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TMI Blog2016 (10) TMI 1030X X X X Extracts X X X X X X X X Extracts X X X X ..... er: 2.1 The respondent No.2 has filed a complaint on 15.6.2015 against the applicants and six others alleging that the applicants have committed offences of money laundering under Section 3 of the PML Act punishable under Section 4 of the PML Act read with Section 120B of the Indian Penal Code, 1860, which is registered as PMLA Case No.8/2015. Learned designated Special Court, Ahmedabad, issued summons against all the accused persons for the above referred offences read with Section 120B of the Indian Penal Code, 1860, and directed the accused to deposit their passports before the learned designated Special Court, Ahmedabad, and to furnish security of Rs. 50,000/-. 2.2 It is the case of respondent No.2 that on receipt of intelligence information, the Enforcement Directorate raided a farm house at Vadodara on 19.3.2015 in connection with hawala transactions. It is alleged that during such raid, incriminating material of cricket betting was found, and therefore, on information supplied by the Enforcement Directorate to the Police Department, a First Information Report being C.R.No.II-222/2015, under Sections 4 and 5 of the Gambling Act and Sections 65, 66 and 66C of the Information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned designated Special Court, Ahmedabad, and the applicants were sent to judicial custody, and since then, they are in judicial custody in connection with ECIR/03/AMZ0/15 and PMLA Complaint No.8/2015. 3.0 Learned Senior Counsel Mr. Vikram Chaudhary with learned advocate Mr. Chetan K. Pandya appearing for the applicants makes the following submissions: 3.1 That the charge sheets in connection with F.I.R. being C.R.No.II-222/2015 were filed against as many as 16 accused, including the applicants for the offences punishable under Sections 4 and 5 of the Gambling Act and under Sections 65, 66 and 66C of the Information Technology Act. However, neither of the Sections for which charge sheets were filed are part of the scheduled offences under the PML Act. Learned Senior Advocate submits that it is pertinent to note that the above allegations were being levelled on the basis of the statements of the applicants recorded on 20.3.2015 under Foreign Exchange Management Act, 1999 (for short `the FEMA') and PML Act, and also recorded after the applicants' arrest on 18.4.2015, 21.4.2015, 22.4.2015 and 23.4.2015. However, there is no evidence on record to substantiate the alleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aged for the offence punishable under Section 3 and 4 of the PML Act is seven years. All the co-accused, total 8 in number, have been released on regular bail. One common observation made by the designated Special Judge while granting bail to the said accused is that the income derived from cricket betting would not be covered under the definition of `proceeds of crime'. Even two of the co-accused viz. Chirag Parikh and Dharmendra Chauhan, who were also accused of scheduled offences, have been released on regular bail. The said two co-accused are the alleged partners of the present applicants in the firm M/s. Maruti, Ahmedabad having 27% and 5% share respectively. The respondents have acquiesced into the bail orders of the other coaccused, and the orders granting regular bail have never been challenged before the higher forum. The movable and immovable properties of all the four partners of M/s. Maruti, Ahmedabad, including the present applicants, are provisionally attached under Section 5 of the PML Act. 3.5. That this High Court was pleased to release the co-accused No. 6 and 9 by order dated 20.10.2015 passed in Cr.M.A. No. 14446 of 2015 and Cr.M.A. No.16555 of 2015 respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n when the investigation would be complete and when the trial would commence, and as such, the very basis of rejection of applicants' bail applications by the trial court on 10.2.2016 on the basis that the trial could be concluded within four to six months stands negated. 3.8 That the offences under the PML Act are non-cognizable and even if they are cognizable, then in both the eventualities, procedure under Chapter XII, Criminal Procedure Code, is necessary to be followed. It is submitted that prima facie the offence under the PML Act is non-cognizable in view of specific omission of Section 45(1) on 21.5.2005, i.e. prior to coming of the Act into force with effect from 1.7.2005, which provided that every offence under the Act would be cognizable. Further, there are no criminal antecedents as to PMLA cases against the applicants. 