Bombay High Court
Direcotrate Of Enforcement vs The State Of Maharashtra And Anr on 7 December, 2020
Author: Prithviraj K. Chavan
Bench: Prithviraj K. Chavan
901-revn-205-2020.doc
Shailaja
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL REVISION APPLICATION NO.205 OF 2020
Directorate of Enforcement ]
(Through Assistant Director) ] Applicant
Vs.
The State of Maharashtra ]
and another. ] Respondents
.....
Mr. Anil Singh, Additional Solicitor General a/w Mr. Shreeram Shirsat,
for Applicant.
Mr. Rizwan Merchant a/w Mr. Sajal Yadav, for Respondent No.2.
Ms. Jyoti Lohokare, A.P.P, for State.
Mr. Mohit Godara, Enforcement Officer present in the Court.
Ms. Archana M. Salaye, Assistant Director-E.D, present in Court.
.....
CORAM : PRITHVIRAJ K. CHAVAN, J.
RESERVED ON : 4TH DECEMBER, 2020.
PRONOUNCED ON : 7TH DECEMBER, 2020.
[Through Video Conferencing]
Digitally signed by
Shailaja S. Shailaja S. Halkude
Halkude Date: 2020.12.07
11:41:27 +0530 1/35
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P.C:
Rule, returnable forthwith.
2. Heard finally with the consent of the learned Additional Solicitor General appearing for the applicant and Mr. Rizvan Merchant, learned Counsel appearing for respondent No.2-original accused.
3. Mr. Merchant waives service of notice on behalf of respondent No.2 and learned A.P.P waives service of notice on behalf of respondent No.1-State.
4. Feeling aggrieved with an order of rejection of extension of custody of respondent No.2 with the applicant-Enforcement of Directorate (for short 'E.D') on 29 th November, 2020 passed by the learned Additional Sessions Judge (In-charge of Holiday Court) in Remand Application No.912 of 2020, revisional powers of this Court have been invoked impugning the said order, inter alia, seeking extension of the custody of the accused-respondent No.2 with the applicant for a period of 10 days.
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5. Facts necessary for disposal of the revision application are as follows:
One Shri Ramesh Ramkrishna Iyer (for short 'the complainant') Ex-Vice Chairman of M/s. Tops Group Services and Solutions Limited (for short 'Tops Group') filed a complaint in the Court of Metropolitan Magistrate, Ballard Piers, Mumbai bearing No.39/Misc/ 2020 dated 15th October, 2020 with a prayer for an investigation under section 156 (3) of the Code of Criminal Procedure (for short 'Cr. P.C').
Pursuant to the directions to that effect, Yellow Gate Police Station, Mumbai registered an F.I.R bearing MECR No.3/2020 dated 28 th October, 2020 under sections 420, 406, 465, 467, 468, 471, 120B of the Indian Penal Code (for short 'I.P.C') against Tops Group and it's Promoter and Chairman Shri Rahul Nanda and others.
6. The sum and substance of the complaint lodged by the complainant is that Mr. Rahul Nanda and his Assistant diverted huge funds from the accounts of the Tops Group to various accounts in India as well as in the accounts of Overseas Companies. The funds were also utilized by Mr. Rahul Nanda and other related individuals for their personal expenses like purchase of real estates etc. Thus, these persons defrauded the company to the tune of Rs.175 Crores. In view of the 3/35 901-revn-205-2020.doc scheduled offences, a case of money laundering under sections 3 and 4 of the Prevention of Money Laundering Act, 2002 (for short 'P.M.L Act')) has been registered and is being investigated by the Enforcement Directorate vide ECIR/MBZO-1/40/2020 dated 31st October, 2020.
7. During the course of the investigation and after having recorded the statements of the complainant and Mr. Amar Panghal-Ex- Finance Director of Tops Group, it revealed that in the year 2014, a contract was signed by Tops Group with Mumbai Metropolitan Regional Development Authority (for short 'M.M.R.D.A'). As per the said contract, 350 to 500 guards were to be deployed on M.M.R.D A sites on monthly basis. However, it was noticed that the only 70% of the guards were actually deployed, however, billing was done in respect of the guards as per the contract. Details of paid wages were submitted to M.M.R.D.A for 100% of the contract value based on number of guards to be deployed as per the contract and not on the basis of actual deployment of the guards. Compliance documents like P.F/E.S.I.C were submitted for 100% of the contract value and not on the basis of actual deployment of the guards which were quite lesser than the agreed contract.
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8. It revealed during the investigation that huge cash amounts were withdrawn from the Bank Accounts of Tops Group and were paid to Mr. Niraj Bijalani-Ex-C.E.O of Tops Group. In the financial year of 2017-2018, an amount of Rs.92,00,000/- approximately was handed over to Mr. Niraj Bijalani. There was an arrangement with two persons namely one Mr. Sanket S. More and Amit Chandole-respondent No.2. As per the said arrangement, 50% of the profits (revenue billed to M.M.R.DA, less wages, P.F and E.S.I.C) were being regularly shared on monthly basis. In addition to it, a fixed commission of Rs.50,000/- per month and Rs.500/- per guard deployed is also being paid to Sanket More and respondent No.2. Those amounts were paid by Mr. Niraj Bijalani to Mr. Sanket More and respondent No.2.
