As per the case facts, individuals accused of money laundering had been denied bail by lower courts, which found initial evidence of their guilt. The appeal concerned whether they met ...
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2024 INSC 217 1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1638 OF 2024
(@ SPECIAL LEAVE PETITION (Crl.) No.6561 OF 2023)
SATYENDAR KUMAR JAIN …APPELLANT
VERSUS
DIRECTORATE OF ENFORCEMENT …RESPONDENT
WITH
CRIMINAL APPEAL NO. 1639 OF 2024
(@SPECIAL LEAVE PETITION (Crl.) No. 7129 OF 2023)
ANKUSH JAIN …APPELLANT
VERSUS
DIRECTORATE OF ENFORCEMENT …RESPONDENT
AND
CRIMINAL APPEAL NO. 1640 OF 2024
(@ SPECIAL LEAVE PETITION (Crl.) No.7130 OF 2023
VAIBHAV JAIN …APPELLANT
VERSUS
DIRECTORATE OF ENFORCEMENT …RESPONDENT
J U D G M E N T
BELA M. TRIVEDI, J.
1. Leave granted.
2. All the three appeals arise out of the common impugned judgment
and order dated 06.04.2023 passed by the High Court of Delhi at
2
New Delhi, in the Bail Application Nos. 3590 of 2022, 3705 of 2022
and 3710 of 2022, whereby the High Court has rejected all the bail
applications of the appellants.
3. Earlier the Special Judge (PC Act) (CBI) -23 (MPs/MLAs cases)
vide the separate detailed orders dated 17.11.2022 had rejected
the bail applications of all the appellants – accused.
FACTUAL MATRIX
4. An FIR being case No.RC-AC-1-2017-A-0005 dated 24
th
August,
2017 came to be registered at the CBI AC-1, New Delhi against
Shri Satyendar Kumar Jain, Minister in the Government of National
Capital Territory of Delhi & Others, for the offences under Section
109 IPC and 13(2) read with Section 13(1)(e) of the PC Act, 1988
at the instance of the Dy. Superintendent of Police, CBI who had
conducted a Preliminary Enquiry, being PE AC-1-2017-A0003
dated 10.04.2017 registered at the said office of the CBI. After the
investigation, a Charge-sheet came to be filed by the CBI in respect
of the said FIR on 03.12.2018 in the Court of Special Judge, CBI,
Patiala House Courts, New Delhi against the six accused viz. Sh.
Satyendar Kumar Jain, Smt. Poonam Jain, Sh. Ajit Prasad Jain,
Sh. Sunil Kumar Jain, Sh. Vaibhav Jain and Sh. Ankush Jain.
3
5. Since Section 13(2) read with Section 13(1)(e) of the PC Act in the
said FIR dated 24
th
August, 2017 were scheduled offences under
the Prevention of Money Laundering Act, 2002 (hereinafter
referred to as the “PMLA”) and since it was alleged inter alia that
Sh. Satyendar Jain with the help of his family members and other
persons had acquired disproportionate assets during the period
from 14.02.2015 to 31.05.2017, while he was functioning as
Minister of Govt. NCT of Delhi, and had laundered tainted cash
amounts through Kolkata based shell companies, the Directorate
of Enforcement had registered an ECIR bearing No.
ECIR/HQ/14/2017 dated 30
th
August, 2017 against Satyendar Jain,
Vaibhav Jain, Ankush Jain and others for investigation into the
commission of the offence of Money laundering as defined under
Section 3 and punishable under Section 4 of the PMLA. On the
completion of the said investigation, the Prosecution Complaint
came to be filed on 27.07.2022 by the Directorate of Enforcement
in the Court of District and Sessions Judge, Rouse Avenue District
Court, New Delhi, against the accused Sh. Satyendar Jain and
others with a prayer to take cognizance of the offences of money
laundering under Section 3 punishable under Section 4 of PMLA.
The said Prosecution Complaint being CC No.23/2022 is now
4
pending at the stage of framing of charge against the appellants –
accused.
6. During the course of investigation, the appellant- Satyendar Kumar
Jain was arrested on 30
th
May, 2022 and the appellants-Vaibhav
Jain and Ankush Jain were arrested on 30
th
June, 2022. The gist
of the allegations made against the appellants-accused as
mentioned in the said Prosecution Complaint is as under: -
S.No. Name of the
Accused
Role in the case (in brief)
1. Satyendar
Kumar Jain
Based on the discussion and material herein above,
it is clear that Satyendar Kumar Jain hatched the
criminal conspiracy and conceptualized the idea of
accommodation entries against cash. To get his idea
implemented, he recommended appointing his old
friend Sh. Jagdish Prasad Mohta, Chartered
Accountant as the auditor of Akinchan Developers
Pvt. Ltd., Paryas Infosolution Pvt. Ltd., Indo
Metalimpex Pvt. Ltd. and Mangalayatan Projects Pvt.
Ltd. He (Satyendar Kumar Jain) first approached Sh.
Jagdish Prasad Mohta for taking accommodation
entries in lieu of cash in his aforesaid four
companies. Shri Mohta arranged a meeting between
Satyendar Kumar Jain and Rajendra Bansal, Kolkata
based accommodation entry provider. In this meeting
all the nitty gritties of these entries was finalized like
percentage of commission, process of cash transfer,
documents to be maintained etc. In this way
Satyendar Kumar Jain was the conceptualizer,
initiator, and supervisor for the entire operation of
these accommodation entries. By taking the
accommodation entries in various companies,
Satyendar Kumar Jain was hiding behind the
Corporate Veil. Investigation into the transactions
and facts prove that Satyendar Kumar Jain initiated,
5
managed and controlled the companies in which
these accommodations entries were received.
Accordingly, the accommodation entries totalling to
Rs.4.81 Crore (Rs.4.75 crores as entries + Rs.5.32
lakhs as commission) were received during the
period 2015-16 from Kolkata based entry operators
in the bank accounts of the aforesaid companies and
cash totalling to Rs.4,65,99,635/- i.e. (sum of
Rs.4,60,83,500/- + Rs.5,16,135/- commission paid to
entry operators), for this purpose, was paid to them.
He also received accommodation entry of
Rs.15,00,000/- in his company J.J. Ideal Estate Pvt.
Ltd. during the year 2015-16 from Kolkata based
entry operators by paying cash amounts of Rs.
15,00,000 + commission of Rs.16,800/-. By this
criminal activity, he while holding the public office of
and functioning as a Minister of Government of
National Capital Territory of Delhi, during the period
14.02.2015 to 31.05.2017, acquired assets to the
tune of Rs .4,81,16,435/- i.e. (sum of
Rs.4,60,83,500/- + Rs.15,00,000/- received in J.J.
Ideal Estate Pvt. Ltd. + Rs.5,16,135/- & Rs.16,800/-
commission paid to entry operators) - , as discussed
in above paragraphs, in his name and in the name of
his family member/ friends, with the help of his
business associates, which are disproportionate to
his known sources of income for which he has not
satisfactorily accounted for and laundered the
proceeds of crime through a complex web of
companies controlled by him.
Satyendar Kumar Jain has thus committed the
offence of money laundering as defined under
Section 3 of PMLA by actually acquiring, possessing,
concealing and using the proceeds of crime to the
tune of Rs.4,81,16,435/- and projecting and claiming
the same as untainted in the mode and manner as
provided in the preceding paragraphs in the present
complaint.
