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TMI Blog2024 (7) TMI 1517X X X X Extracts X X X X X X X X Extracts X X X X ..... pirits as a wholesaler, in which Sh. Sharath Chandra Reddy of M/s Aurbindo Group, Sh. Buchibabu, Sh. Sameer Mahendru, Sh. Arun R. Pillai, Sh. Abhishek Boinpally, etc. were present. In view of the material collected by the investigating agency, this Court is of the opinion that Smt. K. Kavitha was prima facie one of the main conspirators in the criminal conspiracy hatched in relation to formulation and implementation of Delhi Excise Policy 2021-22. Material Collected by Directorate of Enforcement Against the Applicant Smt. K. Kavitha - HELD THAT:- This Court is of the opinion that Smt. K. Kavitha was prima facie involved in payment of kickbacks, establishing M/s Indo Spirit for recoupment of kickbacks, and in various other processes and activities relating to proceeds of crime, and thus, in commission of offence of money laundering as defined under Section 3 of PMLA, for the purpose of appreciating as to whether the twin condition under Section 45 PMLA are met or not and to arrive at a decision as to whether there was material collected by the investigating agencies against the present applicant. Whether the statements of approvers and witnesses should be disregarded at the stage of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant is not guilty of the offence of money laundering, at this stage for the purpose of deciding the bail application. To conclude, the twin conditions under Section 45 of PMLA are not fulfilled in the present case, so as to entitle the applicant to grant of bail in case registered by Directorate of Enforcement. Whether the Applicant Fulfils the Triple Test for Grant of Bail? - HELD THAT:- As far as triple test for grant of bail is concerned, this Court notes that during the course of investigation, the applicant had presented nine mobile phones for examination on 21.03.2023 before the Directorate of Enforcement, which were found to be formatted with no data. She had denied formatting the devices and had informed the investigating agency that the said phones belonging to her were given by her to her household staff and other staff and that she had got them back for the purpose of handing over to the investigating agency - this Court is also of the opinion that many of the crucial witnesses in this case are either close associates or employees of the present applicant, and since it is the case of applicant herself that she is a well-accomplished woman and holds position of eminence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ......................................................................... 17 I. EVIDENCE AGAINST THE PRESENT APPLICANT................................................. 17 Material Collected by Central Bureau of Investigation Against the Applicant Ms. K. Kavitha . 17 Material Collected by Directorate of Enforcement Against the Applicant Smt. K. Kavitha....... 20 II. WHETHER THE STATEMENTS OF APPROVERS WITNESSES SHOULD BE DISREGARDED AT THE STAGE OF BAIL?............................................................ 24 III. WHETHER THE APPLICANT IS ENTITLED TO GRANT OF BAIL AT THIS STAGE? 30 Section 45 of PMLA: The Twin Test.................................................................................... 31 Whether the Applicant Fulfils Twin Test under Section 45 of PMLA?.................................... 34 Whether the Applicant Fulfils the Triple Test for Grant of Bail?............................................. 35 IV. WHETHER THE APPLICANT IS ENTITLED TO BENEFIT OF PROVISO TO SECTION 45 OF PMLA BEING A WOMAN? ................................................................ 36 Applicant is an accomplished and well-educated woman ................................................ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by CBI on 25.04.2023 before the learned Trial Court. Thereafter, second supplementary charge sheet had also been filed on 08.07.2023 before the learned Trial Court whereby the CBI had arrayed more accused persons. 