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PMLA: Anticipatory Bail Granted Due to Absence of 'Proceeds of Crime’

Introduction

In the case of Amit Aggarwal v. Directorate of Enforcement[i] the Delhi High Court (‘HC’) granted anticipatory bail (‘AB’) to Amit Aggarwal (‘Petitioner’) under s. 438 of the Code of Criminal Procedure, 1973 (‘CrPC’). The HC’s decision was influenced by the absence of 'proceeds of crime' typically required for the application of s. 45 of the Prevention of Money Laundering Act, 2002 ('PMLA') and the Petitioner being a sick & infirm person.

Facts

  • A first information report (‘FIR’) was registered at the Economic Offences Wing (‘EOW’) under ss. 420, 467, 468, 471 and 120B of the Indian Penal Code, 1860 (‘IPC’) for the offences of cheating, fraud, and forgery.

  • The investigation stemmed from an email received by a Chartered Accountant from his bank, which notified him of the issuance of Form 15CB certificates (‘Forms’) bearing his credentials. These Forms were used by certain entities to transfer approximately Rs. 300 crores unauthorizedly.

  • The Petitioner was alleged to have issued these forged Forms for unauthorized outward remittances.

  • Given the above facts and circumstances the Enforcement Directorate (‘Respondent’) sought custody of the Petitioner for interrogation.

  • The Petitioner applied for AB arguing a lack of involvement in money laundering and the absence of incriminating evidence against him held by the Respondent.

Arguments Advanced

  • The Petitioner contended that the Respondent lacked documentary evidence to show his involvement in the alleged offences. He also noted that he was not named in the FIR, challenging the basis of his association with the case.

  • The Petitioner further asserted that the statements of the co-accused cannot be considered against him as they are not substantial pieces of evidence. He argued that their evidentiary value should be tested at the end of the trial and not at the stage of granting bail.

  • The Petitioner also contended that there were no ‘proceeds of crime’ from the offence, and therefore, the offence does not fall under the category of scheduled offences to constitute the offence of money laundering.

  • The Respondents argued that the Petitioner was involved in the offence by using a fake identity which has been named in the FIR.

Held

  • The HC granted AB to the Petitioner on a prima facie examination of the facts, imposing specific conditions.

  • It observed that according to s. 2(1)(w) of the PMLA, for property to be considered as proceeds of crime, it must be directly or indirectly linked to criminal activity related to a scheduled offence. The HC noted that the act of issuing forged Forms for unauthorized remittances did not meet the criterion, as there was no direct evidence showing that the funds were derived from criminal activity constituting a scheduled offence.

  • Consequently, the HC observed that the stringent conditions of s. 45 of the PMLA do not apply to the alleged offence relying upon the judgement by the Hon’ble Supreme Court in Vijay Madanlal Choudhary v. Union of India.[ii]

  • The HC considering the Petitioner's health condition and the absence of ‘proceeds of crime’ allowed the AB.

Our Analysis

The HC’s decision relies on various significant precedents regarding the interpretation of ‘proceeds of crime’ within the ambit of the PMLA in the context of granting AB. The case pivoted around the main allegation that the Petitioner was implicated in the outward remittance of funds through forged Forms. Nonetheless, the HC concluded that simply carrying out outward remittances through forged documentation did not constitute ‘proceeds of crime’ unless it could be demonstrated that such funds were derived from a criminal activity related to a scheduled offence.

Consequently, the HC determined that the ED had not successfully established a prima facie case against the Petitioner under the PMLA, tipping the balance of convenience towards granting him AB. This conclusion is rooted in the judicial interpretations leveraged to substantiate the Petitioner’s argument, emphasizing that the offences alleged did not result in the generation of ‘proceeds of crime’ as defined under PMLA.




End Notes

[i] 2024 SCC OnLine Del 141

[ii] 2022 SCC OnLine SC 929




Authored by Maarij Ahmad, Intern at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.

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