9911796707
TMI Blog2017 (9) TMI 1268X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 20-9-2017 - MR. I.S. MEHTA J. Petitioner Through: Mr. Vikram Chaudhri, Sr. Adv. with Mr. Sarvesh P Singh, Mr. Harshit Sethi and Ms. Pragati Sharma, Advs. Respondent Through: Mr. Sanjay Jain, ASG with Mr. Sanjeev Narula, CGSC, Mr. Abhishek Ghai and Ms. Adrija Thakur, Advs. ORDER I.S. MEHTA, J. 1. By way of the above captioned applications, i.e. BAIL APPLN. 1113/2017 BAIL APPLN. 1114/2017, the present petitioners, i.e. (1) Virendra Jain and (2) Surendra Kumar Jain, seek regular bail under Section 439 Cr.P.C. in the case ECIR/01/DLZO-II/2017 dated 11.02.2017, under Sections 3 4 of Prevention of Money Laundering Act, 2002 (herein after referred to as PMLA). 2. The brief facts stated are that vide order dated 28.10.2013 the Ministry of Corporate Affairs ordered an investigation by the Serious Fraud Investigation Officer (SFIO) into the affairs of various companies. Pursuant to that an investigation was conducted by the SFIO and on 31.03.2016 an investigation report under Section 241 of the Companies Act, 1956 was filled. Thereafter, on the basis of the aforesaid investigation report, on 29.11.2016 a Criminal Complaint No. 57463 of 2016 was filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the forgery for the purpose of cheating, i.e. offences punishable under Sections 120-B/420 IPC which are Schedule Offences of Prevention of Money Laundering Act, 2002. 4. On 13.02.2017 Seizure Memo/Panchnama was prepared by the officers of the respondent/department and thereafter, summons dated 01.03.2017, 03.03.2017 and 16.03.2017 were issued to the petitioner- Virendra Jain and summons dated 13.02.2017, 14.02.2017, 27.02.2017, 03.03.2017, 15.03.2017 and 16.03.2017 were issued to the petitioner- Surendra Kumar Jain for their appearance before the Assistant Director of the respondent/department to give statements under Section 50 of the PMLA. 5. Consequently, on 20.03.2017 the petitioners were arrested by the officers of the respondent/department. In the meanwhile the petitioners moved bail application before the Court of Additional Sessions Judge, Patiala House Courts, New Delhi and vide order dated 02.05.2017 the learned ASJ dismissed the bail application of the petitioners. 6. Thereafter, on 18.05.2017 the respondent/department through its Assistant Director filed a complaint under Section 45 of Prevention of Money Laundering Act, 2002 for commission of offences of mone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an undisputed fact that no PMLA proceedings can come into existence unless there is a Scheduled Offence wherefrom any proceeds of crime are derived or obtained and are projected as untainted. He has submitted that in the instant case, the Scheduled Offence is a complaint filed by SFIO against the petitioners on 29.11.2016, inter alia, invoking Sections 420/120-B IPC, however, no cognizance had been taken by any Court when the ECIR was registered. He has further submitted that even on the date of filing of Prosecution Complaint, no cognizance was taken in the Scheduled Offence by any competent Court and in these circumstances, entire proceedings are without any foundation inasmuch as it is a sine qua non that the trial in both the cases have to go simultaneously in terms of Section 44 of PMLA. Therefore, law does not contemplate even initiation of proceedings under PMLA without the Scheduled Offence being in existence. He has further submitted that mere filing of a complaint does not necessarily lead to an inference that either a cognizance has been taken or the offence has seen the light of the day as understood in ordinary legal parlance. 12. The learned senior counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v Kathuria vs. Union of India; 2016 SCC OnLine P H 3428. 16. The learned senior counsel for the petitioners has further submitted that the petitioners, i.e. Virendra Jain and Surendera Kumar Jain, are the brothers. He has submitted that the petitioners are in custody since 20.03.2017 and the prosecution complaint has already been filed on 18.05.2017. It is further submitted that prior to their arrest, the petitioners were associated with investigation on several occasions and they rendered full cooperation. The case originates from an Income Tax Raid conducted at the residential and business premises of the petitioners on 14.09.2010 and assessment order was passed against the petitioners and their appeals before the Commissioner of Income Tax were also dismissed. However, the Income Tax appellate tribunal on 03.02.2016 had set aside the orders passed by the assessing authority and the appellate authority and the matter is now remanded back for a fresh consideration. The petitioners had filed a petition for amalgamation of the two companies before this Hon ble Court and in those proceedings a report was submitted by the Registrar of Companies who had stated that there were cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by SFIO. The proceedings before the Income Tax Authority pursuant to direction are pending and petitioners would be deprived of the contest to those proceedings as well as the adjudication proceedings relating to attachment of immovable property as also their defence in both the criminal case in the present trial. The twin limitations contained in Section 45 (1) of PMLA are not attracted to the case of the petitioners because the schedule offence have been added in Part-A of the schedule by way of an amendment in 2013 and earlier they were in Part-B. The amendment was brought in only to remove the monetary threshold of ₹ 30 lacs and not to apply the twin limitations contained in Section 45 of PMLA. This issue has been raised by a Division Bench of Punjab and Haryana High Court in Gorav Kathuria (supra) wherein it was held that the schedule offence contained in Part-B prior to amendment in 2013, the twin limitations of Section 45 of PMLA would not apply. While disposing of the said case the Division Bench of Punjab and Haryana High Court had issued a certificate of appeal under Article 134 of the Constitution of India and an appeal was filed before the Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies and the judgment of the High Court gets merged into that of the Supreme Court which is a binding precedent. 