Rouse Avenue Court, Delhi: In the present case five accused namely, Mukesh Jain, Shiv Kumar Bhargava, Benu Jain, Nipun Bansal, and Mohd. Nauman were sent up for trial by the Directorate of Enforcement, New Delhi (‘DoE’) in Enforcement Case Information Report (‘ECIR’) dated 14-12-2009 for the commission of offence under Section 3 of the Prevention of Money Laundering Act, 2002 (‘PMLA’) punishable under Section 4 of PMLA. Mohd. Nauman died during the trial at the stage of arguments on the point of charge and hence proceedings against him were abated on 11-10-2021. Mohd. Farrukh, Special Judge (PMLA)*, opined that the omissions on the part of Investigating Officer (‘IO’) Pankaj Kumar coupled with non-arraignment of Pramod Kumar Pandey and Adhiraj Kumar as accused reflect his lackadaisical and nonchalant conduct towards his duty to conduct fair, honest, sincere and dispassionate investigation.
Background
The CBI, EOU-II Unit, New Delhi registered FIR dated 6-4-2009 against unknown bank officials and others for commission of offences of defrauding Punjab National Bank, Lal Bagh Branch, Lucknow, UP (‘PNB’). After completion of investigation, the CBI filed charge-sheet concluding that during October 2008 to March 2009, the five accused persons herein with the other co-accused Mohd. Nauman, Amit Agarwal, Ganesh Lal, Chandra Bhan Singh (public servant), Jamir Ahmad and Raje @ Rajeev conspired among themselves for forging and fabricating eight cheques; three cheques were encashed/cleared and amount of Rs 1,46,71,000 was credited to bank accounts operated by Mukesh Jain and Nipun Bansal causing wrongful loss to PNB and its account holders and wrongful gain to themselves.
It was also concluded in investigation that the accused also attempted to encash the remaining five forged and fabricated cheques of Rs 2,72,38,000, however, their attempts could not fructify as the forgery of cheques were detected by banks concerned. On this premise, these accused persons were sent up to face trial for commission of offences punishable under Sections 120-B, 420, 467, 468, 471, and 511 of the Penal Code, 1860 (‘IPC’) and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 and substantive offences thereof.
Based on the FIR registered by the CBI and the chargesheet filed thereto, the present ECIR was recorded on 14-12-2009 in Delhi Zonal Office of DoE by the then Assistant Director in DoE against the five accused persons namely, Mukesh Jain, Shiv Kumar Bhargava, Benu Jain, Nipun Bansal, and Mohd. Nauman alleging that since alleged offences in CBI case were part of the Scheduled Offences (‘SO’) under PMLA, prima facie case was made out for investigation for commission of offence under Section 3 of the PMLA punishable under Section 4 of PMLA against the accused persons. The ECIR was assigned to the Assistant Director (PMLA) and thereafter, enquiries under PMLA were initiated and after completion of the investigation, Assistant Director filed the present complaint in the ECIR before the Special Court under PMLA on 31-12-2008. Thereafter, cognizance of the complaint was taken on 23-7-2020 and accused were summoned for 25-9-2020.
Analysis, Law, and Decision
Findings in respect of Shiv Kumar Bhargava and Benu Jain
The Court noted that Rs 1,06,71,000 were derived from the criminal activity by Mukesh Jain, Shiv Kumar Bhargava, Benu Jain, for which they faced trial in a predicate offence, wherein vide judgment dated 25-11-2023, Mukesh Jain stood convicted while Shiv Kumar Bhargava and Benu Jain were acquitted. The Court relied on Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929 (‘Vijay Madanlal Choudhary’) wherein the Supreme Court held that “when a person is finally discharged/acquitted of the ‘SO’ or the criminal case against him is quashed by a Court of competent jurisdiction, there can be no offence of money-laundering against that person”. The ratio of the Vijay Madanlal Choudhary Case (Supra) was followed by the Supreme Court in Parvathi Kollur v. State, 2022 SCC OnLine SC 1975.
The Court thus opined that once the basis of a proceedings under PMLA was gone, all consequential acts, actions, orders would fall to the ground automatically, there could be no offence of money-laundering against Shiv Kumar Bhargava and Benu Jain, if they had been acquitted in predicate offence. The Court noted that as per the findings recorded in the Judgement dated 25-11-2023 passed by this Court in the case of Predicate Offence, neither Benu Jain nor Shiv Kumar Bhargava was found involved in the diversion and utilization of any portion of the amount out of Rs 1,06,71,000 being proceeds of crime (‘PoC’) fraudulently deposited in the Bank Account of Bahubali Marketing Pvt. Ltd (‘BMPL’) and therefore no offence under Section 3 of PMLA was made out against them.
The Court, after considering facts and circumstances of the present case, acquitted Shiv Kumar Bhargava and Benu Jain.
Findings in respect of Mukesh Jain
The Court after considering the facts and circumstances, opined that it was proved that Mukesh Jain had fraudulently received an amount of Rs 1,06,71,000 through the two forged cheques of Rs 51,65,000 and Rs 55,06,000 in Bank Account of his firm BMPL by cheating PNB, Lal Bagh Branch and its customer SIFCL. It was further established that Mukesh Jain laundered the said amount by siphoning off the same to different Bank Accounts and the said amount could not be traced by the authorities meant that Mukesh Jain had been enjoying the said PoC throughout.
