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TMI Blog2024 (3) TMI 862X X X X Extracts X X X X X X X X Extracts X X X X ..... h Paul Singh, Adv. Ms. Sonali Sharma, Adv. Mr. Kartik Sabarwal, Adv. Mr. Vivek Gaurav, Adv. Mr. Kshitiz Agarwal, Adv. Ms. Ritumbhara Garg, Adv. Mr. Gaurav Sarkar, Adv. Mr. Gaurav Saini, Adv. JUDGMENT BELA M. TRIVEDI, J. 1. Leave granted. 2. All the three appeals arise out of the common impugned judgment and order dated 06.04.2023 passed by the High Court of Delhi at New Delhi, in the Bail Application Nos. 3590 of 2022, 3705 of 2022 and 3710 of 2022, whereby the High Court has rejected all the bail applications of the appellants. 3. Earlier the Special Judge (PC Act) (CBI) -23 (MPs/MLAs cases) vide the separate detailed orders dated 17.11.2022 had rejected the bail applications of all the appellants - accused. FACTUAL MATRIX 4. An FIR being case No.RC-AC-1-2017-A-0005 dated 24th August, 2017 came to be registered at the CBI AC-1, New Delhi against Shri Satyendar Kumar Jain, Minister in the Government of National Capital Territory of Delhi & Others, for the offences under Section 109 IPC and 13(2) read with Section 13(1)(e) of the PC Act, 1988 at the instance of the Dy. Superintendent of Police, CBI who had conducted a Preliminary Enquiry, being PE AC-1-2017-A0003 dated 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recommended appointing his old friend Sh. Jagdish Prasad Mohta, Chartered Accountant as the auditor of Akinchan Developers Pvt. Ltd., Paryas Infosolution Pvt. Ltd., Indo Metalimpex Pvt. Ltd. and Mangalayatan Projects Pvt. Ltd. He (Satyendar Kumar Jain) first approached Sh. Jagdish Prasad Mohta for taking accommodation entries in lieu of cash in his aforesaid four companies. Shri Mohta arranged a meeting between Satyendar Kumar Jain and Rajendra Bansal, Kolkata based accommodation entry provider. In this meeting all the nitty gritties of these entries was finalized like percentage of commission, process of cash transfer, documents to be maintained etc. In this way Satyendar Kumar Jain was the conceptualizer, initiator, and supervisor for the entire operation of these accommodation entries. By taking the accommodation entries in various companies, Satyendar Kumar Jain was hiding behind the Corporate Veil. Investigation into the transactions and facts prove that Satyendar Kumar Jain initiated, managed and controlled the companies in which these accommodations entries were received. Accordingly, the accommodation entries totalling to Rs.4.81 Crore (Rs.4.75 crores as entries + Rs.5.32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and knowingly assisting Satyendar Kumar Jain in projecting his proceeds of crime to the tune of Rs.4,81,16,435/- as untainted in the mode and manner as described in the preceding paragraphs in the present complaint and is therefore, liable for punishment under Section 4 of PMLA. 3. Vaibhav Jain Vaibhav Jain is involved in knowingly assisting Satyendar Kumar Jain by making declaration under IDS, 2016 for declaring undisclosed income of Rs.8.6 crore (including Rs.1,53,61,166/- during check period) for the period from 2010-11 to 2015-16 in order to save Sh. Satyendar Kumar Jain. He also prepared back dated documents with the help of Sunil Kumar Jain, Ankush Jain and Sh. Jagdish Prasad Mohta with regard to his directorship in Akinchan Developers Pvt. Ltd., Indo Metalimpex Pvt. Ltd. and Mangalayatan Projects Pvt. Ltd. by becoming directors of aforesaid companies from back date for showing his IDS declaration as genuine. Vaibhav Jain has thus committed the offence of money laundering as defined under Section 3 of PMLA by being actually involved in and knowingly assisting Satyendar Kumar Jain in projecting his proceeds of crime to the tune of Rs.4,81,16,435/- as untainted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation against the appellant being the beneficial owner had stood refuted. (vii) The alleged proceeds of crime through accommodation entries were directed to the families of Vaibhav Jain and Ankush Jain, and the fresh shares issued to the Kolkata based Shell Companies were promptly transferred to Vaibhav Jain and Ankush Jain during the check period. The appellant therefore was not in possession of any proceeds of crime. (viii) The appellant could not be held to be in constructive possession of the property, if there was no dominion or control of the appellant over the said property. As per the ED's complaint also the appellant was not in possession of the proceeds of crime and therefore also the appellant could not be said to be in constructive