Himachal Pradesh High Court
Nagar vs Directorate Of Enforcement 2019(9) Scc on 10 November, 2022
Author: Sandeep Sharma
Bench: Sandeep Sharma
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
ON THE 10th DAY OF NOVEMBER , 2022
.
BEFORE HON'BLE MR. JUSTICE SANDEEP SHARMA
CRIMINAL MISC. PETITION(MAIN) NO. 2288 OF 2022
Between: `
DR.LAKHWINDER SINGH S/O LATE SHRI
SARDAR JAGMAIL SINGH, R/O HOUSE
NO.1238, SECTOR 9091, JLPL, MOHALI, SAS
NAGAR, PUNJAB.(AGED 50 YEARS)
....PETITIONER
(BY MR. N.S.CHANDEL, SENIOR ADVOCATE
WITH MR. SIDDHARTH SETH, ADVOCATE)
AND
DIRECORATE OF ENFORCEMENT,
GOVERNMENT OF INDIA, SUB ZONAL
OFFICE, SHIMLA, THROUGH ITS ASSISTANT
DIRECTOR.
....RESPONDENTS
(BY MR. BALRAM SHARMA, DEPUTY
SOLICITOR GENERAL WITH MR.
ANIRUDH SOOD, MR. AJEET SINGH
SAKLANI, Advocates)
Whether approved for reporting? Yes
This petition coming on for order this day, the Court passed the following:
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ORDER
Bail petitioner, namely Dr. Lakhwinder Singh, who is behind the bars since .
26.9.2022, has approached this Court in the instant proceedings filed under Section 439 of the Code of Criminal Procedure, praying therein for grant of regular bail in case ECIR/SHSZO/02/2022, dated 20.06.2022, registered at Shimla, Sub Zonal Office, Directorate of Enforcement, under Sections 3 and 4 of Prevention of Money Laundering Act hereinafter PMLA.
2. Pursuant to notice issued to the instant proceedings in terms of order dated 17.10.2022, respondent-State/ Directorate of Enforcement has filed the status report and Mr. Aman Mor, Assistant Director of Enforcement has come present with record. Close scrutiny of status report/ record reveals that Himachal Pradesh Police registered FIR No. 252 of 2021 under Sections 379, 406, 34 IPC and Section 21 of the Mines and Minerals (Development and Regulation) Act, 1957. After having completed investigation in the aforesaid FIR, police has filed challan under Section 173 Cr.P.C., against Vishal @ Vicky and 15 other persons for their having allegedly committed offence punishable under Section 120-B, 379 of Indian Penal Code and under Section 21 of the Mines and Minerals (Development and Regulation) Act, 1957. Petitioner herein was neither named in the FIR as detailed herein above nor was made accused in final report filed under Section 173 Cr.P.C.
in the Court at Additional Chief Judicial Magistrate, Una. Besides above, police also shared information with regard to filing of aforesaid FIR No.252 of 2021 and registration of case under Section 120-B IPC with Directorate of Enforcement.
::: Downloaded on - 15/11/2022 20:30:48 :::CIS3. Having taken note of the fact that accused named in the aforesaid FIR were also charged with the offence punishable under Section 120-B, of IPC, which is a scheduled .
offence under PMLA, Directorate of Enforcement with a view to investigate the matter registered Enforcement Case Information Report (hereinafter referred to as 'ECIR') as detailed herein above. During investigation of aforesaid ECIR, police conducted investigation against certain persons named in the FIR bearing No.252 of 2021 and during investigation found involvement of present bail petitioner, as such, while exercising powers under Section 17 of Prevention of Money Laundering Act, 2002, raided his residential premises as well as business premises and allegedly recovered some incriminating documents suggestive the fact that petitioner has indulged in the offence punishable under Sections 3 & 4 of PMLA. On the basis of aforesaid material collected during raid, Enforcement Directorate exercising powers under Section 19 of Prevention of Money Laundering Act, arrested bail petitioner on 26.09.2022 and within 24 hours of arrest of the petitioner, he was produced before the Special Judge at Dharamshala, who sent the bail petitioner to Enforcement Directorate custody for interrogation. However, after 14 days of arrest, he was sent to judicial custody and since then he is lodged in District Jail Bangarh, Una, H.P.
4. Since investigation is complete and nothing remains to be recovered from him coupled with the fact that he is in judicial custody for over a month and his health is deteriorating the petitioner has approached this Court for grant of regular bail.
