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Synopsis

The Delhi High Court recently held that a mere exculpatory statement to the Enforcement Directorate (ED) can never suffice to form a ground, leave alone a reasonable ground, to believe that the applicant is not guilty of the offence of money laundering.

A bench of Justice Asha Menon noted, "The investigations are continuing in respect of the scale of operations, but to say that because those investigations are continuing, an incomplete challan had been submitted and therefore, the applicant would technically be entitled to bail under Section 167(2) Cr.P.C., would be a somewhat convoluted argument."

The judgment has been passed in a bail application filed by one Bimal Kumar Jain who was allegedly involved in operating a firm for money laundering in conspiracy with his brother (Naresh Jain). They allegedly incorporated and operated 450 Indian entities and 104 foreign entities for routing proceeds of crime and also enabling the purchase of offices and properties as if with untainted funds.

Allegedly, the investigations traced proceeds of the crime to the tune of Rs.5,65,11,22,269, but the extent of money laundering was more than rupees ninety-six thousand crores.

Advocate Naveen Malhotra appearing for the applicant submitted that the allegations were made only against Naresh Jain, who may be the main accused and there was nothing to connect the applicant with any of the companies belonging to Naresh.

Malhotra further added, "The statements that were made by the applicant to the directorate officials were completely exculpatory, as he had denied any knowledge of the activities of coaccused Naresh Jain and denied having been involved in any routing of proceeds of crime."

In view of the above, such exculpatory statements could not be used against the applicant, Malhotra added.

He further argued that the Enforcement Director acted with vengeance inasmuch as five notices were sent to the applicant when the Covid-19 pandemic was at its peak and when he sent a medical certificate to the effect that he was suffering from Covid-19, ED had prosecuted the lab/dispensary staff, who had prepared the reports.

On the other hand, Advocate Zoheb Hossain, Special Counsel for ED, submitted that there was no ground made out for grant of bail as the application itself had been filed without any change in circumstances.

Hossain clarified that a sum of Rs. 35 crores had been found in the accounts of the applicant and it was not as if he had no role to play; he was actively assisting his co-accused to launder money, the case had international ramifications as the money was being routed from Hong Kong, Singapore, and Dubai, which was why investigations could not be declared concluded.

Given the above, filing the second complaint or the pendency of this investigation would not entitle the applicant to bail, he argued.  

The bench opined, "The allegations against the applicant are very serious in nature. A huge amount of rupees ninety-six thousand crores, is supposed to have been laundered. There have been multiple layering, calling for painstaking and detailed investigations."

"The applicant has fully participated in the money laundering by lending his company's accounts to his brother and making accommodating entries. A sum of Rs. 35 crores are directly traceable to the applicant," the bench added.

Therefore, while considering the gravity of the offence, court denied bail to the applicant. Court further opined, "A mere exculpatory statement to the respondent can never suffice to form a ground, leave alone a reasonable ground to believe that the applicant is not guilty of the offence."

Case Title Bimal Kumar Jain Vs. Directorate of Enforcement