possession of the same. (ix) There was no shred of evidence collected by the ED to show that the appellant had provided cash to Kolkata companies during the check period. It was Vaibhav Jain and Ankush Jain who had explained on their Fragrance business as the legitimate source of the cash during their recording of statements under Section 50 of the PMLA. (x) The Kolkata companies and the persons allegedly providing accommodation entri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he courts ought not to conduct mini trial and should consider only the broad probability of the matter. The appellant is not a flight risk, there is no risk of tampering of documents or witnesses. The jail violation as alleged by the ED has not been accepted by the concerned Jail visiting Judge and the Jail authorities. The appellant being sick and infirm, having undergone a spine surgery, is entitled to bail as per the proviso to Section 45 of PMLA. 8. The learned ASG Mr. SV Raju made the following submissions in the appeal preferred by the appellant Shri Satyendar Kumar Jain : (i) It was revealed during the course of investigation that the appellant Satyendar Kumar Jain while posted and functioning as the Minister in the Government of National Capital Territory of Delhi, during the period from 2015 to 2017 had acquired assets in the form of movable and immovable properties in his name and in the name of his family members, which were disproportionate to his known source of income. (ii) During the check period, the accommodation entries against cash of about 4.81 crores was received in the companies - M/s Akinchan Developers Pvt. Ltd., M/s Paryas Infosolutions Pvt. Ltd., M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principle of company being a separate legal entity from its shareholders is an established principle of Company law, the lifting of corporate veil has been upheld in the cases where the corporate structures have been used for committing fraud, economic offences or have been used as a facade or a sham for carrying out illegal activities. (viii) The bogus nature of IDS declarations was substantiated by the fact that the entire amount of Rs.16.50 Crores received as accommodation entry was split between Vaibhav Jain and Ankush Jain. The said declarations showed their modus operandi to shield Satyendar Jain and his family members, and assume the entire liability upon themselves to give it a colour of a tax evasion simplicitor, rather than a criminal activity relating to disproportionate assets. This modus operandi also showed that the appellants themselves had disregarded the corporate entities of these companies. (ix) The disproportionate pecuniary resources earned by the appellant by the commission of scheduled offence, were used as accommodation entries for concealing and layering the tainted origins of the money, and therefore would qualify to be the proceeds of crime as de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id u/s 193 of the said Act by the Income Tax authorities. Hence, the said act of the appellants filing the IDS cannot be construed as basis for levelling charges under Section 3 of PMLA. Reliance is placed on Karnail Singh vs. State of Haryana and Another (1995) Supp (3) SCC 376 for understanding the meaning of "void." (v) It is not made clear by the ED as to the declaration of which IDS, whether the one filed by Vaibhav Jain or that filed by Ankush Jain has led to the assistance of Satyendar Jain for making out the offence under PMLA. Since the allegations are vague, the benefit of the same should go to the accused. In this regard, reliance is placed on Neelu Chopra and Another vs. Bharti (2009) 10 SCC 184 and Myakala Dharmarajam & Ors. Vs. State of Telangana & Anr. (2020) 2 SCC 743. (vi) Since, the generation of proceeds of crime is not an offence under Section 3 of PMLA and the said offence could be committed only after the accomplishment of the Scheduled Offence, the alleged act could not be said to be an offence under Section 3 of PMLA. The act of the appellants assisting Satyendar Jain for accumulating assets as alleged by the CBI, cannot be said to be an offence under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had received proceeds of crime amounting to Rs.69,00,300/- during the check period in the form of accommodation entries from the Kolkata based shell companies. The said appellant-Vaibhav Jain had transferred the land possessed by M/s. Mangalayatan Projects Pvt. Ltd. in the name of his mother Sushila Jain and wife-Swati Jain to frustrate the proceeds of crime. He also took back the shares