2021 (12) TMI 1234 - DSC - Money Laundering

Money laundering - scheduled offence - Siphoning of funds - ED has jurisdiction to investigate the scheduled offence or not - forged documents - HELD THAT - It is material to note that, there is absolutely on justification for withdrawal of ₹ 1 Crore, that too when accounts were freeze as a part of conversion process. Even there is nothing before the Court to indicate that, Deepak Kumar Prajapati is any legal entity or holding any legal character. Even there is absolutely nothing before the Court to indicate any jural relation between applicant and Deepak Kumar Prajapati. Also there is no explanation nor any justification how cash amount was given to Deepak Kumar Prajapati (A4) and the same came to the applicant by way of loan or otherwise - there is a clear case which prima-facie indicates all the material stages of process of money laundering i.e, generation of proceeds of crime, layering, placement and integration thereof. These statements coupled with documents prima-facie indicate an offence under Sec.3 of PML Act. It is material to note that statement of Chartered Accountant Mr. Upendra G. Muley, Aurangabad prima-facie indicates the conduct of the applicant. It cannot be ignored that, once the said C.A. refused to go ahead with the plot of the applicant and Ms. Bhawana Gawali, his office was attacked and report thereof was lodged at Mukundwadi Police Station, Aurangabad. It cannot be ignored that, some of the documents were procured from the office of Assistant Charity Commissioner and all this was done to materialize the connivance with a goal of money laundering - Considering the conduct of the applicant and the investigation is still pending, if he is released on bail certainly there is every possibility that he would take law in his hands to mould the prosecution case as per their goal. Once the applicant is released on bail, both of them are likely to take fate of the case in their hands by frustrating all the efforts of the ED. Certainly, none of the parameters including tripod test prescribed under Sec.439 of Cr.P.C. is applicable to the case of the applicant. It has to be noted that, if the application is allowed there will be no safe trial - even if the rigors of twin conditions under Sec. 45 of PML Act are not existing and even if the application is dealt with under Sec. 439 of Cr.P.C. with remaining part of Sec.45 of PML Act, the applicant is not entitled to be released on bail. Bail application dismissed.

Issues Involved:
1. Prima facie case for bail in an economic offence.
2. Jurisdiction and authority of the Enforcement Directorate (ED).
3. Involvement in money laundering.
4. Applicability of Section 45 of the Prevention of Money Laundering Act (PMLA).
5. Risk of tampering with evidence and influencing witnesses.

Issue-wise Detailed Analysis:

1. Prima Facie Case for Bail in an Economic Offence:
The court examined whether the applicant made out an exceptionally strong prima facie case for bail. The applicant contended that he was falsely implicated due to political vendetta and promised to abide by all conditions if granted bail. However, the ED argued that the applicant was a material link in the process of money laundering involving generation, placement, layering, and integration of proceeds of crime (POC). The court found that the applicant did not make out a strong prima facie case for bail, noting the serious nature of the allegations and the strong evidence against him.

2. Jurisdiction and Authority of the Enforcement Directorate (ED):
The applicant argued that the ED had no jurisdiction to investigate the scheduled offence and that he was not an accused in the scheduled offence. The court rejected this argument, stating that the ED's investigation was based on an offence under Section 420 of the IPC, which is a scheduled offence under the PMLA. The court emphasized that the ED's investigation into the source, generation, layering, placement, and integration of proceeds of crime was within its wide compass of inquiry as defined under Section 2(1)(u) read with Section 3 of the PMLA.

3. Involvement in Money Laundering:
The court detailed the facts of the case, revealing that the applicant, along with others, unlawfully gained control of Mahila Utkarsh Pratishthan by converting it into a company using forged documents. The applicant siphoned off funds from the trust's educational institutions and engaged in transactions to disguise the illicit origin of the money. The court found sufficient evidence of the applicant's involvement in money laundering, including statements from various individuals and documentary evidence showing the generation, layering, placement, and integration of proceeds of crime.

4. Applicability of Section 45 of the PMLA:
The applicant's counsel argued that the twin conditions under Section 45 of the PMLA for granting bail were struck down by the Supreme Court in the case of Nikesh Tarachand Shah. The court acknowledged this but emphasized that the remaining part of Section 45, read with Section 439 of the CrPC, still applied. The court noted that the applicant's role in the conversion of the trust into a company and the subsequent siphoning off of funds indicated a clear case of money laundering, making him ineligible for bail even under the relaxed conditions.

5. Risk of Tampering with Evidence and Influencing Witnesses:
The court expressed concerns about the applicant's potential to tamper with evidence and influence witnesses if released on bail. The court highlighted the applicant's conduct, including threats and attacks on a Chartered Accountant who refused to cooperate with the fraudulent activities. The court concluded that releasing the applicant on bail would jeopardize the investigation and trial, as there was a high likelihood of the applicant pressurizing witnesses and manipulating the case outcome.

Conclusion:
The court rejected the bail application, finding that the applicant did not make out a strong prima facie case for bail, the ED had jurisdiction to investigate the offence, there was sufficient evidence of the applicant's involvement in money laundering, and there was a significant risk of tampering with evidence and influencing witnesses. The court emphasized the serious nature of money laundering and its devastating consequences on the financial system, justifying the denial of bail to ensure a fair trial and uphold the objectives of the PMLA.

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