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IN THE HIGH COURT OF JHARKHAND AT RANCHI

B.A. No. 11095 of 2023

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Tara Chand, aged about 40 years, Son of Kalyan Sahay,

resident of Plot No. 129, Anand Vihar, Vijaypura Road,

Agra Road, Jaipur, P.O. and P.S. Jaipur, District-Jaipur.

……. Petitioner

Versus

The Union of India though the Enforcement Directorate,

Zonal Office, Ranchi ... ……. Opposite Party

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CORAM: HON’BLE MR. JUSTICE SUJIT NARAYAN PRASAD

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For the Petitioner :Mr. Nilesh Kumar, Advocate

Mr. Ayush Kumar Verma, Advocate

For the Opp. Party :Mr. Amit Kumar Das, Advocate

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C.A.V. on 23/02/2024 Pronounced on 01/03/2024

Prayer

1. The instant application has been filed under Section

439 read with Section 440 of the Code of Criminal

Procedure, 1973 praying for grant of bail in ECIR Case

No.2 of 2023 (A) arising out of ECIR-RNZO/16/2020 dated

17.09.2020 registered for the offence under Sections 3 and

4 of the Prevention of Money Laundering Act, 2002 with

Schedule Offence under Sections 120B of the Indian Penal

Code and 7(b) of the Prevention of Corruption

(Amendment) Act, 2018, pending in the court of learned

Additional Judicial Commissioner-VIII-cum-Special Judge,

PML Act, Ranchi.

Facts of the case

2. The prosecution case in brief is that the investigation

under the Prevention of Money Laundering Act, 2002 was

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initiated by recording the ECIR/RNSZO/16/2020 dated -

17.09.2020 against the accused persons on the basis of

information received from FIR No. 13/2019 dated -

13.11.2019 registered by the ACB, Jamshedpur.

3. Subsequently the Final Report has been filed by the

investigating agency bearing no. 01/2020 dated -

11.01.2020 under Section 120-B and 201 IPC and under

Section 7 (b) of the P.C. Act, 1988 against the accused

persons, namely, Alok Ranjan and Suresh Prasad Verma.

4. Further, in course of search proceeding conducted in

relation to the instant case at different places under

Section 17 PML Act to investigate the role of the accused

persons and their close associates, it is found that part of

the proceeds of crime acquired in the form of

commission/bribe in lieu of allotment of tenders by the

accused Veerendra Kumar Ram, a public servant. The said

bribe money was getting routed by a Delhi based CA

Mukesh Mittal to the bank accounts of family members of

Veerendra Kumar Ram with the help of bank accounts of

Mukesh Mittal's employees/relatives.

5. It is also ascertained that Veerendra Kumar Ram used

to give cash to Mukesh Mittal who with the help of other

entry providers used to take entries in the bank accounts

of his employees and relatives and then such fund was

transferred by Mukesh Mittal into the bank accounts of

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the co-accused Rajkumari (wife of Veerendra Kumar Ram)

and Genda Ram (father of Veerendra Kumar Ram).

6. Further Investigation disclosed that Mukesh Mittal

contacted Ram Parkash Bhatia who is engaged in the

illegal business of providing entries in lieu of commission

for taking the entries into the bank account of Genda

Ram. Subsequently, Ram Parkash Bhatia provided those

entries with the help of his associate Neeraj Mittal using

the bank accounts of the present petitioner which were

opened under a fictitious name.

7. Neeraj Mittal using the bank accounts of the petitioner

which also includes accounts opened on the basis of

forged documents, provided entries of Rs. 3.52 crores into

the bank accounts of relatives/employees of Mukesh

Mittal which subsequently reached into the bank accounts

of Genda Ram.

8. Further, it was also seen that the bank accounts of

Genda Ram received high-valued funds from the bank

accounts of Rakesh Kumar Kedia, Manish, and Neha

Shrestha (relatives/employees of Mukesh Mittal) which

were used in purchasing immovable property in the name

of Genda Ram (father of Veerendra Ram). It is further

identified that all aforementioned three persons

transferred the funds to Genda Ram's bank account after

receiving funds from the bank accounts of three

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proprietorship firms (M/s O m Traders, M/s Shri

Khatushyam Traders & M/s Anil Kumar Govind Ram) of

one fictitious person namely Sachin Gupta. It was further

ascertained that present petitioner Tara Chand who is an

associate of Neeraj Mittal was actually impersonating

himself as Sachin Gupta.

9. In connection with aforementioned case the present

petitioner was arrested by the E.D. on 25.06.2023.

Accordingly, the present petitioner preferred Misc. Cri.

Application No. 2942 of 2023 for grant of bail but the

same was rejected vide order dated 18.10.2023 passed by

the court of, learned Additional Judicial Commissioner-

XVIII-cum-Special Judge, PML Act, Ranchi.

10. Hence the present petition has been filed.

Argument advanced by learned counsel for the

petitioner:

11. Mr. Nilesh Kumar learned counsel for the

petitioner has argued inter alia on the following grounds:

(i)It has been contended that there is no allegation

said to be committed so as to attract the offence under

Section under Section 3 of the PML Act.

(ii) The petitioner namely, Tara Chand, is an employee

of C.A., namely, Mukesh Mittal, save and except there

is no allegation said to be committed so as to attract

the penal offence under PML Act, 2002.

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(iii) Learned counsel for the petitioner in order to

demonstrate the fact that no offe nce has been

committed has placed the material collected in course

of inquiry based upon the ECIR which has been

submitted before the competent court of jurisdiction.

(iv) It has also been alleged that petitioner opened the

bank account by forging documents in the name of

fictitious persons and even if this allegation is taken to

be true then also no case is made out against the

petitioner as because it should come under the

ambit of money laundering and it is necessary that

the person should knowingly assist or knowingly in a

part or is actually involved in any process or activity

connected with proceeds of crime.

(v) However, this petitioner has never opened the bank

account by forging documents and none of the

transactions from the alleged bank accounts which

were opened at Delhi was under the knowledge of this

petitioner nor the petitioner had any knowledge

regarding the existence of the said bank accounts.

(vi) In support of his contention, the learned counsel

relied upon the observation made by the Hon‟ble Apex

Court in the case of Vijay Madan Lal Choudhary

and others Vs. Union of India and others 2022

SCC online SC 929 , Ranjeet Singh Brahmajeet

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Singh Sharma Vs. State of Maharashtra and Anr.

2005 (5) SCC 294, and P. Chidambram Vs.

Directorate of Enforcement 2020 (13) SCC 791 ,

12. Learned counsel for the petitioner based upon the

aforesaid grounds has submitted that in the aforesaid

view of the matter as per the ground agitated hereinabove,

it is a fit case where the petitioner is to be given the

benefit of privilege of bail.

