Supreme Court: In appeals against the judgment and order passed by Delhi High Court on 6-04-2023 rejecting bail applications of Delhi Minister and Aam Aadmi Party (‘AAP’) leader Satyendar Jain and two others, the Division Bench of Bela M Trivedi and Pankaj Mithal, JJ. dismissed the bail application in excise policy money laundering case and directed Jain to surrender before the Special Court.
Factual Matrix
The instant matter pertains to offences under Section 109 of the Penal Code, 1860 (‘IPC’) read with Section 13(1)(e) of the Prevention of Corruption Act, 1988 (‘PC Act’) registered at the instance of Officer of the Central Bureau of Investigation (‘CBI’) which was followed by a chargesheet filed before the Special Judge against Satyendar Jain and 5 others alleging acquiring disproportionate assets between 14-02-2015 and 31-05-2017, while Jain was a Minister of Govt. NCT of Delhi, and laundered tainted cash amounts through Kolkata based shell companies. AAP leader Satyendar Jain was arrested on 30-05-2022.
Court’s Analysis
Considering the fact that chargesheet was filed, Special Court had taken cognizance and charges were set to be framed, the Court in the instant matter acknowledged that any observation may influence the trial, and thus refrained from going into elaborate submissions. The Court confined itself to the twin conditions under Section 45 of PMLA, regarding proof of guild and likeliness of committing offence while on bail.
The Court referred to Gautam Kundu v. Directorate of Enforcement (Prevention of Money-Laundering Act), (2015) 16 SCC 1 and Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929 to look at the reasonable grounds against appellants’ guilt for offences alleged under the Act, and their likeliness to commit any offence while on bail.
Looking at the ED case against Satyendar Jain, the Court found that Jain was the conceptualizer, initiator and supervisor for the entire operation of the accommodation entries, and it was alleged that accommodation entries worth Rs 4.81 Crores were received between 2015-16 from Kolkata based entry operators in the bank accounts of 4 companies owned/controlled by Jain and his family members, and cash of about Rs 4,65,99,635 was paid to said entry operators. It was further alleged that Jain received accommodation entries of Rs.15 lakhs in his company during 2015-16 from the said Kolkata based entry operators by paying cash amounts of Rs.15 lakhs and commission of Rs 16,800. Thus, it was alleged that Satyendar Jain committed money laundering to the tune of Rs 4,81,16,435 projecting the same to be untainted. It was further alleged that his family members assisted him in committing the said offence by making separate independent declarations regarding undisclosed income of Rs 8.26 Crores for 2010-11 to 2015-16, prepared ante-dated documents.
With reference to Vijay Madanlal Choudhary (supra), the Court elaborated Section 3 of PMLA stating that “the offence as defined captures every process and activity in dealing with the proceeds of crime, directly or indirectly, and is not limited to the happening of the final act of integration of tainted property in the formal economy to constitute an act of money laundering” and touched upon proceeds of crime under Section 2(1)(u) of PMLA. Hinting at ED’s heavy reliance upon witness statements and documents under Section 50 of PMLA to show appellants’ involvement in offences alleged, the Court cited Rohit Tandon v. Directorate of Enforcement, (2018) 11 SCC 46 wherein it was held that statements of witnesses recorded by Prosecution — ED are admissible in evidence in view of Section 50.
Coming to the instant facts, the Court said that statements reflect that Satyendar Jain and his family were directly or indirectly owning/controlling the said companies, being the ‘beneficial owner’ as per Section 2(1)(fa) of PMLA. The Court further noted that two other family members sought to avail Income Declaration Scheme, 2016 (‘IDS’) by filing separate declarations under Section 183 of the Finance Act, 2016 on 27-09-2016 when both individually declared an income of Rs 8,26,91,750 as investments in shares of various companies during 2011-12, 2012-13 and 2016-17. The order passed by Principal Commissioner, Income Tax on 9-06-2017 held the said declaration was made “by suppression and misrepresentation of facts”, and therefore they were “void”. Challenge against the said order was dismissed by High Court while elaborately dealing with the issues, and dismissed by the Supreme Court as well.
The Court observed that “there remains no shadow of doubt that the appellant- Satyendar Kumar Jain had conceptualized idea of accommodation entries against cash and was responsible for the accommodation entries totalling to Rs. 4.81 crores (approx.) received through the Kolkata based entry operators in the bank accounts of the four companies by paying cash and the said companies were controlled and owned by him and his family. Though it is true that a company is a separate legal entity from its shareholders and directors, the lifting of corporate veil is permissible when such corporate structures have been used for committing fraud or economic offences or have been used as a facade or a sham for carrying out illegal activities.”
The Court opined that the appellants miserably failed to satisfy the Court regarding reasonable grounds for believing that they were not guilty of offences alleged, but there was sufficient material collected by ED showing their prima facie guilt.
Considering that Satyendar Jain was out on medical bail since 30-05-2023, the Court directed him to surrender before the Special Court and clarified that “right to speedy trial and access to justice is a valuable right enshrined in the Constitution of India, and provisions of Section 436A of the Cr.P.C. would apply with full force to the cases of money laundering falling under Section 3 of the PMLA, subject to the Provisos and the Explanation contained therein.”
[Satyendar Jain v. Directorate of Enforcement, 2024 SCC OnLine SC 317, decided on 18-03-2024]
Advocates who appeared in this case :
For Petitioners: Senior Advocate Dr. Abhishek Manu Singhvi, Senior Advocate N. Hariharan, Advocate on Record Vivek Jain, Advocate Abhinav Jain, Advocate Amit Bhandari, Advocate Rajat Jain, Advocate Shariran Mukherjee, Advocate Umeed Shah, Advocate Siddhant Sahay, Senior Advocate Meenakshi Arora, Advocate Dr. Sushil Kumar Gupta, Advocate Sunita Gupta, Advocate Dr. Sushil Satrawala, Advocate Chandratanay Chaube, Advocate Ankit Shah, Advocate on Record Manan Verma
For Respondents: Additional Solicitor General S.V. Raju, Advocate on Record Mukesh Kumar Maroria, Advocate Zoheb Hussain, Advocate Rajat Nair, Advocate Annam Venkatesh, Advocate Padmesh Mishra, Advocate Sairica S Raju, Advocate Vivek Gurnani, Advocate Abhipriya, Advocate Hitarth Raja, Advocate Madhumita Kesavan, Advocate Samrat Goswami, Advocate Harsh Paul Singh, Advocate Sonali Sharma, Advocate Kartik Sabarwal, Advocate Vivek Gaurav, Advocate Kshitiz Agarwal, Advocate Ritumbhara Garg, Advocate Gaurav Sarkar, Advocate Gaurav Saini
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