2. Ankush Jain Ankush Jain has knowingly assisted Satyendar
Kumar Jain by making declaration under IDS, 2016
for declaring undisclosed income of Rs.8.6 crore
(including Rs.1,53,61,166/- during check period) for
6
the period from 2010-11 to 2015-16 in order to save
and shield Sh. Satyendar Kumar Jain. He also
prepared back dated documents with the help of
Vaibhav Jain, Sunil Kumar Jain and Jagdish Prasad
Mohta with regard to his directorship in Akinchan
Developers Pvt. Ltd., Paryas Infosolution Pvt. Ltd.
and Indo Metalimpex Pvt. Ltd. by becoming directors
of aforesaid companies from back date for showing
his IDS declaration as genuine.
Ankush Jain has thus committed the offence of
money laundering as defined under Section 3 of
PMLA by being actually involved in and knowingly
assisting Satyendar Kumar Jain in projecting his
proceeds of crime to the tune of Rs.4,81,16,435/- as
untainted in the mode and manner as described in
the preceding paragraphs in the present complaint
and is therefore, liable for punishment under Section
4 of PMLA.
3. Vaibhav Jain Vaibhav Jain is involved in knowingly assisting
Satyendar Kumar Jain by making declaration under
IDS, 2016 for declaring undisclosed income of Rs.8.6
crore (including Rs.1,53,61,166/- during check
period) for the period from 2010-11 to 2015-16 in
order to save Sh. Satyendar Kumar Jain. He also
prepared back dated documents with the help of
Sunil Kumar Jain, Ankush Jain and Sh. Jagdish
Prasad Mohta with regard to his directorship in
Akinchan Developers Pvt. Ltd., Indo Metalimpex Pvt.
Ltd. and Mangalayatan Projects Pvt. Ltd. by
becoming directors of aforesaid companies from
back date for showing his IDS declaration as
genuine.
Vaibhav Jain has thus committed the offence of
money laundering as defined under Section 3 of
PMLA by being actually involved in and knowingly
assisting Satyendar Kumar Jain in projecting his
proceeds of crime to the tune of Rs.4,81,16,435/- as
untainted in the mode and manner as aforesaid in the
complaint and is therefore, liable for punishment
under Section 4 of PMLA.
7
SUBMISSIONS:
7. The learned counsels for the parties made their respective
submissions at length. The learned senior advocate Mr. Abhishek
Manu Singhvi broadly made following submissions on behalf of the
appellant Satyendar Kumar Jain:
(i) The appellant was already granted bail in the predicate
offence registered by the CBI, and the arrest of the appellant
was made by the ED almost five years after the registration
of the ECIR, though the appellant was cooperating the ED
by remaining present in response to the summons issued
under Section 50 of the PMLA. The appellant was in custody
from 30.05.2022 to 26.05.2023 and since then has been
granted interim bail on the medical ground.
(ii) No shares of companies as alleged by the ED were acquired
by the appellant within the check period and even otherwise
the assets held by the company could not be attributed to its
shareholders.
(iii) Even if the accommodation entries amounting to Rs. 4.61
crores are attributed to the appellant through his wife’s
shareholdings, it would come only to Rs. 59,32,122/- which
8
is less than 1 crore, and therefore the appellant is entitled to
bail under the proviso to Section 45 of the PMLA.
(iv) There is gross discrepancy in the amount of proceeds of
crime calculated by the ED and the amount mentioned in the
Chargesheet of the CBI in as much as the alleged
disproportionate amount is Rs.1,62,50,294/- as per the FIR
whereas as per the ED the amount is Rs. 4,81,16,435/-.
(v) The appellant had neither served as a Director nor had
signed any financial document during the check period, and
the appellant had already resigned from the directorship of
the allegedly involved Companies two years before the
commission of the alleged offence. It was Vaibhav Jain and
Ankush Jain and their family members who had a significant
influence and control over the said companies.
(vi) The appellant’s role in the companies has been delineated
in the MOU seized from Vaibhav Jain’s locker, which
underscores the business relations and shows that the
appellant’s architectural expertise was to be employed for
the investment to be financed by the families of Vaibhav Jain
and Ankush Jain. Through the quashing of the provisional
attachment order by the Delhi High Court, the allegation
9
against the appellant being the beneficial owner had stood
refuted.
(vii) The alleged proceeds of crime through accommodation
entries were directed to the families of Vaibhav Jain and
Ankush Jain, and the fresh shares issued to the Kolkata
based Shell Companies were promptly transferred to
Vaibhav Jain and Ankush Jain during the check period. The
appellant therefore was not in possession of any proceeds
of crime.
(viii) The appellant could not be held to be in constructive
possession of the property, if there was no dominion or
control of the appellant over the said property. As per the
ED’s complaint also the appellant was not in possession of
the proceeds of crime and therefore also the appellant could
not be said to be in constructive possession of the same.
(ix) There was no shred of evidence collected by the ED to show
that the appellant had provided cash to Kolkata companies
during the check period. It was Vaibhav Jain and Ankush
Jain who had explained on their Fragrance business as the
legitimate source of the cash during their recording of
statements under Section 50 of the PMLA.
10
(x) The Kolkata companies and the persons allegedly providing
accommodation entries were not made the accused by the
ED.
(xi) The allegation of the ED in its complaint that the appellant
had committed a predicate offence of hatching a criminal
conspiracy and by committing criminal activity had acquired
assets to the tune of Rs. 4.81 crore in his name and in the
name of his family members while holding the public office,
was not the allegation made by the CBI in the FIR registered
against the appellant and others with regard to the
disproportionate assets charged under Section 13(1)(e) of
the Prevention of Corruption Act.
(xii) The assumptions of proceeds of crime on the sole basis of
accommodation entries is completely contrary to the
concept of proceeds of crime as explained in the judgment
of Vijay Madanlal Choudhary and Others vs. Union of
India and Others
1
. Such allegation could be a tax violation
but could not be considered as proceeds of crime.
(xiii) The Prosecution Complaint is silent as to when the
scheduled offence was committed and as to how and in what
1
2022 SCC OnLine SC 929
11
manner the proceeds of crime was laundered within the
meaning of Section 3 of the PMLA.
(xiv) As regards the Income Disclosure Scheme (IDS) declaration
made by Vaibhav Jain and Ankush Jain for about Rs.16
crores for the period 2010-2016, it has been submitted that
the said IDS declarations were rejected by the PCIT vide the
order dated 09.06.2017, on the ground of
misrepresentation/suppression of facts. The said order of
PCIT was challenged by Vaibhav Jain and Ankush Jain
before the Delhi High Court, however the High Court had
also rejected that petition vide the order dated 01.08.2019.
Neither the PCIT nor the High Court had given any finding
that the said amount of Rs. 16 crores belonged to the
appellant.
(xv) The reliance placed by the ED on the appellant’s letter dated
27.06.2018 was misleading and incorrect, in as much as the
appellant vide the said letter had explicitly denied the
appellant being the beneficial owner. Since Vaibhav Jain
and Ankush Jain had already deposited the tax on the said
income, the appellant in the said letter had only requested
the authorities to adjust the said tax and not to make a
12
demand again for the same amount from the appellant,
however from the said letter it could not be assumed that the
appellant had accepted the additions made in the
assessment order.
(xvi) As held in Vijay Madanlal Choudhary (supra), the courts
ought not to conduct mini trial and should consider only the
broad probability of the matter. The appellant is not a flight
risk, there is no risk of tampering of documents or witnesses.