9. The Statement of the complainant recorded on 2 nd November, 2020 reveals that Rahul Nanda informed him that respondent No.2 is the close confidante of one Mr. Pratap Sarnaik, a sitting M.L.A and that they have to share monthly profit emerging from M.M.R.D.A with Mr. Pratap Sarnaik through respondent No.2. As such, from May, 2017 till June, 2020, an amount aggregating to Rs.2.36 Crores has been shared as a commission. Out of the said amount, Rs.90,00,000/- have been paid through a Bank transfer to Mr. Sanket 5/35 901-revn-205-2020.doc More and respondent No.2. The complainant had shared the documentary evidence and stated that the amounts are still being shared from the Tops Group Bank accounts. Approximately, seven crores have been paid to Mr. Sanket More and respondent No.2 since 2014.
10. The applicant has also recorded statement of Mr. Niraj Bijalani, Mr. Amar Panghal and Ms. Pragati (Latika) Vikas Randive, Account Assistant as well as statement of respondent No.2 under section 50 of the P.M.L Act.
11. On the basis of the statements of the aforesaid persons, the applicant is satisfied as regards involvement of respondent No.2 in the offence of money laundering, and, therefore, was arrested on 25 th November, 2020.
12. When respondent No.2 was produced before the Special Court under P.M.L Act for remand seeking his custody with the applicant for 10 days, the learned Special Court by an order dated 26 th November, 2020, authorized detention of respondent No.2 with the applicant till 29th November, 2020. It is contended that since respondent No.2 refused to co-operate and was giving evasive replies put by the 6/35 901-revn-205-2020.doc Investigating Officer, and, therefore, looking to the magnitude of the fraud and seriousness of the issues involved in the case, the applicant sought extension of his custody for a period of 10 days by placing on record the papers of investigation. However, the learned Additional Sessions Judge who was in-charge of Holiday Court, by the impugned order dated 29th November, 2020 which was a Sunday, declined to extend the custody, instead, remanded respondent No.2 to the judicial custody till 9th December, 2020.
13. I heard Mr. Anil Singh, learned Additional Solicitor General appearing for the applicant and Mr. Merchant, learned Counsel appearing for respondent No.2 as well as perused a short interim reply tendered on behalf of respondent No.2 opposing the prayer.
14. At the outset, Mr. Singh briefly narrated the history of the case and took me through the statements of a few individuals which came to be recorded by the applicant who were summoned by its Assistant Director in view of sub-section 2 of Section 50. Apart from drawing my attention to the nature, complexity as well as enormity of the case, Mr. Singh contends that in order to go to the root of the crime and to unearth as regards the end use of the proceeds of crime, a period 7/35 901-revn-205-2020.doc of three days was quiet insufficient and inadequate in view of the fact that custody of respondent No.2 was authorized only for three days, out of which 28th November and 29th November were holidays being 4th Saturday and Sunday. The Investigating Agency, therefore, could not interrogate respondent No.2 sufficiently in respect of details of bank transactions as well as investigation in respect of involvement of the public servants. The Investigating Agency, however, during those three days could recover some registers, files, hard disks of computer, computer data and mobiles. It is submitted that the custody of respondent No.2 is necessary for confrontation with accomplice/s and also for verifying the bank accounts in order to thoroughly probe into the scheduled offences and money laundering. Mr. Singh has also drawn my attention to the Whats App chat which is relevant in order to investigate the scheduled offences. Mr. Singh has placed reliance upon few judgments which shall be referred hereinafter.
15. Mr. Merchant, while strongly opposing the prayer of the applicant, at the outset, questioned the maintainability of the revision application, as according to him, it being an interlocutory order, revision is not tenable. Mr. Merchant took me through section 167 (2) of the Cr. P.C vis-a-vis sections 19 and 46 of the P.M.L Act. According to him, the 8/35 901-revn-205-2020.doc custody either judicial or with the Investigating Agency has to be within 15 days as a whole and should not exceed and, therefore, since it is an interlocutory order which has not attained finality and as such cannot be a revisable order in view of section 397 (2) of the Cr. P.C. However, Mr. Merchant submitted that for challenging the said order, powers under section 482 of the Cr. P.C can be invoked but the assignment is with different Court.
16. While supporting the impugned order, Mr. Merchant submits that the order is not perverse wherein the learned Special Judge has applied his mind and exercised his discretion judiciously which needs no interference by way of a revision. He submits that respondent No.2 is not at all concerned either with Tops Group or with M.M.R.D.A, in any manner, whatsoever. As such, ingredients of section 3 of the P.M.L Act are not at all attracted. Mr. Merchant read section 2 (u) of the P.M.L Act which defines "proceeds of crime". He thus submits that respondent No.2 was not privy either to Top Groups or M.M.R.D.A and there is no semblance of truth as the applicant only intends to extract the name of M.L.A Pratap Sarnaik from the mouth of respondent No.2 which is not permissible under the law.
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17. While emphasizing the aspect of powers to arrest under section 19 (1) of the P.M.L Act, it is submitted that there are no reasons for belief of the Assistant Director that respondent No.2 has been guilty of an offence punishable under the Act, recorded in writing and, therefore, the arrest itself is illegal. He further submits that no scheduled offence has been made out in the light of the fact that there is no statement of any person of M.M.R.D.A to indicate that less number of guards were appointed. He also emphasized upon the fact that the offences under the Income Tax Act are not scheduled and, therefore, respondent No.2 could not have been arrested under section 19 of the P.M.L Act. He submits that the very foundation of the case is hearsay evidence of the complainant qua respondent No.2 and the statements of other witnesses and, therefore, there is no substance in the application. It is finally submitted that some new grounds have been raised for the first time in the revision application which cannot be considered as they were not raised in the remand application.
