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TMI Blog2024 (6) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... rsons under Section 24 of the 2002 Act. The offence of money laundering as per Section 3 not only relates to generation of such proceeds of crime but it also includes any activity directly or indirectly relating to concealment or possession or acquisition or use amongst others. The said definition is very wide and inclusive, thus, the fact that directly or indirectly if any person is in possession or use of such proceeds of crime whether directly or indirectly, knowingly assists or knowingly is a party or actually involved in any activity connected with proceeds of crime relating to concealment possession acquisition or use or projecting the property as untainted property or claiming as untainted property in any manner whatsoever would be liable for any offence under the PMLA. In the instant case from the perusal of the complaint and the material brought on record, it reflects prima facie involvement of the applicant. Even though, this Court is conscious of the fact that at this stage a mini trial is not be held nor the court is required to enter into the merits or the depth of the evidence to return a finding of guilt, but what is required of the Court is to prima facie consider t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ekanga Infrastructure Pvt. Ltd, Hariom Construction, Yash Enterprises, A. K. Enterprises and Baseera Construction are involved in dealing with Proceeds of Crime which were generated by M/s Shine City and its directors. 5. It is further alleged that the applicant could not explain the transactions and movement of funds especially as it was shown that about rupees 7.68 crores had been received in the accounts of his above mentioned firms over a period of five years and majority of the large transaction of such money has been received primarily from one source i.e. from M/s Shine City. 6. It has further been alleged that the applicant has helped M/s Shine City in purchasing properties and it has not been satisfactorily explained as to how and why such huge transaction of money was transacted between M/s Shine City and the present applicant. The explanation as given by the applicant allegedly did not inspire confidence and that the applicant is said to be in actual possession of proceeds of crime which has been used by him and it has been attempted to project the proceeds of crime as untainted money by layering the same. 7. Learned counsel for the applicant has submitted that the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prietorship firm of the applicant and its deals with supply of construction goods and most of the supply was made to M/s Shine City. His other firm Yash Enterprises was again established in the year 2016 of which the applicant is the proprietor and through this firm, the applicant was supplying material for civil construction and in this case, major supplies have been made to M/s Shine City. 15. His other firm A. K. Enterprises is again a proprietorship firm created in the 2016 and this firm also deal in supplying material for civil construction and has made supplies mostly to M/s Shine City. The firm Baseera Construction again established in 2016 as a proprietorship was used to supply material for civil construction and in this case also majority of supplies have been made to M/s Shine City. 16. The applicant further indicated that apart from the business income he earned rupees ten lakh a year from agriculture. He also earned rupees one crore per year from dealing with property, rupees thirty lakh per year earned from consultancy relating to documentation for real estate deals and rupees 3.5 crores was received as commission. 17. The applicant purchased various movable propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld out from where he also earned, hence it cannot be said that the money in the hands of the applicant are the proceeds of crime rather it is his business earnings. 22. It is also urged that this is the sole reason why the applicant has not been named in any of the predicate offence despite numerous FIRs filed. The applicant has brokered and received commission and helped M/s Shine City acquire land from the farmers. However, it does not prove any complicity of the applicant. It is further urged that none of the seller of land to M/s Shine City have come forward to make any allegation against the applicant. 23. Learned counsel for the applicant further submits that it may be that M/s Shine City and its director and office bearer may appear to have been involved in alluring investors and home buyers but that does not lead to any complicity of the applicant inasmuch as the business deals of the applicant is quite different from the transactions or deal between the aggrieved home buyers/investors and the company M/s Shine City, hence one cannot be used inter-changely with the other, to implicate the applicant. 24. It has further been submitted that even though the applicant had giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which could prima facie establish the justification and nexus between large amount of money said to have been received by the applicant, from M/s Shine City, with the supplies as well as for the construction work done. Hence, the submissions of the counsel for the applicant does not merit consideration. 30. During investigation, it was found that a total sum of rupees 7.80 crores were received by the applicant in his different bank accounts, this amount was also utilized by the applicant to purchase an of immovable property in Lucknow which was earlier in the name of M/s Shine City. Upon further investigation, it was also found that in the books of account of M/s Shine City, the amount paid to the applicant has been shown as advance for land and not for the construction work which allegedly as per the applicant was done by him. 31. There was no justification or explanation regarding the payment of high brokerage and this clearly indicated the complicity that the applicant was assisting the prime accused in money laundering and the proceeds of crime have been projected to be untainted by layering it through the accounts of the applicant, in such circumstances, the applicant is pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connected with proceeds of crime, namely:- (a) concealment, or (b) possession; or (c) acquisition; or (d) use; or (e) projecting as untainted property; or (f) claiming as untainted property, in any manner whatsoever; (ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever] 4. Punishment for money-laundering:- Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a terms 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 involve 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. 