Bombay High Court
Badshah Majid Malik vs Directorate Of Enforcement And Anr on 19 June, 2024
Author: Prithviraj K. Chavan
Bench: Prithviraj K. Chavan
2024:BHC-AS:24303 BA-3135-2022.doc
This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024
Shailaja
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL BAIL APPLICATION NO.3135 OF 2022
Badshah Majid Malik ] Applicant
Vs.
Directorate of Enforcement, Mumbai ]
Zonal Unit - II, Mumbai and others ] Respondents
.....
Mr. Aabad Ponda, Senior Advocate a/w Mr. Niranjan Mundargi a/w
Ms. Keral Mehta i/b Mr. Deepak Singh, for Applicant.
Mr. Shreeram Shirsat, Special P.P a/w Ms. Tanvi Mate, Mr. Nishad
Mokashi, Ms. Karishma Rajesh and Mr. Shekhar Mane, for
Respondent No.1 - Directorate of Enforcement.
Ms. Rashmi S. Tendulkar, A.P.P, for Respondent No.2.
......
CORAM : PRITHVIRAJ K. CHAVAN, J.
RESERVED ON : 24th April, 2024.
PRONOUNCED ON : 19th June, 2024.
ORDER:
1. By this application, the applicant seeks his release on bail who has been charge-sheeted in respect of ECIR bearing No. MBZO - II/40/2021 dated 6th December, 2021 which was recorded on the basis of prosecution Complaint Case No.155/CW/2017 dated 27 th November, 2017 filed by the Directorate of Revenue Intelligence, Mumbai Zonal Unit (for short "D.R.I"). There are other accused 1 of 48 SHAILAJA Digitally signed by SHAILAJA SHRIKANT SHRIKANT HALKUDE Date: 2024.06.21 HALKUDE 16:36:33 +0530 on - 21/06/2024 ::: Uploaded ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 who are being prosecuted along with the applicant for the alleged offences punishable under sections 132, 135 (1) (a) (ii) and 135 (1)
(b) (ii) r/w 140 of the Customs Act, 1962 (for short "Customs Act:) for false declaration of the consignment as Fabric Glue/Radiators/Assorted Colours for smuggling of Red Sanders and submitting forged/false documents of the companies situate at Special Economic Zones (for short "SEZ") as well as evasion of duty.
2. A specific intelligence was received by the Officers of the DRI Mumbai Zonal Unit that Red Sanders are being smuggled out of India in a export consignment in container No. DRYU2306380 to Jebel Ali Port on the basis of forged documents. In view of the said intelligence input, the aforesaid container was called back to cargo logistic CFS for examination. It led to recovery and seizure of 7.8 metric ton of wooden logs of Red Sanders valued at Rs.3.12 crores on 17th November, 2015. During investigation, it revealed that the consignment of Red Senders was being smuggled by mis - declaring the same as Fabric/Glue/Radiators/Assorted Colours on the basis of forged documents located at SEZ. The investigation further revealed that the applicant was a Kingpin of the syndicate of 2 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 smuggling Red Sanders. He was a history sheeter who had been arrested in the year 2005 by the DRI in case of availing Duty Drawback on the basis of forged documents. He was detained under COFEPOSA in the same case. After his release from detention, he started indulging in smuggling of Red Sanders along with one Ajit Satam. He continued his illegal smuggling of Red Sanders till 2010 and after that he started dealing in Real Estate. In 2014, he again began to indulge in smuggling of Red Sanders.
3. The investigation further reveals that prior to interception the consignment by DRI on 17th November, 2015, the syndicate had smuggled out seventeen such consignments of Red Sanders valued at 47 Crores. As such, DRI, Mumbai Zonal Unit invoked Sections 132, 135 (1) (a) (ii) and 135 (1) (b) (ii) r/w 140 of the Customs Act and filed a Prosecution Complaint vide Case No.155/CW of 2017 dated 27th November, 2017 against the persons/entities.
4. According to the complainant, condition precedent to investigate the offence of money laundering by the complainant/Directorate of Enforcement is on the basis of a Police Report under Section 173 of the Code of Criminal Procedure, 1973 3 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 (for short "Cr. P.C") in respect of a scheduled offence under the Protection of Money Laundering Act, 2002 (for short " PML Act").
5. Apart from the applicant, the prosecution complaint has been filed against Vijay Subbanna Poojary, Harshavardhan Hegde, M/s. Emirates Shipping Agencies India Pvt. Ltd (for short " M/s. ESAIPL") Shivdas Ramesh Tandel, Balu Ramchandra Babar, Bapurao Sharanappa Kamble, Sunil Kumar Nair, Shrinivas Clearing & Shipping India Pvt. Ltd and Noorchand Sayyed @ Noora Mohamed for the offences alleged to have been committed under Sections 132, 135 (1) (a) (ii) and 135 (1) (b) (ii) r/w 40 of the Customs Act for mis-declaration of the consignments as already stated hereinabove.
6. It was revealed from the prosecution complaint that freight booking for the aforesaid consignment was done by M/s. ESAIPL at the behest of M/s. Krrish Corporation having address as 6/85, 1 Hadapsar Industrial Estate - I, Hadapsar, Pune. A search conducted by the Assistant Commissioner, Customs (Preventive), Pune revealed that no firm by name M/s. Krrish Corporation was found at the given address. Upon enquiry made with M/s. ESAIPL, it revealed 4 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 that the said freight booking was done by a person namely Vijay Poojary who himself was a Freight Forwarder and Customs Broker (CB) by profession having freight forwarding by name M/s Marine Trans India Pvt. Ltd and CB firm viz. M/s. Srinivas Clearing & Shipping India Pvt. Ltd (hereinafter referred to as "M/s. SC&SIPL").
7. Investigation further revealed that Vijay Subbanna Poojary had offered requisite services of shipment of Red Sanders in the guise of fabric/glue/radiators/assorted colours and, had also provided details of SEZ unit whose names were to be used for shipment of such consignments. Eighteen such consignments were arranged to be shipped by Vijay Subbanna Poojary through Harshavardhan Hegde, Managing Director of M/s. ESAIPL, who, in turn, had availed the services of his acquaintance and his employees for freight booking for those consignments.
