2024 (6) TMI 1337 - HC - Customs

Seeking grant of bail - false declaration of the consignment as Fabric Glue/Radiators/Assorted Colours for smuggling of Red Sanders - submitting forged/false documents of the companies situate at Special Economic Zones - evasion of duty - proceeds of crime - scheduled offences - HELD THAT - Indubitably, investigation by the Ed is in respect of money laundering of Rs. 51.12 crores which relate to the period from 20th August, 2014 to 14th November, 2015. However, scope and ambit of investigation under the PML Act is wider in nature which can take into account the period even before the date and time of commission of the scheduled offence. As already stated, the criminal activity had been committed even before the same has been notified as a scheduled offence for the purpose of PML Act. The ED was well within it s jurisdiction to investigate continuing offence/s, irrespective of the date and time of commission of the scheduled offence as observed by the Hon ble Supreme Court in the case of Vijay Madanlal Choudhary 2022 (7) TMI 1316 - SUPREME COURT . It is crystal clear that a criminal activity may have been committed before the same had been notified as a scheduled offence for the purpose of PML Act, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, may be liable to be prosecuted for offence of money laundering under the PML Act for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in trenches until fully exhausted. The Supreme Court has made it very clear that the offence of money laundering is not dependent on or linked to the date on which the scheduled offence or if we may say so the predicate offence has been committed. The relevant date is the date on which the person indulges in the process or activity connected with such proceeds of crime. As already stated hereinabove and the details of period unearthed by the Investigating Agency, the applicant had already indulged in the process connected with proceeds of crime - The Ed has a power to investigate a continuing offence of money laundering as the said offence is not dependent on the date on which the scheduled offence or predicate offence has been committed. The E.D, by clinching material placed on record, has shown that the applicant has been in continuing possession of proceeds of crime. The broad parameters which are required to be considered are the nature of accusation, the nature of material and evidence collected by the Investigating Agency in support of the allegations, severity of the punishment prescribed for the offence, character and antecedents of the accused, circumstances which are peculiar to the accused and last but not least, possibility of securing his presence during trial as well as reasonable apprehension of witnesses being hampered or tampered - The applicant has not discharged onus of satisfying this Court as regards reasonable grounds for believing that he is not guilty of such offence and he is not likely to commit any offence while on bail, more particularly in the light of the fact that in the past, he had indulged in similar activities of smuggling red sanders by using fake documents. The application is devoid of merits - Application dismissed.

Summary

Issues Involved:
1. Bail application of the applicant.
2. Allegations of smuggling and money laundering.
3. Jurisdiction and scope of investigation by the Enforcement Directorate (ED).
4. Applicability of twin conditions under Section 45 of the PML Act.
5. Legal precedents and their applicability.

Detailed Analysis:

1. Bail Application of the Applicant:
The applicant sought release on bail after being charge-sheeted in connection with ECIR No. MBZO - II/40/2021. The charges stem from a prosecution complaint filed by the Directorate of Revenue Intelligence (DRI) for offenses under Sections 132, 135(1)(a)(ii), and 135(1)(b)(ii) read with 140 of the Customs Act, 1962. The applicant was accused of false declaration of consignments and smuggling Red Sanders.

2. Allegations of Smuggling and Money Laundering:
The investigation revealed that the applicant was the kingpin of a syndicate smuggling Red Sanders by mis-declaring them as Fabric/Glue/Radiators/Assorted Colours using forged documents. The applicant had a history of similar offenses and had been previously detained under COFEPOSA. The syndicate had smuggled out 17 consignments valued at Rs. 47 crores before being intercepted by DRI. The applicant and his associates had laundered the proceeds through shell companies, projecting them as untainted money.

3. Jurisdiction and Scope of Investigation by the Enforcement Directorate (ED):
The ED's investigation covered transactions from 2010 to 2017, beyond the predicate offense period (2014-2015). The applicant argued this was beyond ED's jurisdiction. However, the court held that the ED has the jurisdiction to investigate continuing offenses, irrespective of the date of the predicate offense. The Supreme Court's judgment in Vijay Madanlal Choudhary clarified that money laundering is a continuing offense, and the ED can investigate any process or activity connected with proceeds of crime.

4. Applicability of Twin Conditions under Section 45 of the PML Act:
The court considered the twin conditions under Section 45 of the PML Act, which set a higher threshold for granting bail. The applicant failed to discharge the burden of showing reasonable grounds for believing he was not guilty and was unlikely to commit any offense if released. The court noted the applicant's past involvement in similar activities and the statutory presumption under Section 24 of the PML Act, which allows the court to presume the involvement of proceeds of crime unless proven otherwise.

5. Legal Precedents and Their Applicability:
The applicant's counsel cited several Supreme Court decisions, including Vijay Madanlal Choudhary, P. Chidambaram, Directorate of Enforcement Vs. Deepak Mahajan, and Ranjitsing Brahmajeetsing Sharma. The court found that the principles laid down in these cases, particularly Vijay Madanlal Choudhary, supported the ED's jurisdiction to investigate continuing offenses. The court also referenced the Supreme Court's judgment in Tarun Kumar, which reiterated that money laundering is an independent offense connected with proceeds of crime derived from criminal activity.

Conclusion:
The court concluded that the applicant's bail application lacked merit. The ED's investigation was within its jurisdiction, and the applicant failed to meet the conditions for bail under Section 45 of the PML Act. The application was thus rejected.