Dismissed

Naresh Kumar Kejriwal v. Directorate of Enforcement

Jharkhand HC6 Dec 2019Cr.M.P./1399/2019

Case brief

AI extract

What is this about?

The petitioner, accused in a PMLA complaint, sought quashing of the ECIR, criminal proceeding and cognizance order on the ground that the predicate CBI charge-sheet against him had been quashed and no scheduled offence survived. The High Court dismissed the petition, holding that cognizance had been taken and the defence documents could be considered only during trial.

What did the court decide?

Liberty granted to the petitioner to raise all points raised in the petition at the appropriate stage.

Naresh Kumar Kejriwal Vs Directorate of Enforcement — Money Laundering | Jharkhand HC (2019)

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IN THE HIGH COURT OF JHARKHAND AT RANCHI Cr.M.P. No. 1399 of 2019

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Naresh Kumar Kejriwal ….. Petitioner Versus Directorate of Enforcement (Prevention of Money Laundering Act), Ranchi ….. Opp. Party

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--------CORAM: HON'BLE MR. JUSTICE ANANT BIJAY SINGH

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For the Petitioner : Mr. Navniti Prasad Singh, Sr. Advocate Mr. Devashish Bharnka, Advocate. Mr. Amit Sinha, Advocate. For the Opp. Party : Mr. Rajiv Sinha, ASGI. Mr. Prashant Vidyarthi, Advocate. Ms. Shreesha Sinha, A.C. to ASGI.

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Reserved On : 11/11/2019 Pronounced On : 06/12/2019

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1. Petitioner has filed this criminal miscellaneous petition Section 482 of the Code of Criminal Procedure for quashing the entire criminal proceeding arising out of ECIR No.12/PAT/2012 &13/PAT/2012 in Complaint Case No. 02/2018 and further prays for quashing of the order dated 19.11.2018 by which the cognizance has been taken against this petitioner and other accused for the offence to have committed under Section 3 of the PMLA Act which is punishable under Section 4 of the PMLA Act, pending in the court of learned Additional Judicial Commissioner-I-cum-Special Judge, PMLA at Ranchi.

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2. It appears that petitioner had earlier moved before this Court for grant of anticipatory bail in A.B.A. No. 299/2019 which was dismissed by Hon'ble Coordinate Bench vide order dated 03.04.2019.

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Thereafter, petitioner had moved Special Leave Petition (Criminal) No. 3533/2019 before the Hon'ble Supreme Court of India challenging the order dated 03.04.2019 passed in ABA No. 299/2019, which was dismissed on 23.04.2019 with the following observation:

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“ the eight weeks time is granted to the petitioner to surrender and move an application for Regular Bail before the learned Trial Court. Such prayer as and when made shall be considered and decided expeditiously by the Trial court. The petitioner shall remain protected against the arrest till the bail application is decided by the Trial Court .”

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3. Thereafter, this Cr.M.P. has been filed on 05.09.2019 and it was listed before the Court on 02.07.2019.

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Thereafter prayer has been made to list this case on 30.07.2019. On 30.07.2019, the matter was directed to be listed on 02.08.2019 and further proceeding in connection with ECIR No. 12/PAT/2012 & 13/PAT/2012 in Complaint Case No. 02 of 2018, pending in the court of learned Additional Judicial Commissioner-I-cum-Special Judge for PMLA at Ranchi, so far petitioner is concerned was stayed.

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On 02.08.2019, learned Hon'ble Coordinate Bench directed the office to list this case before another Bench after obtaining necessary approval of Hon'ble the Acting Chief Justice, but in the meanwhile, it appears that I.A. No. 8028/2019 was filed on behalf of the opposite party on 22.08.2019 with a prayer to recall / modification of the order dated 02.08.2019 passed in Cr.M.P. No. 1399/2019 and the Hon'ble Coordinate Bench after hearing the parties under order dated 03.09.2019 allowed the I.A. No. 8028/2019 and further re-called the paragraph no. 3 of the order dated 02.08.2019 as the protection has already been granted by the Hon'ble Supreme Court.

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Thereafter, this case was assigned to this Court and the matter was listed on 06.09.2019 and thereafter on 18.09.2019 and subsequent dated and finally the matter was heard on 11.11.2019 and order was reserved.

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4. The fact giving rise to the instant writ petition is as under :-

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A complaint being ECIR no. 02/2018 arising out of ECI/12/PAT/2012 and ECIR/13/PAT/2012 in compliant case no. 02/2018 was filed by the Directorate of Enforcement dated 03.11.2018 against six persons including the petitioner who has been made accused no.6.

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The complaint was made under the provisions of the Prevention of Money Laundering Act, 2002 before the Ld. 1^st Additional Judicial Commissioner, Ranchi-cum-Special Judge, PMLA, Ranchi.

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This complaint was inter alia based upon CBI’s Charge Sheet No. 12/2013 dated 31.08.2013.

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It is alleged that one flat at Sugam Hemant Apartment, Kolkata was purchased in the joint name of Shyamal Chakravorty and M/s Nandlal HUF, Karta of the same is Rajendra Kumar who is brother of Dr. Pradeep Kumar vide Sale Deed No. 9786 dated 31.8.2009 of payment of Rs. 42,99,339/from Sri Arun Kumar Agrawal. Rajendra Kumar has disclosed that Rs. 20 lakhs loan were taken from M/s Pathak Telecom, Company (P) Ltd and Rs. 5,95,000/- loan was taken from M/s Hindustan Credit Corporation.