The jail violation as alleged by the ED has not been
accepted by the concerned Jail visiting Judge and the Jail
authorities. The appellant being sick and infirm, having
undergone a spine surgery, is entitled to bail as per the
proviso to Section 45 of PMLA.
8. The learned ASG Mr. SV Raju made the following submissions in
the appeal preferred by the appellant Shri Satyendar Kumar Jain:
(i) It was revealed during the course of investigation that the
appellant Satyendar Kumar Jain while posted and
functioning as the Minister in the Government of National
Capital Territory of Delhi, during the period from 2015 to
2017 had acquired assets in the form of movable and
immovable properties in his name and in the name of his
13
family members, which were disproportionate to his known
source of income.
(ii) During the check period, the accommodation entries against
cash of about 4.81 crores was received in the companies –
M/s Akinchan Developers Pvt. Ltd., M/s Paryas Infosolutions
Pvt. Ltd., M/s. Manglayatan Projects Pvt. Ltd., and M/s JJ
Ideal Estate Pvt. Ltd., beneficially owned/ controlled by the
appellant from Kolkata based entry operators through Shell
Companies.
(iii) From the statements of Rajendra Bansal, Jivendra Mishra,
both residents of Kolkata, and from Shri J.P. Mohta, the
Chartered Accountant, it was revealed that Shri Rajendra
Bansal had arranged accommodation entries in the
companies of the appellant. Shri Vaibhav Jain in his
statement under Section 50 had also stated that the cash
was provided by the appellant himself and had also
explained about the modus operandi of transferring the cash
from Delhi to Kolkata through Hawala operators and as to
how in lieu of cash, accommodation entries were layered
and received from Kolkata based shell companies into the
14
companies owned by the appellant, and agricultural lands
were purchased from the said funds.
(iv) From the documents obtained from the Income Tax
Department it was revealed that the appellant had submitted
the application before the income tax authorities requesting
that the income tax paid by Vaibhav Jain and Ankush Jain
under IDS, 2016 be adjusted against the demands raised in
his individual assessments by the IT authorities, which
established that the IDS declaration made by Vaibhav Jain
and Ankush Jain were made for the appellant and that the
amount paid in IDS as well as the tax paid thereon belonged
to the appellant Satyendar Kumar Jain.
(v) The Special Court having taken the cognizance of the PMLA
case vide the order dated 29.07.2022 and having held that
there was prima facie evidence incriminating about the
involvement of the appellant Satyendar Kumar Jain was
sufficient to show the existence of the scheduled offence
and also the existence of proceeds of crime.
(vi) The appellant Satyendar Kumar Jain was the main person
behind the bogus shell companies based in Kolkata, which
never did any real business. He had either incorporated
15
them or was having majority shareholdings alongwith his
wife. The accommodation entries of Rs. 16.50 crores
(approx.) were received in the said companies during the
financial years 2010-11, 2011-12 and 2015-16 with the
modus operandi as revealed from the statements of the
Auditor/Chartered Accountant Shri J.P. Mohta as well as the
accommodation entry provider Shri Rajendra Bansal and
also from the statement of Vaibhav Jain.
(vii) Though the principle of company being a separate legal
entity from its shareholders is an established principle of
Company law, the lifting of corporate veil has been upheld
in the cases where the corporate structures have been used
for committing fraud, economic offences or have been used
as a facade or a sham for carrying out illegal activities.
(viii) The bogus nature of IDS declarations was substantiated by
the fact that the entire amount of Rs.16.50 Crores received
as accommodation entry was split between Vaibhav Jain
and Ankush Jain. The said declarations showed their modus
operandi to shield Satyendar Jain and his family members,
and assume the entire liability upon themselves to give it a
colour of a tax evasion simplicitor, rather than a criminal
16
activity relating to disproportionate assets. This modus
operandi also showed that the appellants themselves had
disregarded the corporate entities of these companies.
(ix) The disproportionate pecuniary resources earned by the
appellant by the commission of scheduled offence, were
used as accommodation entries for concealing and layering
the tainted origins of the money, and therefore would qualify
to be the proceeds of crime as defined under Section 2(1)(u)
of the PMLA.
(x) The two entry operators namely Rajendra Bansal and
Jivendra Mishra had expressed a fear that Shri Satyendar
Kumar Jain being an influential politician will create danger
to them.
(xi) The mandatory twin conditions of Section 45 of PMLA
having not been satisfied, the appellant should not be
released on bail.
9. So far as the appellants Ankush Jain and Vaibhav Jain are
concerned, the Learned Senior Advocate Ms. Menakshi Arora with
Learned Advocate Mr. Sushil Kumar Gupta made the following
submissions: -
17
(i) The Scheduled offence in the present case i.e. the
disproportionate assets case under Section 13(1)(e) of the
PC Act is a period specific offence and gets accomplished
only at the end of the check period (14.02.2015 to
31.05.2017). As stated in Vijay Madanlal Choudhary
(supra), the proceeds of crime is indicative of criminal
activity related to a scheduled offence already
accomplished, and therefore the offence of money
laundering can be initiated only after the Scheduled Offence
is accomplished. However, in the instant case, the
appellants have been roped in for benami transactions from
2015-2016 which was well before the end of check period i.e
31.05.2017.
(ii) The offence of money laundering against the appellants is
attributed to their act of filing IDS on 27.09.2016 much before
the end of check period i.e. 31.05.2017. Hence, the same
cannot be considered as an act of assisting someone in the
offence of money laundering as the proceeds of crime could
have been generated after the end of the check period and
not before that.
18
(iii) The act of declaring IDS by the appellants in respect of
undisclosed income for the period from 2010-2011 to 2015-
2016 cannot be considered as an act of assisting Satyendar
Jain in committing the offence of money laundering, in as
much as the possession of unaccounted property acquired
by legal means may be actionable for tax violation, but
cannot be regarded as the proceeds of crime unless the
concerned tax legislation prescribes such violations as an
offence and such an offence is included in the Schedule of
the PML Act. In the instant case, the total amount of 16
crores has not been considered as the proceeds of crime as
the ED is relying on the accommodation entries received
during the check period.
(iv) The IDS filed u/s 183 of the Finance Act, 2013 was declared
void u/s 193 of the said Act by the Income Tax authorities.
Hence, the said act of the appellants filing the IDS cannot be
construed as basis for levelling charges under Section 3 of
PMLA. Reliance is placed on Karnail Singh vs. State of
Haryana and Another
2
for understanding the meaning of
“void.”
2
(1995) Supp (3) SCC 376
19
(v) It is not made clear by the ED as to the declaration of which
IDS, whether the one filed by Vaibhav Jain or that filed by
Ankush Jain has led to the assistance of Satyendar Jain for
making out the offence under PMLA. Since the allegations
are vague, the benefit of the same should go to the accused.
In this regard, reliance is placed on Neelu Chopra and
Another vs. Bharti
3
and Myakala Dharmarajam & Ors. Vs.
State of Telangana & Anr.
4
(vi) Since, the generation of proceeds of crime is not an offence
under Section 3 of PMLA and the said offence could be
committed only after the accomplishment of the Scheduled
Offence, the alleged act could not be said to be an offence
under Section 3 of PMLA. The act of the appellants assisting
Satyendar Jain for accumulating assets as alleged by the
CBI, cannot be said to be an offence under the PMLA.