::: Downloaded on - 15/11/2022 20:30:48 :::CIS5. Shri Nareshwar Singh Chandel, learned Senior counsel duly assisted by Shri Sidharth Seth, Advocate, vehemently argued that petitioner has been falsely implicated and .
bare perusal of the material collected on record by Investigating Agency, nowhere suggests that the petitioner has committed offence, if any, punishable under the provisions of Sections 3 & 4 of PMLA. While inviting attention of this Court to FIR No. 252 of 2021 registered by police of H.P. under Section 379, 406, 34 IPC and under Section 21 of the Mines and Minerals (Development and Regulation) Act, 1957. Mr. Chandel, argued that the petitioner herein was never named in the FIR, which otherwise read in its entirety suggests that allegations against the accused named in the FIR are/were that they were found stealing sand from the river Swan Khad Una, which areas was otherwise not leased out to present bail petitioner. He submitted that since nothing was found against the present bail petitioner in the aforesaid FIR, he was not made an accused in the challan filed in the competent court of law, there was no occasion, if any, for Enforcement Directorate to record ECIR against bail petitioner, especially when in earlier FIR as detailed in above there was no evidence that the petitioner after having indulged in criminal activity, which in this case is illegal mining, used proceeds of the crime for procuring property/money, which is subsequently intended to be projected as untainted. Mr. Chandel, learned Senior Counsel, further submitted that otherwise also no offence much less scheduled in the PMLA ever came to be committed by the bail petitioner, as such, he could not be proceeded against under Sections 3 & 4 of the PMLA.
::: Downloaded on - 15/11/2022 20:30:48 :::CIS6. Lastly, Mr. Chandel, learned Senior Counsel, submitted that medical evidence adduced on record along with the petition clearly reveals that the petitioner is highly .
diabetic, overweight and has already undergone heart-surgery as a result of which, it is not safe to keep him behind bars because at any time, he may require immediate medical intervention. While inviting attention of this Court to the material placed on record with regard to treatment being given to the bail petitioner, Mr. Chandel argued that the petitioner is also suffering from acute liver cirrhosis of first stage, which requires constant medication.
Mr. Chandel further argued that though petitioner deserves to be enlarged on bail on the ground that no case, much less case under Section 3 & 4 of Prevention of Money Laundering Act, 2002 is made out against the bail petitioner, but even otherwise, this Court having taken note of medical condition of bail petitioner coupled with the fact that he is in judicial custody for over a month now and nothing remains to be recovered from the bail petitioner, may order his enlargement on bail, subject to stringent conditions.
7. Sh. Balram Sharma, learned Deputy Solicitor General duly assisted by Mr. Anirudh Sood and Mr. Ajeet Singh Saklani, Advocates, while refuting aforesaid submissions made on behalf of the petitioner though admitted that bail petitioner is in Judicial custody and nothing remains to recovered from him but contended that since investigation is still not complete and as such, it may not be in the interest of justice to enlarge petitioner on bail. Mr. Balram Deputy Solicitor General further submitted that though information with regard to lodging of FIR No. 252 of 2021 at Police Station Sadar Una was shared by Police Department after their having filed challan in the aforesaid FIR ::: Downloaded on - 15/11/2022 20:30:48 :::CIS but ECIR, which is subject matter of the present case, was lodged against petitioner on the basis of certain disclosure/information collected by the Enforcement of Directorate after .
having recorded statements of the accused named in the aforesaid FIR. Enforcement Directorate having found involvement of bail petitioner in money laundering case punishable under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 lodged ECIR as detailed herein above and thereafter exercising power under Section 17, raided his house as well business premises. He submitted that since incriminating evidence came to be collected from the house and business premises of the petitioner and such material was suggestive of violation of Sections 3 and 4 of PMLA, Enforcement Department reported the matter to police for taking appropriate action against the petitioner under Section 420 IPC and simultaneously started investigating case under Prevention of Money Laundering Act. He submitted that earlier FIR recorded by the police was neither made basis to register case against the petitioner under Sections 3 and 4 of Prevention of Money Laundering Act, 2002 nor evidence, if any, collected in that case is being used against the petitioner in the case at hand. Mr. Balram Sharma, learned Deputy Solicitor General further submitted that material collected on record at this stage cannot be shared with the accused because investigation is still pending but perusal of the same clearly reveals that bail petitioner after having indulged in criminal activity used the proceeds of the crime to procure/obtain property/wealth, which subsequently he attempted to project as untainted money and as such, he has been rightly booked Under Sections 3 and 4 of Prevention of Money Laundering Act.
::: Downloaded on - 15/11/2022 20:30:48 :::CIS8. While referring to Section 19 of the Prevention of Money Laundering Act, Mr. Balram Sharma, learned Deputy Solicitor General vehemently argued that on the basis .
of material collected during investigation, if investigating Officer has reasons to believe that any person is guilty of offence punishable under this Act, he can arrest such person and at that stage he is only required to be informed with regard to reason of his arrest but no material collected in evidence is required to be shared with him. while making his submissions, Mr. Balram Sharma, Deputy Solicitor General also made available one sealed envelop containing therein document allegedly recovered from the premises of the bail petitioner to demonstrate the manner in which, proceeds of the crime have been used. He further invited attention of this Court to Section 45 of the Act to state that bail in cases registered under PMLA cannot be granted mechanically, especially applying the parameters on the basis of which bail is considered/granted by the Court while exercising power under Sections 437, 438 and 439 in the offences punishable under various provisons of Indian Penal Code and other enactments.