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It has been alleged that loan from Pathak Telecom, Company (P) Ltd was taken on 18.7.2009 and from M/s Hindustan Credit Corporation was taken on 26.12.2008 and on 31.7.2009 but payment were made to Arun Kumar Agrawal much prior to the loan taken from the above mentioned two companies, and as such it has been concluded that the said loan was not taken for the purpose of purchase of flat as payment against the purchase had already completed in the year 2007 and said fact is being established that Rs.4 lakhs received from the account of Hindustan Credit Corporation were utilized for creation of fixed deposit on the very same date.

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It has also been alleged that the amount for purchase of property was arranged by Naresh Kumar Kejriwal (petitioner), the Chartered Accountant of Dr. Pradeep Kumar.

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It has also been alleged that Rajendra Kumar has stated that he did not know Pathak Telecom, Company (P) Ltd and Hindustan Credit Corporation and money was arranged by his brother Dr. Pradeep Kumar’s Chartered Accountant Sri Naresh Kumar Kejriwal and it has also been alleged that the said loan has not been reflected in the ITR of Nandlal HUF.

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It has further been alleged that Sita Ram Pathak has stated that he did not know Dr. Pradeep Kumar and Rajendra Kumar and he has given the loan on the advice of Sri Naresh Kumar Kejriwal who is the Chartered Accountant.

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Accordingly, in the complaint, it has been concluded that Naresh Kumar Kejriwal was involved in acquisition, concealment, transfer of proceeds of crime and remained involved in the activity connected with the proceeds of crime and projected the same as untainted.

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As such, it was alleged that Sri Naresh Kumar Kejriwal has committed offence of Money Laundering as defined under section 3 of the PMLA and punishable under section 4 of the PMLA Act.

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5. Learned senior counsel appearing for the petitioner during course of argument would submit and also made averment in his petition that the petitioner is quite innocent and has been falsely implicated in this case with some ulterior motive and mala fide intention that too without any evidence on record.

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6. It was further stated that the predicate offense of the instant case is one of the case instituted by the CBI vide RC01/A/2011-R registered against Dr. Pradeep Kumar, I.A.S. who was the then Secretary, Health Department, Govt. of Jharkhand, Ranchi.

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7. The allegation against Dr. Pradeep Kumar, IAS was that during the period November 2000 to August 2009, he was in possession of pecuniary resources or property disproportionate to his known source of income for which he could not satisfactorily account.

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8. The CBI instituted the said case and after completion of the investigation, submitted the charge-sheet vide ChargeSheet No. 12/2013 dated 31.08.2013. In the said charge-sheet, the petitioner was made accused, as accused no.4 by the CBI as in the said case charge-sheet was submitted by the CBI for the offence under section 109 of the IPC r/w section 13 (2) r/w section 13 (1) (e) of the Prevention of Corruption Act, 1988. After submission of the charge-sheet, cognizance was taken on 10.9.2013 by the learned Special Judge, CBI, Ranchi.

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9. That it is stated that the charge-sheet was submitted by the CBI in which same allegation has been leveled against the petitioner that on his advice a loan of Rs.20 lakhs was given by Pathak Telecom Pvt. Ltd. and Rs. 5,95,000/- by Hindustan Credit Corporation for purchase of flat in Sugam Hemant Apartment, Kolkata.

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10. That it is stated that the petitioner filed a quashing application under section 482 of the Cr.P.C. before the Hon’ble Jharkhand High Court vide Cr.M.P. No. 2651/2013 for quashing of the order dated 10.9.2013 by which cognizance of the offence punishable under section 109 of the I.P.C. and also

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under section 13 (2) r/w section 13 (1) (e) of the Prevention of Corruption Act, 1988 has been taken against the petitioner. In the course of hearing the said case, the Hon’ble High Court posed specific query as to whether the amount of Rs. 25,95,000/- (loan amount given by Pathak Telecom Pvt. Ltd. and Hindustan Credit Corporation) had ever been accounted for, as income of Dr. Pradeep Kumar against whom the case has been lodged for disproportionate income.

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11. On the said query, the CBI specifically submitted that the amount of Rs. 25,95,000/- has never been included in any of the amount taken to be disproportionate to known source of income of Dr. Pradeep Kumar. On the said submission, the Hon’ble High Court has held that the question of abating in terms of section 109 of the IPC does not arise and accordingly held that there has been no evidence that the petitioner had associated himself with Dr. Pradeep Kumar in abating him to acquire the assets disproportionate to his income and accordingly quashed the order taking cognizance dated 10.9.2013 vide order dated 12.3.2014 passed in Cr.M.P. No. 2651/2013.

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12. That the aforesaid judgment of the Hon’ble High Court of Jharkhand was not challenged by the CBI and therefore, has attained finality. Consequently, the allegations against the petitioner made by the CBI under Charge-Sheet No. 12/2013 dated 31.08.2013 stands quashed.

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13. Learned senior counsel for the petitioner further submitted that the foundation of the impugned complaint ECIR no. 02/2018 arising out of ECI/12/PAT/2012 and ECIR/13/PAT/2012 was filed by the Directorate of Enforcement dated 03.11.2018, so far as the petitioner is concerned, is the aforesaid CBI Charge Sheet No. 12/2013 dated 31.08.2013 [see para. 2(iii) of the complaint]. Undeniably, the foundational CBI charge sheet stands quashed so far as the Petitioner is concerned.

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14. Once that be so, the very substratum of the impugned ED complaint has been removed and therefore, the same is liable to be quashed so far as the petitioner is concerned.

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15. In view of the quashing of the CBI charge sheet against the petitioner, no offence whatsoever is made out under sec. 3 of the PMLA Act against the Petitioner.