8. After having finalized the operational issues, the applicant in association with Vijay Subbanna Poojari and their associates successfully caused shipment of seventeen consignments of Red Sanders to the United Arab Emirates/Africa. Apart from seizure of 7.8 Mts of Red Sanders valued at Rs.3.12 crores that was attempted 5 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 to be shipped out by the syndicate in the guise of Fabric Glue, the syndicate had, in the past, shipped out 120 Mts of Red Sanders valued at Rs.48.00 crores in the guise of fabric glues/radiators in seventeen export containers as stated above.
9. The applicant and his relatives are associated with M/s. Empire India Multi-trade Pvt. Ltd. Statement of the applicant and other material has been analyzed by the Enforcement Directorate (for short "ED"). It revealed that there were several transactions between account of the applicant and M/s. Empire India Multi-trade Pvt. Ltd, wherein the applicant received certain amount from the account of M/s. Empire India Multi-trade Pvt. Ltd and from other accounts.
10. On 20th December, 2021, a search was conducted under Section 17 of the PML Act at eight commercial and residential premises connected with the applicant in respect of the allegations. During search of the residential premises of the applicant and his son Aakib Badshah Malik, the Agency recovered and seized several incriminating documents and record. Statements of the applicant as well as his son were recorded under Section 50 of the PML Act.
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11. On the basis of the aforesaid complaint, case for the offence of money laundering under Section 3 of the PML Act punishable under section 4 of the said Act has been registered. As such, the present ECIR was recorded under the PML Act and thereafter the present complaint came to be filed before the Special Court under the PML Act. The same has been registered as PMLA Special Case No.145 of 2022.
12. I heard Mr. Ponda, learned Senior Counsel at a considerable length as well as Mr. Shirsat, learned Special P.P. I have also meticulously gone through the record and the documents.
13. At the outset, Mr. Ponda would argue that there is hardly any possibility of commencing the trial within a reasonable time as the charge-sheet in respect of predicate offence has not yet been committed to the Sessions Court. The applicant has been arrested on 21st December, 2021. One does not know when the case would be committed and charges would be framed. Mr. Ponda would argue that in view of several pronouncements of the Supreme Court and this Court, right of speedy trial under Article 21 of the Constitution of India is a fundamental right which is far more 7 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 important than the statutory limitations.
14. Apart from the aforesaid submission, Mr. Ponda took me through the record and proceedings in order to buttress his contention that the entire case of ED for money laundering is to the tune of Rs.51.12 crores spanning for a period commencing from 20th August, 2014 to 14th November, 2015 in view of the charge- sheet tendered by the customs officials. He would argue that the predicate offence is only for the period 2014-2015, however, ED investigated the alleged money laundering other than the transactions/consignments of the period 2014-2015 and investigated all incidents prior to 2014-2015. He questions the legality of investigating alleged money laundering for the aforesaid period by the ED by contending as to whether the Investigating Agency is empowered to investigate what is not the part of the predicate offence. Mr. Ponda would place reliance on several decisions, especially, a well-known decision of the Supreme Court in case of Vijay Madanlal Madanlal Chaudhary Vs. Union of India,1 apart from the decisions in the following cases; 1 2022 SCC Online SC 929 8 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 (1) P. Chidambaram Vs. Directorate of Enforcement2 (2) Directorate of Enforcement Vs. Deepak Mahajan and another3 (3) Ranjitsing Brahmajeetsing Sharma Vs. State of Maharashtra and another4
15. Mr. Ponda would emphasize that the Authorities under the PML Act cannot prosecute any person on notional basis or assumption that a scheduled offence has been committed unless it is so registered with the jurisdictional Police and/or pending inquiry/trial undergoing by way of criminal complaint before the competent forum. He also questions as to whether the ED had indicated proceeds of crime generated for the aforesaid period without which it cannot be said to be an act of money laundering which can be investigated by the Agencies. As such, Mr. Ponda would pray for releasing the applicant on bail by imposing all the required conditions, which, according to him, will be strictly adhered to by the applicant.
2 (2020) 13 Supreme Court Cases 791 3 (1994) 3 Supreme Court Cases 440 4 (2005) 5 Supreme Court Cases 294 9 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024
16. Mr. Shirsat, on the other hand, strongly opposed release of the applicant on bail by contending that not only the applicant has been involved in serious economic offences of smuggling Red Sanders out of the country, but had a past history of involvement in different kinds of criminal activities. He would argue that the applicant along with other accused had been exporting Red Sanders wood since 2008 by forming five shell companies. The applicant had formed five fake/shell companies to launder the ill-gotten amount. Son of the applicant is a co-accused in this case. Mr. Shirsat has also placed reliance upon a few decisions including Vijay Madanlal Choudhary (Supra) which shall be referred to hereinafter. However, he would strongly oppose grant of bail to the applicant in view of the strong and clinching evidence against him and also the apprehension of the prosecution that in case of his release, he might abscond.
17. Mr. Shirsat would argue that those shell companies purchased share/s of Empire India Multi-trade Pvt. Limited by showing that the tainted money became untainted. Mr. Shirsat would further argue that ill-gotten money was being deposited in the shell companies from the year 2010 to 2017 from the firm 10 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 started by the applicant by name "Empire India Multitrade Pvt. Limited". It is a continuing activity of money laundering since 2010 itself and, according to him, in view of section 3 of the PML Act, it is an offence of money laundering. The properties derived by the applicant either directly or indirectly are, indeed, an outcome of criminal activity relating to the scheduled offence under the Customs Act and, therefore, these properties are proceeds of crime in view of section 2 (1) (u) of the Act. Mr. Shirsat has invited my attention to the various documents on record to support his contention by emphasizing on the fact that in view of criminal antecedents of the applicant, rigours of section 45 will come into play.
18. Mr. Shirsat has also taken me through various paragraphs of the judgment in case of Vijay Madanlal Choudhary (supra), especially, paragraphs 250, 251, 252, 270 and 280.
19. Mr. Shirsat contends that the applicant has failed to discharge the burden of showing absence of reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence, if released.
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20. The applicant has preferred an application for bail before the Special Court which came to be rejected on 1st July, 2022.