9. While responding to the medical record placed on record, Mr. Balram Sharma, Deputy Solicitor General under instructions of Investigating Officer, present in the Court submitted that till the time bail petitioner was in custody of Enforcement Directorate, he was being provided best medical aid on daily basis. He further submitted that since bail petitioner is in jail, he has reason to presume and believe that as and when required, petitioner would be provided immediate medical aid by the jail Authorities and as such illness if any of the bail petitioner cannot be the ground to enlarge him on bail, especially ::: Downloaded on - 15/11/2022 20:30:48 :::CIS when challan is yet to be filed in the competent court of law. He further submitted that in the event of petitioner being enlarged on bail he may not flee from justice but may also tamper .
with the prosecution evidence and as such his prayer for grant of bail may be rejected.
10. Having heard learned counsel representing parties and perused material available on record this court finds that ECIR, which is subject matter of present case is outcome of FIR bearing No. 252 of 2021 registered at police Station Sadar, Una, under Sections 379, 406 and 34 of IP and Section 21 of Mines and Minerals (Development and Regulation) Act 1957, wherein though the bail petitioner was not named/arrayed as an accused but since accused named in the FIR were found to have committed offenece punishable under Section 120 B of Act, police of Himachal Pradesh shared information with Directorate of Enforcement with regard to registration of case. Neither in the FIR as detailed herein above nor in the challan filed under Section 173, petitioner ever came to be named as an accused. It is only after sharing of information by the State Police with Enforcement Directorate, that the Enforcement Directorate with a view to investigate criminal conspiracy punishable under Section 120-B of IPC, which is otherwise scheduled offence under PMLA, interrogated accused named in the FIR and from there, found some lead with regard to involvement of petitioner in cases of illegal mining. Though, investigation conducted by Enforcement Directorate reveals that bail petitioner herein was granted mining leases by the Industries Department, Himachal Pradesh and same are valid till date and are being renewed from time to time but since during investigation, Directorate of Enforcement found evidence that the present bail petitioner has indulged in the indiscriminate mining in Swan River ::: Downloaded on - 15/11/2022 20:30:48 :::CIS Una and earned huge money by illegal means and subsequently attempted to project the same as untainted property, it recorded ECIR against him and thereafter for investigation .
arrested him. As per Enforcement Department, ECIR as detailed herein above has been registered against petitioner under Sections 3 and 4 of Prevention of Money Laundering Act, 2002 , which reads as under:-
"3. Offence of money-laundering.--Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money- laundering. [Explanation.--For the removal of doubts, it is hereby clarified that,-- (i) a person shall be guilty of offence of r money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely:-- (a) concealment; or (b) possession; or (c) acquisition; or (d) use; or (e) projecting as untainted property; or
(f) claiming as untainted property, in any manner whatsoever;
(ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever.
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 proceeds of crime 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".::: Downloaded on - 15/11/2022 20:30:48 :::CIS
11. Bare perusal of Section 3 of Prevention of Money Laundering Act, 2002 reveals that whosoever directly or indirectly attempts to indulge or knowingly assists or .
knowingly is a party or is actually involved in any process of activities connected with proceeds of crime including his concealment, possession, acquisition or use and projecting/jclaiming it as untainted property shall be guilty of offence of money laundering, which is punishable under Section 4 of the Act, whereby rigorous imprisonment for a term which shall not be less than three years but may extend to seven years has been provided.
12. Careful, perusal of aforesaid provisions contained under Section 3, reveals that to book a person under section 3 of PMLA, it is incumbent upon investigating Agency i.e Enforcement Directorate to establish that person accused of Section 3 of PMLA Act, have firstly indulged in criminal activity as scheduled in the Act and thereafter possessed/acquired the proceeds of crime and thereafter the case used for acquiring property /wealth, which is subsequently tried to be projected as untainted property. No doubt if the provisions of section 3 of PMLA are read in entirety, it not only talks about procurement but also of concealment, possession and acquisition or use. So to attract aforesaid provision, Investigating Agency either is required to establish that proceeds from the crime were concealed or they were possessed or with the help of the and aid of the same, some property was acquired and same was used for some other purposes. At this stage, it would be apt to take note of definition of 'proceeds of crime' as given under Section 2 (u)which reads as under:-
2(u) "Proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of ::: Downloaded on - 15/11/2022 20:30:48 :::CIS criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad; Explanation-For the removal of .
doubts, it is hereby clarified that proceeds of crime including property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence".
