Delhi District Court
Directorate Of Enforcement vs Ashish Kakkar And Ors on 15 April, 2026
IN THE COURT OF MS. SHEFALI BARNALA TANDON,
ADDITIONAL SESSIONS JUDGE-06, NEW DELHI DISTRICT,
PATIALA HOUSE COURT, NEW DELHI
CC No. 1225/2024
Directorate of Enforcement Vs. Ashish Kakkar & Another
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
CNR No. DLND01-003899/2024
15.04.2026
Order on charge
Brief facts of the Case
1. The complaint is being filed under Section 44 (Offences Triable by
Special Court) read with Section 45 and Section 70 (Offences by Companies) of
the Prevention of Money Laundering Act, 2002 (hereinafter referred to as
'PMLA') for the commission of the offence of money laundering as defined in
Section 3 and punishable under Section 4 of the PMLA, 2002, against accused
Ashish Kakkar (vide initial complaint) and Puneet Maheshwari (vide
supplementary complaint). The present proceedings arise out of an ECIR
registered by the Directorate of Enforcement on the basis of multiple FIRs. The
gravamen of the allegations is that the accused persons, in connivance with
others, engaged in the activities amounting to laundering of proceeds of crime
through a network of shell entities, forged documentation, and alleged circular
trading involving cross border remittances.
Arguments on behalf of the ED
2. Ld. SPPs of ED Sh. Simon Benjamin and Sh. Manish Jain have stated at
the threshold as also mentioned in the written submissions filed by them, that the
ECIR of the present case is based on the following predicate offences:
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i) An FIR was registered by EOW, Delhi Police bearing FIR No. 0008/24) U/s
419, 420, 467, 468, 471, 476 and 120B of IPC, 1860 ( RUD-2), alleging that
accused persons namely Ashish Kakkar and Puneet Kumar in connivance
with other persons were engaged in large scale money laundering as well as
International Hawala/ unlawful money transfer to various parts of the world
by creating and operating a number of shell companies in India and abroad.
The said dummy companies have been in the name of his various
employees by using fabricated/ forged documents without any actual
business carried out, and only for import/ export in Special Economic Zones
and outward foreign remittances against these imports made by these
entities to circumvent the restrictions imposed under the provisions of
FEMA, 1999. They operated around 188 bank accounts with several Indian
banks in respect of 167 domestic firms/ companies and around 110 bank
accounts with various foreign banks in respect of 105 foreign
firms/companies. Out of the 105 foreign firms/companies, 46 are found
based in China, 30 in Singapore, 18 in Hong Kong, 07 in UAE, 02 in
Malaysia, 01 in Thailand and 01 in Mauritius. It is alleged that by adopting
aforementioned modus operandi, crores of rupees have been remitted out of
India as Foreign Outward Remittances in the guise of import of goods/
services without any actual business operations through bogus/ dummy
firms/ companies created/ incorporated by using fake/ forged documents.
Investigation conducted so far, prima facie, revealed that outward
remittances to the tune of US$ 18,00,00,000 (Eighteen Crores US Dollars)
approximately have been carried out by them in connivance with their
associates.
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ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
ii) FIR No. 630/2022 Cyber Crime, PS- Mahamandir, Jodhpur City East,
Rajasthan U/s 420, 406, 467, 468, 471 of IPC, 1860 and Sections 66, 66C &
66D of IT Act, 2008 (RUD-3): As per the content of the said FIR, some
unknown cybercrime fraudsters offered a guaranteed profit against
investment and lured one victim namely Shri Arvind Kalani who deposited
Rs.16,26,21,387/- through 101 transaction from his Axis Bank account
number 914010018368047, his OD Axis Bank Account 922030057073996
and his brother Shri Amit Kalani's Axis Bank account number
922030057069641 in the following bank accounts provided by the
fraudsters:
TABLE 01
LIST OF 08 COMPANIES
Name of the Account Holder Bank Name IFSC Code
SRK Trading Ltd. IDFC Bank Ltd. IDFB0080103
SRK Trading Ltd. ICICI bank Ltd. ICIC0000915
Adeke Rakesh Ltd. ICICI bank Ltd. ICIC0003222
Abdul Kedar HE Ltd. Yes Bank Ltd. YESB0000516
Soni Ltd. Axis Bank Ltd. UTIB0000097
Dhanraj Metal IDBI Bank Ltd. IBKL0001342
Mukesh Kumar Ltd. (Nile Traders) ICICI bank Ltd. ICIC0000539
M M Fruit & Veg Ltd. ICICI bank Ltd. ICIC0002484
iii) FIR No. 0048/2022 U/s 419 & 420 of IPC, 1860 and Section 66D IT
Act, 2000, PS Cyber Crime Gautam Budh Nagar, Uttar Pradesh ( RUD-4):
As per FIR, based on an advertisement received on Facebook for part time
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job, complainant registered on a link provided by the fraudsters and
applied for job for which she deposited total amounting to Rs.12,12,093/-
through online banking/ UPI but didn't get back anything.
iv) FIR No. 0070/2022 U/s 419 & 420 of IPC, 1860 PS Cyber Crime
Gurugram Haryana (RUD-5): As per FIR, complainant has filed a
complaint that through Telegram app he got introduced to a South Korean
girl (Anxi) who suggested him to make investment on www.upbitro.com, a
crypto Currency Exchange for good returns. He invested Rs.45,00,000/-
and when his amount reached to Rs. 1,30,00,000/-, he tried to withdraw the
same but it was restricted by the platform and asked to put Rs.25,00,000/-
more to withdraw the amount. This was alarming in nature and when he
checked the site carefully, he noticed that it's a copy of actual well-known
Korean crypto site www.upbit.com.
v) FIR No. 0036 dated 06.08.2022 U/s 420 of IPC, 1860 PS Cyber
Crime Rohtak, Haryana (RUD- 6): The complainant alleged to have
registered for online purchase on his WhatsApp and was defrauded of total
amount of Rs.6,88,231/-.
2.1 It is also alleged that various other complaints have also been registered all
over India in relation to Cyber Crimes alleging cheating the general public of
their hard-earned money and siphoning off the same out of India through the
companies controlled by accused Ashish Kakkar. The complaints are as below:
a) App-In Complaint No. 543/2022 at Cyber Crime Police Station,
Ahmedabad, Gujarat. Allegedly, the suspicious proceeds collected by the
Cybercrime fraudsters in the bank account number 016263400004312 of
M/s Ankur Enterprises were subsequently transferred to the bank account
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of M/ s Brightsuns Tradexim Pvt. Ltd., to the tune of Rs.1,72,49,999/
which is actually controlled and operated by Ashish Kakkar.
b) NCRP Complaint no. 984/2022 dated 18.02.2023 at Cyber Crime
Police Station, Rajkot, Gujarat. The suspicious proceeds collected by the
Cybercrime fraudsters were transferred and accumulated in the bank
accounts of the companies controlled and operated by Ashish Kakkar,
which are:
i) Axis Bank Account No. 922020041841784 maintained by M/s
Motownn Exim Pvt. Ltd.
ii) Axis Bank Account No. 922020021957935 maintained by M/s
Silvershine Warehouse.
iii) Axis Bank Account No. 922020033964710 maintained by M/s
Brightsuns Tradexim Pvt. Ltd.
iv) Axis Bank Account No. 922020033964969 maintained by M/s
Zlow Industries Pvt. Ltd.
c) Cyber Crime Cell Application no 2307B/2022 dated 22.12.2022
filed at Cyber Crime Cell, Mira Bhayandar, Vasai Virar Police
Commissionerate, Maharashtra- The suspicious proceeds collected by the
Cybercrime fraudsters were collected in the bank account number
920020041841784 maintained by M/s Motownn Exim Pvt. Ltd controlled
and operated by Ashish Kakkar.
2.2. Since the offences under Sections 419, 420, 467, 471, 476 and 120B of
IPC, 1860 are Scheduled Offences under Part 'A' of the Prevention of Money
Laundering Act, 2002 as defined under section 2 ( 1) (x) & (y) of PML Act, 2002
therefore, an Enforcement Case Information Report (ECIR) bearing No.
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ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
ECIR/STF/02/2024 dated 23.01.2024 (RUD-7) was recorded by Special Task
Force, headquarter office of the Directorate and investigation into the matter
under the provisions of Prevention of Money Laundering Act, 2002 was initiated.
2.3. The premises relating to Ashish Kakkar and his accomplices were
searched on 22/23.05.2023 by the Directorate of Enforcement under the
provisions of Foreign Exchange Management Act, 1999 (hereinafter referred to
as FEMA) and various documents and digital devices were seized. Further,
during investigation under FEMA, 1999, statements of various persons were
recorded under Section 37 of FEMA, 1999. It is alleged that during the course of
investigation, it was noticed that Ashish Kakkar with the aid and assistance of his
accomplices has indulged in numerous scheduled offences and hence the findings
of investigation was shared to the Economic Offence Wing of Delhi Police for
necessary action. The EOW, after conducting a preliminary enquiry, registered
an FIR and started its investigation vide FIR No. 0008 dated 23.02.2024
(RUD-2). The said FIR was also added in the ECIR/STF/02/2024 vide
addendum dated 01.03.2024 (RUD- 8).
2.4. The FIR No. 630 of 2022 (RUD-3) Jaipur Zonal Office of Enforcement
Directorate (JPZO) has initiated investigation under PMLA, 2002, vide
ECIR/JPZO/02/2023 dated 08.02.2023 (RUD- 9). However, since the said FIR
was a part of instant investigation being carried out under PMLA vide ECIR/STF
/02/2024 (RUD-7), the ECIR recorded by JPZO has been transferred vide letter
dated 01.04.2024 and merged with this instant ECIR/STF/02/2024 for
investigation (RUD-9).
2.5. It is alleged that during investigation it has surfaced that accused Ashish
Kakkar, also known as Pablo, along with his associates Punit Kumar, alias Puneet
Maheshwari or Monu Bhaiya, and John, in order to defraud the public through
intricate cybercrime methods and forgery, engaged in forging essential identity
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documents such as identity proofs, Aadhaar Card, PAN Cards, and signatures,
which played a crucial role in establishing a network of bank accounts of shell
companies and paper entities, both within India and internationally. Investigation
further revealed that the 23 entities and 26 entities are shell entities by the
accused persons respectively, wherein some of the entities are incorporated based
on forged documents. The accused No. 2 to 23 are the shell companies
beneficially owned and controlled by accused No. 1 Ashish Kakkar. The accused
No. 25 to 47 are the shell companies beneficially owned and controlled by
accused No. 24 Puneet Kumar. These shell companies and paper entities were
not having any legitimate businesses but rather served as complex channels for
accumulating, layering, and transferring proceeds obtained from various
cybercrimes. The illicit funds acquired through these criminal activities were
cleverly routed through circular import-export transactions to conceal their origin
and destination, facilitating their transfer out of India. The proceeds of crime
ultimately end up layered and accumulated in the bank accounts of
companies/firms controlled by Ashish Kakkar and his associates. These proceeds
are then fraudulently siphoned out of India as foreign outward remittances
against the import of goods and services.
2.6. During the course of the investigation under PMLA, searches were
conducted under section 17 of PMLA, 2002, at various premises under control of
accused persons and their associates. Incriminating documents, hard disks, digital
devices, mobile phones, gold, cash etc., were seized during these searches.
Statements of individuals associated with accused persons and working for him
were recorded under section 50 of PMLA, 2002. Analysis of the seized
documents and statements recorded revealed that accused persons have
incorporated several shell companies. They then opened bank accounts for these
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shell entities using forged KYC documents and forged AOF's to launder
proceeds of crime generated from various cyber frauds.
2.7. Various incriminating documents were seized from premises of accused
persons, alleged to establish their control over shell companies are as below:
i) Accused persons have utilized the common directors to incorporate the
majority of his shell companies. These companies share common
registered addresses. Upon examining the financial statements and banking
transactions of these shell companies, it becomes apparent that the banking
activities do not align with the financial records. Many of these companies
have failed to submit balance sheets and profit & loss statements to the
Registrar of Companies (RoC).
ii) Statements were recorded from various individuals, including dummy
Directors, employees who executed operations according to accused
person's instructions, and individuals involved in import/ export activities.
These statements revealed that the companies mentioned above were
incorporated, controlled, and operated by accused persons Ashish Kakkar
and Puneet Kumar.
iii) Various documents recovered during searches, such as blank
letterheads, digital rubber stamps of different companies, and import-
export related documents, were seized from accused person's premises.
Documents submitted to banks for outward foreign remittances against
imports were also seized from their premises. Additionally, digital copies
of blank letterheads and visiting cards of various companies bearing their
name were found during the searches, indicating direct control over these
companies.
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2.8. That the PMLA investigation findings indicate that approximately
Rs.16.22 Crores have been transferred from the bank accounts of Arvind Kalani
and Amit Kalani, as mentioned in FIR No. 0630/2022 dated 28.11.2022, to 08
bank accounts held by different individuals/ entities. Analysis of these bank
accounts reveals that the funds underwent layering through various accounts
belonging to multiple individuals, proprietorship firms, and companies before
being siphoned out of India as foreign outward remittances against the import of
goods which were heavily overvalued. After layering the funds, they were
ultimately consolidated into bank accounts opened using forged documents of
certain companies (with dummy directors but actually controlled by accused
persons), from where outward remittances were made against imports. Hence,
accused persons are involved in processes and activities connected to PoC
generated out of various cybercrimes to the tune of thousands of Crores in
various bank accounts of shell companies opened and operated by using forged
KYCs. In sum, accused persons knowingly engaged in concealing, possessing,
acquiring, using, and projecting proceeds of crime as untainted property.
2.9. That on the basis of material seized during the searches conducted under
Section 37 of FEMA 1999, at the premises of accused persons and their
associates; the statements recorded under FEMA which have been taken on
record under Section 50 of the PMLA, 2002 for further investigation under
PMLA; statements of various persons were recorded under Section 50 of PMLA,
2002 including statements of the accused persons and his associates, accused
Ashish Kakkar was arrested on 02.03.2024, under Section 19 of PMLA, 2002, on
the reasonable belief that he was involved in money laundering. Further during
investigation, Accused Punit Kumar was also arrested under section 19 of
PMLA, 2002, on 03.04.2024.
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2.10 To buttress their arguments, Ld. SPPs for the Complainant/ED have placed
reliance upon following judgments:
a. Hon'ble Supreme Court of India in case titled as Vijay Madanlal
Choudhary Vs. Union of India & Ors. reported in 2022 SCC OnLine SC
929, has held that :
"259. This speech, thus, set the tone for the years to come in our
fight against money-laundering. This law was enacted in 2002 yet
brought into force in 2005. Later, a speech was made by the then
Finance Minister, who had introduced the Prevention of Money
Laundering (Amendment) Bill, 2012 in the Rajya Sabha on
17.12.2012.
"SHRI P. CHIDAMBARAM: Mr. Deputy Chairman, Sir, I am
grateful to the hon. Members, especially ten hon. Members who
have spoken on this Bill and supported the Bill. Naturally, some
questions will arise; they have arisen. It is my duty to clarify those
matters. Sir, firstly, we must remember that money-laundering is a
very technically- defined offence. It is not the way we understand
'money-laundering' in a colloquial sense. It is a technically-defined
offence. It postulates that there must be a predicate offence and it is
dealing with the proceeds of a crime. That is the offence of money-
laundering. It is more than simply converting black- money into
white or white money into black. That is an offence under the
Income Tax Act. There must be a crime as defined in the Schedule.
As a result of that crime, there must be certain proceeds -- It could
be cash; it could be property. And anyone who directly or
indirectly indulges or assists or is involved in any process or
activity connected with the proceeds of crime and projects it as
untainted property is guilty of offence of money- laundering. So, it
is a very technical offence. The predicate offences are all listed in
the Schedule. Unless there is a predicate offence, there cannot be
an offence of money-laundering. Initially the thinking was unless a
person was convicted of the predicate offence, you cannot convict
him of money-laundering. But that thinking is evolved now. The
Financial Action Task Force has now come around to the view that
if the predicate offence has thrown up certain proceeds and you
dealt with those proceeds, you could be found guilty of offence of
money-laundering. What we are trying to do is to bring this law on
lines of laws that are commended by FATF and all countries have
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obliged to bring their laws on the same lines. I just want to point to
some of my friends that this Bill was passed in 2002. In 2002, we
felt that these provisions are sufficient. In the working of the law,
we found that the provisions have certain problems. We amended it
in 2005. We amended it in 2009. We still find that there are some
problems. The FATF has pointed out some problems. And, we are
amending it in 2012. It is not finding fault with anyone. All I am
trying to say is that this is an evolutionary process. Laws will
evolve in this way, and we are amending it again in 2012."
xxxxxx
269. From the bare language of Section 3 of the 2002 Act, it is
amply clear that the offence of money-laundering is an independent
offence regarding the process or activity connected with the
proceeds of crime which had been derived or obtained as a result of
criminal activity relating to or in relation to a scheduled offence.
The process or activity can be in any form -- be it one of
concealment, possession, acquisition, use of proceeds of crime as
much as projecting it as untainted property or claiming it to be so.
Thus, involvement in any one of such process or activity connected
with the proceeds of crime would constitute offence of money-
laundering. This offence otherwise has nothing to do with the
criminal activity relating to a scheduled offence -- except the
proceeds of crime derived or obtained as a result of that crime.
270. Needless to mention that such process or activity can be
indulged in only after the property is derived or obtained as a result
of criminal activity (a scheduled offence). It would be an offence
of money-laundering to indulge in or to assist or being party to
the process or activity connected with the proceeds of crime; and
such process or activity in a given fact situation may be a
continuing offence, irrespective of the date and time of commission
of the scheduled offence. In other words, the criminal activity may
have been committed before the same had been notified as
scheduled offence for the purpose of the 2002 Act, but if a person
has indulged in or continues to indulge directly or indirectly in
dealing with proceeds of crime, derived or obtained from such
criminal activity even after it has been notified as scheduled
offence, may be liable to be prosecuted for offence of money-
laundering under the 2002 Act -- for continuing to possess or
conceal the proceeds of crime (fully or in part) or retaining
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possession thereof or uses it in trenches until fully exhausted. The
offence of money-laundering is not dependent on or linked to the
date on which the scheduled offence or if we may say so the
predicate offence has been committed. The relevant date is the date
on which the person indulges in the process or activity connected
with such proceeds of crime. These ingredients are intrinsic in the
original provision (Section 3, as amended until 2013 and were in
force till 31.7.2019); and the same has been merely explained and
clarified by way of Explanation vide Finance (No.2) Act, 2019.
Thus understood, inclusion of Clause (ii) in Explanation inserted in
2019 is of no consequence as it does not alter or enlarge the scope
of Section 3 at all.
271. As mentioned earlier, the rudimentary understanding of
'money-laundering' is that there are three generally accepted stages
to money-laundering, they are:
(a) Placement: which is to move the funds from direct
association of the crime.
(b) Layering: which is disguising the trail to foil pursuit.
(c) Integration: which is making the money available to the
criminal from what seem to be legitimate sources."
b. Hon'ble Supreme Court of India in case titled as Pavana Dibbur Vs.
Directorate of Enforcement reported in 2023 SCC OnLine SC 1586 , has
held that :
"17.Coming back to Section 3 of the PMLA, on its plain reading,
an offence under Section 3 can be committed after a scheduled
offence is committed. For example, let us take the case of a person
who is unconnected with the 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, To give a
concrete example, the offences under Sections 384 to 389 of the
IPC relating to "extortion" are scheduled offences included in
Paragraph 1 of the Schedule to the PMLA, An accused may
commit a crime of extortion covered by Sections 384 to 389 of IPC
and extort money. Subsequently, a person unconnected with the
offence of extortion may assist the said accused in the concealment
of the proceeds of extortion. In such a case, the person who assists
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the accused in the scheduled offence for concealing I the proceeds
of the crime of extortion can be guilty of the offence of money
laundering. Therefore, it is not necessary scheduled offence that a
person against whom the offence under Section 3 of the PMLA is
alleged must have been shown as the accused in the What is held
in paragraph 270 of the decision of this Court in the case of Vijay
Madanlal Choudhary supports the above conclusion. The
conditions precedent for attracting the offerice under Section 3 of
the PMLA are that there must be a scheduled offence and that there
must be proceeds of crime in relation to the scheduled offence as
defined in clause (u) of subsection (1) of Section 3 of the PMLA."
c. Hon'ble Supreme Court of India in case titled as Y. Balaji Vs. Karthik
Desari & Anr. reported in 2023 SCC OnLine 645, has held that :
"96. Section 3 of the Act which defines the offence of money-
laundering reads as follows:
"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 proceeds of crime by its concealment or
possession or acquisition or use or projecting it as untainted
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property or claiming it as untainted property in any manner
whatsoever."
97. If the main part of Section 3 is dissected with forensic
precision, it will be clear that Section 3 addresses itself to three
things (we may call them 3 'P's) namely, (i) person; (ii) process or
activity; and (iii) product. Insofar as persons covered by Section 3
are concerned, they are, (i) those who directly or indirectly attempt
to indulge; or (ii) those who knowingly assists; or (iii) those who
are knowingly a party; or (iv) those who are actually involved.
Insofar as process is concerned, the Section identifies six different
activities, namely (i) concealment; (ii) possession; (iii) acquisition;
(iv) use; (v) projecting; or (vi) claiming as untainted property, any
one of which is sufficient to constitute the offence. Insofar as
product is concerned, Section 3 identifies "proceeds of crime" or
the property representing the proceeds of crime as the product of
the process or activity.
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100. All the three FIRs alleged that the accused herein had
committed offences included in the Schedule by taking illegal
gratification for providing appointment to several persons in the
Public Transport Corporation. In one case it is alleged that a sum of
more than Rs.2 crores had been collected and in another case a sum
of Rs.95 lakhs had been collected. It is this bribe money that
constitutes the 'proceeds of crime' within the meaning of Section
2(1)(u). It is no rocket science to know that a public servant
receiving illegal gratification is in possession of proceeds of crime.
The argument that the mere generation of proceeds of crime is not
sufficient to constitute the offence of money-laundering, is actually
preposterous. As we could see from Section 3, there are six
processes or activities identified therein. They are, (i) concealment;
(ii) possession; (iii) acquisition; (iv) use; (v) projecting as untainted
property; and (vi) claiming as untainted property. If a person takes
a bribe, he acquires proceeds of crime. So, the activity of
"acquisition" takes place. Even if he does not retain it but "uses" it,
he will be guilty of the offence of money-laundering, since "use" is
one of the six activities mentioned in Section 3.
101. The FIRs for the predicate offences identify all the three
components of Section 3, namely, (i) persons; (ii) process; and (iii)
product. Persons accused in the FIRs are those who have indulged
in the process or activity. The illegal gratification that they have
taken, represents the proceeds of crime. The (i) acquisition of such
illegal gratification in the first instance; (ii) the possession of the
tainted money before putting it to use; and (iii) today projecting it
as untainted money, is the process or activity in which the accused
have indulged. The corruption money represents the proceeds of
crime."
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d. Hon'ble Supreme Court of India in case titled as Vijay Nair Vs.
Directorate of Enforcement reported in 2023 SCC OnLine Del 3769, has
held that :
"47. The bare reading of Section 3 of PMLA would make it clear
if a person is 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 an untainted
property shall be guilty of offence of money laundering. Therefore,
it is not necessary to attribute section 3 of the PMLA that the
alleged person must have acquired or in possession of the proceeds
of the crime. If a person has actually been involved in any process
or activity connected with the proceeds of crime, it would be
sufficient to prosecute him under Section 3 of PMLA. The
argument that the proceeds of crime have not been received or the
proceeds of crime has not been recovered and therefore section 3 of
the PMLA will not come into operation is totally fallacious and is
liable to be rejected. It is necessary to keep in mind that such
crimes are committed in a deep conspiracy and under the dark
cover. An act may not be an offence at all if it is done in relation to
any process or activity not connected with the proceeds of crime,
but if such an act is done in relation to any process or activity
connected with the proceeds of crime it will certainly be an offence
under Section 3 of PMLA. The scope and ingredients of offence of
money laundering under Section 3 of PMLA has been defined in
Vijay Madanlal Chaudhary (supra)."
e. Hon'ble High Court of Delhi in case titled as Anand Chauhan Vs.
Directorate of Enforcement reported in 2017 SCC OnLine Del 7790, has
held that :
"28. I cannot agree with the submission of the petitioner that for
the purpose of Section 3 and 4 of the PMLA, the person accused of
the commission of the offence under the PMLA should have
committed the scheduled offence and acquired the proceeds of
crime. The proceeds of crime may be acquired by another person
who commits one of the scheduled offences, and the person
charged with money laundering may have only, directly or
indirectly, assisted or knowingly become a party, or may be
actually involved in the process or activity of, inter alia,
concealing, possessing, acquiring or using and projecting or
claiming the said proceeds of crime as untainted property. The
purpose of scheduling the offences under the PMLA appears to be
to enlist the various crimes through which the proceeds of crime
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 15 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
may be generated. Thus, the submission of the petitioner that he
cannot be charged under the PMLA, does not appear to have any
merit."
f. Hon'ble Supreme Court of India in case titled as Anoop Bartaria Vs.
