2025 (1) TMI 1449 - HC - Money Laundering

Seeking grant of regular bail - Money Laundering - proceeds of crime - reasons to believe - illegal procurement of empty vials and raw materials of anti-cancer drugs such as Keytruda and Opdyta - reasons to believe - whether the applicant s arrest was carried out in adherence to the statutory requirements under Section 19 of the PMLA which mandates that the authorized officer must have reason to believe based on material evidence before arresting an individual accused of money laundering? HELD THAT - After thorough examination of the grounds of arrest it becomes evident that the investigating agency has outlined specific details highlighting the applicant s involvement in the alleged offence. It is observed that the applicant was duly informed about his firm s involvement and that the applicant was a partner is M/s Delhi Medicine Hub along with co-accused Akshay Kumar and both mutually took financial and business decisions regarding the procurement and sale of spurious anti-cancer medicines which is clearly evident from the grounds of arrest - The investigating authority has also relied on statements recorded under Section 50 of the PMLA which reveal that the applicant was directly involved in sourcing counterfeit medicines without invoices demanding sealed and unsealed Keytruda injections and receiving payments through both formal banking channels and illegal hawala transactions. The financial records cited hereinabove indicate substantial money transfers from M/s Delhi Medicine Hub to the accounts of known associates involved in the counterfeit medicine syndicate. These transactions along with the applicant s control over the business operations substantiate the claim that he was engaged in money laundering activities - This Court is satisfied that the investigating authority followed due process and substantiated the reason to believe with concrete evidence rather than mere suspicion. Accordingly the challenge to the legality of the arrest is without merit and no relief is warranted to the applicant on this ground. A careful reading of the provision reveals that the authorities empowered under Section 50 of the PMLA possess the authority to enforce discovery and inspection compel the attendance of individuals examine them on oath require the production of records receive evidence through affidavits and issue commissions for the examination of witnesses and documents - The provision further clarifies that any person summoned under sub-section (2) is legally bound to comply state the truth regarding matters under inquiry and produce the requisite documents as directed by the authorities. It is pertinent to note that such proceedings are deemed to be judicial proceedings under Sections 193 and 228 of the IPC. Whether the statements recorded under this provision are admissible as evidence and to what extent they can be relied upon to justify the applicant s arrest and continued detention? - HELD THAT - The Hon ble Supreme Court in Rohit Tandon v. Directorate of Enforcement 2017 (11) TMI 779 - SUPREME COURT made the following observations regarding the admissibility of statements recorded under Section 50 of the PMLA - it is evident that statements recorded under Section 50 of the PMLA hold evidentiary value and are admissible in legal proceedings. The Hon ble Supreme Court while emphasizing the legal sanctity of such statements observed that they constitute valid material upon which reliance can be placed to sustain allegations under the PMLA. Hon ble Supreme Court also reaffirmed the admissibility of Section 50 of the PMLA distinguishing them from statements recorded under the CrPC. The Court underscored that such statements being recorded during an inquiry rather than an investigation are not subject to the restrictions under Article 20(3) and Article 21 of the Constitution. Instead they are deemed to be judicial proceedings under Section 50 (4) of the PMLA and therefore admissible as evidence in proceedings under the PMLA. The Hon ble Court further clarified that the provisions of Section 50 of the PMLA having an overriding effect by virtue of Sections 65 and 71 of the PMLA prevail over the procedural safeguards under the CrPC. - this Court is of the considered view that statements recorded under Section 50 of the PMLA are admissible in evidence and can be relied upon to establish culpability in money laundering cases. In the present case the investigating agency has relied not only on the statement of co-accused under Section 50 of the PMLA but also on financial records WhatsApp communications and transactional data which indicate the applicant s active role in the alleged money laundering activities - By virtue of Section 24 of the PMLA the respondent is not required to conclusively establish the applicant s guilt at the pre-trial stage rather the applicant must demonstrate that the proceeds of crime attributed to him are not linked to money laundering. In the absence of any rebuttal by the applicant the presumption under Section 24 of the PMLA stands in favor of the respondent thereby justifying his continued detention. In light of the principles enunciated by the Hon ble Supreme Court in Vijay Madanlal Choudhary 2022 (7) TMI 1316 - SUPREME COURT (LB) and reiterated in Prem Prakash 2024 (8) TMI 1412 - SUPREME COURT this Court must determine whether the foundational facts necessary to invoke the presumption under Section 24 of the PMLA have been established by the respondent. The Hon ble Supreme Court has categorically held that the prosecution must satisfy three essential ingredients. First the commission of a scheduled offence must be established. Second the property in question must be shown to have been derived or obtained directly or indirectly as a result of such criminal activity and third the accused must be linked directly or indirectly to any process or activity connected with the proceeds of crime. It is observed by this Court that the respondent has presented corroborative material including financial transactions and records linking the applicant to the proceeds of crime. Considering the presumption under Section 24 of the PMLA the burden shifted to the applicant to disprove his involvement in the alleged offence. However the applicant has failed to provide any credible evidence to rebut the statutory presumption - this Court finds that the applicant s arrest was conducted in compliance with the statutory mandate of Section 19 of the PMLA. It is pertinent to mention here that the word used in the proviso to Section 45 of the PMLA is may which indicates that it is the discretion of the Court concerned and it is not a mandate. As observed by the Hon ble Supreme Court in a catena of judgments it is the discretion of the Court and all the other relevant factors are needed to be weighed in while adjudicating the bail application. The relevant factors include the gravity of the offence likelihood of reoccurrence criminal antecedents etc. - this Court holds that the applicant cannot claim the benefit of the monetary threshold exemption under the proviso to Section 45 of the PMLA. Conclusion - This Court is of the view that considering the filing of the first supplementary prosecution complaint and the ongoing nature of the investigation this Court is not satisfied that the applicant has fulfilled the twin conditions under Section 45 of PMLA. The respondent has presented sufficient material to warrant further investigation including financial records electronic evidence and statements of co-accused implicating the applicant. These materials suggest an active involvement in laundering proceeds of crime and a pattern of financial transactions that need further investigation. The applicant has been unable to put forth any propositions before this Court that are sufficient for grant of bail and thus the same are rejected. In view of the same this Court is not inclined to release the applicant on bail and the instant application is hereby dismissed along with the pending applications if any - Bail application dismissed.

