2024 (6) TMI 627 - HC - Money Laundering

Seeking grant of bail - Money Laundering - proceeds of crime - scheduled offences - cheating innocent citizens by alluring them to invest in the M/s Shine City in terms of various lucrative schemes - HELD THAT - The Apex Court in Rohit Tandon v. Directorate of Enforcement 2017 (11) TMI 779 - SUPREME COURT has held that The consistent view taken by this Court is that economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. Further when attempt is made to project the proceeds of crime as untainted money and also that the allegations may not ultimately be established but having been made the burden of proof that the monies were not the proceeds of crime and were not therefore tainted shifts on the accused persons under Section 24 of the 2002 Act. The offence of money laundering as per Section 3 not only relates to generation of such proceeds of crime but it also includes any activity directly or indirectly relating to concealment or possession or acquisition or use amongst others. The said definition is very wide and inclusive thus the fact that directly or indirectly if any person is in possession or use of such proceeds of crime whether directly or indirectly knowingly assists or knowingly is a party or actually involved in any activity connected with proceeds of crime relating to concealment possession acquisition or use or projecting the property as untainted property or claiming as untainted property in any manner whatsoever would be liable for any offence under the PMLA. In the instant case from the perusal of the complaint and the material brought on record it reflects prima facie involvement of the applicant. Even though this Court is conscious of the fact that at this stage a mini trial is not be held nor the court is required to enter into the merits or the depth of the evidence to return a finding of guilt but what is required of the Court is to prima facie consider the material available on record to enable the court to satisfy itself in order to enable it to form reasonable belief that the applicant is not guilty of the offence and that he is not likely to commit any offence on bail which is one of the condition as enshrined in Section 45 of the PMLA. This Court is unable to persuade itself to form a prima facie satisfaction in terms of Section 45 of the PMLA at this stage that the applicant is not guilty or that he may not commit an offence on bail - Bail application rejected.

Summary

Issues Involved:
1. Applicability of the Prevention of Money Laundering Act (PMLA) to the applicant.
2. Justification of transactions and movement of funds.
3. Prima facie involvement in money laundering.
4. Consideration for bail u/s 45 of PMLA.

Summary:

1. Applicability of the Prevention of Money Laundering Act (PMLA) to the applicant:
The applicant was implicated in ECIR No.LKZO/05/2021, triggering proceedings under the PMLA. The ECIR was lodged in connection with numerous FIRs against M/s Shine City Infra Project Pvt. Ltd. and its directors/officers for cheating home-buyers/investors (para 1). The applicant's firms were alleged to have dealt with "Proceeds of Crime" generated by M/s Shine City (para 4).

2. Justification of transactions and movement of funds:
The applicant received approximately Rs. 7.68 crores in his firms' accounts over five years, primarily from M/s Shine City (para 5). The applicant claimed the funds were business transactions related to real estate and construction services (paras 10-21). However, the Enforcement Directorate (ED) argued that the transactions lacked sufficient justification and were not consistent with prudent business practices (paras 26-30).

3. Prima facie involvement in money laundering:
The court noted that the applicant's firms, established around 2016, received significant funds from M/s Shine City. The applicant's explanation for the high brokerage rates and the nature of transactions did not inspire confidence (paras 43-52). The court found prima facie material linking the applicant to the movement and trail of funds from M/s Shine City, indicating complicity in money laundering (para 49).

4. Consideration for bail u/s 45 of PMLA:
The court referred to several Supreme Court decisions emphasizing the stringent conditions for granting bail under Section 45 of the PMLA (paras 37-42). The court concluded that the applicant did not satisfy the conditions for bail, as there were no reasonable grounds to believe he was not guilty or that he would not commit an offence while on bail (paras 47-53). Consequently, the bail application was rejected (para 53).

In conclusion, the court rejected the bail application due to the applicant's prima facie involvement in money laundering and failure to meet the stringent conditions for bail under Section 45 of the PMLA. The trial court was directed to expedite the trial (para 54).