Directorate of Enforcement reported in 2023 SCC OnLine 477, has held
that:
"27. Having regard to the definition contained in Section 3, it
would be a folly to hold that the knowledge of the accused that he
was dealing with the proceeds of crime, would be a condition
precedent or sine qua non required to be shown by the prosecution
for lodging the complaint under the said Act. As the definition
itself suggests 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. Hence, apart from having
knowledge, if a person who directly or indirectly attempts to
indulge or is actually involved in the process or activity connected
with the proceeds of crime, is also guilty of the offence of money
laundering. In the instant case, the direct involvement of the
petitioners in the activities connected with the proceeds of crime
has been alleged, along with the material narrated in the complaint
which would require a trial to be conducted by the competent
court."
g. Hon'ble Supreme Court of India in case titled as UOI through
the Assistant Director Vs. Kanhaiya Prasad reported in 2025 SCC
OnLine SC 36, has held that :
"18. Though it was sought to be submitted by learned senior
Advocate Mr. Ranjit Kumar for the respondent that the appellant
had relied upon the statements of the respondent recorded under Section 50 of the Act which were inadmissible in evidence, the said submission cannot be accepted in view of the position of law settled by this Court in Vijay Madanlal (supra) in which it has been held inter alia that the person summoned under Section 50 (2) is bound to attend in person or through authorized agents before the authority and to state truth upon any subject concerning which he is being examined or is expected to make statements and to produce the documents as may be required by virtue of sub-section (3) of Section 50. It has been further observed that Article 20(3) of the Constitution would not come into play in respect of the process of recording statement pursuant to such summon issued under sub- section (2) of Section 50. The phrase used in Article 20(3) is "to be Directorate of Enforcement Vs. Ashish Kakkar & Another Page 16 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 a witness" and not to "appear as a witness". It follows that the protection afforded to an accused insofar as it is related to the phrase "to be a witness" is in respect of testimonial compulsion in the court room, and it may also 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 a prosecution.
h. Hon'ble Supreme Court of India in case titled as Tarun Kumar Vs. Directorate of Enforcement reported in 2023 SCC OnLine SC 1486, has held that:
"14. The first and foremost contention raised by learned Senior Counsel Mr. Luthra would be that the appellant was not named in the FIR nor in first three prosecution/ supplementary complaints and has been implicated only on the basis of the statements of witnesses recorded pursuant to the summons issued under Section 50 of the PML Act, without there being any material in support thereof.
15. In our opinion, there is hardly any merit in the said submission of Mr. Luthra. In Rohit Tandon Vs. Directorate of Enforcement; (2018) 11 SCC 46 , a three Judge Bench has categorically observed that the statements of witnesses/ accused are admissible in evidence in view of Section 50 of the said Act and such statements may make out a formidable case about the involvement of the accused in the commission of a serious offence of money laundering. Further, as held in Vijay Mandanlal (supra), the offence of money laundering under Section 3 of the Act is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence.
The offence of money laundering is not dependent or linked to the date on which the scheduled offence or predicate offence has been committed. The relevant date is the date on which the person indulges in the process or activity connected with the proceeds of crime. Thus, the involvement of the person in any of the criminal activities like concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so, would constitute the offence of money laundering under Section 3 of the Act.
16. So far as facts of the present case are concerned, as transpiring from the supplementary complaint filed against the appellant, apart from the statements of witnesses recorded Directorate of Enforcement Vs. Ashish Kakkar & Another Page 17 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 under Section 50 of the said Act, there has been sufficient material collected in the form of documents which prima facie show as to how the appellant was knowingly a party and actually involved in the process and in the activities connected with the proceeds of crime, and how he was projecting/ claiming such proceeds of crime as untainted and how he was the beneficiary of the proceeds of crime acquired through the criminal activities relating to the scheduled offences.
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22. Lastly, it may be noted that as held in catena of decisions, the economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. Undoubtedly, economic offences have serious repercussions on the development of the country as a whole. To cite a few judgments in this regard are Y. S. Jagan Mohan Reddy Vs. Central Bureau of Investigation, (2013) 7 SCC 439; Nimmagadda Prasad Vs. Central Bureau of Investigation, (2013) 7 SCC 466; Gautam Jundu Vs. Directgorate of Enforcement (Supra), State of Bihar & Anr. Vs. Amit Kumar alias Bachcha Rai, (2017) 13 SCC 751. This court taking a serious note with regard to the economic offences had observed as back as in 1987 in case of State of Gujrat Vs. Mohanlal Jitamalji Porwal and Another, (1987) 2 SCC 364 as under:-
"5... The entire community is aggrieved if the economic offenders who ruin the economy of the State are not brought to books. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the community. A disregard for the interest of the community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even-handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the damage done to the National Economy and National Interest..."
23. With the advancement of technology and Artificial Intelligence, the economic offences like money laundering have become a real threat to the functioning of the financial system of the country and have become a great challenge for the investigating agencies to detect and comprehend the intricate nature of Directorate of Enforcement Vs. Ashish Kakkar & Another Page 18 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 transactions, as also the role of the persons involved therein. Lot of minute exercise is expected to be undertaken by the Investigating Agency to see that no innocent person is wrongly booked and that no culprit escapes from the clutches of the law. When the detention of the accused is continued by the Court, the courts are also expected to conclude the trials within a reasonable time, further ensuring the right of speedy trial guaranteed by Article 21 of the Constitution."
i. Hon'ble High Court of Delhi in Bail Application No. 3464/2024 titled as Aditya Krishna Vs. Directorate of Enforcement, has held that :
"37. It is a settled position of law that statements recorded under Section 50 of the PMLA hold evidentiary value and are admissible in legal proceedings. The Hon‟ble Supreme Court, while emphasizing the legal sanctity of such statements, has time and again observed that they constitute valid material upon which reliance can be placed to sustain allegations under the PMLA. In a recent judgment, the Hon‟ble Supreme Court in Abhishek Banerjee v. Enforcement Directorate, (2024) 9 SCC 22 has made such observations which are as under:
"21. ...Section 160 which falls under Ch. XII empowers the police officer making an investigation under the said chapter to require any person to attend within the limits of his own or adjoining station who, from the information given or otherwise appears to be acquainted with the facts and circumstances of the case, whereas, the process envisaged by Section 50 PMLA is in the nature of an inquiry against the proceeds of crime and is not "investigation" in strict sense of the term for initiating prosecution; and the authorities referred to in Section 48 PMLA are not the police officers as held in Vijay Madanlal [Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1] .
22. It has been specifically laid down in the said decision that the statements recorded by the authorities under Section 50 PMLA are not hit by Article 20(3) or Article 21 of the Constitution, rather such statements recorded by the authority in the course of inquiry are deemed to be the judicial proceedings in terms of Section 50(4), and are admissible in evidence, whereas the statements made by any person to a police officer in the course of an investigation under Ch. XII of the Code could not be used for any purpose, except for the purpose stated in the proviso to Section 162 of the Code. In view of such glaring inconsistencies between Section 50 PMLA and Sections Directorate of Enforcement Vs. Ashish Kakkar & Another Page 19 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 160/161CrPC, the provisions of Section 50 PMLA would prevail in terms of Section 71 read with Section 65 thereof."
38. The Hon‟ble Supreme Court in the aforementioned judgment underscored that such statements, being recorded in the course of an inquiry rather than an investigation, are not subject to the restrictions under Article 20(3) and Article 21 of the Constitution. Instead, they are deemed to be judicial proceedings under Section 50(4) of the PMLA and, therefore, admissible as evidence in proceedings under the PMLA.
Xxxxxx
75. From the bare perusal of Section 24 of the PMLA, it is evident that once a person is charged with the offence of money laundering under Section 3, the law presumes that the proceeds of crime are involved in money laundering unless the contrary is proven by the accused.
xxxxxx
77. By virtue of Section 24 of the PMLA, the respondent is not required to conclusively establish the applicant's guilt at the pre- trial stage, rather, the applicant must demonstrate that the proceeds of crime attributed to him are not linked to money laundering. In the absence of any rebuttal by the applicant, the presumption under Section 24 of the PMLA stands in favor of the respondent, thereby justifying his continued detention.
xxxxx
79. In light of the principles enunciated by the Hon‟ble Supreme Court in Vijay Madanlal Choudhary (Supra) and reiterated in Prem Prakash (Supra), this Court must determine whether the foundational facts necessary to invoke the presumption under Section 24 of the PMLA have been established by the respondent. The Hon‟ble Supreme Court has categorically held that the prosecution must satisfy three essential ingredients. First, the commission of a scheduled offence must be established. Second, the property in question must be shown to have been derived or obtained, directly or indirectly, as a result of such criminal activity and third, the accused must be linked, directly or indirectly, to any process or activity connected with the proceeds of crime.
xxxxxxx
81. Applying the legal presumption under Section 24(a) of the PMLA, once the respondent has demonstrated these foundational Directorate of Enforcement Vs. Ashish Kakkar & Another Page 20 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 facts, the onus shifts to the applicant to rebut the presumption that the proceeds of crime were not involved in money laundering. The applicant, however, has failed to provide any credible evidence to rebut this presumption. Mere denial of involvement or assertion of being an investor in the firm without day-to-day operational control is insufficient to discharge the burden imposed by the Statute."
j. Hon'ble Supreme Court of India in case titled as Satish Jaggi Vs. State of Chhattisgarh reported in (2007) 11 SCC 195, has held that :
"Normally in the offence of non-bailable also, bail can be granted if the facts and circumstances so demand. We have already observed that in granting bail in non-bailable offence, the primary consideration is the gravity and the nature of the offence. A reading of the order of the learned Chief Justice shows that the nature and the gravity of the offence and its impact on the democratic fabric of the society was not at all considered. We are more concerned with the observations and findings recorded by the learned Chief Justice on the credibility and the evidential value of the witnesses at the stage of granting bail. By making such observations and findings, the learned Chief Justice has virtually acquitted the accused of all the criminal charges levelled against him even before the trial. The trial is in progress and if such findings are allowed to stand it would seriously prejudice the prosecution case. At the stage of granting of bail, the Court can only go into the question of the prima facie case established for granting bail. It cannot go into the question of credibility and reliability of the witnesses put up by the prosecution. The question of credibility and reliability of prosecution witnesses can only be tested during the trial."
k. Hon'ble Supreme Court of India in Crl. (SLP) No. 6185 of 2023 titled as Pradeep Nirankarnath Sharma Vs. Directorate of Enforcement, has held that :
"29. Furthermore, it is settled law that the determination of the amount involved in a money laundering offence is not to be viewed in isolation but in the context of the overall financial trail and associated transactions. The totality of the evidence must be assessed, which is a matter of trial; but even on a prima facie assessment, it is clear that the proceeds of crime in the present case are significantly higher than the statutory threshold. The appellant has failed to substantiate his claim with any material that Directorate of Enforcement Vs. Ashish Kakkar & Another Page 21 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 contradicts the respondent's submissions in this regard. Therefore, this ground also does not aid the appellant in any manner.
30. The PMLA was enacted with the primary objective of preventing money laundering and confiscating the proceeds of crime, thereby ensuring that such illicit funds do not undermine the financial system. Money laundering has far-reaching consequences, not only in terms of individual acts of corruption but also in causing significant loss to the public exchequer. The laundering of proceeds of crime results in a significant loss to the economy, disrupts lawful financial transactions, and erodes public trust in the system. The alleged offences in the present case have a direct bearing on the economy, as illicit financial transactions deprive the state of legitimate revenue, distort market integrity, and contribute to economic instability. Such acts, when committed by persons in positions of power, erode public confidence in governance and lead to systemic vulnerabilities within financial institutions.
31. The illegal diversion and layering of funds have a cascading effect, leading to revenue losses for the state and depriving legitimate sectors of investment and financial resources. It is settled law that in cases involving serious economic offences, judicial intervention at a preliminary stage must be exercised with caution, and proceedings should not be quashed in the absence of compelling legal grounds. The respondent has rightly argued that in cases involving allegations of such magnitude, a trial is imperative to establish the full extent of wrongdoing and to ensure accountability.
32. The PMLA was enacted to combat the menace of money laundering and to curb the use of proceeds of crime in the formal economy. Given the evolving complexity of financial crimes, courts must adopt a strict approach in matters concerning economic offences to ensure that perpetrators do not exploit procedural loopholes to evade justice.
33. The present case involves grave and serious allegations of financial misconduct, misuse of position, and involvement in transactions constituting money laundering. The appellant seeks an end to the proceedings at a preliminary stage, effectively preventing the full adjudication of facts and evidence before the competent forum. However, as established in multiple judicial pronouncements, cases involving economic offences necessitate a Directorate of Enforcement Vs. Ashish Kakkar & Another Page 22 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 thorough trial to unearth the complete chain of events, financial transactions, and culpability of the accused.
34. The material submitted by the respondent, coupled with the broad legislative framework of the PMLA, indicates the necessity of allowing the trial to proceed and not discharging the appellant at the nascent stage of charge framing. The argument that the proceedings are unwarranted is devoid of substance in light of the statutory objectives, the continuing nature of the offence, and the significant financial implications arising from the alleged acts. Discharging the appellant at this stage would be premature and contrary to the principles governing the prosecution in money laundering cases.
35. Given the severe and grave nature of the allegations against the appellant, it is imperative that he must undergo thorough judicial scrutiny during trial. A proper trial is necessary to unearth the full extent of the offence, to evaluate the evidence produced by the appellant, to analyze the complete chain of final transactions, and find out the veracity of the severe allegations and the amount of proceeds of crime. The legal framework under the PMLA serves as a crucial mechanism to ensure that individuals involved in laundering proceeds of crime are brought to justice and that economic offences do not go unpunished.
36. In light of the above discussion, it is evident that the appellant has failed to establish any legally sustainable ground warranting interference by this Court at a pre-trial stage. The submissions made in support of the appeal are neither legally untenable nor in the best interest of justice. The offence alleged against the appellant is clearly a continuing offence under the PMLA, and the quantum of proceeds of crime involved far exceeds the statutory threshold and requires proper investigation and judicial scrutiny. The findings of the Courts below are well reasoned and do not call for interference.
l. Hon'ble Supreme Court of India in case titled as Soma Chakravarty vs. State reported in (2007) 5 SCC 403, has held that :
"12. It may be mentioned that the settled legal position, as mentioned in the above decisions, is that if on the basis of material on record the Court could form an opinion that the accused might have committed offence it can frame the charge, though for conviction the conclusion is required to be proved beyond Directorate of Enforcement Vs. Ashish Kakkar & Another Page 23 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 reasonable doubt that the accused has committed the offence. At the time of framing of the charges the probative value of the material on record cannot be gone into, and the material brought on record by the prosecution has to be accepted as true at that stage. Before framing a charge the court must apply its judicial mind on the material placed on record and must be satisfied that the commitment of offence by the accused was possible. Whether, in fact, the accused committed the offence, can only be decided in the trial."
m. Hon'ble Supreme Court of India in case titled as State of Rajasthan Vs. Ashok Kumar Kashyap reported in (2021) 11 SCC 191, has held that :
"13. Having considered the reasoning given by the High Court and the grounds which are weighed with the High Court while discharging the accused, we are of the opinion that the High Court has exceeded in its jurisdiction in exercise of the revisional jurisdiction and has acted beyond the scope of Section 227/339 Cr.P.C. While discharging the accused, the High Court has gone into the merits of the case and has considered whether on the basis of the material on record, the accused is likely to be convicted or not. For the aforesaid, the High Court has considered in detail the transcript of the conversation between the complainant and the accused which exercise at this stage to consider the discharge application and/or framing of the charge is not permissible at all.
14. As rightly observed and held by the learned Special Judge at the stage of framing of the charge, it has to be seen whether or not a prima facie case is made out and the defence of the accused is not to be considered. After considering the material on record including the transcript of the conversation between the complainant and the accused, the learned Special Judge having found that there is a prima facie case of the alleged offence under Section 7 of the PC Act, framed the charge against the accused for the said offence. The High Court materially erred in negating the exercise of considering the transcript in detail and in considering whether on the basis of the material on record the accused is likely to be convicted for the offence under Section 7 of the PC Act or not.
15. As observed hereinabove, the High Court was required to consider whether a prima facie case has been made out or not and whether the accused is required to be further tried or not. At the stage of framing of the charge and/or considering the discharge application, the mini trial is not permissible. At this stage, it is to be noted that even as per Section 7 of the PC Act, even an attempt constitutes an offence. Therefore, the High Court has erred and/or Directorate of Enforcement Vs. Ashish Kakkar & Another Page 24 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 exceeded in virtually holding a mini trial at the stage of discharge application.
16. We are not further entering into the merits of the case and/or merits of the transcript as the same is required to be considered at the time of trial. Defence on merits is not to be considered at the stage of framing of the charge and/or at the stage of discharge application."
n. Hon'ble Supreme Court of India in case titled as State of Gujrat Vs. Dilipsinh Kishorsinh Rao reported in 2023 INSC 894, has held that :
"11. This Court in State of T.N. Vs. N. Suresh Rajan (2014) 11 SCC 709 adverting to the earlier propositions of law laid down on this subject has held:
"29. We have bestowed our consideration to the rival submissions and the submissions made by Mr. Ranjit Kumar commend us. True it is that at the time of consideration of the applications for discharge, the court cannot act as a mouthpiece of the prosecution or act as a post office and may sift evidence in order to find out whether or not the allegations made are groundless so as to pass an order of discharge. It is trite that at the stage of consideration of an application for discharge, the court has to proceed with an assumption that the materials brought on record by the prosecution are true and evaluate the said materials and documents with a view to find out whether the facts emerging therefrom taken at their face value disclose the existence of all the ingredients constituting the alleged offence. At this stage, probative value of the materials has to be gone into and the court is not expected to go deep into the matter and hold that the materials would not warrant a conviction. In our opinion, what needs to be considered is whether there is a ground for presuming that the offence has been committed and not whether a ground for convicting the accused has been made out. To put it differently, if the court thinks that the accused might have committed the offence on the basis of the materials on record on its probative value, it can frame the charge; though for conviction, the court has to come to the conclusion that the accused has committed the offence. The law does not permit a mini trial at this stage."
12. The defence of the accused is not to be looked into at the stage when the accused seeks to be discharged. The expression "the record of the case" used in Section 227 Cr.P.C. is to be understood as the documents and articles, if any, produced by the prosecution. The Code does not give any right to the accused to produce any Directorate of Enforcement Vs. Ashish Kakkar & Another Page 25 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 document at the stage of framing of the charge. The submission of the accused is to be confined to the material produced by the investigating agency.
13. The primary consideration at the stage of framing of charge is the test of existence of a prima-facie case, and at this stage, the probative value of materials on record need not be gone into. This Court by referring to its earlier decisions in the State of Maharasthra Vs. Som Nath Thapa (1996) 4 SCC 659 and the State of MP Vs. Mohan Lal Soni (2000) 6 SCC 338 has held the nature of evaluation to be made by the court at the stage of framing of the charge is to test the existence of prima-facie case. It is also held at the stage of framing of charge, the court has to form a presumptive opinion to the existence of factual ingredients constituting the offence alleged and it is not expected to go deep into probative value of the material on record and to check whether the material on record would certainly lead to conviction at the conclusion of trial.
o. Hon'ble Supreme Court of India in case titled as State by Karnataka Lokayukta Police Vs. M.R. Hiremath reported in (2019) 7 SCC 515, has held that :
"The High Court ought to have been cognizant of the fact that the trial court was dealing with an application for discharge under the provisions of Section 239 of the CrPC. The parameters which govern the exercise of this jurisdiction have found expression in several decisions of this Court. It is a settled principle of law that at the stage of considering an application for discharge the court must proceed on the assumption that the material which has been brought on the record by the prosecution is true and evaluate the material in order to determine whether the facts emerging from the material, taken on its face value, disclose the existence of the ingredients necessary to constitute the offence.
p. Hon'ble Supreme Court of India in case titled as Palwinder Singh Vs. Balwinder Singh reported in (2008) 14 SCC 504, has held that :
"Having heard learned counsel for the parties, we are of the opinion that the High Court committed a serious error in passing the impugned judgment insofar as it entered into the realm of appreciation of evidence at the stage of the framing of the charges itself. The jurisdiction of the learned Sessions Judge while exercising power under Section 227 of the Code of Criminal Procedure is limited. Charges can be framed also on the basis of strong suspicion. Marshalling and appreciation of evidence is not Directorate of Enforcement Vs. Ashish Kakkar & Another Page 26 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 in the domain of the Court at that point of time. This aspect of the matter has been considered by this Court in State of Orissa Vs. Debendra Nath Padhi -(2005(1) SCC 568, wherein it was held as under:
"23. As a result of the aforesaid discussion, in our view, clearly the law is that at the time of framing charge or taking cognizance the accused has no right to produce any material. Satish Mehras Case holding that the trial Court has powers to consider even materials which the accused may produce at the stage of Section 227 of the Code has not been correctly decided."
q. Hon'ble Supreme Court of India in case titled as Ram Narian Popli Vs. CBI reported in (2003) 3 SCC 641, has held that :
"343. No doubt in the case of conspiracy there cannot be any direct evidence. The ingredients of offence are that there should be an agreement between persons who are alleged to conspire and the said agreement should be for doing an illegal act or for doing illegal means an act which itself may not be illegal. Therefore, the essence of criminal conspiracy is an agreement to do an illegal act and such an agreement can be proved either by direct evidence or by circumstantial evidence or by both, and it is a matter of common experience that direct evidence to prove conspiracy is rarely available. Therefore, the circumstances proved before, during and after the occurrence have to be considered to decide about the complicity of the accused."
r. Hon'ble Supreme Court of India in case titled as Y. S. Jagan Mohan Reddy Vs. Directorate of Enforcement reported in (2013) 7 SCC 439, has held that :
"34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country."
s. Similar view as above, has been reiterated by Hon'ble Supreme Court of India in case titled as Nimmagadda Prasad Vs. Central Bureau of Investigation reported in (2013) 7 SCC 466 and Hon'ble High Court of Directorate of Enforcement Vs. Ashish Kakkar & Another Page 27 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Delhi in Bail Application No. 544/2025 titled as Arvind Dham Vs. Directorate of Enforcement while referring to case Nimmagadda Prasad (Supra).
t. Hon'ble High Court of Madras in case titled as Directorate of Enforcement Vs, Ashok Anand reported in (2024) SCC OnLine Mad 8528, has held that :
"22. Holistic reading of the provisions of PMLA would indicate that schedule offence is prerequisite condition for initiation of proceedings under PMLA. Once proceedings are initiated under PMLA by recording ECIR, thereafter the investigation and offence of money laundering traced out by the Enforcement Directorate become independent and to be dealt with under the provisions of PMLA and the application of Cr.P.C is undoubtedly limited in view of Section 65 and 71 of PMLA.
23. ECIR cannot be equated with FIR. The schedule offence is quintessential for initiation of proceedings and recording of ECIR but both the offences cannot be placed on the same footing. PMLA proceedings are distinct and the said Act is a complete code in itself. Whereas scheduled offences are tried under other penal laws. When two documents are difference and distinct in their own nature, a combined reading and implication cannot be adduced to them.
24. ECIR is born from FIR, but once the ECIR is born, the umbilical cord that connects the ECIR with FIR looses its relevance and the ECIR becomes an independent document in itself. Consequently, a new life in the form of ECIR emerges, which has breath on its own without the support of FIR. So, the FIR and ECIR become two different documents and both tend to take shape on its own, independent of each other.
25. "Proceeds of Crime" is the focal point for an ECIR, whereas scheduled offence is dealt with under the FIR. Further reliance may be relevant with reference to the judgment in the case of Vijay Madanlal Choudhary vs. Union of India and Others reported in 2022 SCC Online SC 929 and Rajinder Singh Chada vs. Union of India. Both these judgments have noted the distinction between FIR and ECIR. More so, ECIR is treated as an internal document."Directorate of Enforcement Vs. Ashish Kakkar & Another Page 28 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Arguments on behalf of accused Ashish Kakkar
3. Per contra, Ld. Counsel Sh. Ashish Batra for accused argued that in the instant case, proceedings under PMLA, 2002 were initiated basically on five FIRs taken as Scheduled offence, however none of the FIR makes out a case of money laundering. The prosecution initiated against the accused is baseless, unsubstantiated and devoid of merits. For an offence of money laundering, the basic foundational ingredients are:
(i) Commission of the Scheduled offence,
(ii) Generation of the proceeds of crime from the commission of the Scheduled Offence, and
(iii) Laundering of the said proceeds of crime.