21. Learned Senior Counsel Mr. Ponda as well as learned Special P.P Mr. Shirsat have mainly relied upon the judgment of the Supreme Court in the case of Vijay Madanlal Choudhary (supra) wherein the Supreme Court was called upon to deal with the pleas concerning the validity and interpretation of certain provisions of the PML Act and the alleged procedure followed by the ED while inquiring into/investigating offences under the PML Act being violative of the constitutional mandate.
22. As already stated hereinabove, Mr. Ponda's main thrust is upon the very jurisdiction of ED to independently investigate offences which are beyond the predicate offences, in the sense, ED has investigated the offences alleged to have been committed during the period of 2010 and prior to 2014. Entire case of ED, according to Mr. Ponda, for money laundering is to the tune of Rs.51.12 crores which is the break up of two figures which relate to the period 2014-2015 only; to be more precise, the period commenced on 28th August, 2014 and ended on 14th November, 2015.
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23. First of all, it needs to be ascertained as to whether there are proceeds of crime as contemplated in section 2 (1) (u) of the PML Act. It is needless to reiterate the term "proceeds of crime" as it has been elaborately discussed in various pronouncements of the Supreme Court and the High Courts. Nevertheless, the main ingredients of Section 3 and 2 (1) (u) of the PML Act for constituting an offence of money laundering are;
(a) There should have been a criminal activity relating to scheduled offence under P.M.L Act;
(b) The scheduled offence should have resulted in the generation of proceeds of crime; and
(c) The proceeds of crime so generated should have been projected or claimed as untainted money.
24. Section 132 and 135 of the Customs Act are scheduled offences under the Schedule to the P.M.L Act and, therefore, ECIR No. MBZO II/40/2021 dated 6th December, 2021 was recorded for initiating investigation for the offence of money laundering. The applicant with the co-accused named in the prosecution complaint No.155/CW of 2017 dated 27 th November, 2017 filed by the D.R.I, Mumbai Zonal Unit were found indulged in mis-declaration of the 13 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 consignments as fabric glue/Radiators/Asserted Colours for smuggling red sanders out of India by submitting forged documents of the Companies situate at SEZ.
25. A specific intelligence was developed by the officers of DRI, Mumbai Zonal Unit (for short "MZU") that red sanders were being smuggled out of India in an export consignment in container No. DRYU2306380 to Jebel Ali Port on the basis of forged documents. The shipment was being handled by Shipping Agent, M/s. ESAIPL Andheri (West), Mumbai. In view of the said intelligence, Container No. DRYU 2306380 was called back and examined under a panchanama on 27th November, 2015. 7.800 Metric Tonnes (Mts) of wooden logs purported to be Red Sanders, approximately valued at Rs.3.12 crores were recovered. It revealed that the freight booking for the abovesaid consignment was done by M/s. ESAIPL at the behest of M/s. Krrish Corporation having address at 6/85 Hadapsar Industrial Estate - I, Hadapsar, Pune. In fact, no firm by name "M/s. Krrish Corporation" was found at the given address. It was found that the said freight booking was done by a person namely Vijay Poojary (A-4) who was himself a Freight Forwarder and Customs Broker by profession. He was forwarding the freight 14 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 by name "M/s. Marine Trans India Pvt. Ltd" and CB firm viz: "M/s. Srinivas Clearing & Shipping India Pvt. Ltd.
26. Investigation further revealed that the applicant was the kingpin of the syndicate of smuggling the Red Sanders. He was a history sheeter and had been arrested in the year 2005 by DRI in case of availing Duty Drawback on the basis of forged documents. He was detained under COFEPOSA in the said case. After his release from detention, he started indulging in smuggling of Red Sanders along with one Ajit Satam. He continued his illegal smuggling of Red Sanders till 2010 and after that, he started dealing in Real Estate. In 2014, he again began to indulge in smuggling of Red Sanders.
27. Investigation further revealed that Vijay Poojary (A-4) offered the applicant requisite services of shipment of Red Sanders in the guise of fabric/glue/radiators/assorted colours and had also provided details of SEZ units whose names were to be used for shipment of such consignments. Total eighteen consignments were arranged to be shipped by Vijay Poojary (A-4) through one Harshavardhan Hegde, Managing Director of M/s. ESAIPL. The said Mr. Hegde 15 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 had availed services of his acquaintance and his employees for freight booking for those consignments. Having finalized the operational issues, the applicant in association with Vijay Poojary (A-4) and his associates, successfully caused shipment of seventeen consignments of Red Sanders to the United Arab Emirates (for short "UAE")/Africa. Apart from the 7.8 Mts of seized Red Sanders valued at Rs.3.12 crores that was attempted to be shipped out by the syndicate in the guise of Fabric Glue etc, in the past they shipped out 120 Mts of Red Sanders valued at Rs.48.00 Crores in the guise of fabric glues/radiators in seventeen export containers.
28. The ED conducted search and surveys during the course of investigation and found enormous documentary evidence qua the offence of money laundering. Several documents as regards Benami transactions, purchase of land at Khopoli, residential flats at various places in Mumbai were searched and several documents qua those properties came to be seized.
29. During the course of investigation of the case, information was called for from DRI Mumbai Zonal Unit. Statements of the applicant along with co-accused were recorded. Statements, 16 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 account opening forms and KYC documents in respect of bank accounts were called from concerned banks. Upon analysis, Investigating Agency found;
"7.1 Empire India Multitrade Pvt Ltd (A-2) was incorporated on 07.06.2010 and Badshah Majid Malik (A-
1), Saeed Ahmed Malik (A-3) and Shehroz Malik were the promoters of the company and they all inherently belong to the same place in UP.
7.2 Badshah Majid Malik (A-1), Saeed Ahmed Malik (A-
3) and Shehroz Malik have criminal background as all three of them were arrested by DRI in a case of availing Duty Drawback fraudulently in the year 2005 and all three of them were detained by DRI under COFEPOSA in the same case. Sh. Badshah Majid Malik (A-1) is a habitual offender and he was again arrested by DRI in the year 2015 for smuggling Red Sanders and was thereafter detained under COFEPOSA in the same case.
