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TMI Blog2024 (5) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... she was not shown as accused in the scheduled/predicate office. In any case, since the present applicant has been granted pardon in the scheduled/predicate offences, the evidence sought to be given at his instance in those proceedings cannot be used for the purposes of present proceedings under the PMLA. Even in the scheduled/predicate offence the status of the present applicant remains as a witness subject to his full and complete disclosure in terms of the Section 308 of the CrPC - This Court agrees with the judgment given by the learned Single-Judge of Allahabad High Court in Mohan Lal Rathi [ 2023 (9) TMI 1069 - ALLAHABAD HIGH COURT] , that the grant of pardon would bring an accused in the category of witness however, the same, as pointed out hereinabove, is subject to certain conditions enshrined under Sections 306 and 307 of the CrPC and cannot be considered as absolute absolvement in the predicate offence. The Hon ble Supreme Court in Vijay Madanlal Choudhary has held that the Court at the stage of grant of bail is expected to consider the issue as to whether the accused had requisite mens rea . It was further observed by the Hon ble Supreme Court that the Court is not requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een filed. The applicant has been in judicial custody since 25.08.2022 and has undergone incarceration for approximately one year and nine months. It is also not disputed that the applicant has been granted bail in the predicate/scheduled offence apart from the fact that he has now become an approver. It is a matter of record that the applicant had joined investigation as and when directed by the Investigating Officer till he was arrested in the present ECIR. The applicant is directed to be released on bail upon his furnishing a personal bond in the sum of Rs. 50,000/- alongwith two sureties of like amount to the satisfaction of the learned Trial Court/Link Court, further subject to the conditions imposed - application allowed. - HON'BLE MR. JUSTICE AMIT SHARMA For the Applicant Through: Mr. Siddharth Agarwal, Sr. Adv. with Mr. Malak Bhatt, Ms. Neeha Nagpal, Ms. Arshia Ghose, Ms. Smridhi Mr. Ayush Shrivastava, Advs. For the Respondent Through: Mr. Zoheb Hossain, Spl. Counsel for ED with Mr. Vivek Gurnani Mr. Kartik Sabharwal, Advocates. JUDGMENT AMIT SHARMA, J. 1. The present application under Section 439 of the Code of Criminal Procedure, 1973 (for short, CrPC ) read with Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 27.08.2022 and has been in judicial custody since then. The role of the present applicant as alleged in the complaint is that he was nephew of accused Amar Chand Gupta (A-2), who was promoter and director of M/s SBBEL and in connivance with the latter; he had played an instrumental role in opening of various firms on papers. It is alleged that in furtherance of the criminal conspiracy, the present applicant induced indigent people to open up paper firms at his behest. It is alleged that the said paper firms were dummy entities and were involved in bogus sales and purchases with M/s SBBEL. It is alleged that the present applicant was responsible for laundering of money at the behest and in furtherance of conspiracy with the co-accused persons to an amount of almost Rs. 50 Crore. SUBMISSIONS ON BEHALF OF THE APPLICANT 5. Learned Senior Counsel appearing on behalf of the applicant submits that M/s SBBEL was heading a group of 8 companies. It was submitted that CBI had registered 8 RCs and accordingly, 8 ECIRs were registered by Enforcement Directorate. After completion of investigation one complaint was filed with respect to 7 ECIRs and one separate complaint was filed in the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agrawal Through Parokar v. Directorate of Enforcement, BAIL APPLN. 1762/2022 decided on 29.05.2023 by a Co-ordinate Bench of this Court; v. Ashish Mittal v. SFIO, BAIL APPLN. 251/2023 decided on 03.05.2023 by a Co-ordinate Bench of this Court; vi. Pavana Dibbur v. Directorate of Enforcement, 2023 SCC OnLine SC 1586; vii. Jai Narayan Sharma v. Asst. Director, Directorate of Enforcement, Order dated 05.09.2023 in Criminal Appeal No. 2726/2023 (Arising out of S.L.P. (Crl.) No. 11287/2023); viii. Benoy Babu v. Directorate of Enforcement, Order dated 08.12.2023 in S.L.P. (Crl.) No. 11644-11645/2023; ix. Sanjay Agarwal v. Directorate of Enforcement, 2022 SCC OnLine SC 1748; x. Union of India v. K.A. Najeeb, (2021) 3 SCC 713; xi. Raman Bhuraria v. Directorate of Enforcement, BAIL APPLN. 4330/2021 decided on 08.02.2023 by a Co-ordinate Bench of this Court; xii. Ramesh Manglani v. Directorate of Enforcement, BAIL APPLN. 3611/2022 decided on 30.05.2023 by a Co-ordinate Bench of this Court; xiii. Chandra Prakash Khandelwal v. Directorate of Enforcement, BAIL APPLN. 2470/2022 decided on 23.02.2023 by a Co-ordinate Bench of this Court; xiv. Dr. Bindu Rana v. SFIO, BAIL APPLN. 