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TMI Blog2024 (9) TMI 1551X X X X Extracts X X X X X X X X Extracts X X X X ..... 21 dated 18.05.2021, No. 1/2021 dated 18.05.2021, and No. 19/2021 dated 20.05.2021 by the Uttarakhand Police for the commission of offences under Section 420 of the IPC and under Sections 66C & 66D of the IT Act. It was also informed that FIR No. 141/2021 dated 29.05.2021 was registered by the Special Cell, Delhi Police, against unknown persons for the commission of offences under Sections 419, 420, 468, 471, 34, and 120-B of the IPC and Section 66D of the IT Act. FIR No. 8/2021 dated 01.06.2021 was registered for the commission of offences under Section 420 of the IPC and Section 66D of the IT Act by the CID, Cybercrime PS, Karnataka State Police, regarding similar cases of cheating and fraud nationwide, amounting to approximately Rs. 250-300 crores. 3. The preliminary investigation revealed that this was a case of large-scale money laundering, wherein public money was looted through apps such as Power Bank App, Tesla Power Bank App, Ezplan, etc., by luring people with the promise of doubling their money in a short period. Initially, the public received 10-15% of the deposited amount as interest; however, after some time, they stopped receiving any money, and the executives of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cryptocurrencies. 5. During the course of the investigation, the ICICI Bank accounts of M/s. Diyabati Technology Pvt Ltd (Account No. 244605500362), M/s. Maojaza Technologies Private Ltd (Account No. 244605500407), and M/s. Sumyth Technologies Private Ltd (Account No. 244605500408) (first-layer shell entities) were analyzed. This analysis revealed that substantial funds received in these accounts were subsequently transferred to various other bank accounts, including the IndusInd Bank accounts of M/s. Akash Corporation (Account No. 259023954406) and M/s. Haresh Corporation (Account No. 201004377970) (second-layer entities). The ED's investigation also uncovered that these funds were further layered and laundered through additional accounts, including the ICICI Bank account of M/s. Sagar Diamonds Ltd. (Account No. 123805005479) and the IndusInd Bank account of M/s. Patel Rushabh & Co. (Account No. 201007176105) (third-layer entities). It was submitted that M/s. Sagar Diamonds Ltd. further transferred these funds either to its own SBI account (Account No. 039392347980) for outward remittances under the guise of imports or to the IDFC Bank account (Account No. 100055588628) and SB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g him to travel frequently to Dubai under the guise of employment as a Sales Executive at Gems Star Trading FZE, based in Ajman, UAE. Furthermore, it was found that M/s. Sagar Diamonds Ltd. had made outward remittances of approximately Rs. 12 crores during May 2021 to Gems Star Trading FZE under the pretext of payments for diamond imports, indicating the respondent's involvement in transactions executed abroad. 8. The respondent was arrested on 19.09.2022 at 23.40 hours at New Delhi. 9. Vide the impugned order dated 19.10.2022, learned Sessions Judge after noting the submissions of the parties and the relevant laws, admitted the respondent on bail on the following terms; A. There is no reference in the response/reply of the ED regarding any connection of respondent or his company with shell companies like M/s. Diyabati Technology Pvt Ltd, M/s. Maojaza Technology Pvt Ltd, M/s. Sumyth Technologies Pvt Ltd, etc. (first layer entities). B. There is no evidence shown on the record reflecting any connection of respondent with M/s. Akash Corporation, M/s. Haresh Corporation, M/s. Balaji Traders, M/s. Dynamic Fab World, M/s. Jitender Enterprises, etc. (second layer entities) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RHC Global Exports Pvt Ltd and M/s. Sagar Diamonds Ltd, it is noticed that M/s. Sagar Diamonds Ltd has received funds to the tune of approx. Rs.160 crores from M/s. Akash Corporation, M/s. Haresh Corporation and M/s. Patel Rushabh & Co. during the scam period i.e. from November, 2020 to June, 2021 and therefore the observation of he learned Trial Court that there is no material on the record to connect the "fourth layer entities" concerning to the respondent with the first and second layer entitites is wrong on the face of it. In this regard ED has also submitted that M/s. RHC Global Exports Pvt Ltd has shown purchases of approx. Rs.40.20 crores from M/s. Akash Corporation during the period from November, 2020 to March, 2021. (ii) The bail is also liable to the cancelled as the respondent in his statements recorded u/s 50 of the PMLA, falsely stated that he does not know any Mr. Akash Panchal (M/s. Akash Corporation), Mr. Rushabh Patel (M/s. Patel Rushabh & Co.) and Mr. Haresh Panchal (M/s. Haresh Corporation) whereas the whatsapp chats of Mr.Saurin Shah another Director in M/s. Sagar Diamonds Ltd on 05.09.2022, indicates that Mr. Vaibhav Shah & Mr. Saurin Shah are in contact wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1987) 2 SCC 364], Anil Kumar Yadav v. State (NCT of Delhi),(2018) 12 SCC 129 Sunil Dahiya v. State (Govt. of NCT of Delhi), 2016 SCC OnLine Del 5566. 