2022 (9) TMI 132 - HC - Money Laundering

Seeking grant of Bail - money laundering - cheating large number of investors of Jharkhand by inducing them to purchase plots of land - siphoning off of funds - twin conditions under section 45 of PMLA attracted or not - HELD THAT - This Court is of the considered view that the provisions of Section 45 of the Act, 2002 prior to judgment of Ho ble Apex Court in the case of NIKESH TARACHAND SHAH VERSUS UNION OF INDIA AND ANR. 2017 (11) TMI 1336 - SUPREME COURT had been declared unconstitutional; but the defects in provisions of the said Act was cured by Parliament by way of Amendment Act 13 of 2018 and consequently, the twin conditions of Section 45 while disposing of the bail application under the Act, 2002 stood revived. The twin conditions under Section 45 (1) for the offences classified thereunder a Part-A of the Schedule was held arbitrary and discriminatory and invalid in the case of Nikesh Tarachand Shah. Subsequently, the Section 45 of the Act, 2002 has been amended by Amendment Act, 13 of 2008, whereby the words imprisonment for a terms of imprisonment of more than three years under Part A of the schedule has been substituted with accused of an offence under this Act. The Hon ble Apex Court in THE ASST. DIRECTOR ENFORCEMENT DIRECTORATE VERSUS DR. V.C. MOHAN 2022 (1) TMI 511 - SUPREME COURT held once the prayer for bail is made for the offence under PMLA 2002, the rigors principle underlying Section of 45 get triggered on. There are reasonable grounds for believing that applicant is guilty of the offences of money laundering and he is likely to commit any offence, if enlarged on bail - Bail application dismissed.

Summary

Issues:
Bail application under PMLA for alleged money laundering offenses.

Analysis:
The bail application was filed on behalf of the applicant, seeking release in connection with offenses under Section 3 read with Section 4 of the Prevention of Money Laundering Act, 2002. The applicant, a Director of a company, was accused of cheating investors by inducing them to purchase land plots, receiving money but not providing possession, and laundering proceeds through various bank accounts. The investigation revealed multiple bank accounts linked to the company and its directors, including the applicant, for laundering crime proceeds totaling millions. The applicant's defense argued that he was not a shareholder but a salaried employee, and the transactions in his account were erroneous. The prosecution contended that the applicant, as a director actively involved in the company's activities, was liable under Section 70 of PMLA.

The court considered the provisions of the PMLA, including Sections 3, 4, and 70, defining money laundering offenses and punishment. It also discussed the validity of Section 45 of the Act, noting the amendments post the Nikesh Tarachand Shah case. The court cited precedents like Cheviti Venkanna Yadav and Assistant Director Enforcement Directorate vs. Dr. V.C. Mohan, emphasizing the stringent approach towards economic offenses. Referring to YS Jagan Mohan Reddy vs. C.B.I., the court highlighted the seriousness of economic crimes affecting the country's financial health. It also cited State of Gujarat vs. Mohanlal Jitamalji Porwal, underlining the impact of economic offenders on the national economy and the need for accountability.

Ultimately, the court refused the bail application, stating reasonable grounds to believe the applicant's guilt in money laundering offenses and the likelihood of committing further offenses if released on bail. The decision was based on the gravity of the alleged offenses and the potential threat to the economy posed by such crimes.