13. "Proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad; it has been clarified by specifically providing explanation to the aforesaid definition that proceeds of crime including property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence, meaning thereby to attract Section 3 of the Act, firstly Investigating Agency is required to establish that person accused of having committed offence under Section 3 of PMLA derived or obtained directly or indirectly property/wealth by any criminal activity that too, relating to scheduled offence under PMLA. Hon'ble Apex Court in case titled as P. Chidambaram Vs. Directorate of Enforcement 2019(9) SCC 24, while interpreting Section 21 of Prevention of Money Laundering Act, which defines "scheduled offence" categorically held that scheduled offence " is sine qua non or norm for ::: Downloaded on - 15/11/2022 20:30:48 :::CIS the offence of Money Laundering, which would generate the money that is being laundered.
Hon'ble Apex Court has held as under in the judgment supra:
.
"25. Section 2(1) (y) of PMLA defines "scheduled offence", which reads as under:-
2. Definitions-(1) (y) "scheduled offence" means-
(i) the offences specified under Part A of the Schedule; or
(ii) the offences specified under Part B of the Schedule if the total value involved in such offences is one crore rupees or more; or (iii) the offences specified under Part C of the Schedule."
Scheduled offence is a sine qua non for the offence of money laundering which would generate the money that is being laundered. PMLA contains schedules which originally contained three parts, namely, Part A, Part B and C. Part A contains various paragraphs which enumerate offences under the Penal Code. 1860, Narcotic Drugs and Physhoitropic Substances Act, 1985, offences r under the Explosives Substances Act, 1908 and the offences under the Prevention of Corruption Act, 1988 (Para 8) etc. The Schedule was amended by Act 21 of 2009 (w.e.f. 1-6-2009). Section 13 of the Prevention of Corruption Act was inserted in Part A of the Schedule to PMLA by Amendment Act 16 of 2018 (w.e.f. 26-7-2018).
26. Section 3 of PMLA stipulates "money-launderig" to be an offence. Section 3 of PMLA states that whosoever directly or indirectly attempts to indulge or knowingly assist or knowingly is a party or is actually involved in any process or activity connected with the proceeds of the crime and projecting it as untained property shall be guilty of the offences of money-laundering. The provisions of PMLA including Section 3 have undergone various amendments. The words in Section 3 "with the proceeds of crime and projecting" has been amended as " proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming" by Amendment Act 2 of 2013 (w.e.f. 15-2.2013)".
14. Recently Hon'ble Apex Court in case tilted as Vijay Mandal Chaudhary and others versus Union of India and others had an occasion to deal with question of constitutionality and validity of certain provisions of Prevention of Money Laundering Act, 2002, wherein Court ::: Downloaded on - 15/11/2022 20:30:48 :::CIS after having examined entire Act, while drawing conclusion in para 467, specifically observed that the offence under Section 3 of the 2002 Act is dependent on illegal gain of .
property as a result of criminal activity relating to a scheduled offence. Most importantly, Hon'ble Apex court observed that it is concerning the process or activity connected with such property, which constitutes the offence of money-laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. Relevant para of the aforesaid judgment is reproduced herein below:
r |467. In light of the above analysis, we now proceed to summarise our conclusion on seminal points in issue in the following terms:-
(i) The question as to whether some of the amendments to the Prevention of Money laundering Act, 2002 could not have been enacted by the Parliament by way of a Finance Act has not been examined in this judgment. The same is left open for being examined along with or after the decision of the Larger Bench (seven Judges) of this Court in the case of Rojer Mathews,
(ii) The expression "proceedings" occurring in Clause (na) of Section 2(1) of the 2002 Act is contextual and is required to be given expansive meaning to include Inquiry procedure followed by the Authorities of ED, the Adjudicating Authority, and the Special Court.
(iii) The expression "investigation" in Clause (na) of Section 2(1) of the 2002 Act does not limit itself to the matter of investigation concerning the offence under the Act and is interchangeable with the function of "inquiry" to be undertaken by the Authorities under the Act.
(iv) The Explanation inserted to Clause (u) of Section 2(1) of the 2002 Act does not travel beyond the main provision predicating tracking and reaching upto the property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence.::: Downloaded on - 15/11/2022 20:30:48 :::CIS
(v)(a) Section 3 of the 2002 Act has a wider reach and captures every process and activity, direct or indirect, in dealing with the proceeds of crime and is not limited to the happening of the final act of integration of tainted property in the formal economy. The .
Explanation inserted to Section 3 by way of amendment of 2019 does not expand the purport of Section 3 but is only clarificatory in nature. It clarifies the word "and" preceding the expression projecting or claiming as "or"; and being a clarificatory amendment, it would make no difference even if it is introduced by way of Finance Act or otherwise..