7.3 Empire India Multitrade Pvt. Ltd (A-2) was incorporated on 07.06.2010 and its authorized capital was Rs. 1 Crore and paid-up capital was Rs. 1 lakh and id engaged into the business of Real Estate and trading of fabric. The Directors of the Empire India Multitrade Pvt. Ltd (A-2) are detailed below:
D/N Director Name Appointment Cessation Date Date 1 Aakib Badshah Malik 12th Sept Till date 2017 2 Ali Ahmed Saeed 12th Sept Till Date Ahmed Malik 2017 3 Shehroz Zakir Husain 07th June Died 17 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 Malik 2010 4 Saeed Ahmad Zakir 07th June 12th Sept Husain Malik (A-3) 2010 2017 5 Badshah Abdul Majid 07th June 01st Nov Malik 2010 2010 6 Shaista Badshah Malik 01st Nov 2010 31st March 2016 Initially the shares were allotted as tabulated below:
S.No. Name of the Person Initial allotment of shares 1 Saeed Malik 3325 2 Shehroz Malik 3325 3 Badshah Malik 3350 The paid-up Capital/Share Capital of Empire India Multitrade Pvt Ltd (A-2) is detailed below:
S.No. Paid Up Capital/Share Capital 2010-11 100000 2011-12 46000000 2012-13 46900000 2013-14 47800000 2014-15 48250000 2015-16 48250000 7.4. The details of the final allotment of shares during the year 2011-12 are tabulated below:
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1 Saeed Malik 11,00,000 2 Shehroz Malik 10,50,000 3 Badshah Malik 2,50,00.0 4 Rahila Malik 4,50,000 5 Shaista Malik 3,50,000 6 Aadhar Ventures 4,50,000.
previously known as
Prraneta Industries Ltd
7 Speciality Papers Ltd 5,15,000
8 Emporis Projects Ltd 1,00,000
9 Empower India Ltd 40,000
10 Secunderabad Healthcare 10,000
Ltd
11 Afzia Malik 75,000
12 Neha Malik 75,000
13 Sana Malik 75,000
14 Kaiser Malik 1,00,000
15 Shazia Malik 75,000
7.5 These companies have subscribed to the shares of
Empire India Multitrade Pvt Ltd (A-2) as detailed below:
S. Name of the No of Premiu Total Amount No Allottee Shares m per Paid Allotted Share 1 Emporis 1,00,000 Rs.495 Rs.5,05,00,000 Projects Ltd 2 Speciality 5,15,000 Rs.495 Rs.26,00,75,000 Papers Ltd 3 Empower 40,000 Rs.495 Rs.2,02,00,000 Industries Ltd 4 Secunderabad 10,000 Rs.495 Rs.50,50,000 Healthcare 19 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 Pvt. Ltd 5 Aadhar 4,50,000 Rs.495 Rs.8,28,49,500 Ventures India Ltd The inflow of funds from the above tabled companies is depicted in the flow chart below:
Account statements of accounts bearing Nos.
08362320000624 and 017020110000707 of Empire India Multitrade Pvt Ltd (A-2) were obtained and scrutinized.
Analysis of the Bank accounts revealed that a substantial amount of funds received from Investor Companies by Empire India Multitrade Pvt Ltd (A-2) has been transferred to the Directors/Promoters and their relatives as depicted in the flow charts below:
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2) were obtained and scrutinized. Analysis of the account statements revealed that an amount of Rs.9.86 Crores has been transferred to the accounts of Badshah Majid Malik (A-1) as detailed below:
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30. Pages 284 to 310 of the record is the brief summary of evidence to prove involvement of the applicant in the money laundering. Few of the material is extracted below;
S.N Documents Description of Scrutiny analysis submission details documents 1 Statement of MrStatement In his statement he Badshah Majidrecorded u/s 50has revealed that he Malik (A-1) of the PMLAis a shareholder of on 20.12.2021 Empire India Multitrade (P) (A-
2) Ltd and Empire
India Multitrade
(P) (A-2) Ltd is in
the business of
fabrics and
construction and
his son, Aakib
Malik is the
Director and
authorized
signatory of Empire
India Multitrade
(P) Ltd (A-2). He
further revealed
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This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 that he had received funds from Empire India Multitrade Pvt.
Ltd. for the
purpose of fabric
purchase and
investment in his
company namely
Classic Stone
Crusher which
belonged to him.
He further revealed
that he had made a
payment of Rs.2.5
Crores for the
purpose of
repayment of loan
procured from
Gateway Offshore
and he is unaware
of the details of
Gateway offshore.
2. Statement of Mr.Statement In this statement he
Badshah Majidrecorded u/s 50has revealed that he
Malik (A-1) of the PMLAwas arrested by
on 21.12.2021 DRI in July, 2005
on the charges of
fraudulently
availing Duty
Drawback and in
2007 DRI filed
COFEPOSA against
him in the same
case. It was further
revealed that he
was again arrested
by DRI in 2015 for
smuggling Red
Sanders and he was
detained in
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This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 COFEPOSA in the same case. It was further revealed that he is holding a shareholding of 7.5% in Empire India Multitrade Pvt Ltd (A-2) and that his son is the Director of Empire India Multitrade Pvt Ltd (A-2). It was further revealed that after the death of Shehroz Malik he used to take care of day-to-day work of Empire Pvt Ltd (A-
2)
3. Statement of Mr.Statement In his statement he Badshah Majidrecorded u/s 50has revealed that he Malik (A-1) of the PMLAreceived Rs.6 22.12.2021 Crores from Empire India Multitrade Pvt Ltd (A-2)for the purpose of installing a stone crusher as he was having land situated at Khopoli and he was in need of money for the purpose of investment in machinery and therefore he had received the money from Empire India Multitrade Pvt Ltd 24 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 (A-2). It was further revealed that he had utilized the funds received from Empire India Multitrade Pvt Ltd (A-2) for installing stone crusher and the same were then used to meet his personal expenses and procurement of property.
4. Statement of Mr.Statement In his statement he Badshah Majidrecorded u/s 50has revealed that Malik (A-1) of the PMLAthat fund obtained on 23.12.2021 from Empire India Multitrade Pvt Ltd (A-2) have been utilized to pay off his debts.