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16. That the impugned complaint is liable to be quashed on the ground that even if all the allegations in the impugned complaint (being based on the quashed CBI chargesheet) are taken to be correct, yet, no case of an offence under sec. 3, PML Act is made out against the Petitioner.

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17. Learned senior counsel further referred to the provisions of Section 3 and 2(1)(u) of the PMLA Act, 2002.

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a. Sec. 3 and sec. 2(1)(u) of the PMLA Act, 2002 read as under:

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“ 2(1)(u). “proceeds of crime” means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property; ” “ 3. Offence of money-laundering. - Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering.”

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b. A ‘scheduled offence’ under the PML Act is defined in sec. 2(y) to inter alia mean the offences specified under Part A of the Schedule to the said Act.

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c. It is relevant to note at this stage that the quashed CBI charge sheet against the Petitioner alleged offence punishable under sec. 109, Indian Penal Code read with sec. 13(2) read with sec. 13(1)(e) of the Prevention of Corruption Act, 1988.

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d. Paragraph 8 of Part A of the Schedule to the PML Act provides for offences under the Prevention of Corruption Act, 1988 including that under sec. 13 thereof. However, Paragraph 1 of Part A of the Schedule, which enumerates specific offences under the Indian Penal Code, 1860 as schedule offences for the purposes of the PML Act, does not list offence of abatement under sec. 109, IPC.

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e. It is well-settled that Sec. 109, IPC constitutes a distinct offence [ Wakil Yadav v State of Bihar , (2000) 10 SCC 500] . Furthermore, the provisions of the Prevention of Corruption Act, 1988 do not ipso facto apply to private persons. One has to take the aid of sec.

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109, IPC (abatement) in order to charge a private person under the Prevention of Corruption Act.

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f. The Petitioner has not been (and cannot be) charged for an offence only under the Prevention of Corruption Act since he is not a public servant. It is primarily an offence under sec. 109, IPC with which he has been charged with. Since the same is not a scheduled offence, the Petitioner cannot be charged for an offence under sec. 3 of the PML Act.

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In view of the aforesaid, no case is made out against the petitioner under sec. 3 of the PML Act even if the allegations in the impugned ED complaint is taken to be correct in its entirety.

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18. In State of Haryana v Bhajan Lal , 1992 Supp (1) SCC 335 , the Hon’ble Supreme Court held (at para. 102 SCC) that where the uncontroverted allegations made in the FIR or complaint and evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused, the same is liable to be quashed.

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19. That without prejudice to the aforesaid submission, even if it be presumed only for the sake of arguments that the ED can maintain a complaint against the Petitioner even in absence of sec. 109, IPC being not declared a scheduled offence, yet, the the impugned complaint is liable to be quashed vis-à-vis the Petitioner in view of the following:

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a. The amount involved in so far as the Petitioner is concerned is only Rs. 25.95 lakhs.

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b. Sec. 2(u) of the PML Act makes it clear that a schedule offence ought to have been committed so as to generate ‘proceeds of crime’, which would then make it an offence under sec. 3.

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It is clear that a person can only be made accused if he had generated any amount by committing schedule offence or remain involved in concealment and projection of the amount generated by committing schedule offence.

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c. In the instant case, this Hon’ble Court had, while quashing the CBI case against the Petitioner, categorically taken judicial note of the admission of

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CBI that Rs.25.95 lakhs has not been included in the disproportionate assets of Dr. Pradeep Kumar and further observed that the petitioner was not associated himself with Dr. Pradeep Kumar.

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d. In view of such admission by the CBI itself, so far as the aforesaid Rs.25.95 lakh is concerned, it would not even fall within the mischief of Prevention of Corruption Act and therefore, not attributable to either Dr. Pradeep Kumar or to the Petitioner in any manner in connection with an offence.

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20. Learned senior counsel for the petitioner further submitted that the admission of the CBI before the Hon’ble High Court makes it amply clear that such amount cannot be treated as ‘proceeds of crime’ within the meaning of sec. 2(u) of the PML Act and therefore, cannot be the basis for commission of the offence of money laundering under sec. 3 of the PML Act as alleged against the Petitioner.

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21. Further, the principle of issue of estoppel would apply in such a situation and the Petitioner cannot be proceeded with under the PML Act. Continuation of the impugned proceedings is also likely to lead to conflicting situations.

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22. That Rs. 4 lakh was transferred from the account of Hindustan Credit Corporation to the Account of Nandlal HUF on 26.12.2008, Rs.20 lakhs from Cash Credit Account of Pathak Telecom Pvt. Ltd. to the account of Nandlal HUF on 18.7.2009 and Rs. 1,95,000/- from the account of Hindustan Credit Corporation to the account of Nandlal HUF on 31.7.2009.

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23. All these transactions were made through bank to bank that too without any cash deposit and the same can be ascertained from the bank statement of Nandlal HUF maintained in Allahabad Bank.

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24. That Hindustan Credit Corporation is a company which provides loan to its customer and said Hindustan Credit Corporation on 26.12.2008 transferred Rs. 4 lakhs in the account of Nandlal HUF and said transfer was duly reflected in the bank statement as well as balance-sheet of Hindustan Credit Corporation under the heading of loan and advance.

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The said bank statement and balance-sheet were filed before the Income Tax Authorities in the name of Hindustan Credit Corporation for the Financial Year 2008-09 and Assessment Year 2009-10.