3.1. The Complainant/ED has to prima facie prove all the aforesaid three basic ingredients to proceed with the matter in order to raise presumptions against the accused and frame charges against him accordingly. 3.2 The FIR on which the present case is primarily based is of EOW, wherein the ED had been the complainant itself. The allegation therein is that the bank accounts of the shell companies allegedly under operation and control by/of the accused, were opened on the basis of forged documents of its dummy Directors. The said bank accounts were alleged to be used as mode of transfer of funds from one account to another, however no material has been adduced to prove even prima facie by the ED for generation of 'proceeds of crime' from the alleged Scheduled Offence of forging the documents for opening the bank accounts. The onus was on the Complainant/ED to show that the amount of Rs.6,000 Crores in the said bank accounts was derived from commission of the scheduled offence. Till date, the scheduled offence has only been opening of bank accounts by way of forged documents and there is no scheduled offence registered for the transactions carried out in the said bank accounts. In absence Directorate of Enforcement Vs. Ashish Kakkar & Another Page 29 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 of any such material brought on record, the said amount of money in the bank accounts cannot be termed as 'Proceeds of Crime' by any stretch of imagination. The Complainant/ED in their own arguments have referred the amount in those bank accounts as unaccounted money, however it cannot be stated to be 'Proceeds of Crime', hence does not attract the provisions of the Act of Money Laundering. Even in the entire complaint, the ED has failed to adduce any evidence/material to support their own allegations that the amount in the said bank accounts was generated from online gaming. Moreso, the penal provisions of Public Gambling Act, 1867 have not been invoked. Surprisingly, the allegation of conversion of INR into foreign currency is a violation under FEMA and it is not a scheduled offence under PMLA. Further, sending the money through SEZ by over-valuing the imported product and not receiving remittance for export product is offence under Custom's Act, 1962, but in the present case the same has not been invoked as a Scheduled Offence. 3.3 With regard to the FIR registered at Jodhpur, Rajasthan, reliance is placed upon the chargesheet of the said case filed by the Complainant/ED as RUD-3 and it is argued that the accused is admittedly not an accused in the said scheduled offence. Contrary to the case of the Complainant/ED herein as per flow chart at Page 163 of the Prosecution Complaint, the State of Rajasthan stated on an affidavit filed before Hon'ble Supreme Court of India during hearing of anticipatory bail application of an alleged accused in the scheduled offence in SLP No. (Crl.) 14503 of 2023 in FIR No. 630/2022 PS Cyber Crime , that Rs 11.03 Crores out of the 'Proceeds of Crime' amounting to Rs.16.26 Crores, were frozen at the hands of the Bank accountholder itself and were released to the complainant thereafter. For the remaining amount, the police have stated that the flow of funds ends at M/s Sagar Empire Jewels and RHC Global Exports, from which the remaining amount of Rs 5.23 Crores was sent to Hong Kong based Directorate of Enforcement Vs. Ashish Kakkar & Another Page 30 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 companies being Fu Lee Hong Coy Ltd. Mars India & Comm Services Ltd. and not credited to accounts of Astoria Exim Private Ltd. and Motown Exim Private Ltd., alleged to be companies belonging to the accused. The copy of the said affidavit is filed along with the written synopsis filed. 3.4 With respect to the FIRs by Cyber Crime, Gautam Budh Nagar; Cyber Crime, Gurugram and Cyber Crime, Rohtak, it is argued that the accused is admittedly not an accused in any of these FIRs. As per the case of the ED itself, funds were transferred to various Bank accounts before being credited in the Bank accounts allegedly controlled by the accused herein. However, no investigation has been carried out from the Bank accountholders in-between. Without any proper investigation and completing the entire chain of the transactions, it cannot be alleged that the Bank accounts allegedly under control of the accused were having 'proceeds of crime' generated from the said FIRs. 3.5 Hence, in absence of the aforesaid foundational ingredients being satisfied on record, the offence of money laundering cannot be said to have occurred in the instant case. Pertinently, there is no presumption that ' proceeds of crime' have been generated by the commission of the Scheduled offence. As held by the Hon'ble Apex Court, the Complainant/ED has to first satisfy the three foundational facts on record, which they failed to do in the present case.
Arguments on behalf of accused Puneet Kumar
4. Ld. Counsel for accused Sh. Debopriyo Moulik has argued that the accused was not arraigned initially and has been arraigned only in the supplementary complaint. Only alleged Scheduled offence against him is the FIR bearing no 48/2022 of Cyber Crime registered at Gautam Budh Nagar, UP, wherein it has been alleged against him that he was involved in Dabba Trading and online betting, however they can be an offence under FEMA but are not Directorate of Enforcement Vs. Ashish Kakkar & Another Page 31 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Scheduled Offences under PMLA. Even Dabba Trading can, at best, be violative of the Securities Contracts (Regulation) Act, 1956, and online betting can, at best, be violative of the Public Gambling Act, 1867, which are also not a scheduled offence under the PMLA. The offence under Custom's Act has not been invoked.
4.1 Even nothing on record has been shown to prove involvement of the accused in the betting gaming. The statement recorded of the accused and relied by Complainant/ED was recording during his custody and has been retracted during bail proceedings, hence it cannot be relied upon now. It is further argued that that accused was carrying out normal business transactions which is also reflected in the Table 31 relied by the Complainant/ED. 4.2 As per the Table No. 32 relied by the Complainant/ED itself, the accused Puneet has only been linked with M/s Triosam. However, there is break in the link of the alleged money trail since the accused is link with M/s Triosam, which is at Stage 3 layering company, as per para 14.6 of the supplementary prosecution complaint. There are other breakages in the money trail as per Table 30 and 32 also. From the record itself it is evident that there are multiple breaks in the money trail and there is no direct and exclusive link between the money from one account to another specially between Prerna Yadav's bank account and the money that was transferred to Triosam's bank account. Therefore, in absence of any nexus between the transfers, there is no basis to assume that the funds received by Triosam are the 'proceeds of crime' or were connected in any manner with the Scheduled Offence.
4.3 It has also been argued that during search no electronic device, bag or cash has been recovered from the premises of accused Puneet. Lastly, it is submitted that for considering any money as the 'proceeds of crime', the property Directorate of Enforcement Vs. Ashish Kakkar & Another Page 32 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 must be derived or obtained, directly or indirectly, as a result of the criminal activity relating to a Scheduled Offence.
4.4 An application for discharge has also been filed by the accused wherein the grounds for discharge have been reiterated more or less on the basis of oral arguments tendered above. Reply to said application has also been filed by Complainant/ED.
4.5 In order to buttress his arguments Ld. Counsel has placed reliance upon following judgments:
a. Hon'ble Supreme Court of India in case titled as Dipakbhai Jagdishchandra Patel v. State of Gujarat reported in (2019) 16 SCC 547, has held that :
"23. At the stage of framing the charge in accordance with the principles which have been laid down by this Court, what the Court is expected to do is, it does not act as a mere post office. The Court must indeed sift the material before it. The material to be sifted would be the material which is produced and relied upon by the prosecution. The sifting is not to be meticulous in the sense that the Court dons the mantle of the Trial Judge hearing arguments after the entire evidence has been adduced after a full-fledged trial and the question is not whether the prosecution has made out the case for the conviction of the accused. All that is required is, the Court must be satisfied that with the materials available, a case is made out for the accused to stand trial. A strong suspicion suffices. However, a strong suspicion must be founded on some material. The material must be such as can be translated into evidence at the stage of trial. The strong suspicion cannot be the pure subjective satisfaction based on the moral notions of the Judge that here is a case where it is possible that accused has committed the offence. Strong suspicion must be the suspicion which is premised on some material which commends itself to the court as sufficient to entertain the prima facie view that the accused has committed the offence
24. Undoubtedly, this Court has in Suresh Budharmal Kalani Alias Pappu Kalani (supra), taken the view that confession by a co- accused containing incriminating matter against a person would not by itself suffice to frame charge against it. We may incidentally note that the Court has relied upon the judgment of this Court in Kashmira Singh v. State of Madhya Pradesh. We notice the Directorate of Enforcement Vs. Ashish Kakkar & Another Page 33 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 observations, which have been relied upon, were made in the context of an appeal which arose from the conviction of the appellant therein after a trial. The same view has been followed undoubtedly in other cases where the question arose in the context of a conviction and an appeal therefrom. However, in Suresh Budharmal Kalani Alias Pappu Kalani (supra), the Court has proceeded to take the view that only on the basis of statement of the co-accused, no case is made out, even for framing a charge"
b. Hon'ble Supreme Court of India in case titled as Karan Tnalwar Vs. State of Tamil Nadu reported in 2024 INSC 1012, has held that :
"5. Before dealing with the rival contentions, it is only appropriate to refer to the scope of exercise of power under Section 227, Cr.P.C. This Court in P. Vijayan v. State of Kerala & Anr. :
(2010) 2 SCC 39, made an in-depth consideration regarding the scope of power under Section 227, Cr.P.C. and held thus: -
"10. Before considering the merits of the claim of both the parties, it is useful to refer to Section 227 of the Code of Criminal Procedure, 1973, which reads as under: "227. Discharge. -- If, upon consideration of the record of the case and the documents submitted therewith, and after hearing the submissions of the accused and the prosecution in this behalf, the Judge considers that there is not sufficient ground for proceeding against the accused, he shall discharge the accused and record his reasons for so doing."
If two views are possible and one of them gives rise to suspicion only, as distinguished from grave suspicion, the trial Judge will be empowered to discharge the accused and at this stage he is not to see whether the trial will end in conviction or acquittal. Further, the words "not sufficient ground for proceeding against the accused" clearly show that the Judge is not a mere post office to frame the charge at the behest of the prosecution, but has to exercise his judicial mind to the facts of the case in order to determine whether a case for trial has been made out by the prosecution. In assessing this fact, it is not necessary for the court to enter into the pros and cons of the matter or into a weighing and balancing of evidence and probabilities which is really the function of the court, after the trial starts.
11. At the stage of Section 227, the Judge has merely to sift the evidence in order to find out whether or not there is sufficient ground for proceeding against the accused. In other words, the sufficiency of ground would take within its fold the nature of the evidence recorded by the police or the documents produced before the court which ex facie Directorate of Enforcement Vs. Ashish Kakkar & Another Page 34 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 disclose that there are suspicious circumstances against the accused so as to frame a charge against him."
6. While considering the scope of Section 227, Cr.P.C. in Sajjan Kumar v. Central Bureau of Investigation: (2010) 9 SCC 368, this Court laid down certain guiding principles for discharge as under: -
"21. On consideration of the authorities about the scope of Sections 227 and 228 of the Code, the following principles emerge:
(i) The Judge while considering the question of framing the charges under Section 227 CrPC has the undoubted power to sift and weigh the evidence for the limited purpose of finding out whether or not a prima facie case against the accused has been made out. The test to determine prima facie case would depend upon the facts of each case.
(ii) Where the materials placed before the court disclose grave suspicion against the accused which has not been properly explained, the court will be fully justified in framing a charge and proceeding with the trial.
(iii) The court cannot act merely as a post office or a mouthpiece of the prosecution but has to consider the broad probabilities of the case, the total effect of the evidence and the documents produced before the court, any basic infirmities, etc. However, at this stage, there cannot be a roving enquiry into the pros and cons of the matter and weigh the evidence as if he was conducting a trial.
(iv) If on the basis of the material on record, the court could form an opinion that the accused might have committed offence, it can frame the charge, though for conviction the conclusion is required to be proved beyond reasonable doubt that the accused has committed the offence.
(v) At the time of framing of the charges, the probative value of the material on record cannot be gone into but before framing a charge the court must apply its judicial mind on the material placed on record and must be satisfied that the commission of offence by the accused was possible.
(vi) At the stage of Sections 227 and 228, the court is required to evaluate the material and documents on record with a view to find out if the facts emerging therefrom taken at their face value disclose the existence of all the ingredients constituting the alleged offence. For this limited purpose, sift the evidence as it cannot be expected Directorate of Enforcement Vs. Ashish Kakkar & Another Page 35 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 even at that initial stage to accept all that the prosecution states as gospel truth even if it is opposed to common sense or the broad probabilities of the case.
(vii) If two views are possible and one of them gives rise to suspicion only, as distinguished from grave suspicion, the trial Judge will be empowered to discharge the accused and at this stage, he is not to see whether the trial will end in conviction or acquittal."
7. The position of law enunciated in the said decisions would reveal that while calling upon to exercise the power under Section 227, Cr.P.C., the judge concerned has to consider only the record of the case and the documents produced along with the same. If on such consideration the court forms an opinion that there is no sufficient ground to proceed against the accused concerned, he shall be discharged after recording the reasons therefor. It is also evident from the precedence on the aforesaid question that while exercising the said power, the Court could sift the materials produced along with the final report only for the purpose of considering the question whether there is ground to proceed against the accused concerned.
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10. As is evident from the said Section, the alleged offence is consumption of narcotic drug or psychotropic substance other than those specified in or under clause (a) of Section 27, NDPS Act, and therefore, the question is whether any material is available to charge the appellant thereunder. The contention of the appellant is that he has been arraigned as accused No.13 based on the confession statement of co-accused viz., accused No.1. Certainly, in the absence of any other material on record to connect the appellant with the crime, the confession statement of the co- accused by itself cannot be the reason for his implication in the crime. This view has been fortified by the law laid down in Suresh Budharmal Kalani v. State of Maharashtra: (1998) 7 SCC 337, wherein it was stated that a co-accused's confession containing incriminating matter against a person would not by itself suffice to frame charge against him. The materials on record would reveal that the investigating agency had not subjected him to medical examination and instead, going by complaint Witness No.23, he smelt the accused. The less said the better and we do not think it necessary to comment upon adoption of such a course. We need only to say that even if he tendered such evidence, it would not help the prosecution in anyway. There is absolutely no case that any recovery of contraband was recovered from the appellant. As Directorate of Enforcement Vs. Ashish Kakkar & Another Page 36 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 regards the confession statement of the appellant in view of Section 25 of the Indian Evidence Act, 1872 there can be no doubt with respect to the fact that it is inadmissible in evidence. In this context it is worthy to refer to the decision of this Court in Ram Singh v. Central Bureau of Narcotics: (2011) 11 SCC 347. In the said decision, this Court held that Section 25 of the Indian Evidence Act would make confessional statement of accused before police inadmissible in evidence and it could not be brought on record by prosecution to obtain conviction. Shortly stated, except the confessional statement of co-accused No.1 there is absolutely no material available on record against the appellant.
11. When this be the position, the question is whether the two Courts were justified in holding that there is prima facie case against the appellant to proceed against him. In this contextual situation, it is relevant to refer to the decision of this Court in Dipakbhai Jagadishchandra Patel v. State of Gujarat and Anr:
(2019) 16 SCC 547 Paragraphs 23 and 24 of the said decision are relevant for the purpose of this case and they read thus: -
"23. At the stage of framing the charge in accordance with the principles which have been laid down by this Court, what the court is expected to do is, it does not act as a mere post office. The court must indeed sift the material before it. The material to be sifted would be the material which is produced and relied upon by the prosecution. The sifting is not to be meticulous in the sense that the court dons the mantle of the trial Judge hearing arguments after the entire evidence has been adduced after a full-fledged trial and the question is not whether the prosecution has made out the case for the conviction of the accused. All that is required is, the court must be satisfied that with the materials available, a case is made out for the accused to stand trial. A strong suspicion suffices. However, a strong suspicion must be founded on some material. The material must be such as can be translated into evidence at the stage of trial. The strong suspicion cannot be the pure subjective satisfaction based on the moral notions of the Judge that here is a case where it is possible that the accused has committed the offence. Strong suspicion must be the suspicion which is premised on some material which commends itself to the court as sufficient to entertain the prima facie view that the accused has committed the offence.
24. Undoubtedly, this Court has in Suresh Budharmal Kalani [Suresh Budharmal Kalani v. State of Maharashtra, (1998) 7 SCC 337], taken the view that confession by a co-
accused containing incriminating matter against a person Directorate of Enforcement Vs. Ashish Kakkar & Another Page 37 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 would not by itself suffice to frame charge against it. We may incidentally note that the Court has relied upon the judgment of this Court in Kashmira Singh v. State of M.P. [Kashmira Singh v. State of M.P., (1952) 1 SCC 275]. We notice that the observations, which have been relied upon, were made in the context of an appeal which arose from the conviction of the appellant therein after a trial. The same view has been followed undoubtedly in other cases where the question arose in the context of a conviction and an appeal therefrom. However, in Suresh Budharmal Kalani [Suresh Budharmal Kalani v. State of Maharashtra, (1998) 7 SCC 337], the Court has proceeded to take the view that only on the basis of the statement of the coaccused, no case is made out, even for framing a charge."
12. As noted hereinbefore, the sole material available against the appellant is the confession statement of the co-accused viz., accused No.1, which undoubtedly cannot translate into admissible evidence at the stage of trial and against the appellant. When that be the position, how can it be said that a prima facie case is made out to make the appellant to stand the trial. There can be no doubt with respect to the position that standing the trial is an ordeal and, therefore, in a case where there is no material at all which could be translated into evidence at the trial stage it would be a miscarriage of justice to make the person concerned to stand the trial.
c. Hon'ble Supreme Court of India in case titled as Tuhin Kumar Biswas @ Bumba Vs. The State of West Bengal reported in 2025 SCC Online SC 2604, has held that :
"14. Having heard the learned counsel for the parties, this Court is of the view that before proceeding with the matter, it is essential to outline the legal principles to be kept in mind by the Court while deciding an application seeking discharge.
15. This Court has recently in Ram Prakash Chadha v. State of UP (2024) 10 SCC 651, cited with approval earlier decisions of this Court in Stree Atyachar Virodhi Parishad v. Dilip Nathumal Chordia, (1989) 1 SCC 715; P. Vijayan v. State of Kerala, (2010) 2 SCC 398; and Union of India v. Prafulla Kumar Samal, (1979) 3 SCC 4, as under:-
"21. In the decision in Stree Atyachar Virodhi Parishad v. Dilip Nathumal Chordia [Stree Atyachar Virodhi Parishad v. Dilip Nathumal Chordia, (1989) 1 SCC 715 : 1989 SCC (Cri) 285], this Court held that the word "ground" in Section 227CrPC, did not mean a ground for conviction, but a ground for putting the accused on trial.Directorate of Enforcement Vs. Ashish Kakkar & Another Page 38 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
22. In P. Vijayan v. State of Kerala [P. Vijayan v. State of Kerala, (2010) 2 SCC 398 : (2010) 1 SCC (Cri) 1488], after extracting Section 227CrPC, this Court in paras 10 and 11 held thus: (SCC pp. 401-402) "10. ... If two views are possible and one of them gives rise to suspicion only, as distinguished from grave suspicion, the trial Judge will be empowered to discharge the accused and at this stage he is not to see whether the trial will end in conviction or acquittal. Further, the words "not sufficient ground for proceeding against the accused" clearly show that the Judge is not a mere post office to frame the charge at the behest of the prosecution, but has to exercise his judicial mind to the facts of the case in order to determine whether a case for trial has been made out by the prosecution. In assessing this fact, it is not necessary for the court to enter into the pros and cons of the matter or into a weighing and balancing of evidence and probabilities which is really the function of the court, after the trial starts.
11. At the stage of Section 227, the Judge has merely to sift the evidence in order to find out whether or not there is sufficient ground for proceeding against the accused. In other words, the sufficiency of ground would take within its fold the nature of the evidence recorded by the police or the documents produced before the court which ex facie disclose that there are suspicious circumstances against the accused so as to frame a charge against him."
23. In para 13 in P. Vijayan case [P. Vijayan v. State of Kerala, (2010) 2 SCC 398 : (2010) 1 SCC (Cri) 1488], this Court took note of the principles enunciated earlier by this Court in Union of India v. Prafulla Kumar Samal [Union of India v. Prafulla Kumar Samal, (1979) 3 SCC 4 : 1979 SCC (Cri) 609] which reads thus: (Prafulla Kumar Samal case [Union of India v. Prafulla Kumar Samal, (1979) 3 SCC 4 : 1979 SCC (Cri) 609] , SCC p. 9, para 10) "10. ... (1) That the Judge while considering the question of framing the charges under Section 227 of the Code has the undoubted power to sift and weigh the evidence for the limited purpose of finding out whether or not a prima facie case against the accused has been made out.
(2) Where the materials placed before the Court disclose grave suspicion against the accused which has not been properly explained the Court will be fully justified in framing a charge and proceeding with the trial.
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 39 of 117ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 (3) The test to determine a prima facie case would naturally depend upon the facts of each case and it is difficult to lay down a rule of universal application. By and large however if two views are equally possible and the Judge is satisfied that the evidence produced before him while giving rise to some suspicion but not grave suspicion against the accused, he will be fully within his right to discharge the accused. (4) That in exercising his jurisdiction under Section 227 of the Code the Judge which under the present Code is a senior and experienced court cannot act merely as a post office or a mouthpiece of the prosecution, but has to consider the broad probabilities of the case, the total effect of the evidence and the documents produced before the Court, any basic infirmities appearing in the case and so on. This however does not mean that the Judge should make a roving enquiry into the pros and cons of the matter and weigh the evidence as if he was conducting a trial."
16. In M.E. Shivalingamurthy vs. Central Bureau of Investigation Bengaluru, (2020) 2 SCC 768, this Court has held as under:-
"17.This is an area covered by a large body of case law. We refer to a recent judgment which has referred to the earlier decisions viz. P. Vijayan v. State of Kerala and discern the following principles:
17.1. If two views are possible and one of them gives rise to suspicion only as distinguished from grave suspicion, the trial Judge would be empowered to discharge the accused. 17.2. The trial Judge is not a mere post office to frame the charge at the instance of the prosecution.
17.3. The Judge has merely to sift the evidence in order to find out whether or not there is sufficient ground for proceeding. Evidence would consist of the statements recorded by the police or the documents produced before the Court.
17.4. If the evidence, which the Prosecutor proposes to adduce to prove the guilt of the accused, even if fully accepted before it is challenged in cross-examination or rebutted by the defence evidence, if any, "cannot show that the accused committed offence, then, there will be no sufficient ground for proceeding with the trial".
17.5. It is open to the accused to explain away the materials giving rise to the grave suspicion.
17.6. The court has to consider the broad probabilities, the total effect of the evidence and the documents produced before the court, any basic infirmities appearing in the case and so on. This, however, would not entitle the court to make a roving inquiry into the pros and cons.Directorate of Enforcement Vs. Ashish Kakkar & Another Page 40 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 17.7. At the time of framing of the charges, the probative value of the material on record cannot be gone into, and the material brought on record by the prosecution, has to be accepted as true. 17.8. There must exist some materials for entertaining the strong suspicion which can form the basis for drawing up a charge and refusing to discharge the accused.
18. The defence of the accused is not to be looked into at the stage when the accused seeks to be discharged under Section 227 CrPC (see State of J&K v. Sudershan Chakkar). The expression, "the record of the case", used in Section 227 CrPC, is to be understood as the documents and the articles, if any, produced by the prosecution. The Code does not give any right to the accused to produce any document at the stage of framing of the charge. At the stage of framing of the charge, the submission of the accused is to be confined to the material produced by the police (see State of Orissa v. Debendra Nath Padhi)."
17. Consequently, at the stage of discharge, a strong suspicion suffices. However, a strong suspicion must be found on some material which can be translated into evidence at the stage of trial.
18. Keeping in view the aforesaid principles of law, this Court will have to assess as to whether there are sufficient grounds for proceeding against the Appellant-accused for the offences alleged in the FIR."
d. Hon'ble High Court of Kerala in case titled as Dennis Sagaya Jude Vs. Directorate of Enforcement Government of India and Another reported in 2024 SCC OnLine Kar 6421, has observed that :
"12. Section 3 of the Act deals with money laundering, and it states that whosoever directly or indirectly attempts to indulge or know- ingly assist 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 the offence of money laundering.
13. Explanation : For 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 in-
dulged on knowingly assisted or knowingly is a party or is actu- ally involved in one or more of the following processes or activi- ties connected with proceeds of crime, namely,-
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 41 of 117ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
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 whatso- ever;
ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is di- rectly or indirectly enjoying the proceeds of crime by its con- cealment or possession of acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever.
14. The explanation to Section 3 clarifies the scope and nature of the offence of money laundering, which is as follows:
• It is a continuing offence;
• The involvement in money laundering can be direct or indirect; • The accused must have knowledge that the property involved rep- resents the proceeds of the crime and it is not sufficient for the property to be connected to a scheduled offence and the person must be aware of its illicit origin.
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23. However, in the complaint furnished before the Special Judge, which is the basis for prosecuting the petitioner - accused no. 17, the ED has alleged that the petitioner has indirectly in-
dulged and is actually involved in the process connected with the proceeds of crime viz. acquisition and use of the proceeds of crime and is thus guilty of the offence of money laundering
24. It is pertinent to record that the prosecution has --
a) Neither adduced any prima facie evidence to indicate that the petitioner-accused no. 17 had knowledge of the fact that the Directorate of Enforcement Vs. Ashish Kakkar & Another Page 42 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 funds transferred into his account had been derived from criminal activity related to the alleged scheduled offences of sections 120-B (criminal conspiracy), 420 (cheating and dishonestly inducing de- livery of property) and 471 (using as genuine a forged document or electronic record) of IPC, 1860;
b) Nor adduced any prima facie evidence to indicate that the petitioner -accused no. 17 knowingly assisted the prime accused, the accused no. 5, in the concealment or transfer of the illicit pro- ceeds so as to project them as untainted money.
