2023 (5) TMI 1198 - HC - Money Laundering

Money Laundering - proceeds of crime - criminal conspiracy to cause loss to the exchequer and banks by indulging in illegal foreign exchange transactions on the basis of forged/ fabricated documents - Hawala transactions - It has been submitted that the petitioner is neither named as an accused in the FIR in the predicate offence nor was ever summoned during investigation nor charge-sheeted in the predicate offence. HELD THAT - The jurisprudence regarding bail is by now very well settled that rule has always been bail and its exception jail. It has also been stated time and again that such a principle has to be followed strictly. Right to bail is also essential for the reason that it provides the accused with an opportunity of securing fair trial. The right to bail is linked to Article 21 of the Constitution of India which confers right to live with freedom and dignity. However while protecting the right of an individual of freedom and liberty the court also has to consider the right of the society at large as well as the prosecuting agency. This is the reason that the gravity of the offence is required to be taken into account. The gravity of the offence is gathered from the attendant facts and circumstances of the case. It is a settled proposition that economic offences fall within the category of grave offences - The money laundering not only is a threat to the financial health of the country but it may also adversely impact its integrity and sovereignty. Moreover the act of money laundering can even lead to the collapse of the economic system. Whether the person whose role has been found later knew that the money which he has been dealing with is a proceed of crime? - HELD THAT - The court understands that this is very difficult for the department to find direct evidence regarding this. But at the same time despite the twin conditions the court cannot return any finding merely on the basis of inferences and presumptions. It is a settled proposition that at the stage of bail the court is only required to see a prima facie case and is not required to look into the test of guilt. The court is required to maintain a delicate balance between the judgment of acquittal and conviction and an order granting bail before commencement of trial. It is also a settled proposition that the court cannot meticulously examine the evidence and cannot hold a mini trial at this stage. The court is only required to examine the case on the basis of broad probabilities - the department has opposed the bail on the ground that if the petitioner is released on bail he may tamper with the prosecution evidence. However it is matter of record that the entire evidence in the present case is in form of the documentary evidence and thus complaint has already been filed. The petitioner also cannot be stated to be at flight risk. He has roots in the society and even this ground has not been considered by the department. It is pertinent to mention here that in Vijay Madanlal Choudhary 2022 (7) TMI 1316 - SUPREME COURT it has been inter alia held that the Court is at the stage of considering the application for the grant of bail is expected to consider the question from the angle as to whether the accused possessed the requisite mens rea. It was further held that the Court is not required to record a positive finding that the accused have not committed an offence under the Act - the jurisprudence of the bail positively lays down that a liberty of a person should not ordinarily been interfered with unless there exist cogent grounds. Despite the twin conditions it is not necessary that at the stage of bail the Court has to come to the conclusion that the petitioner is not guilty for such an offence. The Court is at the stage of has to examine the case on the scale of broad probabilities. The Court at this stage is required to record an objective finding on the basis of material available on record and no other purpose. A bare perusal of the Section 2 (u) of the Prevention of Money Laundering Act 2005 which provides for the definition of proceeds of crime indicates that it is the property derived or obtained directly or indirectly which relates to criminal activity relating to a scheduled offence. Similarly in order to be punished under Section 3 of PMLA It is necessary that person dealing with the Proceed of crime must have some knowledge that it is tainted money - the serious medical conditions of the petitioner as stated herein has not improved and he has been under regular treatment and has already undergone two procedures. The applicant has also been stated to undergo further procedures and/or surgeries as and when advised. It has been stated that the petitioner is suffering from numbness of limbs which is a precursor to possible paralysis which requires urgent medical attention. Thus taking into account the facts and circumstances the petitioner is admitted to bail on furnishing a personal bond in the sum of Rs. 25, 00, 000/- with two sureties of the like amount to the satisfaction of the trial court subject to the conditions imposed. Bail application allowed.

Summary

Issues Involved:
1. Allegations of criminal conspiracy and money laundering.
2. Role of the petitioner in the money laundering scheme.
3. Suppression of facts by the petitioner during the investigation.
4. Legal arguments regarding the petitioner's bail application.
5. Medical grounds for bail.

Summary:

1. Allegations of Criminal Conspiracy and Money Laundering:
The Directorate of Enforcement alleged that Naresh Jain, his brother Bimal Jain, and accomplices engaged in a criminal conspiracy to cause loss to the exchequer and banks through illegal foreign exchange transactions using forged documents. Naresh Jain allegedly facilitated the parking of funds abroad via an international Hawala structure, incorporating and operating numerous shell companies and bank accounts in India and abroad. The investigation revealed that Naresh Jain and his associates rotated funds amounting to approximately Rs. 96,000 Crores and provided accommodation entries of Rs. 18,679 Crores to 973 beneficiaries.

2. Role of the Petitioner in the Money Laundering Scheme:
The petitioner, Vijay Agarwal, a real estate developer, was alleged to have actively participated in the money laundering scheme by acquiring shares of Graphic Buildcon at undervalued prices and receiving substantial loans and advances from entities controlled by Naresh Jain without proper agreements. The petitioner was accused of being involved in the placement, layering, and integration of proceeds of crime into the financial system, with specific instances of receiving funds from shell entities managed by Naresh Jain.

3. Suppression of Facts by the Petitioner During the Investigation:
It was found that the petitioner deliberately suppressed the details of newly opened bank accounts during the investigation. The accounts were used to deposit sale proceeds from a project, and the funds were diverted immediately after receipt. This conduct indicated concealment and a likelihood of committing the offence if released on bail.

4. Legal Arguments Regarding the Petitioner's Bail Application:
The petitioner sought bail on the grounds that he was not named as an accused in the FIR for the predicate offence, nor was he summoned or charge-sheeted during the investigation. The petitioner argued that the shares were acquired as security for development work and that the loans were legitimate transactions. The petitioner also contended that he had no knowledge of the tainted nature of the money. The court considered the principles of bail, the gravity of economic offences, and the necessity of maintaining a balance between protecting individual liberty and societal interests. The court noted that the evidence was primarily documentary and that the petitioner was not a flight risk.

5. Medical Grounds for Bail:
The petitioner also sought bail on medical grounds, citing deteriorating health conditions and the need for urgent medical attention. The court acknowledged the petitioner's serious medical conditions and the necessity of regular treatment and potential surgeries.

Finding and Analysis:
The court emphasized the importance of the right to bail linked to Article 21 of the Constitution, while also considering the gravity of economic offences. The court noted that the petitioner was not named in the predicate offence and that the evidence against him was primarily documentary. The court found a broad probability in favor of the petitioner and acknowledged his serious medical conditions. Therefore, the petitioner was admitted to bail on furnishing a personal bond of Rs. 25,00,000/- with conditions, including surrendering his passport, residing at his place of residence, appearing before the investigation officer when directed, and not communicating with co-accused or witnesses.

Conclusion:
The court granted bail to the petitioner based on the broad probabilities of the case and his serious medical conditions, subject to specific conditions to ensure compliance and prevent tampering with evidence. The order was not to be relied upon by co-accused persons.