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TMI Blog2025 (1) TMI 1449X X X X Extracts X X X X X X X X Extracts X X X X ..... he Indian Penal Code, 1860 (hereinafter "IPC"). 2. The brief facts that led to the filing of the instant application are that on 12th March, 2024, FIR No. 59/2024 was registered at Police Station - Crime Branch, Delhi under Sections 274, 275, 276, 420, 468, 471 read with 120B and 34 of the IPC, based on a complaint by SI Gulab Singh. The complaint alleged the involvement of several accused persons in the procurement, manufacturing and sale of spurious anti-cancer medicines. 3. In the said FIR, it has been alleged that the primary accused, namely Viphil Jain and Suraj Shat, in collusion with their several associates, were engaged in the illegal procurement of empty vials and raw materials of anti-cancer drugs such as Keytruda and Opdyta. These counterfeit drugs were allegedly manufactured and distributed in the market to unsuspecting cancer patients. 4. Pursuant to the information received, the police formed six teams to conduct simultaneous raids across Delhi-NCR on 11th March, 2024. During the raid at Flat No. 1101, Block-2, Eleventh Floor, CSP Units, DLF Capital Greens, Moti Nagar, New Delhi, the accused persons were allegedly caught in the act of filling empty vials with unau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicant then filed a bail application seeking grant of regular bail, however, vide order dated 4th October, 2024, the said bail application was dismissed by the learned Court below. Hence, the present bail application. 10. Learned counsel appearing on behalf of the applicant submitted that the arrest of the applicant was unwarranted and conducted in violation of Section 19 of the PMLA, which requires 'easons to believe' before an arrest. 11. It is submitted that there was no material evidence to justify his arrest and that the grounds of arrest were merely a mechanical reproduction of statutory language without specific allegations. It is also submitted that he had cooperated with the investigation by responding to all summons and providing the necessary documents, and thus, there was no necessity for his custodial interrogation. 12. It is submitted that there is no direct evidence linking the applicant to the alleged 'proceeds of crime'. It is submitted that the applicant is a mere investor in M/s Delhi Medical Hub and was not involved in its day-to-day operations. It is submitted that the respondent relies primarily on the statement of co-accused Akshay Kumar recorded unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant was not merely an investor in M/s Delhi Medical Hub but was actively involved in the financial management of the firm. It is submitted that the applicant knowingly facilitated transactions involving the proceeds of crime generated through the illegal trade of counterfeit medicines. 22. It is submitted that there is sufficient material evidence, including financial records, electronic data and statements of co-accused persons, to establish the applicant's role in the laundering of illicit proceeds. It is submitted that the financial trail indicates the applicant's complicity in concealing and projecting 'proceeds of crime' as legitimate. 23. It is submitted that the applicant's conduct, such as transactions made via hawala channels and in third-party accounts indicates his direct involvement in the generation and layering of proceeds of crime, thereby falling squarely within the ambit of Section 3 of the PMLA. 24. It is submitted that the applicant has not satisfied the twin conditions under Section 45 of the PMLA, which requires demonstrating/proving that he is not guilty of the offence and that he is unlikely to commit any offence while on bail. 25. It is also submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bail under Section 45 of the PMLA. However, even if it is assumed for the sake of arguments that he is not exempted under the proviso, the applicant satisfies the twin conditions prescribed under the aforesaid provision. 32. Learned counsel for the applicant has contended that the applicant's arrest was not conducted in compliance with the provisions of Section 19 of the PMLA which requires 'easons to believe' before making an arrest. It has been further argued that the statements made by co-accused Akshay Kumar under Section 50 of the PMLA form the sole basis for the applicant's arrest which are not sufficient to justify the applicant's arrest. 33. The question before this court is whether the applicant's arrest was carried out in adherence to the statutory requirements under Section 19 of the PMLA which mandates that the authorized officer must have 'eason to believe' based on material evidence before arresting an individual accused of money laundering. The said provision reads as under: "Section 19. Power to arrest (1) If the Director, Deputy Director, Assistant Director or any other officer authorised in this behalf by the Central Government by general or special order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nshrined under this section." 