25. Furthermore, it is to be borne that the petitioner herein is ar- rayed as accused no. 17 in the complaint as made by the Asst. Di- rector, Directorate of Enforcement, and that on perusal of the con- tents of the complaint (including the above extracted flowchart, which attributes to the prime accused no. 5 his alleged role in the commission of the scheduled offence) and the statement of the pe- titioner, it may be reasonably concluded that the petitioner herein is not involved in the alleged commission of the scheduled offence, and more important, is distant to the alleged commission of the of- fence of money laundering. Furthermore, on the reading of the complaint, it may be noted that it does not bring forth any bare al- legation, much less a specific allegation against the petitioner herein that he had knowingly assisted the accused no. 5 in the con- cealment or utilisation of the illicit proceeds so as to project them as untainted property.
26. The Hon'ble Supreme Court in the case of Sh. Satish Mehra v. Delhi Administration, AIR 1996 SC 375 construed the provisions of Section 226 of Cr. P.C., which obliges the prosecu- tion to describe the charge brought against the accused and to state by what evidence the guilt of the accused would be proved and Section 228 of Cr. P.C. which provides for framing of the charge upon grave suspicion of commission of offence, and opined that if a "Judge is fairly certain that there is no prospect of the case ending in conviction the valuable time of the Court should not be wasted for holding a trial only for the purpose of formally completing the procedure to the pronounce the conclusion on a future date." It fur- ther held that if a "Judge is almost certain that the trial would be an Directorate of Enforcement Vs. Ashish Kakkar & Another Page 43 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 exercise in futility or a sheer waste of time it is advisable to trun- cate" the proceedings the stage of discharge under Sec- tion 227 of Cr. P.C.
27. In the case of Avinash J Mahale v. State of M.H., (2006) 4 AIR Bom R 181 (Bom) : 2006 Cri LJ 3123, the High Court of Bombay referred to the ratio laid down by the Apex Court in the case of State of M.P. v. S.B. Johari, (2000) 2 SCC 57 : AIR 2000 SC 665 and held that a charge can be quashed where the evidence adduced by the prosecution fails to prove that the accused commit- ted the alleged offence.
28. It has been held by the coordinate bench of this Court in the case of Vipul Prakash Patil v. The State of Karnataka (Crl P. No. 104152/2022 KHC-D) where the petitioner sought to quash the FIR and complaint against the offence punishable under Sec- tion 420 of IPC and Section 9 of the Karnataka Protection of Inter- est of Deposits in Financial Establishment Act, 2004 that, "In order to proceed against a person with criminal action, the complaint or the prosecuting agency must make out a prima facie material whereby some nexus could be estab- lished to the alleged crime with a person. If such material is not available, (the) very registration of the case against such persons would definitely amount to the abuse of the process of law affecting (the) right of a citizen enshrined in Arti- cle 21 of the Constitution of India."
It further observed that, "No person shall be allowed to undergo (the) ordeal of a criminal investigation unless there is some material which would connect the said person with the alleged crime."
29. The petitioner is required to rebut the presumption under Section 24 of the Act, 2002, only if there is sufficient evidence or any specific allegation to establish that the petitioner knowingly as- sisted in concealing the proceeds of the crime or facilitated the use of such proceeds to project illicit proceeds as untainted property.
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 44 of 117ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
30. In the case at hand, the petitioner's conduct exhibits neither indirect attempt to indulge, nor active involvement in any process connected with the proceeds of crime as to launder their illicit ori- gin into untainted property. It is apposite to add, at the risk of repe- tition, that no prima facie evidence has been adduced by the prose- cution indicating proof of having knowingly assisted on part of the petitioner herein or having knowingly been a party, in relation to the commission of the offence of money laundering.
e. Hon'ble High Court of Delhi in case titled as Sanjay Pandey Vs. Di- rectorate of Enforcement reported in 2022 SCC OnLine Del 4279, has held that :
"55. The entire prosecution is silent on the identity of the victim who has suffered a wrongful loss. There is nobody named in the prosecution complaint who has been deceived or cheated. Nobody has been named to whom a wrongful loss has been caused and as to what is the wrongful loss. Except for a bald averment that various customers have been cheated, the complaint is totally silent on the name of the customers, the way and manner that they have been cheated.
56. It is alleged that the „customers‟ were cheated as they shared „information‟ only under an assumption that the same would not be recorded. However, the ED has failed to show the na- ture of such information which was shared or misused, or intended to be misused, to cause any wrongful loss or wrongful gain. More- over, no "customers" have filed any complaint or been made wit- nesses in the Complaint.
xxxxxxx
63. Hence, prima facie, for the reasons stated above, ingredients of section 120B read with Section 409 and 420 IPC have not been made out in the present case."Directorate of Enforcement Vs. Ashish Kakkar & Another Page 45 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 f. Hon'ble High Court of Kerala in case titled as Thomas Daniel Vs. Enforcement Directorate reported in 2023 SCC OnLine Ker 8214, has held that :
"26. To attract section 420 IPC, dishonesty or fraudulent intention from the beginning is essential. There is no presumption under the PML Act that an accused is guilty. Of course, section 24 of the PML Act provides for the burden of proof and directs that the court shall presume that the proceeds of crime are involved in money laundering. The PML Act has not created a presumption of guilt of the predicate offences on the accused. Section 24 of the PML Act, refers to the burden of proof and states that the court shall presume that the proceeds of crime are involved in money laundering. In Vi- jay Madanlal Choudhary's case, (paragraph 346) it was explained that the burden on the accused under section 24 of the PML Act is an evidentiary burden and can be discharged at the time of evi- dence as it is only a rule of evidence. The Court also explained that the legal presumption is about the involvement of proceeds of crime in money laundering, which becomes relevant only after es- tablishing three basic or foundational facts. The foundational facts are: (i) The criminal activity relating to a scheduled offence has been committed, (ii) the property in question has been derived or obtained directly or indirectly, by any person as a result of that criminal activity, and (iii) the person concerned is directly or indi- rectly involved in any process or activity connected with the said property being proceeds of crime. Therefore, section 24 of PML Act cannot be utilized to presume the guilt of the accused for the predicate offences alleged."
g. Hon'ble High Court of Bombay in case titled as Sadanand Gangaram Kadam Vs. Enforcement Directorate reported in 2023 SCC OnLine Bom 2613, has held that:
15. Coming back to Section 3 of the PMLA, on its plain reading, an offence under Section 3 can be committed after a scheduled of-
fence is committed. For example, let us take the case of a person who is unconnected with the scheduled offence, knowingly assists the concealment of the proceeds of crime or knowingly assists the Directorate of Enforcement Vs. Ashish Kakkar & Another Page 46 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 use of proceeds of crime. In that case, he can be held guilty of committing an offence under Section 3 of the PMLA. To give a concrete example, the offences under Sections 384 to 389 of the IPC relating to "extortion" are scheduled offences included in Para- graph 1 of the Schedule to the PMLA. An accused may commit a crime of extortion covered by Sections 384 to 389 of IPC and ex- tort money. Subsequently, a person unconnected with the offence of extortion may assist the said accused in the concealment of the proceeds of extortion. In such a case, the person who assists the ac- cused in the scheduled offence for concealing the proceeds of the crime of extortion can be guilty of the offence of money launder- ing. Therefore, it is not necessary that a person against whom the offence under Section 3 of the PMLA is alleged must have been shown as the accused in the scheduled offence. What is held in paragraph 270 of the decision of this Court in the case of Vijay Madanlal Choudhary' supports the above conclusion. The condi- tions precedent for attracting the offence under Section 3 of the PMLA are that there must be a scheduled offence and that there must be proceeds of crime in relation to the scheduled offence as defined in clause (u) of sub-section (1) of Section 3 of the PMLA."
h. Hon'ble Supreme Court of India in case titled as Suresh Budharmal Kalani Vs. State of Maharashtra reported in (1998) 7 SCC 547, has held that :
"7. So far as the confession of Jayawant Suryarao is concerned, the same (if voluntary and true) can undoubtedly be brought on record under Section 30 of the Evidence Act to use it also against Kalani but then the question is what would be its evidentiary value against the latter. The question was succinctly answered by this Court in Kashmira Singh Vs. State of Madhya Pradesh (1952 SCR 526) with the following words :
"The proper way to approach a case of this kind is first, to marshal the evidence against the accused excluding the confession altogether from consideration and see whether, if it is believed, a conviction could safely be based on it. If it is capable of belief independently of the confession, then of course it is not necessary to call the confession in aid. But cases may arise where the judge is not prepared to act on the other evidence as it sands even though if believed, it would be sufficient to sustain a conviction. In aid the confession and use it to lend assurance to the other Directorate of Enforcement Vs. Ashish Kakkar & Another Page 47 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 evidence and thus fortify himself in believing what without the aid of the confession he would not be prepared to accept."
The view so expressed has been consistently followed by this Court. Judged in the light of the above principle the confession of Suryarao cannot called in aid to frame charges against Kalani in absence of any other evidence to do so."
i. Hon'ble High Court of Delhi in case titled as Anil Kumar Aggarwal Vs. Enforcement Directorate reported in 2025 SCC OnLine Del 2216, has held that:
"36. The Applicants also emphasise that the prosecution case hinges almost entirely on the statements of Mr. Tajinder Pal Singh, an approver and self-confessed participant in the alleged conspiracy. It is submitted that his testimony, being that of an accomplice, is inherently tainted and incapable of forming the sole basis for denial of bail without independent corroboration. On a prima facie view of the material placed before this Court, there appears to be some merit in the submission. The law in this regard is well-settled. In Haricharan Kurmi v. State of Bihar: 1964 SCC OnLine SC 28, the Supreme Court held that while the confession of a co-accused under Section 30 of the Evidence Act may be taken into consideration, it is not substantive evidence and cannot be the foundation of conviction in the absence of other evidence. The Court observed that such confessions are "evidence of a very weak type" and must only serve to lend "assurance" to otherwise satisfactory evidence. The judgment reiterates the principle that a confession cannot substitute the primary burden of proof and must be corroborated with material evidence.
37. Further, reliance is also placed in Somasundaram Vs. State:
(2020) 7 SCC 722, relevant portion of which reads as follows:
"Accomplice evidence
71. Section 133 of the Evidence Act declares that an accomplice is a competent witness and further that a conviction based on the uncorroborated testimony of an accomplice is not illegal only on account of it being so. Section 133 reads as follows:
"133. Accomplice.- An accomplice shall be a competent witness against an accused person; and a conviction is not illegal merely because it proceeds upon the uncorroborated testimony of an accomplice."Directorate of Enforcement Vs. Ashish Kakkar & Another Page 48 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
72. It is apposite to notice Section 114 of the Evidence Act, Illustration
(b), the court may presume:
"(b) that an accomplice is unworthy of credit, unless he is corroborated in material particulars."
73. Thus, there appears to be a contradiction between these provisions. The matter is no longer res Integra. We may notice the following statement of the law contained in an early judgment of this Court in Sarwan Singh v. State of Punjab (AIR pp. 640-41, para 7) "7.... It is hardly necessary to deal at length with the true legal position in this matter. An accomplice is undoubtedly a competent witness under the Evidence Act. There can be, however, no doubt that the very fact that he has participated in the commission of the offence introduces a serious stain in his evidence and courts are naturally reluctant to act on such tainted evidence unless it is corroborated in material particulars by other independent evidence.
It would not be right to expect that such independent corroboration should cover the whole of the prosecution story or even all the material particulars. If such a view is adopted it would render the evidence of the accomplice wholly superfluous. On the other hand, it would not be safe to act upon such evidence merely because it is corroborated in minor particulars or incidental details because, in such a case, corroboration does not afford the necessary assurance that the main story disclosed by the approver can be reasonably and safely accepted as true.
But it must never be forgotten that before the court reaches the stage of considering the question of corroboration and its adequacy or otherwise, the first initial and essential question to consider is whether even as an accomplice the approver is a reliable witness. If the answer to this question is against the approver then there is an end of the matter, and no question as to whether his evidence is corroborated or not falls to be considered.
In other words, the appreciation of an approver's evidence has to satisfy a double Find test. His evidence must show that he is a reliable witness and that is a test which is common to all witnesses. If this test is satisfied the second test which still remains to be applied is that the approver's evidence must receive sufficient corroboration. This test is special to the cases of weak or tainted evidence like that of the approver."
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 49 of 117ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
74. We may profitably also refer to the views expressed in Haroon Haji Abdulla v. State of Maharashtra. 835-36, para 8) "8... The law as to accomplice evidence is well settled. The Evidence Act in Section 133 provides that an accomplice is a competent witness against an accused person and that a conviction is not illegal merely because it proceeds upon the uncorroborated testimony of an accomplice. The effect of this provision is that the court trying an accused may legally convict him on the single evidence, of an accomplice. To this there is a rider in Illustration (b) to Section 114 of the Act which provides that the court may presume that an accomplice is unworthy of credit unless he is corroborated in material particulars. This cautionary provision incorporates a rule of prudence because an accomplice, who betrays his associates, is not a fair witness and it is possible that he may, to please the prosecution, weave false details into those which are true and his whole story appearing true, there may be no means at hand to sever the false from that which is true. It is for this reason that courts, before they act on accomplice evidence, Insist on corroboration in material respects as to the offence itself and also implicating in some satisfactory way, however small, each accused named by the accomplice. In this way the commission of the offence is confirmed by some competent evidence other than the single or unconfirmed testimony of the accomplice and the Inclusion by the accomplice of an innocent person is defeated. This rule of caution or prudence has become so ingrained in the consideration of accomplice evidence as to have almost the standing of a rule of law."
75. The dichotomy between the mandate of Section 133 and Illustration (D) to Section 114 of the Evidence Act has been explained as follows in Sheshanna Bhumanna Yadav v State of Maharashtra (SCC pp. 125-26, para 12) "12. The law with regard to appreciation of approver's evidence is based on the effect of Sections 133 and 114, Illustration (0) of the Evidence Act, namely, that that an accomplice is competent to depose but as a rule of caution it will be unsafe to convict upon his testimony alone. The warning of the danger of convicting on uncorroborated evidence is therefore given when the evidence is that of an accomplice. The primary meaning of accomplice is any party to the crime charged and someone who aids and abets the commission of crime. The nature of corroboration is that it is confirmatory evidence and it may consist of the evidence of second witness or of circumstances like the conduct of Directorate of Enforcement Vs. Ashish Kakkar & Another Page 50 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 the person against whom it is required. Corroboration must connect or tend to connect the accused with the crime. When it is said that the corroborative evidence must implicate the accused in material particulars it means that it is not enough that a piece of evidence tends to confirm the truth of a part of the testimony to be corroborated. That evidence must confirm that part of the testimony which suggests that the crime was committed by the accused. If a witness says that the accused and he stole the sheep and he put the skins in a certain place, the discovery of the sad and would not corroborate the evidence of the witness as against the accused. But if the skins were found in the accused's house, this would corroborate because it would tend to confirm the statement that the accused had some hand in the theft."
76. We may finally advert to a recent pronouncement of this Court In K. Hashim v. State of T.: (SCC 250-51, paras 38-
42) "
38. First, it is not necessary that there should be independent confirmation of every material circumstance in the sense that the independent evidence in the case, apart from the testimony of the complainant or the accomplice, should in itself be sufficient to sustain conviction. As Lord Reading says:
"Indeed, if it were required that the accomplice should be confirmed in every detail of the crime, his evidence would not be essential to the case; it would be merely confirmatory of other and Independent testimony. (Baskerville case, KB p. 664 : All ER p. 42 B-C)
39. All that is required is that there must be some additional evidence rendering it probable that the story of the accomplice (or complainant) is true and that it is reasonably safe to act upon it.
40. Secondly, the independent evidence must not only make it safe to believe that the crime was committed but must in some way reasonably connect or tend to connect the accused with it by confirming in some material particular the testimony of the accomplice or complainant that the accused committed the crime. This does not mean that the corroboration as to identification must extend to all the circumstances necessary to identify the accused with the offence. Again, all that is necessary is that there should be independent evidence which will make it reasonably safe to believe the witness's story that the accused was the one, or among those, who committed the offence. The reason for this part of the rule is that:Directorate of Enforcement Vs. Ashish Kakkar & Another Page 51 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 "A man who has been guilty of a crime himself will always be able to relate the facts of the case, and if the confirmation be only on the truth of that history, without identifying the persons, that is really no corroboration at all... It would not at all tend to show that the party accused participated in it.' i. Similarly held in case titled as Raman Bhuraia Vs. Enforcement Directorate reported in (2023) 4 HCC (Del) 197 by Hon'ble High Court of Delhi.
Relevant Provisions of the PMLA, 2002:
5. Before divulging into merits of the present matter, it is pertinent to go through the relevant provisions of Law involved herein:
i) The term "Beneficial Owner" has been defined in Section 2(1) (fa) of the PML Act, 2002 as "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.
ii) "Proceeds of Crime" defined under Section 2 (1)(u) of the PMLA as under: "PoC" means any property derived or obtained directly or indirectly, by any person as a result of criminal activity relating to schedule 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.
iii) Property defined under section 2(l)(v) of the PMLA as under:
''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;Directorate of Enforcement Vs. Ashish Kakkar & Another Page 52 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 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.
iv) Value is defined Section 2(l)(zb) of the PMLA as under: "value" means the fair market value of any property on the date of the acquisition by any person, or if such date cannot be determined, the date on which such property is possessed by such person.
v) Offence of Money Laundering is defined under Section 3 of the PML Act, 2002 as under:
Section 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 PoC including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money laundering.
vi) Punishment for money laundering under section 4 of the PMLA provides as under:
Section 4: Punishment for money-laundering. Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine:
Provided that where the PoC involved in money-laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of this section shall have effect as if for the words "which may extend to seven years", the words "which may extend to ten years" had been substituted.Directorate of Enforcement Vs. Ashish Kakkar & Another Page 53 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
vii) Section 22 of the PMLA, 2002 provides as under: Section 22: Presumption as to records or property in certain cases (1) Where any records or property are or is found in the possession or control of any person in the course of a survey or a search, for where any record or property is produced by any person or has been resumed or seized from the custody or control of any person or has been frozen under this Act or under any other law for the time being in force,] it shall be presumed that-
(i) such records or property belong or belongs to such person;
(ii) the contents of such records are true; and
(iii) the signature and every other part of such records which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a record, stamped, executed or attested, that it was executed or attested by the person by whom it purports to have been so stamped, executed or attested.
(2) Where any records have been received from any place outside India, duly authenticated by such authority or person and in such manner as may be prescribed, in the course of proceedings under this Act, the Special Court, the Appellate Tribunal or the Adjudicating Authority, as the case may be, shall-
(a) presume, that the signature and every other part of such record, which purports to be in the handwriting of any particular person or which the court may reasonably assume to have been signed by, or to be in the handwriting of, any Directorate of Enforcement Vs. Ashish Kakkar & Another Page 54 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 particular person, is in that person's handwriting; and n the case of a record executed or attested, that it was executed or attested by the person by whom it purports to have been so executed or attested;
(b) admit the document in evidence, notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence.
viii) Section 23 of the PMLA, 2002 provides as under:
Section 23: Presumption in inter-connected transactions Where money-laundering involves two or more inter-connected transactions and one or more such transactions is or are proved to be involved in money-laundering, then for the purposes of adjudication or confiscation under section 8 or for the trial of the money- laundering offence, it shall unless otherwise proved the satisfaction of the Adjudicating Authority or the Special Court], be presumed that the remaining transactions form part of such inter-connected transactions.
ix) Section 24 of the PMLA, 2002 provides as under:
Section 24: In any proceeding relating to PoC under this Act-
(a) in the case of a person charged with the offence of money-
laundering under section 3, the Authority or Court shall, unless the contrary is proved, presume that such PoC are involved in money- laundering; and
(b) in the case of any other person the Authority or Court, may presume that such PoC are involved in money-laundering.
x) Section 50 of the PMLA, 2002 provides as under: -
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 55 of 117ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Section 50: Powers of authorities regarding summons, production of documents and to give evidence, etc. (1) The Director shall, for 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 1[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 authorized 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).Directorate of Enforcement Vs. Ashish Kakkar & Another Page 56 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 (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 without recording his reasons for so doing; or
(b) retain in his custody any such records for a period exceeding three months, without obtaining the previous approval of the Joint Director.
xi) Code of Criminal Procedure, 1973 to apply -
The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply, insofar as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all the proceedings under this Act.
xii) Section 70 of the PMLA provides as under:
(1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of and was responsible to the company, for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention Directorate of Enforcement Vs. Ashish Kakkar & Another Page 57 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 took place without his knowledge or that he exercised all due diligence to prevent such contravention. (2) Notwithstanding anything contained in sub-section (1), where a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of any director, manager, secretary or other officer of any company, such director, manager, secretary or other officer shall also be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly.
Explanation [1]-For the purposes of this section- (i) "company" means anybody corporate and includes a firm or other association of individuals; and
(ii) "director'; in relation to a firm, means a partner in the firm."
Analysis of material on record
6. The succinct factual matrix, as emerging from the record, reveals that the present proceedings emanate from multiple FIRs, pursuant to which the Directorate of Enforcement (ED) initiated investigation against the accused persons following registration of present ECIR. The said FIRs are delineated as under:
(i) FIR No. 0008/24 by EOW U/s 419, 420, 467, 468, 471, 476 and 120B of IPC, 1860 (RUD-2)
7. The Complainant/ED has alleged that accused persons namely Ashish Kakkar and Puneet Kumar were engaged in large scale money laundering as well Directorate of Enforcement Vs. Ashish Kakkar & Another Page 58 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 as International Hawala/unlawful money transfer to various parts of the world by creating and operating a number of shell companies in India and abroad as well, in the name of his various employees by using their fabricated/forged documents without any actual business being carried out, and only for import/export in Special Economic Zones and outward foreign remittances against these imports made by these entities to circumvent the restrictions imposed under the provisions of FEMA, 1999.
7.1 That the investigation alleged to have revealed that accused No. 2 to 23 are shell entities incorporated by Ashish Kakkar/accused No. 1, wherein forged KYC documents and forged Account Opening Form (AOF) have been used for opening the bank accounts and these entities were used to siphon out PoC by making outward remittance against circular trading (i.e. import of goods and re-export thereof). The following are the said entities:
8. Arroz Impex Pvt. Ltd
9. Astoriaa Exim Pvt. Ltd
10. Brightsuns Tradexim Pvt. Ltd
11. Camger Traders Pvt. Ltd
12. Chetaki Tradexim Pvt. Ltd
13. Crezora Tradexim Pvt. Ltd
14. Electronio Industries Pvt. Ltd
15. Empon Industries Pvt. Ltd
16. Fosteron Tradexim Pvt. Ltd
17. Lyncage Logistics and Warehouse Services Pvt. Ltd
18. Mixpier Clotex Pvt. Ltd
19. Motownn Exim Pvt. Ltd
20. Omesa Exim Pvt. Ltd
21. Righttime Impex Pvt. Ltd Tikmet Exim Pvt. Ltd
22. Trineq Business Solutions Pvt. Ltd
23. Trioasm India Pvt. Ltd Directorate of Enforcement Vs. Ashish Kakkar & Another Page 59 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
24. Wintrix Impex Pvt. Ltd
25. Woop Industries Pvt. Ltd
26. Avanzado Impex Private Limited
27. Absolute Tradexim Private Limited
28. M/s R. K. Traders
29. Macallan Impex Private Limited 7.2 That the investigation under PMLA, 2002 has further alleged to have revealed that imports in the above-mentioned companies have been made by Ashish Kakkar from foreign entities located at various locations and are under the control of Ashish Kakkar or his associates. The list of such foreign entities is as below:
TABLE-4 List of foreign entities controlled by Ashish Kakkar and his associates S. No. Name of the entity Country Remarks Registered at 1 Raffles Place, #44-01A, One Raffles Place, Singapore 048616 and HRA IT Products and Services 1 Singapore presently struck off. Ashish Kakkar is the Pte. Ltd.
shareholder of the company ASH Stock Pte. Ltd. (RUD-113) 2 Express Luck Pte Limited Singapore Same as above 3 ASH Stock Pte Ltd Singapore Same as above 4 BBKH Trade Pte. Ltd. Singapore Same as above ARN Electricals Stock Pte. Registered at 20 Cecil Street, #05-03, Plus, 5 Singapore Ltd. Singapore 049705 and presently struck off Registered at 8 Ubi Road 2, #08-10, 6 Telexcell Singapore Pte. Ltd. Singapore Zervex, Singapore 408538 Registered at 8 Ubi Road 2, #08-10, 7 The Brindavan Stones Pte. Ltd. Singapore Zervex, Singapore 408538 Registered at 6 Marina Boulevard, #16-18, 8 Idea Giant Pte Ltd Singapore The Sail @ Marina Bay, Singapore 018985 Registered at 7500A Beach Road, #04-
9 ASL Honour Pte Ltd. Singapore
327, The Plaza, Singapore 199591
Registered at 5th Floor, The Core
Nexus Global Financial
10 Mauritius Building, No 62 ICT Avenue, Cybercity,
Services Limited
Ebene Mauritius
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 60 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 S. No. Name of the entity Country Remarks Beijing, 11 Power Electronics Trade Ltd -
China Hong 12 Comet International Ltd -
Kong Hong 13 Huge Force Ltd. -
Kong Hong 14 Lumisoq HK Limited -
Kong Hong 15 Mobitronics International -
Kong Hong 16 Seven Stars International -
Kong Hong 17 Limco Trade Limited -
Kong 18 Power Electronics SDN BHD Malaysia -
Hydro Power Traders SDH.
