2025 (1) TMI 943 - HC - Money Laundering

Seeking grant of bail - offences of drug trafficking and money laundering - applicant has already been tried and convicted by the US authorities for the offence - can applicant be prosecuted in India again? - HELD THAT - In the case of PRABODH K. MEHTA VERSUS CHARUBEN K. MEHTA 2018 (3) TMI 2049 - BOMBAY HIGH COURT the Full Bench of the Hon ble Bombay High Court had considered the principles of law as laid down by the Hon ble Supreme Court in the case of Jitendra Panchal 2009 (2) TMI 912 - SUPREME COURT and answered the reference which has already been quoted hereinabove. According to the settled law now that judgment and order of conviction of a foreign court for the offence committed in that country can be noticed/looked into and recognized by judicial and quasi judicial authorities in India. But it has been held in the case of Prabodh that if the judgment of the foreign court is held binding on the courts and authorities in India it would amount to directly or indirectly enforcing the judgment of the foreign courts. It was held that the effect of such order of conviction would depend upon variety of facts. In the instant case also at some later stage those factors would fall for consideration in the trial of the applicant. It is positive case of the ED that the applicant under Section 50 of the Act has stated that in the year 2017 he and his brother Parvinder Singh did split as they stopped the said business. In the said split Parvinder Singh got 4250 Bitcoins. Those Bitcoins according to the ED are still in the block chain but they could not be accessed for the want of passwords or key phrases. Search has already been made to recover those passwords and key phrases - What is being argued is that the proffer and statement under Section 50 of the Act is not a substantive piece of evidence. There admissibility is not in dispute but their evidentiary value depends on as to whether such statement finds independent corroboration or not? Admittedly the applicant had entered into a plea agreement in the United States. The BTC were surrendered and the applicant received the reduced sentence. The money was transmitted in the Indian accounts during that period only. In the request for assistance sought by the United States Department of Justice the United States authorities have informed the Indian authorities that during investigation the US authorities identified several Pay Pal Money Gram and Western Union accounts (Collectively the funnel accounts) used by the Singh DTO to receive proceeds on drug trafficking. The money was transferred accordingly in the India accounts. It is also true that under Section 60 (2) of the Act such account have not been freezed. Conclusion - Foreign convictions do not preclude domestic prosecution for distinct offenses. It also highlighted the need for corroborative evidence when relying on statements made under coercion. This Court is of the view that there is no ground to enlarge the applicant on bail - bail application is rejected.

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

Whether the applicant can be prosecuted in India for money laundering under the Prevention of Money Laundering Act, 2002 ("the Act"), after being tried and convicted in the United States for related offenses.
The applicability and interpretation of Article 14 sub-clause 7 of the International Covenants of Civil and Political Rights, 1966, and Section 2 of the Protection of Human Rights Act, 1993, in the context of double jeopardy.
The evidentiary value of the applicant's statements made under Section 50 of the Act and the proffer statement made in the United States.
The jurisdiction of Indian courts over offenses involving cryptocurrency transactions initiated abroad.
The applicability of presumptions under Section 23 of the Act regarding interconnected transactions in money laundering.
The consideration of bail for the applicant under the circumstances presented.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Prosecution in India after Conviction in the USA

Relevant legal framework and precedents: The court examined the principles of double jeopardy under Article 14 sub-clause 7 of the International Covenants of Civil and Political Rights, 1966, and Section 2 of the Protection of Human Rights Act, 1993. The court also considered precedents like Jitendra Panchal Vs. Narcotic Control Bureau and Prabodh K. Mehta Vs. Charuben K. Mehta.
Court's interpretation and reasoning: The court reasoned that a conviction in a foreign jurisdiction does not preclude prosecution in India for distinct offenses. The judgment from a foreign court can be noticed but is not binding on Indian courts.
Key evidence and findings: The applicant was convicted in the USA for offenses involving drug trafficking and money laundering, but the Indian prosecution pertains to money laundering activities connected to India.
Application of law to facts: The court found that the offenses for which the applicant was tried in the USA and those for which he is being prosecuted in India are distinct, allowing for separate proceedings.
Treatment of competing arguments: The applicant argued against double jeopardy, while the ED contended that the Indian prosecution is for different offenses.
Conclusions: The court concluded that the applicant can be prosecuted in India despite his conviction in the USA.

