Delhi High Court
Abdul Muqeet vs Directorate Of Enforcement on 4 December, 2024
Author: Jasmeet Singh
Bench: Jasmeet Singh
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on:26.11.2024
Judgment pronounced on: 04.12.2024
+ BAIL APPLN. 1859/2024
PARVEZ AHMED .....Petitioner
Through: Mr. Adit S. Pujari, Mr. A. Nowfal, Mr.
Shaurya Mittal, Ms. Mantika Vohra, Mr.
Arif Hussain, Advs.
versus
DIRECTORATE OF ENFORCEMENT .....Respondent
Through: Mr. Zoheb Hossain, Special Counsel for ED
with Mr. Vivek Gurnani, Panel Counsel for
ED, Mr. Kartik Sabhdarwal, Mr. Pranjal
Tripathi, Mr. Kanishk Maurya, Mr. Azeeq
Mushtaque, Advs.
+ BAIL APPLN. 2001/2024
ABDUL MUQEET .....Petitioner
Through: Mr. Satyakam, Mr. Talha Abdul Rahman,
Mr. Sudhanshuy Tewari, Mr. Arif Hussain,
Advs.
versus
DIRECTORATE OF ENFORCEMENT .....Respondent
Through: Mr. Zoheb Hossain, Special Counsel for ED
with Mr. Vivek Gurnani, Panel Counsel for
ED, Mr. Kartik Sabhdarwal, Mr. Pranjal
Tripathi, Mr. Kanishk Maurya, Mr. Azeeq
Mushtaque, Advs.
+ BAIL APPLN. 2012/2024
MOHD ILYAS .....Petitioner
Through: Mr. Shadan Farasat, Sr. Adv. with Mr. A.
Nowfal, Mr. Harshit Anand, Mr. Aman
Naqvi, Ms. Niharika, Advs.
versus
DIRECTORATE OF ENFORCEMENT .....Respondent
Through: Mr. Zoheb Hossain, Special Counsel for ED
Digitally Signed Page 1 of 31
By:MAYANK
Signing Date:04.12.2024
12:14:28
with Mr. Vivek Gurnani, Panel Counsel for
ED, Mr. Kartik Sabhdarwal, Mr. Pranjal
Tripathi, Mr. Kanishk Maurya, Mr. Azeeq
Mushtaque, Advs.
CORAM:
HON'BLE MR. JUSTICE JASMEET SINGH
JUDGMENT
: JASMEET SINGH,J
1. These are the petitions filed under Section 439 read with Section 482
of the Code of Criminal Procedure, 1973 (“CrPC”) on behalf of the
petitioners seeking regular bail in ECIR/STF/17/2022 dated
21.09.2022 for the commission of offence under sections 3 and 4 read
with section 70 of the Prevention of Money Laundering Act, 2002
(“PMLA”).
BRIEF FACTS
2. The said ECIR /STF/17/2022 dated 21.09.2022 is premised on RC-
14/2022/NIA/DLI dated 13.04.2022 filed by the National
Investigation Agency (“NIA”) under section 120-B of Indian Penal
Code (“IPC”), Sections 17, 18, 18B, 20, 22B, 38 and 39 of Unlawful
Activities (Prevention) Act, 1967 (“UAPA”) as the said offences are
the scheduled offences under Part A of the Scheduled under section
2(1)(y) of PMLA.
3. All the petitioners herein were arrested on 22.09.2022 under the said
ECIR. After the completion of investigation, the Directorate of
Enforcement (“ED”) filed a Complaint before the concerned Court on
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19.11.2022 against the petitioners herein.
4. As per the Complaint filed by the ED, the specific role of the
petitioners are described as under:-
Role of Parvez Ahmed
It is stated that he was the president of Delhi state unit of
Popular Front of India (“PFI”) for the term 2018-2020 and was
actively involved in anti CAA-NRC protests held in Delhi. The
anti-CAA protests in Delhi resulted in Delhi riots of February,
2020 in which he, along with other PFI members, was arrested.
Parvez Ahmed admitted that in his capacity as the President of
PFI Delhi, he followed up the collection of donations. He also
revealed that receipts were issued to individual contributors who
donated funds to PFI.
His statement under section 50 of PMLA was recorded
wherein he, inter alia, stated that he was responsible for PFI‟s
public relations in Delhi and after collection of donations, the
amount was deposited in headquarters office and donation
receipts were taken which were then sent to the donors and this
process was done under the supervision of the District President.
The funds were collected by visiting houses of individuals but at
that time no donation receipts were issued to the donors. The
accounts department handed over only the filled donation slips to
the District Presidents and one copy of the said slips remained in
the booklet. He further stated that the local units wrote the name
of the donor along with address on a piece of paper and handed
over the same to the District President.