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25. That Hindustan Credit Corporation has provided loan amounting to Rs. 1,95,000/- to Nandlal HUF on 31.7.2009 and said amount was transferred from the account of Hindustan Credit Corporation to the Account of Nandlal HUF and said transaction were duly reflected in their balance-sheet under the heading of loan and advance and same was filed before the Income Tax Authority while filing the Income Tax Return of Hindustan Credit Corporation for the Financial year 2009-10 and Assessment Year 2010-11.

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26. That against the above mentioned loan of Rs. 5,95,000/provided by Hindustan Credit Corporation to Nandlal HUF, same was returned with interest by Nandlal HUF on 29.9.2011 in the account of Hindustan Credit Corporation amounting to Rs. 7,98,000/- and the said transaction has also been reflected in the balance-sheet of Hindustan Credit Corporation which has been filed with the Income Tax Return for the Assessment Year 2012-13.

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27. Learned senior counsel for the petitioner mentioned that the said amount i.e. Rs. 5,95,000/- were advance to Nandlal HUF and source of said amount is the repayment of the installment of loans taken by other customer of Hindustan Credit Corporation and same can be ascertained from the balance-sheet of Hindustan Credit Corporation which specifically reflects that upto 31^st March 2010 Hindustan Credit Corporation had advanced loan to different customers amounting to Rs. 7,72,88,593/- and received installment against repayment of loan by the customer amounting to Rs. 9,36,604/- and the same is sufficient to prove that against said amount Hindustan Credit Corporation had advanced Rs.5,95,000/- to Nandlal HUF. The said fact has been properly disclosed to the complainant but the same has been intentionally suppressed just to make out a case against the petitioner.

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28. Learned senior counsel further mention that the Pathak Telecom Pvt. Ltd. is having Cash Credit Account in State Bank of India and Pathak Telecom Pvt. Ltd. had given loan of Rs. 20

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lakhs to Nandlal HUF and said amount was transferred from the Cash Credit Account of Pathak Telecom Pvt. Ltd. to the Account of Nandlal HUF on 18.7.2009. The same can be ascertained from the Bank Statement of Pathak Telecom Pvt. Ld. The said amount has been properly reflected in the balance-sheet of Pathak Telecom Pvt. Ltd. and said balancesheet was filed with the Income Tax Return of Pathak Telecom Pvt. Ltd of which the petitioner is the Chartered Accountant in the Assessment year 2010-11.

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29. That Nandlal HUF has returned the loan amount to Pathak Telecom Pvt. Ltd. by transferring of Rs. 10,78,000/- on 08.10.2011 and Rs. 15,00,000/- on 10.10.2011 i.e. total amount of Rs. 25,78,000/- after adding the amount of interest. The said amount is also the part of the balance–sheet which was filed by Pathak Telecom Pvt. Ltd. in its Income Tax Return for Assessment year 2012-13.

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30. That the Pathak Telecom Pvt. Ltd. has provided loan to Nandlal HUF from its Cash Credit Account meaning thereby the bank has provided facility to the said company to withdraw the amount on which 16.75% interest will be charged by the bank, as such it is not a case that any cash deposit were made in the account of Pathak Telecom Pvt. Ltd. and same was transferred in the account of Nandlal HUF.

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31. That it has wrongly been mentioned in the complaint that Nandlal HUF in its income tax return had not shown the said transaction but the said allegation is completely false and same can be ascertained from the income tax return filed for the assessment year 2012-13.

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32. Learned senior counsel for the petitioner submitted that the loan were advance by Pathak Telecom Pvt. Ltd. and Hindustan Credit Corporation to Nandlal HUF and said amount of loan has also been returned with interest by Nandlal HUF to the above mentioned two companies and the process was purely transparent and complete, as such it can not be said that the said amount was generated by schedule offence.

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33. Learned senior counsel for the petitioner submitted that the complete false allegation has been leveled by the complainant that loan of Rs.20 lakhs advanced by Pathak Telecom Pvt. Ltd. on 18.7.2009 and Rs. 4 lakhs from Hindustan

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Credit Corporation on 26.12.2008 and Rs. 1,95,000/- by Hindustan Credit Corporation on 31.7.2009 but payments were made to Mr. Arun Kumar Agrawal confirming party of the flat much prior to the above loans advanced to Nandlal HUF, but the same is completely false and it appears that the complainant has not properly verified the bank statement of Nandlal HUF as from perusal of the bank statement of Nandal HUF, it would appear that on 18.7.2009 Rs. 8,50,000/- was given to Mr. Arun Kumar Agrawal through demand drafts and demand draft of Rs. 9 lakh was given to Mr. Arun Kumar Agrawal on 18.7.2009 and same can be ascertain from the demand drafts prepared by Nandlal HUF.

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34. Learned counsel for the petitioner submitted that in running page-28 of the complaint, the details of payment of Rs. 38,58,700/- has been mentioned as payment against the purchase of flat and based on those datewise payments mentioned in the chart, the complainant came to the conclusion that the payments were made to Mr. Arun Kumar Agrawal prior to loan advance by Pathak Telecom Pvt. Ltd. and Hindustan Credit Corporation, but the same is completely false and it appears that the complainant has not properly understood the mode of payment.

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35. In fact, earlier Arun Kumar Agrawal had entered into an agreement with the developer for purchase of Flat No. 1A of Sugam Hemant Apartment and in terms of said agreement Mr. Arun Kumar Agrawal had paid a sum of Rs. 38,58,700/towards said Flat and Nandlal HUF had made payment to Mr. Arun Kumar Agrawal after taking loan from above mentioned company and said fact can be ascertained from the certificate issued by Ashicon Housing Pvt. Ltd. on 24.9.2018.

