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TMI Blog2021 (12) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... at statement of Chartered Accountant Mr. Upendra G. Muley, Aurangabad prima-facie indicates the conduct of the applicant. It cannot be ignored that, once the said C.A. refused to go ahead with the plot of the applicant and Ms. Bhawana Gawali, his office was attacked and report thereof was lodged at Mukundwadi Police Station, Aurangabad. It cannot be ignored that, some of the documents were procured from the office of Assistant Charity Commissioner and all this was done to materialize the connivance with a goal of money laundering - Considering the conduct of the applicant and the investigation is still pending, if he is released on bail certainly there is every possibility that he would take law in his hands to mould the prosecution case as per their goal. Once the applicant is released on bail, both of them are likely to take fate of the case in their hands by frustrating all the efforts of the ED. Certainly, none of the parameters including tripod test prescribed under Sec.439 of Cr.P.C. is applicable to the case of the applicant. It has to be noted that, if the application is allowed there will be no safe trial - even if the rigors of twin conditions under Sec. 45 of PML Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/2021. On 12.05.2020 M.P. Ms. Bhawanatai Gawli lodged FIR No.0389 at Risod Police Station, Dist. Washim, against 12 persons. Offence under Ss.406, 408, 420, 34 of I.P.C. was registered against all 12 accused therein. In the said FIR it was alleged that, 12 accused persons mentioned therein committed fraud and misappropriation of ₹ 18,18,40,867/- by cheating the Mahila Utkarsh Pratishthan. Subsequently, accused therein challenged the said FIR before the Hon'ble Bombay High Court, bench at Nagpur. In the meantime, ED suspected money laundering. Offence under Sec.420 of I.P.C. is scheduled under Prevention of Money Laundering Act, 2002 (hereinafter referred to as 'PML Act'), ED registered ECIR/MBZO-I/78/2021 and investigated the same. 5. In the investigation it was revealed that, Mahila Utkarsh Pratishthan was a Public Charitable Trust registered on 27.11.1998 under the Bombay Public Trust Act. M.P. Ms. Bhawana Pundalikrao Gawli was its President and Mr. Ashok Gandole was her Personal Assistant. There were many bank accounts of the said Trust. The said Trust runs 24 educational institutions. During November, 2019 to January, 2020 the said Trust was converted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this way all accused were found involved in the offence of money laundering. These are the facts. 7. GROUNDS CLAIM FOR BAIL. (a) In view of law laid down in Nikesh Tarachand Shah, (2018 )11 SCC 1 by the Hon'ble Supreme Court which is followed in Sameer Bhujbal Vs. Enforcement Directorate by the Hon'ble Bombay High Court and followed in same spirit by this Court while granting bail to Ranjeet Bindra, Kapil Wadhawan etc. rigors of Section 45 (2) of PMLA are of no consequences while seeking bail. (b) Applicant is not an accused in the scheduled offence. (c) ED has no jurisdiction to investigate the scheduled offence. ED has jurisdiction to investigate only the offence under PMLA and officers are authorized for the purpose of conducting investigation under PMLA only. (d) Applicant was pressurized in the ED custody to attribute culpable role to first informant in scheduled offence. (e) Applicant has appeared in response to summons of ED on various occasions. His statement was recorded. He has rendered full cooperation in the investigation. There was absolutely no need to arrest him. Yet, he was arrested by violating procedure established by law. (f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor a part of dispute between Ms. Bhawana Gawali and Mr. Ashok Gandole. (h) ED has no jurisdiction to investigate. Even if it is assumed that, ED has jurisdiction, yet whatever alleged is a clear money and not tainted. (i) Contention of ED is about forged documents, when forgery is not scheduled offence. (j) Conversion of the Trust into Company under Sec.8 of the Companies Act cannot be termed as an offence. (k) ECIR is a counter-blast to the FIR No.0389/2020 lodged by Ms. Bhawan Gawali against 11 persons and the ECIR is on the basis of false allegation. These are the main points in the argument of Ld. Sr. Counsel Mr. Abad Ponda. 8. Ld. S.P.P Mr. Sunil Gonsalves submitted that, 24 institutions used to pay the Trust and all such payments were in cash. This fact is reflected in the statements of account. All that what has been done is nothing except generation of proceeds of crime and money laundering in the guise of conversion of Trust to company and project tainted money as untainted. Applicant is a material link in all this process, hence there is strong prima-facie case against him. There is abundant material to show his involvement in the process of money laund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ques are also used. Hence, money laundering is a serious threat. It has devastating consequences for the financial system. 11. It is necessary to refer the concept of proceeds of crime and true purport of Sec. 3 of PML Act. Sec. 2(1)(u) of PML Act defines 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 such property It is further clarified by way of Explanation that proceeds of crime include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. Sec. 2(1)(v) of PML Act defines property means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, where located. Similarly, Sec. 2(1)(p) of PML Act defines money laundering has the meaning assigned to it in Sec.3. 12. Sec.3 of PML Act deals with the offence of money laund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. Therefore, the argument as such of Ld. Sr. Counsel Mr. Ponda is not justified. 15. Ld. Sr. Counsel Mr. Abad Ponda further argued that, whatever done while converting Trust into a company is legally permissible under Sec.8 of Companies Act. Careful reading of Sec.8 of Companies Act indicates that, it relates to formation of companies with charitable object. Sub-Section (1)(a) thereof indicates various objects like promotion of commerce, arts, science, sports, research etc. (b) when the company intends to apply its profit, if any, or other income in promoting its objects and (c) intends to prohibit the payment of any dividend to its members. Therefore it is clear that, all such objects should be basically legal, acknowledged at law and should be achieved by legal means. If a company is being established on the basis of tainted funds of charitable trust to project them untainted, the same is nothing but frustrating the object of Company Law. Exactly the same situation is involved in this case which will be discussed afterwards. Therefore, this argument of Ld. Sr. Counsel Mr. Ponda is not justified. 