without consideration from shell companies and thus both the appellants helped Satyendar Kumar Jain in projecting the tainted money as untainted in the process of money laundering. (iii) Both the appellants had made declarations in their individual capacity under the IDS, 2016 for declaring undisclosed income of Rs.8.6 Crores during check period i.e. from 2010- 11 to 2015-16, in order to shield Satyendar Kumar Jain for concealing the true nature of proceeds of crime. (iv) Both the appellants prepared back dated documents with the help of each other and with the help of Sunil Kumar Jain and Jagdish Prasad Mohta for becoming directors in their respective companies i.e. Mr. Ankush Jain in M/s. Akinchan Developers Pvt. Ltd., and M/s. Indo Metalimpex Pvt. Ltd., and Mr. Vaibhav Jain in M/s. Akinchan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business activities were carried out by the said companies and the shares were purchased at a very high premium. (xi) The investigation revealed that the cash acquired by Satyendar Jain was given to the Kolkata entry operators for the purpose of accommodation entries contemporaneously during the check period as and when they were acquired and thereafter the same were concealed and projected as untainted and sought to be laundered in the form of share application money. The said amount was also used for repayment of loan and purchase of agricultural lands by the said companies. (xii) Though the CBI in their chargesheet dated 03.12.2018 filed in FIR No. RC-AC-I-2017-A 0005 (dated 24.08.2017) had quantified the proceeds of crime to be Rs.1,47,60,497.67, in view of the investigation conducted under PMLA it was established that all the companies were beneficially owned and controlled by Satyendar Jain, and the amount of Rs.4,81,16,435/- received during the check period was the proceeds of crime in the hands of Satyendar Jain. The said conclusion along with the facts underlying the same, have also been conveyed to the CBI under Section 66(2) of PMLA vide the letter dated 31.03.2022. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess or activity as mentioned in Section 3 of PMLA. Therefore, ED could not have increased the proceeds of crime beyond what was taken as disproportionate assets by the CBI i.e. 1,47,60,497/-. She further submitted that as per the FIR, the figure mentioned was Rs. 1,53,61,166/-, during the arguments and as per the written submissions the figure mentioned was Rs. 4,81,16,435/-, and the figure mentioned as per the affidavit is Rs.4,65,99,635/- which does not find mention in the complaint. Thus, the allegations made against the appellants being vague in nature, the benefit should go to the appellants. ANALYSIS : 13. We are well conscious of the fact that the chargesheet has already been filed in the predicate offence on 03.12.2018 for the offences under the Prevention of Corruption Act allegedly committed by the present appellants alongwith others, and the cognizance thereof has already been taken by the concerned Court. The Prosecution Complaint has also been filed by the respondent - ED against the present appellants alongwith others for the commission of the offence of Money laundering as defined under Section 3 read with Section 70 punishable under Section 4 of PMLA 2002. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill have to be tested on its own merits and not in reference to the reasons weighed with this Court in declaring the provision, (as it existed at the relevant time), applicable only to offences punishable for a term of imprisonment of more than three years under Part A of the Schedule to the 2002 Act. Now, the provision (Section 45) including twin conditions would apply to the offence(s) under the 2002 Act itself. The provision post 2018 amendment, is in the nature of no bail in relation to the offence of money-laundering unless the twin conditions are fulfilled. The twin conditions are that there are reasonable grounds for believing that the accused is not guilty of offence of money-laundering and that he is not likely to commit any offence while on bail. Considering the purposes and objects of the legislation in the form of 2002 Act and the background in which it had been enacted owing to the commitment made to the international bodies and on their recommendations, it is plainly clear that it is a special legislation to deal with the subject of money-laundering activities having transnational impact on the financial systems including sovereignty and integrity of the countries. