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Delhi High Court Grants Bail to Chartered Accountant Accused of Money Laundering 

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Case Title: Manish Kothari (Presently in JC) v. Director of Enforcement, Ministry of Finance, Dept. of Revenue Headquarter Investigation Unit 

Date of Decision: 22nd September 2023 

Case Number: Bail Application 2341 of 2023 

Coram: Hon’ble Mr. Justice Dinesh Kumar Sharma 

 

Introduction 

   

This case revolved around a bail application filed under Section 439 read with Section 167(2) and Section 482 of the Criminal Procedure Code (Cr.P.C.) by Manish Kothari, the petitioner, who was in judicial custody. The petitioner sought bail in connection with CT Case No. 13/2022-ECR/KLZ0/41/2020 dated 25/09/20 under the Prevention of Money Laundering Act, 2002 (PMLA). 

 

Factual Background 

  

The petitioner’s bail application had been previously dismissed by the Special Judge on 09.06.2023. The dismissal was primarily based on the ground that the petitioner failed to meet the threshold of Section 45 of the PMLA. The trial court had held that the petitioner actively assisted co-accused individuals in converting illicit funds into legitimate money and was involved in money laundering. 

 

Additionally, the trial court considered the case a serious economic offense, emphasizing that the petitioner could not be treated differently under the proviso clause of Section 45 of the PMLA, which deals with the share of an accused in the tainted money. The trial court was of the opinion that the petitioner’s role was connected to a substantial amount, approximately Rs. 48 Crores, attributed to the co-accused Anubrata Mondal and his daughter Sukanya Mondal. 

 

Legal Issues 

   

  1. Whether the petitioner meets the criteria for bail under Section 45 of the PMLA? 
  2. Is there sufficient evidence to establish the petitioner’s involvement in money laundering? 
  3. Are the statements recorded under Section 50 of the PMLA admissible as evidence?

 

Contentions of the Petitioner 

   

  • The petitioner’s counsel argued that the petitioner is a law-abiding citizen and a qualified chartered accountant with no prior criminal record.  
  • The petitioner provided professional services to Anubrata Mondal and his family, primarily related to income tax filing.  
  • The petitioner’s role was limited to filing income tax returns and was not involved in any illegal activities.  
  • The prosecution’s case is based mainly on statements of co-accused individuals, which contain contradictions and should not be relied upon.  
  • The petitioner’s arrest grounds were not supplied to him, violating his rights. 

 

Arguments by the Prosecution 

   

  • The prosecution argued that the petitioner played a significant role in managing the finances of Anubrata Mondal and his family in connection with the proceeds of crime generated from illegal activities like cross-border cattle smuggling.  
  • They alleged that the petitioner helped in projecting tainted money as untainted and participated in the creation of benami assets and companies for laundering the proceeds of crime.  
  • The prosecution emphasized the seriousness of economic offenses and the need to treat them differently. 

 

Observation and Analysis 

   

The court observed that at the bail stage, it should consider the probability of the accused’s guilt and whether they are likely to commit further offenses while on bail. The court should not conduct a detailed examination of evidence or make definitive findings of innocence.  

   

The petitioner’s role as a chartered accountant primarily involved tax-related services. The court noted that the allegations against the petitioner did not involve activities beyond the scope of his profession. The veracity of the prosecution’s case and the shifting of blame by co-accused should be evaluated during the trial. 

 

Decision of the Court 

   

The court granted bail to the petitioner, considering the principles of broad probabilities and the prima facie nature of the case. The bail was granted with specific conditions, including surrendering the passport, providing contact information, and refraining from tampering with witnesses or engaging in criminal activities. 

 

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Written by – Ananya Chaudhary 

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Gujarat High Court grants bail to the respondent-accused stating a person cannot be charged with abetment of suicide for trivial reasons

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Rakeshkumar Laxmichand Jain vs State Of Gujarat on 13 June, 2023

Bench: Hemant M. Prachchhak

R/CRIMINAL MISC.APPLICATION NO. 13265 of 2019

Facts

By way of this present application under Section 439(2) of the Code of Criminal Procedure 1973, the applicant herein – original complainant had challenged the order passed by the learned Additional Sessions Judge Ahmedabad in Criminal Appeal No.4181 of 2019 by which the learned Judge had released the respondent herein – original accused on bail. Though the matter was filed in the year 2019, the Court had not issued a Notice for 4 years as the applicant had not turned up for any of the proceedings.

The dispute between the applicant and the respondent No.2 was that the applicant executed a deed in favour of the respondent No.2 – original accused and thereby transferred the disputed property in favour of the respondent accused. As per the say of the applicant – original complainant it was the oral understanding between the deceased and the accused that as and when the deceased returned the money, the accused would again enter into the agreement and return the property to the deceased. Though the deceased had returned the money, the respondent-accused had not executed the deed in favour of the deceased and therefore, under such circumstances, the deceased took the untoward step of committing suicide

The learned counsel appearing for the applicant submitted that the respondent herein – original accused had committed a serious offence and misused the liberty granted at the time of releasing him on bail by the trial Court. He had submitted that the respondent had not complied with the condition of surrendering his passport before the concerned Trial Court. He urged that the present application be allowed and the bail granted to the respondent No.2 – accused be cancelled.