5. During the course of further investigation, CBI on 20.02.2024 had issued notice to Smt. K. Kavitha under Section 41A of Cr.P.C. for joining the investigation on 26.02.2024, but as alleged, she did not join the investigation and thus, she could not be examined by the CBI. Subsequently, the applicant Smt. K. Kavitha was arrested by the Directorate of Enforcement in case no. ECIR/HIU-II/14/2022 on 15.03.2024. Thereafter, CBI had sought permission from the learned Trial Court to examine/interrogate her as she was in judicial custody in the Directorate of Enforcement case and had then interrogated her in judicial custody on 06.04.2024. Further, during the investigation by the CBI, it had been revealed that the accused/applicant Smt. K Kavitha was a partner in M/s. Indo Spirits (L-1 Wholesaler) through her proxy i.e., co-accused Sh. Arun Ramchandran Pillai. Further, Smt. K Kavitha had been arrested by the CBI on 11.04.2024 for her active involvement in the Delhi liquor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the applicant, submits that it is undisputed that the CBI had registered the present RC in August, 2022. On 11.12.2022, the CBI had issued a notice under Section 160 of Cr.P.C. to the applicant Smt. K Kavitha, who was then merely a witness. It is fervently argued that the CBI had examined the applicant at her residence for many hours on the said date, but the applicant was never arrayed as an accused. However, on 20.02.2024, i.e. after about one year, CBI had served notice under Section 41A of Cr.P.C. to the applicant. Learned Senior Counsel further argues that it is astonishing that from the bare perusal of the remand application filed by the CBI seeking custodial interrogation of Smt. K. Kavitha, it can be observed that the custody had been sought based on the material collected during the investigation conducted between December 2022 and July 2023. However, the present applicant had been arrested in April 2024, immediately before the Lok Sabha Elections 2024. Thus, the timing of the arrest of the present applicant/accused is questionable. 8. It is further argued that there has been a grave violation of the applicant s fundamental rights, as Article 21 of the Constitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k Boinpally, Buchi Babu, Arvind Kumar Singh, and Chanpreet Singh have been granted bail by the Hon ble Special Court. Thus, the applicant be enlarged on bail in the CBI case. Arguments qua the case registered by Directorate of Enforcement 12. Sh. Vikram Chaudhri, learned Senior Counsel for the applicant argues that as far as the case of the Directorate of Enforcement is concerned, it is apparent that the arrest of the applicant was effected on the ground that she is not cooperating with the investigating agency and concealing true facts even after being confronted with the evidence. Reliance has been placed on the judgment of the Hon ble Supreme Court in the case of Pankaj Bansal v. Union of India 2023 SCC OnLine SC 1244 to argue that the arrest of the applicant was illegal and improper and it is further argued that the Directorate of Enforcement could not have expected an admission of guilt from the applicant and the so-called non-cooperation in investigation is also not a ground for effecting her arrest. 13. It is argued that there is no evidence of any money trail connecting the applicant with the present case and that the Directorate of Enforcement has made inferences on its ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC OnLine Del 3176. 16. Sh. Vikram Chaudhri, learned Senior Counsel for the applicant argues that the retracted statements cannot be relied upon even at this stage, by the prosecution. It is argued that there is no evidence of destruction of evidence and the allegations are unfounded and malicious. Further as far as the allegations that the applicant did not provide her mobile phone for investigation is concerned, it is submitted that until 07.03.2023, she was not asked to produce any mobile phone. As far as the phones which were used by the applicant in the past two years is concerned, they had been distributed by her to her staff members and when she had asked them to return the phones to her, as they were to be handed over to the Directorate of Enforcement, they were returned to her and she had handed-over the same to Directorate of Enforcement with representation on 21.03.2023. It is also argued that the argument of Directorate of Enforcement that certain phones were formatted between 11.03.2024 and 21.03.2024 is misplaced as she was not in possession of these phones when they were allegedly formatted as they were given back to her by her staff members who in order to safeguard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicant cannot be compared with that of the co-accused who have been admitted to bail. It is further urged that considering her strong influence and political clout also, the applicant cannot claim parity with the coaccused who have been admitted on bail. 21. Learned SPP for the CBI further relies on decisions in case of Y.S. Jaganmohan v. Central Bureau of Investigation (2013) 7 SCC 439; Nimmagadda Prasad v. Central Bureau of Investigation, (2013) 7 SCC 466 and State of Gujarat v. Mohanlal Jitamalji Porwal and Anr. (1987) 2 SCC 364 and argues that the present case being that of an