Argument advanced by learned counsel for the

opposite party-Enforcement Directorate:

13. While on the other hand, Mr. Amit Kumar Das,

learned counsel for the opposite party - Enforcement

Directorate has seriously opposed the said

submission/ground both based upon the fact and the law

as referred hereinabove by Mr. Nilesh Kumar learned

counsel for the petitioner.

(i) It has been submitted that the twin condition for bail

under Section 45 of the Act, 2002 must be made out, i.e.,

the court is required to be satisfied that there are

reasonable grounds to believe that the accused is not

guilty of such offence and is not likely to commit offence

while on bail.

(ii) Further, it has been submitted by referring to the

imputation as has been come in course of investigation

conducted against the present petitioner wherein, the

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direct involvement of the petitioner has been found in

laundering the money which has been acquired by the co-

accused person, namely, Veerendra Kumar Ram.

(iii) Learned counsel for the Enforcement Directorate

has referred the imputation as has come against the

petitioner in the supplementary prosecution complaint

dated 20.08.2023 which has been appended with the

paper book wherein it is alleged that the accused Tara

Chand (petitioner) disclosed during investigation that

three bank accounts were opened by him impersonating

himself as Sachin Gupta in the name of three

proprietorship firms by forging documents on the

instruction of co-accused Neeraj Mittal, who also used to

operate the bank accounts. Further, no business has been

found to be existing in the name of above three

proprietorship firms at the address provided to the bank.

(iv) In support of his contention, the learned counsel

has also relied upon the judgments rendered by the

Hon‟ble Apex Court in the case of Vijay Madan Lal

Choudhary and others Vs. Union of India and others

2022 SCC online SC 929 and Rohit Tondon Vs.

Directorate of Enforcement (2018) 11 SCC 46 .

14. Learned counsel for the respondent -Enforcement

Directorate, based upon the aforesaid ground s, has

submitted that it is not a fit case where the prayer for bail is

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to be allowed taking into consideration his involvement in

dealing with the proceeds of crime of Veerandra Kumar Ram

as an associate of Chartered Accountant namely Mukesh

Mittal.

Analysis of the submissions made on behalf of parties:

15. Heard the learned counsel for the parties, gone across

the pleading available on record as also the finding recorded

by learned court.

16. This Court, before appreciating the argument advanced

on behalf of the parties, deems it fit and proper to discuss

herein some of the provision of law as contained under the

Act, 2002 with its object and intent.

17. The Act was enacted to address the urgent need to have

a comprehensive legislation inter alia for preventing money-

laundering, attachment of proceeds of crime, adjudication

and confiscation thereof including vesting of it in the Central

Government, setting up of agencies and mechanisms for

coordinating measures for combating money-laundering and

also to prosecute the persons indulging in the process or

activity connected with the proceeds of crime. The issues

were debated threadbare in the United Nation Convention

Against Illicit Traffic in Narcotic Drugs and Psychotropic

Substances, Basle Statement of Principles enunciated in

1989, the FATF established at the summit of seven major

industrial nations held in Paris from 14

th to 16

th July, 1989,

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the Political Declaration and Noble Programme of Action

adopted by United Nations General Assembly vide its

Resolution No. S-17/2 of 23.2.1990, the United Nations in

the Special Session on countering World Drug Problem

Together concluded on the 8th to the 10

th June, 1998,

urging the State parties to enact a comprehensive

legislation. This is evident from the introduction and

Statement of Objects and Reasons accompanying the Bill

which became the 2002 Act. The same reads thus:

“INTRODUCTION

Money-laundering poses a serious threat not only to the financial

systems of countries, but also to their integrity and sovereignty.

To obviate such threats international community has taken some

initiatives. It has been felt that to prevent money-laundering and

connected activities a comprehensive legislation is urgently

needed. To achieve this objective the Prevention of Money-

laundering Bill, 1998 was introduced in the Parliament. The Bill

was referred to the Standing Committee on Finance, which

presented its report on 4th March, 1999 to the Lok Sabha. The

Central Government broadly accepted the recommendation of the

Standing Committee and incorporated them in the said Bill along

with some other desired changes.

STATEMENT OF OBJECTS AND REASONS

It is being realised, world over, that money-laundering poses a

serious threat not only to the financial systems of countries, but

also to their integrity and sovereignty. Some of the initiatives

taken by the international community to obviate such threat are

outlined below:—

(a) the United Nations Convention Against Illicit Traffic in Narcotic

Drugs and Psychotropic Substances, to which India is a party,

calls for prevention of laundering of proceeds of drug crimes and

other connected activities and confiscation of proceeds derived

from such offence.

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(b) the Basle Statement of Principles, enunciated in 1989,

outlined basic policies and procedures that banks should follow

in order to assist the law enforcement agencies in tackling the

problem of money-laundering.

(c) the Financial Action Task Force established at the summit of

seven major industrial nations, held in Paris from 14th to 16th

July, 1989, to examine the problem of money-laundering has

made forty recommendations, which provide the foundation

material for comprehensive legislation to combat the problem of

money-laundering. The recommendations were classified under

various heads. Some of the important heads are—

(i) declaration of laundering of monies carried through

serious crimes a criminal offence;

(ii) to work out modalities of disclosure by financial

institutions regarding reportable transactions;

(iii) confiscation of the proceeds of crime;

(iv) declaring money-laundering to be an extraditable

offence; and

(v) promoting international co-operation in investigation of

money-laundering.

(d) the Political Declaration and Global Programme of Action

adopted by United Nations General Assembly by its Resolution

No. S-17/2 of 23rd February, 1990, inter alia, calls upon the

member States to develop mecha nism to prevent financial

institutions from being used for laundering of drug related money

and enactment of legislation to prevent such laundering. (e) the

United Nations in the Special Session on countering World Drug

Problem Together concluded on the 8th to the 10th June, 1998

has made another declaration regarding the need to combat

money-laundering. India is a signatory to this declaration.”

18. It is thus evident that the Act, 2002 was enacted in

order to answer the urgent requirement to have a

comprehensive legislation inter alia for preventing money-

laundering, attachment of proceeds of crime, adjudication

and confiscation thereof for combating money-laundering

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and also to prosecute the persons indulging in the

process or activity connected with the proceeds of crime.

19. It needs to refer herein the definition of “proceeds of

crime” as provided under Section 2(1)(u) of the Act, 2002

which reads as under:

“2(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 3[or where such property is taken or

held outside the country, then the property equivalent in

value held within the country] 4[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;]”

20. It is evident from the aforesaid provision that

“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.

21. In the explanation it has been referred that 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

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any criminal activity relatable to the scheduled offence.

The aforesaid explanation has been inserted in the statute

book by way of Act 23 of 2019.