19 - -
BHD Alam Alkhayal Wholesales 20 UAE -
Trading LLC 7.3 That the investigation under PMLA, 2002 is stated to have established that above mentioned shell companies as listed above are shell companies beneficially owned by Ashish Kakkar [in terms of Section 2(fa) of PMLA, 2002] and are not involved in any real business as:
Common dummy directors have been used for incorporation of companies and photos of unrelated persons have been used for opening of bank accounts by way of forgery.
Common addresses used for incorporation of shell companies. Financial Statements of Shell companies are non-commensurate with transactions in bank accounts Statements of various persons recorded u/ s 50 of PMLA, 2002 have revealed that these are mere shell companies of Ashish Kakkar.Directorate of Enforcement Vs. Ashish Kakkar & Another Page 61 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Documents recovered from the premises belonging to Ashish Kakkar which make it clear that he was controlling the shell companies.
TABLE-4A Details of common Dummy Directors in the Companies controlled by Ashish Kakkar S. Saim Tarun Rahul Ramesh Arvind Company No. James Borah Mittal Bhardwaj Kumar 1 Arroz Impex Pvt. Ltd ✓ ✓ 2 Astoriaa Exim Pvt. Ltd ✓ ✓ 3 Brightsuns Tradexim Pvt. Ltd ✓ ✓ 4 Camger Traders Pvt. Ltd ✓ ✓ 5 Chetaki Tradexim Pvt. Ltd ✓ ✓ 6 Crezora Tradexim Pvt. Ltd ✓ ✓ 7 Empon Industries Pvt. Ltd ✓ ✓ 8 Fosteron Tradexim Pvt. Ltd ✓ ✓ Lyncage Logistics and 9 ✓ ✓ Warehouse Services Pvt. Ltd 10 Motown Exim Pvt. Ltd ✓ ✓ 11 Omesa Exim Pvt. Ltd ✓ ✓ 12 Righttime Impex Pvt. Ltd ✓ ✓ 13 Trioasm India Pvt. Ltd ✓ ✓ 14 Wintrix Impex Pvt. Ltd ✓ ✓ Avanzado Impex Private 15 ✓ ✓ Limited Absolute Tradexim Private 16 ✓ ✓ Limited 17 M/s R. K. Traders ✓ Macallan Impex Private 18 ✓ ✓ Limited 7.4 The following addresses belonging to Ashish Kakkar (as also revealed by various persons including Ashish Kakkar during their statement recorded u/ s 50 of the PMLA 2002 mentioned in the table below) have been used for incorporation of these 23 Shell companies beneficially controlled by Ashish Kakkar:Directorate of Enforcement Vs. Ashish Kakkar & Another Page 62 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 TABLE 06 Shell Companies incorporated with common registered address Persons who have disclosed u/s 50 S. Name of entity Registered address of PMLA, 2002 that the premises No belongs to Ashish Kakkar • Manjeet Singh statement dated 05.03.2024 (RUD-27) 25/32, 1st Floor, Office No 3, Omesa Exim Pvt. • Harikishan Jain statement dated 1 East Patel Nagar, New Delhi -
Ltd 15/16.02.2024 (RUD-28)
110008
• Rohit Kumar Jha statement dated
20/21.03.2024 (RUD-29)
• Harikishan Jain statement dated
15/16.02.2024 (RUD-28)
25/32, 1st Floor, Office No 3,
Wintrix Impex Pvt. • Rohit Kumar Jha statement dated
2 East Patel Nagar, New Delhi -
Ltd 20/21.03.2024 (RUD-29)
110008
• Ashish Kakkar statement dated
06.03.2024 (RUD-30)
25/32, 1st Floor, Office No 3,
• Ashish Kakkar statement dated
3 M/s R. K. Traders East Patel Nagar, New Delhi -
06.03.2024 (RUD-30) 110008 25/32, 1st Floor, Office No 3, Astoriaa Exim Pvt. • Manjeet Singh statement dated 4 East Patel Nagar, New Delhi -
Ltd 05.03.2024 (RUD-27)
110008
9/2, Office No 303, 3rd Floor,
Brightsuns East Patel Nagar, New Delhi - • Harikishan Jain statement dated
5
Tradexim Pvt. Ltd 110008 15/16.02.2024 (RUD-28)
• Arvind Kumar statement dated
9/2, Office No 303, 3rd Floor,
Motownn Exim 20.03.2024 (RUD-31)
6 East Patel Nagar, New Delhi -
Pvt. Ltd • Ashish Kakkar statement dated
110008
06.03.2024 (RUD-30)
9/2, Office No 303, 3rd Floor,
Arroz Impex Pvt. • Ashish Kakkar statement dated
7 East Patel Nagar, New Delhi -
Ltd 06.03.2024 (RUD-30)
110008
9/2, Office No 303, 3rd Floor,
Crezora Tradexim
8 East Patel Nagar, New Delhi - --
Pvt. Ltd
110008
9 Fosteron Tradexim Flat No. 501/26, Pragati Tower, • Manjeet Singh statement dated Pvt. Ltd. Rajendra Place, Patel Nagar, 05.03.2024 (RUD-27) Delhi - 110008. • Harikishan Jain statement dated 15/16.02.2024 (RUD-28) • Rohit Kumar Jha statement dated 20/21.03.2024 (RUD-29) • Ashish Kakkar statement dated Directorate of Enforcement Vs. Ashish Kakkar & Another Page 63 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Persons who have disclosed u/s 50 S. Name of entity Registered address of PMLA, 2002 that the premises No belongs to Ashish Kakkar 06.03.2024 (RUD-30) Flat no 501/26, Pragati Tower, Macallan Impex • Ashish Kakkar statement dated 10 Rajendra Place, Patel Nagar, Private Limited 06.03.2024 (RUD-30) Delhi - 110008 • Manjeet Singh statement dated 05.03.2024 (RUD-27) • Harikishan Jain statement dated Flat No-1205/2, Padma Tower, Avanzado Impex 15/16.02.2024 (RUD-28) 11 Rajendra Place, New Delhi -
Private Limited • Rohit Kumar Jha statement dated 110008 20/21.03.2024 (RUD-29) • Ashish Kakkar statement dated 06.03.2024 (RUD-30) Absolute Tradexim Flat No-1205/2, Padma Tower, • Ashish Kakkar statement dated 12 Private Limited Rajendra Place, New Delhi - 06.03.2024 (RUD-30) 110008 Camger Traders Office no 805, 8th Floor, • Manjeet Singh statement dated 13 Pvt. Ltd Pragati Tower, Rajendra Place 05.03.2024 (RUD-27) Righttime Impex Office no 805, 8th Floor, 14 --
Pvt. Ltd Pragati Tower, Rajendra Place
• Harikishan Jain statement dated
15/16.02.2024 (RUD-28)
• Rohit Kumar Jha statement dated
15 Chetaki Tradexim New Delhi - 110018 20/21.03.2024 (RUD-29)
Pvt. Ltd
• Ashish Kakkar statement dated
06.03.2024 (RUD-30)
16 Empon Industries
New Delhi - 110018 --
Pvt. Ltd
17 Trioasm India Pvt.
New Delhi - 110018 --
Ltd
• Manjeet Singh statement dated
44, First Floor, Left Side, Veer
18 Electronio 05.03.2024 (RUD-27)
Savarkar Block, Shakarpur,
Industries Pvt. Ltd • Rohit Kumar Jha statement dated
Delhi - 110092
20/21.03.2024 (RUD-29)
• Manjeet Singh statement dated
05.03.2024 (RUD-27)
Unit No TF-10, Pearls Omaxe,
19 Mixpier Clotex • Harikishan Jain statement dated
Netaji Subhash Place,
Pvt. Ltd 15/16.02.2024 (RUD-28)
Pitampura, Delhi - 110034
• Rohit Kumar Jha statement dated
20/21.03.2024 (RUD-29)
20 Trineq Business Shop No 120, Aaya Nagar • Manjeet Singh statement dated
Solutions Pvt. Ltd Market, Delhi - 110047 05.03.2024 (RUD-27)
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 64 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Persons who have disclosed u/s 50 S. Name of entity Registered address of PMLA, 2002 that the premises No belongs to Ashish Kakkar • Harikishan Jain statement dated 15/16.02.2024 (RUD-28) • Manjeet Singh statement dated 2nd Floor on Right/North side of 21 Tikmet Exim Pvt. 05.03.2024 (RUD-27) Property bearing no 1-C, Arjun Ltd • Harikishan Jain statement dated Nagar, Delhi - 110029 15/16.02.2024 (RUD-28) 2nd Floor on Right/North side of 22 Woop Industries • Rohit Kumar Jha statement dated Property bearing no 1-C, Arjun Pvt. Ltd 20/21.03.2024 (RUD-29) Nagar, Delhi - 110029 • Manjeet Singh statement dated 05.03.2024 (RUD-27) • Harikishan Jain statement dated Lyncage Logistics IL & FS, 6th Floor, N/Q Bandra 23 15/16.02.2024 (RUD-28) and Warehouse Kurla Complex, Bandra East, • Rohit Kumar Jha statement dated Services Pvt. Ltd Mumbai, Maharashtra - 400051 20/21.03.2024 (RUD-29) • Ashish Kakkar statement dated 06.03.2024 (RUD-30) 7.5 As per the case of the Complainant/ED, upon analysis of financial statements and banking transactions of the above-mentioned 23 shell companies, it is found that banking transactions are not commensurate with the financial statements. In the majority of companies, no balance sheet and profit & loss statement have been filed with RoC by these companies. The details are given in Table No.7. Hence, it is evident that as per financial statements filed with Registrar of Companies (RoC), no business transactions were carried out whereas, as per the bank accounts huge financial transactions have been shown to be done in the name of these companies. This shows that these entities are only paper entities and no actual business activities have been done in these companies except paper transactions for the purpose of layering of proceeds of crime and siphoning off out of India.
7.6 That during the course of investigation under PMLA, 2002, statements of various persons including dummy Directors, employees of Ashish Kakkar who Directorate of Enforcement Vs. Ashish Kakkar & Another Page 65 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 have handled various work as per instructions of Ashish Kakkar, persons who have handled import/ export consignments, Ashish Kakkar (himself) etc. were recorded under Section 50 of PMLA. During recording of the statements, it has been revealed that the above-mentioned companies were incorporated, controlled and operated by Ashish Kakkar. The details of the statements are in Table-8. Even the statements recorded under Section 50 of PMLA, 2002, it is revealed that Ashish Kakkar was also controlling foreign entities used in the trade-based money laundering. The details thereof are in Table-9. 7.7 That during investigation, multiple searches were conducted under the provisions of FEMA and PMLA, wherein documents related to various shell companies controlled by Ashish Kakkar were recovered from various premises belonging to Ashish Kakkar, which are as under:
i. Blank letterheads of various shell companies (both domestic and overseas entities), ii. Digital rubber stamps of various companies (both domestic and overseas entities) and iii. Import-export related documents such as copies of bills of entry, bills of lading, shipping bills, import-export invoices, etc. 7.8 The above-mentioned documents were alleged to be found and seized during the course of search under Panchnama dated 22/23.05.2023 (RUD-37) under Section 37 of FEMA from Flat No-1205, Padma Tower Rajendra Place New Delhi, Delhi- 110008 which is the premises belonging to Ashish Kakkar.
That the recovery of these documents, rubber stamps, letter heads of the shell companies from the premises of Ashish Kakkar clearly establishes that these shell companies are under the control of Ashish Kakkar and used by Ashish Kakkar in circular import/ export activities for sole purpose of sending outward Directorate of Enforcement Vs. Ashish Kakkar & Another Page 66 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 foreign remittances of proceeds of crime for the purpose of money laundering. Import- Export documents, outward remittance documents submitted to Banks, blank letters heads & digital rubber stamps, visiting cards of various companies controlled by Ashish Kakkar, etc. (collectively RUD-38) were retrieved from the data extracted from WD make HDD bearing SL No. WX11A29D4UH4 under Panchnama dated 28.08.2023 (RUD-39) drawn at Cyber Forensic Lab from the hard disk seized under Panchnama dated 22/23.05.2023 under Section 37 of FEMA.
7.9 During the course of investigation, statements of Ashish Kakkar were recorded on 15.02.2024 under Section 17 of PMLA, 2002, 03.03.2024 (RUD-41), 04.03.2024 (RUD-42), 06.03.2024 (RUD-30), 07.03.2024 (RUD-36), 09.03.2024 (RUD-43), 10.03.2024 (RUD-44) and 12.03.2024 (RUD-45) under Section 50 of PMLA, 2002, wherein he stated that the premises i.e. Flat No-1205/2 Padma Tower Rajendra Place New Delhi, Delhi- 110008 from where the incriminating documents/electronic devices were seized belongs to him. The following companies were used and controlled by him:
Companies used for Import:
1) Lyncage Logistics and Warehouse Private Limited
2) Chetaki Tradexim Private Limited
3) Silvershine Warehouse Private Limited
4) Empon Industries Private Limited
5) Taglo Tradex Private Limited
6) Woop Industries Private Limited
7) Astoriaa Exim Private Limited
8) Motownn Exim Private Limited
9) Zlow Industries Private Limited
10) Camger Traders Private Limited Directorate of Enforcement Vs. Ashish Kakkar & Another Page 67 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
11) Crezora Tradexim Private Limited
12) Fosteron Tradexim Private Limited
13) Mixpier Clotex Private Limited
14) Omesa Exim Private Limited
15) Righttime Impex Private Limited
16) Trineq Business Solution Private Limited
17) Trioasm India Private Limited
18) Wintrix Impex Private Limited
19) Zomlim Trade India Private Limited
20) Lovik Tradex Private Limited Companies used for Export
1) Retab Industries Private Limited
2) Omlar Industries Private Limited
3) Crestos Tradexim Private Limited
4) Jaikom Industries Private Limited
5) Skybird Traders (Proprietorship)
6) Ujjwal Trading Company Entities used for making banking transactions:
1) AP Warehousing & Trading LLP
2) Arroz Impex Private Limited
3) Astoriaa Exim Private Limited
4) Avanzado Impex Private Limited
5) Brain Maalish Consortium Private Limited
6) Butlow Exim Private Limited
7) Camger Traders Private Limited Directorate of Enforcement Vs. Ashish Kakkar & Another Page 68 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
8) Celot & Comert Private Limited
9) Chetaki Tradexim Private Limited
10) Clakum Marketing Private Limited
11) Commodities Trading
12) Curfin Betelis Private Limited
13) Determination Infotech India Private Limited
14) Digidatics Services Private Limited
15) Empon Industries Private Limited
16) Feeker Traders Private Limited
17) Frizo Overseas (Partnership Firm)
18) Greensea Multi Trade Private Limited
19) Jabril Tradexim Private Limited
20) Lyncage Logistics and Warehouse Services Private Limited
21) Mahima Sales Corporation
22) Omesa Exim Private Limited
23) Paanpuff Perfumery Private Limited
24) R K Enterprises (Prop. Rohit Kumar)
25) R K Traders (Prop. Govind Goyal)
26) Righttime Impex Private Limited
27) Silvershine Warehouse Private Limited
28) Skihigh Online Services Private Limited
29) Skybird Traders (prop. Manoj Rathore)
30) TBO Online Travelling Private Limited
31) Trioasm India Private Limited
32) Ujjwal Trading Company
33) Ujwal trading company (Prop. Tarun Borah)
34) Zlow Industries Private Limited Directorate of Enforcement Vs. Ashish Kakkar & Another Page 69 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 7.10 That the following overseas entities were used by him for import and export and sending outward foreign remittances:
TABLE 11 List of Overseas Entities used for Import/Export by Ashish Kakkar S. No. Name of the Entity Country 1 Alam Alkhayal Wholesales Trading LLC UAE 2 ARN Electricals Stock Pte. Ltd. Singapore 3 ASH Stock Pte Ltd Singapore 4 ASL Honour Pte Ltd Singapore 5 BBKH Trade Pte. Ltd. Singapore 6 Comet International Ltd Hong Kong 7 Electronics Power SDN BHD Malaysia 8 Express Luck Pte Limited Hong Kong 9 HRA IT Products & Servicer Pte Ltd Singapore 10 Huge Force Ltd. Hong Kong 11 Hydro Power Traders SDH. BHD Malaysia 12 Idea Giant Pte Ltd Singapore 13 Lumisoq HK Limited Hong Kong 14 Mobitronics International Hong Kong 15 Nexus Global Financial Services Ltd. Mauritius 16 Power Electronics Trade Ltd Beijing, China 17 Seven Stars International Hong Kong 18 Telexcell Singapore Pte. Ltd. Singapore 19 The Brindavan Stones Pte. Ltd. Singapore 7.11 During investigation under PMLA, 2002, it has also been revealed that Ashish Kakkar has used SBI Bank Account No. 40136786750 (RUD-104) of M/s. Lyncage Logistics & Warehouse Services Private Limited, a shell entity controlled by Ashish Kakkar, for collection/ layering/ concealment of PoC. The transaction details are as under:Directorate of Enforcement Vs. Ashish Kakkar & Another Page 70 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 TABLE 14 Transactions between Shell Companies and Companies incorporated under Directorship of Ashish Kakkar and his family members Sum amount Sum of amount Name of the entities credited in INR debited in INR Empon Industries Pvt. Ltd. 4,03,07,639 40,89,47,146 Lyncage Logistics and Warehouse 18,29,610 18,12,95,427 Services Pvt. Ltd.
Trioasm India Pvt Ltd 3,06,71,477 8,14,50,000 Camger Traders Pvt Ltd 6,52,023 6,82,95,000 Laurus Trade Exim Private Limited 44,00,000 0 Right Time Impex Pvt Ltd 3,17,000 0 Zlow Industries Private Limited 2,58,000 0 Nimrit Agro Private Limited 51,00,000 30,00,000 TOTAL 8,35,35,749 74,29,87,573 7.12 It is alleged that in view of Table Nos. 17 to 19, it is noticed that by using
forged KYC documents, Ashish Kakkar got opened bank accounts in J&K Bank, Axis Bank and ICICI Bank. The tables are reproduced hereinbelow:
TABLE 17 List of Bank Accounts opened and operated by use of Forged KYCs KYC of the Date of Photograph of the Name of Bank and account person used for opening of person pasted on number opening of bank account KYC accounts J & K Bank account no.
Jitendra and
0055010980000013 30-03-2022 Dev Rajul Gupta
Abhishek Malla
(RUD-62)
ICICI Bank account no. Jitendra and
24-01-2022 Dev Rajul Gupta
022405004355 (RUD-63) Abhishek Malla
Axis Bank account no.
Jitendra and Jitendra @ jitu /
921020045667064 02-02-2022
Abhishek Malla Rajul Gupta
(RUD-64)
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 71 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 TABLE 18 Details of Credit Transactions in Bank Accounts Name of Account No Period Amount Bank 0055010980000013 2022 5,50,28,48,315 J & K Bank (RUD-62) 2023 83,47,75,327 022405004355 (RUD-63) ICICI Bank 2022 25,01,000 921020045667064 (RUD-64) Axis Bank 02-02-2022 604,44,52,711 Total 12,38,45,77,353 TABLE 19 List of Bank Accounts opened and operated by use of forged KYCs Date of KYC of the person Photograph of the Name of Bank and opening of used in opening Bank person pasted on Account Number account account the said KYC J & K Bank account no. Rahul Mittal Hemant Birje 032301010007010 14-10-2022 (RUD-53) Ramesh Bhardwaj Manjeet Singh ICICI Bank account no. Harikishan Jain Rahul Mittal 081605012640 23.03.2023 @ Aakash Jain (RUD-51) Ramesh Bhardwaj Jitendra @ Jitu Axis Bank account no. Harikishan Jain Rahul Mittal 92202020065882022 12.12.2022 @ Aakash Jain (RUD-52) Ramesh Bhardwaj Jitendra @ Jitu 7.13 The said bank accounts were then used for acquiring wrongful gain for Omesa Exim Private Limited and ultimately for Ashish Kakkar, as beneficial owner of Omesa Exim Private Limited. Thus, Ashish Kakkar has acquired PoC to the tune of approximately Rs. 388 Crores in the aforesaid bank account from 2022-2023.Directorate of Enforcement Vs. Ashish Kakkar & Another Page 72 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 7.14 It is also alleged that Ashish Kakkar created various shell companies / firms in the name of employees / hired persons. He created forged Aadhaar Card, PAN and by submitting these documents accused has opened Bank accounts of these shell companies in various banks. The said bank accounts were used for collection, accumulation, layering and siphoning off the proceeds of crime. The above documents fall within the definition of 'valuable securities' as defined in section 30 of the Indian Penal Code, 1860. Since the aforementioned bank accounts were opened based on the forged documents, the entire amount credited in the said bank account is nothing but proceeds of crime to the tune of approximately Rs.37,49,47,18,073/- Crores. 7.15 Hence, it is alleged that accused Ashish Kakkar is knowingly involved in the process and activities such as concealment, possession, acquisitions, use and projecting as untainted property of proceeds of crime, generated out of the scheduled offences by accumulation, layering and siphoning off the same out of India in the guise of foreign outward remittances against import of goods through the bank accounts controlled by him to the tune of thousands of Crores. 7.16. With regard to accused Puneet Kumar, it is the case of the Complainant/ED that the information under Section 66 (2) of PMLA, 2002 was shared with EOW, Delhi Police vidc Letter dated 17.05.2024 (RUD-98), regarding involvement of Punit Kumar in forgery, cheating, cybercrime, online betting, Dabba Trading and other illegal activities. The information contained details of forgery committed by Punit Kumar in respect of incorporation of companies and opening of bank accounts on the basis of forged documents and his involvement in various cybercrimes including Dabba Trading and online betting fraud. In response to the information shared under Section 66(2) of PMLA,2002, EOW, Delhi Police has informed vide letter No. 538/R/ACP/SEC-
VI/EOW dated 30.05.2024 (RUD-99) that the information shared has been taken Directorate of Enforcement Vs. Ashish Kakkar & Another Page 73 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 on record in the investigation of case vide FIR No. 08/2024 dated 23.02.2024, under Sections 419,420,467,468,471,476, 120-B of IPC, 1860. 7.17 The investigation allegedly uncovered that Punit Kumar was engaged in cybercrimes, including dabba trading and online betting frauds. Dabba trading is an illegal form of trading where Punit Kumar facilitated illegal trading in stocks, commodities, futures, and other financial products through informal networks, bypassing official channels like brokers or stock exchanges. Punit Kumar used software and applications to run his dabba trading activities, allowing individuals to bet on financial products without involving standard brokers or exchanges. These brokers, who were his employees, maintained their own records, creating a parallel market. The investigation also revealed Punit Kumar's association with online betting apps, notably www.taj777.com, which he developed, managed, and used to provide an online gambling and betting platform, generating proceeds of crime.