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Role of Mohd Ilyas
It is stated that he was the General Secretary of Delhi state
unit of PFI since November, 2018 and actively participated in the
anti-CAA protests in Delhi which resulted in Delhi Riots. In his
statement recorded under section 50 of PMLA, he stated that
collection of funds was mainly done in the form of donations by
Delhi units of PFI. Further, the cash which was collected was
deposited by him in PFI‟s Shaheen Bagh office with either the
manager Kamal or accountant Jaseer.
In another statement recorded under section 50 of PMLA on
22.09.2022, he, inter alia, stated that his main work was public
relations, whenever there was any protest or public gathering it
was his duty to contact Police and get their approval and was also
responsible for spreading awareness about PFI. He further stated
that PFI did not receive any donations from abroad and most of
PFI‟s donations were through bank transfers and whatever small
cash donations were there would be donated in PFI‟s national
headquarters office and thereafter the account section prepared
the donation receipts which he handed over to the donors.
Role of Abdul Muqeet
It is stated that he was the office secretary of Delhi State
Unit of the organization since 2017. During the investigation, it
was revealed that bogus donation slips were issued in the name
of residents of Mullah Colony, Gharoli for PFI by Abdul Muqeet
along with his associates. It was also revealed that donations
made for a sum of Rs. 50-100 were incorrectly reflected as
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donations to the tune of Rs. 2000 – Rs. 4000. Further, Abdul
Muqeet was actively involved in the collection of donations in
his locality, i.e. Mullah Colony, Gharoli, Delhi-96.
His statement under section 50 of PMLA was recorded
wherein he inter alia, stated that he joined PFI after meeting
Parvez Ahmed and was made office secretary of PFI Delhi.
Further as office secretary, his responsibility was to open and
close PFI‟s office and to attend any PFI related person who came
to the office. He used to attend office every day for 3-4 hours and
it was his responsibility to collect Zakat in Mulla Colony and
nearby areas and after collecting Zakat if anybody used to ask
him for donation receipts, he would talk to Mohd Ilyas and
arranged for receipts.
5. The petitioners were also members of the political front of PFI –
Social Democratic Party of India (“SDPI”) – and were actively
involved in SDPI‟s activities. SDPI gave ticket to Mohd Ilyas for
contesting Delhi Assembly elections, 2020 from Karawal Nagar and
for this purpose, Rs. 2.5 lakhs was given by SDPI to Mohd Ilyas.
6. During the investigation, it was revealed that more than Rs. 60 Crores
have been deposited in the bank accounts of PFI since 2009 and an
amount of Rs. 32.03 Crores was deposited in cash. Several booklets in
respect of cash donations for the period March 2020 were recovered
and seized from the national headquarter office of PFI. Scrutiny of the
said booklets reveals that complete details of a large number of donors
were not mentioned and hence it was not possible to identify them and
also the genuineness of the so-called donations. In a large part of the
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cases, the identity of the so-called donor and the authenticity of the
purported cash donations could not be established. It therefore,
appeared that complete details of the so-called donors were
deliberately concealed as they did not exist in reality.
7. It is also stated in the Complaint that all the petitioners were actively
involved and instrumental in the fund raising activities of PFI as part
of the larger criminal conspiracy to raise and use such funds in PFI‟s
various unlawful activities in India. PFI conducted anti-CAA protests
across India and the petitioners actively participated in such protests.
Further, all the petitioners were an integral part of this conspiracy and
they played a key role in creating and managing the facade of bogus
cash donations by way of which proceeds of crime were concealed,
possessed and projected as untainted money. The petitioners were the
key persons who were responsible for raising and collecting funds and
depositing the same at the National office of PFI at Shaheen Bagh,
New Delhi.
8. The Complaint in conclusion stated that a criminal conspiracy was
hatched by the office bearers of PFI by which suspicious funds from
within the country and abroad have been raised by the PFI. These
funds have been raised as a part of the scheduled offence of criminal
conspiracy. The funds so raised and collected by PFI are thus nothing
but proceeds of crime which they have layered, placed and integrated
through their numerous bank accounts as well as those of their
members/sympathizers.
9. Parvez Ahmed admitted to have looked after the collection of funds in
Delhi. Mohd Ilyas looked after the collection of funds in the trans-
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Yamuna region of Delhi. Abdul Muqeet stated that they (persons
associated with PFI) used to go to mosques in nearby areas to collect
donations from the namaazis and thereafter they issued a receipt for
the total amount collected to the concerned Imam of the mosque and
deposited the collection with Parvez Ahmed.