22. It is, thus, evident that the reason for giving

explanation under Section 2(1)(u) is by way of clarification

to the effect that whether as per the substantive provision

of Section 2(1)(u), the 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 but by way of explanation the proceeds of

crime has been given broader implication by including

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.

23. The “property” has been defined under Section

2(1)(v) which 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.

24. The schedule has been defined under Section

2(1)(x) which means schedule to the Prevention of Money

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Laundering Act, 2002. The “scheduled offence” has been

defined under Section 2(1)(y) which reads as under:

“2(y) “scheduled offence” means— (i) the offences specified

under Part A of the Schedule; or (ii) the offences specified under

Part B of the Schedule if the total value involved in such offences

is [one crore rupees] or more; or (iii) the offences specified under

Part C of the Schedule.”

25. It is evident that the “scheduled offence” means the

offences specified under Part A of the Schedule; or the

offences specified under Part B of the Schedule if the total

value involved in such offences is [one crore rupees] or

more; or the offences specified under Part C of the

Schedule.

26. The offence of money laundering has been defined

under Section 3 of the Act, 2002 which reads as under:

“3. Offence of money-laundering.—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

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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.]”

27. It is evident from the aforesaid provision that

“offence of money-laundering” means 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.

28. It is further evident that 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.

29. The punishment for money laundering has been

provided under Section 4 of the Act, 2002. 30. Section 50

of the Act, 2002 confers power upon the authorities

regarding summons, production of documents and to give

evidence. For ready reference, Section 50 of the Act, 2002

is quoted as under:

“50. Powers of authorities regarding summons, production of

documents and to give evidence, etc.—(1) The Director shall, for

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the purposes of section 13, have the same powers as are vested

in a civil court under the Code of Civil Procedure, 1908 (5 of

1908) while trying a suit in respect of the following matters,

namely:— (a) discovery and inspection; (b) enforcing the

attendance of any person, including any officer of a [reporting

entity] and examining him on oath; (c) compelling the production

of records; (d) receiving evidence on affidavits; (e) issuing

commissions for examination of witnesses and documents; and

(f) any other matter which may be prescribed. (2) The Director,

Additional Director, Joint Director, Deputy Director or Assistant

Director shall have power to summon any person whose

attendance he considers necessary whether to give evidence or

to produce any records during the course of any investigation or

proceeding under this Act. (3) All the persons so summoned shall

be bound to attend in person or through authorised agents, as

such officer may direct, and shall be bound to state the truth

upon any subject respecting which they are examined or make

statements, and produce such documents as may be required.

(4) Every proceeding under sub-sections (2) and (3) shall be

deemed to be a judicial proceeding within the meaning of section

193 and section 228 of the Indian Penal Code (45 of 1860). (5)

Subject to any rules made in this behalf by the Central

Government, 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 w ithout 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].”

30. The various provisions of the Act, 2002 alongwith

interpretation of the definition of “proceeds of crime” has

been dealt with by the Hon‟ble Apex Court in the case of

Vijay Madanlal Choudhary and Ors. Vs. Union of

India and Ors., (2022) SCC OnLine SC 929 wherein the

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Bench comprising of Three Hon‟ble Judges of the Hon‟ble

Supreme Court have decided the issue by taking into

consideration the object and intent of the Act, 2002.

31. The interpretation of the condition which is to be

fulfilled while arresting the person involved in the

predicate offence has been made as would appear from

paragraph 265. For ready reference, relevant paragraphs

is being referred as under:

“265. To put it differently, the section as it stood prior to

2019 had itself incorporated the expression “including”,

which is indicative of reference made to the different process

or activity connected with the proceeds of crime. Thus, the

principal provision (as also the Explanation) predicates that if

a person is found to be directly or indirectly involved in any

process or activity connected with the proceeds of crime must

be held guilty of offence of moneylaundering. If the

interpretation set forth by the petitioners was to be accepted,

it would follow that it is only upon projecting or claiming the

property in question as untainted property, the offence would

be complete. This would undermine the efficacy of the

legislative intent behind Section 3 of the Act and also will be

in disregard of the view expressed by the FATF in connection

with the occurrence of the word “and” prec eding the

expression “projecting or claiming” therein. This Court in

Pratap Singh v. State of Jharkhand, enunciated that the

international treaties, covenants and conventions although

may not be a part of municipal law, the same be referred to

and followed by the Courts having regard to the fact that

India is a party to the said treaties. This Court went on to

observe that the Constitution of India and other ongoing

statutes have been read consistently with the rules of

international law. It is also observed that the Constitution of

India and the enactments made by Parliament must

necessarily be understood in the context of the present-day

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scenario and having regard to the international treaties and

convention as our constitution takes note of the institutions of

the world community which had been created. In Apparel

Export Promotion Council v. A.K. Chopra, the Court observed

that domestic Courts are under an obligation to give due

regard to the international conventions and norms for

construing the domestic laws, more so, when there is no

inconsistency between them and there is a void in domestic

law. This view has been restated in Githa Hariharan, as also

in People's Union for Civil Liberties, and National Legal

Services Authority v. Union of India.”

32. The implication of Section 50 has also been taken

into consideration. Relevant paragraph, i.e., paragraphs-

422, 424, 425, 431, 434 read as under:

“422. The validity of this provision has been challenged on

the ground of being violative of Articles 20(3) and 21 of the

Constitution. For, it allows the authorised officer under the

2002 Act to summon any person and record his statement

during the course of investigation. Further, the provision

mandates that the person should disclose true and correct

facts known to his personal knowledge in connection with

the subject matter of investigation. The person is also obliged

to sign the statement so given with the threat of being

punished for the falsity or incorrectness thereof in terms of

Section 63 of the 2002 Act. Before we proceed to analyse the

matter further, it is apposite to reproduce Section 50 of the

2002 Act, as amended. -----:

424. By this provision, the Director has been empowered to

exercise the same powers as are vested in a civil Court

under the 1908 Code while trying a suit in respect of matters

specified in sub-section (1). This is in reference to Section 13

of the 2002 Act dealing with powers of Director to impose

fine in respect of acts of commission and omission by the

banking companies, financial institutions and intermediaries.

From the setting in which Section 50 has been placed and

the expanse of empowering the Director with same powers

as are vested in a civil Court for the purposes of imposing

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fine under Section 13, is obviously very specific and not

otherwise.

