2022 (6) TMI 207 - HC - Money Laundering

Seeking grant of Bail - siphoning off huge amount to Australia - laundering of money in Australia and Dubai on the pretext of imports through banking channels and through hawala - proceeds of crime - HELD THAT - There cannot be any dispute on the factual background of the case. The petitioner is the prime accused in large number of cases registered initially by the local police alleging offences under Sections 120B, 420, 406 and 409 read with 34 of the Indian Penal Code besides under Sections 3 and 4 read with Sections 21 and 22 of the BUDS Act. The sum and substance of the allegations is that he as the Managing Director of the Company by name Popular Finance, which has branches all over the State and also in some of the southern States of the country, had collected huge amounts as deposits promising to pay attractive interest. He is also having money lender licence under the Kerala Money Lenders Act and is lending money on the security of gold pledged by the customers. The petitioner and his daughter, the second accused, were interrogated in numerous occasions and ultimately, on 09.08.2021, he was arrested by the respondent. Initially he moved the Special Court and by the impugned order, the application was dismissed, though his daughter was granted bail under the proviso to Section 45(1) of the Act. During the pendency of the petition, the respondent filed a complaint, copy of which has been produced for perusal of the court; the petitioner was also served with a copy of the same. But according to the learned counsel for the petitioner, such a complaint was hurriedly filed to deny him statutory bail, so far the Special Court has not taken cognizance of the offence. But it is a fact that complaint has already been preferred. The petitioner has a case that investigation is complete, that all the material documents collected in electronic form are with them, that the conditions imposed by this Court and other courts while granting him bail in the predicate offences are rigorous, that there is no flight risk. It may be true that the respondent has already laid a complaint. All the same, the prime witnesses in the case are the staff members of the petitioner. If he is released on bail, the possibility of him influencing and winning over them cannot be ruled out. Having regard to the gravity of offence and the huge amounts involved, the expectation of the petitioner that he would be able to revive and resurrect the business, is only just like the dream of the milkmaid. The petitioner is justified in seeking bail. The learned Additional Solicitor General and the learned Central Government Counsel have seriously opposed the application for bail. Having regard to the nature of the allegations against the petitioner, the stake involved, the gravity of offences, the fact that the petitioner has business interests in Dubai, Australia etc., it cannot be said that there is no flight risk in the case - Bail application dismissed.

Issues Involved:
1. Application for bail under Section 439 of the Code of Criminal Procedure.
2. Allegations of offences under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 (PMLA).
3. Previous bail applications and conditions imposed.
4. Claims of innocence and cooperation with the investigation.
5. Objections by the respondent regarding the risk of tampering with evidence and influencing witnesses.
6. Compliance with Section 45 of the PMLA and its amendments.
7. Consideration of precedents and their applicability.

Detailed Analysis:

1. Application for Bail under Section 439 of the Code of Criminal Procedure:
The first accused in ECIR No.KCZO/32/2020 moved an application under Section 439 of the Code of Criminal Procedure seeking bail. The petitioner had previously approached the Special Court for trial of offences under the PMLA, and all bail applications were dismissed.

2. Allegations of Offences under Sections 3 and 4 of the PMLA:
The respondent registered the ECIR alleging offences under Sections 3 and 4 of the PMLA. The petitioner was accused of laundering money to the tune of Rs.1,000 crores, involving about 3,000 depositors. The petitioner was arrested on 09.08.2021 and has been in judicial custody since then.

3. Previous Bail Applications and Conditions Imposed:
The petitioner was initially arrested on 29.08.2020 by Konny police for offences under Sections 406, 420 read with 34 of the IPC. He was granted bail by various courts, including the Additional Sessions Court-III, Alappuzha, and the Special Court for CBI cases, with stringent conditions. He was subjected to interrogation and his properties were searched, vehicles seized, and bank accounts frozen.

4. Claims of Innocence and Cooperation with the Investigation:
The petitioner claimed that the allegations were baseless and that he was innocent. He attributed the financial crisis to the Covid-19 lockdown, which hindered his ability to repay fixed deposits. He asserted that he had been running the business since 1965 without complaints and had cooperated with the investigation.

5. Objections by the Respondent Regarding the Risk of Tampering with Evidence and Influencing Witnesses:
The respondent, represented by the Additional Solicitor General, opposed the bail application, citing the enormity of the crime and the risk of tampering with evidence and influencing witnesses. The respondent highlighted that the petitioner had laundered money to Australia and Dubai and had not cooperated with the investigation.

6. Compliance with Section 45 of the PMLA and its Amendments:
The court noted the embargo under Section 45 of the PMLA, which states that no person accused of an offence under the Act shall be released on bail unless the Public Prosecutor has an opportunity to oppose the application and the court is satisfied that there are reasonable grounds for believing that the accused is not guilty and is not likely to commit any offence while on bail. The constitutional validity of the amended provisions was under challenge before the Supreme Court, but the court proceeded on the basis that the provisions were valid.

7. Consideration of Precedents and Their Applicability:
The petitioner relied on the decisions in P. Chidambaram v. Directorate of Enforcement and Krishna Mohan Tripathi v. State Through Enforcement Directorate. However, the court found that these precedents were not factually comparable to the present case. The amounts involved in those cases were significantly lower, and the circumstances differed.

Conclusion:
The court concluded that the petitioner was not entitled to bail due to the gravity and enormity of the allegations, the risk of tampering with evidence and influencing witnesses, and the compliance with Section 45 of the PMLA. The bail application was dismissed.

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