5. Statement of MrStatement In his statement he Badshah Majidrecorded u/s 50has revealed that he Malik (A-1) of the PMLAhad lended loan to on 25.12.2021 Speciality Papers which is one of the Investor companies in Empire India Multitrade Pvt Ltd (A-2). It was further revealed that he deals in respect of the legal aspects of Empire India Multitrade Pvt Ltd (A-2) pertaining to attachment of shares and property under the Benami Act. It was further 25 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 revealed that the shares of the Investor companies of Empire India Multitrade Pvt. Ltd (A-2) have been attached by the Adjudicating Authority, The Prohibition of Benami Property Transaction Act, 1988 considering them as Benami companies.
8. Statement ofStatement In his statement he Badshah Majidrecorded u/s50has revealed that he Malik (A-1) of the PMLAwas authorised on 02.01.2022 signatory of Empire India Multitrade Pvt Ltd (A-2) during 2010 for a period of 4-5 months. It was further revealed that he had made payments of Rs.5.83 Crores to Indivar Traders for procurement of shares of Empire India Multitrade Pvt. Ltd (A-2) from one of the 5 companies holding shares of Empire Multitrade Pvt Ltd Namely Empower, Emporis Speciality papers, Aadhar Ventures Pvt Ltd 26 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 Secunderabad Healthcare Pvt Ltd.
It was further
revealed that that
he does not know
the name of the
company whose
shares he was
proposing to
procure and he was
unable to to buy
shares as he was
not able to arrange
enough funds. It
was further
revealed that the
said amount of
Rs.5.83 Crores is
still laying with
Indivar Traders and
he has no
knowledge in
respect of the
whereabouts of the
Indivar Traders.
17. Certified copies ofCertificate Through this
Bank accountdated account statement
statement of04.02.2022 it was found that
account bearingsubmitted byRs.5.39 crores have
No.083610100007 HDFC Bank been received from
61 pertaining to Empire India Pvt
Badshah Majid Ltd (A-2) that were
Malik (A-1) (copy further transferred
annexed as Exhibit to M/s. Kohinoor
XXXXI) Developers,
Almasood Quereshi
and other
individuals for
purchase of
property, luxury
cards and loan
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18. Certified copies ofCertificate Through this Bank accountdated account statement statement of04.02.2022 it was found that account bearingsubmitted byRs.4.47 Crores No.083615300084 HDFC Bank crores have been 70 pertaining to received from Badshah Majid Empire India Malik (A-1) (Copy Multitrade Pvt Ltd annexed as Exhibit (A-2) XXXXII)
8. Specific role of the accused/co-accused/persons abetting in the commission of offence of money laundering in terms of section 3 of PMLA:
Sr. Name of the Accused Role in the case (Please No. mention in few words)
1. Badshah Majid Malik Badshah Majid Malik (A-1) (A-1) was the kingpin of the whole syndicate involved in the smuggling of Red Sanders.
Badshah Majid Malik (A-1) is a habitual offender. Badshah Majid Malik (A-1) was arrested by DRI during the year 2005 on the charges of fraudulently availing Duty Drawback and was later on detained under COFEPOSA in the same case and he had admitted the same in his statement. He was again arrested by DRI in 2015 for smuggling Red Sanders and he was detained under COFEPOSA in the same case.
During the course of his 28 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 statement recorded before DRI he had stated that when he was in Nashik Jail detained under COFEPOSA Act in 2007, he had met Ajit Satam who was also detained under COFEPOSA Act there.
After release from Nashik Jail in 2008 he had started smuggling of Red Sanders with Ajit Satam. Thereafter, due to a dispute with Ajit Satam he had parted ways with Ajit Satam and again during the year 2014 in greed of money he started smuggling of Red Sanders.
The ill-gotten money acquired through the smuggling of Red Sanders has been laundered through Empire India Multitrade Pvt Ltd (A-2) and then projecting the same as untainted.
Therefore, Mr. Badshah Majid Malik (A-1) is actively involved in the activity connected to the proceeds of crime including its concealment, possession, acquisition related and projected the same as untainted property, thereby, had committed the offence of money laundering as defined under Section 3 of the PMLA, 2002 which is punishable under Section 4 of the PMLA, 2002.
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31. It can thus be seen that the applicant was involved in the smuggling of Red Sanders from 2008 to 2010. He again re-entered in the smuggling of red sanders in the year 2014 and managed to smuggle seventeen containers of Red Sanders valued at 48 Crores between 2014-2015 before the interdiction and seizure of the container of Red Sanders by DRI on 27th November, 2017. The proceeds of crime in respect of smuggling of Red Sanders that were being undertaken by the applicant since 2008 was laundered in the guise of share subscription premium of M/s. Empire India Multitrade (P) Ltd (A-2) that was received from five Benami companies namely Empower India Ltd, Empower Projects Ltd, Speciality Papers Ltd, Secunderabad Healthcare Ltd and Aadhar Ventures Ltd that were controlled by Shirish Chandra Shah, C.A who was an entry operator and used to provide accommodation entries in the form of share subscription premium in lieu of cash payments. Those payments were credited to the accounts of accused No.2 from 2011 to 2017, wherefrom those were transferred to the personal accounts of Directors and relatives including the applicant who received a total of Rs.9.86 Crore in his personal accounts from the accounts of M/s. Empire India Multitrade Pvt Ltd.
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32. Mr. Ponda, learned senior counsel emphasized on paragraphs 253 and 281 to 284 of the judgment of the Supreme Court in case of Vijay Madanlal Choudhary (supra). The same are extracted below;
"253. Tersely put, it is only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. The authorities under the 2002 Act cannot resort to action against any person for money-laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum. For, the expression "derived or obtained" is indicative of criminal activity relating to a scheduled offence already accomplished. Similarly, in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the criminal case (scheduled offence) against him/her, there can be no action for money- laundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence. This interpretation alone can be countenanced on the basis of the provisions of the 2002 Act, in particular Section 2(1)(u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of definition clause "proceeds of crime", as it obtains as of now.