The Court opined that Mukesh Jain who committed a scheduled crime; acquired proceeds therefrom; and thereafter, projected it as untainted money post inclusion of Sections 120-B, 420, and 471 of the IPC in PMLA, would nonetheless be guilty of the offence of money-laundering. Accordingly, even though case registered under SO against the Mukesh Jain and PoC of Rs 1,06,71,000 acquired was earlier to 1-6-2009, he could be prosecuted for commission of offence under Section 3 of PMLA as it was undisputed fact that he has been enjoying PoC acquired as a result of the alleged crime even after 1-6-2009.
Findings in respect of Nipun Bansal
The Court opined that it was proved that Nipun Bansal laundered PoC of Rs 40,00,000 and retained its possession from 26-2-2009 to 5-3-2009 and thereafter, retained the possession of remaining amount of Rs 15,00,000 till 14-9-2010. The Court noted that since Nipun Bansal had already returned Rs 25,00,000 out of Rs 40,00,000 which was PoC prior to the enactment of Sections 120-B, 420, 471 of the IPC being made part of the ‘SO’ of PMLA, Nipun Bansal could not be held guilty of offence under Section 3 of PMLA in respect of amount of Rs 25,00,000. However, undisputedly, remaining Rs 15,00,000 being PoC was retained by him from 26-2-2009 to 14-9-2010 i.e., after the aforementioned ‘SO’ were included under PMLA w.e.f. 1-6-2009.
The Court opined that mere retention of the possession of part of PoC by Nipun Bansal shall be sufficient to conclude that he committed offence under Section 3 of PMLA and his subsequent return of the amount shall not exonerate him from the offence of money laundering. Thus, the Court held that he was liable to be convicted under Section 3 of PMLA.
Defects in Investigation
The Court noted that while Mukesh Jain was alleged to have laundered Rs 1,06,71,000, it was established that after credit of this amount in the Bank Account of BMPL, Mukesh Jain transferred an amount of Rs 60,61,000 in the Bank Account of Analytical Impex Pvt. Ltd. (‘AIPL’) whose director was Pramod Kumar Pandey. It was also established that Rs 10,00,000 were transferred to the Bank Account of Saint Grandeur (‘SG’) from the aforesaid Bank Account and Rs 50,00,000 were withdrawn in cash. Thus, Rs 61,000 was still lying in the Bank Account of AIPL at the time of recording ECIR.
Thus, the Court stated that it was manifest that Bank Account of AIPL was used for laundering the part of PoC and Pramod Kumar Pandey assisted Mukesh Jain in that nefarious act and Bank Account of SG operated by Adhiraj Kumar was also used for laundering of Rs 10,00,000 which were transferred to the aforesaid Bank Account by Pramod Kumar Pandey from the Bank Account of AIPL. The Court opined that there was ample material before IO that both of them assisted Mukesh Jain in laundering of PoC and as per record, neither Pramod Kumar Pandey nor Adhiraj Kumar was accused in the ‘predicate offence case’ registered by CBI.
The Court opined that the omissions on the part of IO Pankaj Kumar coupled with non-arraignment of Promod Kumar Pandey and Adhiraj Kumar as accused reflect his lackadaisical and nonchalant conduct towards his duty to conduct fair, honest, sincere and dispassionate investigation. To bring out the real, complete and unvarnished truth, it was his duty to unearth all the material relating to the present case in respect of all the suspects who indulged in the offence of money-laundering, but he conducted a truncated investigation confining himself only to the persons who were arraigned accused by CBI. Furthermore, his conduct of not conducting investigation with respect to the Bank Accounts of in which Nipun Bansal transferred PoC, non-examination of their respective operators smacks of intentional mischief to misdirect the investigation as well as withhold material evidence which would have implicated them. These proceedings asseverate to be not only a glaring case of faulty investigation but also a case of an investigation coloured with motivation or an attempt to ensure that certain persons could go scot-free.
The Court further opined that in the present case, there is nothing on record to explain as to under what circumstances, it took around 9 to 10 years to complete the investigation. All the documents or witnesses were available in 2009 itself, however, documents were collected in 2018 and statements of the witnesses were also recorded from 2018 onwards. No explanation is forthcoming under what circumstances for what reasons, investigation was kept pending for over 9 to 10 years.
The Court thus summoned Pramod Kumar Pandey and Adhiraj Kumar under Section 319 of the Criminal Procedure Code, 1973 (‘CrPC’) to face the trial under Section 3 of PMLA punishable under Section 4 of PMLA. The Court held that the DoE was successful in proving its case beyond reasonable doubt that accused Mukesh Jain and Nipun Bansal had committed offence of money-laundering as defined under Section 3 of the PMLA and they were convicted accordingly. However, the DoE had failed to prove the offence of money-laundering against Shiv Kumar Bhargava and Benu Jain and thus, they were acquitted under Section 3 of the PMLA.
The Court directed that a notice should be issued to IO Pankaj Kumar for 15-4-2024 to show cause as to why penal action under Sections 217 and 166-A of the CrPC and disciplinary action be not recommended against him.
[Enforcement Directorate, PMLA v. Mukesh Jain, 2024 SCC OnLine Dis Crt (Del) 9, decided on 30-3-2024]
*Judgment authored by: Special Judge (PMLA) Mohd. Farrukh
Advocates who appeared in this case :
For the Complainant: Naveen Kumar Matta, Special PP for Directorate of Enforcement
For the Accused: Deepak Bhadana; Md. Qamar Ali, Counsels; R.P. Shukla, Advocate
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