Gujarat High Court
Chirag Harendrakumar Parikh vs State Of Gujarat & on 8 January, 2016
Author: Z.K.Saiyed
Bench: Z.K.Saiyed
R/CR.MA/17326/2015 CAV ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CRIMINAL MISC.APPLICATION (FOR REGULAR BAIL) NO. 17326 of 2015
With
CRIMINAL MISC.APPLICATION NO. 17420 of 2015
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CHIRAG HARENDRAKUMAR PARIKH....Applicant(s) Versus STATE OF GUJARAT & 1....Respondent(s) ========================================================== Appearance:
MR PINAKIN M RAVAL, ADVOCATE for the Applicant(s) No. 1 MS TRUSHA K PATEL, ADVOCATE for the Respondent(s) No. 2 MR HS SONI, APP for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE Z.K.SAIYED Date : 08/01/2016 CAV ORDER
1. Through Present applications under Section 439 of Code of Criminal Procedure, 1973 (herein after referred to as Code) read with Section 45 of Prevention of Money Laundering Act, 2002 (herein after referred to as PMLA). The applicants have prayed to release them on bail, in connection with PMLA case file No.ECIR/03/AMZO/2015 filed by respondent authority (ED) appointed under the PMLA for the offence punishable under Sections 3 read with Section 4 of the PMLA read with Section 120B of the Indian Penal Code. The said complaint has been registered as PMLA case No.8/2015.Page 1 of 37
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2. After service of the process in present applications to this Court, the respondent authority has filed affidavit and opposed present applications which producing relevant documents collected by the authority filing of the above referred case.
3. The facts of the case arose from the record are as under.
It is a case of the prosecution that in pursuance of the specific intelligence recording the operation of large scale into "Hawala Racket"
in online international cricket betting through UK based website "Betfair.com" by A1 Girishbhai Patel and his associates and A2 Kiran Mala premises rented farm house owned by Jitendra Shah and taken on rent in the name of driver Nagji Rabari situated at village Sikandarpur at Vadodara was raied and searched on 19th March, 2015 under Section 37 of the Foreign Exchange Management Act (FEMA), 1999 which resulted into recovery as well as seizure of incriminating documents, articles and digital records etc.
4. The accused were indulging in the acts of cricket betting at that time. The E.D. also seized literatures of international cricket betting. It is further case of prosecution that, Page 2 of 37 HC-NIC Page 2 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER during the course of initial investigation, other material indicated commission of offences under the Indian Penal Code so, in turn the information along with the documents including statements of A1 and A2 were shared/given by E.D. to Commissioner of Police, Vadodara for further investigation.
5. Further, it is the case of prosecution that, Police Inspector Shri D.I.Vaghela attached with Kishanwadi Police Station gave FIR for State against the accused, which was registered as C.R.No.II222 of 2015 registered on 21.03.2015, under Section 4 and 5 of the Prevention of Gambling Act against 16 accused persons. It is the case of prosecution that, all 16 accused persons were arrested on 21.03.2015 by officers of S.O.G (Special Operation Group) and they were produced on the same day before the learned Judicial Magistrate, First Class, Vadodara City and Police asked for remand of 7 days, which was rejected by the learned Magistrate and all the accused were granted bail by the learned Magistrate on the same day.
6. It is further case of prosecution that, investigation which was carried out by Kishanwadi Police Station, on the basis of the material provided by E.D., also revealed use of simcards, Page 3 of 37 HC-NIC Page 3 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER which were obtained by way of forging documents. Since forgery was committed by the accused, and another FIR bearing C.R.No.I85 of 2015 was again registered by Kishanwadi Police Station on 25.03.2015 against 4 accused (including the petitioners herein) under Section 120(B), 418, 419, 420, 467, 471 of Indian Penal Code.
7. According to E.D., aforesaid offences under the Indian Penal Code are scheduled offences as mentioned in Section 2(1)(y) of P.M.L. Act, 2002, therefore, a separate case was registered by Ahmedabad Zonal Office of E.D. against the accused under case file No.ECIR/03/AMZO/2015 dated 26.03.2015 for the purpose of identifying properties/assetsas defined under Section 2(1) (u) of P.M.L. Act, 2002proceeds of crime. It is the case of E.D. that, the said investigation by E.D. was to ascertain, identify, locate proceeds of crime as a result of criminal activities done by A1 to A4, which constitutes offence under Section 3 and 4 of P.M.L. Act. It is also the case of E.D. that, investigation discloses usage of Money Bank Accounts for routing amount of money by accused. As per case of E.D., residential premises of present petitioner and another accused namely Chirag Parikh were searched on 01.04.2015, none of the accused were found present, but documents were seized from the Page 4 of 37 HC-NIC Page 4 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER place of coaccusedChirag Parikh (not the present petitioner). It is further the case of E.D. that, several summons of appearance were issued under P.M.L. Act, but the accused did not turn up. Therefore, the complainantE.D. filed Criminal Misc. Application No.565 of 2015 before the Designated Court, under P.M.L. Act, 2002 on 09.04.2015 and the learned Designated Judge, Ahmedabad Rural by his order dated 10.04.2015 issued nonbailable warrants against 4 accused to be executed through officers of E.D.