(b) Independent of the above, we are clearly of the view that the expression "and" occurring in Section 3 has to be construed as "or", to give full play to the said provision so as to include "every"
process or activity indulged into by anyone. Projecting or claiming the property as untainted property would constitute an offence of money-laundering on its own, being an independent process or activity.
(c) The interpretation suggested by the petitioners, that only upon r projecting or claiming the property in question as untained property that the offence of section would be complete, stands rejected.
(d) The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money-laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent Jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him". ......
15. Bare reading of aforesaid law laid down by the Hon'ble Apex Court leaves no room for doubt that under 2002 Act. Enforcement Department cannot prosecute any person on notional basis or on the assumption that schedule offence has been committed, rather ::: Downloaded on - 15/11/2022 20:30:48 :::CIS same can be only investigated, if such scheduled offence is registered by police and therein there is some evidence with regard to proceeds of crime acquired by accused from criminal .
activity as defined/ prescribed in the scheduled of Prevention of Money Laundering Act.
While placing reliance upon aforesaid judgment passed by Hon'ble Apex Court in Vijay Mandal (supra), High Court of Delhi vide judgment dated 19th July 2022 passed in Prakash Industries versus Directorate of Enforcement 2022 SCC On line Delhi 2087 has categorically held that the allegation of money laundering is premised and dependent upon the commission of a criminal offence. Unless proceeds are found to have been derived or obtained from criminal activity, the question of money laundering would not arise. The High Court of Delhi, observed as under:
"117. On an overall consideration of the issues delineated above, the Court comes to record the following conclusions:
A. When the offense of money laundering is described as a stand- alone offense, all that is sought to be conveyed is that it represents an independent offense and is to be tried separately in accordance with the procedure prescribed under the Act. The objective of the Act is to try charges of money laundering which entails proceeds of crime being acquired, possessed or used and/or projected as untainted property. Undisputedly, the offense of money laundering rests on the commission of a predicate offense which in turn may have resulted in a pecuniary benefit being obtained and derived. It fundamentally aims at confiscation of benefits that may be derived as a result of criminal activity and the commission of a scheduled offense. It is aimed at countering and penalising the malaise of wealth and assets acquired as a result of criminal activity.
B. It is evident from a reading of the Act that while the commission of a predicate offense is the precipitate step for initiation of proceedings under the Act, the offense of money laundering must be tried and established separately. It is also pertinent to observe that the predicate offense constitutes the very ::: Downloaded on - 15/11/2022 20:30:48 :::CIS foundation of a charge of money laundering. The entire edifice of a charge of money laundering is raised on an allegation of a predicate offense having been committed, proceeds of crime generated from such activity and a projection of the tainted .
property as having been legitimately acquired.
C. However, once it is found on merits that the accused had not indulged in any criminal activity, the property cannot legally be treated as proceeds of crime or be viewed as property derived or obtained from criminal activity. Since the offense of money laundering is itself premised and founded upon the commission of a crime created under an independent statute, it cannot possibly survive or subsist once the predicate offense is found to be not established and a declaration so made by a competent.
D. The description of the offense of money laundering as a stand- alone offense would not in itself infuse jurisdiction in proceedings that may be initiated under the Act even after a competent court has come to hold that no criminal offense stands committed or in situations where the accused is discharged of the offense or proceedings quashed.
E. The allegation of money laundering is premised and dependent upon the commission of a criminal offence. Unless proceeds are found to have been derived or obtained from criminal activity, the question of money laundering would not arise. The Act is concerned with the commission of an offence which may have yielded revenues of profits which are then concealed and their source obfuscated. However, once the charge of commission of a scheduled offence itself comes to be annulled by virtue of a judicial declaration with a competent Court finding that an offence could not be set to have been committed it would be impermissible to assert that a person or entity has indulged in money laundering. F. Since the offence of money laundering is essentially aimed at depriving persons of the fruits and benefits that may have been derived or obtained from criminal activity, the charge is inextricably linked to criminal activity. However, once it is found that a criminal offence does not stand evidenced, the question of any property being derived for obtained therefrom or its confiscation or attachment would not arise at all and in any case, proceedings if initiated under the Act would be wholly without jurisdiction or authority.
G. The Court finds that the expression "proceeds of crime"
creates an inextricable link between criminal activity and the ::: Downloaded on - 15/11/2022 20:30:48 :::CIS acquisition of property and assets as a result thereof. If the charge of criminal activity ceases to exist in law, a charge of money laundering would neither sustain nor survive. The Court thus reiterates the conclusions as drawn and recorded in Rajeev .
Chanana and Gagandeep Singh. Consequently it must be held that once it is found by a competent court, authority or tribunal that a predicate offence is either not evidenced or on facts it is held that no offence at all was committed, proceedings under the Act would necessarily have to fall or be brought to a close. H. Turning then to Section 3 of the Act, the Court finds that the said provision would come into play only if proceeds of crime are found to have been generated. As this Court reads Section 3 it finds that the offence of money laundering has an enduring and ineffaceable link to proceeds of crime. Absent the commission of a criminal offence, the foundation of proceedings initiated under the Act would undoubtedly fall and self-destruct".........
