2022 (11) TMI 293 - HC - Money Laundering

Seeking enlargement of bail - money laundering - predicate offence - diversion of funds/shell companies - It is the specific allegation that the petitioner herein through the said entities collected money from the public through investment apps by offering high and lucrative returns under exchange for the money deposited by them and in this regard more than 300 crores was collected from various depositors and more than 290 crores was diverted to various shell companies - HELD THAT - Admittedly, the nature of services which was represented to Razorpay and PayU were not adhered to and it was Power Bank and Sunfactory which lured the general public to invest the money. It is also evident that Power Bank and Sunfactory were not available on Google Playstore and later on complaint came to be filed in Cr.No.8/2021. Later on Enforcement Directorate has taken up this case. It is also evident from the records that there is specific allegations that the present petitioner did not cooperate during the investigation and the software developer informed that some source code in the software for gaming platform was manipulated by the present petitioner and gateways were linked to Power Bank and Sunfactory. There is no dispute of the fact that the petitioner is partner in both M/s. Clifford Ventures and M/s. H S Ventures Inc. and admittedly more than 290 crores was diverted to various companies and though the services of Razorpay and PayU were taken, but the amount was routed through Power Bank and Sunfactory apps. Thus it clearly establish the intention of the petitioner for routing the transactions from different sources of business - The records also prima-facie disclose that money collected from public has been transferred to several various companies by the petitioner without there being any reason/occasions. It is further alleged that it is a process of concealment and layering of funds that had been acquired by duping the public at large. Admittedly after completing preliminary investigation, the complaint came to be lodged and there is prima-facie material. The other ground for bail on predicate offence cannot be entertained as admittedly it is a economic offence and it is required to be dealt firmly. Further the explanation under Section 50 of the PML Act is required to be considered during the course of the trial and prima-facie there is material evidence which disclose that he has cheated public at large by receiving deposits to the tune of more than Rs.300 crores - Admittedly petitioner is also involved in similar offences in other States also. Looking to these facts and circumstances, this is not a fit case wherein discretion can be exercised in admitting the petitioner on bail. Petition dismissed.

Summary

Issues:
1. Bail application under Section 439 of Cr.P.C. for an offence under the Prevention of Money Laundering Act, 2002.
2. Interpretation of provisions of the PML Act regarding bail eligibility.
3. Examination of evidence and allegations against the petitioner in a money laundering case.
4. Consideration of health issues of the petitioner as a ground for bail.
5. Application of legal precedents in similar cases to the current scenario.

Detailed Analysis:
1. The petitioner filed a bail application under Section 439 of Cr.P.C. seeking release in a case related to money laundering under the PML Act. The petitioner was accused of diverting significant amounts of money through fraudulent means involving various companies and apps, leading to a substantial financial loss to investors. The investigation revealed the petitioner's involvement in cheating the public and diverting funds to shell companies, warranting stringent legal action.

2. The key contention in the case revolved around the interpretation of bail provisions under the PML Act. The prosecution argued that the nature of the scheduled offence under Section 420 of IPC, coupled with the specifics of money laundering as per Section 3 and Section 4 of the PML Act, imposed a negative burden on the petitioner regarding bail eligibility. The prosecution emphasized the overriding effect of the PML Act and the presumption in favor of prosecution under Section 24, making a strong case against granting bail.

3. Detailed examination of the evidence presented against the petitioner revealed a pattern of financial misconduct and fraudulent activities. The petitioner, as a partner in certain companies, allegedly misled investors with false promises of high returns, diverting funds through unauthorized apps and shell companies. The petitioner's lack of cooperation during the investigation and manipulation of software code further implicated him in the money laundering scheme, highlighting the severity of the alleged offenses.

4. The petitioner's health condition, specifically a heart ailment, was raised as a ground for bail consideration. However, the court noted that medical treatment could be provided in custody, and the petitioner's health condition did not outweigh the gravity of the economic offenses committed. The court emphasized that the petitioner's involvement in a significant fraud scheme necessitated firm legal action, precluding the possibility of bail solely based on health concerns.

5. Legal precedents cited by the petitioner were deemed irrelevant to the current case, as the ongoing investigation and substantial evidence of financial fraud and non-cooperation by the petitioner warranted a denial of bail. The court concluded that the petitioner's involvement in cheating the public, diverting funds, and engaging in economic offenses on a large scale rendered the bail application meritless, leading to the rejection of the petition.

In summary, the judgment delved into the complexities of money laundering allegations, bail provisions under the PML Act, evidentiary considerations, health grounds for bail, and the application of legal precedents in determining the petitioner's eligibility for release. The court's detailed analysis highlighted the seriousness of the offenses, the legal framework governing money laundering cases, and the need for stringent action in cases involving significant financial fraud.