425. Indeed, sub-section (2) of Section 50 enables the

Director, Additional Director, Joint Director, Deputy Director

or Assistant Director to issue summon to any person whose

attendance he considers necessary for giving evidence or to

produce any records during the course of any investigation or

proceeding under this Act. We have already highlighted the

width of expression “proceeding” in the earlier part of this

judgment and held that it applies to proceeding before the

Adjudicating Authority or the Special Court, as the case may

be. Nevertheless, sub-section (2) empowers the authorised

officials to issue summon to any person. We fail to

understand as to how Article 20(3) would come into play in

respect of process of recording statement pursuant to such

summon which is only for the purpose of collecting

information or evidence in respect of proceeding under this

Act. Indeed, the person so summoned, is bound to attend in

person or through authorised agent and to state truth upon

any subject concerning which he is being examined or is

expected to make statement and produce documents as may

be required by virtue of sub-section (3) of Section 50 of the

2002 Act. The criticism is essentially because of subsection

(4) which provides that every proceeding under sub-sections

(2) and (3) shall be deemed to be a judicial proceeding within

the meaning of Sections 193 and 228 of the IPC. Even so, the

fact remains that Article 20(3) or for that matter Section 25 of

the Evidence Act, would come into play only when the person

so summoned is an accused of any offence at the relevant

time and is being compelled to be a witness against himself.

This position is well-established. The Constitution Bench of

this Court in M.P. Sharma had dealt with a similar challenge

wherein warrants to obtain documents required for

investigation were issued by the Magistrate being violative of

Article 20(3) of the Constitution. This Court opined that the

guarantee in Article 20(3) is against “testimonial compulsion”

and is not limited to oral evidence. Not only that, it gets

triggered if the person is compelled to be a witness against

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himself, which may not happen merely because of issuance

of summons for giving oral evidence or producing documents.

Further, to be a witness is nothing more than to furnish

evidence and such evidence can be furnished by different

modes. The Court went on to observe as follows: “Broadly

stated the guarantee in article 20(3) is against “testimonial

compulsion”. It is suggested that this is confined to the oral

evidence of a person standing his trial for an offence when

called to the witness-stand. We can see no reason to confine

the content of the constitutional guarantee to this barely

literal import. So to limit it would be to rob the guarantee of

its substantial purpose and to miss the substance for the

sound as stated in certain American decisions. The phrase

used in Article 20(3) is “to be a witness”. A person can “be a

witness” not merely by giving oral evidence but also by

producing documents or making intelligible gestures as in the

case of a dumb witness (See section 119 of the Evidence Act)

or the like. “To be a witness” is nothing more than “to furnish

evidence”, and such evidence can be furnished through the

lips or by production of a thing or of a document or in other

modes. So far as production of documents is concerned, no

doubt Section 139 of the Evidence Act says that a person

producing a document on summons is not a witness. But that

section is meant to regulate the right of cross examination. It

is not a guide to the connotation of the word “witness”,

which must be understood in its natural sense, i.e., as

referring to a person who furnishes evidence. Indeed, every

positive volitional act which furnishes evidence is testimony,

and testimonial compulsion conno tes coercion which

procures the positive volitional evidentiary acts of the person,

as opposed to the negative attitude of silence or submission

on his part. Nor is there any reason to think that the

protection in respect of the evidence so procured is confined

to what transpires at the trial in the court room. The phrase

used in article 20(3) is “to be a witness” and not to “appear

as a witness”. It follows that the protection afforded to an

accused in so far as it is related to the phrase “to be a

witness” is not merely in respect of testimonial compulsion in

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the court room but may well extend to compelled testimony

previously obtained from him. It is available therefore to a

person against whom a formal accusation relating to the

commission of an offence has been levelled which in the

normal course may result in prosecution. Whether it is

available to other persons in other situations does not call for

decision in this case.” (emphasis supplied)

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 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

21

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.

434. It is, thus, clear that the power invested in the officials

is one for conducting inquiry into the matters relevant for

ascertaining existence of proceeds of crime and the

involvement of persons in the process or activity connected

therewith so as to initiate appropriate action against such

person including of seizure, attachment and confiscation of

the property eventually vesting in the Central Government.”

33. It is evident from the observation so made as

above that the purposes and objects of the 2002 Act for

which it has been enacted, is not limited to punishment

for offence of money-laundering, but also to provide

measures for prevention of money-laundering. It is also to

provide for attachment of proceeds of crime, which are

likely to be concealed, transferred or dealt with in any

manner which may result in frustrating any proceeding

relating to confiscation of such proceeds under the 2002

Act. This Act is also to compel the banking companies,

22

financial institutions and intermediaries to maintain

records of the transactions, to furnish information of such

transactions within the prescribed time in terms of

Chapter IV of the 2002 Act.

34. The predicate offence has been considered in the

aforesaid judgment wherein by taking into consideration

the explanation as inserted by way of Act 23 of 2019

under the definition of the “proceeds of crime” as

contained under Section 2(1)(u), whereby and

whereunder, it has been clarified for the purpose of

removal of doubts that, the "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,

meaning thereby, the words “any property which may

directly or indirectly be derived or obtained as a result of

any criminal activity relatable to the scheduled offence”

will come under the fold of the proceeds of crime.

35. So far as the purport of Section 45(1)(i)(ii) is

concerned, the aforesaid provision starts from the non-

obstante clause that notwithstanding anything contained

in the Code of Criminal Procedure, 1973, no person

accused of an offence under this Act shall be released on

bail or on his own bond unless –

23

(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.

36. Sub-section (2) thereof puts limitation on granting

bail specific in subsection (1) in addition to the limitations

under the Code of Criminal Procedure, 1973 or any other

law for the time being in force on granting of bail.

37. The explanation is also there as under sub-section

(2) thereof which is for the purpose of removal of doubts. A

clarification has been inserted 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, and accordingly the officers authorised under this

Act are empowered to arrest an accused without warrant,

subject to the fulfilment of conditions under section 19

and subject to the conditions enshrined under this

section.

38. The fact about the implication of Section 45 has

been interpreted by the Hon‟ble Apex Court in Vijay

Madanlal Choudhary an d Ors. Vs. Union of India and

Ors.(supra) at paragraphs-372-374.

24

39. For ready reference, the said paragraphs are being

referred as under:

“372. Section 45 has been amended vide Act 20 of 2005, Act 13

of 2018 and Finance (No. 2) Act, 2019. The provision as it

obtained prior to 23.11.2017 read somewhat differently. The

constitutional validity of Sub-section (1) of Section 45, as it stood

then, was considered in Nikesh Tarachand Shah. This Court

declared Section 45(1) of the 2002 Act, as it stood then, insofar

as it imposed two further conditions for release on bail, to be

unconstitutional being violative of Articles 14 and 21 of the

Constitution. The two conditions which have been mentioned as

twin conditions are: (i) that there are reasonable grounds for

believing that he is not guilty of such offence; and (ii) that he is

not likely to commit any offence while on bail.

373. According to the petitioners, since the twin conditions have

been declared to be void and unconstitutional by this Court, the

same stood obliterated. To buttress this argument, reliance has

been placed on the dictum in State of Manipur.