economic offence, stands on a different footing from other cases and considering the deep rooted and multi layered conspiracy in the present case, no ground for bail is made out. 22. It is also stated that at the time of interrogation when the application was allowed for permission to interrogate or arrest the accused, she has no right to be heard. It is also stated that incriminating evidence collected so far by the investigating agency necessitated the arrest of the present applicant by CBI as she was already in custody in a connected case ECIR/HIU-II/14/2022 and was lodged in Tihar Jail. It is sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the arrest of the petitioner, which was done after following due process of law. It is also argued that on the basis of investigation conducted so far and the statements and other material collected, there is reason to believe that she is guilty of money laundering. 25. It is also argued that the witnesses and approvers in this case have clearly defined the role of the applicant, the manner in which the conspiracy was hatched, the place where the key conspirators had met in Delhi, the understanding between the present applicant and the co-accused persons, the place of such meetings as well as the chats retrieved in the present case between the co-accused(s) are sufficient to conclude that she is involved in the offence of money laundering. The attention of this Court has been drawn towards the contents of the reply and it is submitted that the detailed role of the applicant in commission of offence has been clearly outlined in the reply. It is therefore argued that the present bail application is liable to be rejected as it does not pass the test of Section 45 of the PMLA. It is also stated that the statement of the approvers and the statements under Section 50 of the PMLA are ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstallments to the associates of Ms. K. Kavitha i.e. Sh. Buchi Babu and Sh. Abhishek Boinpally in June 2021. This resulted in the Sh. Magunta S. Reddy s son, Sh. Raghav Magunta acquiring a 32.5% partnership in the wholesale liquor firm M/s Indo Spirits. This is also evident from the statement of Sh. Raghav Magunta recorded under Section 164 of Cr.P.C. 29. Further, statements by Sh. Dinesh Arora, who has turned approver recorded under Section 161, 164 and 306 of Cr.P.C. confirmed payments of Rs. 90-100 crores from the South Group to Sh. Vijay Nair, with Rs. 30 crores transferred by Sh. Abhishek Boinpally through Sh. Dinesh Arora via hawala channels for Aam Aadmi Party's campaign in Goa. One Sh. Ashok Kaushik, the Personal Assistant of Ms. K. Kavitha has confirmed in his statements recorded under Section 161 and 164 of Cr.P.C. about the delivery of Rs. 25 crores through hawala channels, which is also corroborated by Call Detail Records and statements of the concerned hawala operators. 30. Evidence in the form of chats retrieved from the mobile phone of Sh. Buchi babu have revealed that Ms. K. Kavitha s partnership in M/s Indo Spirits, through her proxy Sh. Arun R. Pillai, as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sh. Gopi Kumaram (staff of Sh. Raghav Magunta), Sh. Sarath Reddy (of South Group), Sh. Buchi Babu (CA of Smt K. Kavitha), and Sh. Dinesh Arora, recorded under Section 50 of PMLA. The details regarding the meeting of Sh. Magunta S. Reddy with Sh. Arvind Kejriwal, and with Smt. K. Kavitha, payment of Rs. 25 crores by Sh. Raghav Magunta to Sh. Buchi Babu and Sh. Abhishek Boinpally, etc., as revealed from some of these statements, have already been discussed in the preceding paragraphs. Further, during the course of investigation, upon examining the data of mobile phone of Sh. Buchi Babu i.e. CA of Smt K. Kavitha, certain portions of the report of Group of Ministers were found in his mobile phone, two days before the said report was submitted by the GoM members to the Council of Ministers in Delhi. As alleged, these excerpts of the policy were received by him due to his access and connection with co-accused Sh. Vijay Nair who was acting on behalf of Sh. Manish Sisodia. 35. Moreover, Sh. Sarath Reddy had disclosed in his statement recorded under Section 50 of PMLA that in March 2021, Sh. Arun Pillai had informed him about a lucrative opportunity in the Delhi liquor business, and that S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utors had been increased from 5% to 12% under the new policy, M/s Indo Spirits had earned a total profit of Rs. 193 crores within a span of 10 months, which has been termed as proceeds of crime by the Directorate of Enforcement. 