10. It is pertinent to mention here that after filing of the bail applications, certain orders came to be passed by this Bench regarding the modification of the terms and conditions of the bail. However, it is not disputed that the respondent has not violated any condition of the bail. 11. The respondent in its counter affidavit denied all the averments and submitted that well reasoned order for bail has been passed. It has been submitted that the respondent had appeared the ED as and when summoned and illegally arrested on 19.09.2022. The respondent submitted that even after grant of bail he had appeared as and when directed by the ED. The respondent submitted that the present petition is devoid of any substance or spirit but merely a browbeating, harassing and intimidating tactics with the sole motive and aim being to coerce, compel and force him to toe the line of the ED to make a confessional statement. The respondent submitted that the learned Sessions Judge has passed a detailed order on the basis of the material on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent has no involvement with any activity arising out of the scheduled offence. It has further been submitted that subsequently, co accused Vaibhav Dipak Shah was admitted to anticipatory bail on 15.112022. Respondent submitted that Mr. Vaibhav Dipak Shah has already deposited an amount of Rs.7.10 Crore which was alleged proceeds of crime. In support of his submissions, learned counsel for the respondent has relied upon the following judgments; i. Dolat Ram v. State of Haryana, (1995) 1 SCC 349; ii. Abdul Basit v. Mohd. Abdul Kadir Chaudhary, (2014) 10 SCC 754; iii. Myakala Dharmarajam v. State of Telangana, (2020) 2 SCC 74; iv. Air Customs Versus Shail Anand and Another 2022 SCC OnLine Del 114. 15. The respondent submitted that there are no supervening circumstances for cancelling of the bail nor is there any allegation that the respondent has misused or interfered in the course of the investigation. There is also no any allegation of tampering with the evidence or witnesses or threatening. The respondent submitted that he always complied with the conditions of the bail. 16. ED has filed the rejoinder to the counter affidavit filed by the respondent denying all the ave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of not knowing Mr. Akash Panchal is false. It was also stated that Mr. Akash Panchal was in regular contact with Mr. Vaibhav Dipak Shah. The ED alleged that documents revealed that the funds arranged by Mr. Akash Panchal from his group entities were involved in a scheme to transfer funds into the bank accounts of M/s Sagar Diamonds Ltd. 19. The documents including transactions of Rs 5.65 crores with M/s Sagar Diamonds Ltd. In the rejoinder, ED also explained the statement made by Mr. Saurin Shah regarding engaging him in various activities by Mr. Vaibhav Dipak Shah. 20. In the rejoinder, the ED brought to the notice of the Courts to the following submissions/facts pertinent to the issue at hand: a) SDL Directors were in contact of Akash Panchal, however, he neither produced Akash Panchal during investigation as committed by Rahil Chovatia in his statement on 13.07.2022 nor provided present whereabouts of Akash Panchal. b) Legal Counsel of Vaibhav Dipak Shah and Rahil Chovatia instructed Akash Panchal not to join investigation in compliance of summons dated 25.07.2022 with an intention to derail the investigation. c) SDL Directors Rahil Chovatia, Saurin Shah and Vaibhav Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ran v. Rambilas (2001) 6 SCC 338, wherein it was inter alia held that the rejection of bail at the initial stage and the cancellation of already granted bail should be considered differently, requiring very cogent circumstances for cancellation. Grounds for canceling bail include interference with justice, evasion, or abuse of the bail concession, although these are not exhaustive. Additionally, a perverse order granting bail in a heinous crime without reasons can be grounds for cancellation. The concept of canceling bail due to an unjustified or illegal order differs from canceling bail due to misconduct or new facts, as clarified in Gurcharan Singh v. State (Delhi Admn.) (1978) 1 SCC 118 under Section 439(2), the focus should be on whether the bail order had serious infirmities, justifying High Court interference in the interest of justice. 22. Learned Special Counsel submitted that while the jurisdiction to grant bail is discretionary, it cannot be exercised in an arbitrary, capricious, or injudicious manner. It was argued that bail can be canceled not only due to supervening circumstances or misconduct by the accused but also if the bail order is unjustified. Counsel submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of crypto currencies. 