35. Having examined the statutory framework governing the power of arrest under Section 19 of the PMLA, this Court shall now proceed to consider the judicial precedents that have interpreted and applied these provisions in various factual contexts. 36. In Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1, the Hon'ble Supreme Court had made the following observations: "208. Section 19 of the 2002 Act postulates the manner in which arrest of person involved in money laundering can be effected. Sub-section (1) of Section 19 envisages that the Director, Deputy Director, Assistant Director, or any other officer authorised in this behalf by the Central Government, if has material in his possession giving rise to reason to believe that any person has been guilty of an offence punishable under the 2002 Act, he may arrest such person. Besides the power being invested in high-ranking officials, Section 19 provides for inbuilt safeguards to be adhered to by the authorised officers, such as of recording reasons for the belief regarding the involvement of person in the offence of money laundering. That has to be recorded in writing and while effecting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 19 PMLA prescribes the manner in which the arrest of a person involved in money laundering can be effected. It was observed that such power was vested in high-ranking officials and that apart, Section 19 PMLA provided inbuilt safeguards to be adhered to by the authorised officers, such as, of recording reasons for the belief regarding involvement of the person in the offence of money laundering and, further, such reasons have to be recorded in writing and while effecting arrest, the grounds of arrest are to be informed to that person." 39. The inference drawn from the above judicial pronouncements is that Section 19 of the PMLA imposes procedural safeguards on the arresting authority, thereby, ensuring that arrests are not made arbitrarily but are based on well-founded reasons which are also recorded in writing. The decisions quoted in the foregoing paragraphs reaffirm that compliance with these procedural requirements is mandatory, and any deviation from the prescribed framework could vitiate the arrest. The courts have consistently emphasized that the power to arrest under the PMLA is vested in high-ranking officials and must be exercised with due diligence, ensuring that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s between Neeraj Chauhan and you, Rajesh Kumar, revealed that you, Rajesh Kumar demanded sealed and unsealed Keytruda injection from Neeraj Chauhan. You, Rajesh Kumar through his firm i.e. M/s Delhi Medicine Hub further sold these anti-cancer medicines in open market including Hospital/s. Further, it is to mention that money for the purchase of such spurious anti-cancer medicines was transferred from the bank accounts of M/s Delhi Medicine Hub to the accounts of family members of Viphil Jain, Suraj Shat, Tushar Chauhan and others. *** *** That further, it is revealed that you, Rajesh Kumar and Akshay Kumar had sold anti-cancer medicines procured from Neeraj Chauhan and others in open market and payments were received in the bank account of M/s Delhi Medicine. *** *** That, you, Rajesh Kumar was associated in running a fake anti-cancer medicine syndicate and involved to sell the said fake anti-cancer medicine with your other associates in open market and thereby you involved yourself in generation of Proceeds of Crime. Further, you have transferred such proceeds of crime in the accounts of your associates and their family members. Therefore, I have reasons to believe tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Director, Enforcement Directorate u/s 50 of PMLA, 2002 on 23.05.2024, In response to the summon no. PMLA/Summon/DLZO2 /2024/2496 dated 27.03.2024 and in compliance of order dated 22.05.2024 passed by Hon'ble Special PMLA, Court, Tis Hazari-West; I, Akshay Kumar S/o Shri Maman Ram Sharma presently residing at 1094, 2nd Floor, Sector-39B, Chandigarh; has appeared before Shri Praveen Kumar, Assistant Director, Directorate of Enforcement, Delhi Zonal Office-II, New Delhi on 23.05.2024, to tender my statement u/s 50 of PMLA, 2002. I have been explained the provisions of section 50 of PMLA, 2002 and I understand that I have to give my true and correct statement. I have been explained that my statement can be used as evidence against me or any other person in the proceedings under the PMLA, 2002. I understand that giving false statement is punishable offence under the law. I proceed to tender my further statement: ***.." 47. The financial records cited hereinabove indicate substantial money transfers from M/s Delhi Medicine Hub to the accounts of known associates involved in the counterfeit medicine syndicate. These transactions, along with the applicant's control over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any officer referred to in sub-section (2) may impound and retain in his custody for such period, as he thinks fit, any records produced before him in any proceedings under this Act: Provided that an Assistant Director or a Deputy Director shall not- (a) impound any records without recording his reasons for so doing; or (b) retain in his custody any such records for a period exceeding three months, without obtaining the previous approval of the [Joint Director]." 