18. First objection of Mr. Merchant is that the impugned order being interlocutory, revision application is not tenable to which Mr. Singh, the learned Additional Solicitor General has pressed into service a judgment of this Court in Criminal Application No.5342 of 2010 in case 10/35 901-revn-205-2020.doc of Alim A Patel Vs. The State of Maharashtra and Criminal Application No.5345 of 2010 in case of Altaf Yusuf Naik Vs. State of Maharashtra decided on 16th December, 2020 (Coram: V.M. Kanade, J.). Facts of the said case in brief are that the petitioners were booked under sections 406, 420, 507 r/w 34 of the Indian Penal Code by Pen Police Station . It was alleged in the complaint that the complainant was induced by the petitioners/accused to deliver a huge amount of Rs.65,71,000/- for purchase of land at Ambeghar, Taluka Pen. Despite receiving such a huge amount of consideration, the land was purchased in the name of the petitioners and their family members and thereby, the complainant was deceived as he was cheated and there was a criminal breach of the trust by the petitioners. After their arrest, the petitioners were produced before the learned J.M.F.C, however, the learned J.M.F.C refused to grant Police custody remand by observing that it was a civil dispute and remanded the petitioners to judicial custody. The learned Magistrate thereafter released the petitioners on bail pursuant to their applications for bail.
19. The revision application preferred by the State before the Sessions Judge was allowed and the learned Additional Sessions Judge set aside the order refusing to grant the Police custody remand. The 11/35 901-revn-205-2020.doc learned Sessions Judge, inter alia, directed the Magistrate to reconsider the application for Police custody again. Being aggrieved by the said judgment of the Sessions Judge, the petitioner approached this Court. The learned Single Judge elaborately discussed the issue involved by taking into consideration the various case laws on the subject. Mr. Singh has drawn my attention to paragraph 10 which is relevant and refers the judgment of the Hon'ble Supreme Court in case of Madhu Limye Vs. State of Maharashtra, AIR 1978 Supreme Court 47. Paragraphs 9, 10, 11 and 12 of this judgment read thus;
"9. In most of the cases decided during several decades the inherent power of the High Court has been invoked for the quashing of a criminal proceeding on one ground or the other. Sometimes the revisional jurisdiction of the High Court has also been resorted to for the same kind of relief by challenging the order taking cognizance or issuing processes or framing charge on the grounds that the Court had no jurisdiction to take cognizance and proceed with the trial, that the issuance of process was wholly illegal or void, or that no charge could be framed as no offence was made out on the allegations made or the evidence adduced in Court. In the background aforesaid, we proceed to examine as to what is the correct position of law after the introduction of a provision like sub section (2) of section 397 in the 1973 Code."
"10. As pointed out in Amar Nath's case (supra) the purpose of putting a bar on the power of revision in relation to any interlocutory order passed in an appeal, inquiry, trial or other proceeding is to bring about expeditious disposal of the cases finally. More often than not, the revisional power of the High Court was resorted to in relation to interlocutory orders 12/35 901-revn-205-2020.doc delaying the final disposal of the proceedings. The Legislature in its wisdom decided to check this delay by introducing sub- section (2), in section 397. On the one hand, a bar has been put in the way of the High Court (as also of the Sessions Judge) for exercise of the revisional power in relation to any interlocutory order, on the other, the power has been conferred in almost the same terms as it was in the 1898 Code. On a plain reading of section 482, however, it would follow that nothing in the Code, which would include sub-section (2) of section 397 also, "shall be deemed to limit or affect the inherent powers of the High Court". But, if we were to say that the said bar is not to operate in the exercise of the inherent power at all, it will be setting at naught one of the limitations imposed upon the exercise of the revisional powers. In such a situation, what is the harmonious way out ? In our opinion, a happy solution of this problem would be to say that the bar provided in subsection (2) of section 397 operates only in exercise of the revisional power of the High Court, meaning thereby that the High Court will have no power of revision in relation to any interlocutory order. Then in accordance with one of the other principles enunciated above, the inherent power will come into play, there being no other provision in the Code for the redress of the grievance of the aggrieved party. But then, if the order assailed is purely of an interlocutory character which could be corrected in exercise of the revisional power of the High Court under the 1898 Code, the High Court will refuse to exercise its inherent power. But in case the impugned order clearly brings about a situation which is an abuse of the process of the Court or for the purpose of securing the ends of justice interference by the High Court is absolutely necessary, then nothing contained in section 397(2) can limit or affect the exercise of the inherent power by the High Court. But such cases would be few and far between. The High Court must exercise the inherent power very sparingly. One such case would be the desirability of the quashing of a criminal proceeding initiated illegally, vexatiously or as being without jurisdiction. Take for example a case where a prosecution is launched under the Prevention of Corruption Act without a sanction, then the trial of the accused will be without jurisdiction and even after his acquittal a second trial after proper sanction will not be barred on the doctrine of Autrefois 13/35 901-revn-205-2020.doc Acquit. Even assuming, although we shall presently show that it is not so, that in such a case an order of the Court taking cognizance or issuing processes is an interlocutory order, does it stand to reason to say that inherent power of the High Court cannot be exercised for stopping the criminal proceeding as early as possible, instead of harassing the accused upto the end? The answer is obvious that the bar will not operate to prevent the abuse of the process of the Court and/or to secure, the ends of justice. The label of the petition filed by an aggrieved party is immaterial. The High Court can examine the matter in an appropriate case under its inherent powers. The present case undoubtedly falls for exercise of the power of the High Court in accordance with section 482 of the 1973 Code, even assuming, although not accepting, that invoking the revisional power of the High Court is impermissible."