3643/2022 decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured to open bogus firms to provide entries to M/s SBBEL through the present applicant. It was further argued that the present applicant in his statement under Section 50 of the PMLA Act had also admitted the fact that he had opened the firms and the accounts at the behest of accused Amar Chand Gupta (A-2). It was argued that modus operandi adopted by accused no. 1 company M/s SBBEL was that the bogus business entities under its control was projecting circular movement of funds under the garb of bogus sale and bogus purchase with the intention to siphoning off the bank fund and simultaneously to enhance its bogus turn over as well. 9. Finally, it was submitted that the present applicant knowingly assisted in the commission of crime of money laundering by accommodating bogus sale and bogus purchase of M/s SBBEL through his firms. It was alleged that M/s Munshi Ram and Sons, of which the present applicant was a proprietor, had accommodated bogus sale to the tune of Rs. 9,40,67,750/-. Similarly, the other proprietorship firm of the present applicant namely, M/s Kansal Enterprises had accommodated bogus sale to the tune of Rs. 10,02,55,323/- and paper purchase to the tune of Rs. 3,25,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Kumar Jain v. Directorate of Enforcement, Order dated 27.02.2023 in SLP (Crl.) 9656/2022; xii. Bimal Kumar Jain v. Directorate of Enforcement, Order dated 04.01.2022 in SLP (Crl.) 7942/2021; xiii. Raj Singh Gehlot v. Directorate of Enforcement, Order dated 31.05.2022 in SLP (Crl.) 4761/2022; xiv. Gautam Thapar v. Directorate of Enforcement, BAIL APPLN. 4185/2021, decided on 02.03.2022 by a Coordinate Bench of this Court: 2022:DHC:799; C. Witness in Predicate Offence can be made an accused in PMLA i. State of Bombay v. Kathi Kalu Oghad, 1961 SCC Online SC 74; ii. Ramanlal Bhogilal Shah v. D.K. Guha, (1973) 1 SCC 696; iii. Laxmipat Choraria v. State of Maharashtra, 1967 SCC Online SC 30; iv. Mohan Lal Rathi v. Union of India Through Directorate of Enforcement, Zonal Office, LKo, And Another., 2023: AHC-LKO:59826; v. Mohan Lal Rathi v. Union of India Anr., Order dated 28.11.2023 in SLP (Crl.) No. 12870/2023. vi. Tarun Kumar v. Assistant Director Directorate of Enforcement, 2023 INSC 1006. REJOINDER ON BEHALF OF THE APPLICANT 11. Learned Senior Counsel by way of rejoinder submitted that the scheduled/predicate offences are directly related to offences under the PMLA and the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) a Special Court may, *** upon a complaint made by an authority authorised in this behalf under this Act take cognizance of offence under section 3, without the accused being committed to it for trial; Provided that after conclusion of investigation, if no offence of money-laundering is made out requiring filing of such complaint, the said authority shall submit a closure report before the Special Court; or (c) if the court which has taken cognizance of the scheduled offence is other than the Special Court which has taken cognizance of the complaint of the offence of money-laundering under sub-clause (b), it shall, on an application by the authority authorised to file a complaint under this Act, commit the case relating to the scheduled offence to the Special Court and the Special Court shall, on receipt of such case proceed to deal with it from the stage at which it is committed. (d) a Special Court while trying the scheduled offence or the offence of money-laundering shall hold trial in accordance with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974) as it applies to a trial before a Court of Session. Explanation. For the removal of doubts, it is clarified that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court will first deal with the issue, whether the fact that the applicant has become an approver in the predicate offence in the present ECIR would have any bearing in the proceedings under the PMLA. The contention of the learned Senior Counsel for the applicant is that once a person becomes an approver then, he is given a pardon in the said case and becomes a witness to the prosecution subject to conditions mentioned in the order granting him pardon. It was further contented that once such a pardon is granted, the applicant in the predicate offence stands discharged and, therefore, the following observation of the Hon ble Supreme Court in Vijay Madanlal Choudhary (supra) gets attracted: - 253. Tersely put, it is only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. The authorities under the 2002 Act cannot resort to action against any person for money-laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pendin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion derived or obtained is indicative of criminal activity relating to a scheduled offence already accomplished. Similarly, in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the criminal case (scheduled offence) against him/her, there can be no action for money-laundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence. This interpretation alone can be countenanced on the basis of the provisions of the 2002 Act, in particular Section 2(1)(u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of definition clause proceeds of crime , as it obtains as of now. (underline supplied) 16. In paragraphs 269 and 270, this Court held thus: 269. From the bare language of Section 3 of the 2002 Act, it is amply clear that the offence of money-laundering is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the PMLA, on its plain reading, an offence under Section 3 can be committed after a scheduled offence is committed. For example, let us take the case of a person who is unconnected with the scheduled offence, knowingly assists the