8. From the record produced along with the petition that, the petitioner came to know that about registration of FIR against him by Kishanwadi Police Station, under Indian Penal Code offences, therefore, the petitioner surrendered themselves before the learned Judicial Magistrate, First Class on 16.04.2015. In that case, the petitioners were remanded and were in custody.
9. It also appears form the record that, on an application of the E.D., the Desognated Court issued transfer warrants and the learned Judicial Magistrate First Class, Vadodara City 3rd Court handed over custody of the present petitioners to the E.D. on 22.04.2015. Thus, the petitioners came to be arrested by E.D. in connection with Page 5 of 37 HC-NIC Page 5 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER the present E.D. offence on 22.04.2015.
10. From the perusal of the record, it appears on 23.01.2015, E.D. produced the petitioner before the learned Special Designated Judge under P.M.L., Ahmedabad Rural and sought remand for 14 days. The learned Special Judge by his order dated 24.04.2015 partly allowed the said application and granted remand upto 27.04.2015, on which, dated again remand was asked by E.D., but the same was rejected. This is how the entire back ground of the matter stands for the consideration of present bail applications.
11. As per the facts of the present petitioner along with coaccused namely Chirag Parikh filed Misc. Criminal Application No.9197 of 2015 for regular bail before this Hon'ble Court directly, and therefore, this Hon'ble Court vide order dated 08.06.2015 permitted the petitioners to withdraw the petition with a liberty and permission to file the bail application firstly before the Lower Court.
12. Thereafter, the petitioners have preferred Misc. Criminal Applications before the learned Designated Special Judge on 10.06.2015 and the same was fixed for hearing. Meanwhile, on 15.06.2015, after a thorough investigation, a detailed complaint along with documents and Page 6 of 37 HC-NIC Page 6 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER statements of witnesses by the E.D. was filed bearing P.M.L. Case No.8 of 2015, and therefore, the petitioner withdrew his bail application with a liberty to file fresh on the basis of written complaint.
13. As per the say of present applicant Chirag Parikh A) That the applicant herein on 16.04.2015 surrendered before the Ld. Judicial Magistrate First Class, IIIrd Floor, Nyay Mandir, Vadodara and was remanded to police custody by the Ld. Court. Subsequently, the applicant was arrested by the Enforcement Directorate on 21.04.2015 and ever since then the present petitioner/applicant is in judicial custody except for the period for which interim bail was granted to him by this Hon'ble Court from time to time.
B) That the Criminal Miscellaneous Application No.9197 of 2015 for seeking a regular bail was filed by the applicant, however, the same was withdrawn on 08.06.2015. That pursuant to the withdrawal of the petition the Enforcement Directorate has filed a complaint under Section 45 of the Page 7 of 37 HC-NIC Page 7 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER Prevention of Money Laundering Act, and further several coaccused have been granted bail by this Hon'ble Court. It is in light of these changed circumstances that the present application was filed by the applicant herein.
C) That it is pertinent to mention here that pursuant to the search that was conducted by the Enforcement Directorate on 19.03.2015 under Section 37 of FEMA, 1999, the said matter was referred to the local Police Station and they registered a case bearing No.IInd C.R.No.222 of 2015 under the provisions of Section 4 and 5 of the Gambling Act, and Section 65 and 66 of the Information and Technology Act, 2000.
D) That it was during the course of investigation of the case IInd C.R.No.222 of 2015 that it was found that about 39 SIM cards were procured by the persons involved in the case IInd C.R.No.222 of 2015 on the basis of false and forged documents, pursuant to a second FIR bearing No.I CR No.85 of 2015 was registered.
E) That during the searches conducted on 19.03.2015, the applicant herein was not Page 8 of 37 HC-NIC Page 8 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER present at the spot and same is clear from FIR No.222 of 2015 where his name does not figure in the said FIR.