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36. Learned senior counsel for the petitioner submitted that all the amount advanced by the Pathak Telecom Pvt. Ltd and Hindustan Credit Corporation Ltd. where the accounted money properly reflected in the Income Tax Return of the said company and same has no bearing with the schedule offence committed by Dr. Pradeep Kumar and as such even if the allegation leveled against the petitioner that on his advice loan were advanced by these two companies to Nandlal HUF can not make out a case against the petitioner.

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37. Learned senior counsel for the petitioner submitted that the amount of loan which were advanced to Nandlal HUF as alleged on the advice of the petitioner comes to Rs. 25,95,000/-, no case of money laundering can be instituted against the petitioner in terms of section 2 (1) (g) of the PMLA as no person can be prosecuted if the value comes to less than Rs. 30 lakhs.

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38. That the petitioner in his professional capacity had advised in the manner in which the loan can be raised and it has no relation with any proceed of crime which is sine qua non for alleging an offence under section 3 of the PMLA Act, 2002. It is not the case of the respondent/opposite party that the petitioner had knowingly involved in a process or activity connected with “proceeds of crime”. The Hon’ble Apex Court has delivered a judgment in case of Nikesh Tarachand Shah Vrs. Union of India , (2018) 11 SCC 1 has held at para-11 as under:

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“11 ……. Section 3, therefore, contains all the aforesaid ingredients and before somebody can be adjudged as guilty under the said provision, the said person must not only involved in any process or activity connected with proceeds of crime, but must also project or claim it a being untainted property.”

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39. That in the facts and circumstances stated above, it would be expedient for the ends of justice to quash the entire criminal proceeding arising out of arising out of ECIR No. 02/2018 as well as the order dated 19.11.2018 by which the cognizance has been taken against this petitioner and other accused for the offence alleged to have been committed under section 3 of the PMLA Act which is punishable under section 4 of the PMLA Act.

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40. That in view of the facts stated above, entire criminal proceeding is illegal, and without jurisdiction and it shall prejudicial to the petitioner and therefore fit to be set aside.

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41. In view of the submissions, the entire proceedings arising out of ECIR No. 12/PAT/2012 & 13/PAT/2012 in Complaint Case No. 02 of 2018 as well as order taking cognizance dated 19.11.2018, pending in the court of learned Additional Judicial Commissioner-I-cum-Special Judge for PMLA at Ranchi are fit to be quashed.

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42. Opposite party appeared and they have also filed their counter affidavit. Learned counsel for the opposite party in the counter affidavit and also during course of argument submitted that during the investigation conducted under PMLA, it is revealed that:

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i) Final Reports – (a) No. 05/2011, (b) 06/2011 & (c) No. 12/2013, filed by the Central Bureau of Investigation (CBI) reveals that Dr. Pradeep Kumar has caused huge loss to the exchequer and wrongful gain to himself by abusing his official position. He has ammassed huge assets by investing the proceeds of crime;

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ii) Dr. Pradeep Kumar has laundered the illicit wealth with the help of his brother Rajendra Kumar, Shyamal Chakravarty, Dharmendra Kumar Dhiraj, Naresh Kumar Kejriwal, Inderlal Kejriwal and Sitaram Pathak; iii) Dr. Pradeep Kumar willfully formed Nand Lal HUF, with the help of his brother, Rajendra Kumar on the advice of Naresh Kumar Kejriwal to launder the proceeds of crime. Rajendra Kumar, despite being Karta of the Nand Lal HUF is unaware about the beneficiaries. Rajendra Kumar has entered into the transactions of immovable properties without being aware of the details like location, owner of the property, mode of payment etc. Further, all his transactions have happened with individuals who are in some way connected with Dr. Pradeep Kumar. In fact, in all the transactions involved in money laundering, Dr. Pradeep Kumar has played the central role. This shows that Rajendra Kumar has knowingly acted as a front for assisting Dr. Pradeep Kumar in laundering the proceeds of crime;

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iv) Both Dr. Pradeep Kumar and Rajendra Kumar could not submit any evidence regarding source for creation of IVPS and KVPS which formed the basis for formation of Nand Lal HUF. This shows that proceeds of crime generated by Dr. Pradeep Kumar were invested in Nand Lal HUF which was formed on the advice of Naresh Kumar Kejriwal, Chartered Accountant of Dr. Pradeep Kumar for the only purpose of concealment of proceeds of crime so that tainted property could be projected as untainted;

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v) Rajendra Kumar stated that he took loan from M/s (Pathak Telecom Co. (P) Ltd. (Proprietor Sitaram Pathak) and Hindustan Credit Corporation (a firm managed by Naresh Kumar Kejriwal) for acquisition of immovable property but he could not produce any loan agreement and he does not know these persons individually. Moreover, all the payment for acquisition of this immovable property had already been done much prior to receipt of the loans. These loans haw not been reflected in the books of account. Both the transfer were made to the bank account of Rajendra Kumar from Pathak Telecom Co. (P) Ltd. (Proprietor - Sitaram Pathak) and Hindustan Credit Corporation (a firm managed by Naresh Kumar Kejriwal) was arranged by Naresh Kumar Kejriwal, the Chartered Accountant of Dr. Pradeep Kumar. This makes evident that Dr. Pradeep Kumar has invested proceeds of crime for acquisition of immovable properties and Naresh Kumar Kejriwal has arranged transactions involved in money laundering through Pathak Telecom Co. (P) Ltd. and Hindustan Credit Corporation without any basis in an attempt to conceal the proceeds of crime so that tainted properties could be projected as untainted. Once the investigation of CBI was initiated, the transferred amount was repaid to these firms to project these transactions as genuine. However, money for repayment came from M/s Rhea Enterprises, a firm controlled by Shyamal Chakravarty. Rajendra Kumar has himself denied any financial transaction with Rhea Enterprises. This shows that Dr. Pradeep Kumar and Rajendra Kumar are knowingly trying to hide the origin of tainted property and frustrate the proceedings under PMLA with the connivance of Shyamal Chakravarty and Naresh Kumar Kejriwal;