3.9 That in Rakesh Manekchand Kothari vs. Union of India and others in Special Criminal Application No.4247 of 2015 it was held prima facie that the offences under PML Act are non-cognizable. In the case of Om Prakash Vs. Union of India reported in (2011) 14 SCC 1 Hon'ble Supreme Court held that the respondent was bound to follow the procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 That in pursuance of specific intelligence information regarding operation of large scale on-line hawala racket in international cricket betting through UK based website `Betfair. Com' by one Shri Girish Parshottam Patel @ Tommy Patel and his associate Shri Kiran Jayantilal Mala, the premises identified as a farm house in village Sikandarpur, near Ajwa Chowkdee, Vadodara was searched under Section 37 of the Foreign Exchange Management Act, 1999, which resulted into recovery and seizure of incriminating documents, digital records, etc., and therefore, F.I.R. being C.R.III-222/2015 for the offences of betting was registered on 21.3.2015. Thereafter, on 25.3.2015, F.I.R. being C.R.No.I-85/2015 was registered by Kishanwadi Police Station, Vadodara, against one Girish Parshottam Patel @ Tommy Patel, Kiran Jayantilal Mala, Dharmendrasinh Vishwanath Chauhan @ Dharmin Chauhan and Chirag Parikh for commission of offences under Sections 120B read with Sections 418, 419, 420, 467 and 471 of the Indian Penal Code which are scheduled offences of PML Act. 4.3 That in pursuance to the aforementioned F.I.R. investigation under the provisions of PML Act 2002 was conducted vide ECIR/03/AMZO/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of recovery and seizure of incriminating documents, digital records, etc., in pursuance to the search under Section 37 of the FEMA, 1999 as well as the search carried out under Section 17(1) of the PML Act. Learned counsel further submits that the scope of appeal under Section 45 of the PML Act is very limited and required to be considered in addition to the conditions prescribed under Section 439 of the Cr.P.C. and for grant of bail, two more conditions are required to be fulfilled, i.e. (i) the public prosecutor be afforded an opportunity to oppose and (ii) where the public prosecutor opposes the application, the Court is satisfied that there are reasonable grounds for believing that the applicant is not guilty of such offences and that he is not likely to commit offence while on bail. According to learned counsel for the respondent No.2 while considering the bail application, the Court is required to satisfy itself about the two conditions enumerated under Section 45 of the PML Act, and if the Court is not satisfied with those conditions, even if there is any procedural lapse in initial arrest, the same would not be sufficient to enlarge the applicant on bail. 4.5 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imum 3 years which can be extended till 7 years and it can be further extended to 10 years in certain cases along with fine. The compliance of provisions of Section 155 Cr.P.C. is applicable to non-cognizable offences under the provisions of Indian Penal Code, and therefore, the contention with regard to non-compliance of Section 155 of Cr.P.C. is not sustainable, as the same is against the proceedings of Special enactment, i.e. the PML Act. It is also submitted that from the investigation carried out so far, there is a strong prima facie case made out against the applicants-accused, and therefore, no benefit can be extended to the applicants-accused by way of any relief looking to the role of the accused and the gravity of the offence. 4.7. In support of above submissions, following case laws have been cited: Afroz Hassan Fatta case (M.Cr.A No.17000 of 2014), Hasan Ali Khan case (2011) 10 SCC 235, Rakesh Kothari case (Cr.M.A. No.3637 of 2015 - Gujarat High Court), Rakesh Manekchand Kothari vs. Union of India (W.P. Cr. No.61 of 2015 - Supreme Court), Gautam Khaitan Vs. Enforcement Directorate (Bail Application No.2354 of 2014 - Delhi High Court), Manojkumar Punamia Vs. State of Jh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering" "4. Punishment for money-laundering - Whosoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine: Provided that where the proceeds of crime involved in money laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of this Section shall have effect as if for the words "which may extend to seven years", the words "which may extend to ten years" had been substituted. The definition of "proceeds of crime" provided in Section 2(u) reads as under: "2(u) "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; or where such property is taken or held outside the country, then the property equivalent in valued held within the country." The "scheduled offence" defined under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s available in the instant case to the applicants or not. 6.3 In view of the above aspects for the purpose of deciding the present bail application following issues are required to be discussed: 6.4 With respect to proceeds of crime: The learned advocate for the applicant seeks to apply the ground of parity with two co-accused, namely, Chirag Parikh and Dharmendra Chauhan, a coordinate bench of this Court in Cr.M.A. No.17326/2015, observed that - "since in the present case the scheduled offence is cheating, forgery and criminal conspiracy for the procurement of SIM Cards on the basis of false and forged documents hence there is no proceeds of the crime in the present case which is related to the commission of these scheduled offences. That even Section 17 of PMLA differentiates between 'proceeds of crime' and 'property related to crime'." The Bench further observed that, "it is an admitted position that cricket betting is not a scheduled offence and hence the money generated out of cricket betting does not come within purview of the definition of `proceeds of crime'." 