16. Ld. Sr. Counsel Mr. Abad Ponda further cited Income-tax Returns for Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of conversion process. If this argument is accepted, how amount of ₹ 1 Crore got withdrawn from the account of company ? This speaks volumes. All this prima-facie indicates that, Trust money was siphoned for laundering the same and bring it under control of applicant and Ms. Bhawana Gawli. These monies are nothing but proceeds of crime as defined under Sec.2(1)(u) of PML Act. This transfer of money is a clear proof which is sufficient at this stage to hold that, proceeds of crime are generated, layered and travelled to the company. 19. Records further indicates that, the present applicant pretended that, he had taken cash ₹ 3,58,00,000/- from Deepak Prajapati for purchasing the said property. But this fact is not supported by evidence and the evidence indicates something different that it is the applicant who had given ₹ 3.5 Crore out of ₹ 7 Crore to Deepak Prajapati and Deepak Prajapati again gave the same to the applicant for purchasing property. Hence, there is a clear case to hold that black money rather tainted monies are tried to be projected as untainted by way of such transactions. Records further indicate that, the property which is not in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll which he filed on 17.09.2019, after she had signed and digitally approved the same as well on the IT site. He also met the officials of the Trust and got their signatures on the closure agreement dt.28.09.2019 at the instance of Ms. Bhawana Gawali and draft copy of the closure agreement which she had mailed him. He further stated that, he was asked to finalize the account of the said Trust for the year 2018-19. Mr. Saeed Khan and Ms. Bhawana Gawali insisted him to alter the financial and incorporate entries to the tune of ₹ 25 Crore (approximately) by showing the said amount to be as big siphoned off by Mr. Ashok Gandole and others. He refused to do the same when applicant Saeed Khan and his goons assaulted and pressurized him to accept their fraudulent demand, but he denied the same and also denied the said assignment. 22. He further stated that on 13.10.2019 there were serious attack took place at his office and the goons came at his place. They wanted to fabricate audited statement with all their desired adjustments and figures. However, he denied all assignments as such and filed detailed complaint against Ms. Bhawana Gawali, applicant Saeed Khan and his goons on 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bound to attend in person. Section 50 (4) clearly indicates that every proceedings under sub-Sections (2) and (3) of Section 50 shall be deemed to be judicial proceedings within the meaning of Section 193 and Section 228 of the I.P.C.as held by The Hon ble High Court in Shri Vijay Narendra Kumar Kothari Vs. Directorate of Enforcement (Bail application No.2109 of 2019, decided on November 29, 2019). 25. These statements can be seen at this very preliminary stage of bail and also can be relied upon while deciding the fate of bail application. These are not only the statements but there is abundant material which prima-facie corroborates the statements referred above. It is argument of Ld. Sr. Counsel Mr. Ponda that, there is Income-tax record about ₹ 20 Lac and ₹ 40 Lac. Acknowledgment receipts are also there. Interest has been paid and the same are at page No.129 to 131. Further, provisions under Income-tax Act are not scheduled offence nor ED can investigate it. Scheduled offence does not relate to amount of ₹ 7 Crore. Even if Chartered Accountant says about misappropriation, neither the same nor Sec.511 of I.P.C. are scheduled offences etc. 26. I have care ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d his reliance on Sushila Aggarwal and Others Vs. State (NCT Of Delhi) And Anr.(2020) 5 SCC 1, wherein the Hon'ble Supreme Court referred Gurbaksh Singh Sibbia Vs. State of Punjab, (1980) 2 SCC 565, and held that, the narrow, instructed interpretation of Sec.438 was not warranted. It is also held that, if anticipatory bail can be given, certainly bail can be given. Ld. Sr. Counsel Mr. Ponda further placed his reliance on Gurucharan Singh And Others Vs. State (Delhi Administration), [(1978) 1 SCC 118 wherein the Hon'ble Supreme Court held as, In other non-bailable cases the Court will exercise its judicial discretion in favour of granting bail subject to sub-section (3) of Section 437, Cr.P.C. if it deems necessary to act under it. Unless exceptional circumstances are brought to the notice of the Court which may defeat proper investigation and a fair trial, the Court will not decline to grant bail to a person who is not accused of an offence punishable with death or imprisonment for life. 29. On the basis of these main authorities Ld. Sr. Counsel Mr. Abad Ponda firstly argued that, twin conditions under Sec.45 of PML Act being struck down, will have no eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of Sec. 45 of PML Act r.w. Sec.439 of Cr.P.C. 32. It is necessary to note role of the present applicant. I have already noted above various documents and the statements recorded under Sec.50(2) and (3) of PML Act. Role of the applicant from the voluminous documents prima-facie indicates that, he was instrumental in conversion of the Mahila Utkarsh Pratishthan Trust into Sec.8 company under the Companies Act, 2013 by submitting forged/fake documents with Regisrar of Companies, Mumbai. Further, by gaining the control of the trust, applicant Saeed Khan, being Director and one of the controlling persons of the newly incorporated company, diverted and siphoned off funds received by various educational institutions of the said Trust by withdrawal of cash from the accounts of the institutions under the trust and transfer of amounts from account of Trust to own accounts. The applicant used the cash received from Mahila Utkarsh Pratishthan to purchase a property. Applicant is, thus, involved in money laundering as defined under Sec.3 r.w. Sec.2 (1)(u) of PML Act and there is glaring satisfactory evidence against him even at this stage. In this way he is active participant in generati ..... 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