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2024 (3) TMI 862 - SC - Money LaunderingGrant of bail - money laundering - proceeds of crime - scheduled/predicate offences - hatching the criminal conspiracy and conceptualizing the idea of accommodation entries against cash - whether the appellants have been able to satisfy the twin conditions laid down in Section 45 of the PMLA? - HELD THAT - It is confined to deal with the bare minimum facts necessary for the purpose of deciding whether the appellants have been able to satisfy the twin conditions laid down in Section 45 of the PMLA, that is (i) there are reasonable grounds for believing that the persons accused of the offence under the PMLA is not guilty of such offence; and (ii) that he is not likely to commit any offence while on bail. In GAUTAM KUNDU VERSUS MANOJ KUMAR, ASSISTANT DIRECTOR, EASTERN REGION, DIRECTORATE OF ENFORCEMENT (PREVENTION OF MONEY LAUNDERING ACT) GOVT. OF INDIA 2015 (12) TMI 1133 - SUPREME COURT , while holding that the conditions specified under Section 45 of PMLA are mandatory, it was observed the conditions enumerated in Section 45 of PMLA will have to be complied with even in respect of an application for bail made under Section 439 CrPC. That coupled with the provisions of Section 24 provides that unless the contrary is proved, the authority or the Court shall presume that proceeds of crime are involved in money-laundering and the burden to prove that the proceeds of crime are not involved, lies on the appellant. The offence of money laundering as contemplated in Section 3 of the PMLA has been elaborately dealt with by the three Judge Bench in VIJAY MADANLAL CHOUDHARY ORS. VERSUS UNION OF INDIA ORS. 2022 (7) TMI 1316 - SUPREME COURT , in which it has been observed that Section 3 has a wider reach. The offence as defined captures every process and activity in dealing with the proceeds of crime, directly or indirectly, and is not limited to the happening of the final act of integration of tainted property in the formal economy to constitute an act of money laundering. Of course, the authority of the Authorised Officer under the Act to prosecute any person for the offence of money laundering gets triggered only if there exists proceeds of crime within the meaning of Section 2(1)(u) of the Act and further it is involved in any process or activity - The property must qualify the definition of Proceeds of Crime under Section 2(1)(u) of the Act. As observed, in all or whole of the crime property linked to scheduled offence need not be regarded as proceeds of crime, but all properties qualifying the definition of Proceeds of Crime under Section 2(1)(u) will necessarily be the crime properties. In the instant case, it has been found during the course of investigation from the statements of witnesses recorded under Section 50 that the appellant Satyendar Jain and his family directly or indirectly were owning/controlling the companies - M/s. Akinchan Developers Pvt. Ltd., M/s. Paryas Infosolution Pvt. Ltd., M/s. Indo Metalimpex Pvt. Ltd. and M/s. Mangalayatan Projects Pvt. Ltd. He was the conceptualizer, initiator and supervisor of the accommodation entries totalling to Rs.4.81 Crores approximately, which were received from the Kolkata based entry operators in the Bank accounts of the said four companies - also, the witnesses had clearly stated that Satyendar Kumar Jain was the conceptualizer, initiator, fund provider and supervisor for the entire operation to procure the accommodation, share capital/premium entries. Though, the shareholding patterns of the said four companies are quite intricate, they do show that Mr. Satyendar Kumar Jain through his family was controlling the said companies directly or indirectly and that Mr. Satyendar Kumar Jain was the beneficial owner within the definition of Section 2(1) (fa) of PMLA. There remains no shadow of doubt that the appellant- Satyendar Kumar Jain had conceptualized idea of accommodation entries against cash and was responsible for the accommodation entries totalling to Rs. 4.81 crores (approx.) received through the Kolkata based entry operators in the bank accounts of the four companies i.e. M/s. Akinchan Developers Pvt. Ltd., M/s. Paryas Infosolution Pvt. Ltd., M/s. Indo Metalimpex Pvt. Ltd. and M/s. Mangalayatan Projects Pvt. Ltd., by paying cash and the said companies were controlled and owned by him and his family. Though it is true that a company is a separate legal entity from its shareholders and directors, the lifting of corporate veil is permissible when such corporate structures have been used for committing fraud or economic offences or have been used as a facade or a sham for carrying out illegal activities. The appellants have miserably failed to satisfy us that there are reasonable grounds for believing that they are not guilty of the alleged offences. On the contrary, there is sufficient material collected by the respondent-ED to show that they are prima facie guilty of the alleged offences - it is not possible to hold that appellants had complied with the twin mandatory conditions laid down in Section 45 of PMLA. The High Court also in the impugned judgment after discussing the material on record had prima facie found the appellants guilty of the alleged offences under the PMLA, which judgment does not suffer from any illegality or infirmity. Appeal dismissed.
Issues Involved:
1. Discrepancy in Proceeds of Crime Calculation 2. Role and Control over Companies 3. Validity of IDS Declarations 4. Prima Facie Guilt and Compliance with Section 45 of PMLA Summary: 1. Discrepancy in Proceeds of Crime Calculation: The appellant argued a significant discrepancy between the proceeds of crime calculated by the ED and the amount mentioned in the CBI chargesheet. The CBI mentioned Rs. 1,47,60,497/- as disproportionate assets, while the ED calculated Rs. 4,81,16,435/-. The appellant contended that even if accommodation entries amounting to Rs. 4.6 crores were attributed through his wife's shareholdings, it would only amount to Rs. 59,32,122/-, which is less than one crore, thus entitling him to bail under the proviso to Section 45 of the PMLA. 2. Role and Control over Companies: The appellant claimed he neither served as a Director nor signed any financial document during the check period and had resigned from the directorship of the companies two years before the alleged offence. The ED argued that the appellant, through his family, was controlling the companies directly or indirectly and was the "beneficial owner" as defined under Section 2(1)(fa) of PMLA. Witness statements under Section 50 corroborated this, indicating the appellant's significant role in conceptualizing and supervising accommodation entries. 3. Validity of IDS Declarations: The appellants Ankush Jain and Vaibhav Jain had filed declarations under the IDS, 2016, which were rejected by the Principal Commissioner of Income Tax on grounds of misrepresentation. The High Court upheld this rejection, stating that the declarations were made to protect Satyendar Kumar Jain. The appellants argued that since the declarations were held "void" under Section 193 of the Finance Act, 2016, they should not be considered in the present proceedings. However, the court held that the declarations, though void, substantiated the ED's case. 4. Prima Facie Guilt and Compliance with Section 45 of PMLA: The court examined whether the appellants met the twin conditions under Section 45 of PMLA: (i) reasonable grounds for believing they are not guilty, and (ii) they are not likely to commit any offence while on bail. The court found sufficient material collected by the ED to show prima facie guilt. The High Court's judgment, which found the appellants prima facie guilty, was upheld. The appellants failed to satisfy the twin conditions, and the appeals were dismissed. The appellant Satyendar Kumar Jain, who was on bail on medical grounds, was ordered to surrender forthwith. Conclusion: The Supreme Court dismissed the appeals, upholding the High Court's decision, and found that the appellants failed to satisfy the twin conditions under Section 45 of PMLA. The court emphasized the substantial evidence collected by the ED and the corroborative witness statements, leading to a prima facie case of guilt against the appellants.
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