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281. The next question is: whether the offence under Section 3 is a standalone offence? Indeed, it is dependent on the wrongful and illegal gain of property as a result of criminal activity relating to a scheduled offence. Nevertheless, it is concerning the process or activity connected with such property, which constitutes offence of money-laundering. The property must qualify the definition of "proceeds of crime" under Section 2(1)(u) of the 2002 Act. As observed earlier, all or whole of the crime property linked to scheduled offence need not be regarded as proceeds of crime, but all properties qualifying the definition of "proceeds of crime" under Section 2(1)(u) will necessarily be crime properties. Indeed, in the event of acquittal of the person concerned or being absolved from allegation of criminal activity relating to scheduled offence, and if it is established in the court of law that the crime property in the concerned case has been rightfully owned and possessed by him, such a property by no stretch of imagination can be termed as crime property and ex-consequenti proceeds of crime within the meaning of Section 2(1)(u) as it stands today. On the other hand, in the trial in connection with the scheduled offence, the Court would be obliged to direct return of such property as belonging to him. It would be then paradoxical to still regard such property as proceeds of crime despite such adjudication by a Court of competent jurisdiction. It is well within the jurisdiction of the concerned Court trying the scheduled offence to pronounce on that matter.
282. Be it noted that the authority of the Authorised Officer under the 2002 Act to prosecute any person for offence of money- laundering gets triggered only if there exists proceeds of crime within the meaning of Section 32 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 2(1)(u) of the 2002 Act and further it is involved in any process or activity. Not even in a case of existence of undisclosed income and irrespective of its volume, the definition of "proceeds of crime" under Section 2(1)(u) will get attracted, unless the property has been derived or obtained as a result of criminal activity relating to a scheduled offence. It is possible that in a given case after the discovery of huge volume of undisclosed property, the authorised officer may be advised to send information to the jurisdictional police (under Section 66(2) of the 2002 Act) for registration of a scheduled offence contemporaneously, including for further investigation in a pending case, if any. On receipt of such information, the jurisdictional police would be obliged to register the case by way of FIR if it is a cognizable offence or as a non-cognizable offence (NC case), as the case may be. If the offence so reported is a scheduled offence, only in that eventuality, the property recovered by the authorised officer would partake the colour of proceeds of crime under Section 2(1)(u) of the 2002 Act, enabling him to take further action under the Act in that regard.
283. Even though, the 2002 Act is a complete Code in itself, it is only in respect of matters connected with offence of money- laundering, and for that, existence of proceeds of crime within the meaning of Section 2(1)(u) of the Act is quintessential. Absent existence of proceeds of crime, as aforesaid, the authorities under the 2002 Act cannot step in or initiate any prosecution.
284. In other words, the Authority under the 2002 Act, is to prosecute a person for offence of money-laundering only if it has reason to believe, 33 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 which is required to be recorded in writing that the person is in possession of "proceeds of crime". Only if that belief is further supported by tangible and credible evidence indicative of involvement of the person concerned in any process or activity connected with the proceeds of crime, action under the Act can be taken forward for attachment and confiscation of proceeds of crime and until vesting thereof in the Central Government, such process initiated would be a standalone process".
33. It is quite evident and clear from the material gathered by the ED referred hereinabove that the property in question has been derived directly as a result of criminal activity of smuggling Red Sanders relating to the scheduled offence and, as such, are proceeds of crime. It cannot be said that the authority had proceeded on an assumption that the properties recovered by them are the proceeds of crime and that scheduled offence has been committed by the applicant. The material placed on record is also sufficient to construe that the properties in question qualified the definition "proceeds of crime" under section 2 (1) (u) of the P.M.L Act. It would not be out of place to mention here that ED under the PML Act is prosecuting the applicant and the others for the offences of money laundering on the basis of its reasons to believe that the applicant has been in possession of "proceeds of crime" which is 34 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 supported by tangible and credible evidence indicating involvement of the applicant in the activity connected with the proceeds of crime. A futile attempt is made to subterfuge the true nature of real activity.
34. Mr. Shirsat, learned Special P.P, as already stated hereinabove, while strongly opposing release of the applicant on bail, invited my attention to paragraphs 250, 251, 252, 270 and 280 of the judgment in the case of Vijay Madanlal Choudhary (supra).
35. Indubitably, investigation by the Ed is in respect of money laundering of Rs.51.12 crores which relate to the period from 20 th August, 2014 to 14th November, 2015. However, scope and ambit of investigation under the PML Act is wider in nature which can take into account the period even before the date and time of commission of the scheduled offence. As already stated, the criminal activity had been committed even before the same has been notified as a scheduled offence for the purpose of PML Act.
36. In short, it is a continuing offence. I find a great deal of substance in the argument of Mr. Shirsat, who has invited my 35 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 attention to the aforesaid paragraphs. It would be apposite to extract the paragraphs hereinbelow;
"250. The other relevant definition is "proceeds of crime" in Section 2(1) (u) of the 2002 Act. This definition is common to all actions under the Act, namely, attachment, adjudication and confiscation being civil in nature as well as prosecution or criminal action. The original provision prior to amendment vide Finance Act, 2015 and Finance (No.2) Act, 2019, took within its sweep any property (mentioned in Section 2 (1)(v) of the Act) derived or obtained, directly or indirectly, by any person "as a result of " criminal activity "relating to" a scheduled offence (mentioned in Section 2(1)(y) read with Schedule to the Act) or the value of any such property. Vide Finance Act, 2015, it further included such property (being proceeds of crime) which is taken or held outside the country, then the property equivalent in value held within the country and by further amendment vide Act 13 of 2018, it also added property which is abroad. By further amendment vide Finance (No.2) Act, 2019, Explanation has been added which is obviously a clarificatory amendment. That is evident from the plain language of the inserted Explanation itself. The fact that it also includes any property which may, directly or indirectly, be derived as a result of any criminal activity relatable to scheduled offence does not transcend beyond the original provision. In that, the word "relating to" (associated with/has to do with) used in the main provision is a present participle of word "relate" and the word "relatable" is only an adjective. The thrust of the original provision itself is to indicate that any property is derived or obtained, directly or indirectly, as a result of criminal activity concerning the
36 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 scheduled offence, the same be regarded as proceeds of crime. In other words, property in whatever form mentioned in Section 2 (1)(v), is or can be linked to criminal activity relating to or relatable to scheduled offence, must be regarded as proceeds of crime for the purpose of the 2002 Act. It must follow that the Explanation inserted in 2019 is merely clarificatory and restatement of the position emerging from the principal provision [i.e., Section 2 (1) (u)].
