2024 (12) TMI 612 - HC - Money Laundering

Money Laundering - predicate offence - Legality of arrest and detention under the Prevention of Money Laundering Act - Alleged clandestine business of call centres being run at Godrej Waterside Building - requirement to satisfy twin conditions laid down under section 45 of PMLA - Rebuttal of presumption under section 24 - reliability of the statement of the petitioner, the co-accused and others recorded under section 50 of the PMLA - Right to life and personal liberty enshrined under Article 21 of the Constitution. Rebuttal of presumption under section 24 - HELD THAT - It is for the E.D. to establish the foundational facts after which the onus shall shift upon the petitioner to rebut the presumption under section 24 - The Hon ble Supreme Court, in Prem Prakash 2024 (8) TMI 1412 - SUPREME COURT held that once these foundational facts are established by the prosecution the onus shifts on the person facing charge of offence of money laundering to rebut the legal presumption that the proceeds of crime are not involved in money laundering, by production of evidence which is within his personal knowledge. Reliability of the statement of the petitioner, the co-accused and others recorded under section 50 of the PMLA - HELD THAT - In the authority in Prem Prakash 2024 (8) TMI 1412 - SUPREME COURT the Hon ble Supreme Court has held that when an accused is in custody under PMLA irrespective of the case for which he is under custody, any statement under section 50 PMLA to the same investigating agency is inadmissible against the maker. The reason being that the person in custody pursuant to the proceeding investigated by the same investigating agency is not a person who can be considered as one operating with a free mind. It will be extremely unsafe to render such statements admissible against the maker. In the present case, though the predicate offence and the present proceeding have been investigated by two different agencies, the vulnerable position in which the petitioner was placed when his statement was recorded while he was in custody cannot be ignored. Also, it is trite law that statement under section 50 of the PMLA cannot be treated as substantive piece of evidence and can at best lend corroboration to the material available against the accused in course of investigation - Statement of the co-accused cannot be considered against the petitioner. Such statements cannot be taken as gospel truth and only broad probabilities have to be seen. Operation of fake call centres in the premises in question - transfer of proceeds of crime to the account of the petitioner - HELD THAT - The payment of Rs. 1.50 crores to the petitioner in cash has prima facie not been substantiated. The said cash transaction surfaced from a purported excel sheet available in the laptop of Aditya Gupta who is neither an accused, nor a witness in the present proceeding. A comprehensive investigation appears to have been done by the E.D. resulting in overlapping of statements, documents, etc., in both the PMLA cases - There is no scope for the petitioner to tamper with the same. The witnesses cited are official witnesses who are employees of the department and it is expected that the petitioner is not in a position to influence them. The issue of the petitioner being at flight risk can be addressed by imposing stringent conditions upon the petitioner while granting him bail. Investigation has culminated in submission of charge sheet. Further detention of the petitioner is not required for the purpose of custodial interrogation. Right to life and personal liberty enshrined under Article 21 of the Constitution - HELD THAT - The Hon ble Supreme Court has time and again held that prolonged incarceration before being pronounced guilty of an offence should not be permitted to become punishment without trial and in such a case Article 21 applies irrespective of the seriousness of the crime. The right to life and personal liberty enshrined under Article 21 of the Constitution is overarching and sacrosanct. A constitutional Court cannot be restrained from granting bail to an accused on account of restrictive statutory provisions in a penal statute if it finds that the right of the accused-under trial under Article 21 of the Constitution has been infringed. Even in the case of interpretation of a penal statute, howsoever stringent it may be, a constitutional Court has to lean in favour of constitutionalism and the rule of law of which liberty is an intrinsic part. Upon consideration of the facts and circumstances of the case, material on record as well as law on the point, this Court is inclined to release the petitioner on bail subject to stringent conditions - the petitioner be released on bail upon furnishing bond of Rs. 10,00,000/- with adequate sureties, half of whom should be local, subject to the fulfilment of conditions imposed - bail application allowed.

Summary

Issues Involved:

1. Legality of arrest and detention under the Prevention of Money Laundering Act (PMLA).
2. Allegations of running fake call centers and money laundering.
3. Validity of evidence and statements under Section 50 of the PMLA.
4. Conditions for granting bail under Section 45 of the PMLA.
5. Risk of flight and tampering with evidence.

Issue-wise Detailed Analysis:

1. Legality of Arrest and Detention under PMLA:

The petitioner was shown as arrested on 7th January 2024, while in custody for another case, and produced before the court on 9th January 2024, beyond the statutory period of twenty-four hours as laid down under Section 19(3) of the PMLA. The practice of "shown arrest" without producing the accused in court is not recognized in law. The court noted that unless the accused is produced physically or virtually, the concept of "showing arrest" is impermissible.

2. Allegations of Running Fake Call Centers and Money Laundering:

The Enforcement Directorate (E.D.) alleged that the petitioner, along with another individual, operated fake call centers, cheating people globally by offering fake loans. The E.D. claimed that the petitioner received proceeds of crime from these activities. However, the petitioner argued that the transactions between his company and the co-accused's company were legitimate rent payments under a lease agreement, and no victims were cited in the charge sheet.

3. Validity of Evidence and Statements under Section 50 of the PMLA:

The prosecution's case heavily relied on statements recorded under Section 50 of the PMLA. The court emphasized that such statements cannot be treated as substantive evidence and are inadmissible against the maker if recorded while in custody. The court also highlighted that the statement of a co-accused cannot be solely relied upon without corroborating evidence.

4. Conditions for Granting Bail under Section 45 of the PMLA:

For granting bail under Section 45 of the PMLA, the court must be satisfied that there are reasonable grounds for believing the accused is not guilty and is unlikely to commit an offense while on bail. The court found that the primary allegations against the petitioner were not substantiated with tangible evidence, and the petitioner had already been granted bail in the predicate offense.

5. Risk of Flight and Tampering with Evidence:

The E.D. expressed concerns about the petitioner's flight risk and potential to tamper with evidence. However, the court noted that the case is based on documentary evidence already in the E.D.'s custody, and the witnesses are official employees, reducing the risk of tampering. The court proposed imposing stringent conditions to mitigate the flight risk.

Conclusion:

Upon considering the facts, the court decided to grant bail to the petitioner, emphasizing the importance of Article 21 of the Constitution, which upholds the right to life and personal liberty. The court imposed several conditions, including surrendering the passport, not leaving the jurisdiction without permission, and regularly appearing in court. The judgment clarified that these observations were solely for deciding the bail application and should not influence the trial's merits.