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TMI Blog2015 (11) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... rant of bail in the present case, since the applicant is an accused in the scheduled offence, the rigours of section 45 of the PML Act would apply and the court is required to record twin satisfaction, one that, there are reasonable grounds for believing that the applicant is not guilty of such offence and second that, he is not likely to commit any offence while on bail. One of the conditions precedent, namely, that the applicant is not guilty of such offence, is not satisfied, the applicant is not entitled to be released on bail under section 45 of the PML Act. - any observation made in this order is a prima facie observation made only for the purpose of deciding the bail application and the same shall have no bearing on the merits of the case at the time of trial which has to be adjudicated on the basis of the evidence that may be led by the respective parties. - Decided against appellant. - CRIMINAL MISC. APPLICATION (FOR REGULAR BAIL) NO. 17000 of 2014 - - - Dated:- 5-10-2015 - MS. HARSHA DEVANI, J. FOR THE APPELLANT MR PM THAKKAR, SR. ADVOCATE with MR RJ GOSWAMI, ADVOCATE FOR THE RESPONDENT MR DEVANG VYAS, ADVOCATE, MS TRUSHA K PATEL, ADVOCATE JUDGMENT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt appeared before the Directorate of Enforcement pursuant to the summons and his statement came to be recorded under section 50 of the PML Act. On 08.05.2014, the applicant appeared before the Directorate of Enforcement pursuant to summons, however, on that date, no statement was recorded. On 21.05.2014, the applicant appeared before the Directorate of Enforcement in pursuance of the summons and his statement came to be recorded under section 50 of the PML Act and he came to be arrested on the very same day. It is the case of the applicant that he, however, was not brought before the Judicial Magistrate or the Metropolitan Magistrate, as prescribed under section 19(3) of the PML Act, but was brought before the Special Court designated under section 43 thereof. The applicant submitted an application for bail on 21.5.2014. The Directorate of Enforcement prayed for remand, pursuant to which, on 22.05.2014, the Designated Court granted three days remand. According to the applicant, during the period of remand, he had provided all documents that were demanded from him by the Directorate of Enforcement and upon completion of the period of remand on 25.05.2014, the Directorate of Enforce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... criminal application wherein, the court observed that the observations made in the said decision would not come in the way of the bail application and that the bail application may be decided on merits. By an order dated 05.03.2015, this court allowed the bail application filed by the applicant being Criminal Miscellaneous Application No.2191 of 2015 and granted him regular bail. Thereafter, Rakesh Kothari, a coaccused, who had also filed a habeas corpus petition before this court, which had been rejected by a common order along with the habeas corpus petition filed by the petitioner, presented another habeas corpus petition before this court being Special Criminal Application No.4247 of 2015, wherein a Division Bench of this court by an order dated 03.08.2015, granted interim relief releasing the said co-accused and admitted the matter as it was of the opinion that the same required deeper consideration. 4. Mr. P. M. Thakkar, Senior Advocate, learned counsel with Mr. R. J. Goswami, learned advocate for the applicant submitted that the applicant was neither named in the first information report, nor in the second first information report registered in respect of the scheduled of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 45 of the PML Act, the offences under the said Act are non-cognizable offences and hence, the Directorate of Enforcement could not have arrested the petitioner without obtaining warrant from the Metropolitan Magistrate in view of section 2(l) read with section 155 of the Code. Therefore, the arrest of the applicant without a warrant in a non-cognizable offence, which is being investigated without any order of the Magistrate, is in total violation of the mandatory provisions of section 155 read with section 4(2) of the Criminal Procedure Code read with section 45 of the PML Act and is therefore, unauthorised and illegal. 4.2 It was submitted that the alleged offence under the ECIR/the complaint/the supplementary complaint under the PML Act is punishable up to a maximum imprisonment of seven years. In the scheduled offence in which the maximum punishment is much higher, this court has already granted bail to the applicant herein. Under the circumstances, there is no reason for not granting bail in the present offence. In support of such submission, reliance was placed upon the decision of the Supreme Court in the case of Arnesh Kumar v. State of Bihar and another , (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted by statements of the coaccused which have no evidentiary value. 