Similarly, in the case of Amar Nath, AIR 1977 SC 2185 (supra) which has been referred to by the Apex Court in Madhu Limaye, AIR 1978 SC 47 (supra), the Supreme Court in para 13 has observed as under:-
"13.......... It is neither advisable, nor possible, to make a catalog of orders to demonstrate which kinds of orders would be merely, purely or simply interlocutory and which kinds of orders would be final, and then to prepare an exhaustive list of those types of orders which will fall in between the two...."
The Court, therefore, has to consider the nature of the order and determine whether the said order becomes final or not and, accordingly, decide whether the revision application can be filed against it. The learned Single Judge of this Court in Ambarish Rangeshahi Patnigere (supra) considered this aspect in respect of refusal by the Magistrate to consider the request for police custody and, in my view, has rightly observed that observation of the Apex Court in N.M.T Joy Immaculate (supra) would not apply to the facts of that case since the question which fell for consideration before the Apex Court in the said case was whether the order passed by the Magistrate granting police custody for one day was an interlocutory order or not.
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11. In the present case, the learned Magistrate has refused to grant police custody and, therefore the said order, in my view clearly had become a final order since thereafter the State cannot file further application for granting of police custody and in respect of the said subject matter the order had become final. The ratio of the judgment in Ambarish Rangeshahi Patnigere, 2010 ALL MR (Cri) 2775 (supra), therefore, in my view, would squarely apply to the facts of the present case. Therefore, I am of the view that the Sessions Court has correctly held that the revision application is maintainable.
12. So far as the question of continuation of PCR is concerned, Shri Chitnis, the learned Senior Counsel for the Petitioners relied upon the judgment in Anupam J. Kulkarni, (1992) 3 SCC 141 (supra) in support of his submission. In my view, ratio of the judgment in the case of Anupam J. Kulkarni, (1992) 3 SCC 141, would not apply to the facts of the present case. In the said case, facts were that on the basis of the material which was available Shri Kulkarni was arrested on 4/10/1991 and was produced before the Chief Metropolitan Magistrate, Delhi on 05/10/1991. On the request of CBI, Shri Kulkarni was remanded to judicial custody till 11/10/1991. On 10/10/1991, a test identification parade was arranged but Shri Kulkarni refused to cooperate and his refusal was recorded by the Munsif Magistrate concerned. On 11/10/1991, application was moved by the Investigating Officer seeking police custody of Shri Kulkarni which application was allowed. However, in the meantime, Shri Kulkarni was taken to hospital and he remained confined on the ground of illness upto 21/10/1991 and, thereafter, upto 29/10/1991 he was remanded to judicial custody by the Magistrate and was sent to jail. Since during this period he cold not be remanded to police custody, an application was made by the Investigating Officer seeking police custody which was refused by the learned Magistrate. A revision application was preferred. However, in the revision application, High Court observed that it was not desirable to confine him in jail and, therefore, he was granted bail. 15/35
901-revn-205-2020.doc Against this order the matter was taken to the Apex Court. The Apex Court has made the following observation in para 2 of its said judgment in Anupam J. Kulkarni, (1992) 3 SCC 141 :-
"2...... The High Court, however, did not decide the question whether or not after the expiry of the initial period of 15 days a person can still be remanded to police custody by the Magistrate before whom he was produced. The said order is challenged in these appeals."
The Apex Court, thereafter, in view of the facts of the said case viz. that the accused was arrested and remanded to judicial custody after some time, held that the accused, thereafter, cannot be remanded to police custody after expiry of initial 15 days and in the light of the said facts the Apex Court came to the conclusion that such a course of action was not permissible in law. In my view, ratio of the said judgment would not apply to the facts of the present case. In the said case applicant was arrested and was remanded to judicial custody where he remained for more than 15 days. The Apex Court, therefore, held that the period of calculating the custody would commence from the date of order of remand which in the said case was 05/10/1991 and, thereafter, he remained in jail custody till 29/10/1991 continuously for a period of more than 15 days and, under these circumstances, the Apex Court has observed that thereafter an application for PCR could not be made".
20. It has been observed by this Court that when the Magistrate refuses to grant Police custody, the said order becomes a final order and thereafter the State cannot file further application for grant of Police 16/35 901-revn-205-2020.doc custody and in respect of the said subject matter, the order had become final.
21. It is thus clear that it is for the Court to consider the nature of the order and determine whether the order has become final or not and accordingly decide whether the revision application can be entertained against it.
22. In view of the judgment in case Ambarish Rangeshahi Patnigere Vs. State of Maharashtra, 2010 ALL MR (Cri.) 2775, the Single Judge of this Court has considered the aspect in respect of refusal by the Magistrate to consider the request for Police custody and has observed that the observations of the Apex Court in the case State represented by Inspector of Police and others Vs. of N.M.T Joy Immaculate, (2004) 5 Supreme Court Cases 729 would not apply to the facts of that case since the question which fell for consideration before the Apex Court in the said case was whether the order passed by the Magistrate granting Police custody for one day was an interlocutory order or not. Refusal to grant Police custody, therefore, became a final order since thereafter the State cannot file further application for grant of Police custody and in 17/35 901-revn-205-2020.doc respect of the said subject matter the order has become final. Thus, in view of the ratio laid down by this Court, the revision application is maintainable.