6.5 The charge sheet filed for gambling offence, i.e. C.R.No.II- 222/2015 suggests prima facie that mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding copy thereof to the concerned court within 24 hours, maintenance of case diary, etc. which was mandatory. It appears that the Enforcement Directorate approached the Honourable Supreme Court vide S.L.P.(Cr.) No.9727 of 2015 assailing the order of Division Bench of this Court, i.e. Rakesh Kothari case, the Honourable Supreme Court dismissed the said S.L.P. in limine and thereby clearly upheld the order dated 3.8.2015 passed by the Division Bench. It also appears that similar view has recently been taken by a Division Bench of Honourable Delhi High Court vide order dated 27.4.2016 in Gurucharan Singh (supra). Thus, in both Rakesh Manekchand Kothari (supra) and Gurucharan Singh (supra), the Division Bench of Gujarat and Delhi High Courts have directed the respective detenues to be released on bail. 6.10 Reliance has been placed by the respondents on Rakesh Manekchand Kothari (supra), which prima facie, appears to be untenable and misconceived for the following reasons: (i) Prayer in the said case was for issuance of writ of habeas corpus wherein vires of Section 45 of the PMLA was challenged only on the ground that all offences have been indiscriminately shifted from Part B of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order dated 16.1.2015(supra), the Hon'ble Supreme Court granted permission for withdrawal with specific liberty to the petitioner to file any other writ petition. Relevant extract of the order dated 7.7.2015 passed by the Hon'ble Supreme Court reads as under:- "W.P.(Cri.) No.61/2015: Learned counsel for the petitioner, on instructions, seeks permission of this Court to withdraw the Writ petition. Permission sought for is granted. The writ petition is disposed of as withdrawn. It is clarified that the withdrawal of the present writ petition will not come in the way of any other writ petition that is already pending or that may be filed by the petitioner. SLP (Cri.) CRL.MP.No.7277/2015: Delay condoned. Learned counsel for the petitioner, on instructions, seeks permission of this Court to withdraw the Special Leave Petition. Permission sought for is granted. The Special Leave Petition is disposed of as withdrawn." (vii) It is further a matter of record that vide order dated 24.7.2015, the subsequent Division Bench of this Court [Hon'ble Mr. Justice Mohinder Pal & Hon'ble Mr. Justice R.D. Kothari] hearing the aforesaid Special Criminal Application ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... procedure is live, germane and open and the view taken by the Division Bench in its order dated 3.8.2015 passed in S.Cr.A (Habeas Corpus) 4247 of 2015 Rakesh Manekchand Kothari (supra) prevails so far. The Hon'ble Single Judge in a batch matter has taken the view that the offences under PMLA are cognizable and no procedure under Cr.P.C. is required to be followed. This view is based primarily on the judgment passed by a Division Bench of Hon'ble Punjab and Haryana High Court in its judgment dated 22.12.2015 titled as Karam Singh Vs. Union of India CWP No. 3317 of 2015 and Vinod Kumar Garg vs. Union of India CWP No.314 of 2015. It is a matter of record that review application bearing R.A. No.83 of 2016 in Karam Singh (supra) case is already pending before the Division Bench of Hon'ble Punjab and Haryana High Court. In M/s. Ark Imports Private Limited and Anr Vs. Directorate of Enforcement CRWP 1051 of 2016 vide order dated 5.8.2016 another Division Bench of the Hon'ble Punjab and Haryana High Court has been pleased to frame certain tentative questions of law for reference to a larger bench, thereby, doubting the view in Karam Singh's case. The questions of law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d: and, xx xx xx The second anomaly that we found was that the expression "investigation officer" and the "investigation" occur in number of sections, but they were not defined in the Act. Consequently, one has to go to the definition in the criminal procedure code and that code provides only "investigation by a police officer or by an officer authorized by a magistrate". So clearly there was a lacuna in not enabling the director or the assistant director under this Act to investigate offences. That has been cured now. xx xx xx What we are doing is, we are inserting a new section 2(n)(a) defining the term `investigation'; making an amendment to Sections 28, 29 and 30, dealing with tribunals; amending Section 44 and 45 of the Act to make the offence non-cognizable so that only the Director could take action; and also making consequential changes in Section 73." 