50. A careful reading of the provision reveals that the authorities empowered under Section 50 of the PMLA possess the authority to enforce discovery and inspection, compel the attendance of individuals, examine them on oath, require the production of records, receive evidence through affidavits, and issue commissions for the examination of witnesses and documents. 51. The provision further clarifies that any person summoned under sub-section (2) is legally bound to comply, state the truth regarding matters under inquiry, and produce the requisite documents as directed by the authorities. It is pertinent to note that such proceedings are deemed to be judicial proceedings under Sections 193 and 228 of the IPC. 52. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of inquiry are deemed to be the judicial proceedings in terms of Section 50 (4), and are admissible in evidence, whereas the statements made by any person to a police officer in the course of an investigation under Ch. XII of the Code could not be used for any purpose, except for the purpose stated in the proviso to Section 162 of the Code. In view of such glaring inconsistencies between Section 50 PMLA and Sections 160/161CrPC, the provisions of Section 50 PMLA would prevail in terms of Section 71 read with Section 65 thereof." 55. In light of the foregoing judicial pronouncements, it is evident that statements recorded under Section 50 of the PMLA hold evidentiary value and are admissible in legal proceedings. The Hon'ble Supreme Court, while emphasizing the legal sanctity of such statements, observed that they constitute valid material upon which reliance can be placed to sustain allegations under the PMLA. 56. In the aforesaid judgment, the Hon'ble Supreme Court also reaffirmed the admissibility of Section 50 of the PMLA distinguishing them from statements recorded under the CrPC. The Court underscored that such statements, being recorded during an inquiry rather than an in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62. With regard to the above, this Court has referred to the judgment of the Hon'ble Supreme Court in Prem Prakash v. Enforcement Directorate, (2024) 9 SCC 787, wherein, the following observations were made: "In Vijay Madanlal Choudhary [Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1] dealing with Section 24 PMLA, the three-Judge Bench held as under : (SCC pp. 229-31, paras 237 & 239-40) "237. Be that as it may, we may now proceed to decipher the purport of Section 24 of the 2002 Act. In the first place, it must be noticed that the legal presumption in either case is about the involvement of proceeds of crime in money-laundering. This fact becomes relevant, only if, the prosecution or the authorities have succeeded in establishing at least three basic or foundational facts. First, that the criminal activity relating to a scheduled offence has been committed. Second, that the property in question has been derived or obtained, directly or indirectly, by any person as a result of that criminal activity. Third, the person concerned is, directly or indirectly, involved in any process or activity connected with the said property being proceeds of crime. On establishing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t he is not involved in any process or activity connected with the proceeds of crime. In any case, in terms of Section 114 of the Evidence Act, it is open to the court to presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct, and public and private business, in their relation to the facts of the particular case. Considering the above, the provision under consideration [Section 24 (a)] by no standards can be said to be unreasonable much less manifestly arbitrary and unconstitutional." 63. In light of the principles enunciated by the Hon'ble Supreme Court in Vijay Madanlal Choudhary (Supra) and reiterated in Prem Prakash (Supra), this Court must determine whether the foundational facts necessary to invoke the presumption under Section 24 of the PMLA have been established by the respondent. The Hon'ble Supreme Court has categorically held that the prosecution must satisfy three essential ingredients. First, the commission of a scheduled offence must be established. Second, the property in question must be shown to have been derived or obtained, directly or indirectly, as a result of such crimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, production of evidence, or explanations under Section 313 of the CrPC. In the absence of any such rebuttal, the presumption stands in favor of the respondent, and the applicant's continued detention is justified under the PMLA. 69. Therefore, it is observed by this Court that the respondent had sufficient material in its possession, including financial records, digital evidence, and the applicant's communications, to establish a valid 'reason to believe' that the applicant was guilty of the offence of money laundering. The procedural safeguards under the Act were duly followed, and the challenge to the legality of the arrest is without any merit. 