However, it is still a mystery that how the name of the present applicant got roped in case No.I CR 85 of 2015. The first CR No.85 of 2015 was registered under Section 120B read with Section 418, 419, 420, 467 & 471 of the IPC, as there are the scheduled offences, hence, on the very next date i.e. 23.03.2015 and ECIR i.e. ECIR/03/AMZO/2015 was registered by the Enforcement Directorate and thereby the investigation started.
F) That it is important to see here that, in the complaint No.8 filed by the respondent No.2 on 15.06.20156 is silent about the IInd C.R. i.e. CR No.222 of 2015, even the written submissions filed by the respondent No.2 does not speak/specify about Case No.222 of 2015 filed against the present applicant pursuant to the search conducted by the Enforcement Directorate on 19.03.2015 under Section 37 of the FEMA, 1999. G) That on the bare perusal on the above mentioned facts and circumstances it shows that the two FIRS have been Page 9 of 37 HC-NIC Page 9 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER registered by the local police, fist i.e. I CR No.85/2015 pertaining to the conspiracy hatched by the four persons, i.e. Shri Girish Patel, Shri Kiran Mala, Shri Dharmendra Singh and Shri Chirag Parikh the applicant herein for procurement of the SIM cards on the basis of false and forged documents and a second FIR was registered i.e. IInd CR No.222 of 2015 for the involvement of 16 accused persons in cricket betting and the said case was registered under the Gambling Act and the Information and Technology Act, 2000.
I) That a bare perusal of the above mentioned facts and circumstances shows that there has been registration of two different FIRS pertaining to two different conspiracies and both the FIRs did not have any connection with each other and both were with respect o separate offences. It is worthwhile to mention here though the name of the present applicant figured in the IR No.85 of 2015 of the Kishanwadi Police Station, Vadodara, but this name did not figure in FIR No.222 of 2015 as he was not present at the place where the cricket betting was going on and at the Page 10 of 37 HC-NIC Page 10 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER same time of search conducted on 19.03.2015.
J) That on a bare perusal of the evidences cited by the respondent No.2 in their written submissions harp mainly in the form of the statement of various accused persons recorded under Section 17 and 50 of the PMLA Act, 2002 and Section 37 of the FEMA,1999. A bare perusal of all the statements just show that the applicant herein has been involved in cricket betting for the last for days in the partnership with Smt. Kiran Mala and Shri. Dharmendra Singh in Shreeji Corporation and Shreeji Buildcon, purchase of various properties by Shreeji Buildcon and Shreeji Corporation, is having the knowledge that Ganesh Patel, Kiran Mala are bookies engaged in cricket betting for the last 15 years, existence of a firm in the name and style of Maruti Ahmedabad engaged in the business of cricket betting and he is doing the cricket betting in the name of JK and various accounts of settlement in respect of the cricket betting.
Learned Counsel Mr Panchal has contended that Page 11 of 37 HC-NIC Page 11 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER as per the statement of original accused No1 it is disclosed that both are main masterminds and leaders . From the statement of accused No.3 he is shown simply as a partner in Shreeji Buildcon. From the statement of accused Nos.5, 6, 7, there is no allegation leveled against applicants. Mr. Panchal has further drawn attention from the co ordinate bench of this Court who has granted bail of two coaccused in Criminal Misc. Application (For regular bail) No. 18711 of 2015 and 14446 of 2015.
14. As per the case of prosecution and complaint filed by E.D. is to the effect that A1 to A4 carried out illegally online cricket betting racket using mobile phones and sim cards which were obtained by forging signatures of different persons belonging to different areas under the name of M/s. Maruti Ahmedabad. It is further the case of E.D. that lines were offered to other bookies as well who operated from other parts of India. Accused had received and placed various bets from large number of bookies and punters on different matches which were played. M/s Maruti Ahmedabad settled proceeds of crime generated therefrom and also settled different accounts as per E.D., such proceeds of crime were also utilized and invested in certain immovable properties and accused also handed and dealt with Page 12 of 37 HC-NIC Page 12 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER proceeds of crime. It is the case of E.D. that furthermore for swift running of racket, accused also procure mater log in I.D. for Maruti Ahmedabad. It is the case of E.D. that aforesaid offences were committed by the accused in collusion and in conspiracy with each other, wherein each accused has played different role.
15. After aforesaid filing of written complaint, the petitioners have filed Misc. Criminal Application before the learned Special Court and the learned Judge by special designates rejected the same. Hence, these petitions are filed by the present applicants .For the purpose of deciding present application, the Court is taken through entire complaint filed by E.D. by both the sides. The Court has perused and considered whole complaint in detail. The Court has also taken into account accompanying documents produced by the E.D. along with the complaint, Court has also minutely examined the below applications with its Annexures, and also the detailed reply filed by the complainant E.D. The Court has at the same time also considered the arguments advanced by both the sides.