10. Investigation has revealed that such fund collection exercise was a
sham and was falsely projected to be received from PFI sympathizers
and was further revealed that these transactions were bogus. Hence,
cash from suspicious sources was nothing but proceeds of crime
generated out of criminal conspiracy to disturb communal harmony,
incite violence through riots and other unlawful activities for
spreading terror across India. Thus, by concealing, possessing and
acquiring proceeds of crime raised in India and abroad as part of
criminal conspiracy and by thereafter projecting such funds as
untainted money (by preparing bogus cash donations slip/receipts), the
petitioners have been directly involved been knowingly a party to the
various processes and activities connected with the proceeds of crime
and thus committed the offence of money laundering as defined under
Section 3 of PMLA.
SUBMISSIONS ON BEHALF OF THE PETITIONERS
On behalf of the petitioner i.e. Mohd Ilyas
11. Mr Farasat, learned senior counsel appeared for the petitioner i.e.
Mohd Ilyas and has advanced his submissions as under:-
A. No offence under PMLA has been made out.
12. He submits that the Complaint does not make out any PMLA offence
against the petitioner. The petitioner is accused of receiving Rs. 2.5
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lakhs from the SDPI, the PFI‟s political wing, to contest Delhi
Assembly Elections, 2020. He argues that there is nothing on record to
prove that this money was a „proceeds of crime‟; in fact, the complaint
does not even allege that the said money was given to SDPI by PFI,
for members and activities for alleged predicate offences.
13. Learned senior counsel argues that the Complaint further alleges that
an amount of Rs. 1.02 lakhs was deposited in the petitioner‟s bank
account in Cochin, the source or reason has not been explained by the
petitioner. Nevertheless, there is nothing in Complaint which indicate
that such amount was received by the petitioner on account of any
PFI-related activity, let alone be „proceeds of crime‟, this allegation is
nothing but an accusation against the petitioner made by the ED
without any substantive evidence that the said amount was obtained as
a result of a scheduled offence.
14. He further points out from the Complaint that there are no specific
transactions either directly or indirectly which link the petitioner to
any money trail allegedly collected or concealed for and on behalf of
PFI. He further states that statements which are prejudicial in nature
have been made by the ED and the same cannot be a substitute to
satisfy the ingredients of the alleged offence despite howsoever strong
or damaging they may be. Statements made under Section 50 of the
PMLA are not admissible and further they are not corroborated by any
evidence.
15. Learned senior counsel argues that PMLA offence is a separate
offence whose existence is dependent upon the presence of the
predicate offence, in the present case ED has tried to describe the
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funds obtained as a part of alleged predicate offence as „proceeds of
crime‟ in the complaint. In P. Chidambaram vs. Directorate of
Enforcement (2019) 9 SCC 24, the Hon‟ble Supreme Court has held
that a scheduled/predicate offence is a sine qua non for the offence of
money-laundering which would generate the money which is being
laundered. At its highest, this allegation links the petitioner to
generation of „proceeds of crime‟ which is not a crime under the
PMLA.
16. He further argues that the phrase „proceeds of crime‟ needs to be
construed strictly as it is the core ingredient constituting the offence of
money laundering. For being regarded as proceeds of crime, the
property associated with the scheduled offence must have been
derived or obtained by a person „as a result of‟ criminal activity
relating to the concerned scheduled offence. Hence, as per the
complaint filed by the ED against the petitioner, no offence of money
laundering under section 3 of PMLA is made out against the
petitioner.
B. Right to Liberty has been violated on account of Long
Incarceration and Delay in Trial.
17. Learned senior counsel further submits that the petitioner has been in
custody for more than 2 years 2 months and maximum punishment for
an offence under section 4 of PMLA is 7 years. Trial is yet to begin as
the charges have not been framed against the petitioner. Even if the
trial commences, it is unlikely to conclude in the near future as there
are 185 prosecution witnesses cited in the Complaint and
Supplementary Complaints, 456 relied upon documents and digital
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evidence running into lakhs of pages which are required to be
examined. Hence, the trial will take considerable period of time to
conclude. Reliance is placed on the following judgments:-
1) Manish Sisodia (II) v. Enforcement Directorate, 2024 SCC
OnLine SC 1920
2) Kalvakuntla Kavitha v. Enforcement Directorate, 2024 SCC
OnLine SC 2269.
3) Prem Prakash v. Enforcement Directorate, (2024) 9 SCC
787.
4) V. Senthil Balaji v. Enforcement Directorate, 2024 SCC
OnLine SC 2626.
5) Vijay Nair vs. Directorate of Enforcement, Special Leave
Petition (Criminal) Diary No(s). 22137/2024.
6) Modh. Enamul Haque vs. Directorate of Enforcement
Criminal Appeal No. 3984/2024.
On behalf of the petitioner i.e. Abdul Muqeet
18. Mr Satyakam, learned counsel appeared for the petitioner i.e. Abdul
Muqeet and submits that the allegations are vague, contradictory and
do not disclose any criminality. As the petitioner is not charge sheeted
in the predicate offence, it is difficult to comprehend that how he
could be involved in generation, concealment, use and projection of
proceeds of crime.