70. Furthermore, the contention that the applicant's arrest was solely based on the statement of co-accused Akshay Kumar under Section 50 of the PMLA is unfounded. 71. It is observed by this Court that the respondent has presented corroborative material, including financial transactions and records, linking the applicant to the proceeds of crime. Considering the presumption under Section 24 of the PMLA, the burden shifted to the applicant to disprove his involvement in the alleged offence. However, the applicant has faile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... special order, and, subject to such conditions as may be prescribed.] (2) The limitation on granting of bail specified in sub-section (1) is in addition to the limitations under the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force on granting of bail. [Explanation.--For the removal of doubts, it is clarified that the expression "Offences to be cognizable and non-bailable" shall mean and shall be deemed to have always meant that all offences under this Act shall be cognizable offences and non-bailable offences notwithstanding anything to the contrary contained in the Code of Criminal Procedure, 1973 (2 of 1974), and accordingly the officers authorised under this Act are empowered to arrest an accused without warrant, subject to the fulfillment of conditions under section 19 and subject to the conditions enshrined under this section.]" 75. This Court shall now proceed to analyze the statutory framework under Section 45 of the PMLA which governs the grant of bail in cases of money laundering. Section 45 imposes stringent conditions on the grant of bail. A careful reading of the provision reveals the following essential ingredients that mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant. Section 45 (1) PMLA reads as under: "45. Offences to be cognizable and non-bailable. - (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence [under this Act] shall be released on bail or on his own bond unless- (i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail: Provided that a person, who, is under the age of sixteen years, or is a woman or is sick or infirm or is accused either on his own or along with other co-accused of money-laundering a sum of less than one crore rupees, may be released on bail, if the Special Court so directs: Provided further that the Special Court shall not take cognizance of any offence punishable under Section 4 except upon a complaint in writing made by- (i) the Director; or (ii) any officer of the Central Government or a State Government authorised in writing in this behalf by the Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the exception. Deprivation can only be by the procedure established by law, which has to be a valid and reasonable procedure. Section 45 PMLA by imposing twin conditions does not re-write this principle to mean that deprivation is the norm and liberty is the exception. As set out earlier, all that is required is that in cases where bail is subject to the satisfaction of twin conditions, those conditions must be satisfied. *** Scope of inquiry under Section 45 PMLA 16. Coming back to the scope of inquiry under Section 45, Vijay Madanlal Choudhary [Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1] , while reiterating and agreeing with the holding in Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra [Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra, (2005) 5 SCC 294 : 2005 SCC (Cri) 1057], 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 probability on the basis of reasonable material collected during investigati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceeds of crime are attributable to the same along with the discretion granted to the Courts under the proviso to Section 45 of the PMLA. The relevant paragraphs of the same are as under: "..19. As stated hereinabove, the supplementary complaint was filed against the appellant along with the other accused on 30-1-2023, in which the summary of investigative findings against each of the accused persons have been recorded in Para 8 thereof. The details of the investigation conducted by the respondent ED have been stated in Para 9 and the role of each accused including the appellant in the commission of alleged offence of money laundering has been stated in Para 10 thereof, which reads as under: "10. Role of accused in the offence of money laundering A. Evidences of offence of money laundering against Smt Saumya Chaurasia-Mrs Saumya Chaurasia is an officer of the Chhattisgarh State Civil Services who was posted as the Deputy Secretary in the Office of Chief Minister of Chhattisgarh and was working as an OSD to CM. Despite being relatively very junior in the bureaucratic hierarchy, she enjoyed unprecedented power and control because of her direct access to higher political p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Manish Upadhyay was inserted in as an extra layer of protection for cash dealings between Mr Suryakant Tiwari and Mrs Saumya Chaurasia. He used to transport cash from Mr Suryakant Tiwari to Mrs Saumya Chaurasia. ED investigation has established that Mrs Saumya Chaurasia and her family went on a spree of acquiring immovable assets during the period which coincided with the coal levy scam. These assets of which she is the real beneficial owner were identified and attached by issuance of provisional attachment orders(s) as detailed in succeeding paragraphs." 