HC Granted Bail to Petitioner as he was Unaware that Loan was Tainted and there was no Direct Link to Criminal Activities

Case Details: Vijay Agrawal v. Directorate of Enforcement - [2023] 153 taxmann.com 509 (HC-Delhi)

Judiciary and Counsel Details

• • Dinesh Kumar Sharma, J.
  • Sidharth Aggarwal, Sr. Adv., Arjun Dewan. Shahryar Khan & Ms Arshiya Ghosh. Advs. for the Petitioner.
  • Zoheb Hossain, Spl. Counsel, Vivek Gurnani & Baibav, Advs. for the Respondent.

Facts of the Case

In the instant case, the petitioner/the real estate developer undertook the development of lands held by the company ‘G’ belonging to ‘N’ and ‘B’ i.e. the accused persons and the petitioner was allotted shares of ‘G’ as security. The FIR was filed against the accused persons under section 3 of the Prevention of Money Laundering Act, 2002.

The petitioner was named as an accused in a supplementary prosecution complaint filed by the Directorate of Enforcement (ED) alleging that the accused persons and their accomplices including the petitioner rotated the funds.

Further, it was alleged that the petitioner in lieu of the said development, by acquiring shares, which were acquired by ‘N’ out of the proceeds of crime and by availing loans/advances from shell companies of the co-accused, had actively participated in the scheme of money laundering and the integration of the proceeds of crime.

The petitioner was sent to judicial custody, resultantly, the petitioner filed the instant application seeking bail submitting that it had no prior association with the accused persons, also it was not aware of the tainted nature of money by which the accused persons had purchased the said lands.

High Court Held

The High Court observed that in order to be punished under section 3 of PMLA, it was necessary that the person dealing with the proceeds of crime must have some knowledge that it was tainted money and there has to be a substantial link between money received and criminal activity relating to the scheduled offence which could be attributed to the petitioner.

The High Court held that since direct evidence could not meticulously be examined at an instant stage and the instant Court could not proceed on assumptions, on a broad probability, the petitioner was to be admitted to bail.

List of Cases Reviewed

• • Ranjitsingh Brahamjeet Singh Sharma v. State of Maharashtra [2005] 1 SCR 876 (para 32) followed.

List of Cases Referred to

• • Vijay Madanlal Choudhary v. Union of India 2022 SCC Online SC 929/[2022] 140 taxmann.com 610 (SC) (para 7)
  • Tahir Hussain v. Asstt. Director Enforcement Directorate [2022] DHC/005093] (para 7)
  • Union of India v. Rattan Mallik @ Habul [2009] 2 SCC 624 (para 7)
  • Lalit Goel v. Directorate of Enforcement [CRM-M.7039 of 2022 dated 8-4-2022] (para 19)
  • Ranjitsingh Brahamjeet Singh Sharma v. State of Maharastra [2005] 1 SCR 876 (para 31)
  • Sanjay Pandey v. Directorate of Enforcement 2022 SCC Online Delhi 4279 (para 34).