19. Learned counsel further states that the primary evidence against the
petitioner is his own statements recorded under section 50 of PMLA
which do not implicate the petitioner. The said statements have weak
probative value. His own statement cannot be the starting point of
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evidence. Confessions require corroborative material to verify the
contents and mere admissibility does not mean proof of facts. The
statements of the petitioner are imported from different ECIR where
the petitioner is not an accused. Reliance is placed on Prem Prakash
(supra).
20. He further submits that to constitute an offence under section 3 of
PMLA, there must be a predicate offence which should lead to
generation of a money or money trail which is absent. Hence the
rigors of section 45 of PMLA are not applicable. Even taking all the
allegations in the Complaint as correct, even then the money
generation precedes the crime, i.e. Delhi riots.
21. Lastly, Mr Satyakam adopts the argument of Mr Farasat, learned
senior counsel on the point of delay in trial and long incarceration
which violates the Article 21 of Constitution of India.
On behalf of the petitioner i.e. Parvez Ahmed
22. Mr Pujari, learned counsel appears for the petitioner i.e. Parvez
Ahmed and submits that the allegation in the Complaint is that the
petitioner facilitated in the collection of funds for the purpose of
committing a crime and the funds so collected are therefore proceeds
of crime. He states that „proceeds of crime‟ must be derived or
obtained as a result of any criminal activity, not merely for an offence
intended to be committed.
23. The ED‟s stand in the Complaint is totally against the established
legal principles of money laundering. By asserting that the collection
of funds for the purpose of committing a crime constitutes „proceeds
of crime‟, the ED totally has failed to appreciate the settled law related
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to the proceeds of crime. Proceeds only become „proceeds of crime‟
after they are generated as a direct result of a criminal offence. It is
incorrect for the ED to presume that funds collected to commit a crime
are proceeds of crime.
24. He states that ED presupposes that the money was collected with
criminal intent and the same were used for illegal activities without
any evidence to support the same. The petitioner is not charged under
UAPA and is not even an accused in the predicate offence. Hence
there is no question of funds being collected for illegal activities. If
the ED‟s stands is true then the petitioner would have been charged
under Section 17 of UAPA.
25. Lastly, the petitioner adopts the argument of Mr Farasat, learned
senior counsel on the point of delay in trial and long incarceration
which violates the Article 21 of Constitution of India.
SUBMISSIONS ON BEHALF OF THE RESPONDENT
26. Refuting the above submissions made by the respective learned
counsels, Mr Hossain, learned Special Counsel submits that the
offence of money laundering commenced pursuant to criminal
conspiracy of raising and utilizing funds by PFI and its related
organizations for various terrorist activities, including involvement in
terror funding and unlawful activities aimed at disrupting communal
harmony, as was revealed in the NIA FIR No. RC/14/2022/NIA/DLI
dated 13.04.2022. With an intent to curb the nefarious activities of the
organization, the Ministry of Home Affairs vide notification dated
27.09.2022 has banned PFI and its affiliates and declared it as an
“unlawful association”.
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27. He further submits that the funds raised by PFI were deposited in their
27 bank accounts in cash all over India. Funds were also deposited in
the accounts of its sympathizers/other individuals wherefrom the
funds were transferred into various bank accounts of PFI in order to
make the same look like genuine banking transfers. Total credits
exceeding Rs. 60 crores were identified as proceeds of crime, with
over half i.e. Rs. 32.03 crores comprising of substantial cash deposits.
28. The same became evident when the statements of cash donors were
recorded under section 50 of PMLA wherein these individuals
categorically denied any association with PFI and stated that they had
never made any cash donations to PFI. In additions some witnesses
also confirmed that cash was transferred into their bank accounts and
same were immediately transferred to PFI bank accounts.
29. With regard to the role of Parvez Ahmed, learned special counsel
argues that Parvez Ahmed was president of Delhi state unit of PFI
from 2018-2020. He was responsible for overseeing PFI affairs inter-
alia of Delhi state, including the collection of funds on behalf of PFI.
As a result, he is guilty under section 70 of PMLA. My attention is
drawn to the Memorandum of Association (“MOA”) and Constitution
of PFI to show that all important decisions regarding the affairs of PFI
including operating the bank accounts were to be taken by the State
President. He further submits that an individual only becomes a
President when he is actively participating in the institution or based
upon their performance over a number of years. Parvez Ahmed was
involved in collection of donations for PFI and looked after the bank
account. The total funds collected by Parvez Ahmed while being the
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President of PFI Delhi State during the period Jan 2018 – Dec 2020,
amounted to Rs. 2.14 crore.