(vii) The control of the entire records of the companies was with
the appellants, including the bank accounts. They were the
main decision- makers being the Directors, in respect of the
acts performed on behalf of the Companies, and Mr.
3
(2009) 10 SCC 184
4
(2020) 2 SCC 743
20
Satyendar Jain had nothing to do with the said Companies
after 2013. The prosecution has unnecessarily tried to link
the appellants with Satyendar Jain from the statements of
witnesses recorded under Section 50 of the PMLA.
(viii) The Scheduled Offence does not allege conspiracy. The day
Mr. Satyendar Jain decided to enter into politics, all the
relations with him whether in respect of the Companies or
any business transactions were severed, and since July
2013 he was neither a Director nor a shareholder nor had
any relation with the Companies which were the Companies
of the appellants.
(ix) The appellants are in custody since 30.06.2022 except for
the period when they were released on the interim bail
(Vaibhav Jain on 18.08.2023 to 27.12.2023 and Ankush Jain
on 12.09.2023 to 27.12.2023).
(x) The appellants have not violated any conditions imposed by
the Court when on interim bail, and have also not tried to
delay the proceedings before the trial court in any manner.
21
10. The learned ASG Mr. S.V. Raju appearing on behalf of the
respondent-Directorate of Enforcement made his submissions in
the appeals preferred by the appellants- Ankush Jain and Vaibhav
Jain as under: -
(i) The appellants-Ankush Jain and Vaibhav Jain were actively
involved in the commission of the offence of money
laundering by assisting the accused-Satyendar Kumar Jain.
The appellant Ankush Jain was the Director of M/s.
Mangalayatan Projects Pvt. Ltd. during the check period.
The said company is one of the accused in the Prosecution
Complaint filed on 27.07.2022. The said company had
received the proceeds of crime amounting to
Rs.1,90,00,000/- during the check period in the form of
accommodation entries from Kolkata based shell
companies. The said appellant-Ankush Jain transferred the
land possessed by M/s. Mangalayatan Projects Pvt. Ltd. in
the name of his mother Indu Jain to frustrate the proceeds
of crime.
(ii) Similarly, the appellant-Vaibhav Jain was the Director of M/s.
Paryas Infosolution Pvt. Ltd. during the check period. The
said company is also one of the accused in the Prosecution
22
Complaint filed on 27.07.2022. The said company had
received proceeds of crime amounting to Rs.69,00,300/-
during the check period in the form of accommodation
entries from the Kolkata based shell companies. The said
appellant-Vaibhav Jain had transferred the land possessed
by M/s. Mangalayatan Projects Pvt. Ltd. in the name of his
mother Sushila Jain and wife-Swati Jain to frustrate the
proceeds of crime. He also took back the shares without
consideration from shell companies and thus both the
appellants helped Satyendar Kumar Jain in projecting the
tainted money as untainted in the process of money
laundering.
(iii) Both the appellants had made declarations in their individual
capacity under the IDS, 2016 for declaring undisclosed
income of Rs.8.6 Crores during check period i.e. from 2010-
11 to 2015-16, in order to shield Satyendar Kumar Jain for
concealing the true nature of proceeds of crime.
(iv) Both the appellants prepared back dated documents with
the help of each other and with the help of Sunil Kumar Jain
and Jagdish Prasad Mohta for becoming directors in their
respective companies i.e. Mr. Ankush Jain in M/s. Akinchan
23
Developers Pvt. Ltd., and M/s. Indo Metalimpex Pvt. Ltd.,
and Mr. Vaibhav Jain in M/s. Akinchan Developers Pvt. Ltd.,
M/s. Mangalayatan Projects Pvt. Ltd. and M/s. Indo
Metalimpex Pvt. Ltd. for showing the IDS declarations as
genuine.
(v) The income sought to be disclosed by the appellants under
the IDS declarations belonged to the appellant- Satyendar
Jain, and the said IDS declarations were rejected by the
Income Tax authorities under Section 193 of the Finance
Act, 2016 on the ground of misrepresentation and
suppression of facts. The said order was upheld by the High
Court and the Supreme Court.
(vi) The declarations of the appellants were held void under
Section 193 of the Finance Act, 2016, which applied only for
the purpose of the said scheme, however, if the making of
such declarations was an offence under a separate Act,
namely, PMLA, then such an act would not be effaced
merely because of Section 193.
(vii) The very fact that such declarations were made by the said
appellants, was the relevant fact for the purposes of the
alleged offence under the PMLA, as both the appellants are
24
being prosecuted in their individual capacities for allegedly
actively assisting the appellant- Satyendar Jain in
concealing the proceeds of crime and projecting the
proceeds of crime as untainted.
(viii) Section 13(1)(e) and Section 13(2) are both scheduled
offences under the PMLA, and Section 3 of PMLA ropes in
any person who may or may not have any role to play in the
scheduled offence but has directly or indirectly attempted to
indulge or knowingly assisted or knowingly is a party
involved in any process or activity connected with the
proceeds of crime.
(ix) The money laundering need not commence only after the
check period, inasmuch as the offence under Section 13(1)
(e) of the PC Act contemplates that at any time the assets of
the public servant could be disproportionate to his income,
which could have been acquired by the public servant either
at the beginning or in the middle of the check period also.
(x) From the statements of bank accounts of the four companies
and various other Kolkata based shell companies controlled
by Kolkata based entry operators revealed that the amount
totalling to Rs. 4,60,83,500/- was received in M/s. Akinchan
25
Developers Pvt. Ltd., M/s. Mangalayatan Projects Pvt. Ltd.
and M/s. Paryas Infosolution Pvt. Ltd. from Kolkata based
shell companies during the period 01.04.2015 to 31.03.2016
(during the check period) despite no business activities were
carried out by the said companies and the shares were
purchased at a very high premium.
(xi) The investigation revealed that the cash acquired by
Satyendar Jain was given to the Kolkata entry operators for
the purpose of accommodation entries contemporaneously
during the check period as and when they were acquired and
thereafter the same were concealed and projected as
untainted and sought to be laundered in the form of share
application money. The said amount was also used for
repayment of loan and purchase of agricultural lands by the
said companies.
(xii) Though the CBI in their chargesheet dated 03.12.2018 filed
in FIR No. RC-AC-I-2017-A 0005 (dated 24.08.2017) had
quantified the proceeds of crime to be Rs.1,47,60,497.67,
in view of the investigation conducted under PMLA it was
established that all the companies were beneficially owned
and controlled by Satyendar Jain, and the amount of
26
Rs.4,81,16,435/- received during the check period was the
proceeds of crime in the hands of Satyendar Jain. The said
conclusion along with the facts underlying the same, have
also been conveyed to the CBI under Section 66(2) of PMLA
vide the letter dated 31.03.2022.
(xiii) Though the accommodation entries per se may not be the
proceeds of crime in a given case, since in the instant case,
it has been specifically alleged that the shares in the three
companies during the check period which were held by the
bogus share companies, were purchased by the Kolkata
based bogus companies as entries in lieu of cash, the
source of which cash was the public servant, namely,
Saytendar Jain, he was the beneficial owner of the shares
which was a vehicle to introduce the unaccounted cash or
disproportionate pecuniary resources which squarely fell
within the meaning of proceeds of crime as defined under
Section 2(1)(u) of the PMLA.