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... understanding of the scheme of the 2002 Act. As we have repeatedly mentioned in the earlier part of this judgment that the offence of money-laundering is one wherein a person, directly or indirectly, attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime. The fact that the proceeds of crime have been generated as a result of criminal activity relating to a scheduled offence, which incidentally happens to be a non-cognizable offence, would make no difference. The person is not prosecuted for the scheduled offence by invoking provisions of the 2002 Act, but only when he has derived or obtained property as a result of criminal activity relating to or in relation to a scheduled offence and then indulges in process or activity connected with such proceeds of crime. Suffice it to observe that the argument under consideration is completely misplaced and needs to be rejected." 16. In the light of the aforestated position of law propounded by the three Judge Bench, we have prima facie examined the case alleged against the appellants and the prima facie defense put forth by the appellants, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parate independent declarations under IDS 2016 for declaring undisclosed income of Rs.8.26 crores for period from 2010-11 to 2015-16 in order to protect Satyendar Kumar Jain. As per the case of ED, the appellants Ankush Jain and Vaibhav Jain had prepared ante dated documents with the help of Sunil Kumar Jain and Jagdish Prasad Mohta with regard to the Directorship in Akinchan Developers Pvt. Ltd. Paryas Infosolution Pvt. Ltd., Indo Metalimpex Pvt. Ltd., and Mangalayatan Projects Pvt. Ltd. by becoming the Directors of the said companies from the back date for showing their IDS declarations as genuine. Thus, the said appellants have also committed the offence of money laundering as defined under Section 3 of PMLA by being actually involved in and knowingly assisting Satyendar Kumar Jain in projecting his proceeds of crime to the tune of Rs.4,81,16,435/- as untainted in the mode and manner stated in the Prosecution Complaint. 19. It was vehemently argued by the Learned Senior Advocate Mr. Singhvi, for the appellant Satyendar Jain that there was gross discrepancy in the amount of proceeds of crime calculated by the ED in the Prosecution Complaint and in the amount with regard to dispr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 (1)(v) (v) "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, wherever located; Explanation. --For the removal of doubts, it is hereby clarified that the term property includes property of any kind used in the commission of an offence under this Act or any of the scheduled offences; Section 3 Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds 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. Explanation. --For the removal of doubts, it is hereby clarified that, -- (i) a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree Judge Bench has held that the statements of witnesses recorded by Prosecution - ED are admissible in evidence in view of Section 50. Such statements may make out a formidable case about the involvement of the accused in the commission of the offence of money laundering. 23. Again, the three Judge Bench in Vijay Madanlal Choudhary (supra) while examining the validity of the provisions contained in Section 50 held as under: - 431. In the context of the 2002 Act, it must be remembered that the summon is issued by the Authority under Section 50 in connection with the inquiry regarding proceeds of crime which may have been attached and pending adjudication before the Adjudicating Authority. In respect of such action, the designated officials have been empowered to summon any person for collection of information and evidence to be presented before the Adjudicating Authority. It is not necessarily for initiating a prosecution against the noticee as such. The power entrusted to the designated officials under this Act, though couched as investigation in real sense, is to undertake inquiry to ascertain relevant facts to facilitate initiation of or pursuing with an action regarding pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptualizer, initiator and supervisor of the accommodation entries totalling to Rs.4.81 Crores approximately, which were received from the Kolkata based entry operators in the Bank accounts of the said four companies. Shri J.P. Mohta in his statement had stated inter alia that Mr. Satyendar Jain had informed him in June/July, 2010 that he wanted to get investment/accommodation entries in his companies against cash payment and therefore