20. The evidence relating to strong relations between the appellant and Mr Suryakant Tiwari, between the appellant and Mr Manish Upadhyay, and between the appellant and Mr Anurag Chaurasia; the evidences of movement of funds acquired out of extortion syndicate run by Mr Suryakant Tiwari to Manish Upadhyay, proxy of the appellant; the utilisation of proceeds of crime and acquisition of properties by the appellant in the name of her mother Shanti Devi and cousin Mr Anurag Chaurasia along with the details of the said properties, etc. have been detailed in the said prosecution complaint, which leave no doubt in the mind of the Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose an absolute bar. The discretion of the court in granting bail remains judicial and must be exercised in accordance with the settled legal principles. The governing principle that "bail is the rule, and jail is the exception" must be harmonized with the legislative mandate that requires satisfaction of the conditions laid down under Section 45 before bail can be granted. 93. In the present case, the respondent has placed on record material indicating the applicant's active involvement in the procurement and sale of spurious anti-cancer medicines, the proceeds of which were funneled through various channels, including formal banking and hawala transactions. The grounds of arrest, along with financial records and electronic evidence, establish a prima facie case of money laundering. The applicant's role in the laundering of illicit proceeds through his firm, M/s Delhi Medicine Hub, stands corroborated by the investigative findings, including statements under Section 50 of the PMLA and independent documentary evidence. 94. The applicant has failed to discharge the burden placed upon him under Section 45 (1) (ii) of the PMLA, which requires him to establish that there are reasona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith evidence. In money laundering cases, where the trail of proceeds of crime is intricate and dependent on multiple records and statements, the possibility of interference with ongoing investigations remains high, and third, whether there is a reasonable apprehension that the accused may indulge in similar offences if granted bail, thereby prejudicing the ongoing investigation and endangering public interest. 100. In Satender Kumar Antil v. CBI, (2022) 10 SCC 51, the Hon'ble Supreme Court has held that while granting bail, the gravity of the allegations must be taken into account. 101. Applying the aforesaid principle to the present case, this Court finds that the gravity of the allegations against the applicant is of a serious nature, involving the alleged laundering of proceeds derived from the sale of spurious anti-cancer medicines. The offence not only entails significant financial implications but also poses a grave risk to public health and safety. 102. As observed in the foregoing paragraphs, but not being repeated for the sake of brevity, the applicant in the present case is alleged to have played an active role in the procurement, distribution, and financial management ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther solidify the allegations against the applicant. The complexity of the financial trail and its potential societal and national ramifications require continued custodial interrogation. 109. In light of the above discussions on facts and law, it is held that the applicant has been unable to put forth any propositions before this Court that are sufficient for grant of bail and thus, the same are rejected. In view of the same, this Court is not inclined to release the applicant on bail and the instant application, is, hereby, dismissed along with the pending applications, if any. 110. The applicant, if on interim bail, is directed to surrender before the Court concerned within a period of seven days from today and the sureties/bail bond, if any shall stand discharged. If the applicant fails to surrender as directed, the investigating agency shall take appropriate steps to take the applicant in custody to secure his presence. 111. It is made clear that any observations made herein are only for the purpose of deciding the present petition and shall not be construed as an expression on the merits of the case. The learned Trial Court shall proceed with the matter uninfluenced by any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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