7.18 That allegedly Punit Kumar used various deceptive techniques, such as rate manipulation, technical glitches, account restrictions, use of multiple IDs, deceptive profit offers, and delayed settlements, to cheat individuals. 7.19 During investigation under PMLA, search and seizure operations under Section 17 of PMLA, 2002 were conducted at various premises, wherein various electronic devices containing records/data having incriminating nature, incriminating documents, gold, cash etc. were found and seized. Details of the searches conducted are as under: -
TABLE-3 (Of Supplementary Complaint) LIST OF PREMISES SEARCHED UNDER PMLA, 2002 S. Name of entity/person Address Date of search No. 15/16.02.2023 1 Ashish Kakkar 706, Ansal Bhawan, KG Marg, Delhi (RUD-10 of FPC) 15.02.2023 2 Ashish Kakkar W-119, 3rd Floor, GK-2, New Delhi (RUD-11 of FPC) Directorate of Enforcement Vs. Ashish Kakkar & Another Page 74 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 S. Name of entity/person Address Date of search No. Punit Kumar alias Punit J-73, 7th Floor, DLF Capital Greens, Shivaji 15.02.2023 3 Maheshwari Marg, Karampura, Delhi-110015 (RUD-12 of FPC) Shiv Dagar alias Shiv 15.02.2023 4 H-36D, Saket, Delhi Dargar (RUD-13 of FPC) C-49, Anand Niketan, Chanakyapuri, New 15.02.2023 5 Keshav Sood Delhi-110021 (RUD-14 of FPC) Shaila Projects Private 6/79, 2nd Floor, Old Rajinder Nagar, New 15.02.2023 6 Limited Delhi-110060 (RUD-15 of FPC) Hari Kishan Jain alias D-681, 682 JJ Colony, Tigri, South 15.02.2023 7 Akash Jain Delhi-110062 (RUD-16 of FPC) B9, Sai apartment, Sector-13 Rohini, New 15.02.2023
8 Prateek Mittal Delhi-110085 (RUD-17 of FPC) C-28, Sahibkunj, New Palam Vihar, Gurugram, 15.02.2023 9 Zeeshan Mirza Haryana-122017 (RUD-18 of FPC) B-II/210, 2nd Floor, Phase-I, Punjabi Saudagar 15.02.2023 10 Imran Mirza Society, Mayur Vihar, Delhi-110091 (RUD-19 of FPC) Euro Star Container Line Euro Star Office: F-26, 1st Floor, Star City 15.02.2023 11 Private Limited Mall, Mayur Vihar-I Extn, Delhi-110091 (RUD-20 of FPC) 1/22, Block-1, Single Story, Tilak Nagar, 15.02.2023 12 Prateek Anand Rajouri Garden, Delhi (RUD-21 of FPC) 607, 6th Floor, Surya Kiran Building, Kasturba 15.02.2023 13 Ashish Kakkar Gandhi Marg, C.P., New Delhi (RUD-22 of FPC) Office No. 7 & 18, KASEZ Association 15.02.2023 14 Kiran Ujalsingh Kouchar Building, Gandhidham, Kutch, Gujarat (RUD-23 of FPC) Lobby and Cafeteria area of ground floor of 02.03.2023 15 Ashish Kakkar Holiday Inn, Gurugram, Sector-90, Gurugram, (RUD-24 of FPC) Haryana-122505 25.04.2024 16 Punit Kumar 6/12, West Patel Nagar, New Delhi (RUD-3) Locker No. 30, Indian Bank, MCF-04, Chawla 03.05.2024 17 Punit Kumar Colony, Ballabhgarh, Faridabad, (RUD-4) Haryana-121004 7.20 During searches conducted at the following premises, gold bars, gold jewellery, cash etc. were alleged to be recovered and seized as under:
TABLE 04 (Supplementary) Value of seizure Sl. as per Govt.
Premises Details Date of seizure Details of seizure
No approved valuer
(in INR)
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 75 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
i) 08 gold bars weighing 8000 Gms.
ii) 44 ginni weighing 352 gm
iii) 1 chain weighing 33.950 gm
iv) 2 rings weighing 18 gm
v) 1 ring diamond weighing 12.030 gm Residence of Punit vi) 1 ginni weighing 8 gm Kumar situated at Flat vii) 2 gold kade weighing Panchnama dated No. 073, Tower J-73, 7th 43.150 gm 1 15.02.2024 5,62,92,594/-
Floor, DLF Capital viii) 1 ring weighing 10.610 (RUD-12 of FPC) Greens, Moti Nagar, New gm Delhi ix) 2 ginni weighing 16 gm
x) 4 gold coins 24K weighing 31.660 gm
xi) 6 gold bangles weighing 100 gm
xii) 1 gold set with kada weighing 98 gm
xiii) 2 rings weighing 9.900 gm
xiv) 4 ring diamonds weighing 30.460 gm
xv) 1 ring diamond weighing 6.208 gm xvi) 2 pair tops diamonds weighing 13 gm
i) 5 Gold Bars of ARGOR HERAEUS SA, Switzerland make of 1 KG weight each
ii) 3 Gold Bars of VALCAMBI SUISSE make of Locker No. 30, Indian 1 KG weight each Bank, MCF-04, Chawla iii) 2 Gold Bars of BRIGHT Colony, Ballabhgarh, GOLD make of 1 KG weight Panchnama dated Faridabad, each 2 03.05.2024 14,04,00,000/-
Haryana-121004 (Locker iv) 2 Gold Bars marked (A) of
(RUD-4)
maintained in the name of 1 KG weight each
Smt. Lata Rani, mother of v) 1 Gold Bar of RAND
Punit Kumar) REFINERY make of 1 KG
weight
vi) 1 Gold Bar of NADIR
METAL RAFINERI make of
1 KG weight
vii) 1 Gold Bar of Agnis Gold
make of 1 KG weight
viii) 1 Gold Bar of TASHA
make of 1 KG weight
ix) 1 Gold Bar of M. D.
Overseas Private Limited
make of 1 KG weight
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 76 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
x) 1 Gold Bar of MMTC PAMP make of 1 KG weight
xi) 1 Gold Bar of 1 KG weight
xii) 3 Gold Bars of MMTC PAMP make of 100 GM weight each
xiii) 1 Gold Bar of CREDIT SUISSE make of 100 GM weight
xiv) 1 Gold Bar of VALCAMBI SUISSE make of 100 GM weight
i) Mercedes E-220D, Registration No. HP12L5511, Color - Selenite Grey, Chassis No. WDD2131046L013932, Engine No. 65492080200006
ii) Audi Q7, Registration No. UP16DK4959, Color -
Residence of Ashish Barrique Brown M, Chassis Kakkar situated at W-119, 15.02.2024 Value yet to be 3 No. 3rd Floor, GK-2, New (RUD-11 of FPC) ascertained WAUZAHN4M8NY0005456, Delhi Engine No. DCB552708
iii) Kia Carnival, Registration No. UP16DP7299, Color -
Glacier White Pearl, Chassis No. MBZMBC81AMPN013596, Engine No. D4HBND000938 Ashish Kakkar (Lobby and Cafeteria area of ground floor of Holiday 02.03.2024 4 Rs. 15,00,000/- cash 15,00,000 Inn, Gurugram, (RUD-24 of FPC) Sector-90, Gurugram, Haryana-122505) Residence of Ashish Kakkar situated at M-25/3, GK-II, New 5 22.05.2023 Rs. 13,50,000/- cash 13,50,000/- Delhi 28282.968 Kgs. of Gold and Gold Jewellery and Rs.
TOTAL 19,95,42,594/-
28,50,000/- cash + three cars (value yet to be ascertained) 7.21 The details of companies incorporated allegedly under the directorship of employees/hired persons by Punit Kumar is as under -
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 77 of 117ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 TABLE 07 Company Designation Date of Appointment Date of Cessation Marvelox Universal Private Limited Director 30-Nov-22 - Finatech M Industries Private Limited Director 30-Nov-22 - Dreamzen Softserve Industries Private Limited Director 30-Nov-22 - Electronio Industries Private Limited Director 13-Jul-22 13-Dec-22 Gimaxery Md Softserve Private Limited Director 08-Dec-22 09-Dec-22 Alscat Universal Private Limited Director 24-Jun-22 07-Jul-22 JHALAN RAM (DIN: 09646610) Company Designation Date of Appointment Date of Cessation Marvelox Universal Private Limited Director 30-Nov-22 - Gritfix Softserve Private Limited Director 23-Jun-22 - Electronio Industries Private Limited Director 13-Jul-22 25-Jul-22 Detrosoftec Industries Private Limited Director 30-Nov-22 09-Dec-22 Alscat Universal Private Limited Director 24-Jun-22 07-Jul-22 ABHISHEK MAVI (DIN: 09207170) Company Designation Date of Appointment Date of Cessation Lyncage Logistics and Warehouse Services Additional 31-Dec-21 18-May-22 Private Limited Director Triosam India Private Limited Director 14-Jan-22 18-May-22 SRIRAM DIGAL (DIN: 09812758) Company Designation Date of Appointment Date of Cessation Octradix M Industries Private Limited Director 25-02-2023 - Broxfix Mu Softserve Private Limited Director 10-12-2022 -
Utsab Pradhan (DIN: 09353612) Company Designation Date of Appointment Date of Cessation Septragianx Industries Private Limited Director 26-09-2022 - Alsceat Universal Private Limited Director - 26-08-2022 Additional Onpoint Planning Private Limited - 14-01-2022 Director Additional Camger Traders Private Limited - 25-05-2022 Director Arjit Singh (DIN: 09814607) Company Designation Date of Appointment Date of Cessation Allwaster Mu Universal Private Limited Director 26-12-2022 03-04-2023 Directorate of Enforcement Vs. Ashish Kakkar & Another Page 78 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Blonchesoftec Industries Private Limited Director 10-12-2022 04-04-2023 Gimaxery Md Softserve Private Limited Director 09-12-2022 04-04-2023 Octradix Mu Industries Private Limited Director 31-12-2022 22-03-2023 Arroz Impex Private Limited Director 07-12-2022 08-12-2022 Crezora Tradexim Private Limited Director 07-12-2022 08-12-2022 Saim James (DIN: 08646065) Company Designation Date of Appointment Date of Cessation Additional Zlow Industries Private Limited 08-03-2021 -
Director Additional Trioasm India Private Limited 18-05-2022 -
Director Additional Chetaki Tradexim Private Limited 24-11-2022 -
Director
Lyncage Logistics And Warehouse Services Additional
18-05-2022 -
Private Limited Director
Additional
Empon Industries Private Limited 28-01-2020 -
Director
Witcos Traders Private Limited Director 13-01-2020 16-10-2021
Additional
Paanpuff Perfumery Private Limited 20-01-2020 16-10-2021
Director
Additional
Veca Tradex Private Limited 11-05-2020 16-10-2021
Director
Additional
Silvershine Warehouse Private Limited 22-03-2022 27-09-2022
Director
Additional
Feeker Traders Private Limited 01-05-2020 16-10-2021
Director
Yeltuc Traders Private Limited Director 01-07-2020 16-10-2021
Snoora Trade Private Limited Director 24-12-2019 16-10-2021
Nomzor Traders Private Limited Director 26-06-2020 16-10-2021
Lyncage Logistics And Warehouse Services Additional
08-03-2021 31-12-2021
Private Limited Director
Additional
Camger Traders Private Limited 18-07-2020 30-12-2021
Director
SREQ Industries Private Limited Director 29-06-2020 16-10-2021
Additional
Iditi Exim Private Limited 07-12-2020 16-10-2021
Director
Additional
Righttime Impex Private Limited 15-02-2022 11-04-2022
Director
7.22 As mentioned in the Table-5, allegedly majority of the shell entities have
been incorporated with a common registered address:
TABLE- 8 Directorate of Enforcement Vs. Ashish Kakkar & Another Page 79 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 SHELL COMPANIES OPENED WITH COMMON ADDRESSES S No Name of entity Date of Incorporation Registered address Blonchesoftec Industries 16-2664 SF Beadon Pura Gali No. 2-3, Karol 1 21-11-2022 Private Limited Bagh, Delhi DL Broxifx Mu Softserve Private 2 10-12-2022 Karol Bagh, Delhi DL Limited Detrosoftec Industries Private 3 30-11-2022 Central Delhi 110005 Limited Septragianx Industries Private 4 26-09-2022 Central Delhi 110005 Limited Geekfix Softserve Private 44, F-F, Left Side Veer Savarkar Block, Shakarpur, 5 23-05-2017 Limited East Delhi, Delhi, India, 110092 Electronio Industries Private 6 13-07-2022 Delhi, India Limited Octradix MU Industries 7 18-10-2022 Delhi, India Private Limited 3rd Floor, Office No. 308 15A-1, Prestige 8 KDM Associates 16-03-2021 Chamber, Karol Bagh, Delhi, Central Delhi, Delhi, 110005 9 Mahima Sales Corporation 07-07-2021 Delhi, Central Delhi, Delhi, 110005 Megha Commercial 10 16-12-2020 Delhi, Central Delhi, Delhi, 110005 Enterprise 11 Ujwal Trading Company 09-12-2020 Delhi, Central Delhi, Delhi, 110005 7.23 It has been putforth by the Complainant/ED that upon analysis of financial statements and banking transactions of the above-mentioned shell companies, it is found that banking transactions are not commensurate with the financial statements. In the majority of companies, no balance sheet and profit & loss statement have been filed with RoC by these companies. The details are given in Table 09 of the supplementary complaint. 7.24 In view of the above, it is alleged that as per financial statements filed with Registrar of Companies (RoC), no business transactions were carried out whereas as per the bank account statements huge financial transactions have been shown to be done in the name of these companies. It is shown that these entities are only paper entities and no actual business activities have been done in these companies except paper transactions for the purpose of layering of proceeds of crime and siphoning off out of India.Directorate of Enforcement Vs. Ashish Kakkar & Another Page 80 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 7.25 During the course of investigation under PMLA, 2002, statements of various persons including dummy directors, employees/hired persons of Punit Kumar who have undertaken various tasks as per instructions of Punit Kumar, were recorded under Section 50 of PMLA, 2002. During recording of the statements, it has been revealed that the above-mentioned 26 companies were incorporated, controlled and operated by Punit Kumar.
8. Whereas, the defence has argued in nutshell the bank accounts of the shell companies allegedly under operation and control by/of the accused, were allegedly opened on the basis of forged however, no material has been adduced on record to prove even prima facie by the Complainant/ED for generation of 'proceeds of crime' from the alleged Scheduled Offence in the bank accounts.
The onus was on the Complainant/ED to show that the amount in the said bank accounts was derived from commission of the scheduled offence. No scheduled offence has been registered for the transactions carried out in the said bank accounts, hence the money in the bank accounts cannot be termed as ' proceeds of crime'. With regard to the allegation of fraud by online gaming, the penal provisions of Public Gambling Act, 1867 have not been invoked. The allegation of conversion of INR into foreign currency is a violation under FEMA, which is not a scheduled offence under PMLA. The allegation of sending the money through SEZ by over-valuing the imported product and not receiving remittance for export product is offence under the Custom's Act, 1962, which is not invoked as a Scheduled Offence.
8.1 Ld. Counsel for accused Puneet has additionally argued in brief that only alleged Scheduled offence against him is the FIR bearing No. 48/2022 of Cyber Crime registered at Gautam Budh Nagar, UP, wherein it has been alleged against him that he was involved in Dabba Trading and online betting, however they can be an offence under FEMA but are not Scheduled Offences under Directorate of Enforcement Vs. Ashish Kakkar & Another Page 81 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 PMLA. Even Dabba Trading can, at best, be violative of the Securities Contracts (Regulation) Act, 1956, and online betting can, at best, be violative of the Public Gambling Act, 1867, which are also not a scheduled offence under the PMLA. The offence under Custom's Act has not been invoked. 8.2 Even nothing on record has been shown to prove involvement of the accused in the betting gaming. The statement recorded of the accused and relied by Complainant/ED was recording during his custody and has been retracted during bail proceedings, hence it cannot be relied upon now. It is further argued that the accused was carrying out normal business transactions which is also reflected in the Table 31 relied by the Complainant/ED. 8.3 That as per the Table No. 32 relied by the Complainant/ED itself, the accused Puneet has only been linked with M/s Triosam. However, there is break in the link of the alleged money trail since the accused is in link with M/sTriosam, which is at Stage 3 layering company, as per para 14.6 of the supplementary prosecution complaint. There are other breakages in the money trail as per Table 30 and 32 also. From the record itself it is evident that there are multiple breaks in the money trail and there is no direct and exclusive link between the money from one account to another specially between Prerna Yadav's bank account and the money that was transferred to Triosam's bank account. Therefore, in absence of any nexus between the transfers, there is no basis to assume that the funds received by Triosam are the ' proceeds of crime' or were connected in any manner with the Scheduled Offence. 8.4 It has also been argued that during search no electronic device, bag or cash has been recovered from the premises of accused Puneet. Lastly, it is submitted that for considering any money as the 'proceeds of crime', the property must be derived or obtained, directly or indirectly, as a result of the criminal Directorate of Enforcement Vs. Ashish Kakkar & Another Page 82 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 activity relating to a Scheduled Offence. Even, the provisions of Securities Contract (Regulation) Act, 1956 have been filed on record.
Court observation
9. At the outset, it is apposite to note the authoritative pronouncement of the Hon'ble Supreme Court of India in Vijay Madan Lal Chaudhary (Supra), wherein it was held:
"97. Be that as it may, we may now proceed to decipher the purport of Section 24 of the 2002 Act. In the first place, it must be noticed that the legal presumption in either case is about the involvement of proceeds of crime in money-laundering. This fact becomes relevant, only if, the prosecution or the authorities have succeeded in establishing at least three basic or foundational facts. First, that the criminal activity relating to a scheduled offence has been committed. Second, that the property in question has been derived or obtained, directly or indirectly, by any person as a result of that criminal activity. Third, the person concerned is, directly or indirectly, involved in any process or activity connected with the said property being proceeds of crime. On establishing the fact that there existed proceeds of crime and the person concerned was involved in any process or activity connected therewith, itself, constitutes offence of money-laundering. The nature of process or activity has now been elaborated in the form of Explanation inserted vide Finance (No. 2) Act, 2019. On establishing these foundational facts in terms of Section 24 of the 2002 Act, a legal presumption would arise that such proceeds of crime are involved in money-laundering. The fact that the person concerned had no causal connection with such proceeds of crime and he is able to disprove the fact about his involvement in any process or activity connected therewith, by producing evidence in that regard, the legal presumption would stand rebutted."
9.1 Therefore as per above said preposition laid down by Hon'ble Supreme Court of India, Complainant/ED has to establish three foundational basic facts:
i) The criminal activity relating to a schedule offence has been committed,
i) That the property in question has been derived or obtained directly or indirectly, by any person as a result of that criminal activity, and Directorate of Enforcement Vs. Ashish Kakkar & Another Page 83 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
ii) The person concerned is directly involved in any process or activity connected with the said property being proceeds of crime 9.2 In case titled as Bhagwan Bhagat Vs. Directorate of Enforcement SLP (Criminal) 6905/2024 dated 12.08.2024 it was held by Hon'ble Apex court that "Prima Facie, there must be factual assertions in the complaints to show that the offenses which are named as scheduled offenses on the basis of which complaints are filed, directly or indirectly, generated proceeds of crime".
9.3 In the present FIR, there exists sufficient material on record to prima facie demonstrate that the aforesaid bank accounts of the companies were opened on the strength of forged and fabricated documents. It is further borne out from the statements recorded under Section 50 of the Prevention of Money Laundering Act, 2002, of various employees associated with accused namely Gaurav Pradhan, Saim James, Tarun Bohra, Hari Kishan Jain, Jitender, Manjeet Singh, among others that the said entities/companies were, in fact, under the control and dominion of the accused.
9.4 However, it is noteworthy that while placing on record the detailed account particulars in paragraphs 10.1 to 10.11 of the main complaint, the Enforcement Directorate has, in the concluding portion of each such entry, asserted that since the concerned bank accounts were opened on the basis of forged documentation, the entirety of the funds lying therein constitutes "Proceeds of Crime".
9.5 The 'Proceeds of Crime' have been defined elaborately by the Hon'ble Apex Court in Vijay Madan Lal Chaudhary (Supra) and it is defined that:
"31. The "proceeds of crime" being the core of the ingredients constituting the offence of money-laundering, that expression needs to be construed strictly. In that, all properties recovered or attached by the investigating agency in connection with the criminal activity relating to a scheduled offence under the general law cannot be regarded as proceeds of crime.Directorate of Enforcement Vs. Ashish Kakkar & Another Page 84 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 There may be cases where the property involved in the commission of scheduled offence attached by the investigating agency dealing with that offence, cannot be wholly or partly regarded as proceeds of crime within the meaning of Section 2(1)(u) of the 2002 Act -- so long as the whole or some portion of the property has been derived or obtained by any person "as a result of" criminal activity relating to the stated scheduled offence. To be proceeds of crime, therefore, the property must be derived or obtained, directly or indirectly, "as a result of" criminal activity relating to a scheduled offence. To put it differently, the vehicle used in commission of scheduled offence may be attached as property in the concerned case (crime), it may still not be proceeds of crime within the meaning of Section 2(1)(u) of the 2002 Act. Similarly, possession of unaccounted property acquired by legal means may be actionable for tax violation and yet, will not be regarded as proceeds of crime unless the concerned tax legislation prescribes such violation as an offence and such offence is included in the Schedule of the 2002 Act. For being regarded as proceeds of crime, the property associated with the scheduled offence must have been derived or obtained by a person "as a result of" criminal activity relating to the concerned scheduled offence. This distinction must be borne in mind while reckoning any property referred to in the scheduled offence as proceeds of crime for the purpose of the 2002 Act. Dealing with proceeds of crime by way of any process or activity constitutes offence of money-laundering under Section 3 of the Act."
9.6 In view of the above said definition, there is no doubt that opening of bank account on fabricated document is a Scheduled Offence under PMLA Act but the unaccounted money deposited in the said bank account itself cannot become "Proceeds of Crime" unless it is explained that the amount in the above said entities were earned by the accused persons and linkage of the amount earned to the criminal activity directly or indirectly. Only mentioning that as the account was opened on the basis of forged document, therefore, the entire amount credited in the bank account is nothing but Proceeds of Crime is not sufficient. Complainant/ED in the complaint from para 10.1 to 10.11 has explained the role of these companies and there is no investigation qua the said fact as to how the amount was generated in the said companies by accused persons. It seems that the Complainant/ED is only alleging on the basis of presumption that the amount Directorate of Enforcement Vs. Ashish Kakkar & Another Page 85 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 credited in the said shell companies is Proceeds of Crime but failed to explain the mode of the amount being generated in such shell companies by the accused persons.
9.7 In part 11 (of main complaint), Complainant/ED is alleging about siphoning off of proceeds of crime out of India but firstly Complainant/ED has to establish that the amount credited in the account of shell companies is the 'Proceeds of Crime' and it is paramount for the Complainant/ED to establish 03 foundational facts i.e. firstly criminal activity w.r.t. scheduled offence, secondly property in question derived or obtained directly or indirectly as a result of criminal activity and thirdly the person is directly or indirectly involved in any process or activity connected with the said property being proceeds of crime. However, the Directorate of Enforcement has failed to explain the mode and manner of the amount being received in the account of such shell companies as derived or obtained by accused persons, therefore, the second foundational fact as per judgment of Vijay Madanlal (supra) is missing from investigation of the ED w.r.t. FIR No. 8/2024 PS EOW.
9.8 Such a sweeping inference, bereft of any demonstrable linkage between the funds and a specific scheduled offence, falls short of the statutory mandate. The Hon'ble Supreme Court in Vijay Madanlal Choudhary (Supra) has clarified that "Proceeds of Crime" must be strictly construed to mean property derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence. The mere association of property with a crime or its use in the commission thereof, does not ipso facto render it "Proceeds of Crime". 9.9 Applying the aforesaid principles, it becomes evident that while the act of opening bank accounts using forged documents may itself constitute a Scheduled Offence, the funds deposited therein cannot automatically be classified as "Proceeds of Crime" in the absence of a clear and cogent explanation as to their Directorate of Enforcement Vs. Ashish Kakkar & Another Page 86 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 origin and nexus with the alleged criminal activity. The complaint, as it presently stands, does not elucidate the source of the funds credited in these accounts, nor does it establish how such funds were derived as a consequence of any scheduled offence.
9.10 The assertions in Part 11 of the complaint regarding the siphoning of funds abroad, though serious in nature, presuppose the existence of proceeds of crime. However, the foundational requirement of establishing that the funds in question indeed constitute "Proceeds of Crime" remains unfulfilled. In the absence of such foundational facts, the presumption under Section 24 of the PMLA cannot be invoked.
9.11 Consequently, it prima facie appears that the Directorate of Enforcement has failed to satisfy the second essential limb as laid down in Vijay Madanlal Choudhary (Supra), namely, that the property in question was derived or obtained as a result of criminal activity. At this stage, the prosecution case rests on conjecture and presumption rather than substantive evidentiary linkage. 9.12 It is also pertinent to note that while foreign remittances may attract regulatory scrutiny under the provisions of the Foreign Exchange Management Act, 1999, the same, in isolation, does not constitute an offence under the Prevention of Money Laundering Act, 2002, unless it is demonstrably linked to proceeds of crime arising from a scheduled offence. 9.13 At this stage, it is apposite to refer to definition of Schedule Offence. Said definition is extracted herein below for ready reference:
"Section 2 (1) (y) stipulates that: Schedule 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 Rs.1 Crore or more or (iii) the offences specified under part C of the schedule. Section 2 (1) (x) defines schedule as to mean the schedule to this act."Directorate of Enforcement Vs. Ashish Kakkar & Another Page 87 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 9.14 According to the said definition, offence of particular statue contained in said schedule appended to PMLA are said to be Scheduled Offence. This definition seems to be complete in itself and does not leave scope for inclusion of any offence on the principle of being an identical offence. The language used by Legislature in its wisdom to define offence of schedule offence is very categorical. In the case titled as Vijay Madan Lal (Supra) while defining the terms of PMLA, Hon'ble Supreme Court of India has held that strict interpretation of the terms used in PMLA should be made. This observation had come in respect of the term proceeds of crime and taking a cue from said decision of Hon'ble Supreme Court of India, it is held that all the terms used in PMLA needs to be construed accordingly i.e. a strict interpretation is to be given to the terms used in PMLA.