16. It is submitted by learned Senior Counsel J.M.Panchal and learned Senior Counsel Mr.Sumit Shah for applicants that, investigation qua the Page 13 of 37 HC-NIC Page 13 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER present petitioners are over. All the material is already collected. Even remand of the present petitioners was also obtained. Their custodial interrogation is now no more required by the E.D. Mr. Panchal and Mr. Shah have submitted that, entire case rests on documentary evidence and when the investigation is over against the present accused persons, they have prayed to release the accused on bail.
17. As per submission of Mr. Panchal and Mr. Shah no specific role is alleged by the E.D. against the present petitioners. So far as allegations against the present petitioners are concerned, they are vague and general in nature. In their submissions, Mr. Panchal and Mr. Shah have invited the attention of the Court to the chargesheet submitted by the Police in Indian Penal Code offences against the accused and has argued that M/s. Maruti Ahmedabad is projected as oral partnership firm. Learned counsels have also argued that there cannot be any oral partnership firm. Mr. Panchal has also submitted that, there is no material to show that M/s Maruti Ahmedabad is in existence.
18. Learned counsels have also argued that, merely, because the petitioners are a friend of Accused No.1 and 2, he is falsely involved in the Page 14 of 37 HC-NIC Page 14 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER present offence. Learned counsels have also canvassed the argument that, petitioners are in the business of partnership in the name and style of Shriji Corporation and Shriji Build Cons. It is also vehemently argued by counsels that, the petitioners have no connection with the activities carried out by Accused No.1 and 2 and the petitioners have no connection with the proceeds of crime.
19. By relying on the chargesheet submitted by Police in Indian Penal Code offences. learned counsels for both the applicants have also argued that, in the opinion of Police Cricket Betting activity was carried out by accused nos1 & 2 (who are kingpins) with Foreign Punters through Mobile numbers of different witnesses by projecting before Foreign Bookies that such mobile numbers were belonging to the Company formed by accused persons and thereby, the accused persons have committed the offence of criminal breach of trust and cheating etc.
20. Learned counsels have also placed reliance on the remand report of Police dated 21.03.2015, wherein Police applied for remand from the Ld. JMFC, Vadodara City. As per the remand report, A 1 and A2 are master minds and leaders of the entire racket. Mr. Panchal has also drawn Page 15 of 37 HC-NIC Page 15 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER attention to that observation of Police in the remand report. Both the counsels of the applicants have submitted that, in the present case, the E.D. officials have recorded statements of accused as well as witnesses, which are incorporated in nutshell and reproduced in the written detailed complaint filed by E.D. In the submission of both the counsels, if those statements of accused as well as witnesses are taken into account at their face value, no involvement of the petitioners are revealed. For that purpose, my attention was also invited to relevant part of the complaint, which is thereon record.
21. It has also been argued that, statement of accused as well as witnesses show that everything was handled and managed by A1 and A2. Ld counsels for both the applicants have submitted that, there is no material to show that the petitioners are involved in possession or acquiring any proceeds of crimeuse of proceeds of crime in any manner. Ld counsels for both the applicants have submitted that, whatever amount is projected in the complaint is an imaginary and notional amount and also submitted that, the petitioners are already arrested and granted remand by the competent Court.
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22. As per the submission of both the counsels, the main goal as per the prosecution case of the accused persons were to do betting, which would constitute a gambling offence which, the petitioners are already arrested and granted remand by the competent Court. As per the submission of both the applicants that, petitioners are not involved in forging of any sim card or any other document. According to both the counsels, the activity of cricket betting is not covered under the scheduled offence as defined in Section 2(1)(y). Ld counsels have also at the same time argued that, sim card for cricket betting would not by itself generate proceeds. Ld counsels have also submitted that, the applications form for getting sim card are not valuable security.
23. It is submitted that main offence which is committed by the accused are gambling and other offences are ancillary in nature. Lastly, it has been argued by both the counsels that maximum punishment under the P.M.L. Act, which is provided is 7 years so considering from this point of view also, the accused persons may be enlarged on bail. Ld counsels have also relied on Section 3 of P.M.L. Act and argued that, basic ingredients of the offences are not made out against the present petitioner. Both the Ld. Page 17 of 37 HC-NIC Page 17 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER counsels have also submitted that, no incriminating material is found from the house of both present petitioners. It is further argued by the counsels that, no monetary loss is caused to mobile provider company and no liability of any person is created by using mobile sim cards. It has also been submitted that, there is no material available on record to show any meeting of mind or any agreement by the accused for the purpose of hatching any criminal conspiracy. Both the counsels have requested the Court to enlarge both the applicants on bail considering the fact that there are no criminal antecedents against the present petitioner. Thus, the main thrust of submission of learned counsels are that, from single offence the same is bifurcated and divided in three different offences.
