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2023 (4) TMI 874 - SC - Money LaunderingSeeking grant of bail - Money Laundering - proceeds of crime - predicate offence - misappropriation of amount by forging the signatures, with the help of the pledged documents - fraudulent GDR issue - Sections 44 and 45 of PMLA - HELD THAT - There is no controversy about the following facts (i) that the registration of the ECIR and the lodging of the prosecution complaint in the year 2022 were a sequel to the registration of the FIR for the predicate offence, way back in the year 2013, at the instance of one M. Srinivas Reddy, Managing Director, Farmax and also a sequel to the order passed by SEBI in the year 2020; (ii) that no final report has been filed in the FIR for the predicate offence, for the past nine years; (iii) that even M. Srinivas Reddy, the de-facto complainant in the FIR for the predicate offence, was sought to be arrested as an accused in connection with the ECIR, but the application of the Enforcement Directorate for remand was rejected; (iv) that the appellant is a Chartered Accountant by profession and has been in jail from 26.09.2022; and (v) that the relevant portion of paragraph 8 of the prosecution complaint filed by the Enforcement Directorate, which we have extracted in the preceding paragraph, gives room for a valid argument that the second condition found in Clause (ii) of sub-section (1) of Section 45 of PMLA is satisfied qua the appellant. Therefore, the continued incarceration of the appellant may not be justified. However, the apprehension of the Enforcement Directorate that the appellant is a flight-risk and may go out of the country if released on bail, has to be taken care of by imposing appropriate conditions. The appellant is directed to be enlarged on bail, subject to such terms and conditions as may be imposed by the Metropolitan Sessions Judge-cum-Special Court - Appeal allowed.
Issues involved:
The issues involved in the legal judgment are related to a criminal complaint registered against the appellant for alleged offenses under Sections 406, 407, 415 to 420, 120B read with Section 34 IPC, the delay in filing a final report, violations of SEBI regulations, money laundering under the Prevention of Money-laundering Act, 2002 (PMLA), and the appellant's continued incarceration without a charge sheet being filed. Criminal Complaint and SEBI Order: A criminal complaint was registered against the appellant and others for alleged offenses related to misappropriation of funds raised through Global Depository Receipts (GDRs). The complaint was lodged by the Managing Director of a company, Farmax, stating that the accused misappropriated a significant amount by forging signatures. Additionally, SEBI found violations in GDR issues involving fraudulent schemes. Enforcement Directorate's Action: Following SEBI's findings, the Enforcement Directorate filed an information report naming individuals and entities suspected of money laundering under PMLA. The appellant was arrested and remanded to judicial custody by the Metropolitan Sessions Judge, Hyderabad, based on a prosecution complaint filed under PMLA against four individuals and two entities. Contentions and Considerations: The appellant's counsel argued that he had been in jail without a charge sheet for an extended period, and there was no evidence of him possessing the proceeds of crime. The Additional Solicitor General contended that the appellant was the mastermind behind the transactions and should not be granted bail under Section 45 of PMLA. The court considered the specific role attributed to the appellant in the prosecution complaint and concluded that his continued incarceration may not be justified. Decision and Bail Conditions: The court allowed the appeal and directed the appellant to be enlarged on bail, subject to conditions imposed by the Special Court under PMLA. Additional conditions included surrendering the passport and regular appearance before the Special Court. The decision was made to address the Enforcement Directorate's concern regarding the appellant being a flight risk.
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