38. The Directorate of Enforcement, in its reply, has also spelt out the role of applicant Smt. K. Kavitha with respect to proceeds of crime, in detail and has referred to statements of various witnesses and the investigation conducted by it. Though detailed appreciation of the same is not necessary at this stage, an overview of the same would reveal that the personal assistant and associate of Smt. K Kavitha had disclosed about collecting two heavy bags containing cash from the office of Sh. Dinesh Arora, on instructions of Sh. Abhishek Boinpally, and delivering it to Sh. Vinod Chauhan, and Sh. Vinod Chauhan had then transferred the same for election campaign of AAP in Goa through hawala channels. Investigation has also revealed that Sh. Arun Pillai had received about Rs. 32.86 crores in his account, from the profits of M/s Indo Spirits, and out of this amount, Sh. Arun Pillai had paid Rs. 5 crores to one M/s Creative Developers for purchasing a property, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the offence of money laundering. The relevant observations of the Hon'ble Apex Court are as under: 31. ...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 Act of 2002. 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 43. These observations were reiterated by the Hon ble Apex Court in case of Tarun Kumar v. Enforcement Directorate 2023 SCC OnLine SC 1486. 44. As far as statements of approvers are concerned, the same have been recorded under Section 164 of Cr.P.C. before a Judicial Magistrate. In case of Arvind Kejriwal v. Enforcement Directorate 2024 SCC OnLine Del 2685, this Court has made the following observations on the reliability of statements of approvers at the stage of arrest, etc: 88. This Court therefore holds that, the contents of above paragraph would lead to a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, sans the same, there will be no incriminating material to record satisfaction of the Court under Section 45 of PMLA, this Court deems it appropriate to observed that in criminal jurisprudence, journey of a criminal case goes to the following stages before its culmination into filing of report under Section 173 of Cr.P.C. or filing of a complaint as the case may be as under PMLA: ● Filing of complaint with the investigating agency. ● Preliminary enquiry into the allegations. ● Registration of FIR or RC or ECIR, as the case may be under different statutory laws. ● Investigation by examining the complainant and witnesses who may have knowledge about the case or who are alleged to be a part of the conspiracy. ● Analyzing the digital evidence, wherever available. ● Analyzing documentary and other material recovered during investigation. ● Arresting the accused persons, if necessary or deemed appropriate, as per provisions of law and judicial precedents ● Filing of chargesheet or prosecution complaints, as the case may be. 46. Recording of statements of witnesses, complainant, and in many cases an accused turning approver and his stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject bail to the accused. 48. Learned Senior Counsel for the applicant has also argued, at length, that the arrest of the applicant in the present case by the respondents was mala fide, illegal and there was no necessity to arrest her at the time when she was arrested. However, this Court is of the opinion that the issues regarding legality of arrest of the applicant, the timing of arrest, necessity of arrest, etc. have already been raised by the applicant in the petitions challenging arrest by the respondents. The petition wherein arrest by Directorate of Enforcement has been challenged is pending before the Hon ble Apex Court and the petitioner challenging the legality of arrest by CBI is pending before the Roster bench of this Court. 49. Therefore, this Court is of the opinion that the present bail applications have to be decided on the basis of facts and material collected by the investigating agencies and the contentions regarding grant of bail raised by the learned defence counsels in light of the law and the judicial precedents. The contentions regarding the legality, timing and necessity of arrest are subject matters of different writ petitions pending before the Hon ble Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. This is not an ordinary offence. To deal with such serious offence, stringent measures are provided 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 invol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the PML Act over the other law for the time being in force, under Section 71 of the PML Act. (emphasis supplied) 55. This Court, in case of Manish Sisodia v. Enforcement Directorate 2024 SCC OnLine Del 3731, has observed as under, on the scope of Section 45 of PMLA: 96. At the stage of considering the bail