23. On similar point, Mr. Singh has also pressed into service the judgment of the Division Bench of Gujarat High Court in case of Kandhal Sarman Jadeja Vs. State of Gujarat in Criminal Reference No.3 of 2009 in Special Criminal Application No.1590 of 2009. Relevant paragraphs read as under;
"9. .... But apart from the above mentioned expression used by the Supreme Court in Amar Nath's case AIR 1977 SC 2185 : (1977 Cri LJ 1891), as we see it, the question, to our mind, can be examined also in the light of the subsequent judgment of the Supreme Court in Madhu Limaye v. State of Maharashtra, AIR 1978 SC 47 : (1978 Cri LJ 165). In that case, an order rejecting the application challenging the jurisdiction of the Court to proceed with the trial was held not to be an interlocutory order and the revisional application filed against the said order was held by the Supreme Court to be maintainable, disagreeing with the view of Bombay High Court. While taking that view, the Supreme Court went a step further and held as follows (at p.169 of Cri LJ) :-
"Ordinarily and generally the expression 'interlocutory order' has been understood and taken to mean as a converse of the term 'final order'. In vol.22 of the third Ed. of Halsbury's Laws of England at page 742, however, it has been stated in para 1606:-18/35
901-revn-205-2020.doc 'a judgment or order may be final for one purpose and interlocutory for another, or final as to part and interlocutory as to part. The meaning of the two words must therefore be considered separately in relation to the particular purpose for which it is required.' In para 1607 it is said :
'In general a judgment or order which determines the principal matter in question is termed 'final'.' In para 1608 at pages 744 and 745 we find the words :
'An order which does not deal with the final rights of the parties, but either (1) is made before judgment, and gives no final decision on the matters in dispute, but is merely on a matter of procedure, or (2) is made after judgment, and merely directs how the declarations of right already given in the final judgment are to be worked out, is termed 'interlocutory'. An interlocutory order, though not conclusive of the main dispute, may be conclusive as to the subordinate matter with which it deals.' In para 15 of the said judgment, the Supreme Court has indicated that even certain orders, which would be normally stamped as interlocutory orders, took in their embrace a final adjudication so far as certain important rights of the parties were concerned and that if that was so, the order in question should not be considered as interlocutory order. In this connection the Supreme Court had occasion to deal with Amar Nath's case AIR 1977 SC 2185 : (1977 Cri LJ 1891). The Supreme Court observed in that connection as follows :-
"It is neither advisable, nor possible to make a catalogue of orders to determine which kinds of orders would be merely, 19/35 901-revn-205-2020.doc purely or simply interlocutory and which kinds of orders would be final, and then to prepare an exhaustive list of those types of orders which will fall in between the two."
It will be seen that having regard to this view taken by the Supreme Court, in fact in Madhu Limaye's case AIR 1978 SC 47 : (1978 Cri LJ 165), the larger Bench of the Supreme Court has expressed an opinion that the broad statement of law contained in Amar Nath's case needed certain modification. However, the Supreme Court reaffirmed the decision in Amar Nath's case and held that the order releasing some of the accused on perusal of the police report and subsequently summoning them was not an interlocutory order but was a final order. To our mind, reading the two cases together Amar Nath's case and Madhu Limaye's case, no doubt is left about the legal position, namely, that an order rejecting the Department's application for remand of the accused to judicial custody is a final order and not an interlocutory order."
10. We are, therefore, of the opinion that an order refusing to grant police remand is a final order against which Revision Application under Section 397 read with Section 401 of the Criminal Procedure Code would be maintainable."
24. Thus, revision application is maintainable against the impugned order. This issue is, therefore, no more res integra.
25. In so far as nexus of respondent No.2 as well as his knowledge and indulgence either directly or indirectly in the offence of money laundering as well as possessing or holding proceeds of crime is 20/35 901-revn-205-2020.doc concerned, statements of the complainant, Amar Panghal, Niraj Bijalani as well as respondent No.2 are quite relevant. The statements of these individuals came to be recorded under section 50 of sub-section 2 and 3 of the P.M.L Act. It would be apposite to refer only the relevant portion of the statements for the purpose of indicating nexus of respondent No.2 with the alleged crime.
26. Relevant portion of statement of the complainant-Ramesh Iyer reads thus;
Statement of Mr. Ramesh Iyer (I) :-
"(p) Loans have been taken by Tops Group by making myself and Mr Amar Panghal as guarantors by appointing us as the directors. The said loans still have not been repaid by Tops Group. Also Corporate Credit cards are issued in the names of Company and are being utilised by Mr. Rahul Randhir Nanda and his family members and we are now being made scapegoats to take all blame of the Company. It is also learnt that Mr. Rahul Randhir Nanda and his family members have already left the country and are currently based in Dubai.
(r) In the year 2014, a contract was signed with Mumbai Metropolitan Regional Development Authority (MMRDA) wherein there were about 350 to 500 guards which were deployed at MMRDA sites on a monthly basis. It is found out from records that the billing was done for all the guards as per contract, but only 70% of guards were actually deployed. The wages paid details were submitted to MMRDA for 100% of the contract value based on the 21/35 901-revn-205-2020.doc number of guards to be deployed as per the contract and not on the basis of actual deployment of the guards.
Accordingly, compliance documents like PF/ESIC are being submitted for 100% of the contract value and not on the basis of actual deployment i.e. at the reduced strength of guards deployed.