19. It is further submitted that Gautam Kundu (supra) had no occasion to deal with the question as to whether post amendment of 2013 the erstwhile Part-B offences which have now been merged into Part-A would still attract the rigours of Section 45 of PMLA. A judgment of the Court cannot be read as an arithmetical and mathematical theorem and it must be read in the context of the lis. The reliance placed by other side on the view taken by Karnataka High Court and Gujarat High Court that Gorav Kathuria (supra) is not a binding precedent are per-inquirium. Thus, High Courts have not considered the ratio of law laid down in V.M.Salgaocar (supra). In any event in a recent pronouncement later than those High Courts the Madras High Court in J.Sekar vs. Assistant Director, Directorate of Enforcement, Chennai Zonal Office; Criminal Original Petition Nos. 7146/2017 dated 12.05.2017 h as clearly held that doctrine of merger applies and in view of Gorav Kathuria (supra) twin limitations of Section 45 of PMLA will not apply. Regarding merits, it is submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd integration of the layered money into the books of the owners of unaccounted cash in the guise of fresh share subscription at a premium. He has further submitted that the original owners of unaccounted funds regain control over their entities by subsequent transfer of shares at a drastically discounted price in the names of close relatives/associates of the promoters/directors. He has further submitted that the full cycle of activities is clearly visible in the case of companies controlled by Jain Brothers (petitioners herein) and M/s Jagat Projects Ltd. with the mediation of Rajesh Aggarwal, Chartered Accountant. 22. The learned ASG has further submitted that M/s Jagat Projects Ltd, have converted its unaccounted money to the tune of ₹ 64.70 Crore into apparently legitimate transactions by way of share subscription by various companies. He has further submitted that this illegal activity related to the scheduled offence have generated property involved in money laundering to the extent of ₹ 64.70 Crore which was further invested by M/s Jagat Projects Ltd. into their sister concern M/s Divine Infracon Pvt. Ltd. for construction of Hotel, (now managed by Radisson B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hers (petitioners herein) were providing accommodation entries by accepting funds from their beneficiaries through mediators and converting the same into share premium transactions in the beneficiary company. In this process Jain Brother earned money as a certain percentage of the unaccounted money converted into share premium. Jain brothers have received funds of ₹ 62.20 Crore in advance from M/s Jagat Projects Ltd. through Rajesh Aggarwal, Chartered Accountant and placed the funds, pertaining to M/s Jagat Projects Ltd., from the accounts of various firms into the account of M/s Tulika Securities Pvt. Ltd., for layering and then theses funds were transferred to 26 companies for final investment into M/s Jagat Projects Ltd. For the entire process of receiving funds pertaining to M/s Jagat Projects Ltd., in the accounts of various firms and from there into the account of M/s Tulika Securities Pvt. Ltd. for layering and then transferring to the accounts of their 26 companies for final investment into M/s Jagat Projects Ltd. the petitioners have received commission to the tune of ₹ 1,11,96,000/- through their companies for converting unaccounted money of ₹ 62.20 Cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vation of the Hon ble Supreme Court was followed in a subsequent judgment of the Hon'ble Supreme Court in Crl.A.No. 1223/2017 titled Union of India vs. Varinder Singh @ Raja Anr. dated 21.07.2017 in which it has been held that when complying with a requirement of Section 45 of PMLA, the High Court should not have granted the bail. By this order the Hon ble Supreme Court had set aside the order of granting the bail passed by the High Court. The respondent/Department would also placed reliance on a judgment of a High Court of Karnataka passed in S.C. Jayachandra vs. Enforcement Directorate, Banglore; MANU/KA/0456/2017. 