251. The "proceeds of crime" being the core of the ingredients constituting the offence of money-laundering, that expression needs to be construed strictly. In that, all properties recovered or attached by the investigating agency in connection with the criminal activity relating to a scheduled offence under the general law cannot be regarded as proceeds of crime. There may be cases where the property involved in the commission of scheduled offence attached by the investigating agency dealing with that offence, cannot be wholly or partly regarded as proceeds of crime within the meaning of Section 2 (1) (u) of the 2002 Act -- so long as the whole or some portion of the property has been derived or obtained by any person "as a result of " criminal activity relating to the stated scheduled offence. To be proceeds of crime, therefore, the property must be derived or obtained, directly or indirectly, "as a result of " criminal activity relating to a scheduled offence. To put it differently, the vehicle used in commission of scheduled offence may be attached as property in the concerned case (crime), it may still not be proceeds of crime within the meaning of Section 2 (1) (u) of the 2002 Act. Similarly, possession of unaccounted property acquired by legal means may be actionable for tax violation and yet, will not be regarded as proceeds of crime unless the 37 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 concerned tax legislation prescribes such violation as an offence and such offence is included in the Schedule of the 2002 Act. For being regarded as proceeds of crime, the property associated with the scheduled offence must have been derived or obtained by a person "as a result of " criminal activity relating to the concerned scheduled offence. This distinction must be borne in mind while reckoning any property referred to in the scheduled offence as proceeds of crime for the purpose of the 2002 Act. Dealing with proceeds of crime by way of any process or activity constitutes offence of money-laundering under Section 3 of the Act.
252. Be it noted that the definition clause includes any property derived or obtained "indirectly" as well. This would include property derived or obtained from the sale proceeds or in a given case in lieu of or in exchange of the "property" which had been directly derived or obtained as a result of criminal activity relating to a scheduled offence. In the context of Explanation added in 2019 to the definition of expression "proceeds of crime", it would inevitably include other property which may not have been derived or obtained as a result of any criminal activity relatable to the scheduled offence. As noticed from the definition, it essentially refers to "any property" including abroad derived or obtained directly or indirectly. The Explanation added in 2019 in no way travels beyond that intent of tracking and reaching upto the property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence. Therefore, the Explanation is in the nature of clarification and not to increase the width of the main definition "proceeds of crime". The definition of "property" also contains Explanation which is for the removal of doubts and to clarify that the term 38 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 property includes property of any kind used in the commission of an offence under the 2002 Act or any of the scheduled offences. In the earlier part of this judgment, we have already noted that every crime property need not be termed as proceeds of crime but the converse may be true. Additionally, some other property is purchased or derived from the proceeds of crime even such subsequently acquired property must be regarded as tainted property and actionable under the Act. For, it would become property for the purpose of taking action under the 2002 Act which is being used in the commission of offence of money- laundering. Such purposive interpretation would be necessary to uphold the purposes and objects for enactment of 2002 Act.
270. Needless to mention that such process or activity can be indulged in only after the property is derived or obtained as a result of criminal activity (a scheduled offence). It would be an offence of money-laundering to indulge in or to assist or being party to the process or activity connected with the proceeds of crime; and such process or activity in a given fact situation may be a continuing offence, irrespective of the date and time of commission of the scheduled offence. In other words, the criminal activity may have been committed before the same had been notified as scheduled offence for the purpose of the 2002 Act, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, may be liable to be prosecuted for offence of money-laundering under the 2002 Act -- for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in 39 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 trenches until fully exhausted. The offence of money-laundering is not dependent on or linked to the date on which the scheduled offence or if we may say so the predicate offence has been committed. The relevant date is the date on which the person indulges in the process or activity connected with such proceeds of crime. These ingredients are intrinsic in the original provision (Section 3, as amended until 2013 and were in force till 31.7.2019); and the same has been merely explained and clarified by way of Explanation vide Finance (No.2) Act, 2019. Thus understood, inclusion of Clause (ii) in Explanation inserted in 2019 is of no consequence as it does not alter or enlarge the scope of Section 3 at all.
280. We may also note that argument that removing the necessity of projection from the definition will render the predicate offence and money-laundering indistinguishable. This, in our view, is ill founded and fallacious. This plea cannot hold water for the simple reason that the scheduled offences in the 2002 Act as it stands (amended upto date) are independent criminal acts. It is only when money is generated as a result of such acts that the 2002 Act steps in as soon as proceeds of crime are involved in any process or activity. Dealing with such proceeds of crime can be in any form -- being process or activity. Thus, even assisting in the process or activity is a part of the crime of money- laundering. We must keep in mind that for being liable to suffer legal consequences of ones action of indulging in the process or activity, is sufficient and not only upon projection of the ill-gotten money as untainted money. Many members of a crime syndicate could then simply keep the money with them for years to come, the hands of the law in such a situation cannot be bound and stopped from proceeding against 40 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 such person, if information of such illegitimate monies is revealed even from an unknown source".
37. A harmonious reading of the aforesaid paragraphs referred to by Mr. Ponda and Mr. Shirsat would indicate that the ED was well within it's jurisdiction to investigate continuing offence/s, irrespective of the date and time of commission of the scheduled offence as observed by the Hon'ble Supreme Court in the case of Vijay Madanlal Choudhary (supra). It is crystal clear that a criminal activity may have been committed before the same had been notified as a scheduled offence for the purpose of PML Act, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, may be liable to be prosecuted for offence of money laundering under the PML Act for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in trenches until fully exhausted. The Supreme Court has made it very clear that the offence of money laundering is not dependent on or linked to the date on which the scheduled offence or if we may say so the predicate offence has been committed. The relevant date is the date on which the person indulges in the process 41 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 or activity connected with such proceeds of crime. As already stated hereinabove and the details of period unearthed by the Investigating Agency, the applicant had already indulged in the process connected with proceeds of crime. I am afraid, I cannot buy the arguments of Mr. Ponda that the action on the part of the ED to investigate into an offence beyond the predicate offence is against the basic tenets of provisions of PML Act. The Ed has a power to investigate a continuing offence of money laundering as the said offence is not dependent on the date on which the scheduled offence or predicate offence has been committed. The E.D, by clinching material placed on record, has shown that the applicant has been in continuing possession of proceeds of crime.