30. With regard to the role of Mohd Ilyas, Mr Hossain submits that till his
arrest, he was the General Secretary of Delhi State Unit of PFI since
November 2018. He was in charge of managing PFI operations in
Trans-Yamuna Area of Delhi state, including the collection of funds
on behalf of PFI for these areas. As a result, he is guilty under section
70 of PMLA. My attention is drawn to MOA and Constitution of PFI
to show that the General Secretary had an important role in decision
making including collections of funds. Mohd. Ilyas tried to legitimise
bogus donations as legitimate and the incomplete details on receipts
was intentional so that the identity of the donors could not be verified.
Even though he claimed that most of the donations were in the month
of Ramzan, the record shows that the dates were outside the period of
Ramzan.
31. With regard to the role of Abdul Muqeet, Mr Hossain submits that he
was the Office Secretary of Delhi State Unit of PFI since November
2018 to till his arrest. He was entrusted with the task of collecting
donations in cash in Mulla Colony.
32. All these funds were used for funding terrorist activities including the
payments made to terrorist and who would further promote terrorism.
33. Lastly, learned SPP submits that while relying on Manish Sisodia (I)
v. CBI, 2023 SCC OnLine SC 1393, the Court cannot ignore the
nature of allegations and grant bail to the accused persons only on the
ground of long incarceration and delay in trial. In the present case, the
accusations against the petitioners are serious in nature inter alia,
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allegations of terrorist activities. Hence, these allegations cannot be
ignored while considering bail.
ANALYSIS AND FINDING
34. Heard the rival submissions advanced by the learned counsels for the
parties and perused the material available on record.
35. PMLA legislation was brought in to prevent and control the issue of
money laundering, to seize the proceeds of crime, and to punish the
perpetrators. Now what exactly is money laundering, to put in simple
words, an act of dealing with illegal money or assets i.e. money
obtained or derived as result of criminal act relating to scheduled
offence. The said act is an offence under section 3 of PMLA which
reads as under:-
“3. Offence of money-laundering.– Whosoever directly or
indirectly attempts to indulge or knowingly assists or
knowingly is a party or is actually involved in any process
or activity connected with the proceeds of crime and
projecting it as untainted property shall be guilty of offence
of money laundering.”
36. The core ingredient to commit money laundering offence is „proceeds
of crime‟ which is defined under section 2(1)(u) of PMLA which
reads as under:-
“(u) “proceeds of crime” means any property derived or
obtained, directly or indirectly, by any person as a result of
criminal activity relating to a scheduled offence or the value
of any such property;”
37. The Hon‟ble Supreme Court in Vijay Madanlal Choudhary v. Union
of India, (2023) 12 SCC 1 has extensively interpreted „proceeds of
crime‟. Relevant paras are extracted below:-
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“106. The “proceeds of crime” being the core of the
ingredients constituting the offence of money laundering,
that expression needs to be construed strictly. In that, all
properties recovered or attached by the investigating
agency in connection with the criminal activity relating to a
scheduled offence under the general law cannot be regarded
as proceeds of crime. There may be cases where the
property involved in the commission of scheduled offence
attached by the investigating agency dealing with that
offence, cannot be wholly or partly regarded as proceeds of
crime within the meaning of Section 2(1)(u) of the 2002 Act
— so long as the whole or some portion of the property has
been derived or obtained by any person “as a result of”
criminal activity relating to the stated scheduled offence. To
be proceeds of crime, therefore, the property must be
derived or obtained, directly or indirectly, “as a result of”
criminal activity relating to a scheduled offence. To put it
differently, the vehicle used in commission of scheduled
offence may be attached as property in the case (crime)
concerned, it may still not be proceeds of crime within the
meaning of Section 2(1)(u) of the 2002 Act. Similarly,
possession of unaccounted property acquired by legal
means may be actionable for tax violation and yet, will not
be regarded as proceeds of crime unless the tax legislation
concerned prescribes such violation as an offence and such
offence is included in the Schedule to the 2002 Act. For
being regarded as proceeds of crime, the property
associated with the scheduled offence must have been
derived or obtained by a person “as a result of” criminal
activity relating to the scheduled offence concerned. This
distinction must be borne in mind while reckoning any
property referred to in the scheduled offence as proceeds of
crime for the purpose of the 2002 Act. Dealing with
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proceeds of crime by way of any process or activity
constitutes offence of money laundering under Section 3
PMLA.
107. …….
108. In the earlier part of this judgment, we have already
noted that every crime property need not be termed as
proceeds of crime but the converse may be true.
Additionally, some other property if purchased or derived
from the proceeds of crime even such subsequently acquired
property must be regarded as tainted property and
actionable under the Act. For, it would become property for
the purpose of taking action under the 2002 Act which is
being used in the commission of offence of money
laundering. Such purposive interpretation would be
necessary to uphold the purposes and objects for enactment
of the 2002 Act.