9.15 This Court is enlightened by decision of Hon'ble Supreme Court of India in case titled as Pavana Dibbur (Supra) , wherein inter-alia, it has been held that:
"18. Now, we come to the third argument made by the learned senior counsel appearing for the appellant based on the interpretation of the Schedule. It must be noted here that in the case of Vijay Madanlal Choudhary, even the validity of the Schedule was under challenge. A perusal of the said decision shows that this Court was not called upon to interpret any entry in the Schedule and, in particular, entry of Section 120B in the Schedule. The challenge to the Schedule is dealt with in paragraphs 453, 454 and 455 of the said decision. The contention before this Court was that even minor offences have been included in the Schedule, and even compoundable offences form part of the Schedule. It was submitted that the offences which do not have cross border implications have been included in the Schedule. In paragraphs 454 and 455 of the said decision, this Court held thus:Directorate of Enforcement Vs. Ashish Kakkar & Another Page 88 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 "454. This Schedule has been amended by Act 21 of 2009, Act 2 of 2013, Act 22 of 2015, Act 13 of 2018 and Act 16 of 2018, thereby inserting new offences to be regarded as scheduled offence. The challenge is not on the basis of legislative competence in respect of enactment of Schedule and the amendments thereto from time to time. However, it had been urged before us that there is no consistency in the approach as it includes even minor offences as scheduled offence for the purposes of offence of money laundering, more so even offences which have no transborder implications and are compoundable between the parties.
The classification or grouping of offences for treating the same as relevant for constituting offence of money laundering is a matter of legislative policy. The Parliament in its wisdom has regarded the property derived or obtained as a result of specified criminal activity, being an offence under the concerned legislation mentioned in the Schedule. The fact that some of the offences may be non-cognizable offences under the concerned legislation or regarded as minor and compoundable offences, yet, the Parliament in its wisdom having perceived the cumulative effect of the process or activity concerning the proceeds of crime generated from such criminal activities as being likely to pose threat to the economic stability, sovereignty and integrity of the country and thus, grouped them together for reckoning it as an offence of money laundering, is a matter of legislative policy. It is not open to the Court to have a second guess at such a policy.
455. Needless to underscore that the 2002 Act is intended to initiate action in respect of money laundering activity which necessarily is associated with the property derived or obtained by any person, directly or indirectly, as a result of Directorate of Enforcement Vs. Ashish Kakkar & Another Page 89 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 specified criminal activity. The prosecution under this Act is not in relation to the criminal activity per se but limited to property derived or obtained from specified criminal activity. Resultantly, the inclusion of criminal activity which has been regarded as non-cognizable, compoundable or minor offence under the concerned legislation, should have no bearing to answer the matter in issue. In that, the offence of money laundering is an independent offence and the persons involved in the commission of such offence are grouped together as offenders under this Act.
There is no reason to make distinction between them insofar as the offence of money laundering is concerned. In our opinion, therefore, there is no merit in the argument under consideration." In this case, we are not called upon to decide the validity of the Schedule or any part thereof. The question is whether the offence under Section 120B of IPC, included in Paragraph 1 of the Schedule, can be treated as a scheduled offence even if the criminal conspiracy alleged is to commit an offence which is not a part of the Schedule. This issue did not arise for consideration in the case of Vijay Madanlal Choudhary.
Now, we turn to the Schedule to the PMLA. We find that many offences, which may generate proceeds of crime, have not been included in the Schedule. We are referring to only a few of such offences only by way of illustration:
a. Section 263A of IPC, which deals with the offence of making or possessing fictitious stamps is not a part of the Schedule;
b. Though offences punishable under Sections 392 to 402 regarding robbery and dacoity have been included in part A of the Schedule, the offence punishable under Section 379 of committing theft and the offence punishable under Directorate of Enforcement Vs. Ashish Kakkar & Another Page 90 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Section 380 of theft in a dwelling house are not made a part of parts A and B of the Schedule. The theft of both categories can be of a very large amount running into crores. The said two offences become scheduled offences by virtue of clause (3) of part C of the Schedule only if the offences have cross border implications;
c. The offence punishable under Section 403 of dishonest misappropriation of property does not form part of the Schedule. The said offence becomes a scheduled offence by virtue of clause (3) of part C of the Schedule only if the offence has crossborder implications;
d. The offence under Section 405 of criminal breach of trust, which is punishable under Section 406, is not a part of the Schedule The said offence becomes a scheduled offence by virtue of clause (3) of part C of the Schedule only if the offence has crossborder implications;
e. Though the offence under Section 417 of cheating has been made a scheduled offence, the more stringent crime of forgery for the purposes of cheating under Section 468 is not a part of the Schedule, and f. Though the offences under Sections 489A to 489C regarding forging or counterfeiting currency notes are part of the Schedule, the offence under Section 489D of making or possessing instruments or materials for forging or counterfeiting currency notes is not a part of the Schedule.
21. Now, coming to Part B of the Schedule, it includes only one offence under Section 132 of the Customs Act, 1962. The offence under Section 132 of the Customs Act of making a false declaration, etc., becomes a scheduled offence in view of subclause (ii) of Clause (y) of subsection (1) of Section 2 of the PMLA only if the total value involved in the offence is Rs.1 crore or more. Part C of Directorate of Enforcement Vs. Ashish Kakkar & Another Page 91 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 the Schedule provides that any offence specified in Part A having cross border implications becomes a part of Part C. More importantly, all the offences against the property under Chapter XVII of IPC having cross border implications become scheduled offences. As pointed out earlier, the offences punishable under Sections 379 (theft), 380 (theft in dwelling house), 403 (dishonest misappropriation of property) and 405 (criminal breach of trust) are part of Chapter XVII. Though the said offences are not included in Part A, they become scheduled offences by virtue of Part C only if they have crossborder implications. Thus, it can be said that many offences capable of generating proceeds of crime do not form a part of the schedule.
22. The learned Additional Solicitor General argued that as Section 120B of IPC is included in Part A to the Schedule, even if the allegation is of making a criminal conspiracy to commit an offence which is not a part of the Schedule, the offence becomes a scheduled offence. As stated earlier, many offences under Chapter XVII of IPC are not included in Parts A and B. They become scheduled offences only if the same have cross border implications.
Thus, the offences of dishonest misappropriation of property or criminal breach of trust or theft can become a scheduled offence, provided they have cross border implications. If the argument of the learned Additional Solicitor General is accepted, if there is a conspiracy to commit offences under Section 403 or Section 405, though the same have no cross border implications, the offence under Section 120B of conspiracy to commit offences under Sections 403 and 405 will become a scheduled offence. Thus, if any offence is not included in Parts A, B and C of the Schedule but if the conspiracy to commit the offence is alleged, the same will become a scheduled offence. A crime punishable under Section 132 of the Customs Act is made a scheduled offence under Part B, provided the value involved in the offence is Rupees One Crore or Directorate of Enforcement Vs. Ashish Kakkar & Another Page 92 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 more. But if Section 120B of IPC is applied, one who commits such an offence having a value of even Rs.1 lac can be brought within the purview of the PMLA. By that logic, a conspiracy to commit any offence under any penal law which is capable of generating proceeds, can be converted into a scheduled offence by applying Section 120B of the IPC, though the offence is not a part of the Schedule. This cannot be the intention of the legislature.
23. The penal statutes are required to be strictly construed. It is true that the penal laws must be construed according to the legislative intent as expressed in the enactment. In Chapter 1 of GP Singh's Principles of Statutory Interpretation (15th Edition), it is observed that:
"The intention of the Legislature, thus, assimilates two aspects: In one aspect it carries the concept of "meaning", i.e. what the words mean and in another aspect, it conveys the concept of "purpose and object" or the "reason and spirit" pervading through the statute. The process of construction, therefore, combines both literal and purposive approaches. In other words the legislative intention, i.e., the true or legal meaning of an enactment is derived by considering the meaning of the words used in the enactment in the light of any discernible purpose or object which comprehends the mischief and its remedy to which the enactment is directed." In the words of A Driedger, Construction of Statute, 2nd Edn, 1983: The words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the Scheme of the Act, the object of the Act, and the intent of the Parliament. This formulation later received the approval of the Supreme Court and was called the "cardinal principle of construction"." In both Constitutional and statutory Directorate of Enforcement Vs. Ashish Kakkar & Another Page 93 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 interpretation, the court is supposed to exercise discretion in determining the proper relationship between the subjective and objective purposes of the law and help the law achieve its purpose." (Emphasis added).
24. While giving effect to the legislature's intention, if two reasonable interpretations can be given to a particular provision of a penal statute, the Court should generally adopt the interpretation that avoids the imposition of penal consequences. In other words, a more lenient interpretation of the two needs to be adopted.
25. The legislative intent which can be gathered from the definition of the scheduled offence under clause (y) of sub Section (1) of Section 2 of the PMLA is that every crime which may generate proceeds of crime need not be a scheduled offence. Therefore, only certain specific offences have been included in the Schedule. Thus, if the submissions of the learned Additional Solicitor General are accepted, the Schedule will become meaningless or redundant. The reason is that even if an offence registered is not a scheduled offence, the provisions of the PMLA and, in particular, Section 3 will be invoked by simply applying Section 120B. If we look at Section 120B, only because there is a conspiracy to commit an offence, the same does not become an aggravated offence. The object is to punish those involved in conspiracy to commit a crime, though they may not have committed any overt act that constitutes the offence. Conspiracy is an agreement between the accused to commit an offence. If we look at the punishments provided under Section 120B, it becomes evident that it is not an aggravated offence. It only incorporates the principle of vicarious liability. If no specific punishment is provided in the Statute for conspiracy to commit a particular offence, Section 120B treats a conspirator of the main accused as an abettor for the purposes of imposing the Directorate of Enforcement Vs. Ashish Kakkar & Another Page 94 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 punishment. The interpretation suggested by the ED will defeat the legislative object of making only a few selected offences as scheduled offences. If we accept such an interpretation, the statute may attract the vice of unconstitutionality for being manifestly arbitrary. It cannot be the legislature's intention to make every offence not included in the Schedule a scheduled offence by applying Section 120B. Therefore, in our view, the offence under Section 120B of IPC included in Part A of the Schedule will become a scheduled offence only if the criminal conspiracy is to commit any offence already included in Parts A, B or C of the Schedule. In other words, an offence punishable under Section 120B of IPC will become a scheduled offence only if the conspiracy alleged is of committing an offence which is otherwise a scheduled offence."
9.16. Against the said decision, a review petition was also filed in Hon'ble Supreme Court of India but the said review petition was dismissed by Hon'ble Supreme Court of India which implies that above said principle laid down by Hon'ble Apex Court has been reaffirmed by it. The necessary corollary of above noted settled principle of law in respect of schedule offence of PMLA is that any offence or statue which is not mentioned in the schedule to PMLA cannot be included in the schedule in any manner. In part A of schedule to PMLA, first entry is in respect of Indian Penal Code. Not only name of statue is mentioned but Act number and year of implementation of the said statute is also mentioned. Reference to such exact details is an indicator of fact that legislature intends to make clear that schedule included in said statute alone and nothing else. There is no provision in entire PMLA which enable investigating agency or court to include any other statue in the schedule on the ground that though, said statue is not part of schedule to PMLA but replica of that offence in another statute is Directorate of Enforcement Vs. Ashish Kakkar & Another Page 95 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 included in the schedule of PMLA. The above decision of Hon'ble Supreme Court of India clearly hold that such interpretation cannot be lent to the term schedule offence defined in section 2 (1) (y) of PMLA. 9.17 Reverting to the present matter, it has been putforth by the Complainant/ED that accused persons have used modus of Circular trading (Import-Export) in order to siphon off the funds to foreign countries and to disguise the origins of illicit funds thereby laundering the proceeds of crime. Accused persons established various shell companies in India and abroad. They also obtained GST Registrations/ IECs and Letter of Permission (LoP) of SEZ etc. by using KYCs of dummy directors/ persons. They further opened bank accounts of these shell companies by using these forged KYCs and these companies have not carried out any legitimate business and exist primarily to facilitate money laundering.
9.18 Accused persons have intentionally used the SEZ entities for circular Import-Export for siphoning off the proceeds of crime as foreign outward remittances. Since SEZ area is subject to different economic regulations than other regions within the same country and Special economic zones are typically created in order to facilitate rapid economic growth by leveraging tax incentives to attract foreign investment and spark technological advancement. SEZs have been set up basically for giving leverage for boosting the economy of the country but they mis-used the leverage given to the SEZ Entities and devised the modus of circular import-export activities.
9.19 The accused persons have been re-exporting the same imported goods from the SEZ without processing the goods to the overseas entities shell owned/ controlled by him without getting any remittances against the exports. They have undertaken circular Import-Export with a sole intent to remit the "Proceeds of Directorate of Enforcement Vs. Ashish Kakkar & Another Page 96 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Crime" out of India, thus no inward foreign remittances have been noticed in the bank account of the entities who have exported the goods out of India. 9.20 As per the settled law, Foreign Remittance can be offence under FEMA 1999, but it is not an offence under PMLA 2002. It is also pertinent to note that while foreign remittances may attract regulatory scrutiny under the provisions of the Foreign Exchange Management Act, 1999, the same, in isolation, does not constitute an offence under the Prevention of Money Laundering Act, 2002, unless it is demonstrably linked to proceeds of crime arising from a scheduled offence.
9.21 With regard to dabba trading and online betting, it is not in dispute that dabba trading, though illegal and violative of regulatory laws such as the Securities Contracts (Regulation) Act, 1956 and the SEBI Act, 1992, does not find mention in the Schedule to PMLA. The prosecution has failed to demonstrate that the alleged acts constitute any offence specifically enumerated in the Schedule.
9.22 With respect to Online gaming, the alleged illegality stems from gambling- related laws such as the Public Gambling Act, 1867. However, offences under gambling laws are not included in the Schedule of PMLA. As rightly pointed out by the defence, the provisions under Custom's Act have not been invoked in the present matter.
9.23 The Hon'ble Supreme Court in Vijay Madanlal Choudhary (supra) has categorically held:
"The offence under PMLA is dependent on the existence of a scheduled offence, and if the predicate offence fails or is not established, the offence of money laundering cannot survive."Directorate of Enforcement Vs. Ashish Kakkar & Another Page 97 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 (ii) FIR No. 630/2022 Cyber Crime, PS- Mahamandir, Jodhpur City East, Rajasthan (RUD-3)
10. The Complainant/ED has brought on record with respect to the money trail of the 'Proceeds of Crime' that during the course of investigation, proceeds generated through various cybercrimes have been traced and money trail has been prepared which clearly shows that proceeds of crime generated from crime committed as detailed in FIRs and cyber complaints have been routed through companies of Ashish Kakkar and ultimately siphoned off. Investigation under PMLA has revealed that funds to the tune of Rs 16.22 Crores approx. have been transferred from the bank accounts of Arvind Kalani and Amit Kalani (victims of cyberfraud) as mentioned in FIR No. 0630/2022 dated 28.11.2022 (RUD-3) to 08 bank accounts of different individuals/ entities as mentioned in Table 01 above. Statement dated 06.03.2024 (RUD-71) of Shri Arvind Kalani was recorded under section 50 of PMLA, 2002, wherein he, inter-alia, explained the modus of cheating done by cybercrime fraudsters. Analysis of these banks accounts have revealed that the funds were layered through various bank accounts pertaining to several individuals/ proprietorship firms and companies and finally the funds were siphoned off out of India as foreign outward remittance against import of goods. It is pertinent to mention that in order to camouflage the real nature of transactions between the group of accounts, various cross-transactions were done and after layering the funds, same were finally accumulated to the bank accounts opened based on the forged documents of certain companies (having dummy directors but actually controlled by Ashish Kakkar) from where outward remittances were done against imports.
STAGE-I LAYERING TABLE-52 Details of Bank Accounts for Acquiring of POC in FIR No. 630/2022 Directorate of Enforcement Vs. Ashish Kakkar & Another Page 98 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Name of the Account Holder Bank Name IFSC Code YSM Enterprises IDFC Bank Ltd. IDFB0080103 SRK Trading Ltd. ICICI Bank Ltd. ICIC0000915 Adeke Rakesh Ltd. ICICI Bank Ltd. ICIC0003222 Abdul Kedar H E Ltd. Yes Bank Ltd. YESB0000516 Soni Ltd. Axis Bank Ltd. UTIB0000097 Dhanraj Metal IDBI Bank Ltd. IBKL0001342 Mukesh Kumar Ltd. (Nile Traders) ICICI Bank ICIC0000539 M M Fruit & Veg Ltd. ICICI Bank ICIC0002484 10.1 On analysis of these 08 bank accounts it has been alleged that they have revealed that the funds received from Arvind Kalani and Amit Kalani were further transferred to various other bank accounts pertaining to several individuals/ proprietorship firms and companies. The entities and accounts where funds were transferred from the bank accounts of Arvind Kalani and Amit Kalani have been categorized as Stage-1 entities/ accounts for the purpose of demonstration of the fund trail. These entities are:
TABLE 53 Transfer of Funds from Arvind Kalani and Amit Kalani to 08 Companies Name Counter Bank Sum of Party No Account CP Account No of Party Party Name Debit M.M. Fruits Amit 922030057069641 248405500165 ICICI
-- & Vegeta- 21,03,914 Kalani (RUD-72) (RUD-75) Bank bles 79SRK Arvind 914010018368047 091505005808 ICICI
-- Trading Pvt. 4,58,254 Kalani (RUD-73) (RUD-76) Bank Ltd.
Abdul
Arvind 914010018368047 051685800001762 YES
-- Kader H E 10,00,000
Kalani (RUD-73) (RUD-77) Bank
Ltd
Arvind 914010018368047 Adeke 322205500398 ICICI
-- 94,82,288
Kalani (RUD-73) Rakesh (RUD-78) Bank
Arvind 914010018368047 -- Deepak 922020038936406 AXIS 1,98,54,195
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 99 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Name Counter Bank Sum of Party No Account CP Account No of Party Party Name Debit Kalani (RUD-73) Soni (RUD-79) Bank Arvind 914010018368047 Dhanraj 1342102000032346 IDBI
-- 47,00,000 Kalani (RUD-73) Metal (RUD-80) Bank M.M. Fruits Arvind 914010018368047 248405500165 ICICI
-- & Vegeta- 7,67,43,651 Kalani (RUD-73) (RUD-81) Bank bles Arvind 914010018368047 053905500700 ICICI
-- Nile Traders 2,90,51,660 Kalani (RUD-73) (RUD-82) Bank Arvind 914010018368047 YSM Enter- 10104049558 IDFC
-- 11,50,721 Kalani (RUD-73) prises (RUD-83) Bank Abdul Arvind 922030057073996 051685800001762 YES
-- Kader H E 41,00,000 Kalani (RUD-74) (RUD-77) Bank Ltd Arvind 922030057073996 Adeke 322205500398 ICICI
-- 1,06,73,440 Kalani (RUD-74) Rakesh (RUD-78) Bank M.M. Fruits Arvind 922030057073996 248405500165 ICICI
-- & Vegeta- 30,00,000 Kalani (RUD-74) (RUD-75) Bank bles 16,23,18,123 10.2 As evident from the table above, a sum of Rs. 16,23,18,123 /- has been credited in 08 bank accounts as mentioned above from Arvind Kalani and Amit Kalani and sum of Rs.15,65,00,116/- have been debited to following 14 individuals/entity of 2nd Stage transaction for the purpose of layering.
STAGE-2 LAYERING TABLE 56 SUMMARY OF STAGE-2 TRANSACTIONS IN FIR 630/2022 Name of the Counterparty Counterparty Name Counterparty Account Sum of Credit Sum of Debit entity Bank Adarsh Trans-
Century Enterprises 057763300002360 YES BANK - 1,79,10,000 port M.M. Fruits & Veg-
248405500165 ICICI BANK 1,28,10,000 -
etables
Nile Traders 053905500700 ICICI BANK 50,00,000 -
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 100 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Name of the Counterparty Counterparty Name Counterparty Account Sum of Credit Sum of Debit entity Bank Deepak Soni 9220200389936406 AXIS BANK 53,73,229.85 - M.M. Fruits & Veg-
248405500165 ICICI BANK 39,80,620 -
etables
Amanulla Nakeshatra Traders 46963300003301 YES BANK - 1,25,00,000
Ravula Rajendra
092205008244 AXIS BANK - 30,30,000
Prasad
Shriram Enterprises 046963300003108 YES BANK - 2,95,00,000
Ashok
Century Enterprises 057763300002360 YES BANK - 1,60,00,000
Rasalkar
AXIS
Deepak Soni 922020038936406 11,008.85 -
BANK
M.M. Fruits & ICICI
248405500165 53,81,646 -
Vegetables BANK
Century ICICI
Nile Traders 053905500700 55,00,000 -
Enterprises BANK
Farzana Century Enterprises 057763300002360 YES BANK - 93,00,000
M.M. Fruits & ICICI
248405500165 2,39,96,648 -
Vegetables BANK
Nakshatra Traders 046963300003301 YES BANK - 65,00,000
ICICI
Nile Traders 053905500700 80,00,000 -
BANK
R R Enterprises 004863300005292 YES BANK - 1,38,70,000
ICICI
Adarsh Transport 177105000977 - 8,20,000
BANK
Century Enterprises 057763300002360 YES BANK - 45,00,000
Kedar
M.M. Fruits & ICICI
Chandershekar 248405500165 1,40,00,000 -
Vegetables BANK
Sinasangli
Nakshatra Traders 046963300003301 YES BANK - 1,43,00,000
ICICI
Nile Traders 053905500700 30,00,000 -
BANK
R R Enterprises 004863300005292 YES BANK - 19,30,000
ICICI
Adele Rajesh 322205500398 40,50,200 -
BANK
AXIS
Deepak Soni 922020038936406 1,57,30,730 -
BANK
Dhanraj Metal 1342102000032346 IDBI BANK 10,62,000 -
Nakshatra Traders 46963300003301 YES BANK - 2,81,00,000
Nakshatra ICICI
Nile Traders 053905500700 60,00,000 -
Traders BANK
Narella M.M. Fruits & ICICI
248405500165 10,00,000 -
Shivaappa Vegetables BANK
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 101 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Name of the Counterparty Counterparty Name Counterparty Account Sum of Credit Sum of Debit entity Bank Krishna ICICI Nile Traders 053905500700 10,91,000 -
BANK
AXIS
Deepak Soni 922020038936406 31,014.75 -
BANK
Ravula
Muhammed Shafi ICICI
Rajendra 265405000219 - 2,70,000
Arakkal BANK
Prasad
Nakshatra Traders 46963300003301 YES BANK - 85,00,000
ICICI
Nile Traders 053905500700 6,00,000 -
BANK
Century Enterprises 057763300002360 YES BANK - 19,00,000
M.M. Fruits & ICICI
Rekha Sonde 248405500165 18,03,000 -
Vegetables BANK
Nakshatra Traders 46963300003301 YES BANK - 19,00,000
Abdul Kader H B
0516858000011762 YES BANK 20,05,000 -
Ltd
ICICI
Adele Rakesh 322205500398 1,16,29,100 -
BANK
Muhammed Shafi ICICI
S Barani 265405000219 - 20,00,000
Arakkal BANK
Nakshatra Traders 46963300003301 YES BANK - 3,85,50,000
Shriram Enterprises 046963300003108 YES BANK - 60,00,000
Shriram ICICI
Adele Rakesh 322205500398 20,00,000 -
Enterprises BANK
Motown Exim Pvt. AXIS
9220200041841784 - 1,60,99,999
Ltd. BANK
Silvershine AXIS
922020021957935 - 2,05,68,000
Warehouse Pvt. Ltd. BANK
Century Enterprises 057763300002360 YES BANK - 4,80,00,000
Subashin AXIS
Deepak Soni 922020038936406 22,11,900 -
Gnanasvelu BANK
M.M. Fruits & ICICI
248405500165 1,87,73,018 -
Vegetables BANK
Nakshatra Traders 046963300003301 YES BANK - 35,00,000
ICICI
Nile Traders 053905500700 4,60,000 -
BANK
Grand Total 15,65,00,116 30,05,47,999
10.3 Further, hereinafter third stage of layering is explained by the table.
STAGE 3 LAYERING Directorate of Enforcement Vs. Ashish Kakkar & Another Page 102 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 TABLE 58 SUMMARY OF STAGE-3 TRANSACTIONS IN FIR 630/2022 Counterpar Name of the Counterparty Sum of Counterparty Party ty Bank Sum of Credit Party Account Debit Name Adarsh Kedar Chandershekhar 136105500139 ICICI Bank 8,20,000 Transport Sinais ingbal Adarsh Transport 177105000977 ICICI Bank 1,79,10,000 Ashok Rasalkar 139205006001 ICICI Bank 1,60,00,000 Brightsuns Tradexim Pvt. 92202003396471 AXIS Bank 70,00,000 Ltd. 0 Farzana 603505016265 ICICI Bank 93,00,000 Kedar Chandershekhar 136105500139 ICICI Bank 45,50,000 Sinais ingbal Century Enterprises Motown Exim Pvt. Ltd 92202004184178 AXIS Bank 31,00,000 4 Rekha Sonde 101605001793 ICICI Bank 19,00,000 Silvershine Warehouse 92202002195793 AXIS Bank 3,11,00,000 Pvt. Ltd. 5 Subashini Gnanavelu 108205003534 ICICI Bank 4,80,00,000 92202003396496 Zlow Industries Pvt. Ltd. AXIS Bank 52,00,000 9 Astoria Exim Private 05501010000796 Motown J&K Bank 1,44,30,500 Limited 3 Exim Pvt.
