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TMI Blog2025 (2) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... e qua non for alleging the existence of proceeds of crime. Property derived or obtained, directly or indirectly, by a person as a result of criminal activity relating to a Scheduled Offence constitutes proceeds of crime. Thus existence of proceeds of crime at the time of trial of the offence under Section 3 of the PMLA can be proved only if the Scheduled Offence is established in prosecution of the Scheduled Offence. This clearly envisages that even if trial of the case under the PMLA proceeds it cannot be officially tested unless the trial of the Scheduled Offence concludes. In the present case before me in the Scheduled Offence, Chargesheet has not been filed and trial is not likely to start in the near foreseeable future. Therefore prima facie, there are no possibility of both trials concluding in the foreseeable future. Applicant is in judicial custody pending trail for more than one year. Attention invited to the decision of the Supreme Court in the case of Manish Sisodia Vs. Directorate of Enforcement [2024 (8) TMI 614 - SUPREME COURT] with respect to application of rigours of Section 45 of the PMLA especially in cases where there is delay in trial. The Supreme Court has hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r short "PMLA"). Applicant has been arrested and is in jail since 17.01.2024. The designated Special Court by order dated 09.09.2024 dismissed the Bail Application preferred by the Applicant. Bail Application is filed in connection with the alleged offence under Section 3 of the PMLA which is punishable under Section 4 of the said Act. Six volumes of the charge-sheet is filed as compilation by Applicant. Reference to relevant documents is as per the documents appearing in the compilation. 2. Briefly stated, prosecution case is that Mumbai police registered FIR on 01.09.2023 on the basis of Complaint filed by Gopal Pandurang Lavne - EOW officer in respect of two specific Work orders issued by the Municipal Corporation of Greater Mumbai (for short "MCGM") dated 14.04.2020 and 17.04.2020 to supply cooked food (khichdi) during the COVID-19 Pandemic lock down period between March 2020 and July 2020 to the Ward Offices for distribution to the citizens. Delay in filing the complaint is prima facie evident. Work order dated 14.04.2020 was issued in favour of M/s. Vaishnavi Kitchen (Sahyadri Refreshments) and Work order dated 17.04.2020 to M/s. Force One Multi Services for supply of 300 gm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceeds of crime' which was partly diverted into the personal bank account of Applicant and into another bank account of Applicant's partnership firm called M/s. Fire Fighters Enterprises. 7. Fifth allegation is that Applicant received the alleged proceeds of crime since he was instrumental in getting the Work order to supply cooked food for M/s. Force One Multi Services by using his influence as a leader of the then political party in dispensation without having played any role in contributing to the supply of the cooked food despite which he received an amount of Rs.1.35 Crores into his bank account from M/s. Force One Multi Services during June 2020 to December 2020. 8. Sixth allegation is that Applicant received the alleged amount of Rs.1.35 Crores into his bank account by showing that he was a salaried employee of M/s. Force One Multi Services by relying upon two ante dated appointment letters dated 01.04.2019 and 01.04.2020 and thus is liable for having conspired in generating and layering the proceeds of crime. 9. In the above background, Mr. Mundargi, learned Senior Advocate for Applicant has made the following five submissions for seeking Applicant's enlargement on Bail. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... responsibility and wrongfully gained Rs. 3.68 Crores. He would draw my attention to paragraph 13, which is the conclusion of investigation wherein it is concluded that M/s. Sahyadri Refreshments and M/s. Force One Multi Services without fulfilling the eligibility criteria laid down by MCGM circumvented the regulations and resorted to illegitimate practices of supplying food (khichdi) packets and pocketed illegitimate gains of 2.82 Crores and 3.68 Crores respectively and thus this amount of Rs. 6.5 Crores is the proceeds of crime under Section 2 (1) (u) in the instant case. He would draw my attention to the accusation that Applicant and his firm M/s Fire Fighters Enterprises received Rs.1.35 Crores out of the above amount and Applicant has further laundered