Judgement

The Court graned bail to the respondent and held that, so far as Section 306(abetment of suicide) of the Indian Penal Code was concerned, this cannot be termed as an abatement to commit suicide and therefore, after considering all these aspects, the learned Trial Court had rightly exercised powers while granting bail to the respondent accused and thereafter, no allegation with regard to violation or any breach of peace or tranquility had been made against the respondent accused nor was there any allegation with regard to win over the witnesses or indulge into pressurize the witnesses. In the present case, except for the condition that the respondent accused had not surrendered his passport before the I.O. or before the concerned Court, no other breach is said to have been reported. Even the State had not preferred any application for cancellation of bail granted to the respondent accused. Hence, considering the facts and circumstances of the case, the court granted bail to the respondent-accused.

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Written by- Aadit Shah

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The Gujarat High Court mentions that bail should not be cancelled on the assumption of the accused’s guilt and that the appellate or superior court can consider the correctness of an order granting bail if material facts or crucial circumstances were ignored.

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Case-  Thakor Shivaji Kanaji vs Water Supply And Sewerage Board (C/SCA/14211/2013)

Decided on: 3rd July 2023

CORAM: HON’BLE Justice Rajendra M. Sareen
Introduction

The petitioner challenged the judgment and award passed by the Labour Court, Mehsana, in a reference case related to terminating the petitioner’s services.

According to the facts presented in the text, the petitioner was working as a labourer for the respondent (employer) from 2001 with a monthly salary of Rs. 2000. The petitioner claimed that his services were terminated by the employer on June 30, 2003, without any notice or notice pay, which he considered a violation of specific provisions of the Industrial Disputes Act. The matter was referred to the Labour Court, Mehsana, and after trial, the court awarded the petitioner compensation of Rs. 10,000 in lieu of reinstatement. Both the petitioner and the employer filed separate writ petitions challenging the judgment.

Judgement

The petitioner’s submission argued that the termination was illegal and that the Labour Court should have granted reinstatement instead of compensation. In the alternative, they requested an increase in the prize awarded.

The employer’s submission claimed they did not directly employ the petitioner and were instead employed by a security service provider. They argued that the Labour Court wrongly concluded that the petitioner was working under the employer and that there was no basis for the compensation awarded.

After hearing the arguments from both sides and examining the evidence, the judge concluded that the Labour Court’s finding that the petitioner had worked for 240 days in the last year and that the termination was illegal was justified. The judge also noted that the employer failed to provide documentary evidence to prove that the petitioner was working under a contractor. Therefore, the judge upheld the Labour Court’s decision regarding the termination’s illegality.

However, the judge considered the time since the termination occurred in 2003 and found that reinstatement was not feasible. The judge referred to previous court decisions stating that reinstatement with total back wages is not automatic in cases of illegal termination and that compensation may be appropriate instead. The judge noted that the prize awarded by the Labour Court was inadequate but did not provide a specific ruling on enhancing the payment.

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Written by- Aadit Shah

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The Gujarat High Court mentions that bail should not be cancelled on the assumption of the accused’s guilt and that the appellate or superior court can consider the correctness of an order granting bail if material facts or crucial circumstances were ignored.

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Case-  Chetnaben W/O Manilal Chaudhari vs State Of Gujarat (R/CR.MA/2110/2016)

Decided on: 22nd June 2023

CORAM: HON’BLE Justice Hemant M. Prachchhak
Introduction

The original complainant makes the application to cancel the bail granted to the accused persons. The accused were granted bail in connection with a case registered under various sections of the Indian Penal Code and the G.P. Act.

Judgement

The court has heard arguments from the counsels representing the respective parties. The counsel for the applicant argues that the bail granted is illegal and arbitrary, while the counsel for the accused states that there have been no incidents or complaints against the accused since their release on bail.

The court examines the impugned order passed by the Trial Court and considers the submissions and facts of the case. It notes that the injured persons are no longer under treatment and are out of danger. Based on these considerations, the court opines that the Trial Court has rightly exercised its power under Section 438 of the Code of Criminal Procedure to grant bail.

The court then emphasises the distinction between considering a bail application and deciding on a petition for its cancellation. It cites previous court decisions that highlight the grounds for cancellation of bail, such as interference with the administration of justice, evasion of justice, abuse of the concession of bail, possibility of the accused absconding, likelihood of misuse of bail, and tampering with evidence or threatening witnesses.

The court refers to various Supreme Court judgments that guide the cancellation of bail, including the need for compelling and overwhelming circumstances to justify cancellation, the examination of relevant material and omission of considerations in the bail grant, and the inability of the court that grant bail to review its order as to give of bail on the grounds of it being unjustified, illegal, or perverse.

