2024 (10) TMI 1405 - HC - Money Laundering

Grant of regular bail - Money Laundering - proceeds of crime - scheduled offence - offence of cheating and criminal conspiracy - HELD THAT - For consideration of the bail application under PMLA, 2002 the Court need not go deep inside the merits of the case but should consider the prima facie material against the accused in the case. The Hon ble Supreme Court in the matter of Vijay Madanlal Chaudhary case 2022 (7) TMI 1316 - SUPREME COURT has held that ' The Court will not weigh the evidence to find the guilt of the accused which is, of course, the work of Trial Court. The Court is only required to place its view based on probability on the basis of reasonable material collected during the investigation and the said view will not be taken into consideration by the Trial Court in recording its finding of the guilt or acquittal during trial which is based on the evidence adduced during the trial.' In the case of Satish Jaggi Vs. State of Chhattisgarh 2007 (4) TMI 775 - SUPREME COURT , the Hon ble Supreme Court has held that at the stage of granting of bail, the Court can only go into the question of prima facie case established for granting bail, it cannot go into the question of credibility and reliability of witnesses put up by the prosecution. The question of credibility and reliability of prosecution witnesses can only be tested during trial. The criminal activity of opening bogus/benami bank accounts and utilizing them for illegal online betting therefore the illegal funds belonging to Mahadev Online Book being transferred through the bogus bank account is the proceeds of crime as defined under Section 2 (1) (u) of PMLA, 2002. The digital record seized in the case and from the statements recorded under Section 50 of the PMLA, 2002 clearly establishes the link of the present applicant with the illegal betting website Sky Exchange and the generation of proceeds of crime through it. In the statement of Prashant Bagari recorded under Section 50 of the PMLA, 2002, the involvement of the present applicant Nitin Tibrewal at the highest level of Sky Exchange clearly appeared which corroborates the statement Smt. Preeti Rathi and Kamal Kishore Rathi the present applicant Nitin Tibrewal was engaged in online betting through Sky Exchange. On perusal of the material produced in the present case, it is not acceptable that the present applicant did not know about the transactions in either from Techpro IT Solutions or from other sources and owned a property at UAE. Denial by the accused itself is not sufficient to consider prima facie that there is no mens rea of the applicant for the said offence under the PMLA, 2002. Although the statement recorded under Section 50 of the PMLA, 2002 is required to be tested at the time of trial, for the purpose of consideration of bail application the statement recorded under Section 50 of the PMLA, 2002 can be considered against the applicant. It cannot be said that there is no involvement of the applicant in the offence in question. Considering the role of the applicant in the ensuing money laundering case of proceeds of crime in Mahadev Book App, it is found that, there is sufficient evidence collected by the respondent-Enforcement Directorate to prima facie show the involvement of the applicant in the offence of money laundering as defined under Section 3 of the PMLA, 2002. It is an organized crime having various facets of its complexion, therefore, further considering the provisions of Section 45 of the PMLA, 2002 this Court is satisfied that there are reasonable grounds for believing that the applicant is involved in the offence and he is likely to commit any other offence while on bail, it is not required to grant bail to the applicant. The present bail application filed by the applicant Nitin Tibrewal is rejected.

Summary

Issues Involved:
1. Legality of the applicant's arrest and detention.
2. Involvement of the applicant in money laundering activities under the PMLA, 2002.
3. Existence of a scheduled offence under the PMLA, 2002.
4. Evidence against the applicant regarding proceeds of crime.
5. Consideration of bail under the PMLA, 2002.

Detailed Analysis:

1. Legality of the applicant's arrest and detention:
The applicant argued that his detention on 11-01-2024 was illegal as he was held without a formal arrest and was only informed of the grounds for arrest on 12-01-2024. The applicant's counsel contended that this violated Section 19 of the PMLA, 2002, and Article 20(3) of the Constitution of India. The Enforcement Directorate (ED) countered that the arrest was conducted in accordance with the law and that the applicant's brother-in-law was informed of the arrest promptly.

2. Involvement of the applicant in money laundering activities under the PMLA, 2002:
The prosecution alleged that the applicant was involved in money laundering activities through his association with M/s Techpro IT Solutions LLC and the illegal betting website Sky Exchange. The ED presented evidence suggesting that the applicant was a majority shareholder in M/s Techpro IT Solutions LLC, which was used to invest proceeds of crime from the Mahadev Online Book in the Indian stock market. The applicant was also implicated in managing illegal betting operations through Sky Exchange, allegedly earning Rs. 2 crore per month.

3. Existence of a scheduled offence under the PMLA, 2002:
The applicant's counsel argued that the alleged offences related to the Mahadev Online Book were not scheduled offences under the PMLA, 2002, and thus could not constitute the basis for money laundering charges. The ED maintained that the illegal funds generated through bogus/benami bank accounts constituted proceeds of crime under Section 2(1)(u) of the PMLA, 2002, due to their association with criminal activities.

4. Evidence against the applicant regarding proceeds of crime:
The ED presented digital records and statements from various individuals, including Prashant Bagariya and Preeti Rathi, which linked the applicant to illegal betting activities and the concealment of proceeds of crime. The applicant denied any involvement with M/s Techpro IT Solutions LLC and claimed that any association was without his knowledge. However, the court found the evidence sufficient to establish a prima facie case against the applicant.

5. Consideration of bail under the PMLA, 2002:
The court referred to the Supreme Court's guidelines in Vijay Madanlal Chaudhary's case, emphasizing that at the bail stage, the court need not delve deeply into the merits but must consider whether there is a prima facie case against the accused. The court found that there were reasonable grounds to believe the applicant was involved in money laundering and that he might commit further offences if released on bail. Consequently, the bail application was rejected.

The judgment concluded that the applicant's involvement in organized crime related to money laundering was sufficiently established, and given the provisions of Section 45 of the PMLA, 2002, the court was not inclined to grant bail.