Summary

The judgment addresses a bail application filed by the applicant under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023, and/or Section 439 of the Code of Criminal Procedure, 1973, read with Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA). The applicant seeks regular bail in connection with a case involving allegations of money laundering and related offences under the Indian Penal Code (IPC).

Issues Presented and Considered:

The core issues considered by the Court include:

• Whether the applicant's arrest complied with Section 19 of the PMLA, which mandates 'reasons to believe' before an arrest.
• Whether the statements recorded under Section 50 of the PMLA are admissible and sufficient to justify the applicant's arrest.
• Whether the applicant is exempt from the twin conditions for bail under Section 45 of the PMLA.
• Whether the applicant satisfies the twin conditions under Section 45 of the PMLA for the grant of bail.

Issue-Wise Detailed Analysis:

1. Compliance with Section 19 of the PMLA:

• Legal Framework and Precedents: Section 19 requires that an arresting officer must have 'reason to believe' based on material evidence, recorded in writing, before making an arrest. The Court referred to precedents such as Vijay Madanlal Choudhary v. Union of India and V. Senthil Balaji v. State, which emphasize procedural safeguards in arrests under the PMLA.
• Court's Interpretation: The Court examined the grounds of arrest and found that specific details were provided, highlighting the applicant's involvement in the alleged offence.
• Evidence and Findings: The grounds of arrest included details of the applicant's role in the procurement and sale of counterfeit medicines and the transfer of proceeds of crime.
• Conclusion: The Court concluded that the arrest was conducted with due process, based on concrete evidence, and was not arbitrary.

2. Admissibility of Statements under Section 50 of the PMLA:

• Legal Framework and Precedents: Section 50 of the PMLA allows authorities to summon individuals and record statements, which are admissible as evidence. The Court cited Rohit Tandon v. Directorate of Enforcement and Abhishek Banerjee v. Enforcement Directorate, affirming the admissibility of such statements.
• Court's Interpretation: The Court noted that statements recorded under Section 50 are judicial proceedings and hold evidentiary value.
• Conclusion: The Court held that the statements, along with other evidence, justified the applicant's arrest and detention.

3. Exemption from Twin Conditions under Section 45 of the PMLA:

• Legal Framework and Precedents: Section 45 imposes stringent conditions for bail, requiring the Public Prosecutor's opportunity to oppose and the Court's satisfaction of the applicant's non-guilt and non-reoffending. The Court referred to Nikesh Tarachand Shah v. Union of India and Vijay Madanlal Choudhary v. Union of India.
• Court's Interpretation: The Court found that the applicant's role in a broader criminal conspiracy involving proceeds exceeding one crore rupees precluded exemption under the proviso to Section 45.
• Conclusion: The applicant could not claim exemption from the twin conditions, given the scale of the alleged offence.

4. Satisfaction of Twin Conditions under Section 45 of the PMLA:

• Legal Framework and Precedents: The Court considered the principles that "bail is the rule, and jail is the exception," as reiterated in Prem Prakash v. Enforcement Directorate and Manish Sisodia v. Enforcement Directorate.
• Court's Interpretation: The Court found substantial evidence of the applicant's involvement in money laundering, including financial records and electronic evidence.
• Conclusion: The applicant failed to satisfy the twin conditions, as there were no reasonable grounds for believing he was not guilty, nor assurance against reoffending.

Significant Holdings:

• The Court emphasized the procedural safeguards under Section 19 of the PMLA, requiring 'reason to believe' based on material evidence before an arrest.
• The admissibility of statements under Section 50 of the PMLA was reaffirmed, holding evidentiary value in proceedings.
• The Court held that the applicant's alleged role in a broader criminal conspiracy precluded exemption from the twin conditions under Section 45 of the PMLA.
• The applicant failed to satisfy the twin conditions for bail under Section 45 of the PMLA, given the evidence of involvement in money laundering activities.
• The Court dismissed the bail application, citing the ongoing investigation and potential risk of interference with evidence and witnesses.