application of a person, who is accused of committing the offence of money laundering under PMLA, the Court is not required to conduct a mini-trial to establish his guilt as provided under Section 45. Instead, the Court's role is to scrutinize the material on record to determine whether there are reasonable grounds to believe that the accused is guilty of the offence under PMLA. The focus is on prima-facie assessing the evidence available at this stage, to decide if it justifies either the continuation of custody or the grant of bail, without delving into a detailed examination of the merits of the case or making definitive findings of fact. Whether the Applicant Fulfils Twin Test under Section 45 of PMLA? 56. As noted above, one of the conditions for satisfaction of twin test under Section 45 of PMLA is that the Court has to arrive at a conclusion, by taking a prima facie v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, considering this conduct of the applicant, this Court at this stage cannot rule out the possibility of her tampering with evidence if released on bail, moreso since investigation in the present case has yet not been fully concluded. Furthermore, this Court is also of the opinion that many of the crucial witnesses in this case are either close associates or employees of the present applicant, and since it is the case of applicant herself that she is a well-accomplished woman and holds position of eminence in the field of politics, the possibility of influencing witnesses cannot also be ruled out at this stage. Thus, this Court is of the opinion that the applicant herein does not fulfill the triple test for grant of bail. 59. The investigation in the present case is at a crucial stage and the final chargesheets/prosecution complaints are yet to be filed when the bail application was heard, and charges are also yet to be framed. IV. WHETHER THE APPLICANT IS ENTITLED TO BENEFIT OF PROVISO TO SECTION 45 OF PMLA BEING A WOMAN? 60. One of the contentions raised by the learned Senior Counsel for the applicant is that the applicant herein, being a woman, is entitled to the benefit of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 years. No doubt the courts need to be more sensitive and sympathetic towards the category of persons included in the first proviso to Section 45 and similar provisions in the other Acts, as the persons of tender age and women who are likely to be more vulnerable, may sometimes be misused by the unscrupulous elements and made scapegoats for committing such Crimes, nonetheless, the courts also should not be oblivious to the fact that nowadays the educated and well placed women in the society engage themselves in the commercial ventures and enterprises, and advertently or inadvertently engage themselves in the illegal activities. In essence, the courts should exercise the discretion judiciously using their prudence, while granting the benefit of the first proviso to Section 45 PMLA to the category of persons mentioned therein. The extent of involvement of the persons falling in such category in the alleged offences, the nature of evidence collected by the investigating agency etc., would be material considerations. (emphasis supplied) 64. Thus, the Hon ble Supreme Court has observed that though the Courts should be sensitive and sympathetic to the vulnerable groups such as women, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slative Council, etc., this Court is bound to keep in mind the observations of the Hon ble Apex Court in case of Saumya Chaurasia (supra). The material collected by the Directorate of Enforcement, which has been discussed in the preceding paragraphs has pointed out that the applicant herein was one of the chief conspirators in the entire conspiracy relating to formulation and implementation of new Excise Policy of Delhi. In fact, some other accused persons were working on behalf of the applicant and as per her instructions, as noted in the preceding discussion. 68. Thus, Smt. K. Kavitha cannot be equated to a vulnerable woman who may have been misused to commit an offence, which is the class of women for whom the proviso to Section 45 of PMLA has been incorporated, as held by the Hon ble Apex Court in case of Saumya Chaurasia (supra). Accordingly, this Court is of the considered opinion that Smt. K. Kavitha is not entitled to the benefit of proviso to Section 45 of PMLA. V. THE DECISION 69. For the reasons recorded in the aforesaid discussion, this Court is of the view that no case for grant of regular bail in RC0032022A0053 and ECIR/HIU-II/14/2022 is made out at this stage. 70. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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