2023 (3) TMI 586 - HC - Money Laundering

Money Laundering - criminal conspiracy - illegal mining - large scale theft of the natural resources like stone chips and boulders which are public property - link between the predicate offence and proceeds of crime generated by the said offence - invocation of burden to prove in the pre-charge stage - HELD THAT - This Court is of the view that the argument advanced on behalf of the E.D. is persuasive enough to reject the petition for bail. Contrary to the submission by the learned Counsel on behalf of the petitioner, the offence of money laundering is an independent offence and it is not necessary that the accused charged with the offence of money laundering are the same who are made accused in predicate offence as per the ratio decided in Vijay Madan Lal Choudhary 2022 (7) TMI 1316 - SUPREME COURT . The law enforcement agencies are now confronted with a new species of crime in the form of money laundering, which necessitated the special Act. The law is evolving with different amendments and judicial pronouncements. These are not like conventional crime and the modus operandi involves three stages (a) Placement which is to move the funds from direct association of the crime. (b) Layering which is disguising the trail to foil pursuit. (c) Integration which is making the money available to the criminal from what seem to be legitimate sources. A normal business transaction between the different entities involved in the criminal conspiracy cannot be expected in such cases and therefore, the provision for reverse burden has also been made under Sections 23 and 24 of the PMLA. In the present case, the role of this petitioner has come-up in the statement of Ravi Kejriwal and Anil Jha - Huge cash transactions have been shown in the account of the company in the name of this petitioner, regarding which no plausible explanation has been offered. The investigation revealed that the cash receipts amounting to Rs. 5,65,17,000/-in Punjab National Bank Account No. 21881132000179 of M/s Herbal Green Solutions Pvt. Ltd, and subsequent payments worth Rs. 5,31,18,000/-to one company M/s Aurora Studio Pvt. Ltd., a company of Amit Agarwal, required to be satisfactorily answered by the petitioner, but he failed to do so. Quite interestingly, even two AK 47 rifles were seized from his house which are said to be of the security guards not posted in his place. Petition dismissed.

Summary

Issues Involved:
1. Connection of the petitioner with the predicate offence and proceeds of crime.
2. Validity of the evidence linking the petitioner to money laundering.
3. Arguments regarding the burden of proof under the Prevention of Money Laundering Act (PMLA).
4. Relevance of illegal mining as a predicate offence under PMLA.
5. Arguments for and against the bail petition.

Issue-wise Detailed Analysis:

1. Connection of the petitioner with the predicate offence and proceeds of crime:
The petitioner is in custody in connection with ECIR Case No. 04 of 2022, arising from Barharwa P.S. Case No. 85 of 2020. The prosecution alleges that the petitioner was involved in a criminal conspiracy to control Barharwa Toll, which was crucial for monitoring vehicles transporting illegally mined stone chips. The investigation revealed that the petitioner, along with Pankaj Mishra and others, was involved in illegal mining and laundering the proceeds of crime, which included substantial cash transactions and bank transfers.

2. Validity of the evidence linking the petitioner to money laundering:
The prosecution presented evidence, including statements from Ravi Kumar Kejriwal and Anil Jha, implicating the petitioner in money laundering activities. Kejriwal's statement mentioned that the Chief Minister directed Pankaj Mishra to hand over funds from illegal mining to the petitioner. Jha's statement detailed cash transactions conducted on the petitioner's behalf. The evidence also included significant unexplained cash transactions in the petitioner's company's bank account, linking him to the proceeds of crime.

3. Arguments regarding the burden of proof under the Prevention of Money Laundering Act (PMLA):
The petitioner's counsel argued that under the amended Section 24 of PMLA, the burden of proof could only be cast on the accused after charges are framed. They cited the Supreme Court's decision in Vijay Madan Lal Choudhary Versus Union of India, which emphasized the need to establish a link between the predicate offence and the proceeds of crime. The counsel contended that mere possession of a large amount of money was insufficient to shift the burden of proof to the petitioner.

4. Relevance of illegal mining as a predicate offence under PMLA:
The petitioner's counsel argued that illegal mining is not a scheduled offence under PMLA, making references to such activities irrelevant. They cited the Karnataka High Court's decision in Obulapuram Mining Company Pvt. Ltd. Versus Joint Director, Directorate of Enforcement, which quashed an ECIR on similar grounds. However, the prosecution countered that the Supreme Court's decision in Vijay Madan Lal Choudhary clarified that money laundering is an independent offence, and the accused in the predicate offence need not be the same as those charged with money laundering.

5. Arguments for and against the bail petition:
The petitioner's counsel argued that there was no direct evidence linking the petitioner to illegal mining or money laundering, and that the transactions in question were legitimate business dealings. They also highlighted the lack of any FIR or charge sheet against the petitioner for illegal mining. Conversely, the prosecution emphasized the petitioner's involvement in a criminal conspiracy, substantial unexplained cash transactions, and the seizure of AK 47 rifles from his residence. They argued that granting bail would not serve the interest of justice, given the nascent stage of the investigation.

Conclusion:
After considering the arguments, the court found the prosecution's case persuasive enough to reject the bail petition. The court noted that money laundering is an evolving crime requiring special legislation and that the petitioner's involvement in the conspiracy and unexplained transactions warranted further investigation. The bail petition was thus rejected to ensure the integrity of the ongoing investigation.