24. As against it the application is equally vehemently opposed by Ms. Trusha Patel, Standing Central Government Counsel for the department. As per the submission of Ms. Patel, accused are involved in the offences from the very beginning. Ms. Patel has submitted that, there is huge scam of 'Hawala Racket' running into crores of rupees in the game of cricket netting. In the submission of Ms. Patel, from farm house different material is recovered and seized, which shows that the present petitioner along with the other accused Page 18 of 37 HC-NIC Page 18 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER has committed the offences. Ms. Patel has further submitted that, investigation has revealed that accused have actively participated in the illegal activity of cricket betting. Ms. Patel has drawn the attention of the Court on various statements recorded by E.D. to point out that the accused present petitioner has dealt with proceeds of crime. Ms. Patel has also argued that, the present offences would be covered under the scheduled offences and there is voluminous evidence against the accused to show that the present case falls under Section 3 of P.M.L. Act. Ms. Patel has also relied on Section 24 of P.M.L. Act to show that, burden of proof is on accused persons to prove that money received by them are untainted and has argued that unless the Court is satisfied that there are reasonable grounds for believing that accused persons are not guilty of such offences and that the accused is not likely to commit any offence while on bail. That Court would release the accused on bail. In the end, Ms. Patel has requested the Court to reject the application by relying on order of this Hon'ble Court.
25. From the perusal of the matter, I have also considered that coordinate Benches of this Court have passed orders regarding the offence of PMLA Act, which reliance has been drawn by learned Page 19 of 37 HC-NIC Page 19 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER counsel Ms. Patel in which coordinate Bench of this Court (Coram: Hon'ble Mrs Justice Harsha Devani) in the case of Afroz Fatta Versus Deputy Director, in which Hon'ble Court has refused bail, Ms. Patel in alternate has submitted that even otherwise considering the gravity of the offence and the maximum punishment provided under the PMLA Act, for bail is concerned, Court may not use its powers under Section 439 of Code.
Ms. Patel has also relied upon the judgment order of the coordinate bench of this Court passed in Criminal Mis Application (Regular Bail) No.17000 of 2014 (Afroz Fatta Case) and also submitted that Section 45 of the PMLA Act is also required to be considered. She has also relied upon the judgment order of Hon'ble Apex Court passed in the case of Union of India VEersus Hasan Ali Khan , 2011 (10) SCC 235, and 2015 (O) AIGELHC 232328, Rakesh Kothari Vs Deputy Director Enforcement (Order of Coordinate bench of this Court ) and Order of Hon'ble Apex Court passed in Same party case in Writ Petition (Criminal) No.(S) 61/2015 and (2013) 7 SCC page 466 Nimma Gadda Prasad Vs CBI and 1999 (O) GHEL SC 30069 State of UP Vs O.P.Sharma and AIR 1970 SC 940 and 1995 Supp. (4) SCC 663. Ms. Patel has further drawn attention from the provision of Section 17, Section 27, Section 24 and 50 and Page 20 of 37 HC-NIC Page 20 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER argued that statements of present applicants accused and other coaccused are produced on record and per their confessional statements they have admitted that criminal act committed by them, so statements are admissible in eye of law.