374. The first issue to be answered by us is: whether the twin

conditions, in law, continued to remain on the statute book post

decision of this Court in Nikesh Tarachand Shah and if yes, in

view of the amendment effected to Section 45(1) of the 2002 Act

vide Act 13 of 2018, the declaration by this Court will be of no

consequence. This argument need not detain us for long. We say

so because the observation in State of Manipur in paragraph 29

of the judgment that owing to the declaration by a Court that the

statute is unconstitutional obliterates the statute entirely as

though it had never been passed, is contextual. In this case, the

Court was dealing with the efficacy of the repealing Act. While

doing so, the Court had adverted to the repealing Act and made

the stated observation in the context of lack of legislative power.

In the process of reasoning, it did advert to the exposition in

Behram Khurshid Pesikaka and Deep Chand including American

jurisprudence expounded in Cooley on Constitutional Limitations

and Norton v. Shelby County.”

40. Subsequently, the Hon‟ble Apex Court in the case

of Tarun Kumar vs. Assistant Director Directorate of

25

Enforcement, (2023) SCC OnLine SC 1486 by taking into

consideration the law laid down by the Larger Bench of the

Hon‟ble Apex Court in Vijay Madanlal Choudhary and

Ors. Vs. Union of India and Ors.(supra), has laid down

that since the conditions specified under Section 45 are

mandatory, they need to be complied with. The Court is

required to be satisfied that there are reasonable grounds

for believing that the accused is not guilty of such offence

and he is not likely to commit any offence while on bail. It

has further been observed that as per the statutory

presumption permitted under Section 24 of the Act, the

Court or the Authority is entitled to presume unless the

contrary is proved, that in any proceedings relating to

proceeds of crime under the Act, in the case of a person

charged with the offence of money laundering under

Section 3, such proceeds of crime are involved in money

laundering. Such conditions enumerated in Section 45 of

PML Act will have to be complied with even in respect of an

application for bail made under Section 439 Cr. P.C. in

view of the overriding effect given to the PML Act over the

other law for the time being in force, under Section 71 of

the PML Act.

41. For ready reference, paragraph-17 of the said

judgment is quoted as under:

26

“17. As well settled by now, the conditions specified under

Section 45 are mandatory. They need to be complied with. The

Court is required to be satisfied that there are reasonable

grounds for believing that the accused is not guilty of such

offence and he is not likely to commit any offence while on bail. It

is needless to say that as per the statutory presumption

permitted under Section 24 of the Act, the Court or the Authority

is entitled to presume unless the contrary is proved, that in any

proceedings relating to proceeds of 17 A.B.A. No. 10671 of 2023

crime under the Act, in the case of a person charged with the

offence of money laundering under Section 3, such proceeds of

crime are involved in money laundering. Such conditions

enumerated in Section 45 of PML Act will have to be complied

with even in respect of an application for bail made under

Section 439 Cr. P.C. in view of the overriding effect given to the

PML Act over the other law for the time being in force, under

Section 71 of the PML Act.”

42. The Hon‟ble Apex Court in the said judgment has

further laid down that the twin conditions as to fulfil the

requirement of Section 45 of the Act, 2002 before granting

the benefit of bail is to be adhered to which has been dealt

with by the Hon‟ble Apex Court in Vijay Madanlal

Choudhary and Ors. Vs. Union of India and Ors.(supra)

wherein it has been observed that the accused is not guilty

of the offence and is not likely to commit any offence while

on bail.

43. In the judgment rendered by the Hon‟ble Apex

Court in Vijay Madanlal Choudhary and Ors. Vs. Union

of India and Ors.(supra) as under paragraph 284, it has

been held that the Authority under the 2002 Act, is to

prosecute a person for offence of money-laundering only if

27

it has reason to believe, which is required to be recorded in

writing that the person is in possession of “proceeds of

crime”. Only if that belief is further supported by tangible

and credible evidence indicative of involvement of the

person concerned in any process or activity connected with

the proceeds of crime, action under the Act can be taken to

forward for attachment and confiscation of proceeds of

crime and until vesting thereof in the Central Government,

such process initiated would be a standalone process. So

far as the issue of grant of bail under Section 45 of the Act,

2002 is concerned, as has been referred hereinabove, at

paragraph-412 of the judgment rendered in Vijay

Madanlal Choudhary and Ors. Vs. Union of India and

Ors.(supra) it has been held therein by making

observation that whatever form the relief is couched

including the nature of proceedings, be it under Section

438 of the 1973 Code or for that matter, by invoking the

jurisdiction of the Constitutional Court, the underlying

principles and rigors of Section 45 of the 2002 must come

into play and without exception ought to be reckoned to

uphold the objectives of the 2002 Act, which is a special

legislation providing for stringent regulatory measures for

combating the menace of money-laundering.

44. The Hon‟ble Apex Court in the case of Gautam

Kundu vs. Directorate of Enforcement (Prevention of

28

Money-Laundering Act), Government of India through

Manoj Kumar, Assistant Director, Eastern Region,

(2015) 16 SCC 1 has been pleased to hold at paragraph -

30 that 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 Cr.P.C shall 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.

45. 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. Tha t

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.

For ready reference, paragraph-30 of the said judgment

reads as under:

29

“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

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 an ything

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.”

46. Now, after having discussed the judgments passed

by the Hon‟ble Apex Court on the issue of various

provisions of the Act, 2002, this Court, is proceeding to

answer the legal grounds as has been raised on behalf of

the learned counsel for the petitioner.

47. It needs to refer herein that the co-accused

Mukesh Mittal has filed application for grant of pre-arrest

bail being A.B.A. No.10671 of 2023.

48. This Court has dealt with the said Anticipatory bail

application and has rejected the same vide order dated

16.02.2024. Reason for referring the aforesaid order is that

the legal issues have also been taken into consideration in

the same regarding the implication of law that if the ECIR

30

has already been submitted, the case has been converted

into a complaint case and hence, at this stage, the public

prosecutor appearing for the Enforcement Directorate

cannot have jurisdiction to make opposition. Further the

stage of Section 19(1) has already been expired the

moment the ECIR has been submitted before the

concerned court and since there is cooperation of the

petitioner in course of conducting the preliminary enquiry

converted into the ECIR, as such, at this stage his

incarceration will be irrelevant.

49. The aforesaid ground has already been dealt by

this Court while rejecting the Anticipatory Bail Application

of Mukesh Mittal vide order dated 16.02.2024.

50. Now adverting in to fact of the instant case and

the allegation leveled against the present petitioner which

according to learned counsel for the petitioner is being said

that the same cannot be said to attract the ingredient of

Section 3 of PMLA 2022 while on the other hand, the

learned counsel appearing for the ED has submitted by

referring to various paragraphs of prosecution complaint

that the offence is very much available attracting the

offence under provision of PML Act.