109. Tersely put, it is only such property which is derived or
obtained, directly or indirectly, as a result of criminal
activity relating to a scheduled offence that can be regarded
as proceeds of crime. The authorities under the 2002 Act
cannot resort to action against any person for money
laundering on an assumption that the property recovered by
them must be proceeds of crime and that a scheduled
offence has been committed, unless the same is registered
with the jurisdictional police or pending inquiry by way of
complaint before the competent forum. For, the expression
“derived or obtained” is indicative of criminal activity
relating to a scheduled offence already accomplished.
Similarly, in the event the person named in the criminal
activity relating to a scheduled offence is finally absolved by
a court of competent jurisdiction owing to an order of
discharge, acquittal or because of quashing of the criminal
case (scheduled offence) against him/her, there can be no
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action for money laundering against such a person or
person claiming through him in relation to the property
linked to the stated scheduled offence. This interpretation
alone can be countenanced on the basis of the provisions of
the 2002 Act, in particular Section 2(1)(u) read with Section
3. Taking any other view would be rewriting of these
provisions and disregarding the express language of the
definition clause “proceeds of crime”, as it obtains as of
now.”
(Emphasis added)
38. The Hon‟ble Supreme Court has very categorically laid down the
distinction with respect to „proceeds of crime‟. The above paras hold
that any property derived or obtained directly or indirectly „as a result
of criminal activity‟ which is a scheduled offence under the PMLA is
proceeds of crime. In other words, any property obtained following
the commission of the scheduled offence or from the proceeds of the
scheduled offence will be the proceeds of crime. Further, it is also
appropriate to refer to the judgment of Pavana Dibbur v.
Enforcement Directorate, 2023 SCC OnLine SC 1586 wherein it was
observed that for proceeds of crime, the existence of the scheduled
offence is a condition precedent. To invoke section 3 of PMLA, it is
not necessary that the accused persons must have been shown as
accused in the scheduled offences and the proceeds of crime must be
from the scheduled offence. Relevant paras are extracted below:-
“15. The condition precedent for the existence of proceeds
of crime is the existence of a scheduled offence. ……
16.
17. Coming back to Section 3 of the PMLA, on its plain
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a scheduled offence is committed. For example, let us take
the case of a person who is unconnected with the scheduled
offence, knowingly assists the concealment of the proceeds
of crime or knowingly assists the use of proceeds of crime.
In that case, he can be held guilty of committing an offence
under Section 3 of the PMLA. To give a concrete example,
the offences under Sections 384 to 389 of the IPC relating to
“extortion” are scheduled offences included in Paragraph 1
of the Schedule to the PMLA. An accused may commit a
crime of extortion covered by
Sections 384 to 389 of IPC and extort money. Subsequently,
a person unconnected with the offence of extortion may
assist the said accused in the concealment of the proceeds of
extortion. In such a case, the person who assists the accused
in the scheduled offence for concealing the proceeds of the
crime of extortion can be guilty of the offence of money
laundering. Therefore, it is not necessary that a person
against whom the offence under Section 3 of the PMLA is
alleged must have been shown as the accused in the
scheduled offence. What is held in paragraph 270 of the
decision of this Court in the case of Vijay Madanlal
Choudhary supports the above conclusion. The conditions
precedent for attracting the offence under Section 3 of the
PMLA are that there must be a scheduled offence and that
there must be proceeds of crime in relation to the scheduled
offence as defined in clause (u) of sub-section (1) of Section
3 of the PMLA.”
39. In the present case, ED has alleged that all the petitioners are
members/office bearers of the banned organisation i.e. PFI. The role
of the petitioners are that they have collected funds for and on behalf
of the organization from unknown sources, thereafter they provided
fake receipts/showed the collections as legitimate donations to utilize
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those funds to commit terrorist activities (scheduled offences). Hence,
the funds so collected by the petitioners are the proceeds of crime.
40. In order to invoke the provisions of section 3 of PMLA, there must be
proceeds of crime as discussed above and these proceeds must be a
result of a criminal activity. The case set up by the ED that the funds
which the petitioners were generating were used for committing a
scheduled offence, hence proceeds of crime, is not the scheme of
PMLA. The offence committed by the collection of funds may be an
offence under any law including a scheduled offence but cannot be
termed as a proceeds of crime to invoke section 3 of PMLA.
41. On perusing the Complaint, there is no evidence to show that any
scheduled offence has been committed, it is stated that the petitioners
participated in the anti-CAA protests in Delhi which culminated in
Delhi Riots. Learned counsels for the petitioners have rightly pointed
out that in the present case i.e. collection of funds precedes the crime
i.e. Delhi Riots. The proceeds of crime has to be generated as a result
of criminal activity (scheduled offence). The collection of funds in an
illegal way to commit a scheduled offence in future is not an offence
of money laundering under PMLA. The funds so collected are not
proceeds of crime and can be proceeds of crime only when they were
generated as a result of scheduled offence. The case set up by the ED
is putting the cart before the horse.