The court also mentions that bail should not be cancelled on the assumption of the accused’s guilt and that the appellate or superior court can consider the correctness of an order granting bail if material facts or crucial circumstances were ignored.

Ultimately, based on the facts and circumstances of the case, the court concludes that there are no cogent and relevant grounds to cancel the bail granted to the accused. It affirms the reasoning of the Trial Court and dismisses the application for cancellation of bail.

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Written by- Aadit Shah

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Delhi High court granted bail to an accused under the offence of Kidnapping, as per their authority under section 439 of CrPC.

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Title: Shah Alam vs State Govt. of NCT Delhi

Reserved: 01.06.2023

Pronounced: 07.06.2023

BAIL APPLN. 1033/2023

CORAM: HON’BLE MR. JUSTICE VIKAS MAHAJAN

Introduction

Delhi High court granted bail to an applicant under section 439 of CrPC seeking regular bail in FIR No.394/2020 under Sections 364A/365/342/323/506/102B/34 IPC.

Facts of the case

The mother of the victim on 03.09.2020 made a complaint to the police at 10:02 p.m. that the victim, her daughter, aged about 24 years went to HDFC Bank, Sector-02, Noida, U.P at about 01:30 p.m. with her ATM, passbook and cheque book and she has not returned home and despite searching for her, the victim could not be found. She suspected that some unknown person has kidnapped her daughter by luring her. On the basis of the said complaint, FIR was registered under Section 365 IPC.

The father of the victim also produced few video recordings as well as Whatsapp messages regarding the demand for ransom. On the basis of the statement of the father, Sections 364A/506/342/323/120B/34 IPC were also added in the case.

Search was made for the victim with the help of location and CDR of victim’s mobile number and the victim was recovered on 04.09.2020 from the custody of accused persons namely, Simpal Srivastav and her boyfriend Shah Alam (petitioner herein) from Village Chhalera, Sector-44, Noida (U.P). The said accused persons were arrested on 04.09.2020.

During investigation statement under Section 164 CrPC of the victim was recorded wherein she alleged that she was kidnapped by both the accused persons for ransom and she was also beaten by them. Her mobile phone was also taken by the accused person from which the calls were made and Whatsapp messages were sent demanding ransom. She was also threatened by the accused person and was wrongly confined.

Analysis of the court and decision

The Delhi High Court held that it is Suffice it to state that only the Magistrate’s powers, while handling petitions for the grant of bail, are governed by the punishment specified for the offence for which the bail is requested. An offence under section 364A IPC is punished with death or life in prison. Generally speaking, the Magistrate lacks the authority to issue bail unless the case is covered by the provisos attached to section 437 of the Code if the punishment specified is the life sentence or death penalty and the offence is only triable by the Court of Session (Prahlad Singh Bhati v. State (NCT of Delhi)) There are no such restrictions limiting the High Court’s or the Court of Session’s authority while using the Section 439 CrPC’s authority.

It could also be appropriate to cite the Hon’ble Supreme Court’s ruling in Sanjay Chandra v. CBI, (2012) 1 SCC 40, which outlined the specific conditions under which a person facing trial’s freedom could be restricted as –

“The object of bail is to secure the appearance of the accused person at his trial by reasonable amount of bail. The object of bail is neither punitive nor preventative. Deprivation of liberty must be considered a punishment, unless it can be required to ensure that an accused person will stand his trial when called upon. The Courts owe more than verbal respect to the principle that punishment begins after conviction, and that every man is deemed to be innocent until duly tried and duly found guilty. Detention in custody pending completion of trial could be a cause of great hardship. From time to time, necessity demands that some unconvicted persons should be held in custody pending trial to secure their attendance at the trial but in such cases, “necessity” is the operative test. In India, it would be quite contrary to the concept of personal liberty enshrined in the Constitution that any person should be punished in respect of any matter, upon which, he has not been convicted or that in any circumstances, he should be deprived of his liberty upon only the belief that he will tamper with the witnesses if left at liberty, save in the most extraordinary circumstances. Apart from the question of prevention being the object of refusal of bail, one must not lose sight of the fact that any imprisonment before conviction has a substantial punitive content and it would be improper for any court to refuse bail as a mark of disapproval of former conduct whether the accused has been convicted for it or not or to refuse bail to an unconvicted person for the propose of giving him a taste of imprisonment as a lesson.”

Thus, without getting into the specifics of the case at this time, the court believes that, in light of the explanation above, the petitioner has established a case for the granting of bail. As a result, the petition is granted, and upon presenting a personal bond in the amount of Rs. 20,000/- and one surety bond in the same amount, the petitioner is permitted to bail, subject to the satisfaction of the learned Trial Court, CMM, or Duty Magistrate.

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Written By – Shreyanshu Gupta

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