2023 (2) TMI 42 - HC - Money Laundering

Seeking grant of Bail - Money Laundering - round tripping of money - proceeds of crime - predicate offences - misappropriation and criminal breach of trust - manipulation of books of accounts through fictitious accounts - retraction of statements - conversion of property against unknown public servants - tampering with the evidences - mens rea - offences punishable under Sections 120-B read with Sections 420, 467, 468 and 471 IPC and Section 13(2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988. Whether the petitioner, who is alleged to have abetted the main accused in the offence of money laundering, is entitled for bail or not? HELD THAT - If the court finds a prima facie case against the accused, it cannot come to a satisfaction that there are reasonable grounds for believing that the accused is not guilty of such offence and that he is not likely to commit any offence while on bail as specified in Section 45(1)(ii) of the PML Act. The investigation so far done by the respondent, prima facie, leads to an inference that it is a classic case of money laundering by round tripping of money. Therefore, the stand taken by the respondent that even after commission of the scheduled offence and generatioin of proceeds of crime, different persons could join the main accused either as abettors or conspirators for committing the offence of money laundering by helping him in laundering the proceeds of crime and such persons might not have involved in the original criminal activity that had resulted in the generation of proceeds of crime and just because they were not prosecuted for the predicate offence, their prosecution for money laundering cannot be said to be illegal, appears to be a valid one. No doubt bail is a rule and jail is an exception and it has been time and again held by various courts that no person shall be deprived of his life or personal liberty except according to a procedure established by law. But, at the same time, the courts must strike a balance between the interest of the society in general and the right of an accused to personal liberty. In the case on hand, the petitioner, claiming to be an uneducated or a little educated person, is said to have been deployed to act as Director in various Companies for several years by the main accused, which itself shows the understanding and relationship between them and the mens rea of the petitioner in abetting the offence of the main accused. Therefore, this court cannot brush aside the objection of the respondent that in the event of the petitioner's coming out on bail at this stage, there is every possibility of his continuance in abetting the offence of the main accused in tampering with the evidence and interfering with the further investigation claiming that he does not have the so-called mens rea , by feigning ignorance as if he was a mere puppet at the hands of the main accused and thereby, this court is of the view that the petitioner has not complied with the second condition laid down under Section 45(1) of the Prevention of Money Laundering Act, 2002 for grant of bail. This court is of the view that the petitioner is not entitled to grant of bail at this stage - Petition dismissed.

Issues Involved:
1. Validity of the petitioner's arrest without notice under Section 41A of Cr.P.C.
2. Connection of the petitioner with the alleged proceeds of crime.
3. Petitioner's involvement and mens rea in the money laundering case.
4. Compliance with Section 45(1) of the PML Act for granting bail.
5. Potential for tampering with evidence if bail is granted.

Issue-wise Detailed Analysis:

1. Validity of the petitioner's arrest without notice under Section 41A of Cr.P.C.:
The petitioner argued that his arrest was arbitrary as he was not issued any notice as required under Section 41A of Cr.P.C. The respondent countered that the arrest was under Section 19 of the PML Act, which does not necessitate adherence to Section 41 & 41A of Cr.P.C., thus no notice was required.

2. Connection of the petitioner with the alleged proceeds of crime:
The petitioner claimed he was not involved in seeking financial assistance from banks or in cheating them, thus not connected with the alleged proceeds of crime. He argued that merely acquiring windmills through loans from other entities and repaying them does not implicate him in money laundering. The respondent provided evidence of the petitioner's association with various companies involved in transactions with the Surana Group, indicating his involvement in the financial dealings.

3. Petitioner's involvement and mens rea in the money laundering case:
The petitioner asserted he had no mens rea as he was not part of the management of Surana Corporation Limited and was merely a name lender. The respondent argued that the petitioner, a relative of the main accused, acted as a dummy director/partner in several companies involved in money laundering activities. The court noted the petitioner's long-term association with the Surana Group companies and his involvement in significant transactions, indicating his active participation and knowledge of the financial operations.

4. Compliance with Section 45(1) of the PML Act for granting bail:
The petitioner claimed to have complied with the twin conditions under Section 45(1) of the PML Act. The court emphasized that if a prima facie case is found against the accused, it cannot be satisfied that there are reasonable grounds for believing the accused is not guilty or unlikely to commit an offence while on bail. The court found that the petitioner had not met the second condition of Section 45(1) as his involvement in the companies and transactions indicated his complicity in the offence.

5. Potential for tampering with evidence if bail is granted:
The respondent argued that the petitioner, having not cooperated fully with the investigation, might tamper with evidence if released on bail. The court concurred, noting the petitioner's role in the companies and his potential to influence the ongoing investigation. The court highlighted the balance between individual liberty and societal interest, concluding that the petitioner's release could hinder the investigation.

Conclusion:
The court dismissed the bail petition, emphasizing the petitioner's significant involvement in the money laundering activities of the Surana Group, his potential to tamper with evidence, and the failure to meet the conditions under Section 45(1) of the PML Act. The court maintained that the petitioner's claim of ignorance and lack of mens rea was not credible given his extensive association with the implicated companies.

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