2021 (10) TMI 489 - HC - Money Laundering

Seeking grant of Anticipatory Bail - Money Laundering - siphoning of funds - fake transactions - shell/dummy entities incorporated to perpetuate the fraud - HELD THAT - Both the petitioners are said to be erstwhile directors of M/s. VMC Systems Limited, which was in the business of manufacture and sale of electronic products, with specific focus on AC-DC power convertors and communication products. A huge amount of about ₹ 1747.45 crores has been laundered/siphoned and that lead to registration of subject FIR No.15 of 2018 on the file of CBI, BS FC, Bangalore. There are serious and grave allegations against the petitioners that they have indulged in money laundering offences by resorting to various dubious transactions in between the companies, involving the shell/dummy entities incorporated to perpetuate the fraud and siphoned the amounts. In view of huge magnitude of conspiracy angle and possible involvement of the petitioners herein and pending their interrogation, granting any sort of relief, including anticipatory bail, to the petitioners would disable the respondent/ prosecution from further proceeding to trace the proceeds of crime and attaching it provisionally under Section 5(1) of PML Act, which is the basic objective of the said Act. In view of the serious allegations, thorough investigation and interrogation is warranted. It is also pertinent to state that in the event of grant of bail under Section 438 Cr.P.C, it may not be possible for the respondent/prosecution to trace the proceeds of the crime and take necessary action in terms of Section 5(1) of the PML Act. While granting bail, the Court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations - In the instant cases, grant of anticipatory bail at the stage of investigation may frustrate the investigating agency in interrogating the petitioners/accused and in collecting the useful information and also the material, which might have been concealed. Success in such interrogation would escape, if the petitioners/accused knows that they are protected by the order of the Court. Grant of anticipatory bail, particularly in economic offences, would definitely hamper the effective investigation. This Court is of the view that it is not a fit case to grant anticipatory bail to the petitioners/accused under Section 438 of Cr.P.C. - Petition dismissed.

Summary

Issues Involved: Entitlement to anticipatory bail under Section 438 of Cr.P.C.

Issue-wise Detailed Analysis:

1. Entitlement to Anticipatory Bail under Section 438 Cr.P.C:

The petitioners sought anticipatory bail under Section 438 of Cr.P.C., arguing that they were falsely implicated in the case and had no involvement in the alleged offenses. They claimed that the investigation by the Directorate of Enforcement, Hyderabad, was based on a unilateral declaration of their company’s account as 'fraud' without a proper hearing or forensic audit report. The petitioners highlighted their respectable social standing, sacrifices made for the company, and the health condition of one petitioner, who is a senior citizen. They cited the Supreme Court's ruling in Badresh Bipinbhai Seth Vs. State of Gujarat, emphasizing the fundamental right to anticipatory bail under Article 21 of the Constitution of India.

2. Prosecution's Argument Against Granting Bail:

The prosecution contended that the petitioners were involved in laundering approximately ?1747.45 crores through dubious transactions involving shell entities. They argued that the petitioners did not cooperate with the investigation, suppressed information, and granting anticipatory bail could hinder the ongoing investigation. The prosecution emphasized the severity of the offenses under the Prevention of Money Laundering Act (PML Act) and referenced the Delhi High Court's decision in Vakamulla Chandrasekhar Vs. Enforcement Directorate, which suggested that anticipatory bail is excluded under the PML Act's scheme. They also pointed out that the petitioners' earlier bail petitions were dismissed.

3. Court's Analysis and Decision:

The court noted the serious allegations against the petitioners, including their involvement in money laundering and fraudulent transactions that caused significant financial losses. The court highlighted the need for thorough investigation and interrogation, which could be compromised if anticipatory bail were granted. The court referred to the Supreme Court's stance on economic offenses, emphasizing the grave nature of such crimes and their impact on the country's financial health. The court concluded that granting anticipatory bail at this stage could frustrate the investigation and hinder the collection of crucial information and evidence. Therefore, the court deemed it inappropriate to grant anticipatory bail to the petitioners.

Conclusion:

The court dismissed both Criminal Petitions, denying anticipatory bail to the petitioners, and emphasized the importance of allowing the investigation to proceed without hindrance. The court also closed any pending miscellaneous petitions related to the case.