Ltd. 04696330000310
Shriram Enterprises YES Bank 1,60,99,999
8
Muhamed Ravula Rajendra Prasad 92205008244 ICICI Bank 2,70,000
Shafi Arakkal S Barani 027505009915 ICICI Bank 20,00,000
Amanulla 778805500051 ICICI Bank 1,25,00,000
Farzana 603505016265 ICICI Bank 65,00,000
Kedar Chandershekhar
136105500139 ICICI Bank 1,43,00,000
Sinais ingbal
92202004184178
Motown Exim Pvt. Ltd. AXIS Bank 1,87,80,000
4
Muhamed Shafi Arakkal 265405000219 ICICI Bank 2,81,00,000
Nakshatra
Traders Ravula Rajendra Prasad 92205008244 ICICI Bank 85,00,000
S Barani 027505009915 ICICI Bank 3,35,50,000
Silvershine Warehouse 92202002195793
AXIS Bank 66,32,000
Pvt. Ltd. 5
Subashini Gnanavelu 108205003534 ICICI Bank 35,00,000
92202003396496
Zlow Industries Pvt. Ltd. AXIS Bank 2,78,00,000
9
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 103 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Rekha Sonde 101605001793 ICICI Bank 19,00,000 Brightsuns Tradexim Pvt. 92202003396471 AXIS Bank 28,00,000 Ltd. 0 Farzana 603505016265 ICICI Bank 1,38,70,000 Kedar Chandershekhar 136105500139 ICICI Bank 19,30,000 Sinais ingbal RR Enterprises 92202004184178 Motown Exim Pvt. Ltd. AXIS Bank 24,00,000 4 Silvershine Warehouse 92202002195793 AXIS bank 1,24,00,000 Pvt. Ltd 5 92202003396496 Zlow Industries Pvt. Ltd AXIS bank 55,28,000 9 Ravula Rajendra Amanulla 778805500051 ICICI bank 30,30,000 Prasad Amanulla 778805500051 ICICI bank 2,95,00,000 92202004184178 Motown Exim Pvt. Ltd AXIS bank 24,16,092 4 Shriram Enterprises S Barani 027505009915 ICICI bank 60,00,000 Silvershine Warehouse 92202002195793 AXIS bank 26,96,303 Pvt. Ltd 5 Astoria Exim Private 05501010000796 Silvershine J&K bank 3,82,84,206 Limited 3 Warehouse Pvt. Ltd 04696330000310 Shriram Enterprises YES bank 2,05,68,000 8 18,05,67,10 Grand Total 30,05,47,999 3 10.4 As evident from the table above, a sum of Rs. 30,05,47,999 /- has been credited in the bank accounts as mentioned above from 3rd Stage entities and sum of Rs.18,05,67,103/- has been debited to following 05 individuals/entity of 4th Stage transaction for the purpose of layering.
STAGE 4 LAYERING TABLE 60 SUMMARY OF STAGE-4 TRANSACTIONS IN FIR NO. 630/2022 Name of the Counterparty Counterp Sum of Counterparty Name Sum of Debit Party Account arty Bank Credit Astoriaa Exim Motown Exim Pvt. AXIS 922020041841784 1,44,30,500 Private Limited Ltd. BANK Directorate of Enforcement Vs. Ashish Kakkar & Another Page 104 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 SUMMARY OF STAGE-4 TRANSACTIONS IN FIR NO. 630/2022 Silvershine Warehouse AXIS 922020021957935 3,62,84,208 Pvt. Ltd. BANK J&K Astoria Exim Pvt. Ltd. 055010100007963 29,41,90,600 Bank YES Brightsuns Century Enterprises 057763300002360 70,00,000 BANK Tradexim Pvt.
Motown Exim Pvt. J&K
Ltd. 055010970000006 1,87,00,000
Ltd. Bank
YES
R R Enterprises 4863300005292 28,00,000
BANK
J&K
Astoria Exim Pvt. Ltd. 055010100007963 46,17,52,156
Bank
YES
Century Enterprises 057763300002360 31,00,000
BANK
Motown Exim Pvt. J&K
055010970000006 6,70,85,000
Motown Exim Ltd. (RUD-103) Bank
Pvt. Ltd. YES
Nakshatra Traders 46963300003301 1,87,80,000
BANK
YES
R R Enterprises 4863300005292 24,00,000
BANK
YES
Shriram Enterprises 046963300003108 24,16,091.59
BANK
J&K
Astoria Exim Pvt. Ltd. 055010100007963 22,12,27,349
Bank
YES
Century Enterprises 057763300002360 3,11,00,000
BANK
Silvershine
YES
Warehouse Pvt. Nakshatra Traders 46963300003301 66,32,000
BANK
Ltd.
YES
R R Enterprises 4863300005292 1,24,00,000
BANK
YES
Shriram Enterprises 046963300003108 26,96,303.35
BANK
J&K
Astoria Exim Pvt. Ltd. 055010100007963 23,81,49,883
Bank
Zlow Industries YES
Century Enterprises 057763300002360 52,00,000
Pvt. Ltd. BANK
Motown Exim Pvt. J&K
055010970000006 5,27,50,000
Ltd. Bank
YES
Nakshatra Traders 46963300003301
BANK
YES
R R Enterprises 4863300005292
BANK
Grand Total 1,35,38,54,988 18,05,67,102
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 105 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 10.5 It is alleged that the funds credited in the bank accounts of Century Enterprises and Nakshatra Traders were further transferred into Stage 4 bank accounts pertaining to 4 companies namely, Brightsuns Tradexim Private Limited, Zlow Industries Private Limited, Motownn Exim Private Limited, Silvershine Warehouse Private Limited which were having dummy Directors but were actually controlled by Ashish Kakkar. That total debit amount in the relevant period in these companies is much higher i.e. Rs.1,35,38,54,988/- than the credit of Rs.18,05,67,102/- in their accounts (credited from the 3 rd layer of shell companies as found during investigation while trailing the proceeds of crime generated from defrauding Arvind Kalani and Amit Kalani). This is due to the fact that these accounts are used to accumulate the proceeds of crime from various victims of cybercrimes. The same has been shown in Table 61. 10.6 Allegedly, the funds accumulated in the above mentioned 04 bank accounts are ultimately transferred to the bank account of M/ s Astoriaa Exim Private Limited and M/ s Motownn Exim Private Limited (having dummy directors but actually controlled by Ashish Kakkar) from where it is remitted out of India in lieu of payments for imports by Ashish Kakkar. Details of entities and its bank accounts from which funds have been siphoned off are given in Table 62. 10.7 Thus, it is alleged that the amount of Rs. 157.69 Crores is nothing but proceed of crime generated from various cyber frauds going all over the country including the proceeds generated from the crime registered vide FIR No. 630 of 2022 at PS- Mahamandir, Jodhpur, Rajasthan (RUD- 3).
11. Whereas, the defence has putforth that as per flow chart at pg. 163 of the Prosecution Complaint, the case of ED has been that the funds were ultimately credited in the bank accounts of the company controlled by the accused persons at the fourth level but the State of Rajasthan stated on an Directorate of Enforcement Vs. Ashish Kakkar & Another Page 106 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 affidavit filed before Hon'ble Supreme Court of India in anticipatory bail application of an alleged accused in the scheduled offence in SLP No. (Crl.) 14503 of 2023 in FIR No. 630/2022 PS Cyber Crime, that Rs 11.03 Crores out of the 'proceeds of crime' amounting to Rs 16.26 Crores, were frozen at the hands of the Bank account holder itself and were released to the complainant thereafter. For the remaining amount, the police have stated that the flow of funds ends at M/s Sagar Empire Jewels and RHC Global Exports, from which the remaining amount of Rs 5.23 Crores was sent to Hong Kong based companies being Fu Lee Hong Coy Ltd. Mars India & Comm Services Ltd. and not credited to accounts of Astoria Exim Private Ltd. and Motown Exim Private Ltd., alleged to be companies belonging to the accused. The copy of the said affidavit has been filed on record.
Court's Observations
12. The factual narration discloses that the complainant, Mr. Arvind Kalani, fell victim to a sophisticated cyber fraud perpetrated under the guise of a lucrative investment-cum-multi-level marketing scheme, promising assured and exorbitant returns. Acting upon such inducement, the complainant is stated to have transferred an aggregate sum of ₹16,26,21,387/- through as many as 101 transactions, routed from his own bank account maintained with Axis Bank as well as from the account of his brother, Mr. Amit Kalani. 12.1 As per the case set up by the Enforcement Directorate, a substantial portion of the said amount, approximating ₹16.22 crores, was further disseminated into eight distinct bank accounts held in the names of various individuals/entities, as detailed in Table 52 of the main complaint, namely: (i) YSM Enterprises, (ii) SRK Trading Ltd., (iii) Adele Rakesh Ltd., (iv) Abdul Kedar HE Ltd., (v) Soni Ltd., (vi) Dhanraj Metal, (vii) Mukesh Kumar Ltd. (Nile Traders), and (viii) M M Directorate of Enforcement Vs. Ashish Kakkar & Another Page 107 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Fruit & Veg Ltd. It is, however, emphatically asserted that none of the aforesaid entities are either owned or controlled or in any manner connected with the present accused.
12.2 The prosecution further alleges that, through multiple stages of layering, the funds were ultimately consolidated to the tune of ₹18,05,07,102/- and routed into five corporate entities, as enumerated in Table 60 of the main chargesheet, namely: (i) Brightsuns Tradexim Pvt. Ltd., (ii) Motownn Exim Pvt. Ltd., (iii) Silvershine Warehouse Pvt. Ltd., (iv) Slow Industries Pvt. Ltd., and (v) Astoriaa Exim Private Limited. It is further alleged that from Astoriaa Exim Private Limited and Motownn Exim Pvt. Ltd., certain amounts were transferred outside India, particularly to jurisdictions such as Hong Kong and Dubai, as reflected in the flow chart at page 165 of the main complaint. 12.3 Significantly, reliance has been placed upon an affidavit filed by the State of Rajasthan before the Hon'ble Supreme Court in connection with the bail proceedings of one Sanjay Kumar Ghanshyambhai Moradiya in SLP (Crl.) No. 11930/2023. The said affidavit, which has been placed on record by the accused Ashish along with the written synopsis qua arguments on point of charge, has not been controverted by the Enforcement Directorate either during course of arguments herein or in the earlier proceedings of this matter and, hence it has reached finality. A perusal thereof reveals that an amount of approximately ₹11.03 crores has already been resituated to the complainant pursuant to Court orders, while a further sum of about ₹5 crores remains to be recovered. The affidavit further records that certain high-turnover entities, namely Sagar Empires and RHC Global, were the ultimate beneficiaries of the fraud proceeds, from whose account's funds were remitted to Hong Kong. 12.4 It is of considerable import that neither Sagar Empires nor RHC Global are alleged to be owned or controlled by the present accused, and yet, as per the Directorate of Enforcement Vs. Ashish Kakkar & Another Page 108 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 investigation conducted by the Rajasthan Police, these entities constitute the conduits through which the funds were transmitted abroad. In stark contrast, the Enforcement Directorate, in its investigation, attributes the outward remittance of the very same proceeds of crime to entirely different entities, namely Astoriaa Exim Private Limited and Motownn Exim Pvt. Ltd. 12.5 This glaring inconsistency between the findings of two governmental investigating agencies, both acting within the domain of the same predicate offence, casts a serious shadow of doubt on the prosecution narrative. Moreover, it is noteworthy that no independent or specific investigation appears to have been conducted by the Enforcement Directorate with respect to the entities Sagar Empires and RHC Global, despite their explicit mention in the affidavit filed by the State of Rajasthan before the Hon'ble Supreme Court.
(iii) FIR No. 0048/2022 U/s 419 & 420 of IPC, 1860 and Section 66D IT Act, 2000, PS Cyber Crime Gautam Budh Nagar, Uttar Pradesh (RUD-4)
13. Insofar as FIR No. 48/2022 registered at Police Station Cyber Crime, Gautam Budh Nagar is concerned, the prosecution case, in essence, is that the complainant, Ms. Prerna Yadav, was induced into a fraudulent scheme upon encountering an online advertisement on Facebook offering a part-time employment opportunity. Acting upon the representations so made, she registered herself through a link provided by the alleged fraudsters and initially deposited a sum of ₹100. Upon completion of the first assigned task, she received a sum of ₹132, thereby gaining confidence in the purported scheme. Subsequently, she was persuaded to deposit ₹500, upon which she received ₹1,430 after completion of further tasks.
13.1 Thereafter, the fraudsters, masquerading as "trading officers" on Telegram, induced her to invest further sums, including an amount of ₹1,000, which, Directorate of Enforcement Vs. Ashish Kakkar & Another Page 109 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 however, could not be withdrawn. Under continued inducement and misrepresentation, the complainant was compelled to deposit additional sums from time to time, culminating in a total loss of ₹12,12,093/-. 13.2 As per the investigation conducted by the Enforcement Directorate, the statement of Ms. Prerna Yadav was recorded under Section 50 of the Prevention of Money Laundering Act, 2002. The financial trail, as delineated in Table 30 of the first supplementary complaint, reveals that out of the aforesaid amount, a sum of ₹3,35,000/- and ₹2,77,893/- was transferred from the account of Ms. Prerna Yadav to an entity styled as "Capric" (Proprietor: Laxmanan Soundarajan), along with certain smaller transfers to other entities. 13.3 It is further alleged that from the said entity Capric, a sum of ₹46,80,000/- was transferred to Mark Enterprises, as reflected in Table 31 of the first supplementary complaint. Thereafter, from Mark Enterprises, an aggregate amount of ₹8,97,15,348/- is stated to have been transferred to the following five entities, as detailed in Table 32 of the said complaint:
(a) Silvershine Warehouse Private Limited,
(b) Brightsuns Tradexim Private Limited,
(c) Trioasm India Private Limited,
(d) AR Enterprises, and
(e) Motownn Exim Private Limited.
14. Per contra, it has been agitated by the defence that as alleged the funds were transferred to various Bank accounts before being credited in the Bank accounts allegedly controlled by the accused herein. However, no investigation has been carried out from the Bank account holders in-between. Without any proper investigation and completing the entire chain of the transactions, it cannot be alleged that the Bank accounts allegedly under control of the accused were having 'proceeds of crime' generated from the said FIRs.
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 110 of 117ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Court's observation 15 A critical scrutiny of the investigation reveals a conspicuous and material lacuna. Despite the admitted position that the complainant was defrauded of approximately ₹12.12 lakh and that a substantial portion thereof was routed to Capric, no meaningful investigation appears to have been undertaken by the Enforcement Directorate either with respect to the said entity Capric or the downstream entities to which the funds were subsequently transferred, for reasons best known to the investigating agency. 15.1 Further, while it is alleged that an amount of ₹46.80 lakh was transferred from Capric to Mark Enterprises, and thereafter a sum of ₹8.97 crore was transferred from Mark Enterprises to the aforesaid five entities allegedly associated with the accused/applicant, the investigation is conspicuously silent as to the underlying purpose or commercial rationale for such transfers. No inquiry appears to have been conducted to ascertain the nature, source, or legitimacy of these transactions.
15.2 More importantly, there is a complete absence of any effort on the part of the Enforcement Directorate to verify whether the amounts so transferred from Capric to Mark Enterprises, or from Mark Enterprises to the said five entities, in any manner include or are traceable to the funds allegedly defrauded from Ms. Prerna Yadav. In the absence of such foundational verification, the mere existence of subsequent high-value transactions cannot, ipso facto, lead to an inference that the proceeds of crime pertaining to Ms. Prerna Yadav were ultimately routed to the accounts of the said five entities. 15.3 In these circumstances, it cannot, at this stage, be conclusively or even prima facie inferred that the amount allegedly defrauded from Ms. Prerna Yadav Directorate of Enforcement Vs. Ashish Kakkar & Another Page 111 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 has been laundered through or has reached the entities purportedly owned or controlled by the accused/applicant.
Other Cyber Crime FIRs ie FIR No. 0070/2022 U/s 419 & 420 of IPC, 1860 PS Cyber Crime Gurugram Haryana (RUD-5) & FIR No. 0036 dated 06.08.2022 U/s 420 of IPC, 1860 PS Cyber Crime Rohtak, Haryana (RUD- 6)
16. It has been the case of the Complainant/ED that the bank accounts used in layering of Proceeds of Crime are Mule Accounts which refers to an account used by criminals to facilitate illicit activities such as money laundering or fraud. These mule accounts are opened and operated for a small period and gets closed as soon as the purpose of opening the account is achieved. Investigation has revealed that multiple Mule accounts (which have been operational for only a small period of time) were used to siphon off the PoC as per detail given in Table 64, of the main complaint.
16.1 That the bank accounts alleged to be used for layering of proceeds of crime and its siphoning off were used as accumulation accounts, where proceeds of crime generated from various cyber-frauds by defrauding several victims were accumulated in a short span of time and then siphoned off. 16.2 The details of alleged total Proceeds of crime in which Ashish Kakkar has been found to be involved is given in Table 65. Thus, Ashish Kakkar alleged to be knowingly involved in processes and activities connected with proceeds of crime amounting to ₹64,91,82,68,150/- including its generation, concealment, possession, acquisition, and projection as tainted property.
Court's Observation
17. The Directorate of Enforcement has filed its written explanation in earlier proceedings before Ld. Predecessor of the Court contending, inter alia, that in Directorate of Enforcement Vs. Ashish Kakkar & Another Page 112 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 relation to FIR No. 70/2022, the only material procured during the course of investigation is the correspondence addressed by the Gurugram Police to Axis Bank, pursuant to which Account No. 922020041841784 standing in the name of M/s Motownn Exim Private Limited--allegedly a shell entity under the control of the accused--was frozen on 09.05.2023. It is submitted that beyond the said act of freezing, no further investigative steps have been undertaken by the Enforcement Directorate. Consequently, there is a conspicuous absence of any inquiry or material elucidating the role of the accused or tracing the flow of funds from the predicate offence, i.e. FIR No. 70/2022, into the accounts of M/s Motownn Exim Private Limited.
18. Similarly, with respect to FIR No. 36/2022 registered at Police Station Cyber Crime, Rohtak, Haryana, it has been averred that the only document obtained by the Enforcement Directorate pertains to the freezing of Account No. 921020045667064 maintained in the name of M/s Trioasm India Private Limited, a purported shell company allegedly controlled by accused Ashish Kakkar and Punit Kakkar. It is further submitted that save and except the procurement of the aforesaid freezing order, no substantive investigation has been carried out by the Enforcement Directorate in connection with the said FIR. Even, there exists no sufficient material on record demonstrating either the involvement of the accused persons or the manner in which the proceeds of crime arising out of FIR No. 36/2022 were channelized into the accounts of M/s Trioasm India Private Limited.
19. The Complainant/ED has failed to investigate key intermediary entities forming part of the alleged money trail. The absence of any inquiry into such entities breaks the chain of causation and renders the alleged linkage between the defrauded amount and the accused's entities speculative. No material has been Directorate of Enforcement Vs. Ashish Kakkar & Another Page 113 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 placed to show that the funds received by the alleged entities of the accused include the amount defrauded from the complainant
20. Consequently, it appears prima facie that the Directorate of Enforcement has failed to satisfy the second essential limb as laid down in Vijay Madanlal Choudhary (supra), namely, that the property in question was derived or obtained as a result of criminal activity. The prosecution case rests on conjecture and presumption rather than substantive evidentiary linkage.
With respect to the complaints: (a) App-In Complaint No. 543/2022 at Cyber Crime Police Station, Ahmedabad, Gujarat, (b) NCRP Complaint no. 984/2022 dated 18.02.2023 at Cyber Crime Police Station, Rajkot, Gujarat, (c) Cyber Crime Cell Application no 2307B/2022 dated 22.12.2022 filed at Cyber Crime Cell, Mira Bhayandar, Vasai Virar Police Commissionerate, Maharashtra
21. The ED has allegedly connected accused Ashish with the aforesaid cyber- crime frauds alleging only on the basis that certain documents ( RUD-43 including following documents) were recovered from the mobile phone of Shri Ashish Kakkar:
a. Screenshot of complaint No. 31111220080693 dated 28/11/2022, related to online financial fraud recovered from the mobile of Shri Ashish Kakkar (at PS-Anjar, Kachh East, Gandhidham, Gujarat). b. Screenshot of complaint No. 31111220079820 dated 25/11/2022, related to online financial fraud recovered from the mobile of Shri Ashish Kakkar (at PS-Anjar, Kachh East, Gandhidham, Gujarat) c. Copy of correspondence No. 3054-5A dated 01.12.22, between PS-Cyber Crime, Rohtak, Haryana and Axis Bank for debit freeze the bank account No. 921020045667064 (Trioasm Tradexim Pvt. Ltd. controlled by Shri Ashish Kakkar) in connection with FIR No. 36 dated 06.08.2022 registered under sections 420 & 467 of IPC.Directorate of Enforcement Vs. Ashish Kakkar & Another Page 114 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 d. Screenshot of correspondence dated 25.11.22 between Cyber CID Police Gujarat and Axis Bank for marking lien from Bank Account No. 922020033964969 of M/ s Zlow Industries Pvt. Ltd. controlled by Shri Ashish Kakkar in case of online UPI fraud.
Court's Observations
22. It is now trite, in view of the authoritative pronouncement of the Hon'ble Supreme Court in Vijay Madanlal Choudhary (supra) that the offence of money laundering under Section 3 of PMLA is not a standalone offence, but is inextricably dependent upon the existence of a scheduled (predicate) offence. The said offence is parasitic in nature, deriving its very sustenance from the proceeds generated through criminal activity relatable to a scheduled offence. Absent such foundational fact, the edifice of money laundering is rendered wholly illusory.
23. The position is further fortified by the principles echoed in Pankaj Bansal v. Union of India reported in (2023) SCC OnLine SC 1244, wherein the Hon'ble Supreme Court has underscored the necessity of strict adherence to procedural safeguards while exercising the extraordinary powers vested in the Enforcement Directorate.
24. In the present case, the absence of any material demonstrating the existence of a scheduled offence, much less its formal registration, strikes at the very root of the case of the Enforcement Directorate.
Applicability of Section 24 PMLA, 2002
25. The prosecution has sought to rely upon the statutory presumption under Section 24 of the PMLA. However, it is trite that the presumption under Section 24 is not absolute and arises only upon the prosecution first discharging its initial Directorate of Enforcement Vs. Ashish Kakkar & Another Page 115 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 burden of establishing the foundational facts, particularly the existence of "proceeds of crime."
26. As clarified in Vijay Madanlal (supra), unless it is prima facie shown that the property in question has been derived or obtained as a result of criminal activity relating to a scheduled offence, the burden cannot be shifted upon the accused.
27. In the present case, as discussed hereinafter, the prosecution has failed to establish even the foundational requirement of derivation of property from criminal activity. Consequently, the presumption under Section 24 does not get triggered.
Conclusion
28. At the stage of charge, the Court is required to assess whether the material placed on record discloses grave suspicion against the accused warranting framing of charge. However, it is equally well-settled that where the material fails to disclose the essential ingredients of the alleged offence, the accused is entitled to discharge.
29. In the light of this background reliance is placed upon the law laid down by Hon'ble Supreme Court of India in the case titled as Union of India Vs Prafulla Kumar Samal reported in (1979) 3 SCC 4 that in case two views are possible, at this stage of framing of charge, the view favouring the accused should be adopted/taken.
30. From the cumulative assessment of the material on record, this Court finds:
The prosecution has failed to establish the existence of "proceeds of crime" attributable to the accused;
The essential nexus between the alleged funds and any scheduled offence is absent;
The money trail is incomplete and suffers from significant investigative gaps;Directorate of Enforcement Vs. Ashish Kakkar & Another Page 116 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024 Material inconsistencies between different investigations further erode the prosecution's case;
The statutory presumption under Section 24 PMLA is not attracted in the absence of foundational facts.
31. Hence, as a squeal to above discussion, the material produced by ED in the form of relied upon documents is not sufficient to show prima facie case or create grave suspicion u/s 3 /4 of PMLA against any of the accused persons in the present matter. The Court is of the considered opinion that no grave suspicion arises against the accused warranting framing of charge under the PMLA. Continuation of proceedings in the absence of foundational facts would amount to abuse of the process of law and would subject the accused persons to unwarranted prosecution. Therefore, all the accused persons namely Ashish Kakkar and the respective companies (i.e. accused No. 1 to 23) and Puneet Kumar and the respective companies (ie. Accused No. 24 to 47) are hereby discharged under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002.
32. Bail bonds, if any, stand cancelled. Sureties are discharged. Endorsements, if any, be also cancelled and documents if any, retained on record be returned as per rules.
33. File be consigned to Record Room.
Pronounced in the open Court on 15.04.2026 (Shefali Barnala Tandon) Additional Sessions Judge -06, NDD, PHC, Delhi Directorate of Enforcement Vs. Ashish Kakkar & Another Page 117 of 117 ECIR No. - ECIR/STF/02/2024 dated 23.01.2024