51. This Court, in order to appreciate the rival

submission, is of the view that various paragraphs of

supplementary prosecution complaint upon which the

31

reliance has been placed on behalf of both the parties,

needs to be referred herein so as to come to the conclusion

as to whether the parameter as fixed under Section 45(ii) of

the PMLA is being fulfilled in order to reach to the

conclusion that it is a fit case where regular bail is to be

granted or not. Relevant paragraphs of supplementary

prosecution complaint are quoted herein :

“5.4.2 identification of the source of Funds received in the

bank account of Genda Ram

52. (iii) Thus, it is found that a total of Rs 4.43 crores transferred

from bank account of Rakesh Kumar Kedia, Manish Neha

Shrestția and Genda Ram (A/c Number 110089477752) into the

bank account of Genda Ram (A/c Number 127000628767) and

out of this sum of Rs. 4.43 crores, a sum of Rs. 3.39 crores was

funded from bank accounts of three proprietorship, namely (1)

Shri Khatushyam Traders (079 205500560), (ii) Anil Kumar

Govind Ram Traders and (082705001671) (iii) Om Traders

(0724050017401 & Rs. 13 lakhs from one bank account

(675705602113) of Tarachand.

(iv) Further, it was also found that all these bank accounts of

three proprietorship firms are being maintained in ICICI Bank

which are all operating under a single proprietor named Sachin

Gupta, S/0 Ashrafi Lal Gupta. The proprietor (Sachin Gupta

holds three different PAN details (DGRPG9506F, DERPO 1369A

and DBJPG3661Q) in three of his aforementioned proprietorship

firms (later it was found that Tara Chand (Accused Number-6)

had been impersonating himself as Sachin Gupta). Findings of

the investigation in this regard has already been explained in

detail in the Prosecution Complaint filed before this Hon'ble Court

on 21.04.2023 and the same is not repeated for the sake of

brevity.

(v) Further, the source of rest Rs. 91 lakhs are as follows: Rs.

48.75 lakhs were transferred through the Canara bank account

of Mukesh Mittal (2577101050981), Rs. 18.00 lak hs

32

transferred from Axis Bank Account (922020004021785) of

Jamidara Trading which was also found to be non-existing on

field verification, Rs. 10 lakhs transferred from ICICI bank

account (425405000759) of Oyecool Technologies (Prop. Harish

Yadav-Accused Number-9), Rs 9.99 lakhs from Krishna

Enterprise (Equitas Small Finance Bank, 200000747964) and

Rs 4.50 lakh from Decent Traders (Equitas Small Finance Bank,

200001383885).

(vii) Further, no business has found to be existing in the name

of three proprietorship firms or in the name of their proprietor

Sachin Gupta, at the addresses provided to the bank. Business

operation of M/s Oyecool Technologies (Prop. Harish Yadav) too

found to be non-existence at the given address. Therefore, the

absence of any business addresses or its business operation

makes it established that the firms were only running on paper,

i.e. shell companies (Firms) and such shell firms have been

formed only to accommodate banking transactions to launder

proceeds of crime in the guise of business transactions.

(viii) Further search u/s 17 of PMLA was conducted at the

residence of Tara Chand and it was found that Tara Chand

has been impersonating himself as Sachin Gupta and his

statement was recorded on 21.02.2023, wherein he stated that

he has opened the aforesaid three proprietary firms and

subsequently their bank accounts viz(i) Shri Khatushyam

Traders (079205500560), (ii) Anil Kumar Govind Ram Traders

and (082705001671) (iii) Om Traders 072405001740) were

opened by forging documents such as Aadhar and PAN cards,

and he stated that such bank accounts are being operated by

Neeraj Mittal (accused Number- 7) . Tara Chand (Accused

Number 6) has disclosed that photos in all the three

PAN/AADHAR cards are his own and also stated that such

hank accounts were opened for providing accommodation

entries into the bank accounts of those who give cash, and such

work is done in lieu of commission. Details of such forged

documents and finding of the investigation thereof has been

discussed in detail in Prosecution complaint filed before this

Hon'ble court on 21/04/2023. So same is not repeated here for

the sake of brevity.

33

(ix) Statement of Tara Chand (Accused Number 6) was also

recorded later u/s 50 of PMLA wherein he stated that he used

to collect cash from the Ram Parkash Bhatia (to whom Mukesh

Mittal used to hand over the cash of Veerendra Kumar Ram) on

the instructions of Neeraj Mittal and the total funds of Rs. 3.52

crores that have been transferred to the bank accounts of

Rakesh Kumar Kedia, Manish and Neha Shrestha which were

provided by Ram Parkash Bhatia (Accused Number 8) and

these are only fake business entries given in lieu of

commission. He also stated that the aforesaid four bank

accounts of himself (Tara Chand) were operated by Harish

Yadav (Accused Number 9) on the instruction of Neeraj Mittal).

He had further stated that the mobile numbers 8700647152,

8595844694 and 9355775681 linked with the aforesaid bank

accounts of firms were in the possession of Harish Yadav

(Accused 9) and one mobile number 9911011060 linked with

his ICICI bank account 675705602113 was in his (Tara

Chand's) possession and Harish used to take OTP from him

whenever needed for the purpose of making entry.

(x) -------The whole findings of investigation regarding purchase-

sale of crates and transfer of funds in lieu of such transaction

will be discussed paras below He also stated that he does not

know Rakesh Kumar Kedia, Manish, Neha Shrestha and

Genda Ram. He further stated that he used to give a

commission of 0.2 to 0.3% to Ram Parkash Bhatia for providing

cash. He stated that he used to give him the commission of

0.1% to Tara Chand for the amount that was credited into the

bank accounts of Tara Chand. He further stated that he used to

give Rs. 25,000/- per month to Harish Yadav to operate the

aforesaid bank accounts and make RTGS entries---

(xii) Statement of Harish Yadav (Accused was recorded u/s 50

of PMLA wherein he stated that he used to operate the bank

account of three proprietorship firms of Sachin Gupta on the

instructions of Tara Chand and Neeraj Mittal. He was also

found in possession of mobile numbers linked to the bank

accounts of three proprietorship firms of Sachin Gupta during

the course of search u/s 17 of PMLA at his premises on

21.02.2023. He further stated that he transferred the funds of

34

Rs. 3.52 crores in multiple trenches using the bank accounts of

three proprietorship firms of Sachin Gupta and one bank

account of Tara Chand to the bank accounts of Rakesh Kumar

Kedia, Manish and Neha Shrestha. He also st ated that the

mobile numbers linked with the bank account of Tara Chand

(675705602113) was in the possession of Tara Chand himself

and he used to get OTP from him whenever required.

(Xiii) ---search was conducted at the residence of Harish Yadav

(Accused-9) at D-7/276 2

nd

floor, sector-6 Rohini Delhi on

21.02.2023 and his statement was recorded on the same day

wherein he stated that he transferred the said amount of Rs.

