2022 (11) TMI 101 - HC - Money Laundering

Seeking grant of Bail - Money Laundering - allegation of siphoning off huge amount of money from Mahila Utkarsha Pratishthan, Risod, (hereinafter referred to as the Trust ) for his personal use - it is also alleged that Applicant and the co-accused converted the Trust into Section 8 Company on the basis of forged and fabricated documents - diversion of funds/proceeds of crime - twin conditions as mentioned in Section 45 of the PMLA fulfilled or not?. HELD THAT - It may be mentioned that Section 45 of the PMLA imposes two conditions for grant of bail to any person accused of an offence punishable for a term of imprisonment of more than three years under part A of the schedule of the Act viz, (i) the public prosecutor must be given an opportunity to oppose the application for such bail; (ii) where the public prosecutor opposes the application, the Court must be satisfied that there are reasonable grounds for believing that the accused person is not guilty of such offence and is not likely to commit any offence while on bail. Reverting to the facts of the present case, the thrust of the accusations against the Applicant is that he in connivance with the co- accused Bhavna Gawali cheated and misappropriated the funds of the Trust, for his personal use. The Applicant credited cash of Rs. 3.58 crores into the account of Deepak Prajapati, who transferred the money into the account of M/s. Master Plan Finance Ltd, of which he is one of the Directors. Said Deepak Prajapati aided money laundering by effecting a loan entry to give legitimacy to the proceeds of crime and/or to disguise the illicit nature of criminal proceeds. The said payment was then utilized by the applicant to purchase office No.16 on the first floor of Nariman Bhavan at Nariman Point. The only incriminating material against the Applicant is in the form of the statements of Upendra Mule, Ashok Gandole, Uddhav Gandole, Vinod Pandhare, Santosh Somani, Bharat Devgire and others, who are the accused in crime No.389 of 2020 registered at Risod Police Station, pursuant to the complaint lodged by Bhavna Gawali for cheating and misappropriating the money of the Trust. Said Ashok Gandole and others had filed applications before the Division Bench of this Court at Nagpur Bench for quashing the said FIR. While dismissing the said applications, the Division Bench of this Court had prima facie observed that Ashok Gandole was Incharge of the affairs of the Trust and the other Applicants were connected with him - It is observed that Ashok Gandole and others are alleged to have deposits in their personal accounts and have substantial properties. In the light of these observations, the statements of these witnesses recorded under Section 50 of the PMLA will have to be tested in evidence during trial. Considering the totality of the circumstances, prima facie the offence of cheating is not made out and in all probability, the Applicant may not be ultimately convicted for offence of money laundering. In the absence of any material as regards criminal antecedents of the Applicant, it can be held that there is no possibility of the Applicant committing such crime in future. Most of the co-accused are either on bail or are not arrested. The Applicant is in custody since September, 2021. The charge sheet has been filed and considering the large pendency, the trial is not likely to commence and conclude in the immediate future. The Applicant is a permanent resident of the State and there is no likelihood of the Applicant absconding or tampering with the evidence. Considering the above facts and circumstances, it is not necessary to detain the Applicant any further. Hence, case is made out for grant of bail. Bail application allowed.

Summary

Issues Involved:
1. Allegations of money laundering under PMLA.
2. Applicant's involvement with the Trust and financial transactions.
3. Legal standards for granting bail under Section 45 of PMLA.
4. Examination of evidence and material against the Applicant.
5. Conditions for granting bail.

Detailed Analysis:

1. Allegations of Money Laundering under PMLA:
The Applicant was arrested for alleged offences under Section 3 read with Section 4 of the Prevention of Money Laundering Act, 2002 (PMLA). The accusations include siphoning off substantial amounts from Mahila Utkarsha Pratishthan (the Trust) for personal use, converting the Trust into a Section 8 Company using forged documents, and laundering money through various transactions, including a significant loan transaction used to purchase property.

2. Applicant's Involvement with the Trust and Financial Transactions:
The Applicant's counsel argued that the Applicant had no direct relationship with the Trust except for heading the Fraud Detection Committee. The counsel contended that the Applicant was not a signatory to the Trust's bank accounts and was not responsible for converting the Trust into a company. The Applicant was involved in purchasing office premises through a legitimate loan and was not connected with the Trust during the alleged financial misconduct period. The counsel also highlighted that the money received by the Applicant was included in his income tax returns.

3. Legal Standards for Granting Bail under Section 45 of PMLA:
Section 45 of PMLA imposes two conditions for granting bail: (i) the public prosecutor must have an opportunity to oppose the bail application, and (ii) the court must be satisfied that there are reasonable grounds to believe that the accused is not guilty and is unlikely to commit any offence while on bail. The court referenced conflicting views on the revival of these conditions post the amendment Act 13 of 2018 and cited relevant case law, including the Supreme Court's interpretation in Ranjitsingh Brahmajeetsingh Sharma vs. State of Maharashtra and Anr.

4. Examination of Evidence and Material Against the Applicant:
The court noted that the allegations against the Applicant included transferring large sums from the Trust to personal accounts and using these funds for personal gain. However, the court found that the Applicant was not questioned adequately on these transactions and that there was no material to show that the money received was not part of his legal dues. The court also noted that the Applicant was not involved with the Trust at the time of the alleged financial misconduct and that the transactions were completed before he became a director of the company.

5. Conditions for Granting Bail:
Considering the totality of circumstances, the court found that the offence of cheating was not prima facie made out and that the Applicant was unlikely to be convicted for money laundering. The Applicant had no criminal antecedents, co-accused were on bail, and the trial was not expected to commence soon. Therefore, the court granted bail with specific conditions, including surrendering the passport, reporting to the Enforcement Directorate monthly, and not tampering with evidence.

Conclusion:
The bail application was allowed with conditions to ensure the Applicant's compliance and prevent tampering with evidence. The court emphasized that the findings were tentative and would not prejudice the trial's outcome.