6.12 In view of the aforesaid emerging legal position, now the question arises as to whether the limitations/rigours contemplated under Section 45 of the PML Act are applicable to the case of the applicants or not. Admittedly, the schedule offence in the present case are certain sections of the Indian Penal Code, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndering of proceeds of crime involved in offences earlier falling under Part B of the Schedule, there is no embargo of minimum value of Rs. 30 lacs. This 2013 amendment in Schedule carried out as proposed vide the Prevention of Money Laundering (Amendment) Bill 2011 was not intended to introduce a substantive amendment for creating an embargo on grant of bail to a person arrested under PMLA in respect of offences earlier falling under Part B of the Schedule. After having perused the "Statement of Objects and Reasons" as incorporated in the Prevention of Money Laundering Amendment Bill 2011, which led to 2013 amendment in Schedule, we are unable to agree with the petitioner that by necessary corollary of the aforesaid 2013 amendment, the stringent limitations in grant of bail were now made applicable to all scheduled offences which are punishable for more than three years and were put together in the new Part-A. If that interpretation as sought to be given by the petitioner, which is devoid of any support from the objects and reasons available on record in the Prevention of Money-Laundering (Amendment) Bill 2011, is accepted by us, the provision of Section 45(1) would become unreas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, if the twin limitations in grant of bail stipulated under Section 45(1) of PMLA would be applied even to those persons arrested under PMLA on accusation of commission of any such scheduled offences, which were listed under Part B of the Schedule omitted in 2013 but only for the limited purpose as specified in the "Statement of Objects and Reasons" in the Prevention of Money-Laundering (Amendment) Bill 2011. b) Whether as per the provisions of the Code of Criminal Procedure, 1973 read with the provisions of the PMLA and Rules made thereunder, a private individual can set the criminal law into motion by either seeking registration of case for investigation by the authority under PMLA or by directly approaching the jurisdictional Magistrate for issuance of directions for investigations of the individual by either seeking registration of case for investigation by the authority under PMLA or by directly approaching the jurisdictional Magistrate for issuance of directions for investigations to the authority under PMLA, when there is neither any report of commission of any Scheduled offence sent under Section 157 of the Code to the Magistrate nor any complaint for taking cognizance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) of PML Act, both the trials of scheduled offences and PML Act are required to be tried together. Thus, prima facie there is a reason to believe that commencement of trial and its conclusion is likely to take some more time. Both the applicants are in custody since 17.4.2015, i.e. since last about one year and six months. The learned designated Special Court rejected the applicants' bail applications vide order dated 10.2.2016 by assigning a reason that the trial could be concluded within four to six months, but till date, the trial has not even commenced and likely to take some more time. The applicants are permanent residents of Ahmedabad and Unjha and are having responsibilities towards their families, and therefore, they are not likely to abscond or run away, and their presence can be secured at the time of trial by imposing proper conditions. The apprehension shown by the respondents that in the event of their release there are chances of their fleeing away is already taken care of as their passports have been deposited before the Designated Special Court and in furtherance thereof certain conditions can be imposed whereby their movement can be restricted to a limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c] surrender passport, if any, to the lower court forthwith, if not already deposited; [d] shall not enter into Vadodara, Mehsana, Kheda and Gandhinagar Districts. [e] not leave the State of Gujarat without prior permission of the Designated Special Court concerned; [f] mark presence before the Deputy Director, Enforcement Directorate, Ahmedabad, on every Monday of each English calendar month for a period of six months and thereafter, every alternate Monday till the charge is framed between 11:00 a.m. and 2:00 p.m.; [g] furnish present/latest and permanent address of residence to the Investigating Officer and also to the Court at the time of execution of the bond and shall not change the residence without prior permission of this Court; [h] the amount of Rs. 25,00,000/- each shall be deposited by the applicants without prejudice to their rights and contentions within one month from the date of their release. The said amounts shall be deposited in a Fixed Deposit for a period of three years initially by the concerned Designated Court under PMLA, Ahmedabad; and if the trial is not concluded within the said period, the said Fixed Deposits shall be renewed for a further perio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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