2023 (6) TMI 67 - HC - Money Laundering

Seeking grant of Regular Bail - Money Laundering - predicate Offence - siphoning off of funds on the basis of fake/fictitious invoices - main thrust of the petitioner's submission is that the petitioner exercised no control over the affairs of Phoenix FZC; and that he was neither an employee, nor did he hold any key position in the management of the company - HELD THAT - It cannot be gainsaid that the offence comprised in section 3 of the PMLA is a grave and serious economic offence, and has been couched in the widest of terms. However, before proceeding to consider the rival submissions of the parties, it is necessary to briefly set-out the position of law as enunciated by the Supreme Court as regards the considerations that must inform the grant or denial of bail in matters under the PMLA. In its recent decision in Ashish Mittal vs. Serious Fraud Investigation Office 2023 (5) TMI 144 - DELHI HIGH COURT , in the context of section 212(6) of the Companies Act, 2013 which contains a provision in pari materia to section 45(1)(i) and (ii) of the PMLA, this court has held that When the public prosecutor opposes a bail plea, he would have to establish foundational facts sufficiently to dislodge the presumption of innocence, and it is only then that the onus of satisfying the stringent twin-conditions would shift onto the accused. To be clear, there is no statutory mandate for the court to depart from the presumption of innocence. Insofar as the ED not having arrested similarly placed co-accused persons; and not even having arraigned some other persons evidently connected with the offending transactions as accused in the prosecution complaint, though these aspects would not be dispositive of a bail plea one way or the other, they are also not wholly irrelevant and the doctrine of parity is not immaterial - insofar as the allegation of the ED as regards the petitioner s conduct is concerned, it would appear that the petitioner has been forthcoming with the investigating agency about information that he did possess about the affairs of Phoenix FZC, as is seen from his statements recorded under section 50 of the PMLA. As regards the ED s submission that the petitioner asked his son to delete e-mails concerning transactions of Phoenix FZC from his e-mail ID [email protected] and forwarded the same to another e-mail ID [email protected], it is observed that such e-mails have subsequently been recovered by the investigating agency and the investigation has not suffered on that count. The prosecution complaint having now been filed, there is no demonstrable risk as to evidence tampering. In the circumstances, for the purpose of grant of regular bail to the petitioner, this court is satisfied that there are reasonable grounds to believe that the petitioner is not guilty of the offence under section 3 of the PMLA. Further, considering that the prosecution complaint has been filed before the learned trial court; that the petitioner has materially co-operated in the investigation; and in view of the nature of the alleged role played by the petitioner in the allegedly offending transactions, this court is also satisfied that the petitioner is not likely to commit any offence under PMLA while on bail. This court is of the view that the petitioner deserves to be granted relief; and is hereby admitted to regular bail pending trial, subject to the conditions imposed - application allowed.

Issues Involved:
1. Whether the petitioner is entitled to regular bail under section 439 of the Cr.P.C. read with section 45 of the PMLA.
2. Whether the petitioner had control over Phoenix FZC and was involved in the alleged money laundering activities.
3. Whether the petitioner had the requisite mens rea for the commission of the offence under section 3 of the PMLA.
4. Whether the principle of parity applies in granting bail to the petitioner.

Issue 1: Entitlement to Regular Bail
The petitioner sought regular bail under section 439 of the Cr.P.C. read with section 45 of the PMLA. The court noted that the petitioner had materially cooperated with the investigation and was not likely to commit any offence under the PMLA while on bail. The court also emphasized that the twin conditions under section 45 (1) of the PMLA are to be applied in addition to the usual and ordinary principles required for granting or denying bail.

Issue 2: Control Over Phoenix FZC
The court observed that the petitioner was a resident of Dubai and was appointed as the Authorized Signatory to operate the bank account of Phoenix FZC. The petitioner was neither a director nor a shareholder in the company during the period of the alleged offending transactions. The court found that the petitioner was not involved in issuing the invoices against which the inward remittances were received by Phoenix FZC, and the transactions were conducted on instructions from Sahil Mehta.

Issue 3: Requisite Mens Rea
The court noted that the petitioner had no financial interest in the transactions and was only performing his role as an Authorized Signatory. The court found that the petitioner did not have the requisite mens rea for the commission of the offence under section 3 of the PMLA. The court also observed that the petitioner received a small commission on an ad-hoc basis for the transactions he conducted, which had no correlation to any particular transaction.

Issue 4: Principle of Parity
The court highlighted that the principle of parity is not immaterial and noted that Sanjay Godhwani, one of the main accused, had been granted bail by the trial court. The court found that the petitioner's role in the allegedly offending transactions was far more peripheral than that of Sanjay Godhwani, and this circumstance weighed in favor of granting bail to the petitioner.

Conclusion:
The court granted regular bail to the petitioner, subject to stringent conditions, including furnishing a personal bond, surrendering his passport, and cooperating with further investigation. The court was satisfied that there were reasonable grounds to believe that the petitioner was not guilty of the offence under section 3 of the PMLA and was not likely to commit any offence under the PMLA while on bail. The petition was disposed of accordingly.

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