10 lakhs (which is proceeds of crime of V.K. Ram) into the bank

secount 127000890839 of Manish (son of driver of Mukesh

Mittal) on the instructions of Tara Chand and in return, he

received a commission of Rs. 2,000/. He also stated that he

transferred such funds without having any business. He also

stated that Tara Chand and Sachin Gupta are the same

persons and he has known Tara Chand since 2013. He also

stated that Tara Chand had introduced him to Neeraj Mittal

who was involved in providing entries. It is also stated by

Neeraj Mittal that he did not have knowledge of transfer of this

Rs. 10 lakha from proprietorship of Harish Yadav, Thus the

same was done by Harish Yadav directly on the instruction of

Tara Chand.

10.3 Specific role of the accused in the commission of offence of

money laundering by directly or by indirectly attempts to

indulge or knowingly assist or knowingly is a party or in

involved in concealment/possession/acquisition or use in

projecting or claiming Proceeds of Crime as untainted property

under Section 3 of PMLA, 2002

(a) Tara Chand has created a fictitious person namely

Sachin Gupta and also opened three bank accounts in the

name of three proprietorship viz M/s Om Traders, M/s Shri

Khatu Shyam Traders & M/s Anil Kumar Govind Ram, of

this fictitious person Sachin Gupta by forged documents.

He also opened one bank account in his real name. Further

Tara Chand provided these four bank accounts to Neeraj

Mittal (Accused no 7) for the purpose of laundering of

35

Proceeds of crime of Veerendra Kumar Ram. Same bank

accounts were also used for routing of other funds.

b) Shri Tara Chand was engaged in the illegal business of

money transfer and providing entry, in lieu of commission.

c) Tara Chand on the instructions of Shri Neeraj Mittal used

to collect cash from Ram Parkash Bhatia, which was

actually the proceeds of crime of Veerendra Kumar Ram.

d) It is also ascertained that credit transaction of Rs 122

crores approximately have taken place from the said four

bank accounts of Tara Chand and thus same amount was

used for routing of funds, as also discussed above.

e) Tara Chand also played the vital role in this organized

structure/process of illegal routing of proceeds of crime.””

53. It is evident from the aforementioned paragraphs

that the present petitioner is close associate of accused

Harish Yadav and he used to operate the above-said three

bank accounts at the instruction of co-accused Neeraj

Mittal.

54. Further, it reveals that accused Tara Chand used

to collect cash from the Ram Parkash Bhatia (to whom

Mukesh Mittal used to hand over the cash of Ve erendra

Kumar Ram) on the instructions of Neeraj Mittal used to

transfer it to the bank accounts of Rakesh Kumar Kedia,

Manish and Neha Shrestha provided by Ram Prakash

Bhatia.

55. The investigation further disclosed that the

petitioner got instructions from Neeraj Mittal to provide

him few bank accounts for the purpose of providing RTGS

entries, after which he provided the same to Neeraj Mittal,

36

and such bank accounts were actually operated by Neeraj

Mittal with the help of Petitioner and Harish Yadav.

56. It transpires that the present petitioner Tara

Chand opened bank accounts by forging documents i.e.

Aadhar and PAN Cards in the name of fictitious person

and these bank accounts were utilized for providing

accommodation entries which after routing in some bank

accounts reached to the bank accounts of co -accused

Genda Ram. Further, it is also ascertained that some bank

accounts opened (at Delhi) on the basis of forged

documents was also being used in routing of funds.

57. The accused Tara Chand (petitioner) disclosed

during investigation that three bank accounts were opened

by him impersonating himself as Sachin Gupta in the

name of three proprietorship firms by forging documents

on the instruction of co-accused Neeraj Mittal, who also

used to operate the bank accounts. Further, no business

has been found to be existing in the name of above three

proprietorship firms at the address provided to the bank. It

is also stated that the accused Tara Chand is close

associate of accused Harish Yadav and he also used to

operate the above-said three bank accounts at the

instruction of co-accused Neeraj Mittal.

58. The accused Harish Yadav is the proprietor of M/s

Oyecool Technologies and its business operation too found

37

to be non-existence at the given address. It is further

stated that the mobile numbers linked with the aforesaid

bank accounts of firms were in the possession of accused

Harish Yadav and one mobile number with his ICICI bank

account was in possession of Tara Chand and the accused

Harish Yadav used to take OTP from him whenever needed

for the purpose of making entry. Further, the investigation

disclosed that the prime accused Veerendra Kumar Ram

used to give cash to accused Mukesh Mittal who with the

help of his above associates used to take entries in the

bank accounts and then such fund was transferred by

Mukesh Mittal into the bank accounts of the co-accused

Rajkumari and Genda Ram by exchanging commission for

the said transactions through the above bank a ccounts

which were opened on the basis of the forged documents.

59. It has come that the petitioner was working as a

commission agent and whatever money has been deposited

by the accused namely Veerandra Kumar Ram in the

account of C.A Mukesh Mittal, the said Mukesh Mittal

used to transfer the amount through Tara Chand and was

found to be involved in managing all the accounts to be

operated through Hawala transaction on the basis of

commission of 0.1%.

60. Thus, from preceding paragraph, prima-facie it

appears that the present petitioner namely Tara Chand

38

has created a fictitious person namely Sachin Gupta and

also opened three bank accounts in the name of three

proprietorship viz M/s Om Traders, M/s Shri Khatu

Shyam Traders & M/s Anil Kumar Govind Ram, of this

fictitious person Sachin Gupta by forged documents. He

also opened one bank account in his real name. Further

Tara Chand provided these four bank accounts to Neeraj

Mittal (Accused no 7) for the purpose of laundering of

Proceeds of crime of Veerendra Kumar Ram . Same bank

accounts were also used for routing of other funds.

61. Thus from the investigation it appears that the

present petitioner was engaged in the illegal business of

money transfer and providing entry, in lieu of commission

and on the instructions of Neeraj Mittal used to collect

cash from Ram Parkash Bhatia, which was actually the

proceeds of crime of Veerendra Kumar Ram. It has come

on record that credit transaction of Rs 122 crores

approximately have taken place from the said four bank

accounts of Tara Chand and thus same amount was used

for routing of funds, as also discussed above.

62. Thus, prima-facie, the involvement of the present

petitioner in illegal routing of proceeds of crime cannot be

denied as he played the vital role in this organized

structure/process of illegal routing of proceeds of crime of

accused Veerendra Kumar Ram.

39

63. Now in the light of aforesaid discussion at this

juncture this Court thinks fit to revisit the scope of section

45 of the PML Act 2002. As discussed in preceding

paragraphs that Section 45 (ii) of the PMLA Act, 2002

provides twin test. First „reason to believe‟ is to be there for

the purpose of reaching to the conclusion that there is no

prima facie case and second condition is that the accused

is not likely to commit any offence while on bail.