36. In so far as the issue regardi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out warrant, subject to the fulfillment of conditions under Section 19 and subject to the conditions enshrined under this section.] 37. Having taken a glance at the aforesaid statutory provisions it now will be worthwhile to notice certain decisions of the Apex Court on the issue of the offence of money laundering and the approach of courts while dealing with an application for bail. 38. The Apex Court in Rohit Tandon v. Directorate of Enforcement, (2018) 11 SCC 46 has held as under:- "19. The sweep of Section 45 of the 2002 Act is no more res intergra. In a recent decision of this Court in Gautam Kundu v. Directorate of Enforcement (2015) 16 SCC 1, this Court has had an occasion to examine it in paras 28-30. It will be useful to advert to paras 28 to 30 of this decision which read thus : (SCC pp. 14-15) "28. Before dealing with the application for bail on merit, it is to be considered whether the provisions of Section 45 of PMLA are binding on the High Court while considering the application for bail under Section 439 of the Code of Criminal Procedure. There is no doubt that PMLA deals with the offence of money laundering and Parliament has enacted this law as per commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gautam Kundu case, SCC p. 16) "34. … We have noted that Section 45 of PMLA will have overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them. As mentioned earlier, Section 45 of PMLA imposes two conditions for grant of bail, specified under the said Act. We have not missed the proviso to Section 45 of the said Act which indicates that the legislature has carved out an exception for grant of bail by a Special Court when any person is under the age of 16 years or is a woman or is sick or infirm. Therefore, there is no doubt that the conditions laid down under Section 45-A of PMLA, would bind the High Court as the provisions of special law having overriding effect on the provisions of Section 439 of the Code of Criminal Procedure for grant of bail to any person accused of committing offence punishable under Section 4 of PMLA, even when the application for bail is considered under Section 439 of the Code of Criminal Procedure." The decisions of this Court in Subrata Chattoraj v. Union of India (2014) 8 SCC 768, Y.S. Jagan Mohan Reddy v. CBI (2013) 7 SCC 439 and Union of India v. Hassan Ali Khan (2011) 10 SCC 235 have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o new currency has been acquired by him. The prosecution is relying on statements of 26 witnesses/accused already recorded, out of which 7 were considered by the Delhi High Court. These statements are admissible in evidence, in view of Section 50 of the 2002 Act. The same makes out a formidable case about the involvement of the appellant in commission of a serious offence of money laundering. It is, therefore, not possible for us to record satisfaction that there are reasonable grounds for believing that the appellant is not guilty of such offence. Further, the courts below have justly adverted to the antecedents of the appellant for considering the prayer for bail and concluded that it is not possible to hold that the appellant is not likely to commit any offence ascribable to the 2002 Act while on bail. Since the threshold stipulation predicated in Section 45 has not been overcome, the question of considering the efficacy of other points urged by the appellant to persuade the Court to favour the appellant with the relief of regular bail will be of no avail. In other words, the fact that the investigation in the predicate offence instituted in terms of FIR No. 205/2016 or that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence. The process or activity can be in any form -- be it one of concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so. Thus, involvement in any one of such process or activity connected with the proceeds of crime would constitute offence of money-laundering. This offence otherwise has nothing to do with the criminal activity relating to a scheduled offence -- except the proceeds of crime derived or obtained as a result of that crime. ---------******--------******------****** 295. As aforesaid, in this backdrop the amendment Act 2 of 2013 came into being. Considering the purport of the amended provisions and the experience of implementing/enforcement agencies, further changes became necessary to strengthen the mechanism regarding prevention of money-laundering. It is not right in assuming that the attachment of property (provisional) under the second proviso, as amended, has no link with the scheduled offen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided in the 2002 Act for prevention of money-laundering and combating menace of money-laundering, including for attachment and confiscation of proceeds of crime and to prosecute persons involved in the process or activity connected with the proceeds of crime. In view of the gravity of the fallout of money-laundering activities having transnational impact, a special procedural law for prevention and regulation, including to prosecute the person involved, has been enacted, grouping the offenders involved in the process or activity connected with the proceeds of crime as a separate class from ordinary criminals. The offence of money-laundering has been regarded as an aggravated form of crime "world