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vi) After the purchase of flat from Jascon Interbuild (Prop. Dharmendra Kumar Dhiraj), almost entire sale consideration was paid back to Rajendra Kumar by Dharmendra Kumar Dhiraj. This shows that in reality, the proceeds of crime parked with Dharmendra Kumar Dhiraj were utilised for acquisition of the said flat. This underlines the role of Dharmendra Kumar Dhiraj in

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concealment of proceeds of crime so that tainted properties can be projected as untainted;

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vii) Dr. Pradeep Kumar has claimed false rented income from Dharmendra Kumar Dhiraj in his ITR from flat at Jascon Plaza. Against his claim of flat being leased or rented, they continue to mention the same flat as residential as well as business address in different documents. Against income from other sources and business income mentioned in the ITRS of Nand Lal HUF, Rajendra Kumar (karta) could not produce any evidence to substantiate this claim. This shows that there is no income from genuine sources and ITRS have been fabricated by Dr. Pradeep Kumar and his brother Rajendra Kumar to conceal the proceeds of crime and to frustrate the proceedings under PMLA. Dharmendra Kumar Dhiraj has knowingly assisted Dr. Pradeep Kumar in making false claim of rental income and thus, has knowingly assisted in concealment of proceeds of crime; viii) Huge cash was deposited in the account of AHC Pvt. Ltd. and Jascon Enterbuild, Joint Venture, a firm owned by Dharmendra Kumar Dhiraj and the same was used for acquisition of immovable property at Bangalore. Rajendra Kumar could not produce any loan agreement/ other documents to justify receipt of huge amount from this firm. Neither Rajendra Kumar nor Dharmendra Kumar Dhiraj offered any explanation for this transaction. This makes it evident that proceeds of crime were layered through the bank account of this firm by Dharmendra Kumar Dhiraj for acquisition of immovable property to project the tainted property as untainted;

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ix) Shyamal Chakravarty was partner of Rajendra Kumar in M/s Essar Enterprises, he was granted General Power of Attorney by Dr. Pradeep Kumar for purchase of property at Udaipur. Shyamal Chakravarty arranged the deal in respect of this transaction. Moreover, for repayment of transferred amount to the firms owned by Sitaram Pathak and Inderlal Kejriwal, money was credited to the account of Nand Lal HUF from M/s Rhea Enterprises which is controlled by Shyamal Chakravarty. As per statements of Rajesh Kumar Fogla under section

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164 Cr. P.C. by the Magistrate I-Class which was also corroborated by Shri Vikash Khetan (who too made his statement under section 164 of Cr.PC) as an accused, Shyamal Chakravarty used to receive the bribe money for Dr. Pradeep Kumar. Thus, it is evident that Shyamal Chakravarty has knowingly parked and concealed the proceeds of crime acquired by Dr. Pradeep Kumar to project the tainted properties as untainted;

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x) Both Dr. Pradeep Kumar and Rajendra Kumar have made contradictory and false submissions before the investigating officer. This shows that they are deliberately trying to frustrate the proceedings under the PMLA;

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xi) That, both Dr. Pradeep Kumar and Rajendra Kumar have entered into suspicious transactions proceeds of crime have been invested in Nand Lal HUF and routed through several firms for acquisition of immovable and movable properties. This shows a deliberate attempt to project the tainted property as untainted and attempt to frustrate the proceedings under PMLA;

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xii) During investigation under PMLA, it has been established that Nand Lal HUF was created for the purpose of laundering of proceeds of crime on the advice of Naresh Kumar Kejriwal, a fact confirmed by Dr. Pradeep Kumar in his statement under section 50 of the PMLA. Rajendra Kumar, the Karta of Nand Lal HUF, admitted, during his statement under section 50 of PMLA that he doesn't know the beneficiaries of this HUF and the person who filed the Income Tax Returns of Nand Lal HUF. He is not aware of the bank accounts of the Nand Lal HUF also. This shows that Rajendra Kumar is a dummy karta who is acting on behalf of Dr. Pradeep Kumar to launder the proceeds of crime. Rajendra Kumar has also stated that the books of accounts of Nand Lal HUF were being managed by Naresh Kumar Kejriwal, the Chartered Accountant of Dr. Pradeep Kumar. The firmly establishes that Naresh Kumar Kejriwal has played a key role in the formation of Nand Lal HUF and is knowingly involved in concealment and transfer of proceeds of crime through this HUF;

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xiii) Naresh Kumar Kejriwal arranged the payment of Rs.20 lacs from Pathak Telecom Co. (P) Ltd. and Rs. 5.95 lacs from Hindustan Credit Corporation to Rajendra Kumar in the garb of fake loan so as to disguise the actual purchase of property through proceeds of crime. Sitaram Pathak, the proprietor of Pathak Telecom Co. (P) Ltd. during the statement under section 50 of the PMLA, has clearly stated that he does not know Rajendra Kumar and has transferred the amount only on the advice of his Chartered Accountant, Naresh Kumar Kejriwal. Inderlal Kejriwal, the proprietor of Hindustan Credit Corporation, during his statement under section 50 of the PMLA, has stated that he does not know Rajendra Kumar and the transfer of money was done by his brother Naresh Kumar Kejriwal who is actually managing_Hindustan Credit Corporation. This shows that Naresh Kumar Kejriwal is knowingly providing accommodation entry to disguise the actual purchase of property through proceeds of crime so that tainted properties can be projected as untainted. Hence, it is established that Naresh Kumar Kejriwal is knowingly assisting Dr. Pradeep Kumar in concealment and transfer of proceeds of crime so as to project the tainted properties as untainted.