the said amount for wrongful and illegal gain and acquired properties and assets with that amount which are liable to be confiscated. In paragraph 14, he would draw my attention to the conclusion that further investigation is pending in respect of the other named accused in the FIR "if found" to be involved in PMLA offence. Juxtaposing these 3 paragraphs, he would argue that all suspect persons in the chain have not been arrested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid Partnership Deed of M/s. Force One Multi Services at page No. 279. The Deed of Partnership of M/s. Force One Multi Services is placed on record. He would vehemently submit that allegation of prosecution that M/s. Force One Multi Services is engaged in sand transport business stands clearly disproved when the partnership deed is seen as Force One Multi Services is, inter alia, engaged into hospitality services apart from its other services / activities. 9.3. Apart from the aforesaid factual issues, on the legal front he would draw my attention to the provisions of PMLA. While drawing my attention to Section 19 (1), he would argue that for enforcement of the said provision to arrest the Applicant, Competent Authority is required to record and form a belief of the reasons on which it desires to proceed against the Accused. He would submit to the extent that such belief ought to be recorded in writing which is not done in the present case nor Applicant is informed about the said reasons. In the same breath he would submit that before arrest applicant ought to have been conveyed the grounds of his arrest which is also not complied with as mandatorily provided under Section 50 (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) Arvind Kejriwal Vs. Directorate of Enforcement 2024 SCC OnLine SC 1703; (iii) Priyavrat Mandhana Vs. Directorate of Enforcement and Ors. WPST No.16175 of 2024 decided on 12.09.2024 - Bombay High Court.; (iv) Superintendent and Rememberancer of Legal Affairs, West Bengal Vs. Mohan Singh and Ors. (1975) 3 SCC 706; (v) Anil Khadkiwala Vs. State (Government of NCT of Delhi) and Anr. (2019) 17 SCC 294; (vi) Vinod Kumar, IAS Vs. Union of India and Ors. 2021 SCC OnLine SC 559; (vii) Ramkripal Meena Vs. Directorare of Enforcement Special Leave to Appeal (Cri.) No(s).3205/2024 decided on 30.07.2024; (viii) Prem Prakash Vs. Union of India (2024) 9 SCC 787; (ix) Manish Sisodia Vs. Directoate of Enforcement AIR 2024 SC 4053; (x) Mahesh Pandurang Naik Vs. The State of Maha and Anr. WP(ST) No.13835 of 2024; (xi) Prabir Purkayastha Vs. State (NCT of Delhi) (2024) 8 SCC 254 : (2024) 3 SCC (Cri) 573; (xii) Vaibhav Jain Vs. Directorate of Enforcement 2024 SCC OnLine Del 7478. 9.6. He would finally submit that Applicant has been in custody for more than one year and taking into consideration the period spent in custody and there being no likelihood of conclusion of trial w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us task of preparation of food articles during Covid-19 pandemic. He would submit that M/s. Force One Multi Services surreptitiously entered into a sub-contract with M/s. Sneha Caterers and Decorators and M/s. Golden Star Banquet Hall & Catering Services to supply food packets (khichdi) to MCGM without there being any provision for the same under the Work order. On the factual front, he would finally submit that both the aforesaid entities supplied under weighing food packets of 100 grams instead of the prescribed 300 grams under the said Work orders thus illegally profiteering and unjustly enriching them by crores of rupees and out of this amount of Rs. 1.35 Crores was routed to the bank account of Applicant without Applicant playing any role whatsoever in supply of food packets to MCGM. He would submit that the aforesaid amount of Rs. 3.64 Crores has been surreptitiously misappropriated by M/s. Force One Multi Services and investigation is on in the matter at present and if found guilty, other accused will also be implicated in accordance with law. 10.2. On the legal front, he would draw my attention to the relevant provisions of IPC and PMLA Act and would submit that it is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted the submissions made by Mr. Venegavkar and for brevity has not re-argued the same and persuaded me to take cognizance of the said submissions for the State. 12. I have heard Mr. Mundargi, learned Senior Advocate for Applicant; Mr. Venegavkar, learned Special PP for Respondent No. 1 and Mr. Dedhia, learned APP for the State. Submissions made by the learned Advocates have received due consideration of the Court. 