16. In the instant case, it is pertinent to take note of fact that though ECIR, which is subject matter of present case, is claimed to be not made on the basis of FIR 252 of 20221, but as has been discussed herein above entire genesis of the case against petitioner is on the basis of allegation contained in FIR No. 252 of 2021 wherein admittedly petitioner was not made an accused. Even after having completed investigation though police found offence alleged to have been committed by accused named in the FIR Section 120-B but not against the petitioner and as such he was not named even in the final report under Section 173, Cr.P.C. Though, Mr. Balram Sharma, learned Deputy Solicitor General argued that on the basis of information shared by police pursuant to lodging of aforesaid FIR and challan, wherein Section 120-B was also invoked, which is a scheduled offence under Prevention of Money Laundering Act, 2002, investigating officer investigated the matter and found case under Section 3 and 4 of Prevention of Money Laundering Act, 2002 against the petitioner ::: Downloaded on - 15/11/2022 20:30:48 :::CIS but as has been held by Hon'ble Apex Court in Vijay Mandal (Supra) authorities under 2000 Act cannot prosecute any person on notional basis or on the assumption that a .
scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. Admittedly in the case at hand at the time of recording of ECIR which is subject matter of present case, no criminal complaint/FIR if any was filed against bail petitioner accusing him of having committed offence under Section 120 B and 420 0f IPC.
It is only after filing of challan in other FIR, ECIR, which is subject of present case, was registered against the bail petitioner and thereafter Enforcement Directorate after having found some incriminating evidence against petitioner reported the matter to police praying therein to lodge FIR against petitioner under Section 420 of IPC, which is again a scheduled offence in the schedule of provisions of Money Laundering Act. No doubt, one FIR under Section 420 IPC was registered against the petitioner, but after recording of ECIR. It is not in dispute that subsequent FIR recorded under Section 420 IPC is pending investigation and till date no conclusion, if any has been arrived by the investigating agency of police department with respect to involvement of bail petitioner in an offence under Section 420 IPC. In the case at hand, on the one hand Enforcement Directorate shared information with the police Under Section 66(2) of the prevention of Money Laundering Act, 2002, with the State Police but at the same time arrested bail petitioner on the basis of ECIR as detailed hereinafter. Now question which needs determination is, "whether without there being any evidence of en-massing/procurement of 'proceeds of crime' if any by bail petitioner, ::: Downloaded on - 15/11/2022 20:30:48 :::CIS Enforcement Agency could proceed to register the case under Section 3 and 4 of Prevention of Money Laundering Act, 2002 or not? No doubt, had some material emerged in the earlier .
FIR 252 of 2021 against the petitioner suggestive the fact that he after having indulged in criminal activity possessed/ acquired or procured wealth/property with the help and aid of the proceeds of crime, Enforcement Department would have been justified to proceed against bail petitioner under Section 3 and 4 of Prevention of Money Laundering Act, 2002.
17. As per Enforcement Department, petitioner approximately earned Rs.35 crore on account of illegal mining, but interestingly at no point of time Mining Department ever came to be associated nor area was got demarcated by Joint Inspection Committee as has been specifically provided under Mining Mineral Rules, 2015 rather department after having associated some private surveyor arrived at a conclusion that petitioner has extracted mines and minerals from area over and above leased out to him, as a result of which he earned approximately Rs. 35 Crores, so aforesaid amount arrived at by department is all imaginary and presumptive. Even the documents made available in sealed cover to this Court do not support aforesaid claim of the Enforcement Department. Though aforesaid aspects of the matter are to be decided by the Court below in its totality but at this stage this court for the reasons detailed herein above has reasons to presume and believe the Enforcement Department has acted in hot haste manner and without following due procedure. Having taken note of aforesaid glaring aspect of the matter, this court sees no reason to let bail petitioner incarcerate in jail for an indefinite period during trial, especially ::: Downloaded on - 15/11/2022 20:30:48 :::CIS when there is sufficient material available on record suggestive of the fact that bail petitioner is medically unfit and in the event of his being kept behind bars his health may deteriorate.
.
