2017 (9) TMI 1358 - HC - Money Laundering

Application for bail - offence under PMLA act - Held that - Rigors of Section 21(4) of MCOC Act as under consideration which is pari materia with Section 45(1) of PML Act, and considering the facts of the present case and the observations made hereinabove grounds for grant of bail are made out. The reasonable satisfaction contemplated under Section 45(1) has to be construed on the basis of aforesaid principles. The observations herein are restricted to an application under Section 439 of Cr.P.C. and the same shall not be taken into consideration for purpose of quashing the proceedings, discharge application or at the time of trial. (i) The applicant is directed to be released on the bail in connection with ECIR/MBZO11/05/2016 registered by Directorate of Enforcement, Mumbai on furnishing P. R. Bond in the sum of ₹ 1 lakh (Rupees One Lakh only.) with one or more sureties in the like amount; (ii) The applicant is directed to report to Enforcement Directorate, Mumbai once in a month on the first Saturday of the month between 11.00 am to 1.00 pm till further orders; (iii) The applicant shall not leave country without the permission of the Court; (iv) The applicant is permitted to furnish cash security in the sum of ₹ 1 lakh for a period of four weeks in lieu of sureties;

Issues Involved:
1. Application for bail under Section 439 of Cr.P.C.
2. Prosecution case details and allegations.
3. Compliance with Section 19 of the PML Act.
4. Applicability of Section 45(1) of the PML Act.
5. Arguments by the applicant’s counsel.
6. Arguments by the Enforcement Directorate.
7. Analysis of evidence and involvement of the applicant.
8. Consideration of precedents and legal principles.
9. Final decision on the bail application.

Issue-wise Detailed Analysis:

1. Application for Bail under Section 439 of Cr.P.C.:
The applicant sought enlargement on regular bail in ECIR/MBZO-II/05/16, registered by the Enforcement Directorate, Mumbai, for an offence punishable under Section 3 read with Section 4 of the Prevention of Money Laundering Act, 2002 (PML Act).

2. Prosecution Case Details and Allegations:
The prosecution alleged that the applicant was involved in a scheme where forged bills of entry were used to remit ?304,35,77,609/- illegally abroad. The applicant was associated with companies like M/s. Kanika Gems Pvt. Ltd., which remitted large sums to Hong Kong-based exporters using forged documents. It was also alleged that the applicant purchased properties with proceeds of crime and did not disclose significant financial transactions involving his wife.

3. Compliance with Section 19 of the PML Act:
The applicant’s counsel argued that the arrest was contrary to Section 19 of the PML Act, which requires that the authorized officer must have material in possession, record reasons to believe in writing, and believe that the person is guilty of money laundering. The counsel contended that these prerequisites were not met in this case.

4. Applicability of Section 45(1) of the PML Act:
The applicant’s counsel argued that the bar under Section 45(1) of the PML Act should not apply to offences that were originally under Part B and later included in Part A after the 2013 amendment. They cited the case of Gorav Kathuria Vs. Union of India to support their argument that the bar should not apply.

5. Arguments by the Applicant’s Counsel:
The applicant’s counsel submitted that the applicant had cooperated fully with the investigation, provided all necessary information, and was a whistleblower who had reported the fraudulent activities of the co-accused. They argued that there was no justification for the applicant’s arrest and detention, especially since the main accused, Vijay Kothari, was not arrested.

6. Arguments by the Enforcement Directorate:
The Enforcement Directorate opposed the bail application, asserting that there was substantial evidence against the applicant, showing his involvement in the crime. They argued that the applicant was a director of the company involved in the fraudulent remittances and had transferred significant funds to his and his wife’s accounts. They also emphasized the rigor of Section 45(1) of the PML Act, which restricts the granting of bail.

7. Analysis of Evidence and Involvement of the Applicant:
The court noted that the applicant was appointed as a Director of Kanika Gems Private Limited and had provided detailed statements about his involvement and the transactions executed by the companies. The court observed that the main accused, Vijay Kothari, was identified as the mastermind behind the money laundering activities. The court found no cogent evidence that the applicant had knowledge that the funds were proceeds of crime.

8. Consideration of Precedents and Legal Principles:
The court referred to several precedents, including the Supreme Court’s decision in Ranjit Singh Sharma Vs. State of Maharashtra, which emphasized that the presumption of innocence is a human right and that the court must balance the need for bail with the seriousness of the offence. The court also considered the Gujarat High Court's interpretation of Section 24 of the PML Act, which presumes involvement in money laundering unless proven otherwise.

9. Final Decision on the Bail Application:
The court concluded that the applicant had cooperated with the investigation, and there was no justification for further detention. The court granted bail to the applicant, subject to conditions, including furnishing a P.R. Bond of ?1 lakh, reporting to the Enforcement Directorate once a month, and not leaving the country without permission.

Order:
The applicant was directed to be released on bail with conditions, including furnishing a P.R. Bond of ?1 lakh, reporting to the Enforcement Directorate once a month, and not leaving the country without the court's permission. The bail application was disposed of accordingly.

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