26. For the ready reference and to appreciate the documents advanced by learned counsels for respective parties certain provisions of the PMLA Act is required to be considered which are reproduced herein below. Section 3 and 4 of PMLA read as under: "3. Offence of moneylaundering Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in nay process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of moneylaundering"
"4. Punishment for moneylaundering Whosoever 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 which may extend to five lakh rupees:
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." The definition of "proceeds of crime: provided in Section 2(u) reads as under: Page 21 of 37 HC-NIC Page 21 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER "2(u) "Proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property;"
27. The "scheduled offence" defined under Section 2(y) of PMLA reads as under: "2(y) "scheduled offence" means
i) the offences specified under Part A of the Schedule; or
ii) the offences specified under Part B of the Schedule if the total value involved in such offences is thirty lakh rupees or more; or
iii)the offences specified under Part C of the Schedule;"
"Section 17 reads under (1) Where the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section,] on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person--
(i) has committed any act which constitutes moneylaundering, or
(ii) is in possession of any proceeds of crime involved in moneylaundering, Or
(iii) is in possession of any records relating to moneylaundering, 2[or] 3[(iv) is in possession of any property related to crime] then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to--
(a) enter and search any building, place, Page 22 of 37 HC-NIC Page 22 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept;
(b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where the keys thereof are not available;
(c) seize any record or property found as a result of such search;
(d) place marks of identification on such record or 4[property, if required or] make or cause to be made extracts or copies therefrom;
(e) make a note or an inventory of such record or property;
(f) examine on oath any person, who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any investigation under this Act:
5[Provided that no search shall be conducted unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 157 Sec. 17] "Provided that no search shall be conducted unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 157 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person, authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be.".Page 23 of 37
HC-NIC Page 23 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER 22 The Prevention of Moneylaundering Act, 2002 of the Code of Criminal Procedure, 1973, (2 of 1974) or a complaint has been filed by a person, authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or in cases where such report is not required to be forwarded, a similar report of information received or otherwise has been submitted by an officer authorised to investigate a scheduled offence to an officer not below the rank of Additional Secretary to the Government of India or equivalent being head of the office or Ministry or Department or Unit, as the case may be, or any other officer who may be authorised by the Central Government, by notification, for this purpose.] 1[(1A) Where it is not practicable to seize such record or property, the officer authorised under subsection (1), may make an order to freeze such property whereupon the property shall not be transferred or otherwise dealt with, except with the prior permission of the officer making such order, and a copy of such order shall be served on the person concerned:
Provided that if, at any time before its confiscation under subsection (5) or sub section (7) of section 8 or section 58B or subsection (2A) of section 60, it becomes practical to seize a frozen property, the officer authorised under subsection may seize such property.] (2) The authority, who has been authorised under subsection (1) shall, immediately after search and seizure 2[or upon issuance of a freezing order] forward a copy of the reasons so recorded along with material in Page 24 of 37 HC-NIC Page 24 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER his possession, referred to in that sub section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed.
(3) Where an authority, upon information obtained during survey under section 16, is satisfied that any evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence:
Provided that no authorisation referred to in subsection (1) shall be required for search under this subsection.
3[(4) The authority seizing any record or property under subsection (1) or freezing any record or property under subsection (1A) shall, within a period of thirty days from such seizure or freezing, as the case may be, file an application, requesting for retention of such record or property seized under subsection (1) or for continuation of the order of freezing served under sub section (1A), before the Adjudicating Authority. Section 23 reads as under.
23. Presumption in interconnected transactions.--Where money laundering involves two or more interconnected transactions and one or more such transactions is or are proved to be involved in moneylaundering, then for the purposes of adjudication or confiscation 1[under section 8 or for the trial of the money laundering offence, it shall unless otherwise proved to the satisfaction of the Adjudicating Authority or the Special Page 25 of 37 HC-NIC Page 25 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER Court], be presumed that the remaining transactions form part of such inter connected transactions.
Section 24 of PMLA reads as under : "24. Burden of Proof When a person is accused of having committed the offence under Section 3, the burden of proving that proceeds of crime are untainted poverty shall be on the accused."
Under Section 45 (2) of the PMLA Act, the other provision of the Code would be applicable and therefore, the case is to be dealt with accordingly.
Section 50 provides as under:
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 Page 26 of 37 HC-NIC Page 26 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER Director, Deputy Director or Assistant Director shall have power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this Act.
(3) All the persons so summoned shall be bound to attend in person or through authorised agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required.
(4) Every proceeding under subsections (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, 1860 (45 of 1860).
(5) Subject to any rules made in this behalf by the Central Government, any officer referred to in subsection (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 Director.
28. It is also argued by learned Counsel of applicant in connection of reply of argument of Page 27 of 37 HC-NIC Page 27 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER Ms. Patel that in the case of "Unlawful Activities Prevention Act, 1967" Section 2(g) of the said Act defines 'proceeds of terrorism' as all kinds of properties which have been derived or obtained from commission of have been acquired from funds traceable to a terrorist act, irrespective of person in whose name such proceeds are standing or in whose possession they are found, also gives a very restricted meaning to the word proceeds of terrorism as related to properties having nexus with terrorist activity.