4.4 Reference was made to the statements of Urvishbhai and Ashwinbhai referred to in the complaint, to submit that any material against Natural Trading Company and M/s Gangeshwar Mercantile Pvt. Ltd. must come from the investigation of the scheduled offence, which is not being investigated by the Directorate of Enforcement. It was submitted that apart from the fact that Natural Trading Company and M/s Gangeshwar Mercantile Pvt. Ltd. are not arraigned as accused in the scheduled offence, in the complaint, they are stated to be fictitious firms; however, no statement of any person has been obtained in this regard. Moreover, both the firms and their directors are arraigned as accused and such firms have bank accounts and hence, it is wrong to say that they are fictitious firms. It was submitted that receiving money from fictitious firms is not proceeds of crime because in the light of the definition under section 2(u) of the PML Act, the proceeds of crime must emanate from the scheduled offence. It was submitted that, therefore, there is no evidence that the amount received by the applicant are proceeds of crime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orded that the provisions of section 45 of the PML Act do not override the provisions of Article 21 of the Constitution of India. 4.7 Reliance was also placed upon the decision of the Supreme Court in the case of Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra and another , (2005) 5 SCC 294I, to submit that the applicant was called under section 50 of the PML Act and then arrested. It was urged that the nomenclature of section under which he was summoned is inconsequential and that the applicant having been arrested by an authority who recorded his statement and who had the power to search, seize and arrest, which is akin to the powers of a police officer, therefore, the arrest of the applicant without a warrant in a non-cognizable offence is without authority of law. Reliance was placed upon a decision of the Supreme Court in the case of Tofan Singh v. State of Tamil Nadu, (2013) 16 SCC 31 , wherein the court in paragraph 35 of the reported decision has held that the crucial test to determine whether an officer is a police officer for the purpose of section 25 of the Evidence Act viz. the influence or authority that an officer is capable of exercising over a pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under the PML Act is a non-cognizable offence, in the absence of any specific provision conferring power to arrest without warrant, as provided by section 6 of the Railway Property (Unlawful Possession) Act, 1966, the respondent has no power to arrest without warrant. Reference was made to the provisions of section 5 and 6 of the Railway Property (Unlawful Possession) Act, 1966, which read thus: 5. Offences under the Act not to be cognizable Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (5 of 1898) an offence under this Act shall not be cognizable. 6. Power to arrest without warrant Any superior officer or member of the Force may, without an order from a Magistrate and without a warrant, arrest any person who has been concerned in an offence punishable under this Act or against whom a reasonable suspicion exists of his having been so concerned. It was submitted that thus, under that Act, despite the fact that the offence thereunder is non-cognizable , section 6 thereof expressly permits arrest without warrant , whereas there is no such similar provision in the PML Act authorizing the Director or the officer so authorised by the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed the High Court praying that the same be quashed. It was pointed out that by an order dated 19.11.2014 made in Special Criminal Application No.4697 of 2014, this court quashed and set aside the nonbailable warrants. It was also pointed out that the Directorate of Enforcement had approached the Special Court seeking non-bailable warrant against Prithviraj Kothari in connection with the ECIR No.1/2014, and the learned Special Judge issued nonbailable warrant, which came to be quashed by this court in Special Criminal Application No.4441 of 2014. That on 02.08.2014, the Directorate of Enforcement filed an application seeking non-bailable warrants against the accused No.2 to 79 in connection with the Complaint Case No.3/2014, which came to be rejected on the same day by the Special Court. It was pointed out that insofar as the other co-accused persons are concerned, either non-bailable warrants have not been issued at all, or if issued, the same have been quashed, and in other cases, they have been granted bail, to submit that under the circumstances, there is no reason for refusing to grant bail to the applicant. 4.12 In conclusion, it was urged that a prima facie case has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rima facie grounds. It contemplates substantial probable causes for believing that the accused is not guilty of the alleged offence. Reliance was also placed upon the decision of this court in the case of Sardarsing Nagsing Rajput and others v. State of Gujarat , 1993 (1) GLH 861, wherein the court has held that merely because some default is committed either in not physically forwarding the custody of the accused or the police papers pertaining to him to the Special/Sessions Court, that by itself cannot be held to be sufficient to mechanically confer any right on the accused to be released on default-bail, who is otherwise arrested and kept in the custody on some serious charges of non-bailable offences under the NDPS Act, for which the Legislature has come out with a special enactment and thereafter with a provision under section 37 (amended) placing absolute limitation on the courts while considering the bail applications. The court observed that as held by the Supreme Court in the case of Narcotics Control Bureau v. Kishan Lal, AIR 1990 SC 556 , such procedural illegality cannot be permitted to outweigh and over-shadow the underlying object of the special provision as conta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision Bench of this Court recorded on Special Criminal Application No.4496 of 2014. The court made special reference to paragraphs 10.12 to 12.13 of the said decision which was rendered in a petition filed by the applicant therein. Various decisions laying down similar propositions of law were also relied upon by the learned counsel for the respondents; however, with a view to avoid prolix reference is not made to all such decisions. 