2023 (3) TMI 133 - HC - Money Laundering

Seeking grant of bail - money laundering - commission of the scheduled/predicate offence - proceeds of crime - foreign funds have been remitted to India through hawala/ underground channels and through remittance sent to the accounts of members/ activists/office bearers of PFI/CFI and other related organizations - Applicability of Section 45 of the PMLA - HELD THAT - It is clear that a person may not be involved in original criminal activity that had resulted in generation of proceed of crime but he can join the main accused either as abettor or conspirator for committing the offence of money laundering by helping him in laundering the proceed of crime. Therefore, just because the applicant was not named or not prosecuted for the predicate offence, his prosecution for money laundering cannot be said to be illegal. The Apex Court in re; Vijay Madanlal Choudhary 2022 (7) TMI 1316 - SUPREME COURT has held that provision in the form of Section 45 of PMLA, as applicable post amendment of 2018, is reasonable and has direct nexus with the purposes and objects sought to be achieved by the PMLA to combat the menace of money laundering having transnational consequences including impacting the financial systems and sovereignty and integrity of the country. While granting bail of an accused person, twin conditions of Section 45 of the PMLA will have to be adhered to. Considering the facts and circumstances of the issue in question, the bail application of the present applicant does not qualify the twin conditions of Section 45 of the PMLA inasmuch as at this stage it cannot be observed that the present applicant has not committed the offence for which the complaint has been filed against him. The proceed of crime is also in crores. The applicant is based at Abu Dhabi. The factum of guilt can be proved or disproved before the learned trial court. Learned counsel for the E.D. has informed that the trial in the present case is going on with good pace and the same may likely be concluded very soon, therefore, bail cannot be granted to the present applicant, rather direction issued to the learned trial court to conclude the trial with expedition. The bail application is rejected.

Issues Involved:
1. False implication under the Prevention of Money Laundering Act (PMLA).
2. Definition and interpretation of "proceeds of crime."
3. Predicate offences and their relevance to the applicant.
4. Allegations against the applicant.
5. Bail considerations and parity with co-accused.
6. Role of the applicant in the alleged money laundering activities.
7. Compliance with Section 45 of the PMLA.
8. Directions for trial court.

Issue-wise Detailed Analysis:

1. False Implication under PMLA:
The applicant's counsel argued that the applicant has been falsely implicated under Sections 3, 4, and 70 of the PMLA. The applicant has been in jail since 10.03.2022, and it was contended that no case is made out against the applicant under Section 3 of the PMLA, which defines the offence of money laundering.

2. Definition and Interpretation of "Proceeds of Crime":
The counsel for the applicant emphasized the strict interpretation of "proceeds of crime" as defined under Section 2(u) of the PMLA, referring to the Supreme Court's judgment in Vijay Madanlal Choudhary and Others Vs. Union of India and Others, 2022 SCC OnLine SC 929. The court noted that for property to be considered proceeds of crime, it must be derived or obtained as a result of criminal activity related to a scheduled offence.

3. Predicate Offences and Their Relevance to the Applicant:
The applicant's counsel highlighted that the applicant was not named in any of the three predicate offences listed in the case. FIR No.276/2013, FIR No.199/2020, and FIR No.04/2021 were cited, and it was argued that since the applicant was not an accused in these offences, his arrest under the PMLA was unjustified.

4. Allegations Against the Applicant:
The allegations against the applicant included being a member of the Popular Front of India (PFI) and being involved in a project (Munnar Villa Vista Project) allegedly used for money laundering. The applicant's counsel argued that the applicant was merely a shareholder and had no managerial or directorial role in the project. Legitimate transactions amounting to Rs.33,72,043 were made to Rehab India Foundation, and there was no evidence that these funds were proceeds of crime.

5. Bail Considerations and Parity with Co-accused:
The applicant's counsel argued for bail based on the principles of non-tampering with evidence, non-influencing of witnesses, and non-flight risk. Reference was made to the bail granted to co-accused Sidhique Kappan by the High Court. However, the court noted that the role of the applicant was different from that of Sidhique Kappan, who had fewer allegations against him.

6. Role of the Applicant in the Alleged Money Laundering Activities:
The Enforcement Directorate (E.D.) argued that the applicant was involved in raising and transferring funds through illegal channels. The applicant's role as a PFI member and his involvement in transferring funds to Rehab India Foundation were highlighted. The court noted that the applicant's role was serious, and his involvement in the alleged activities was significant.

7. Compliance with Section 45 of the PMLA:
The court emphasized the twin conditions under Section 45 of the PMLA for granting bail: (i) the Public Prosecutor's opportunity to oppose the bail application, and (ii) reasonable grounds for believing that the accused is not guilty and is not likely to commit any offence while on bail. The court found that the applicant did not satisfy these conditions, given the seriousness of the allegations and the substantial amount of proceeds of crime involved.

8. Directions for Trial Court:
The court directed the trial court to conclude the trial with expedition, preferably within six months, by fixing short dates and avoiding unnecessary adjournments. The applicant was given liberty to file another bail application if the trial was not concluded within the stipulated time. The court clarified that it had not entered into the merits of the issue, and the trial court should conduct and conclude the trial without being influenced by any observations in the bail order.

Conclusion:
The bail application was rejected, and the trial court was directed to expedite the trial. The applicant was given the liberty to file another bail application if the trial was not concluded within the specified period.

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