27. The Karnataka High Court discussed in detail as to whether the judgment of Punjab and Haryana High Court in Gorav Kathuria (supra) would be constituted as having binding effect within the meaning of Article 141 of the Constitution of India. After considering several judgments on this aspect, the Court came to the conclusion in para 30 of the judgment that Gorav Kathuria (supra) case cannot be treated as a binding precedent and further held that the pronouncement in Gautam Kundu (supra) was still the good law, so far as the question regarding limita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per share at the high share premium of ₹ 400/- per share. In this manner, the unaccounted money of M/s Jagat Projects Limited challenges through Rajesh Aggarwal, Chartered Accountant and then the petitioners were brought back into the accounts of M/s Jagat Projects Limited in a laundered firm. Thus it is a most blatant case of Money Laundering. It is in these circumstances that the respondent/Enforcement Directorate had commenced the investigation under PMLA and having found unimpeachable material in the course of its investigation, eventually instituted the statutory complaint before the Special Court. The cognizance has already been taken in respect of PMLA complaint on 03.07.2017. In fact a bail application was filed before the Special Court also, which has been dismissed with a detailed reasoning vide order dated 02.05.2017. 30. It is further submitted that there is no change of circumstances. Since the time the bail was refused and in fact the special court had all the material available to it while adjudicating upon the said bail applications. As regards the argument of the ECIR wrongly been initiated for the reason that on 11.02.2017, the Court had not taken cogniz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utam Kundu (supra), regularly followed by Hon ble Supreme Court as well as different High Courts, there is no ground made out for grant of bail. 32. The instant petitions for grant of bail under Section 439 Cr.P.C. are arising from ECIR/01/DLZO-II/2017, under Sections 3 4 of Prevention of Money Laundering Act, 2002 on the basis of Criminal Complaint No. 57463 of 2016. The allegations made in ECIR/01/DLZO-II/2017 at para 7.3 is that M/s Jagat Projects Ltd. with the help of Chartered Accountant Rajesh Aggarwal and other accused persons as shown in ECIR/01/DLZO-II/2017 dated 11.02.2017 were involved in money laundering activities wherein M/s Jagat Projects Ltd. succeeded in laundering its unaccounted income through a set of companies controlled by the petitioners in the guise of share subscription money at a huge premium to the tune of ₹ 64.70 Crore during the financial year 2008-09. The entire share subscription (including the share premium) of ₹ 64.70. Crore has been held to be unexplained cash credit under Section 68 of the Income Tax Act in the hands of M/s Jagat Projects Ltd. 33. Further M/s Jagat Projects Ltd. failed to explain the payment of ₹ 1,16,46, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment recorded the statement of the petitioner-Surendra Kumar Jain under Section 50 of PMLA which reveals that the mediator Rajesh Aggarwal, Chartered Accountant has given cheque to their group/associate companies for buying shares of M/s Jagat Projects Ltd. at a high price, i.e. Premium of ₹ 390/- per share on share of ₹ 10/- each per share with buy back guarantee and later on as per advice/direction of Rajesh Aggarwal, Chartered Accountant those shares were transferred to the companies of the persons/associates of M/s Jagat Projects Ltd. at a nominal price of ₹ 10-12/- per share; that due to this activity of buying shares at premium and selling the same at nominal price, their holding companies have made huge losses in the books of account but in actual the said amount has already been received by their companies in advance against the sale of shares from the beneficiary/mediator Rajesh Aggarwal, Chartered Accountant and all these transaction are duly recorded in books of account of respective companies. 36. Further, out of the 30 companies 26 companies belongs to the petitioner-Surendera Kumar Jain and the aforesaid 26 companies invested a sum of ₹ 62 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mium of ₹ 390/- per share on share of ₹ 10/- each per share each with buy back guarantee, which made them profit of ₹ 1,11,96,000/- through illegal means. 40. Admittedly the complaint was filed against the petitioners on the allegation of committing offence punishable under Section 4 of PMLA which is an Economic offence and need to be visited with a different approach in the matter of bail. The contention made on behalf of the petitioners that no offence is made out against the petitioners under Sections 420/120-B IPC, which is a Schedule Offence under PMLA needs to be considered from the material collected during the investigation and further to be considered by the competent Court and not by this Court at this stage. 41. The Apex Court in Y.S. Jagan Mohan Reddy vs. Central Bureau of Investigation; AIR 2013 SC 1933 has observed as under:- 34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (ii) That the Court must be satisfied that there are reasonable grounds for believing that the accused person is not guilty of such offence and that he is not likely to commit any offence while on bail. 30. The conditions specified Under Section 45 of the PMLA are mandatory and needs to be complied with which is further strengthened by the provisions of Section 65 and also Section 71 of the PMLA. Section 65 requires that the provisions of Code of Criminal Procedure shall apply in so far as they are not inconsistent with the provisions of this Act and Section 71 provides that the provisions of the PMLA shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. PMLA has an overriding effect and the provisions of Code of Criminal Procedure would apply only if they are not inconsistent with the provisions of this Act. Therefore, 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 of Code of Criminal Procedure. That coupled with the provisions of Section 24 provides that unless the contrary is proved, the Author ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