42. Even assuming for the sake of argument that the petitioners have
generated proceeds of crime, even then, prima facie, the petitioners do
not have dominion and control over the said alleged proceeds of
crime. Admitted case of the ED is that the petitioners collected the
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funds and deposited the same with the accountant or PFI‟s account.
The Hon‟ble Supreme Court in Manish Sisodia (I) (supra) has dealt
with the same and observed as under:-
“13. Fourthly, the contention of the DoE that generation of
proceeds of crime is itself „possession‟ or „use‟ of the
„proceeds of crime‟, prima facie, appears to be unclear and
not free from doubt in view of the ratio in Vijay Madanlal
Choudhary (supra). Further, the DoE’s contention that
„generation‟ amounts to possession and the expression
„possession‟ includes constructive possession, for which
reliance is placed upon Mohan Lal v. State of Rajasthan, is
not assured.
14. ……… It is submitted that Vijay Madanlal
Choudhry (supra) has held that PML Act is an independent
and distinct Act which deals with offences relating to only
proceeds of crime, and not with the crime itself which
generates the proceeds of the crime. In particular,
paragraph 406 in Vijay Madanlal Choudhary (supra)
states:
“406…The fact that the proceeds of crime have been
generated as a result of criminal activity relating to a
scheduled offence, which incidentally happens to be a
non-cognisable offence, would make no difference. The
person is not prosecuted for the scheduled offence by
invoking provisions of the 2002 Act, but only when he
has derived or obtained property as a result of
criminal activity relating to or in relation to a
scheduled offence and the indulges in process or
activity connected with such proceeds of crime…”
15. Paragraph 407 similarly states:
“407…the offence under this Act in terms of Section 3
is specific to involvement in any process or activity
connected with the proceeds of crime which isDigitally Signed Page 21 of 31
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generated as a result of criminal activity related to the
scheduled offence…”
16. In Mohan Lal (supra), the expression „possession‟, it is
held, consists of two elements. First, it refers to corpus of
physical control and second it refers to the animus or intent
which has reference to exercise of self-control. In the
context of narcotics laws, a person is said to possess control
over the substance when he knows the substance is
immediately accessible and exercises dominion or control
over the substance. The power and dominion over the
substance is, therefore, fundamental. The stand of the DoE
as to the constructive possession, will be satisfied only if the
dominion and control criteria is satisfied. If the proceeds of
crime are in dominion and control of a third person, and not
in the dominion and control of the person charged under
Section 3, the accused is not in possession of the proceeds of
the crime. It would be a different matter, when an accused,
though not in possession, is charged for use, concealment or
acquisition of the proceeds of the crime, or projects or
claims the proceeds of crime as untainted property. The
involvement of an accused may be direct or indirect. Prima
facie, there is lack of clarity, as specific allegation on the
involvement of the appellant – Manish Sisodia, direct or
indirect, in the transfer of Rs. 45,00,00,000 (rupees forty
five crores only) to AAP for the Goa elections is missing.
(Emphasis added)
43. In the present case, the role of the petitioners is that they collected
funds and deposited the same to the accountant or PFI‟s account.
Hence, in this scenario, prima facie, the dominion and control over the
generation of alleged proceeds of crime is not of the petitioners herein.
44. At this juncture, I am also conscious that for deciding bail in PMLA,
the accused person has to cross the hurdle of twin conditions laid
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down in section 45 of PMLA which read as under:-
“45. Offences to be cognizable and non-bailable.– (1)
Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), no person accused of
an offence punishable for a term of imprisonment of more
than three years under Part A of the Schedule shall be
released on bail or on his own bond unless–
(i) the Public Prosecutor has been given an
opportunity to oppose the application for such release;
and
(ii) where the Public Prosecutor opposes the
application, the court is satisfied that there are
reasonable grounds for believing that he is not guilty
of such offence and that he is not likely to commit any
offence while on bail:”
45. For the reasons noted above, I am of the view that in the present case,
the twin conditions of section 45 have been met. The Special Counsel
for ED has been given an opportunity to oppose the bail applications.
Prima facie, I am of the view that the offence of money laundering is
not made out against the petitioners herein.
Delay in trial and long incarceration.
46. The petitioners have undergone substantial period of incarceration i.e.
more than 2 years 2 months and there is no likelihood that the trial
will be concluded in the near future.
47. Our Constitution under Article 21 guarantees that no person shall be
deprived of his life or personal liberty except according to procedure
established by law. Personal liberty of under trial prisoner is a
fundamental right which flows from the said article. Unless the
accused is convicted, the accused is entitled to the presumption ofDigitally Signed Page 23 of 31
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innocence and a fair procedure and trial. Our Courts have adopted the
principle i.e. Bail is the rule and Jail is an exception. Liberty of an
accused is paramount and should be curtailed only by a procedure
established by law which should be both fair and reasonable. The
offences in the special statutes like Narcotic Drugs and Psychotropic
Substances Act, 1985, UAPA and PMLA imposes additional stringent
conditions for grant of bail which are to be tested on the facts and
circumstances of each case but these stringent conditions do not take
away the fundamental rights guaranteed under Article 21.