11. During the course of arguments, the Court had sought clarification
from the learned ASG Mr. Raju with regard to the role of the
appellants- Ankush Jain and Vaibhav Jain, as also the quantum of
proceeds of crime with which they were allegedly involved,
27
specifically in respect of the figures mentioned in the Prosecution
Complaint against them. Pursuant to the same, the Deputy Director,
Directorate of Enforcement has filed his affidavit clarifying the role
of the appellants – Ankush Jain and Vaibhav Jain and further stating
inter alia that the figure of Rs.1,53,61,166/- was inadvertently
mentioned at page no.-248, as it was the amount attributed by the
CBI in its Chargesheet to Satyendar Jain, Ankush Jain and Vaibhav
Jain individually for the purpose of receiving total accommodation
entries in lieu of cash of Rs.4.61 Crores, however respondent’s
investigation has revealed that the entire Rs.4.81 Crores (Rs.4.61
Crores plus commission plus Rs.15 lakhs in J.J. Ideal Estates Pvt.
Ltd.) was entirely the property of Satyendar Jain received in his
companies as accommodation entries in lieu of cash and this entire
sum was sought to be declared by the appellants Ankush Jain and
Vaibhav Jain in the IDS as their own income.
12. In the light of the said clarification, the Learned Senior Advocate
Ms. Arora had further submitted that the so-called inadvertent error
was not pointed out before the trial court and the High Court and it
was only during the course of arguments before this Court, the said
clarification/rectification was sought to be made, which is not
permissible. According to her, ED attains jurisdiction to investigate
28
only after the proceeds of crime is generated and when the same
is subjected to any process or activity as mentioned in Section 3 of
PMLA. Therefore, ED could not have increased the proceeds of
crime beyond what was taken as disproportionate assets by the
CBI i.e. 1,47,60,497/-. She further submitted that as per the FIR,
the figure mentioned was Rs. 1,53,61,166/-, during the arguments
and as per the written submissions the figure mentioned was Rs.
4,81,16,435/-, and the figure mentioned as per the affidavit is
Rs.4,65,99,635/- which does not find mention in the complaint.
Thus, the allegations made against the appellants being vague in
nature, the benefit should go to the appellants.
ANALYSIS:
13. We are well conscious of the fact that the chargesheet has already
been filed in the predicate offence on 03.12.2018 for the offences
under the Prevention of Corruption Act allegedly committed by the
present appellants alongwith others, and the cognizance thereof
has already been taken by the concerned Court. The Prosecution
Complaint has also been filed by the respondent – ED against the
present appellants alongwith others for the commission of the
offence of Money laundering as defined under Section 3 read with
29
Section 70 punishable under Section 4 of PMLA 2002. We have
also been apprised that the Special Court has fixed the Prosecution
Complaint for framing of charge against the appellants alongwith
others. Under the circumstances any observation made by us may
influence the process of trial. We, therefore would refrain ourselves
from dealing with the elaborate submissions made by the learned
counsels for the parties on the merits of the case, we would rather
confine ourselves to deal with the bare minimum facts necessary
for the purpose of deciding whether the appellants have been able
to satisfy the twin conditions laid down in Section 45 of the PMLA,
that is (i) there are reasonable grounds for believing that the
persons accused of the offence under the PMLA is not guilty of such
offence; and (ii) that he is not likely to commit any offence while on
bail.
14. In Gautam Kundu vs. Directorate of Enforcement (Prevention
of Money-Laundering Act), Government of India
5
, while holding
that the conditions specified under Section 45 of PMLA are
mandatory, it was observed as under: -
“30. The conditions specified under Section 45 of PMLA are
mandatory and need to be complied with, which is further
strengthened by the provisions of Section 65 and also Section 71
of PMLA. Section 65 requires that the provisions of CrPC shall
5
(2015) 16 SCC 1
30
apply insofar as they are not inconsistent with the provisions of
this Act and Section 71 provides that the provisions of PMLA
shall have overriding effect notwithstanding anything inconsistent
therewith contained in any other law for the time being in force.
PMLA has an overriding effect and the provisions of CrPC would
apply only if they are not inconsistent with the provisions of this
Act. Therefore, the conditions enumerated in Section 45 of PMLA
will have to be complied with even in respect of an application for
bail made under Section 439 CrPC. That coupled with the
provisions of Section 24 provides that unless the contrary is
proved, the authority or the Court shall presume that proceeds of
crime are involved in money-laundering and the burden to prove
that the proceeds of crime are not involved, lies on the appellant.”
15. In Vijay Madanlal Choudhary (supra), a three-judge bench while
upholding the validity of Section 45 had observed as under: -
“387. Having said thus, we must now address the challenge to
the twin conditions as applicable post amendment of 2018. That
challenge will have to be tested on its own merits and not in
reference to the reasons weighed with this Court in declaring the
provision, (as it existed at the relevant time), applicable only to
offences punishable for a term of imprisonment of more than
three years under Part A of the Schedule to the 2002 Act. Now,
the provision (Section 45) including twin conditions would apply
to the offence(s) under the 2002 Act itself. The provision post
2018 amendment, is in the nature of no bail in relation to the
offence of money-laundering unless the twin conditions are
fulfilled. The twin conditions are that 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
31
for prevention of money-laundering and combating menace of
money-laundering, including for attachment and confiscation of
proceeds of crime and to prosecute persons involved in the
process or activity connected with the proceeds of crime. In view
of the gravity of the fallout of money-laundering activities having
transnational impact, a special procedural law for prevention and
regulation, including to prosecute the person involved, has been
enacted, grouping the offenders involved in the process or
activity connected with the proceeds of crime as a separate class
from ordinary criminals. The offence of money-laundering has
been regarded as an aggravated form of crime “world over”. It is,
therefore, a separate class of offence requiring effective and
stringent measures to combat the menace of money-laundering.
400. It is important to note that the twin conditions provided under
Section 45 of the 2002 Act, though restrict the right of the
accused to grant of bail, but it cannot be said that the conditions
provided under Section 45 impose absolute restraint on the grant
of bail. The discretion vests in the Court which is not arbitrary or
irrational but judicial, guided by the principles of law as provided
under Section 45 of the 2002 Act.
404. As aforementioned, similar twin conditions have been
provided in several other special legislations validity whereof has
been upheld by this Court being reasonable and having nexus
with the purposes and objects sought to be achieved by the
concerned special legislations. Besides the special legislation,
even the provisions in the general law, such as 1973 Code
stipulate compliance of preconditions before releasing the
accused on bail. The grant of bail, even though regarded as an
important right of the accused, is not a mechanical order to be
passed by the Courts. The prayer for grant of bail even in respect
of general offences, have to be considered on the basis of
objective discernible judicial parameters as delineated by this
Court from time to time, on case-to-case basis.
406. It was urged that the scheduled offence in a given case may
be a non-cognizable offence and yet rigors of Section 45 of the
2002 Act would result in denial of bail even to such accused. This
argument is founded on clear misunderstanding of the scheme
of the 2002 Act. As we have repeatedly mentioned in the earlier
32
part of this judgment that the offence of money-laundering is one
wherein a person, directly or indirectly, attempts to indulge or
knowingly assists or knowingly is a party or is actually involved
in any process or activity connected with the proceeds of crime.
The fact that the proceeds of crime have been generated as a
result of criminal activity relating to a scheduled offence, which
incidentally happens to be a non-cognizable offence, would make
no difference. The person is not prosecuted for the scheduled
offence by invoking provisions of the 2002 Act, but only when he
has derived or obtained property as a result of criminal activity
relating to or in relation to a scheduled offence and then indulges
in process or activity connected with such proceeds of crime.