38. The Supreme Court in case of Tarun Kumar Vs. Assistant Directorate of Enforcement5 had an occasion to deal with similar issue wherein the Supreme Court reiterated the ratio laid down in Vijay Madanlal Choudhary (supra) in respect of interpretation of Section 3 of the PMLA. Paragraphs 269, 283 and 284 of the said judgment read thus;
"269. From the bare language of Section 3 of the 2002 Act, it is amply clear that the 5 Criminal Appeal No. of 2023 (@ SLP (Cri) No.9431 of 2023 42 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 offence of money-laundering is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence. The process or activity can be in any form -- be it one of concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so. Thus, involvement in any one of such process or activity connected with the proceeds of crime would constitute offence of money- laundering. This offence otherwise has nothing to do with the criminal activity relating to a scheduled offence -- except the proceeds of crime derived or obtained as a result of that crime".
283. Even though, the 2002 Act is a complete Code in itself, it is only in respect of matters connected with offence of money- laundering, and for that, existence of proceeds of crime within the meaning of Section 2 (1) (u) of the Act is quintessential. Absent existence of proceeds of crime, as aforesaid, the authorities under the 2002 Act cannot step in or initiate any prosecution.
284. In other words, the Authority under the 2002 Act, is to prosecute a person for offence of money-laundering only if it has reason to believe, which is required to be recorded in writing that the person is in possession of "proceeds of crime". Only if that belief is further supported by tangible and credible evidence indicative of involvement of the person concerned in any process or activity connected with the proceeds of crime, action under the Act can be taken forward for 43 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 attachment and confiscation of proceeds of crime and until vesting thereof in the Central Government, such process initiated would be a standalone process".
39. In view of the judgment of the Supreme Court in the case of P. Chindambaram Vs. Directorate of Enforcement (supra) wherein the Supreme Court relied upon the principles laid down by it in case of Sanjay Chandra Vs. CBI6 wherein it is held that in economic offences, since the punishment is seven years, the bail should be granted and that there is no bar that in any economic offence bail cannot be granted. There can be no dispute about the said principle laid down. Nevertheless, in case of Tarun Kumar (supra), apart from the fact that it involves commission of economic offence, yet the ratio laid down by the Supreme Court in case of Vijay Madanlal Choudhary (supra) would be squarely applicable to the present case, more particularly, in regard to the continuance dealing with proceeds of crime.
40. I am conscious of the fact that this is an application seeking bail and, therefore, it is needless to delve deep into the merits and demerits of the case.
6 (2012) 1 SCC 40 44 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024
41. The broad parameters which are required to be considered are the nature of accusation, the nature of material and evidence collected by the Investigating Agency in support of the allegations, severity of the punishment prescribed for the offence, character and antecedents of the accused, circumstances which are peculiar to the accused and last but not least, possibility of securing his presence during trial as well as reasonable apprehension of witnesses being hampered or tampered. Of course, the larger interest of the State will have to be also considered.
42. At this stage, it would also be necessary to keep in mind twin conditions set down in Section 45 of the PML Act which are a much higher threshold bar than any of the conditions laid down in the Act. The applicant has not discharged onus of satisfying this Court as regards reasonable grounds for believing that he is not guilty of such offence and he is not likely to commit any offence while on bail, more particularly in the light of the fact that in the past, he had indulged in similar activities of smuggling red sanders by using fake documents. It is needless to say that as per the statutory presumption under Section 24 of the PML Act, the Court or Authority is entitled to presume, unless contrary is proved, that such 45 of 48 ::: Uploaded on - 21/06/2024 ::: Downloaded on - 08/07/2024 01:00:32 ::: BA-3135-2022.doc This Order is modified/corrected by Speaking to Minutes Order dated 03/07/2024 proceeds of crime are involved in money laundering.
43. Learned Senior Counsel has also pressed into service a few judgments of the Supreme Court. Firstly, in the case of Directorate of Enforcement Vs. Deepak Mahajan and another (supra). It would be apposite to extract paragraph 103 of the said judgment;
"103. In fact, Justice Yogeshwar Dayal speaking for the majority in Union of India v. O.P. Gupta has rightly observed thus:
"The expression 'accused' used in Section 167(2) of the Code is not in the sense of accused under Article 20(3) of the Constitution and/or Section 25 of the Indian Evidence Act with which the Supreme Court was concerned in the cases of Ramesh Chander Mehta and/or Illias. The word, 'accused' in Section 167(2) of the Code is merely used in the sense of defining a person who has been arrested, detained and produced before a Magistrate and not in the sense of accused person under the Customs Act and/or Foreign Exchange Regulation Act since that person has been defined in the aforesaid two judgments as only that person against whom cognizance has been taken by the Magistrate on a complaint being filed. Therefore, the judgments of the Supreme Court in the cases of Ramesh Chander Mehta or Illias referred to above do not stand in the way of applicability of Section 167(2) of the Code to the person detained and produced by competent officer before the Magistrate in pursuance of Section 104(2) of the Customs Act or Section 35(2) of the Foreign Exchange Regulation Act."
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44. The Supreme Court differentiated the word "accused" in Section 167 of the Cr.P.C vis-a-vis the word "accused" used under the Customs Act and/or Foreign Exchange Regulation Act. The word "accused" in section 167 (2) of the Cr. P.C is merely used in the sense of defining a person who has been arrested, detained and produced before a Magistrate and not otherwise. When a person is accused under the provisions of the Customs Act and/or FERA is referred as an accused against whom cognizance has been taken by the Magistrate on a complaint being filed.
45. The learned Senior Counsel has also pressed into service a well-known judgment of the Supreme Court in case of Ranjitsing Brahmajeetsing Sharma (supra). Ratio laid down in the said case will not be of any assistance to the applicant in view of the decision of the Supreme Court in case of Vijay Madanlal Choudhary (supra). As already discussed hereinabove, the Enforcement Directorate has jurisdiction to investigate a continuing offence.
46. Upshot of the aforesaid discussion is that the application is devoid of merits.
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47. Now, to the order.
:ORDER:
Application stands rejected.
[PRITHVIRAJ K. CHAVAN, J.]
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