18. Shri Balram Sharma, learned Deputy Solicitor General, while placing reliance upon Section 45 of the Act contended that the bail in cases registered under PMLA Act cannot be granted in routine manner. However, perusal of Section 45 of PMLA nowhere suggests that there is complete bar/prohibition to grant bail in cases registered under Prevention of Money Laundering Act, 2002, rather in such like cases court after having afforded due opportunity of being heard to public prosecutor and being satisfied that bail petitioner has been falsely implicated and there is no likelihood of the accused indulging in the crime again, can always proceed to grant bail. Moreover, proviso to aforesaid provision further provide that a person who is under the age of 16 years or is a women or is a sick or infirm can be released on bail if the Court so directs. The petitioner herein is stated to be obese and his weight is almost 130 Kg, medical evidence adduced on record clearly reveals that the petitioner is suffering from liver cirrhosis of first stage, and apart from this, he is severally diabetic and has undergone heart surgery. Though, this Court has no reason to disbelieve that bail petitioner is being provided medical aid on day-to-day basis in the Jail but keeping in view his serious health condition coupled with the fact that nothing is required to be recovered from him, this court finds expedient in the interest of justice to enlarge him on bail so that in the event of any medical emergency he is taken to some good hospital.
::: Downloaded on - 15/11/2022 20:30:48 :::CIS19. Learned counsel representing the petitioner has invited the attention of this Court to judgment passed by Punjab and Haryana High Court in case titled as Paranjil .
Batra versus Directorate of Enforcement, in CRM-M-23705-2022(O&M) decided on 04.11.2022, wherein, in similar facts and circumstances, court having taken note of medical condition of the petitioner, who was stated to be obese having 153 Kg.wWeight, having erratic hypertension and diabetes was ordered to be enlarged on bail. It would be apt to take note of para-20 and 21 of the aforesaid judgment:
"20. A perusal of above reproduced medical report shows that the petitioner is an obese person weighing 153 kilograms having erratic hypertension and diabetes issues. Additionally he is found to be having Coronary Artery Disease(CAD). Though, it r appears that he was taken to Civil Hospital, Ambala and was provided treatment, where he also remained admitted but the Doctor, in the aforesaid certificates, has in unambiguous terms opined that the physical health condition of said patient is deteriorating considerably.
21. Obesity, as in the case of the petitioner, who weighs 153 kilograms is not just a symptom but is itself a disease which becomes root-cause of several other diseases. With such co-morbodities, the response, the resistance, the resilience and the capacity of the body to fight ailments and recuperate efficaciously, decreases substantially. The jail doctor or for that matter, a civil hospital may not be fully equipped to handle a patient having multiple ailments who apart from medical treatment may require a certain level of monitoring, care and attention which ordinarily is not available in jail. Considering the co-morbodities of the petitioner, it can safely be said that he falls in the exception of being " sick" as carved out in Section 45 of the Act, so as to entitled to be released on bail. The petitioner, otherwise has been behind bars since the last about 8 months. Supplementary complaint already stands presented against him. There is no occasion for his custodial interrogation now at this stage. The co-accused Radhe Shyam and Bansi Lal ::: Downloaded on - 15/11/2022 20:30:48 :::CIS were released on bail immediately upon their appearance in Court pursuance to issuance of summons for their appearance."
20. No doubt, the petitioner is accused of having committed serious offence .
under Sections 3 and 4 of Prevention of Money Laundering Act, 2002, but guilt if any of the bail petitioner is yet to be established on record by leading cogent and the convincing evidence and as such there appears to be no reason to curtail his freedom for an indefinite period during trial, especially when investigating agency has already taken into custody entire record from the accused and he is in judicial custody for over a month. Though Shri Balram Sharma, learned Deputy Solicitor General submitted that since complaint is yet to be filed and statement of some of witnesses are yet to be recorded, there is possibility of tampering with evidence but this court finds no force in the aforesaid submission of Mr. Balram Sharma, learned Deputy Solicitor General for the reason that the entire record already stands seized by the investigating agency and for the delay, if any in recording the statement of remaining witnesses by the Enforcement department, bail petitioner cannot be allowed to suffer. Moreover, apprehension expressed by the learned Deputy Solicitor General of India that in the event of petitioner being enlarged on bail, he may flee from justice and tamper with the prosecution evidence can be best met by putting him to stringent conditions:-
21. By now, it is well settled that gravity alone cannot be a decisive ground to deny bail, rather competing factors are required to be balanced by the court while exercising its discretion. It has been repeatedly held by the Hon'ble Apex Court that object of bail is to ::: Downloaded on - 15/11/2022 20:30:48 :::CIS secure the appearance of the accused person at his trial by reasonable amount of bail. The object of bail is neither punitive nor preventative.
