General suggested a substantial deposit by the petitioner due to the gravity of the offense and reduced share values. The petitioner's failure to deposit the amount and uncertainty regarding his son's return raised doubts about his intentions and cooperation.

The Court expressed dissatisfaction with the petitioner's evasive conduct, including evading arrest previously and failing to ensure his son's cooperation in the investigation. Despite assurances to facilitate his son's return, the petitioner's actions indicated a lack of genuine effort to comply with bail conditions. The Court found the petitioner in breach of the cooperation condition and canceled his provisional bail, ultimately dismissing the Special Leave Petition challenging the High Court's decision to deny bail.

In conclusion, the Supreme Court upheld the High Court's decision to deny bail, emphasizing the petitioner's lack of cooperation and questionable conduct. The petitioner was granted a week to surrender, with the Court clarifying that any observations made in the order were prima facie and should not influence the case's independent legal proceedings.