13. At the outset, the statutory legal position as applicable is required to be considered and stated. Chapter III of the Constitution of India enumerates the fundamental rights which have been time and again construed to be inherent and any law which abrogates and abridges such fundamental rights would be violative of the basic structure doctrine including right of protection imposed against arrest and detention in certain cases contemplated under Article 22 of the Constitution of India. Article 22 (1) and (2) read thus:- "22. Protection against arrest and detention in certain cases - (1) No person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest nor shall he be denied the right to consult, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Municipal Corporation for distribution. It is seen that similar Work orders were given to various Vendors viz; NRAI (2 Work orders), Delhi Darbar (3 Work orders), Bohra Kitchen, Wadia Kitchen - Mini Bodhanwala (3 Work orders), Blue Sea Worli (2 Work orders), Dhanraj Shetty (2 orders), Laxmi SHG - Masurkar Madam, Shivsena - Rajashree Madam, Yogesh, Dhanraj Shetty, Sai Palace, Vaishnavi Kitchen - Bala Kadam, Force One Multi Services, Sundeep Hotels, Iskon Pankaj Singh, Classic Fast Food - Shetty, Amini Industries, Sheetal Ashish Hotel Pvt Ltd - Bhola Yadav, Shetty Brothers (Link View), Sheetal Ashish Hotels Pvt Ltd, Hotel Prasad International Dahisar Check Naka, Laxman Yadav Kitchen, Dinesh N. Shetty, SHG N Ward, Shetty Dinesh & Pravin Shetty all throughout Mumbai. 15.1. From the above, it is seen that Vaishnavi Kitchen - Bala Kadam and Force One Multi Services have been issued one Work order each. Material has been placed before me to show the application made by them in the prescribed format giving all such details appended thereto along with licenses issued by the Food and Drug Administration, Maharashtra State and the Health Department of the Municipal Corporation which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his bank account from M/s. Force One Multi Services once again will be a matter of trial. Question arising before the Court in the above facts is that when the investigation is completed, is further incarceration of the Applicant warranted or otherwise. 15.2. In this regard, I would like to refer to the provisions of Section 45 of the PMLA which reads as under:- "45. Offences to be cognizable and non-bailable - (1) 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 a 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, 3[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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of V. Senthil Balaji Vs. The Deputy Director, Directorate of Enforcement AIR 2024 SC 4760. Paragraph Nos. 24 to 28 read as under:- "24. There are a few penal statutes that make a departure from the provisions of Sections 437, 438, and 439 of the Code of Criminal Procedure, 1973. A higher threshold is provided in these statutes for the grant of bail. By way of illustration, we may refer to Section 45 (1) (ii) of PMLA, proviso to Section 43D (5) of the Unlawful Activities (Prevention) Act, 1967 and Section 37 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (for short, 'NDPS Act'). The provisions regarding bail in some of such statutes start with a non-obstante Clause for overriding the provisions of Sections 437 to 439 of the Code of Criminal Procedure. The legislature has done so to secure the object of making the penal provisions in such enactments. For example, the PMLA provides for Section 45 (1) (ii) as money laundering poses a serious threat not only to the country's financial system but also to its integrity and sovereignty. 25. Considering the gravity of the offences in such statutes, expeditious disposal of trials for the crimes under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the minimum and maximum sentence for the offence. Another important consideration is the higher threshold or stringent conditions which a statute provides for the grant of bail. Even an outer limit provided by the relevant law for the completion of the trial, if any, is also a factor to be considered. The extraordinary powers, as held in the case of K.A. Najeeb, can only be exercised by the Constitutional Courts. The Judges of the Constitutional Courts have vast experience. Based on the facts on record, if the Judges conclude that there is no possibility of a trial concluding in a reasonable time, the power of granting bail can always be exercised by the Constitutional Courts on the grounds of violation of Part III of the Constitution of India notwithstanding the statutory provisions. The Constitutional Courts can always exercise its jurisdiction Under Article 32 or Article 226, as the case may be. The Constitutional Courts have to bear in mind while dealing with the cases under the PMLA that, except in a few exceptional cases, the maximum sentence can be of seven years. The Constitutional Courts cannot allow provisions like Section 45 (1) (ii) to become instruments in the han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s actually involved in any process or activity connected with the 1[proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering. [Explanation.