Suffice it to observe that the argument under consideration is
completely misplaced and needs to be rejected.”
16. In the light of the aforestated position of law propounded by the
three Judge Bench, we have prima facie examined the case alleged
against the appellants and the prima facie defense put forth by the
appellants, to satisfy ourselves whether there are reasonable
grounds for believing that the appellants are not guilty of the alleged
offences under the Act and that they are not likely to commit any
offence while on bail. Though it was urged on behalf of the
respondent – ED that the appellant Satyendar Kumar Jain is a very
influential political leader and is likely to influence the witnesses if
released on bail, we would rather objectively decide the appeals on
merits.
17. The case in nutshell put forth by the respondent – ED is that the
appellant Satyendar Kumar Jain had conceptualized the idea of
33
accommodation entries against cash and at this instance, his close
associate Shri Jagdish Prasad Mohta had arranged a meeting
between Satyendar Kumar Jain and Rajendra Bansal, a Kolkata
based accommodation entry provider in July/ August, 2010. In the
said meeting the modalities of carrying out accommodation entries,
percentage of commission, process of cash transfer and
documents to be maintained etc. were finalized. Thus, according to
the ED, Satyendar Kumar Jain was the conceptualizer, initiator and
supervisor for the entire operation of the accommodation entries. It
has been alleged that the accommodation entries totalling to
Rs.4.81 crores were received during the period 2015-16 from
Kolkata based entry operators in the bank accounts of the four
companies – Paryas Infosolution Pvt. Ltd., Indo Metalimpex Pvt.
Ltd., Mangalayatan Projects Pvt. Ltd. and Akinchan Developers
Pvt. Ltd., which companies were owned/controlled by him and his
family members, and the cash totalling Rs.4,65,99,635/-
approximately was paid to the said entry operators. It has been also
alleged that the appellant Satyendar Kumar Jain received
accommodation entries of Rs.15 lakhs in his company J.J. Ideal
Estate Pvt. Ltd. during the year 2015-16 from the said Kolkata
based entry operators by paying cash amounts of Rs.15 lakhs and
commission of Rs.16,800/-. Thus, it has been alleged that
34
Satyendar Kumar Jain committed offence of money laundering
under Section 3 of PMLA by actually acquiring, possessing,
concealing and using the process of bank to tune of
Rs.4,81,16,435/- and projecting and claiming the same as
untainted.
18. The ED has also alleged against the appellants Ankush Jain and
Vaibhav Jain inter alia that they had assisted Satyendar Kumar Jain
in the commission of the alleged offence by making separate
independent declarations under IDS 2016 for declaring undisclosed
income of Rs.8.26 crores for period from 2010-11 to 2015-16 in
order to protect Satyendar Kumar Jain. As per the case of ED, the
appellants Ankush Jain and Vaibhav Jain had prepared ante dated
documents with the help of Sunil Kumar Jain and Jagdish Prasad
Mohta with regard to the Directorship in Akinchan Developers Pvt.
Ltd. Paryas Infosolution Pvt. Ltd., Indo Metalimpex Pvt. Ltd., and
Mangalayatan Projects Pvt. Ltd. by becoming the Directors of the
said companies from the back date for showing their IDS
declarations as genuine. Thus, the said appellants have also
committed the offence of money laundering as defined under
Section 3 of PMLA by being actually involved in and knowingly
assisting Satyendar Kumar Jain in projecting his proceeds of crime
35
to the tune of Rs.4,81,16,435/- as untainted in the mode and
manner stated in the Prosecution Complaint.
19. It was vehemently argued by the Learned Senior Advocate Mr.
Singhvi, for the appellant Satyendar Jain that there was gross
discrepancy in the amount of proceeds of crime calculated by the
ED in the Prosecution Complaint and in the amount with regard to
disproportionate assets mentioned by the CBI in the chargesheet
filed in the predicate offence. According to him, the amount with
regard to disproportionate assets mentioned by the CBI is Rs.
1,47,60,497/- whereas as per the ED the proceeds of crime is
Rs.4,81,16,435/-. Even if the accommodation entries amounting to
about Rs.4.6 crores are attributed to the appellant-Satyendar
Kumar Jain through his wife’s share holdings, it would come to only
Rs.59,32,122/- which is less than one crore. He has further
submitted that the appellant-Satyendar Kumar Jain neither served
as a Director nor had signed any financial document during the
check period and that he had already resigned from the
Directorship of the companies two years before the commission of
the alleged offence. According to him, it was the appellants-
Vaibhav Jain and Ankush Jain, and their family members who had
36
the significant influence over the control of the companies involved
in the case.
20. In order to appreciate the submissions of Mr. Singhvi, let us have a
cursory glance over the definitions of the words “beneficial owner”
as contained in Section 2(1)(fa), “Money laundering” as defined in
Section 2(1)(p), “Proceeds of Crime” in section 2(1)(u) and
“Property” in Section 2(1)(v), and the offence under Section 3 of the
PMLA. The said definitions read as under:
“Section 2 (1) (fa)
(fa) "beneficial owner" means an individual who ultimately owns
or controls a client of a reporting entity or the person on whose
behalf a transaction is being conducted and includes a person
who exercises ultimate effective control over a juridical person;
Section 2 (1) (p)
(p) "money-laundering" has the meaning assigned to it in section
3;
Section 2 (1)(u)
(u) "proceeds of crime" means any property derived or obtained,
directly or indirectly, by any person as a result of criminal activity
relating to a scheduled offence or the value of any such
property or where such property is taken or held outside the
country, then the property equivalent in value held within the
country or abroad;
Explanation. --For the removal of doubts, it is hereby clarified that
"proceeds of crime" include property not only derived or obtained
from the scheduled offence but also any property which may
directly or indirectly be derived or obtained as a result of any
criminal activity relatable to the scheduled offence;
37
Section 2 (1)(v)
(v) "property" means any property or assets of every description,
whether corporeal or incorporeal, movable or immovable,
tangible or intangible and includes deeds and instruments
evidencing title to, or interest in, such property or assets,
wherever located;
Explanation. --For the removal of doubts, it is hereby clarified that
the term property includes property of any kind used in the
commission of an offence under this Act or any of the scheduled
offences;
Section 3
Whosoever directly or indirectly attempts to indulge or knowingly
assists or knowingly is a party or is actually involved in any
process or activity connected with the 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.”
38
21. The offence of money laundering as contemplated in Section 3 of
the PMLA has been elaborately dealt with by the three Judge Bench
in Vijay Madanlal Choudhary (supra), in which it has been
observed that Section 3 has a wider reach. The offence as defined
captures every process and activity in dealing with the proceeds of
crime, directly or indirectly, and is not limited to the happening of
the final act of integration of tainted property in the formal economy
to constitute an act of money laundering. Of course, the authority
of the Authorised Officer under the Act to prosecute any person for
the offence of money laundering gets triggered only if there exists
proceeds of crime within the meaning of Section 2(1)(u) of the Act
and further it is involved in any process or activity. Not even in case
of existence of undisclosed income and irrespective of its volume,
the definition of “Proceeds of Crime” under Section 2(1)(u) will get
attracted, unless the property has been derived or obtained as a
result of criminal activity relating to a scheduled offence. The
property must qualify the definition of “Proceeds of Crime” under
Section 2(1)(u) of the Act. As observed, in all or whole of the crime
property linked to scheduled offence need not be regarded as
proceeds of crime, but all properties qualifying the definition of
39
“Proceeds of Crime” under Section 2(1)(u) will necessarily be the
crime properties.