he introduced Mr. Jain with his friend Mr. Rajendra Bansal who was in the business of providing accommodation entries against cash. Mr. Rajendra Bansal in his statement under Section 50 had stated in detail as to how his companies provided accommodation entries to the four companies owned/controlled by Satyendar Jain from 2010-11 to 2015-16 against cash. Mr. Rajender Bansal had also stated that the cash was being received from Satyendar Kumar Jain/Jagdish Prasad Mohta at Kolkata through Hawala operators, and he used to pass on the address of Hawala operators to the other entry operators namely Jivendra Mishra and Abhishek Chokhani for collecting cash after taking token from them. He used to arrange entries for the companies of Satyendar Kumar Jain as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note that the appellants- Vaibhav Jain and Ankush Jain had sought to avail of the Income Declaration Scheme, 2016 (IDS) by filing separate declarations under Section 183 of the Finance Act, 2016 in Form-I on 27.09.2016, in which both of the said appellants had individually declared an income of Rs.8,26,91,750/- as investments in shares of various companies in the assessment years 2011-12, 2012-13 and 2016-17. The Principal Commissioner, Income Tax (IV), New Delhi vide the order dated 09.06.2017 passed under Section 183 of the Finance Act, 2016 held that the said declaration of income of Rs.8,26,91,750/- by each of the appellants- Vaibhav Jain and Ankush Jain was made "by suppression and misrepresentation of facts", and therefore they were "void". It is further pertinent to note that the said order of PCIT was based on the report submitted by the ACIT, Special Range (IV) dated 07.06.2017 with regard to the assessment proceedings in case of M/s. Akinchan Developers Pvt. Ltd., M/s. Indo Metalimpex Pvt. Ltd., M/s. Paryas Infosolution Pvt. Ltd. ,and Mr. Satyendar Kumar Jain. It was noted in the said report inter alia that the said companies had taken accommodation entries in the form of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of all material facts." 27. The said order of the High Court was challenged by the appellants- Ankush Jain and Vaibhav Jain before the Supreme Court by filing Special Leave Petitions being SLP(C)Nos. 27522 of 2019 and 27610 of 2019, however they came to be dismissed vide the order dated 29.11.2019. 28. From the above stated facts there remains no shadow of doubt that the appellant- Satyendar Kumar Jain had conceptualized idea of accommodation entries against cash and was responsible for the accommodation entries totalling to Rs. 4.81 crores (approx.) received through the Kolkata based entry operators in the bank accounts of the four companies i.e. M/s. Akinchan Developers Pvt. Ltd., M/s. Paryas Infosolution Pvt. Ltd., M/s. Indo Metalimpex Pvt. Ltd. and M/s. Mangalayatan Projects Pvt. Ltd., by paying cash and the said companies were controlled and owned by him and his family. Though it is true that a company is a separate legal entity from its shareholders and directors, the lifting of corporate veil is permissible when such corporate structures have been used for committing fraud or economic offences or have been used as a facade or a sham for carrying out illegal activities. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said submission. We are satisfied from the explanation put forth in the affidavit filed on behalf of the respondent-ED that it was only an inadvertent mistake in mentioning the figure Rs.1,53,61,166/- in the bracketed portion, which figure was shown by the CBI in its chargesheet. The said inadvertent mistake has no significance in the case alleged against the appellants in the proceedings under the PMLA. 32. From the totality of facts and circumstances of the case, it is not possible to hold that appellants had complied with the twin mandatory conditions laid down in Section 45 of PMLA. The High Court also in the impugned judgment after discussing the material on record had prima facie found the appellants guilty of the alleged offences under the PMLA, which judgment does not suffer from any illegality or infirmity. 33. The appellants were released on bail for temporary period after their arrest and the appellant-Satyendar Kumar Jain was released on bail on medical ground on 30.05.2022, which has continued till this day. He shall now surrender forthwith before the Special Court. It is needless to say that right to speedy trial and access to justice is a valuable right enshrin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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