That the advanced law Lexicon while differentiating the words 'derived', 'traced' and 'deducted' has stated that the act of deriving is immediate and direct, that of tracing a gradual process and that of deducting a ratio cinatine process. A person derives his name from a given source, he traces his family upto a given period and principles or power are deducted from circumstances or observations. The Trojans derived the name of their city from Tros, a King of Phrygia and they traced the line of their Kings to the Dardanus. Further, derived has been defined as 'to draw or receive or obtain as from a source or origin or by regular transmission'.
Thus in the light of the above it can be inferred that since in the present case the Page 28 of 37 HC-NIC Page 28 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER scheduled offence is cheating, forgery and criminal conspiracy for the procurement of SIM Cards on the basis of false and forged documents hence there is no proceeds of the crime in the present case which is related to the commission of these scheduled offences.
That even Section 17 of PMLA differentiates between 'proceeds of crime' and 'property related to crime'. Section 17 of the PMLA explains the position with respect to search and seizure, Section 17of the PMLA is provided as below:
"Search and seizure. (1) Where 1 [the Director or any other officer not below the rank of Deputy Director authorized by him for the purpose of this Section,] on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person
(i) has committed any act which constitutes moneylaundering, or
(ii) is in possession of any proceeds of crime involved in moneylaundering, or
(iii) is in possession of any records relating to moneylaundering, 2 [or] 3[(iv) is in possession of any property related to crime] then, subject to the rules made in this behalf, before the Adjudicating Authority.
That the portion shows bold, clearly that the PMLA Act itself distinguishes two different phrases i.e. "proceeds of the crime involved in money laundering" and "property related to crime" In the present case, even assuming, purely for the purposes of argument, the worst against the petitioners, the Page 29 of 37 HC-NIC Page 29 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER properties against which provisional attachment order has been issued may at maximum be called as 'property related to crime' but by no stretch of imagination be termed as 'proceeds of crime' That Section 3 of the Act defines the offence of money laundering as under:
"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 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, the main fulcrum of the offence in the present case is "proceeds of the crime"
and since in the present case there are no "proceeds of crime". Hence there is no offence under Section 3 of PMLA.
That the respondent No.2 is harping upon Section 23 and 24 of the PMLA from drawing a presumption against the present applicant. For the applicant of the said Section it is necessary that the "proceeds of crime" should exist and since in the present case there is no "proceeds of crime" as mentioned above against the applicant herein, hence, the question of applicability of Section 23 and 24 of the PMLA does not arise. The respondent No.2 is trying to place the "cart before the horse".
29. I have carefully perused provision of section 17, section 23, 24, 25 and section 50 and its Page 30 of 37 HC-NIC Page 30 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER applicability under PMLA Act and also perused various judgments cited by both the parties. I have also perused all statements of the accused produced by respondent No.2. It appears that the applicants were involved in cricket betting and was setting the accounts with respect of the money generated out of cricket betting. It is an admitted position that cricket betting is not a scheduled offence and hence the money generated out of cricket betting does not come within the purview of the definition of proceeds of crime. In the present case, the scheduled offences are cheating and forgery and the conspiracy to commit the same with an object of procuring SIM Cards on the basis of false and forged documents. All the SIM Cards in the present case were recovered during the search conducted on the 19.03.2015 under Section 37 of the FEMA, 1999 and since the applicant herein was not present there at the time of search he has nothing to do with those SIM Cards.
I have minutely perused contention of the FIR No.222 of 2015 where the name of the applicant does not figure. Even for the sake of argument if we believe that the contents of Case No.85 of 2015 are correct, then also what emerges out of the scheduled offences are the SIM Cards. That what was derived or obtained directly or Page 31 of 37 HC-NIC Page 31 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER indirectly were the SIM Cards, and as far as the usage of the SIM Cards are concerned, it is a separate offence and the same is not relied upon by the Enforcement Directorate.
It is true that in the case of Ankush Bansal, whose bail order forms part of the bail application, this Hon'ble Court while admitting the bail in para No.10 have observed that money generated from cricket betting are not proceeds of crime. If this is the situation, then without there being any proceeds of crime the offences under Section 3 of PMLA is not made out against the present applicant herein and since no offence as such under the PMLA are made out against the applicant, hence, the applicability f Section 45 of the PMLA does not arise. A bare perusal of Section 45 of the PMLA shows that when the Courts are satisfied that there is a reasonable ground of believing that when the applicant is not guilty of such offence and that he is not likely to commit any offence while on bail, he can be granted bail. Since, in the present condition there are no proceeds of crime existing hence Section 3 of the PMLA does not arise.