25. Learned counsel further submitted that during the period 07.05.2021 to 11.05.2021, POC to the tune of Rs. 10.10 crores was transferred from the first layer entities to the bank account of M/s Akash Corporation and M/s Haresh Corporation. During the period 07.05.2021 to 11.05.2021 and this was further layered and laundered during the same period in the ICICI Bank account of M/s Sagar Diamonds Ltd. M/s Sagar Diamonds Ltd. further transferred the said funds either to its own SBI account or in the guise of for making outward remittances in the guise of import or to the IDFC Bank account and SBI account of M/s. RHC Global Exports Pvt. Ltd. M/s. RHC Global Exports Pvt. Ltd. further remitted the said POC or Rs. 10.10 crores outward during the same period remittances in the guise of imports from Hongkong and Dubai. 26. Learned counsel further submitted that Mr. Akash Panchal and Mr. Haresh Panchal, who are relatives and actually involved in the business of trading vegetables, were in constant touch with the respondent and other directors of M/s Sagar Diamonds Pvt. Ltd., including Mr. Vaibhav Dipak Shah and Mr. Saurin Shah, for preparing legal declarations relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 30. Learned counsel submitted that the accused was the authorized signature of M/s RHC Global Exports Pvt. Ltd. and M/s Sagar Diamonds Ltd. Learned counsel submitted that the prosecution complaint has already been filed. It has further been submitted that after grant of bail to the respondent, Mr. Akash Panchal initially, remained absconded till he was traced on 18.11.2022 at Mumbai. It has been submitted that in his statement under Section 50 of PMLA on 18.11.2022 at Mumbai Zonal Office, Mr. Akash Panchal admitted that he used to provide accommodation entries on the instructions of/to the M/s Sagar Diamonds Ltd. and M/s RHC Global Pvt. Ltd. on instructions of the respondent. Learned counsel also submitted that Mr. Akash Panchal had also admitted that he had not done any business with the first layer entities and had provided only accommodation entries. 31. Learned special counsel submits that the discretion has been revealed that Mr. Akash Panchal was not involved in any real business activity and was only providing accommodation entries. An entry of 5.65 cores was given to M/s Sagar Diamonds Ltd. which establishes that the fund availed by his group entities (involved in acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of accounts of M/s Sagar Diamonds Ltd. and M/s RHC Global Exports Pvt. Ltd revealed that each of the said two entities has shown export sales of more than Rs.200 crores to Mars Ind & Comm Services Ltd. during the scam period April to June 2021 against which either the payment is outstanding till date or barter import purchases of similar goods has been shown to set off the Imports & Exports in their books of account. It has further submitted that M/s Sagar Diamonds Ltd. shown total outstanding payment of Rs. 1880 crores against exports to Mars Ind & Comm Services Ltd, Hongkong as on 01.04.2021 which was increased to Rs. 5,374 crores as on 01.04.2022 and final the same was found increased to Rs. 11,684 crores as on date of search whereas M/s RHC Global Exports Pvt. Ltd had shown total outstanding payment of Rs.304 cores against exports to Mars Ind & Comm Services Ltd. Hongkong as on 01.04.2021 which was increased to Rs. 4,630 crores as on 01.04.2022 and finally the same was found increased upto Rs.6754 crores as on date of search. Learned counsel submitted that such exponential increase in huge outstanding funds against the Exports as well as the overvaluation and misdeclaration of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l submits that this case involves alleged money laundering to the tune of Rs. 7.10 crores, which has already been deposited by Mr. Vaibhav Dipak Shah and Mr. Akash Panchal. Counsel further submitted that the ED has now come up with exponentially higher figures, seemingly to mislead the Court. It was submitted that the transactions between M/s Sagar Diamonds Pvt. Ltd. and M/s RHC Global Pvt. Ltd. are supported by documents and are genuine transactions. Similarly, it was submitted that the transaction of Rs. 10.10 crores was made for importing goods, and during the relevant time, amounts of Rs. 507,599 were transferred to Gem Star, and Rs. 50,535,188 was transferred to M/s Jiya Impex. It was submitted that these were genuine transactions, duly documented. Learned senior counsel further submitted that there is no material on record to connect the respondent even with the second-layer entities. 35. Learned senior counsel submitted that it has been rightly observed that the mere transfer of funds from the accounts of first-layer entities to second, third, or fourth-layer entities does not, by itself, indicate acquired knowledge that those funds were "proceeds of crime." 