(s)Huge cash amount's were withdrawn from Topsgrup bank accounts and were given to the ex-CEO of Tops Group Mr. Niraj Bijlani. In the year FY 2017-18 itself an amount of Rs.92 lakhs or thereabout was handed over to Mr. Niraj Bijlani and it is understood from him that there was an arrangement with two persons named Mr. Sanket S. More and Mr. Amit S. Chandole that 50% of the profits (i.e. Revenue billed to MMRDA less wages, PF, ESIC) will be shared on a monthly basis. Additionally, a fixed commission of Rs.50,000/- per month and Rs.500/- per guard (as per contracted agreement) deployed is being paid to both these above persons and these amounts were paid by Mr. Niraj Bijlani to both the above persons.
(t) In the year 2018 and 2019, such commission amounts were paid to the above two mentioned persons in their personal accounts and which continue to be paid till date. I am submitting the details of the subject transfers under my dated signature."
(u)Commission details shared for last 3 years i.e. from May 2017 till June 2020 aggregating to Rs.2.36 crores of which Rs.90 Lakhs has been paid through bank transfers to Mr. Sanket S. More and Mr. Amit S. Chandole. All these amounts are still being paid from Tops Group bank account's. It is estimated that the commission paid is to the tune of Rs.7 Crores since 2014 when the contract got initiated."
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901-revn-205-2020.doc Statement of Mr. Ramesh Iyer (II) Q.1 :- In your earlier statement, you had stated that certain amounts were given to Mr. Sanket More & Mr. Amit Chandole from the Tops Group in relation to the contract of MMRDA. What was the reason for giving this amount to these persons?
Reply :- As told by Mr. Rahul Nanda to me, Mr. Amit Chandole is the main person of Mr. Pratap Sarnaik who is MLA and having business in the name and style of Vihang Group. Mr. Rahul Nanda told me several times that Mr. Amit Chandole is the main man of Mr. Pratap Sarnaik and we have to share the monthly profit emerging from MMRDA contract with Mr. Pratap Sarnaik through Amit Chandole. As I earlier told you that as per contract between Tops Group AND MMRDA about 350 to 500 guards were agreed to be deployed at MMRDA sites on a monthly basis but only around 70% of guards were actually deployed. However, billing used to be done for all the guards as per contract. Mr. Rahul Nanda use to share good bonding with Mr. Pratap Sarnaik.
I am submitting 12 pages of the whatsapp chats of "Senior Management Group" showing in support of the above. In the subject Group, myself, Mr. Rahul Nanda, Mr. Ayush Pasari, Mr. Jasmeet Reki, Mr. Amar Panghal, Mr. Shashidharan, Ms. Rasshi Nanda and Roohie Nanda. In Whatsapp chat dated 15 June 2019, Mr. Rahul Nanda specifically asked me to handle Amit properly as he is Pratap's main man. In the conversations, the word "PO" was used. I want to clarify that the word "PO" was a code word for carrying out cash transactions whenever. I wish to add that, in the marriage of Purvesh Sarnaik, son of Mr. Pratap Sarnaik, 100 guards were provided complimentary at the marriage venue on the instructions of Mr. Rahul Nanda, I am submitting one page of whatsapp conversation held in "Senior Management Group" in this regard".
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27. Relevant portion of the statement of Amar Panghal reads thus;
"(n) There are several irregularities in the contract of MMRDA also. In the year 2014, a contract was signed with Mumbai Metropolitan Regional Development Authority (MMRDA) wherein there were about 350 to 500 guards which were deployed at MMRDA sites on a monthly basis. It is found out from records that the billing was used to be done for all the guards, however only 70% of guards were actually deployed by Tops Group under instructions of Mr. Nanda. The wages were being paid by MMRDA for 100% of the contract value based on the number of guards to be deployed as per the contract and not on the basis of actual deployment of the guards.
(o) In relation to the above MMRDA contract, huge cash amounts were withdrawn from Tops Group bank accounts and were given to the ex-CEO of Tops Group Mr. Niraj Bijlani. As per financial records of the year FY 2017-18, an amount of Rs.92 Lakhs was handed over to Mr. Niraj Bijlani and it is understood from him that there was an arrangement with two persons named Mr. Sanket S. More and Mr. Amit S. Chandole that 50% of the profits will be shared on a monthly basis. Additionally, a fixed commission of Rs.50,000/- per month and Rs.500/- per deployed is being paid to both these above persons and these amounts were paid by Mr. Niraj Bijlani to both the above persons.
(q) I wish to add that in relation to MMRDA project, ,the commission details shared for last 3 years i.e. from May 2017 till June 2020 aggregating to Rs.2.36 crores of which Rs.90 Lakhs has been paid through bank transfer to Mr. Sanket S. More and Mr. Amit S. Chandole."24/35
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28. Relevant portion of the statement of Niraj Bijalani reads thus;
"Q.4:- What do you know about the contract of MMRDA with Tops Security ?
Ans :- I had no role to play in getting this contract as this was awarded to the company through open tendering process. The contract was regarding security and traffic marshal of foot over bridges of Mumbai. The contract was of around 32-33 lac per month. Regarding this contract, profit sharing was used to be done between Tops Security and Mr. Pratap Sarnaik on 50:50 basis. For this, a profit sharing sheet was used to be prepared by Finance Department and approved by Director Finance, Mr. Amar Panghal. On the basis of this sheet, the said profit sharing used to be done. Being President of Guarding Business, once I have perused this sheet to ascertain the profitability of this business.