5.2 Reliance was placed upon the decision of the Supreme Court in the case of Union of India v. Hassan Ali Khan and another , (2011) 10 SCC 235, wherein, the Supreme Court cancelled the order of bail granted by the High Court observing that when there are surrounding circumstances which reveal that there were doubts about origin of accounts and monies deposited therein, and when the accused had not been able to establish that the same were neither proceeds of crime nor untainted property, he ought not to have been released. 5.3 Ms. Patel next submitted that the applicant has neither challenged the act of his production before the Designated Judge, nor has he raised any protest about his arrest by the Directorate of Enforcement without war ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the court was invited to the provisions of section 68 of the PML Act, to submit that the same provides that even if there is any irregularity in following any procedure, the same would not invalidate the action if it is in furtherance of the object. According to the learned counsel, by production of the applicant directly before the Designated Judge, the object and purpose of the Act is, in no manner, defeated. Reliance was placed upon the decision of the Supreme Court in the case of Sundeep Kumar Bafna v. State of Maharashtra and another , AIR 2014 SC 1745 , for the proposition that no provision in the Code categorically prohibits the production of an accused before the Sessions Court or the High Court. Reliance was also placed upon the decision of this court in the case of Directorate of Enforcement v. Deepak Mahajan and another , 1994 (2) GLH 603, for the proposition that every law is designed to further the ends of justice but not to frustrate on the mere technicalities. 5.7 As regards the contention that the supplementary complaint cannot be looked into while considering the bail application of the applicant, it was submitted that the supplementary complaint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sections 193 and 228 of the Indian Penal Code. Reliance was also placed upon the decision of the Supreme Court in the case of Naresh J. Sukhawani v. Union of India, AIR 1996 SC 522. 5.9 Insofar as reliance placed by the learned counsel for the applicant on the interim order passed by the Division Bench of this court in Special Criminal Application No.4247 of 2015, the learned counsel submitted that the said petition was a petition of habeas corpus, governed by wide powers under Article 226 of the Constitution of India; whereas the present application is an application for bail which has to be considered within the limited scope of section 45 of the PML Act. Thus, the scope of both the provisions is entirely different. It was also submitted that the order passed by the Division Bench being an interim order, cannot be treated as a precedent. In support of such submission, the learned counsel placed reliance upon the decision of the Supreme Court in the case of State of Assam v. Barak Upatyaka D. U. Karmachari Sanstha, AIR 2009 SC 2249. 5.10 On the merits of the bail application, it was submitted that the applicant herein has used the firms M/s R. A. Distributors P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the stock market and real estate and projecting the same as untainted property was clearly covered under section 3 of the PML Act. It was contended that Shri Jafar Mohamed Hasan Fatta had stated that his brother Shri Afroz had arranged the said money when he was in need of the same. It was contended that receipt of ₹ 7 crores in the applicant s own account with Union Bank of India from M/s Natural Trading Co. was nothing but proceeds of crime. The illegal money earned for his role in entire scam was unquestionable and beyond doubt. The layering and placement of the same in the stock market and in real estate was an attempt made to project the same as untainted. The proceeds of crime thus earned by the applicant and his brother are appropriately covered under the definition of proceeds of crime as envisaged under section 2(u) of the PML Act. It was submitted that the role of the applicant in making fraudulent remittances abroad on the strength of fake documents is covered under the scheduled offences. It was pointed out that M/s Nile Trading Corporation is into trading of utensils and has surprisingly received ₹ 6.31 crores in the month of February 2014 from one M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. 