In the light of the argument made by learned counsel as a legal submission, it is true that Page 32 of 37 HC-NIC Page 32 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER under Section 2(1)(U) of the Act defines "proceeds of crime" and under Section 105A(C) defines proceeds of crime as under:
"any property derived or obtained directly or indirectly, by any person as a result of criminal activity (including crime involving currency transfers) or the value of any such property". As per the provision of Section 65 of PMLA Act to application of the provision of Criminal Procedure Code, 1973, it is true that word (proceeds of crime) as defined in Act has a restrictive and narrow meaning under Section 105A of CR.P.C meaning of "proceeds of crime"
and in a result of criminal Acts related to schedule offence.
The Hon'ble Supreme Court while giving the meaning to the word 'derived from' in various provisions of the Income Tax Act has given it a very narrow and restrictive meaning. That the Hon'ble Supreme Court, in the case of Liberty India Versus CIT (2009) 9 SCC 329 has held that 'derived from' is narrower than 'attributed to' and the Parliament intended to cover sources not beyond the first degree source. There is a requirement of direct nexus and immediate source or first degree source. Similarly in the case of CIT Vs Sterling Food Mangalore [AIR 1999 SC 2036] it has been laid Page 33 of 37 HC-NIC Page 33 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER down that the words 'derived from' occurring in Section 80 HH of the Income Tax Act would mean that must be a direct nexus between the profits and gains and the industrial undertaking.
From the overall discussion made as above it is established prima facie that scheduled offences cheating, forgery and criminal conspiracy for the procurement of SIM Cards on the basis of false and forged documents, there is no proceeds of the crime in present case with related to the commission of scheduled offences. Learned counsel Ms. Patel who has cited bail order of Afzal Fattas case in which coordinate bench of this court has declined bail, but Hon'ble Supreme Court has released him on interim bail who is also facing charges under PMLA Act as well as scheduled offences. As per the observation of Section 23 and 24 of PMLA Act from drawing a presumption but well there is no proceeds of crime as mentioned against the applicants then applicability of Section 23 and 24 of Act does not arise.
30. In the case of Rakesh Manekchand Kothari in Special Criminal Application No.4247/2015 and in the case of Afroz Fatta (supra) wherein it is held specifically that if a person is facing charge of schedule offence under PMLA, the rigors Page 34 of 37 HC-NIC Page 34 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER would be applicable and otherwise such case can be considered according to the Criminal Procedure Code. Hon'ble Supreme Court has decided case of Sanjay Chandra Versus CBI reported in (2012) I SCC page 40 and Gurucharan Singh and Ors Versus State reported in (1978) I SCC 118 and Arnesh Kumar Vs State of Bihar and Ors (2014) 8 SCC 273 and Ranjit Singh Brahmajit Singh Sharma Vs State of Maharashtra and Ors (2005) 5 SCC 294. In view of observation made by Hon'ble Apex Court, present applicants have a good ground to consider applications in their favour.
31. In view of above observation, I am of the opinion that present both the applications require consideration. Hence, both the applications are allowed and the applicants are ordered to be released on bail in connection with ECIR No.ECIR/03/AMZO/2015 [NOW PMLA Complaint No.8 of 2015] on executing a bond of Rs.2,00,000/ each (Rupees Two Lac Only) with two local surities of Rs. 50,000/ each to the satisfaction of the trial Court with following conditions. They shall,
1) not take undue advantage of liberty and misuse liberty.
2) not tamper with the evidence of the prosecution.
3) surrender passports, if any, to the Special Page 35 of 37 HC-NIC Page 35 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER Designated Court within a week.
4) not to leave the State of Gujarat without prior permission of the Special Designated Court.
5) mark presence with the authority of E.D. office like Assistant Director every Friday between 11:00 am to 2:00 pm upto the framing of the charge.
6) furnish the address of their residence to the I.O. and also to the Court at the time of execution of the bond and shall not change the residence without prior permission of this Court;
32. If the breach of any of the above conditions is committed, the concerned Sessions Judge will be free to issue warrant or take appropriate action in the matter.
33. Bail before the lower Court having jurisdiction to try the case. It would be open to the trial Court concerned to give time to furnish the solvency certificate if prayed for.
34. Rule is made absolute. Direct service is permitted.
(Z.K.SAIYED, J.) After pronouncement of the order Ms.Trusha Patel, learned counsel has prayed for stay of the order. The request is rejected.
Page 36 of 37 HC-NIC Page 36 of 37 Created On Sat Jan 09 02:33:40 IST 2016 R/CR.MA/17326/2015 CAV ORDER (Z.K.SAIYED, J.) kks Page 37 of 37 HC-NIC Page 37 of 37 Created On Sat Jan 09 02:33:40 IST 2016