Calcutta High Court (Appellete Side)
Arun Mukherjee vs Enforcement Directorate on 28 September, 2018
Author: Shivakant Prasad
Bench: Shivakant Prasad
1
IN THE HIGH COURT AT CALCUTTA
(Criminal Miscellaneous Jurisdiction)
Present: The Hon'ble Justice Shivakant Prasad
CRM 2033 of 2018
Arun Mukherjee
-Versus-
Enforcement Directorate
For the Petitioner : Mr. Tirthankar Ghosh
Mr. Debasis Mullick Chowdhury
Mr. Satadru Lahiri
For the Opposite Party : Mr. Kaushik Chanda, Additional Solicitor
General
Mr. Vipul Kundalia
Heard on : 11.09.2018
Judgment on : 28.9.2018
This is to consider an application under Section 439 of the Code of
Criminal Procedure in connection with ML case No.03 of 2015 under Section 4 of
Prevention of Money Laundering Act, 2002 pending in the Court of learned Judge
Special CBI Court No.1 and Judge Special Court of PMLA Bichar Bhavan,
Calcutta. This application has been preferred after the prayer for bail was turned
down by the learned Judge vide order dated 28th December, 2017.
Mr. Tirthankar Ghosh learned counsel for the petitioner at the outset
submitted that the learned Judge has failed to exercise his jurisdiction without
appreciating the mandate of law and rejected the bail application in a mechanical
and cryptic manner by not considering the provision of Section 50 of the said Act,
2002 and thereby acted contrary to the well settled principle of law regarding
appreciation of materials collected in the course of investigation as well as
guidelines for deciding an application for bail.
2
Mr. Ghosh adverted to statement of the petitioner dated 24.3.2015 who is
a debenture trustee member of Rose Valley Group to argue that the petitioner is
innocent and not involved in the alleged offence who had surrendered on his own
before the concerned Court. It appears from his voluntary statement recorded
under PMLA that he was nominated as the Debenture Trustee for the period
2007-08. The number of Debenture Trustees were four including him.
Debentures were issued two times, about five crores value each time. In his
statement he has stated that Shri Goutam Kundu was the person responsible for
the acts and affairs of the Debenture issue who knew about the process of issue
of debenture and the money was directly deposited to Rose Valley Branch Office
by Debentures Holders. Mr. Ghosh contended that the petitioner was made
Debenture Trustee without his contribution or role of such action.
My attention to the specific role of the petitioner in commission of the
offence as emerged from the complaint is invited to argue that the petitioner was
a debenture trustee member of the company not responsible for the day to day
affairs of the company at the material point of time but it reveals that on being
interrogated, the accused persons had disclosed the source of huge accumulation
of money totalling a sum of Rs. 11,99,35,385.6 which were laundered in fourteen
fixed deposits with United Bank of India. Final report under Sections
420/408/409/420-B and 34 of I.P.C. read with Sections 4, 5 and 6 of Act Prize Chit and Money Circulation Schemes (Banning Act, 1978) has been submitted in connection with FIR RC 39 (S/2014-2 KOL) dated 05.06.2014. It reveals that the petitioner has been arrayed as an accused in the said charge sheet. It is pointed 3 out that as per the statement of Goutam Kundu, Mr. N. C. Pillahi retired from service of bank had joined Rose Valley Group who was responsible for day to day affairs as General manager.
Next, drawing my attention to the statement of the said N.C. Pillahi recorded on 28.4.2015, it is submitted that the petitioner and one Abir Kundu both are trustees. It reflects from the debenture deed dated 10 October, 2007 and 10 August, 2007 between the company and the trustees that the same was signed by Arun Mukherjee and Abir Kundu another debenture trustee, each for five crores between the Rose Valley Real Estate and Construction Ltd. . The petitioner with Abir Kundu had signed on the said deeds although the witness was not aware of their credit worthiness which can be answered by the then company secretary B.K. Mallick.
This statement was brought to the notice of the Court annexed together with the charge sheet now placed by way of supplementary affidavit on behalf of the petitioner only to argue that there are other names being relatives of the chairman Goutam Kundu responsible for the affairs of the Rose Valley Group of Company.
Mr. Ghosh further submitted that the petitioner joined Rose Valley in the year 2001 as a field officer and he was made Debenture Trustee in 2007 without benefit in the service condition without any authority to collect funds, to disburse or distribute funds, to invest in any property or in the planning and designing of the Aashirbad Scheme. It is also submitted that Section 70(2) PMLA do not automatically make Debenture Trustee a person responsible for day to 4 day conduct of the company. Had it been so, Abir Kundu, Subhra Dey and others whose names are reflected in the statement of N.C.Pillahi should have been implicated in the case since the complaint discloses that the period of offence under investigation was from 2001 to 2008. It is also argued that no search and seizure has been made and no bank account of the petitioner has been scrutinized and that the issue of proceeds of crime cannot be said to be accrued in favour of the petitioner.