concealment of the proceeds of crime or knowingly assists the use of proceeds of crime. In that case, he can be held guilty of committing an offence under Section 3 of the PMLA. To give a concrete example, the offences under Sections 384 to 389 of the IPC relating to extortion are scheduled offences included in Paragraph 1 of the Schedule to the PMLA. An accused may commit a crime of extortion covered by Sections 384 to 389 of IPC and extort money. Subsequently, a person unconnected with the offence of extortion may assist the said accused in the concealment of the proceeds of extortion. In such a case, the person who assists the accused in the scheduled offence for concealing the proceeds of the crime of extortion can be guilty of the offence of money laundering. Therefore, it is not necessary that a person against whom the offence under Section 3 of the PMLA is alleged must have been shown as the accused in the scheduled offence. What is held in par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the scheduled offence against him used by the Hon ble Supreme Court in Vijay Madanlal Chaudhary (Supra). The pardon granted under Section 306 Cr.P.C. to a person in a scheduled offence would not ipso facto result in his acquittal in the offence under the PMLA, unless, of course, the accused person seeks pardon in the case under PMLA also by making a full and true disclosure of the whole of the circumstances within his knowledge relative to the offence under PMLA also. SLP against the said judgment has been dismissed as withdrawn by Hon ble Supreme Court vide order dated 28.11.2023 in SLP (Crl.) No. 12870/2023. 19. In any case, since the present applicant has been granted pardon in the scheduled/predicate offences, the evidence sought to be given at his instance in those proceedings cannot be used for the purposes of present proceedings under the PMLA. Even in the scheduled/predicate offence the status of the present applicant remains as a witness subject to his full and complete disclosure in terms of the Section 308 of the CrPC. This Court agrees with the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s provision have stated that the Court at the stage of considering the application for grant of bail, is expected to consider the question from the angle as to whether the accused was possessed of the requisite mens rea. The Court is not required to record a positive finding that the accused had not committed an offence under the Act. The Court ought to maintain a delicate balance between a judgment of acquittal and conviction and an order granting bail much before commencement of trial. The duty of the Court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. Further, the Court is required to record a finding as to the possibility of the accused committing a crime which is an offence under the Act after grant of bail. **** **** **** 400. It is important to note that the twin conditions provided under Section 45 of the 2002 Act, though restrict the right of the accused to grant of bail, but it cannot be said that the conditions provided under Section 45 impose absolute restraint on the grant of bail. The discretion vests in the Court which is not arbitrary or irrational but judicial, guided by the principles of law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bearing on the merit of the case and the trial court would, thus, be free to decide the case on the basis of evidence adduced at the trial, without in any manner being prejudiced thereby (emphasis supplied) 401. We are in agreement with the observation made by the Court in Ranjitsing Brahmajeetsing Sharma. The Court while dealing with the application for grant of bail need not delve deep into the merits of the case and only a view of the Court based on available material on record is required. The Court will not weigh the evidence to find the guilt of the accused which is, of course, the work of Trial Court. The Court is only required to place its view based on probability on the basis of reasonable material collected during investigation and the said view will not be taken into consideration by the Trial Court in recording its finding of the guilt or acquittal during trial which is based on the evidence adduced during the trial. As explained by this Court in Nimmagadda Prasad, the words used in Section 45 of the 2002 Act are reasonable grounds for believing which means the Court has to see only if there is a genuine case against the accused and the prosecution is not required to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the broad probabilities, though undoubtedly the probative value of the statement(s) of the witnesses and their credibility or reliability, will be analyzed by the trial court only at the stage of trial for arriving at a conclusive finding apropos the guilt of the applicant. 