8 Thus, whereas while the High Court is vested with wide powers while exercising writ jurisdiction under Article 226 of the Constitution of India, it has limited powers while considering a bail application like one as the same is governed by section 45 of the PML Act read with section 439 of the Code. Therefore, the applicable parameters would be those which are applicable to a bail application under section 439 of the Code and under section 45 of the PML Act. Therefore, in addition to the normal parameters which are applied while granting bail under section 439 of the Code, the conditions laid down under section 45 of the PML Act are also required to be taken into consideration. 9. As noticed hereinabove, various contentions have been raised by the learned counsel for the applicant as regards the validity of arrest of the accused on the ground of nonproduction before the Magistrate as well as the order of remand made by the Special Court being dehors its powers. Thus, from the submissions advanced by the learned counsel for the applicant it appears that under the guise of a bail application, in effect and substance, what the applicant seeks to challenge is the validity or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n paragraph 24 of the order that it was not in dispute that the petitioner therein was not arraigned as accused in the scheduled offence investigated by the Crime Branch. The court observed that a bare reading of section 45 shows that the rigours of bail are applicable only to the person accused of an offence in Schedule I and recorded a prima facie view that rigours of section 45 in granting bail are even otherwise not applicable in the case qua the petitioner therein. Whereas, in the present case, it is an admitted position that the applicant has also been arraigned as an accused in the scheduled offence and has been granted bail in respect thereof. Before the Designated Court, it was the case of the applicant that he has not committed the scheduled offence and that he is arraigned as an accused in the complaint only after complying with section 120B of the IPC on the basis of the statement of Praful Patel. Thus, though it is the case of the applicant that he has not committed a scheduled offence, it is nevertheless a fact that he is an accused in the scheduled offence being C.R. No. I 17/2014. Evidently therefore, in view of the fact that the applicant is an accused in the sched ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 135(1) of the Customs Act, 1962 as a bailable offence, which question at that point of time, was pending determination. The court indicated that subsequently, in Om Prakash v. Union of India (supra), it had held that the offences under the Customs Act were bailable. The court on the basis of the averments and submission was given the impression that the alleged offences were confined to the provisions of the Customs Act alone and had stayed the arrest of the petitioner therein, in connection with the subject matter of the said file, presuming that the same would be relating to the offences under the Customs Act, 1962. The court in paragraph 4 of the said decision noted that however, in the petition for vacating the interim relief, it was brought to its notice that the subject-matter of the said file had nothing to do with the offences under the Customs Act but under the provisions of the Foreign Exchange Management Act, 1999, and the Prevention of Money Laundering Act, 2002, in respect of which it had not expressed any opinion regarding the bailability of the offences thereunder. The court, accordingly, held that insofar as the provisions of the Customs Act are concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equirements of both, section 439 of the Code as well as section 45 of the PML Act have to be satisfied. The Supreme Court in Collector of Customs v. Ahmadalieva Nodira (supra) has in the context of clause (b) of sub-section (1) of section 37 of the Narcotic Drugs and Psychotropic Substances Act, 1985 which is in pari materia with sub-section (1) of section 45 of the PML Act, held thus: 6. As observed by this Court in Union of India v. Thamisharasi, clause (b) of sub-section (1) of Section 37 imposes limitations on granting of bail in addition to those provided under the Code. The two limitations are: (1) an opportunity to the Public Prosecutor to oppose the bail application, and (2) satisfaction of the court that there are reasonable grounds for believing that the accused is not guilty of such offence and that he is not likely to commit any offence while on bail. 7. The limitations on granting of bail come in only when the question of granting bail arises on merits. Apart from the grant of opportunity to the Public Prosecutor, the other twin conditions which really have relevance so far as the present accused-respondent is concerned, are: the satisfaction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ign Exchange Management Act, 1999. It was found that seven companies (which have been referred to in detail in the preceding paragraphs) have sent foreign remittances against bogus/forged bills of entry mainly to Hong Kong based companies, one of which was AI Mignas FZE Ltd. The said seven companies received monies through RTGS from M/s Vandana Co., M/s Natural Trading Co., M/s Maruti Trading, M/s Millennium Co., M/s Aarzoo Enterprises, M/s G. T. Traders, M/s M. D. Enterprises, M/s Jash Traders etc., which had transferred the amounts out of their bank accounts held at Mumbai and Surat. Further, these firms had received RTGS credits into their bank accounts from various other firms based in New Delhi, Mumbai and Surat. Investigation revealed that the Companies, namely, M/s Vandana Co., M/s Natural Trading Co., M/s Maruti Trading, M/s Millennium Co., M/s Aarzoo Enterprises, M/s G. T. Traders, M/s M. D. Enterprises, M/s Jash Traders, who made RTGS credits to the Surat based entities have turned out to be fictitious. Funds were received through RTGS also from Cosmo Impex, S G Trade Impex, S K Trading Co., Archana Traders, etc., having bank accounts in Surat, Mumbai and Delhi. