2022 (7) TMI 1185 - HC - Money Laundering

Grant of regular bail - Money laundering - illegal transportation of essential commodities of Wheat and Rice from godowns - Conspiracy - scheduled offences - proceeds of crime - dirty money - offence under Section 3 and punishable under Section 4 of the PMLA, 2002 - statements of the applicant was recorded under Section 50 of the PMLA 2002 - compliance with the twin conditions under Section 45 of the PMLA 2002 or not - HELD THAT - The Hon ble Supreme Court of India recently in the case of J. SEKAR @ SEKAR REDDY VERSUS DIRECTORATE OF ENFORCEMENT 2022 (5) TMI 309 - SUPREME COURT has held that in cases of PMLA, the Court cannot proceed on the basis of preponderance of probabilities. It is further observed that on perusal of the statement of objects and reasons specified in PMLA, it is the stringent law brought by Parliament to check money-laundering. Thus, the allegations must be proved beyond reasonable doubt in the Court. Even otherwise, it is incumbent upon the Court to look into the allegations and the material collected in support thereto and to find out whether the prima-facie offence is made out. It is further held that unless the allegations are substantiated by the authorities and proved against a person in the Court of law, the person is innocent. The findings of the Forensic Audit Report, the observations are that the aforesaid eight firms received amounts from IMAAL with some unidentified receipts and the amount received have been withdrawn in cash and further, these firms did not carry any business relations with IMAAL - In this case, the scheduled offence was registered on 19/07/2018, whereas, the Forensic Audit Report is for the period January 2018 to July 2018. The findings of the Forensic Audit Report, as referred above, only mention that all the said firms received amount from IMAAL with some unidentified receipts and they did not carry any business relations with IMAAL. The expression proceeds of crime is defined under clause (u) of Section 2(1) of the PMLA which makes it clear that proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property - It is the case of the prosecution in the predicate offence that the co-accused in the said case Kapil Bajrang Gupta of Shri Lambodhar Trading Company handed over to truck driver some forged documents pretending to be his own Lambodhar Trading Companies food grains. The said accused Kapil Bajrang Gupta in accomplish of the Government food grains transport contractors namely Lalit Raj Brijlal Khurana and Raju Pralhad Arshewar had supplied food grains to the company of the applicant, pretending that the food grains were his own goods. In absence of any allegation that the applicant had any such knowledge as referred herein above, making the payment of Rs.80,10,000/- by the applicant to Kapil Bajrang Gupta, which amount is the part of proceeds of crime, creates doubt about the veracity in respect of allegations as regards transactions with the remaining seven companies and payments made to the said companies, particularly when there is nothing to prima-facie show that the applicant is related or having control over the said companies - In the present case, the prosecution has failed to bring on record the foundational facts to show that the proceeds of crime is connected with the scheduled offence. As far as the judgment in the case of Gautam Kundu 2015 (12) TMI 1133 - SUPREME COURT as regards twin conditions under Section 45 of the PMLA 2002, there is no dispute that the twin conditions are mandatory. The applicant shall be released on bail - application is allowed.

Issues involved:

1. Application for regular bail under Section 439 of Cr.P.C. and Section 65 of PMLA, 2002.
2. Allegations of illegal transportation and acquisition of food grains.
3. Inquiry under PMLA based on scheduled offences under IPC.
4. Forensic Audit findings and alleged proceeds of crime.
5. Arguments for and against the applicant's involvement in money laundering.
6. Examination of legal principles and precedents.
7. Consideration of twin conditions under Section 45 of PMLA, 2002.
8. Decision on the bail application.

Issue-wise detailed analysis:

1. Application for regular bail under Section 439 of Cr.P.C. and Section 65 of PMLA, 2002:
The applicant sought regular bail in connection with ECIR/NGSZO/13/21 registered by the Directorate of Enforcement for offences under Sections 3 and 4 of PMLA, 2002.

2. Allegations of illegal transportation and acquisition of food grains:
An offence was registered at Kuntur Police Station under various IPC sections, alleging that the applicant and others illegally transported essential commodities from FCI godowns to a company, IMAAL. Further investigation revealed the involvement of 192 trucks in the illegal transportation.

3. Inquiry under PMLA based on scheduled offences under IPC:
Since Sections 420 and 120(B) of IPC are scheduled offences under PMLA, an inquiry was initiated. The applicant's statements were recorded, and a forensic audit was conducted, revealing significant cash withdrawals without business rationale.

4. Forensic Audit findings and alleged proceeds of crime:
The forensic audit indicated that Rs.55,27,43,000/- was transferred to various firms without business rationale. The applicant allegedly used fake firms to launder money obtained through illegal procurement of food grains. The forensic audit identified eight firms involved in these transactions.

5. Arguments for and against the applicant's involvement in money laundering:
The applicant's counsel argued that the applicant was falsely implicated and that the money involved did not meet the criteria for money laundering under PMLA. They emphasized that the allegations lacked evidence of the applicant's direct involvement in the alleged criminal activity. The prosecution argued that sufficient material was collected to show the applicant's involvement and that the forensic audit report indicated illegitimate transactions.

6. Examination of legal principles and precedents:
The court examined the definitions and stages of money laundering, emphasizing that allegations must be proved beyond reasonable doubt. It referenced several judgments, including those from the Supreme Court and High Courts, to clarify the prerequisites for establishing money laundering under PMLA.

7. Consideration of twin conditions under Section 45 of PMLA, 2002:
The court considered whether there were reasonable grounds to believe that the applicant was not guilty of the alleged offence and whether the applicant was likely to commit any offence while on bail. It noted the lack of direct evidence connecting the proceeds of crime to the scheduled offence and the absence of any knowledge on the applicant's part regarding the alleged forged documents.

8. Decision on the bail application:
The court concluded that there were reasonable grounds to believe that the applicant was not guilty of the alleged offence and was unlikely to commit any offence while on bail. The application for bail was allowed with specific conditions, including the requirement for the applicant to furnish a bond, not pressurize witnesses, deposit his passport, and attend trial regularly.

Conclusion:
The court granted the applicant's bail application, emphasizing the lack of direct evidence connecting the proceeds of crime to the scheduled offence and the need for allegations to be substantiated beyond reasonable doubt. The decision was based on legal principles and precedents, ensuring that the applicant's right to a fair trial was upheld.

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