64. Sub-section (1)(ii) of Section 45 of the Act, 2002,

provides that if 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, meaning thereby, the parameter which is to be

followed by the concerned court that satisfaction is

required to be there for believing that such accused person

is not guilty of such offence and is not likely to commit of

offence while on bail.

65. Section 45(2) provides to consider the limitation for

grant of bail which is in addition the limitation under the

Code of Criminal Procedure, 1973, i.e., limitation which is

to be considered while granting the benefit either in

exercise of jurisdiction conferred to this Court under

Section 438 or 439 of Cr.P.C. is to be taken into

consideration.

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66. It is, thus, evident by taking into consideration the

provision of Section 19(1), 45(1), 45(2) of PML Act that the

conditions provided therein are required to be considered

while granting the benefit of regular bail in exercise of

power conferred under Section 438 or 439 of Cr.P.C., apart

from the twin conditions which has been provided under

Section 45(1) of the Act, 2002.

67. Further, it is required to refer herein that the

Hon'ble Apex Court in the case of Pavana Dibbur vs. The

Directorate of Enforcement passed in Criminal Appeal

No. 2779 of 2023 has considered the effect of the

appellant not being shown as an accused in the predicate

offence by taking into consideration Section 3 of the Act,

2002. The Hon'ble Apex Court by interpreting the provision

of Section 3 of the Act, 2002 has come out with the finding

that on a plain reading of Section 3, unless proceeds of

crime exist, there cannot be any money laundering offence.

68. Based upon the definition Clause (u) of sub-section

(1) of Section 2 of the Act 2002 which defines “proceeds of

crime”, the Hon'ble Apex Court at paragraph-12 has been

pleased to observe that clause (v) of sub-section (1) of

Section 2 of PMLA defines “property” to mean any property

or assets of every description, whether corporeal or

incorporeal, movable or immovable, tangible or intangible.

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69. To constitute any property as proceeds of crime, it

must be derived or obtained directly or indirectly by any

person as a result of criminal activity relating to a

scheduled offence. The explanation clarifies that the

proceeds of crime include property, not only derived or

obtained from 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. Clause (u) also clarifies that even the value of any

such property will also be the proceeds of crime.

70. At paragraph-14 of the aforesaid judgment , it has

observed by referring the decision rendered by the Hon'ble

Apex Court in Vijay Madanlal Choudhary and Ors. Vs.

Union of India and Ors.(supra ) that the condition

precedent for the existence of proceeds of crime is the

existence of a scheduled offence. At paragraph -15 the

finding has been given therein that on plain reading of

Section 3 of the Act, 2002, an offence under Section 3 can

be said to be committed after a scheduled offence is

committed. By giving an example, it has been clarified that

if a person who is unconnected with the scheduled offence,

knowingly assists the concealment of the proceeds of crime

or knowingly assists the use of proceeds of crime, in that

case, he can be held guilty of committing an offence under

Section 3 of the PMLA. Therefore, it is not necessary that a

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person against whom the offence under Section 3 of the

PMLA is alleged must have been shown as the accused in

the scheduled offence.

71. This Court, based upon the imputation as has

been discovered in course of investigation, is of the view

that what has been argued on behalf of the petitioner that

proceeds cannot be said to be proceeds of crime but as

would appear from the preceding paragraphs, money

which has been obtained by the accused person Veerendra

Kumar Ram has been routed by this petitioner and he has

also withdrawn the money from different fake accounts

and transferred it into the account of the accused persons.

72. Now coming in to facts of the present case, it is

evident from various paragraphs of the prosecution

complaint dated 20.08.2023 that the petitioner is not only

involved rather his involvement is direct. Further, it has

come that part of the proceeds of crime acquired in the

form of commission/bribe in lieu of allotment of tenders by

the accused Veerendra Kumar Ram, a public servant and

the said bribe money was getting routed by the help of

present petitioner and Delhi based CA Mukesh Mittal to

the bank accounts of family members of Veerendra Kumar

Ram with the help of bank accounts of Mukesh Mittal's

employees/ relatives.

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73. This Court on the basis of aforesaid discussion

factual aspect as also the legal position is of the view that

there is no reason to believe by this Court that the

petitioner is not involved managing the money said to be

proceeds of crime.

74. This Court while considering the prayer for regular

bail has taken into consideration that though the Court is

not sitting in appeal on the order passed by learned court

since this Court is exercising the power of Section 439

Cr.P.C but only for the purpose of considering the view

which has been taken by learned court while rejecting the

prayer for bail, this Court is also in agreement with the

said view based upon the material surfaced in course of

investigation, as referred hereinabove.

75. This Court is conscious of this fact that while

deciding the issue of grant bail in grave economic offences

it is utmost duty of this Court that the nature and gravity

of the alleged offence should have been kept in mind

because corruption poses a serious threat to our society

should be dealt with by iron hand.

76. The Hon‟ble Apex Court in the case of Central

Bureau of Investigation Vs Santosh Krnani and

Another, 2023 SCC O nLine SC 427 has observed that

corruption poses a serious threat to our society and must

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be dealt with iron hands. The relevant paragraph of the

aforesaid judgment is being referred as under:-

“31. The nature and gravity of the alleged offence should have

been kept in mind by the High Court. Corruption poses a serious

threat to our society and must be dealt with iron hands. It not

only leads to abysmal loss to the public exchequer but also

tramples good governance. The common man stands deprived of

the benefits percolating under social welfare schemes and is the

worst hit. It is aptly said, “Corruption is a tree whose branches

are of an unmeasurable length; they spread everywhere; and the

dew that drops from thence, Hath infected some chairs and

stools of authority.” Hence, the need to be extra conscious.”

77. This Court, in view of the aforesaid material available

against the petitioner, is of the view, that in such a grave

nature of offence, which is available on the face of the

material, applying the principle of grant of bail wherein the

principle of having prima facie case is to be followed, the

nature of allegation since is grave and as such, it is not a fit

case of grant of bail.

78. For the foregoing reasons, having regard to facts and

circumstances, as have been analysed hereinabove, the

petitioner failed to make out a special case for exercise of

power to grant bail and considering the facts and

parameters, necessary to be considered for adjudication of

bail, without commenting on the merits of the case, this

Court does not find any exceptional ground to exercise its

discretionary jurisdiction to grant bail.

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79. Therefore, this Court is of the view that it is not a case

where the prayer for bail is to be granted, as such the

instant application stands dismissed.

80. It is made clear that the views expressed in this order

are prima-facie for consideration of matter of bail only.

(Sujit Narayan Prasad, J.)

Alankar/-

A.F.R