22. So far as the facts of the present case are concerned, the
respondent ED has placed heavy reliance on the statements of
witnesses recorded and the documents produced by them under
Section 50 of the said Act, to prima facie show the involvement of
all the three appellants in the alleged offence of money laundering
under Section 3 thereof. In Rohit Tandon vs. Directorate of
Enforcement
6
, a three Judge Bench has held that the statements
of witnesses recorded by Prosecution – ED are admissible in
evidence in view of Section 50. Such statements may make out a
formidable case about the involvement of the accused in the
commission of the offence of money laundering.
23. Again, the three Judge Bench in Vijay Madanlal Choudhary
(supra) while examining the validity of the provisions contained in
Section 50 held as under: -
431. In the context of the 2002 Act, it must be remembered that
the summon is issued by the Authority under Section 50 in
connection with the inquiry regarding proceeds of crime which
may have been attached and pending adjudication before the
Adjudicating Authority. In respect of such action, the designated
officials have been empowered to summon any person for
collection of information and evidence to be presented before the
6
(2018) 11 SCC 46
40
Adjudicating Authority. It is not necessarily for initiating a
prosecution against the noticee as such. The power entrusted to
the designated officials under this Act, though couched as
investigation in real sense, is to undertake inquiry to ascertain
relevant facts to facilitate initiation of or pursuing with an action
regarding proceeds of crime, if the situation so warrants and for
being presented before the Adjudicating Authority. It is a different
matter that the information and evidence so collated during the
inquiry made, may disclose commission of offence of money-
laundering and the involvement of the person, who has been
summoned for making disclosures pursuant to the summons
issued by the Authority. At this stage, there would be no formal
document indicative of likelihood of involvement of such person
as an accused of offence of money-laundering. If the statement
made by him reveals the offence of money-laundering or the
existence of proceeds of crime, that becomes actionable under
the Act itself. To put it differently, at the stage of recording of
statement for the purpose of inquiring into the relevant facts in
connection with the property being proceeds of crime is, in that
sense, not an investigation for prosecution as such; and in any
case, there would be no formal accusation against the noticee.
Such summons can be issued even to witnesses in the inquiry
so conducted by the authorised officials. However, after further
inquiry on the basis of other material and evidence, the
involvement of such person (noticee) is revealed, the authorised
officials can certainly proceed against him for his acts of
commission or omission. In such a situation, at the stage of issue
of summons, the person cannot claim protection under Article
20(3) of the Constitution. However, if his/her statement is
recorded after a formal arrest by the ED official, the
consequences of Article 20(3) or Section 25 of the Evidence Act
may come into play to urge that the same being in the nature of
confession, shall not be proved against him. Further, it would not
preclude the prosecution from proceeding against such a person
including for consequences under Section 63 of the 2002 Act on
the basis of other tangible material to indicate the falsity of his
claim. That would be a matter of rule of evidence.
24. In the instant case, it has been found during the course of
investigation from the statements of witnesses recorded under
41
Section 50 that the appellant Satyendar Jain and his family directly
or indirectly were owning/controlling the companies - M/s. Akinchan
Developers Pvt. Ltd., M/s. Paryas Infosolution Pvt. Ltd., M/s. Indo
Metalimpex Pvt. Ltd. and M/s. Mangalayatan Projects Pvt. Ltd. He
was the conceptualizer, initiator and supervisor of the
accommodation entries totalling to Rs.4.81 Crores approximately,
which were received from the Kolkata based entry operators in the
Bank accounts of the said four companies. Shri J.P. Mohta in his
statement had stated inter alia that Mr. Satyendar Jain had
informed him in June/July, 2010 that he wanted to get
investment/accommodation entries in his companies against cash
payment and therefore he introduced Mr. Jain with his friend Mr.
Rajendra Bansal who was in the business of providing
accommodation entries against cash. Mr. Rajendra Bansal in his
statement under Section 50 had stated in detail as to how his
companies provided accommodation entries to the four companies
owned/controlled by Satyendar Jain from 2010-11 to 2015-16
against cash. Mr. Rajender Bansal had also stated that the cash
was being received from Satyendar Kumar Jain/Jagdish Prasad
Mohta at Kolkata through Hawala operators, and he used to pass
on the address of Hawala operators to the other entry operators
namely Jivendra Mishra and Abhishek Chokhani for collecting cash
42
after taking token from them. He used to arrange entries for the
companies of Satyendar Kumar Jain as per the details provided by
Jagdish Prasad Mohta through his companies and other entry
operators. He (Mr. Bansal) used to issue cheque/RTGS to
subscribe the shares of the four companies of Satyendar Kumar
Jain receiving the amounts in cash. He had further stated that the
accommodation entries were reflected in the books of accounts of
his companies as investments in shares. He used to give signed
share applications along with signed blank transfer deeds to
Jagdish Prasad Mohta. He had further stated that he had received
cash through Hawala operators of Kolkata 40-50 times during
2010-2016 totaling to approximately 17 crores on the instructions
of Satyendar Jain/Jagdish Prasad Mohta and he had provided
accommodation entries for Satyendar Jain’s Companies of about
17 crores, for which he had earned commission of Rs 12,40,000/-
for providing/arranging such accommodation entries to the
companies of Satyendar Jain.
25. Mr. Pankul Agarwal had stated in his statement that though he was
appointed as a Director in M/s. J.J. Ideal Estate Pvt. Ltd., he did
nothing except signing of the documents and that the said company
was controlled by Satyendar Kumar Jain and Poonam Jain, and
43
that he was never informed about any business activity of the said
company by them. The appellant-Vaibhav Jain himself in his
statement recorded on 27.02.2018, had stated that the cash
amount of Rs.16.50 crores (approx.) was paid by him, Sunil Kumar
Jain, Ankush Jain and Satyendar Kumar Jain for taking
accommodation entries in M/s. Akinchan Developers Pvt. Ltd.,
Paryas Infosolution Pvt. Ltd., Indo Metalimpex Pvt. Ltd. and
Mangalayatan Projects Pvt. Ltd. through Kolkata based entry
operators, and that the entire idea was mooted by Satyendar
Kumar Jain to use it for purchasing agricultural lands and to
develop the township. The said witnesses had clearly stated that
Satyendar Kumar Jain was the conceptualizer, initiator, fund
provider and supervisor for the entire operation to procure the
accommodation, share capital/premium entries. Though, the
shareholding patterns of the said four companies are quite intricate,
they do show that Mr. Satyendar Kumar Jain through his family was
controlling the said companies directly or indirectly and that Mr.
Satyendar Kumar Jain was the “beneficial owner” within the
definition of Section 2(1) (fa) of PMLA.
44
26. At this juncture, it is extremely pertinent to note that the appellants-
Vaibhav Jain and Ankush Jain had sought to avail of the Income
Declaration Scheme, 2016 (IDS) by filing separate declarations
under Section 183 of the Finance Act, 2016 in Form-I on
27.09.2016, in which both of the said appellants had individually
declared an income of Rs.8,26,91,750/- as investments in shares
of various companies in the assessment years 2011-12, 2012-13
and 2016-17. The Principal Commissioner, Income Tax (IV), New
Delhi vide the order dated 09.06.2017 passed under Section 183 of
the Finance Act, 2016 held that the said declaration of income of
Rs.8,26,91,750/- by each of the appellants- Vaibhav Jain and
Ankush Jain was made “by suppression and misrepresentation of
facts”, and therefore they were “void”. It is further pertinent to note
that the said order of PCIT was based on the report submitted by
the ACIT, Special Range (IV) dated 07.06.2017 with regard to the
assessment proceedings in case of M/s. Akinchan Developers Pvt.
