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The court noted that in cases such as these, where multiple accused persons were involved, thousands of pages of evidence needed to be reviewed, and numerous witnesses had to be examined, the trial was not expected to conclude soon. Therefore, the court held that keeping the accused in custody under Section 45 of the PMLA as a means of incarceration is not permissible.
The Delhi High Court, on November 20, granted bail to Managing Director of Lava Internation Hari Om Rai regarding his involvement in the money laundering case related to Vivo Mobile Communication. The bench of Justice Manoj Kumar Ohri also remarked that the liberty of an accused cannot be curtailed by Section 45 PMLA without taking all other germane considerations into account.
The court also remarked that “The accused in a money laundering case cannot be equated with those punishable with death, imprisonment for life, ten years or more like offences under the Narcotic Drugs and Psychotropic Substances Act, 1985, murder, cases of rape, dacoity, etc”.
According to the prosecution complaint, Vivo Mobile Communication Co. Ltd., China and others conspired to fraudulently establish Vivo group companies in India, concealing their true ownership. Vivo India, along with its State Distribution Companies (SDCs), allegedly misrepresented its Chinese ownership, presenting itself as a subsidiary of Hong Kong-based Multi Accord Limited, while being ultimately controlled by Vivo China.
It is also alleged that Vivo India transferred Rs. 70,837 Crores outside India between January 2015 and March 2021, with Vivo China controlling companies under a corporate veil and acquiring proceeds of crime amounting to Rs. 2,02,41,17,72,292.89, which were allegedly diverted to overseas trading companies controlled by Vivo China.
Additional illegalities include the use of forged driving licenses to open bank accounts and obtain Director Identification Numbers by Chinese nationals and violations related to visa procurement.
Hari Om Rai, Managing Director of Lava International Ltd., a competitor of Vivo, was also accused of assisting Chinese nationals from Vivo China in establishing companies in India, providing logistical and financial support totaling Rs. 3.17 Crores to Labquest Engineering Pvt. Ltd. to aid in this process.
Senior Advocate Vikas Pahwa, representing Hari Om Rai, argued that the applicant is innocent and has been falsely implicated. He asserted that there is no evidence linking the applicant to the alleged offenses or to the proceeds of crime. Pahwa further argued that the applicant's constitutional right to life and liberty is being violated due to the slow pace of the trial, which is unlikely to conclude soon.
Special Counsel Zoheb Hossain, representing the Enforcement Directorate (ED), opposed the bail application, claiming that the applicant was involved in money laundering, destruction of evidence, and the fraudulent establishment of companies. Hossain further contended that the applicant used Labquest to circumvent foreign investment regulations and assist in setting up Vivo India's network of companies. Additionally, forensic analysis of the applicant's laptop allegedly revealed attempts to delete evidence by searching for ways to remove emails.
The court noted that a plain reading of Section 45 indicated that the public prosecutor must have an opportunity to oppose the application, and the court must have reasonable grounds to believe the applicant is not guilty of the offence and is unlikely to commit any further offences while on bail. Although these twin conditions restrict the right of the accused to be released on bail, they do not impose an absolute prohibition, leaving the decision to the court.
The court also acknowledged that the trial was unlikely to conclude soon, considering the volume of evidence and the number of accused persons. As such, the applicant's continued detention under Section 45 of the PMLA was not justified, especially when other accused persons had already been granted bail.
The court further emphasized that the right to a fair trial and liberty under Article 21 of the Constitution outweighed the statutory conditions for bail. Therefore, the court directed that the applicant be released on regular bail.
In another connected cases, the Patiala House Court granted bail to Rajan Malik, a Chartered Accountant for his involvement in the Vivo India money laundering cases and the Chinese visa scam.
For Petitioner: Senior Advocate Vikas Pahwa with Advocates Abhay Raj, Anshay, Namisha and SanskritiFor Respondent: Special Counsel Zoheb Hossain, Special Public Prosecutor Manish Jain with Advocates Vivek, Pranjal and RishabhCase Title: Hari Om Rai v ED (2024:DHC:8972)
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