Issue 2: Evidentiary Value of Statements

Relevant legal framework and precedents: The court referred to precedents like A. Tajudeen Vs. Union of India and Kunal Gupta Vs. E.D regarding the evidentiary value of statements under Section 50 of the Act.
Court's interpretation and reasoning: The court noted that such statements are not substantive evidence unless corroborated by independent evidence.
Key evidence and findings: The applicant's statements under coercion were retracted, and their corroborative value was questioned.
Application of law to facts: The court emphasized the need for independent corroboration of the applicant's statements.
Treatment of competing arguments: The applicant argued that his statements were coerced and retracted, while the ED maintained their admissibility.
Conclusions: The court did not rely solely on the applicant's statements for determining guilt.

Issue 3: Jurisdiction Over Cryptocurrency Transactions

Relevant legal framework and precedents: The court considered the jurisdictional principles for prosecuting offenses involving cryptocurrency, referencing cases like Ion Science Limited & Duncan John.
Court's interpretation and reasoning: The court reasoned that jurisdiction can be established where the owner of the cryptocurrency is domiciled.
Key evidence and findings: The applicant was alleged to possess untraceable Bitcoins linked to money laundering activities.
Application of law to facts: The court found that Indian courts have jurisdiction since the applicant is domiciled in India.
Treatment of competing arguments: The ED argued for jurisdiction based on domicile, while the applicant contested the applicability.
Conclusions: The court upheld the jurisdiction of Indian courts over the cryptocurrency transactions.

Issue 4: Presumptions Under Section 23 of the Act

Relevant legal framework and precedents: Section 23 of the Act presumes interconnected transactions to be part of money laundering if one or more transactions are proven.
Court's interpretation and reasoning: The court applied this presumption due to the applicant's involvement in drug trafficking and money laundering activities.
Key evidence and findings: The court noted the applicant's lack of legitimate income sources and the transmission of funds to India.
Application of law to facts: The court presumed the funds transmitted to India were proceeds of crime.
Treatment of competing arguments: The applicant contested the presumption, arguing a lack of evidence linking funds to crime.
Conclusions: The court upheld the presumption under Section 23, pending further scrutiny at trial.

Issue 5: Bail Consideration

Relevant legal framework and precedents: The court considered principles for granting bail, referencing cases like Vijay Madanlal Choudhary and CBI Vs. Vijay Sai Reddy.
Court's interpretation and reasoning: The court emphasized the need to assess the genuineness of the case without delving deeply into the merits.
Key evidence and findings: The court found substantial grounds to believe in the applicant's involvement in money laundering.
Application of law to facts: The court applied the principle of "reasonable grounds for believing" and denied bail.
Treatment of competing arguments: The applicant sought bail based on previous convictions, while the ED opposed it, citing ongoing investigations.
Conclusions: The court rejected the bail application, citing sufficient grounds for continued detention.

3. SIGNIFICANT HOLDINGS

Preservation of verbatim quotes of crucial legal reasoning: "The court is only required to place its view based on probability on the basis of reasonable material collected during investigation and the said view will not be taken into consideration by the trial court in recording its finding of the guilt or acquittal during trial which is based on the evidence adduced during the trial."
Core principles established: The judgment reinforced that foreign convictions do not preclude domestic prosecution for distinct offenses. It also highlighted the need for corroborative evidence when relying on statements made under coercion.
Final determinations on each issue: The court upheld the jurisdiction of Indian courts, applied presumptions under Section 23 of the Act, and denied bail based on the evidence and legal principles discussed.

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