Q.5 :- How was this profit used to be delivered to Mr. Pratap Sarnaik?
Ans:- One Mr. Amit Chandole, the right hand man of Mr. Pratap Sarnaik used to coordinate for the same with the finance department. Mr. Amit Chandole used to collect the said profit share on behalf of Mr. Pratap Sarnaik. The funds mostly used to be delivered in cash. Either he used to collect the same or the finance staff used to deliver the same to him. Ms. Latika Randive used to maintain the records for the same and she mostly used to coordinate with Mr. Amit Chandole.
Q.6 :- What was the reason for sharing the profit with Mr. Pratap Sarnaik?
Ans:- Mr. Pratap Sarnaik used to have a good family bonding with Mr. Rahul Nanda. For the various events organized by Mr. Pratap Sarnaik, free of cost security guards were used to be provided to him under instructions of Mr. 25/35 901-revn-205-2020.doc Rahul Nanda. Mr. Pratap Sarnaik had no role to play in the company and as per my understanding, the reason for sharing the profit with Mr. Pratap Sarnaik was better coordination of MMRDA with Tops Security & smooth running of contract.
Q.7 :- Have you met Mr. Pratap Sarnaik or Mr. Amit Chandole?
Ans :- I met Pratap Sarnaik in his office and I was introduced to him by Mr. Rahul Nanda only. As far as I remember, I along with Mr. Rahul Nanda and Mr. Ramesh Iyer had met Mr. Pratap Sarnaik regarding some tenders of Thane Municipal Corporation. I have met Mr. Chandole around 5-6 times as he used to come to office frequently for the purpose as stated above in reply to the Q-5 and Q-6."
29. Relevant portion of the statement of Chandrakant Abhang reads thus;
"Q.4. How do you know Sh. Amit Chandole?
Ans :- I saw him in 2014/2015 in Land & Estate Department of MMRDA, coming out of DMC Cabin. Later, I was informed by Raju Pandey that he is Sh. Amit Chandole."
30. Relevant portion of the statement of Pragati (Latika) Vikas Randive reads thus:-
Q.3 :- Do you know Mr. Amit Chandole ?
Ans :- Yes. He used to come to collect cash of around Rs.6 Lac per month.26/35
901-revn-205-2020.doc Q.4 :- Do you know, why every month such cash was being paid to Mr. Amit Chandole?
Ans :- I do not have any idea about the reason for this payment. I used to be instructed by Mr. Neeraj Bijlani to pay the cash to Mr. Amit Chandole, every month. I used to call Mr. Amit Chandole and ask him where to make the payment. For cash withdrawal, I used to give a cheque to office Assistant to withdraw cash from the Allahabad Bank or State Bank of India. Then the assistant used to give that cash to me. Some times I used to give that cash to Mr. Amit Chandole. Some times office assistant used to directly go and give that cash to Mr. Amit Chandole. After making the payments, I used to inform Mr. Neeraj Bijlani about making cash payment.
I used to make an entry of such cash withdrawal and cash payment in J.D. Edwards system. I used to make entry as cash withdrawal and payment cash payment to Mr. Amit as
- business promotion. Later on, I was instructed to make entries as Wages payable. You will find these entries in the computer system. However, this system was shut by J.D. Edwards system over non-payment of their dues.
Every month such payments were made to Mr. Amit Chandole. Whenever, there was a delay, next month double payment used to be made."
31. It is, prima facie, apparent from the aforesaid statements the network and coterie of the concerned indulging in the offence of the money laundering.
32. The learned Holiday Judge in the impugned order failed to consider the documents and the material placed before him as has been rightly 27/35 901-revn-205-2020.doc submitted by Mr. Singh, the learned Additional Solicitor General. It appears that the learned Judge has taken a very casual and perfunctory approach by ignoring that it is not a simple crime but is so enormous and complex which requires a thorough probe and investigation by the Investigating Agency in view of the provisions of P.M.L Act. Merely because, the Investigating Officer could not answer the queries of the learned Judge does not ipso facto mean that the material collected and the statements recorded by the Investigating Agency are figments as there is no reason for the Enforcement Directorate to falsely implicate respondent No.2 when there is clinching material prima facie exhibiting nexus of respondent No.2 with the co-conspirators. Unless there is free, fair and full investigation of the crime of such a large and colossal magnitude, which could fructify only by a custodial investigation, the learned Judge ought to have applied his mind while considering prayer of extending custodial interrogation.
33. It appears that the learned Judge pre-supposed that the complainant being an ex employee of the Tops Group has every reason to implicate the former employer. Such observations are uncalled for, unnecessary and without any basis. Thus, requirements of section 3 of P.M.L Act are precisely attracted from the aforesaid material placed on 28/35 901-revn-205-2020.doc record. Prima facie, it appears that the proceeds of crime exchanged hands from M.M.R.D.A, Tops Group and respondent No.2.
34. On the point of arrest of respondent No.2, Mr. Merchant contends that there are no reasons for the belief of the Investigating Officer which are to be recorded in writing and, therefore, there is no due compliance of section 19 of the P.M.L Act. A perusal of the arrest order dated 25 th November, 2020 reveals that respondent No.2 has been informed of the grounds of such arrest. There is an endorsement in the handwriting of respondent No.2 which has been signed by him in acknowledgment of having been informed about the grounds of arrest on the same day. Not only that there is further endorsement by respondent No.2 that he had informed about his arrest to his lawyer Mr. Shoeb Memon whose mobile number has also been mentioned therein. Therefore, unless something contrary is produced on record, it has to be presumed and held that respondent No.2 was informed about the grounds of arrest and acknowledgment thereof. He has signed beneath the arrest order. If no such grounds were communicated to him, then it is clear that he would have made an endorsement to the effect that he has not received the grounds of arrest. Respondent No.2 is not an illiterate person in the 29/35 901-revn-205-2020.doc sense that he is not a naive person.