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f entry in question being fake. Thus, precious foreign exchange worth ₹ 5395.75 crores had been fraudulently siphoned off by the said Surat based entities against which no imports were made by them. It is the case of the respondents that the investigation has revealed that the masterminds behind the entire clandestine and illegal foreign remittances were Shri Afroz Mohamed Hasan Fatta (the applicant herein), Bilal Haroon Galani, Surat and Madanlal Jain, Mumbai. Investigation also revealed that the accounts of the firms, viz. M/s Vandana Co., M/s Natural Trading Co., M/s Maruti Trading, M/s Millennium Co., M/s Aarzoo Enterprises, M/s G. T. Traders, M/s M. D. Enterprises and M/s Jash Traders, with Axis Bank were opened pursuant to the directions of Shri Madanlal Jain. M/s Natural Trading Co., Surat was found to have made five such RTGS transfers on a single day on 16.12.2013 and thirtyseven RTGS transfers involving an amount to the tune of ₹ 95.13 crores from its account at the Axis Bank, Shivaji Park, Mumbai were made till 18.02.2014, that is, within 62 days to M/s R. A. Distributors Pvt. Ltd. Investigation also revealed that M/s Natural Trading Company made RTGS cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jain and sought ₹ 7 crores for investment in the share market; Shri Madanlal Jain had arranged the said fund in the form of unsecured loan which he received through RTGS in his personal account with Union Bank of India, Nanpura, Surat and the said amount was received in three parts, ₹ 1 crore, ₹ 3 crores and ₹ 3 crores; that on his request, Shri Madanlal Jain had arranged ₹ 3 crores for his brother Shri Jafar Mohamed Hasan Fatta from M/s Natural Trading Co. In his statement recorded under section 50 of the PML Act on 22.05.2014, the applicant had stated that there were no documents relating to the unsecured loans taken from M/s Natural Trading Co. by him and his brother Shri Jafar Mohamed Hasan Fatta. During the course of his custodial interrogation on 24.05.2014, the applicant had produced retail invoices dated 10.12.2013 and 12.12.2013 of M/s Vidhatri Exim Pvt. Ltd. respectively for ₹ 3,00,00,123/- and ₹ 2,99,10,013/- showing the purchase of cut and polished diamonds by M/s Nile Trading Corporation. He also produced four invoices of M/s Nile Trading Corporation all dated 14.12.2013 for having sold the said cut and polished diamonds for &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he court to record satisfaction that (i) there are reasonable grounds for believing that the accused is not guilty of such offence and (ii) that he is not likely to commit any offence while on bail. Both the above conditions have to be satisfied cumulatively. The facts of the case are required to be examined keeping in view the above statutory provisions. 23. One of the main contentions advanced on behalf of the applicant is that the statement of the co-accused recorded under section 50 of the PML Act cannot be taken into consideration as they have no evidentiary value. Strong reliance has been placed upon the decision of the Supreme Court in the case of Toofan Singh v. State of Tamil Nadu (supra) wherein, the Supreme Court has referred the matter to the Larger Bench for reconsideration of the issue as to whether the officer investigating the matter under the NDPS Act would qualify as police officer or not. The second related issue was whether the statement recorded by the Investigating Officer under section 67 of the NDPS Act can be treated as a confessional statement or not, even if the officer is not treated as police officer. The court noted thus: 43. As far as this s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llegation against the applicant is that the amount of ₹ 13 crores paid to the applicant and further amount paid to his brother at the instance of the applicant, are proceeds of crime within the meaning of such expression as envisaged under section 2(u) of PML Act and that the applicant has attempted to project the same as untainted money. The expression proceeds of crime means any property derived or obtained directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property. On the facts as emerging from the record, it cannot be said that the respondents have not been able to establish any link between the scheduled offence and the moneys received by the applicant. As held by the Supreme Court in Union of India v. Hassan Ali Khan (supra), the said allegation may not ultimately be established, but having been made, the burden of proof that the said monies were not the proceeds of crime and were not, therefore, tainted shifts on the applicant under section 24 of the PML Act, which provides that in any proceeding relating to proceeds of crime under that Act, in case of a person charged with the offence of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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