36. Learned se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be construed strictly and therefore, the property must be derived or obtained, directly or indirectly, "as a result of" criminal activity relating to a scheduled offence; e. For being regarded as proceeds of crime, the property associated with the scheduled offence must have been derived or obtained by a person "as a result of" criminal activity relating to the concerned scheduled offence; f. Action cannot be resorted to against any person for money-laundering on an assumption that the property recovered from 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 the competent forum. For, the expression "derived or obtained" is indicative of criminal activity relating to a scheduled offence already accomplished: g. In the event the person named in the criminal activity relating to a scheduled offence is 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same makes the said order vulnerable and subject to scrutiny by the appellate court. Thus, if an order of grant of bail is perverse, the same can be set at naught only by the superior court. In Ranjit Singh vs. State of M.P. (2013) 16 SCC 797 it was inter alia held that there is a distinction between the concept of setting aside an unjustified, illegal or perverse order and cancellation of an order of bail on the ground that the accused has misconducted himself or certain supervening circumstances warrant such cancellation. Thus, if the order granting bail is found to be perverse one or passed on irrelevant materials, it can be annulled by the superior court. In Mayakala Dharmarajam and others vs. State of Telangana and Another (2020) 2 SCC 743, the petition was filed for cancellation of bail on ground of illegality of order passed by the Sessions Court and conduct of appellants subsequent to their release after bail was granted. The High court allowed the application for cancellation of bail. It was contended by the appellants that no specific overt act was attributed to any of the accused, except for omnibus allegations made against them. The apex court inter alia held that it mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of material placed on the record of the possibility of the accused absconding is yet another reason justifying the cancellation of bail. However, bail once granted should not be cancelled in a mechanical manner without considering whether any supervening circumstances have rendered it no longer conducive to a fair trial to allow the accused to retain his freedom by enjoying the concession of bail during the trial" 43. Recently, the apex court in Prem Prakash vs. Union of India through the Directorate of Enforcement SLP (Crl) no. 5614/2024 dated 28.08.2024, while considering the scope of enquiry under Section 45 of PMLA has inter alia held as under: "13. Coming back to the scope of inquiry under Section 45, Vijay Madanlal Choudhary (Supra), while reiterating and agreeing with the holding in Ranjitsing Brahmajeetsing Sharma vs. State of Maharashtra and Another reported in (2005) 5 SCC 294, held that the Court while dealing with the application for grant of bail in PMLA need not delve deep into the merits of the case and only a view of the Court based on the available material available on record is required. It held that the Court is only required to place its view based on p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not necessary to be assigned, the order granting bail must demonstrate application of mind at least in serious cases as to why the applicant has been granted or denied the privilege of bail. 46. 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. However, while dealing with a special statute like MCOCA having regard to the provisions contained in sub-section (4) of section 21 of the Act, the court may have to probe into the matter deeper so as to enable it to arrive at a finding that the materials collected against the accused during the investigation may not justify a judgment of conviction. The findings recorded by the 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". We are in agreement with the observation made by the court in Ranjitsing Brahmajeetsing Sharma (supra). The court while dealing with the application for grant of bail need not delve de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only a prima facie view being expressed by the court and such observations are not taken into consideration while deciding the matter finally. Generally, any observations made at the stage of bail are not taken into account after the parties lead their evidence and the matter is appreciated by the learned trial court. The case of the ED is based on the fact that the entity of the respondent has received the funds from the first, second and third layer entities. It is to be kept in mind that even as per Vijay Madan Lal Chaudhary (supra) it has categorically been held that ingredients constituting the offence of money laundering needs to be construed strictly. It is also no longer a matter of debate that the probative value of statement under section 50 of PMLA is to be considered at the stage of trial. The bail cannot be denied merely on the assumption that the property recovered from the respondent must be proceed of crime. 47. The ED has also sought cancellation of bail on the ground of certain WhatsApp chat of Mr. Saurin Shah another director in M/s Sagar Diamond Ltd. indicates that he was in touch of Vaibhav Shah for preparing legal declaration/affidavit of Akash Corporatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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