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43. That, from the above para, it is evident that Dr. Pradeep Kumar, Rajendra Kumar, Nandlal HUF, Shyamal Chakravarty, Dharmendra Kumar Dhiraj, Naresh Kumar Kejriwal, Inderlal Kejriwal and Sitaram Pathak are knowingly involved in acquisition, concealment and transfer of proceeds of crime and are knowing involved in projection of tainted properties as untainted;

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44. That, during the investigation under the PMLA, the Provisional Attachment Order (PAO) No. 04/2018, dated 20.02.2018 was issued by the Directorate of Enforcement, Patna Zonal Office under section 5 (1) of the PMLA whereby movable and immovable properties of Dr. Pradeep Kumar Rajendra Kumar, Nand Lal HUF and Shyamal Chakravarty amounting to Rs. 1,76,38,527/- were provisionally attached . The said PAO has been duly confirmed by the learned Adjudicating Authority vide its order, dated 03.08.2018 which found the properties of the defendants viz. Dr. Pradeep Kumar,

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Shri Rajendra Kumar, Nand Lal HUF and Shri Shyamal Chakravarty to be involved in money laundering.

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45. That, the complaint under section 45 read with section 44 of the PMLA for commission of offence under section 3, punishable under section 4 of the PMLA was also duly filed on 03.11.2018 before the Hon'ble Court of Special Judge, CBIcum- under PMLA at Ranchi against the six accused persons viz. Dr. Pradeep Kumar (A-1), Rajendra Kumar(A-2), Nand Lal HUF (A-3), Shyamal Chakravarty (A-4) Dharmendra Kumar Dhiraj (A-5) and Naresh Kumar Kejriwal (A-6) wherein cognizance has already been taken by the Hon'ble Special Court for the offence under section 3, punishable under section 4 of the PMLA and the same is pending for trial before the Hon'ble Special Court;

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46. Learned counsel for the opposite party would submit that the statement as recorded under section 50 of the PMLA, Rajendra Kumar stated that money was arranged by his brother Dr. Pradeep Kumar's Chartered Accountant Shri Naresh Kumar Kejriwal. Further, in course of statement as recorded under section 50 of the PMLA, Dr. Pradeep Kumar stated that Naresh Kumar Kejriwal is the C.A. of him as well as M/s Nand Lal HUF.

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47. On the advice of his Chartered Accountant Naresh Kumar Kejriwal only, M/s Nand Lal HUF was formed and Rajendra Kumar (his brother) became the Karta of the HUF. Further, Sitaram Pathak, the proprietor of Pathak Telecom Co. (P) Ltd. during his statement under section 50 of the PMLA, has clearly stated that he does not know Rajendra Kumar and has transferred the amount only on the advice of his Chartered Accountant, Naresh Kumar Kejriwal.

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48. This makes it amply evident that Naresh Kumar Kejriwal is knowingly involved in concealment and transfer of proceeds of crime generated by Dr. Pradeep Kumar in order to project the tainted property as untainted.

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49. Shri Inderlal Kejriwal, inter alia, in course of his statements dated 07.08.15, 17.09.2015 & 12.02.2018 under section 50 of PMLA stated that Shri Naresh Kumar Kejriwal, who is his brother and C.A. of the firm, manages the Hindustan Credit Corporation. Thus, it is established that Naresh Kumar Kejriwal is knowingly involved in process or activity connected

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with proceeds of crime and projection of the same as untainted.

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50. Therefore, Naresh Kumar Kejriwal has committed the offence of money laundering, as defined under section 3 of the PMLA, and punishable under section 4 of the PMLA. This is evident from the following:

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I. During investigation under PMLA, it has been established that Nand Lal HUF was created only for the purpose of laundering of proceeds of crime on the advice of Naresh Kumar Kejriwal, a fact confirmed by Dr. Pradeep Kumar in his statement under section 50 of the PMLA. Rajendra Kumar, the Karta of Nand Lal HUF, admitted during his statement under section 50 of PMLA that he doesn't know the beneficiaries of this HUF and the person who filed the Income Tax Returns of Nand Lal HUF. He is not aware of the bank accounts of the Nand Lal HUF also.

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This shows that Rajendra Kumar is a dummy Karta, who is acting on behalf of Dr. Pradeep Kumar to launder the proceeds of crime. Rajendra Kumar has also stated that the books of accounts of Nand Lal HUF were being managed by Naresh Kumar Kejriwal, the Chartered Accountant of Dr. Pradeep Kumar.

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This firmly establishes the fact that Naresh Kumar Kejriwal has played a key role in the formation of Nand Lal HUF and is knowingly involved in concealment and transfer of proceeds of crime through this HUF.