Mr. Ghosh referred to a decision in case of Nikash Tarachand Shah Vs. Union of India and Anr. reported in 2018 (11) SCC 1 to argue that twin restrictions on the discretion of the Court to grant bail to the accused under Section 45 of Prevention of Money Laundering Act has been done away with as the provision is manifestly arbitrary and used in arbitrary fashion to deny bail for offences under the said Act and struck down as unconstitutional and specifically placed reliance on the observation made by the Hon'ble Supreme Court in paragraphs 11, 12 and 13 reproduced thus:-
"11. Having heard learned counsel for both sides, it is important to first understand what constitutes the offence of money laundering. Under Section 3 of the Act, the kind of persons responsible for money laundering is extremely wide. Words such as "whosoever", "directly or indirectly" and "attempts to indulge" would show that all persons who are even remotely involved in this offence are sought to be roped in. An 23 important ingredient of the offence is that these persons must be knowingly or actually involved in any process or activity connected with proceeds of crime and "proceeds of crime" is defined under the Act, by Section 2 (u) thereof, to mean any property derived or obtained directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence (which is referred to in our judgment as the predicate offence). Thus, whosever is involved as aforesaid, in a process or activity connected with "proceeds of crime" as defined, which would include concealing, possessing, acquiring or using such property, would be guilty of the offence, provided such persons also project or claim such property as untainted property. Section 5 3, therefore, contains all the aforesaid ingredients, and before somebody can be adjudged as guilty under the said provision, the said person must not only be involved in any process or activity connected with proceeds of crime, but must also project or claim it as being untainted property.
12. Under Section 4 of the Act, the offence of money laundering is punishable with rigorous imprisonment for a minimum period of three years which may extend to 7 years and fine. Also, under 24 the proviso, where the proceeds of crime involved in money laundering relate to a predicate offence under paragraph 2 of Part A of the Schedule, the sentence then gets extended from 7 years to 10 years.
13. Under Section 5 of the Act, attachment of such property takes place so that such property may be brought back into the economy. Coming now to Chapter VII of the Act with which we are really concerned, Section 43 lays down that Special Courts to try offences under the Act are to be designated for such area or areas or for such case or class or group of cases as may be specified by notification. Section 44 is very important in that the Section provides for the trial of a scheduled offence and the offence of money laundering together by the same Special Court, which is to try such offences under the Code of Criminal Procedure as if it were a court of sessions. Under Section 46, read with Section 65 of the Act, the provisions of the Code of Criminal Procedure apply to proceedings before the Special Court and for the purpose of the said provisions, the Special Court shall be deemed to be a court of sessions. "
Thus, the Hon'ble Apex Court has declared Section 45(1) of Prevention of Money Laundering Act, 2002, insofar as it imposes two conditions for release on bail, to be unconstitutional as it violates Articles 14 and 21 of the Constitution of India holding that the said provision is a drastic provision which turns on its head the presumption of innocence which is fundamental to a person accused of any offence.
Mr. Ghosh further referred to case of Goutam Kundu Vs. Directorate of Enforcement (2015) 16 SCC 1 and in Rohit Tandon Vs. Directorate of Enforcement (2018) 11 SCC 46 to argue that vires of Section 45 was never considered in the cited cases and it was simply an application for bail and both the decisions were taken into consideration while deciding the issue in 6 the case of Nikesh Tarachand Shah (supra). Rohit Tandon subsequently was granted bail by the Hon'ble High Court Delhi in Bail Application No. 437/2018. In this case, three of the other accused persons are already on bail whereas the petitioner stands on better footing because he co-operated with the investigating agency in the case instituted by Central Bureau of Investigation over the self same transaction and there is nothing on record to show that if the petitioner is released on bail there is any possibility of influencing witness or tampering of evidence and rejection of the bail would be palpably putting the accused petitioner behind the bar under detention which will amount to pre trial conviction or undue deprivation of the right to life and liberty without due process of law which is against the cardinal principles of law.