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The Hon'ble Apex Court in Sanjay Chandra versus Central Bureau of Investigation (2012)1 Supreme Court Cases 49; has been held as under:-
"The object of bail is to secure the appearance of the accused person at his trial by reasonable amount of bail. The object of bail is neither punitive nor preventative. Deprivation of liberty must be considered a punishment, unless it can be required to ensure that an accused person will stand his trial when called upon. The Courts owe more than verbal respect to the principle that punishment begins after conviction, and that every man is deemed to be innocent until duly tried and duly found guilty. Detention in custody pending completion of trial could be a cause of great hardship. From time to time, necessity demands r that some unconvicted persons should be held in custody pending trial to secure their attendance at the trial but in such cases, "necessity" is the operative test. In India , it would be quite contrary to the concept of personal liberty enshrined in the Constitution that any person should be punished in respect of any matter, upon which, he has not been convicted or that in any circumstances, he should be deprived of his liberty upon only the belief that he will tamper with the witnesses if left at liberty, save in the most extraordinary circumstances. Apart from the question of prevention being the object of refusal of bail, one must not lose sight of the fact that any imprisonment before conviction has a substantial punitive content and it would be improper for any court to refuse bail as a mark of disapproval of former conduct whether the accused has been convicted for it or not or to refuse bail to an unconvicted person for the propose of giving him a taste of imprisonment as a lesson."
22. Needless to say object of the bail is to secure the attendance of the accused in the trial and the proper test to be applied in the solution of the question whether bail should be granted or refused is whether it is probable that the party will appear to take his trial.
::: Downloaded on - 15/11/2022 20:30:48 :::CISOtherwise also, normal rule is of bail and not jail. Apart from above, Court has to keep in mind nature of accusations, nature of evidence in support thereof, severity of the .
punishment, which conviction will entail, character of the accused, circumstances which are peculiar to the accused involved in that crime.
23. In Manoranjana Sinh alias Gupta versus CBI, (2017) 5 SCC 218, Hon'ble Apex Court has held as under:
"This Court in Sanjay Chandra vs. Central Bureau of Investigation (2012) 1 SCC 40, also involving an economic offence of formidable magnitude, while dealing with the issue of grant of bail, had observed that deprivation of liberty must be considered a punishment unless it is required to ensure that an accused person would stand his trial when r called upon and that the courts owe more than verbal respect to the principle that punishment begins after conviction and that every man is deemed to be innocent until duly tried and found guilty. It was underlined that the object of bail is neither punitive nor preventive. This Court sounded a caveat that any imprisonment before conviction has a substantial punitive content and it would be improper for any court to refuse bail as a mark of disapproval of a conduct whether an accused has been convicted for it or not or to refuse bail to an unconvicted person for the purpose of giving him a taste of imprisonment as a lesson. It was enunciated that since the jurisdiction to grant bail to an accused pending trial or in appeal against conviction is discretionary in nature, it has to be exercised with care and caution by balancing the valuable right of liberty of an individual and the interest of the society in general. It was elucidated that the seriousness of the charge, is no doubt one of the relevant considerations while examining the application of bail but it was not only the test or the factor and that grant or denial of such privilege, is regulated to a large extent by the facts and circumstances of each particular case. That detention in custody of under-trial prisoners for an indefinite period would amount to violation of Article 21 of the Constitution was highlighted."::: Downloaded on - 15/11/2022 20:30:48 :::CIS
24. The Apex Court in Prasanta Kumar Sarkar versus Ashis Chatterjee and .
another (2010) 14 SCC 496, has laid down the following principles to be kept in mind, while deciding petition for bail:
(i) whether there is any prima facie or reasonable ground to believe that the accused had committed the offence;
(ii) nature and gravity of the accusation;
(iii) severity of the punishment in the event of conviction;
(iv) danger of the accused absconding or fleeing, if released on bail;
(v) character, behaviour, means, position and standing of the accused;
(vi) likelihood of the offence being repeated;
2. reasonable apprehension of the witnesses being influenced; and
3. danger, of course, of justice being thwarted by grant of bail.
25. In view of above, bail petitioner has carved out a case for himself.
Consequently, present petition is allowed. Bail petitioner is ordered to be enlarged on bail, subject to furnishing bail bonds in the sum of Rs.25 lac/- with two local sureties in the like amount each, to the satisfaction of the Investigating Officer, besides the following conditions:
a. He shall make himself available for the purpose of interrogation, if so required and regularly attend the trial on each and every date of hearing and if prevented by any reason to do so, seek exemption from appearance by filing appropriate application;
b. He shall not tamper with the prosecution evidence nor hamper the investigation of the case in any manner whatsoever;
c. He shall not make any inducement, threat or promises to any person acquainted with the facts of the case so as to dissuade him/her from disclosing such facts to the Court or the Police Officer; and ::: Downloaded on - 15/11/2022 20:30:48 :::CIS d. He shall not leave the territory of India without the prior permission of the Court.
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e. He shall surrender passport, if any, held by him.
26. It is clarified that if the petitioner misuses the liberty or violates any of the conditions imposed upon him, the investigating agency shall be free to move this Court for cancellation of the bail.
27. Any observations made hereinabove shall not be construed to be a reflection on the merits of the case and shall remain confined to the disposal of this petition alone.
The petition stands accordingly disposed of.
10th November, 2022 (Sandeep Sharma),
Judge
(gaurav/Subhash)
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