over". It is, therefore, a separate class of offence requiring effective and stringent measures to combat the menace of money-laundering. ---------******--------******------****** 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court while granting or refusing bail undoubtedly would be tentative in nature, which may not have any 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 (2013) 7 SCC 466 the words used in Section 45 of the 2002 Act are "reasonable grounds for believing" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 45 of PML Act will have to be complied with even in respect of an application for bail made under Section 439 Cr. P.C. in view of the overriding effect given to the PML Act over the other law for the time being in force, under Section 71 of the PML Act." 42. Again, the Apex Court in Pavana Dibbur v. Enforcement Directorate, 2023 SCC OnLine SC 1586 has held as under:- 15. The condition precedent for the existence of proceeds of crime is the existence of a scheduled offence. On this aspect, it is necessary to refer to the decision of this Court in the case of Vijay Madanlal Choudhary. In paragraph 253 of the said decision, this Court held thus: "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 pending inquiry by way of complaint before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d been notified as scheduled offence for the purpose of the 2002 Act, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, may be liable to be prosecuted for offence of money- laundering under the 2002 Act -- for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in trenches until fully exhausted. The offence of money- laundering is not dependent on or linked to the date on which the scheduled offence or if we may say so the predicate offence has been committed. The relevant date is the date on which the person indulges in the process or activity connected with such proceeds of crime. These ingredients are intrinsic in the original provision (Section 3, as amended until 2013 and were in force till 31.7.2019); and the same has been merely explained and clarified by way of Explanation vide Finance (No. 2) Act, 2019. Thus understood, inclusion of Clause (ii) in Explanation inserted in 2019 is of no consequence as it does not alter or enlarge the scope of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst property cannot be said to have any connection with the proceeds of the crime as the acts constituting scheduled offence were committed after the property was acquired; d. The issue of whether the appellant has used tainted money forming part of the proceeds of crime for acquiring the second property can be decided only at the time of trial; and e. The offence punishable under Section 120-B of the IPC will become a scheduled offence only if the conspiracy alleged is of committing an offence which is specifically included in the Schedule. 43. Having examined the statutory provisions as well as the dictum of the Apex Court in the aforesaid mentioned decisions and applying the principles as laid therein to the facts of the instant case. The position as obtained, prima facie, is as under:- (i) Apparently, the record reflects that the applicant has six business firms and almost all the firms have come in existence some time in and around the year 2016 and onwards. The private limited company, namely Baseera Niwas Pvt. Ltd., Ekanga Infrastructure Pvt. Ltd., are closely held companies comprising of the applicant and his wife. Hariom Construction, Yash Enterprises, A. K. Enterpr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly or indirectly if any person is in possession or use of such proceeds of crime whether directly or indirectly, knowingly assists or knowingly is a party or actually involved in any activity connected with proceeds of crime relating to concealment possession acquisition or use or projecting the property as untainted property or claiming as untainted property in any manner whatsoever would be liable for any offence under the PMLA. 47. In the instant case from the perusal of the complaint and the material brought on record, it reflects prima facie involvement of the applicant. Even though, this Court is conscious of the fact that at this stage a mini trial is not be held nor the court is required to enter into the merits or the depth of the evidence to return a finding of guilt, but what is required of the Court is to prima facie consider the material available on record to enable the court to satisfy itself in order to enable it to form reasonable belief that the applicant is not guilty of the offence and that he is not likely to commit any offence on bail which is one of the condition as enshrined in Section 45 of the PMLA. 48. While forming such satisfaction, the Court is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f real estate brokerage. The generation of wealth by the applicant and his firms from 2016 on wards in various parts of the country such as a shop and a flat in Mumbai, 19 shops in Surat, number of four wheelers and purchase of a property from M/s Shine City only through business transaction from a select few customers of which M/s Shine City is the 'prominent golden goose' for the applicant and coupled with the fact that the said statements given to the Enforcement Directorate are at variance with the accounts statements of M/s Shine City. The meteoric rise of the applicant and his firms in business with the business aid, encouragement and boost from mainly M/s Shine City indicates prima facie complicity of the applicant. 53. Thus taking an overall view including the gravity of offence including the fact that the witnesses of fact are yet to be examined also keeping in mind the dictum of the Apex Court in Pavana Dibbur (supra) and for all the reasons aforesaid, this Court is unable to persuade itself to form a, prima facie, satisfaction in terms of Section 45 of the PMLA, at this stage, that the applicant is not guilty or that he may not commit an offence on bail. Thus, f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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