2021 (12) TMI 1503 - HC - Money Laundering

Money Laundering - cheating, criminal breach of trust and forgery - offence punishable under Sections 120B and 420 of IPC and Sections, 7, 12 and 13 of Prevention of Corruption Act - HELD THAT - The issue about swapping of Credit Card of CKG for transfer of Rs.500 Crores is concerned, even it is attributed to Mr. Peter Kerkar, it could be inferred from the record that the applicant, an internal auditor was not aware of the same. Rather by not objecting the same, the applicant has supported the said illegal activity of siphoning of funds of the other accused. Forgery - HELD THAT - The investigation papers depicts that balance-sheet and books of account of CKG were forged. It further depicts that an amount of Rs.80 Crores withdrawn by the applicant along with co-accused from Ezeego under the guise of loan was subsequently converted into 800 NCDs of Redkite. The aforesaid illegal activities cannot be done without the consent and support from other co-accused Mr. Peter Kerkar and Mr. Anil Khandelwal. The fact that CKG has gone bankrupt primarily demonstrates that the applicant in the capacity of internal auditor has failed to check illegal flow of finances and rather supported such activity which demonstrates his prima-facie involvement in the crime. The diversion of amount of Rs.1997 Crores out of loan of Rs.3642 Crores from Yes Bank and from the account of CKG to three domestic entities and Rs.1645 Crores against two overseas entities sufficiently speaks of siphoning of funds. The economic offences constitute serious fraud and required to be dealt with very seriously. While dealing with such offences, the Court is required to take independent approach regarding prayer for bail. The economic offences are held to have been designed with criminal conspiracy involving huge losses of public money are required to be viewed very seriously. Such offences are grave in nature, affect economy of the country and various financial institutes and pose a serious threat to financial health of the country. As the economic offences against the applicant fall in the category of grave economic offences particularly in view of nature of the accusation and material available against him, the severity of the punishment, character of the applicant/accused does not deserve him to be released. In that view of the matter, no case for bail is made out - Application dismissed.

Summary

Issues:
1. Bail application filed by the applicant in ECIR-38 of 2020.
2. Allegations of financial irregularities, fraud, and siphoning of funds involving the applicant, Mr. Peter Kerkar, and others.
3. Prima facie involvement of the applicant in serious financial offenses.
4. Legal arguments regarding the applicant's alleged role in the offenses.
5. Opposing arguments by the prosecution regarding the ongoing investigation and the seriousness of economic offenses.

Analysis:

1. The applicant, an internal auditor at CKG, was arrested in ECIR-38 and is seeking regular bail. The prosecution's case involves allegations of financial mismanagement, diversion of funds, and illegal transactions within CKG and related entities.

2. The prosecution alleges that the applicant, along with co-accused, diverted significant amounts of money from CKG to other entities, causing financial losses. The applicant is accused of involvement in a criminal conspiracy to siphon funds, obtain illegal loans, and inflate accounts, leading to substantial financial discrepancies and losses.

3. The defense argues that the applicant was not directly involved in the alleged transactions and that the main accused, Mr. Ajay Kerkar, is responsible for the financial irregularities. The defense disputes the prosecution's claims regarding the applicant's role in the offenses and attempts to show that the applicant's actions were legitimate professional activities.

4. The court considered the seriousness of economic offenses and the potential impact on the economy and financial institutions. The judge noted the gravity of the allegations, the ongoing investigation, and the need to prevent further financial harm. The court concluded that the severity of the accusations and the ongoing investigation do not warrant granting bail to the applicant at this stage.

5. The prosecution highlighted the ongoing investigation, the complexity of tracing siphoned funds, and the applicant's professional expertise as a chartered accountant and internal auditor. The prosecution argued that the applicant cannot evade responsibility for the financial irregularities and must be held accountable for his alleged involvement in the serious economic offenses.

This detailed analysis of the judgment outlines the key issues, legal arguments, and the court's decision regarding the bail application and the allegations of financial crimes against the applicant.