2021 (5) TMI 269 - DSC - Money Laundering

Seeking grant of anticipatory bail - Commission of offences punishable under section-420 IPC and section-10 of the Haryana Development and Regulation of Urban Areas Act, 1975 - violating the terms conditions of the licence granted for the development of a colony - HELD THAT - Grant of anticipatory bail at this stage of investigation is likely to frustrate the right of investigating agency to interrogate the accused and collect the useful information as well as material which might have been concealed - success in such interrogation would elude if the accused knows that he is protected by the order of the Court and therefore, hold that with regard to the instant offence which comes within the category of economic offence the very purpose of the investigation will stand materially hampered. Taking into consideration the entire facts and scenario and without commenting anything on the merits of the case irrespective of the quantum of financial loss which has been caused to the State Exchequer, the overall act and conduct of the applicant/accused leads this Court to a definite conclusion that affording the benefit of anticipatory bail will deny the investigating agency a fair right to investigate the case properly by effectively interrogating the accused and this denial will scuttle the investigation. Therefore, hold that the applicant/accused is not entitled for the benefit of anticipatory bail and his request for anticipatory bail deserves to be declined. Hence, the instant application for anticipatory bail is hereby dismissed. However, any observation recorded in this order shall not be treated as an expression of opinion on the merits of the case. File be consigned to the record room after due compliance.

Issues Involved:
1. Application for anticipatory bail under Section 438 of Cr.P.C.
2. Alleged violation of terms and conditions of the license granted for development.
3. Involvement of Section 420 IPC and its implications.
4. Jurisdiction and role of the Directorate of Enforcement.
5. Financial loss to the State and its quantum.
6. Applicability of the Prevention of Money Laundering Act (PMLA).
7. Requirement of custodial interrogation.

Issue-Wise Detailed Analysis:

1. Application for anticipatory bail under Section 438 of Cr.P.C.:
The applicant/accused sought anticipatory bail under Section 438 of Cr.P.C. in connection with a case registered by the Directorate of Enforcement (E.D.) for alleged violations related to the development of a colony. The application was initially dismissed by the High Court of Bengaluru and subsequently, the Supreme Court granted temporary protection for two weeks, directing the applicant to seek appropriate relief from the competent court.

2. Alleged violation of terms and conditions of the license granted for development:
The case originated from an FIR lodged at Police Station Bajghera, Gurugram, based on a complaint by the District Town Planner. The complaint alleged that the applicant/accused, as Vice-Chairman and Managing Director of a development company, violated the terms of the license by selling "No Profit No Loss" (NPNL) plots through Limited Liability Partnerships (LLPs), thereby overriding the agreements with the Director, Town and Country Planning.

3. Involvement of Section 420 IPC and its implications:
Initially, the charge sheet was filed under Section 10 of the Haryana Development and Regulation of Urban Areas Act (HDRUA Act) without invoking Section 420 IPC. However, during further investigation, it was found that the applicant/accused had caused financial loss to the State by not paying development fees, leading to the addition of Section 420 IPC, which deals with cheating and fraud.

4. Jurisdiction and role of the Directorate of Enforcement:
The applicant/accused argued that the Directorate of Enforcement had no jurisdiction to investigate since the initial charge sheet did not include any scheduled offense under the Prevention of Money Laundering Act (PMLA). However, with the addition of Section 420 IPC, which is a scheduled offense under PMLA, the jurisdiction of the Directorate of Enforcement was justified.

5. Financial loss to the State and its quantum:
The applicant/accused contended that the financial loss caused to the State was exaggerated and pertained only to the development fee of approximately ?25 lakhs for License No.58 of 2013. The prosecution, however, argued that the loss was substantial and involved several hundred crores, emphasizing that the quantum of loss was not the sole factor but the act and conduct of the accused were crucial.

6. Applicability of the Prevention of Money Laundering Act (PMLA):
The court noted that with the inclusion of Section 420 IPC, the provisions of PMLA were attracted. The prosecution argued that the applicant/accused's scheme involved money laundering activities, requiring a thorough investigation to track the money trail and the ultimate beneficiaries.

7. Requirement of custodial interrogation:
The court emphasized the need for custodial interrogation to unearth the scheme and track the money trail. It was noted that granting anticipatory bail would hamper the investigation as the accused might not cooperate effectively. The court cited several Supreme Court judgments highlighting the importance of custodial interrogation in economic offenses involving complex financial transactions.

Conclusion:
The court dismissed the application for anticipatory bail, stating that granting such relief would frustrate the investigation's purpose. The court emphasized that the applicant/accused's actions involved a well-planned scheme to defraud the State and circumvent the terms of the license, causing significant financial loss. The need for a thorough investigation and effective interrogation outweighed the applicant's plea for anticipatory bail. The court's observations were made without commenting on the merits of the case.

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