25. In the present case, admittedly the applicant was not a key managerial personnel and was not holding any designation in M/s SBBEL which would indicate that he was responsible or in-charge of running day-to-day affairs of the said company. The thrust of allegation in the prosecution complaint is that the present applicant was involved in creating paper companies by allegedly inducing indigent persons in order to show sham sale and purchase of goods thereby diverting the loan amount received by the said company. The case of the prosecution qua the present applicant as recorded in the complaint in paragraph no. 11.5 is as under: - Sanjay Kansal is the proprietor of M/s Munshi Ram Sons and M/s Kansal Enterprises. He has knowingly assisted in the crime of money laundering by accommodating bogus sale and paper purchase from M/s SBBEL through his firms. It has transpired that M/s Munshi Ram Sons had accommodated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has stated that Shri Amar Chand Gupta is his maternal uncle and he had worked with him from 1990 to 1999 and thereafter, from 2012 till 2017. He has stated that he was handling the cheque and cash transactions of all entities of Shri Amar Chand Gupta, Shri Ram Lal Gupta, Shri Raj Kumar Gupta, as per their instructions and was drawing a salary of Rs. 20,000/- cash per month from the period extending from 2012 to 2017. It is pertinent to note that in none of these statements relied upon by the respondent in the complaint has the applicant stated that he was having the knowledge of the fact that the money which was allegedly being siphoned off through the paper companies was from the loan taken by M/s SBBEL. The applicant, like the other proprietors of the paper entities, have given the statement that all these transactions were being done on commission basis of 50 paise per quintal (out of Re. 1 per quintal) with some entities and on a fixed commission on monthly basis ranging between Rs. 7,000/- to Rs. 20,000/- with other entities. In the statements relied upon by prosecution, applicant has stated that all the actions taken by him were on the instructions of Shri Amar Chand Gupta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce which can be attributed to the petitioner. 29. Learned Special Counsel for the ED has relied on a judgment of Hon ble Supreme Court in Tarun Kumar (supra) to demonstrate that the appellant therein while not being named in the FIR or in the first three prosecution complaints was implicated on the basis of the statement under Section 50 of the PMLA. It is noted that the appellant, therein, was Vice President of Purchases and thus, in the said capacity was responsible for the day-to-day operations of the said company. It is further noted that the Hon ble Supreme Court has further observed that the role of the appellant, therein, was also made out from the financials, where direct loan funds were siphoned to other sister concerns of the said company where the appellant, therein, was either a shareholder or a director. It was further observed that the appellant, therein, was a beneficiary of the proceeds of crime. As pointed out hereinabove, applicant herein, admittedly, was neither holding any Key Managerial Position in the company, M/s SBBEL, nor any other executive post. As per the statements relied upon by the prosecution, the applicant was a field boy and was working on the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chand in cash. Therefore, there are conclusive and cogent evidence that Shri Naresh Kumar was directly indulged in the process of concealment of proceeds of crime. Admittedly, the aforesaid persons amongst many others have not been arrested by the ED in the present case. At this stage, it is apposite to refer to the observation made by a Co-ordinate Bench of this Court in Sanjay Jain (supra) wherein it has been observed as under:- 94. There is merit in the contention of the learned Senior Counsel for the petitioner that non-arrest of co-accused is a relevant factor which can be taken into account in addition to other surrounding factors to grant the concession of bail to the petitioner. Reference in this regard may be had to the judgment of this Court in Dr. Bindu Rana vs. Serious Fraud Investigation Office in BAIL APPLN. 3643/2022 dated 20.01.2023, wherein it was held as under: 45. The fact is that the complaint has been filed by the SFIO without feeling the need of any custody of the 53 out of 55 accused persons. The main accused even as per the SFIO has not been arrested, being protected by the order passed by this Court in Writ Petition (Criminal) No. 1242 of 2022. The said wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inion of this Court, the applicant has been able to make out a case under Section 45 of the PMLA. Apart from the above, complaint in the present has been filed. The applicant has been in judicial custody since 25.08.2022 and has undergone incarceration for approximately one year and nine months. It is also not disputed that the applicant has been granted bail in the predicate/scheduled offence apart from the fact that he has now become an approver. It is a matter of record that the applicant had joined investigation as and when directed by the Investigating Officer till he was arrested in the present ECIR. 32. In totality of the facts and circumstances of the case, the application is allowed. The applicant is directed to be released on bail upon his furnishing a personal bond in the sum of Rs. 50,000/- alongwith two sureties of like amount to the satisfaction of the learned Trial Court/Link Court, further subject to the following conditions: i. The memo of parties shows that the applicant is residing at A-1/63-B, Keshav Puram, Onkar Nagar, North West Delhi 110035. In case of any change of address, the applicant is directed to inform the same to the learned Trial Court and the Inves ..... X X X X Extracts X X X X X X X X Extracts X X X X
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