Ltd., M/s. Indo Metalimpex Pvt. Ltd., M/s. Paryas Infosolution Pvt.
Ltd. ,and Mr. Satyendar Kumar Jain. It was noted in the said report
inter alia that the said companies had taken accommodation entries
in the form of share capital from Kolkata based shell companies.
On the basis of the said report, the notices under Section 148 of
45
the Income Tax Act for the year 2011-12 an 2012-13 were issued to
Mr. Satyendar Kumar Jain. The information regarding
accommodation entries was also received by the Initiating officer
for further examination and necessary action under the Prohibition
of Benami Property Transactions Act, 1988 (for short “the PBPT
Act). The Initiating officer had issued provisional attachment orders
under Section 24(4) of the PBPT Act on 24.05.2017 holding that Mr.
Satyendar Kumar Jain was the beneficial owner of the bogus share
capital introduced in the companies. The said order of PCIT dated
09.06.2017 passed under Section 183 of the FA, 2016 was
challenged before the High Court of Delhi at New Delhi by the
appellants-Ankush Jain and Vaibhav Jain by filing Writ Petition
(C)Nos. 6541 of 2017 and 6543 of 2017 which came to be
dismissed by the High Court vide the order dated 21.08.2019. The
High Court in the said judgment had elaborately dealt with all these
issues and while dismissing the said writ petitions held as under:
“30. There are eight companies whose shares were purchased
by the two petitioners, whose names have been included in the
list. Admittedly, in respect of the shares in ADPL, proceedings
under section 24(4) of the Prohibition of Benami Property
Transaction Act, 1988 have been initiated. The petitioners have
themselves enclosed a copy of the order dated May 24, 2017
passed in respect of the "Benamidar", i.e., ADPL, which inter-alia
notes that the cash that was routed through accommodation
entries in the garb of share capital/premium in fact belonged to
Mr. Satyender Kumar Jain and that it was at his direction that the
46
entire transaction was orchestrated. It was noted that neither of
these two petitioners was either a director or shareholder in the
said company. It was noted that the declarants had not provided
the name of the "Benamidar" through whom the investment had
been routed and that these facts were all completely within the
knowledge of the two petitioners. These conclusions of the
Principal Commissioner of Income-tax have not been
convincingly countered by either of the petitioners. In the
circumstances, the Principal Commissioner of Income-tax was
right in concluding that neither of the petitioners had made a full
and true disclosure of all material facts.”
27. The said order of the High Court was challenged by the appellants-
Ankush Jain and Vaibhav Jain before the Supreme Court by filing
Special Leave Petitions being SLP(C)Nos. 27522 of 2019 and
27610 of 2019, however they came to be dismissed vide the order
dated 29.11.2019.
28. From the above stated facts there remains no shadow of doubt that
the appellant- Satyendar Kumar Jain had conceptualized idea of
accommodation entries against cash and was responsible for the
accommodation entries totalling to Rs. 4.81 crores (approx.)
received through the Kolkata based entry operators in the bank
accounts of the four companies i.e. M/s. Akinchan Developers Pvt.
Ltd., M/s. Paryas Infosolution Pvt. Ltd., M/s. Indo Metalimpex Pvt.
Ltd. and M/s. Mangalayatan Projects Pvt. Ltd., by paying cash and
the said companies were controlled and owned by him and his
47
family. Though it is true that a company is a separate legal entity
from its shareholders and directors, the lifting of corporate veil is
permissible when such corporate structures have been used for
committing fraud or economic offences or have been used as a
facade or a sham for carrying out illegal activities.
29. It has also been found that the appellants - Ankush Jain and
Vaibhav Jain had assisted the appellant-Satyendar Kumar Jain by
making false declarations under the IDS each of them declaring
alleged undisclosed income of Rs.8.26 crores in order to protect
Satyendar Kumar Jain. Though it was sought to be submitted by
the learned counsel for the appellants that the said declarations
under IDS having been held to be “void” in terms of Section 193 of
FA, 2016 by the income tax authorities, the same could not be
looked into in the present proceedings, the said submission cannot
be accepted. The declarations made by the appellants-Ankush Jain
and Vaibhav Jain under IDS have not been accepted by the Income
Tax authorities on the ground that they had misrepresented the fact
that the investments in the said companies belonged to the said
appellants, which in fact belonged to Mr. Satyendar Kumar Jain.
The appellants could not be permitted to take advantage of their
own wrongdoing of filing the false declarations to mislead the
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Income Tax authorities, and now to submit in the present
proceedings under PMLA that the said declarations under the IDS
were void. The declarations made by them under the IDS though
were held to be void, the observations and proceedings recorded
in the said orders passed by the Authorities and by the High Court
cannot be brushed aside merely because the said declarations
were deemed to be void under Section 193 of the Finance Act,
2016. The said proceedings clearly substantiates the case of the
respondent ED as alleged in the Prosecution Complaint under the
PMLA.
30. Having regard to the totality of the facts and circumstances of the
case, we are of the opinion that the appellants have miserably failed
to satisfy us that there are reasonable grounds for believing that
they are not guilty of the alleged offences. On the contrary, there is
sufficient material collected by the respondent-ED to show that they
are prima facie guilty of the alleged offences.
31. Though Ms. Arora had faintly sought to submit that the so-called
inadvertent mistake committed by the ED with regard to the figures
mentioned in the Prosecution Complaint in respect of the role of the
appellants Ankush Jain and Vaibhav Jain should not be permitted
49
to be corrected, which otherwise show that the allegations against
the appellants were vague in nature, we are not impressed by the
said submission. We are satisfied from the explanation put forth in
the affidavit filed on behalf of the respondent-ED that it was only an
inadvertent mistake in mentioning the figure Rs.1,53,61,166/- in the
bracketed portion, which figure was shown by the CBI in its
chargesheet. The said inadvertent mistake has no significance in
the case alleged against the appellants in the proceedings under
the PMLA.
32. From the totality of facts and circumstances of the case, it is not
possible to hold that appellants had complied with the twin
mandatory conditions laid down in Section 45 of PMLA. The High
Court also in the impugned judgment after discussing the material
on record had prima facie found the appellants guilty of the alleged
offences under the PMLA, which judgment does not suffer from any
illegality or infirmity.
33. The appellants were released on bail for temporary period after
their arrest and the appellant-Satyendar Kumar Jain was released
on bail on medical ground on 30.05.2022, which has continued till
this day. He shall now surrender forthwith before the Special Court.
It is needless to say that right to speedy trial and access to justice
50
is a valuable right enshrined in the Constitution of India, and
provisions of Section 436A of the Cr.P.C. would apply with full force
to the cases of money laundering falling under Section 3 of the
PMLA, subject to the Provisos and the Explanation contained
therein.
34. In that view of the matter, all the appeals are dismissed.
……………………………………J.
[BELA M. TRIVEDI]
.…………….. ……………………. J.
[PANKAJ MITHAL]
NEW DELHI;
MARCH 18
th
, 2024.
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