In rebuttal, Mr. Kaushik Chanda learned Additional Solicitor General submitted that the twin conditions enumerated in Section 45 of the PMLA, 2002 with regard to granting of bail only upon satisfaction that the Court is to find that the accused person is not guilty of such offence being declared unconstitutional by the Hon'ble Apex Court in Nikesh Tarachand Shah case (Supra) will not apply in view of the amendment of Section 45 of PMLA, 2002 by notification of the Ministry of Finance (Department of Revenue) being Notification No. 2/2018/F. No.M.11011/1/2015-S.O. (E.S.Cell) dated 19th April, 2018 because the said twin conditions were retained in respect of the money involved in the alleged offence for more than one crore and the said notification is subsisting and has not been challenged. It is therefore, submitted that the cited decision may not be applicable in the instant case particularly when the 7 bail application was filed on 2nd May, 2018, much after the amendment made by the above Notification.
Raising objection to the prayer of the petitioner for his release on bail, Mr. Chanda urged that the petitioner is arrayed as one of the accused persons in connection with complaint case no. C-14214 of 2013 initiated under Section 24 of the SEBI Act, 1992 on the basis of the complaint of the Security and Exchange Bureau of India (SEBI). Learned Chief Metropolitan Magistrate, Calcutta after taking cognizance on the complaint of the Enforcement Directed (ED) Government of India, registered the case being ML case no. 03 of 2015 for investigation against the Rose Valley Real Estate Construction Ltd. (RVRECL) and others who have involved themselves in siphoning off public funds for commission of offence under Section 3 of the said Act.
In conclusion it is argued that the petitioner being a Debenture Trustee member of the company along with other accused persons is responsible for the acts and affairs of the company at the relevant time who planned and designed the illegal scheme and issue of debenture with false assurances of high return and thereby generated huge sums of money and diverted and laundered the money for different purpose by befooling the common public which is evident from the statements of Goutam Kundu one of the main accused persons, statements of the petitioner himself and said N.C.Pillahi, General Manager of Rose Valley Group who raised Rs.12,74,00,000/ from the public without taking permissions from SEBI and RBI and thereby committed the offence under 8 Section 3 read with Section 70(2) of PMLA, 2002 punishable under Section 4 of the said Act.
Mr. Chanda raising serious objection to grant of bail to the petitioner, adverted to the provision of Section 45 of PMLA,2002 and the amendment brought in with effect from 19.4.2018 vide GSR 383 (E) in exercise of powers conferred under Section 207 of the Finance Act, 2018 (13 of 2018) which provisions are reproduced for profitable understanding as under-
"S.45. Offences to be cognizable and non-bailable.--
(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence punishable for a term of imprisonment of more than three years under Part A of the Schedule shall be released on bail or on his own bond unless--
(i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and
(ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail:
Provided that a person who is under the age of sixteen years or is a woman or is sick or infirm, may be released on bail, if the special court so directs:
Provided further that the Special Court shall not take cognizance of any offence punishable under section 4 except upon a complaint in writing made by--
(i) the Director; or
(ii) any officer of the Central Government or state Government authorised in writing in this behalf by the Central Government by a general or a special order made in this behalf by that Government.
[(1A) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), or any other provision of this Act, no police officer shall investigate into an offence under this Act unless specifically authorised, by the Central Government by a general or special order, and, subject to such conditions as may be prescribed.] (2) The limitation on granting of bail specified in 29 [***] sub-section (1) is in addition to the limitations under the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force on granting of bail." 9 Amended provision :
"(e) in Section 45, in Sub-Section (1),
(i) for the words "punishable for a term of imprisonment of more than three years under Part A of the Schedule", the words "under this Act" shall be substituted;
(ii) in the proviso, after the words "sick and infirm", the words "or is accused either on his own or along with other co-accused of money-
laundering a sum of less than one crore rupees "shall be inserted." Thus, I find from the amended provision of Section 45 of the Act that no person accused of an offence under this Act shall be released on bail or on his own bond unless he is under the age of sixteen years or is a woman or is sick or infirm or is accused either on his own or along with other accused of money laundering a sum of less than one crore rupees, may be released on bail, if the Special Court so directs.
It appears prima facie from the entirety of the complaint and final report submitted after investigation that the accused petitioner along with other accused persons collected funds and laundered the proceeds of crime generated through cheating the public at large who were motivated to invest their money through agents of Rose Valley with high rate of interest.
Bearing in mind the serious nature of the offence under Section 45 of PMLA, 2002 and amended provision thereto, I am not inclined to enlarge the accused petitioner on bail even though the charge sheet has been submitted.
The CRM 2033 of 2018 is thus, dismissed with direction to the concerned Court to undertake trial of the case as expeditiously as possible. 10
Urgent certified photostat copy of this Judgment, if applied for, be supplied to the parties upon compliance with all requisite formalities.
(SHIVAKANT PRASAD, J.)