--For the removal of doubts, it is hereby clarified that,-- (i) a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities 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.]" 16.1. Perusal of the above statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tionary in the High Court or Courts having jurisdiction to try the offence: R. v. Mc Cartie [1859] 11 Ir. C.L.R. 188; R. v. Platt [1777] 1 Leach 157; on the other hand, bail in misdemeanour is said to be of right at common law : R. v. Spilsbury [1898] 2 Q.B. 615; R. v. Badgar [1843] 4 Q.B. 468; Re Frost [1888] 4 J.L.R. 757; see also R. v. Crowe [1829] 4 C. & P. 251; R. v. Beardmore [1836] 7 C. & P. 497; R. v. Osborne [1837] 7 C. & P. 799; King v. Fortier [1902] 13 Quebec K.B. 251. This distinction is reflected in sections 496 and 497 of the Criminal Procedure Code which treat respectively of the grant of bail in cases of what are described in the phraseology of the Indian Legislature as bailable and non-bailable offences. 15. The substance of the matter is that the discretionary power of the Court to admit to bail is not arbitrary, but is judicial, Manikam v. Queen [1882] 6 Mad. 63, and is governed by established principles. The object of the detention of the accused being to secure his appearance to abide the sentence of law, the principal enquiry is, whether a recognizance would effect that end. In seeking an answer to this enquiry, Courts have considered the seriousness of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time, the prayer for bail may be meritorious. While the prosecution may pertain to an economic offence, yet it may not be proper to equate these cases with those punishable with death, imprisonment for life, ten years or more like offences under the Narcotic Drugs and Psychotropic Substances Act, 1985, murder, cases of rape, dacoity, kidnapping for ransom, mass violence, etc. Neither is this a case where 100/1000s of depositors have been defrauded. The allegations have to be established and proven. The right to bail in cases of delay, coupled with incarceration for a long period, depending on the nature of the allegations, should be read into Section 439 of the Code and Section 45 of the PML Act. The reason is that the constitutional mandate is the higher law, and it is the basic right of the person charged of an offence and not convicted, that he be ensured and given a speedy trial. When the trial is not proceeding for reasons not attributable to the Accused, the court, unless there are good reasons, may well be guided to exercise the power to grant bail. This would be truer where the trial would take years." 20. Since the case before me is restricted to grant of bail on acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y-Laundering Act - 2002 on furnishing P.R. Bond in the sum of Rs. 1,00,000/- with one or two sureties in the like amount; Applicant shall be released on furnishing cash bail of Rs.1,00,000/- immediately and is permitted to provide one or two sureties as directed within a period of 4 weeks from the date of his release from prison; (ii) Applicant shall report to the Investigating Officer in the office of the Enforcement Directorate once every month on the third Saturday between 10:00 a.m. to 12:00 noon for the first three months and thereafter as and when called; (iii) Applicant shall co-operate with the conduct of trial and attend the Court on all dates unless specifically exempted and will not take any unnecessary adjournments, if he does so, it will entitle the prosecution to apply for cancellation of this order; (iv) Applicant shall not leave the State of Maharashtra without prior permission of the Trial Court. He shall deposit his passport, if any, with the Special Court under the PMLA at Mumbai within one week after his release from prison on bail; (v) Applicant shall not influence any of the witnesses or tamper with the evidence in any manner; (vi) Applicant shall ke ..... X X X X Extracts X X X X X X X X Extracts X X X X
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