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II. It is further submitted that Naresh Kumar Kejriwal arranged the payment of Rs. 20 lacs from Pathak Telecom Co. (P) Ltd. and Rs. 5.95 lacs from Hindustan Credit Corporation to Rajendra Kumar in the garb of loan in order to disguise the actual purchase of property through proceeds of crime. Sitaram Pathak the proprietor of Pathak Telecom Co. (P) Ltd. during the statement under section 50 of the PMLA, has clearly stated that he does not know Rajendra Kumar and has transferred the amount only on the advice of his Chartered Accountant, Naresh Kumar Kejriwal. Further, Inderlal Kejriwal, the proprietor of Hindustan

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Credit Corporation, during his statement under section 50 of the PMLA has stated that he does not know Rajendra Kumar and the transfer of money was done by his brother Naresh Kumar Kejriwal who is actually managing Hindustan Credit Corporation. This shows that Naresh Kumar Kejriwal is knowingly providing accommodation entry to Pradeep Kumar to disguise he actual purchase of property through proceeds of crime in order to project tainted properties as untainted.

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51. That, learned counsel for the opposite party would referred to the judgment dated 05/08/2010 in the case of Radha Mohan Lakhotia Vs The Deputy Director Directorate of Enforcement , the Hon'ble Bombay High Court has observed as under:

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[Para 13] ...the same deal with the offence of money-laundering and punishment for moneylaundering, both the provisions, even on strict construction, plainly indicate that the person to be prosecuted for this offence need not necessarily be charged of having committed a scheduled offence. For, the expression used is "whosoever". The offence of money-laundering under section 3 of the Act of 2002 is an independent offence. It is committed if "any person" directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property...

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52. During investigations under PMLA, the petitioner has been found to be knowingly involved in concealment and transfer of Proceeds of Crime acquired by Dr Pradeep Kumar so as to project the tainted properties as untainted.

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53. Learned ASGI appearing on behalf of the opposite party Directorate of Enforcement submitted that cognizance has been taken against the petitioner and trial is in progress, so no interference is required in the instant case and the instant Cr.M.P. is fit to be dismissed.

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54. Learned ASGI further referred to para-23 of the judgment of the Hon'ble Supreme Court passed in the case of

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Rohit Tandon Vs. Enforcement of Directorate reported in AIR 2017 SC 5309 , whereby the Hon'ble Supreme Court had taken note of the fact that the predicate offence is included in Part A in paragraph 1 of the Schedule in the Act of 2002, in particular, Sections 420, 467, 471 and 120-B of the I.P.C., but expression “criminal activity” has not been defined.

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55. Learned ASGI further relied on the Division Bench judgment of the Madras High Court passed in Criminal Original Petition No. 9796/2019 and Criminal Original Petition No. 5129 of 2019 in the case of M/s VGN Developers P Ltd. & Another Vrs. The Deputy Director, Directorate of Enforcement (The Prevention of Money Laundering Act, 2002) dated 04.10.2019 and referred to para-7, wherein it is stated that learned Additional Solicitor General of India appearing for the respondent would submit that the complaint discloses a stand along offence punishable under Section 3 of the Prevention of Money Laundering Act, 2002. Section 2(u) of the Act, which defines the “proceeds of crime”, makes the position clear that what is required is the involvement of a person qua the “proceeds of crime”. These two provisions are wide enough to include the very property in question. This property of 10.4 acres sold by the State Bank of India itself is the “proceeds of crime”. As per explanation to Section 2(u) of the Act, which defines the property, the complaint has been filed after thorough investigation.

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The statements including the documentary evidence by way of e-mails have been taken into consideration. One has to see the scope and ambit of Section 24 of the Act, which fixes the burden of proof on a person charged. Therefore, until and unless the presumption is dispelled by proving to the contrary, the proceeding cannot be questioned. The act is self contained and stand along and thus, independent of predicating offence. 56. The Hon'ble Division Bench in para-8 agreed with the submissions of the ASGI that the definition of “proceeds of crime” under Section 2 (u) of the Act is very exhaustive and elaborate. It speaks of any property derived or obtained, directly or indirectly, by any person. It is no doubt true that the complaint has been made by the respondent only in pursuant to the scheduled offence. In a given case, the complaint may emanate from a registration of a case involving scheduled

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offence. But the fate of the investigation in the said scheduled offence cannot have bearing to the proceedings under the Prevention of Money Laundering Act, 2002. Section 2(u) of the Act merely speaks of a criminal activity relating to a scheduled offence. Therefore, we are concerned with the criminal activity qua a scheduled offence.

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57. After hearing the learned counsel for the parties, going through the averments made in the complaint petition and submissions advanced on their behalves and also the judgments relied upon by them and considering the fact that cognizance has already been taken against the petitioner in this case, at this stage, the document which have been relied by the petitioner and the order dated 12.03.2014 passed in Cr.M.P. No. 2651 of 2013 filed by the petitioner for quashing of order dated 10.09.2013 passed in R.C. Case No. 01(A) of 2011R, whereby cognizance of the offence punishable under Section 109 of the Indian Penal Code and under Section 13(2) read with Section 13(1)(e) of the Prevention of Corruption Act, 1988 taken against the petitioner, whereby the Cr.M.P. was allowed and cognizance order dated 10.09.2013 was quashed, cannot be relied upon.

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58. It is not part of the complaint or the document filed by the prosecution relied upon by them, but the same is by way of defence.

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59. The documents filed on behalf of the petitioner can be seen in course of trial only.

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60. Taking all these facts and circumstances, I am not inclined to interfere with the impugned order. Accordingly, this Cr.M.P. stands dismissed without cost.

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61. However, liberty is given to the petitioner to raise all the points raised in this petition at the appropriate stage.

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(Anant Bijay Singh, J.)

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Sunil/

Naresh Kumar Kejriwal v. Directorate of Enforcement

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Naresh Kumar Kejriwal v. Directorate of Enforcement

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