35. As regards the grievance of respondent No.2 that grounds of arrest have not been communicated to him in writing which cannot be accepted to hold the breach of any statutory safeguards. It is for the reason that neither section 19 (1) nor definition of the word 'order' as given in sub-clause (h) of Rule-2 provides that the grounds for such arrest are to be provided in writing to the person arrested. It indicates that oral communication of the grounds of arrests is not only a substantial but proper compliance of the provision.
36. Provision of Section 19 (1) also does not state that the grounds of arrest are to be informed to the person arrested immediately. The use of the word in the said provision "as soon as may be", makes it clear that grounds of arrest are not to be supplied at the time of arrest itself or immediately on arrest, but "as soon as may be".
37. Photostat copies of the Bank account of respondent No.2 with State Bank of India have been tendered at Exhibit R colly. A bare perusal of these extracts reveals about the transaction in the name of 30/35 901-revn-205-2020.doc respondent No.2 in whose account, from time to time, huge amounts in lakhs appear to have been debited from the account of Tops Group. Respondent No.2 shall have to explain about the same.
38. The grounds (f) and (g) on page No.6 of the revision application as rightly been stated by Mr. Merchant, were not raised in the remand application and, therefore, these grounds cannot be considered for the first time in the revision application.
39. However, it would be important to read even the statement of respondent No.2 recorded on 25th November, 2020 under section 50 of the P.M.L Act wherein he has clearly stated that he came into contact with Rahul Nanda through Mr. Pratap Sarnaik, who is his close friend. It indicates that there was contract of Tops Group with M.M.R.D.A in which he has 50% share of the profit arising out of contract which was for providing security guards to M.M.R.D.A. There was no written agreement about share of 50% profit as it was an oral agreement on the basis of trust. It also reveals that 50% profit sharing used to be made in cash. Mr. Bijlani used to pay the amount who used to get the payment through NEFT also.
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40. It is argued by Mr. Singh that involvement of respondent No.2 with proceeds of the crime is not only with respect to the less supply of Security Guards to MMRDA and excess bills raised but also his involvement with respect to other transactions as well. It is quite surprising that a person like respondent No.2 has been collecting cash from the amount received from MMRDA without any lawful authority which indeed needs to be probed thoroughly. Mr. Singh submits that not only has MMRDA been cheated, but a very influential political personality is likely to be exposed who has been illegally sharing the proceeds of crime. It is submitted that respondent No.2 is a very close confidante of MLA Pratap Sarnaik with whom there are monetary dealings which are also the proceeds of crime. The applicant had vividly stated the same in the remand application which the learned Additional Sessions Judge failed to take into consideration. The investigation with respect to Guards employed at the MMRDA site is in progress and summons have been issued to all the concerned persons who appeared before the applicant. Looking to the wider ramifications, custodial interrogation of respondent No.2 is essential. The accusation is thus well founded.
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41. Having taken into consideration the totality of the facts and circumstances, I am of the considered view that the learned Additional Sessions Judge holding charge of the Holiday Court has not exercised his jurisdiction with due application of mind and approached to the matter in a very casual manner. I am mindful of the fact that liberty of an individual is of paramount importance. However, at the same time, balance needs to be struck between individual's right as well as there should be no prejudice to the free, fair and full investigation. Material placed on record, prima facie indicates complicity and nexus of respondent No.2 in the alleged crime. Mr. Singh has, therefore, pressed into service a judgment of the Hon'ble Supreme Court in the case of Y.S. Jagan Mohan Reddy Vs. Central Bureau of Investigation, (2013) 7 SCC
439. It would be apposite to reproduce the relevant portion from the said judgment, which reads thus :-
"Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offence affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar 33/35 901-revn-205-2020.doc to the accused, reasonable possibility of securing the presence of the accused at the trial reasonable apprehension of the witnesses being tampered with, the larger interests of the public / State and other similar considerations."
42. Even though it was a matter concerning Sections 439, 437 of Cr.P.C. for the offences under Section 120B r/w Sections 420, 409 and 477A of the Indian Penal Code and Sections 13(2) r/w Section 13(1)
(c)and (d) of the Prevention of Corruption Act, 1988, the Hon'ble Supreme Court has emphasized as to how one should have an approach to the economic offence which constitute a class apart and needs to be visited with a different approach.
43. Thus, in the light of the observations made hereinabove, the impugned order passed by the Holiday Court on 29.11.2020 in Remand Application No. 912 of 2020 is quashed and set aside.
44. The learned Special Judge shall, in the light of the observations made hereinabove, reconsider prayer of the applicant-Enforcement Directorate to authorize detention of respondent No.2 in its custody and shall pass appropriate order today itself.
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45. The parties shall appear before the learned Additional Sessions Judge on 7th December, 2020 at 3.00 p.m. i.e. today itself.
46. Rule is made absolute in the aforesaid terms.
47. This order will be digitally signed by the Personal Assistant of this Court. All concerned shall act on production by fax or e-mail of a digitally signed copy of this order.
[PRITHVIRAJ K. CHAVAN, J.] 35/35