48. The Hon‟ble Supreme Court in Union of India v. K.A. Najeeb, (2021)
3 SCC 713 upholding the Constitutional rights of the accused despite
the rigors of section 43-D(5) of UAPA, observed as under:-
“17. It is thus clear to us that the presence of statutory
restrictions like Section 43-D(5) of the UAPA per se does
not oust the ability of the constitutional courts to grant bail
on grounds of violation of Part III of the Constitution.
Indeed, both the restrictions under a statute as well as the
powers exercisable under constitutional jurisdiction can be
well harmonised. Whereas at commencement of
proceedings, the courts are expected to appreciate the
legislative policy against grant of bail but the rigours of
such provisions will melt down where there is no likelihood
of trial being completed within a reasonable time and the
period of incarceration already undergone has exceeded a
substantial part of the prescribed sentence. Such an
approach would safeguard against the possibility of
provisions like Section 43-D(5) of the UAPA being used as
the sole metric for denial of bail or for wholesale breach of
constitutional right to speedy trial.”
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49. In Manish Sisodia (II) (supra), the Hon‟ble Supreme Court while
noting that the accused therein has undergone approx. 17 months,
observed as under:-
“53. The Court further observed that, over a period of time,
the trial courts and the High Courts have forgotten a very
well-settled principle of law that bail is not to be withheld
as a punishment. From our experience, we can say that it
appears that the trial courts and the High Courts attempt to
play safe in matters of grant of bail. The principle that bail
is a rule and refusal is an exception is, at times, followed in
breach. On account of non-grant of bail even in straight
forward open and shut cases, this Court is flooded with
huge number of bail petitions thereby adding to the huge
pendency. It is high time that the trial courts and the High
Courts should recognize the principle that “bail is rule and
jail is exception”.”
50. Recently, in V. Senthil Balaji (supra), again the Hon‟ble Supreme
Court while noting that the accused therein has undergone 15 months
and considering both the aforesaid judgments, observed as under:-
25. Considering the gravity of the offences in such statutes,
expeditious disposal of trials for the crimes under these
statutes is contemplated. Moreover, such statutes contain
provisions laying down higher threshold for the grant of
bail. The expeditious disposal of the trial is also warranted
considering the higher threshold set for the grant of bail.
Hence, the requirement of expeditious disposal of cases
must be read into these statutes. Inordinate delay in the
conclusion of the trial and the higher threshold for the grant
of bail cannot go together. It is a well-settled principle of
our criminal jurisprudence that “bail is the rule, and jail is
the exception.” These stringent provisions regarding the
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grant of bail, such as Section 45(1)(iii) of the PMLA, cannot
become a tool which can be used to incarcerate the accused
without trial for an unreasonably long time.
26. There are a series of decisions of this Court starting
from the decision in the case of K.A. Najeeb, which hold
that such stringent provisions for the grant of bail do not
take away the power of Constitutional Courts to grant bail
on the grounds of violation of Part III of the Constitution of
India. We have already referred to paragraph 17 of the said
decision, which lays down that the rigours of such
provisions will melt down where there is no likelihood of
trial being completed in a reasonable time and the period of
incarceration already undergone has exceeded a substantial
part of the prescribed sentence. One of the reasons is that if,
because of such provisions, incarceration of an undertrial
accused is continued for an unreasonably long time, the
provisions may be exposed to the vice of being violative of
Article 21 of the Constitution of India.
27. Under the Statutes like PMLA, the minimum sentence is
three years, and the maximum is seven years. The minimum
sentence is higher when the scheduled offence is under the
NDPS Act. When the trial of the complaint under PMLA is
likely to prolong beyond reasonable limits, the
Constitutional Courts will have to consider exercising their
powers to grant bail. The reason is that Section 45(1)(ii)
does not confer power on the State to detain an accused for
an unreasonably long time, especially when there is no
possibility of trial concluding within a reasonable time.
What a reasonable time is will depend on the provisions
under which the accused is being tried and other factors.
One of the most relevant factor is the duration of the
minimum and maximum sentence for the offence. Another
important consideration is the higher threshold or stringent
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conditions which a statute provides for the grant of bail.
Even an outer limit provided by the relevant law for the
completion of the trial, if any, is also a factor to be
considered. The extraordinary powers, as held in the case of
K.A. Najeeb, can only be exercised by the Constitutional
Courts. The Judges of the Constitutional Courts have vast
experience. Based on the facts on record, if the Judges
conclude that there is no possibility of a trial concluding in
a reasonable time, the power of granting bail can always be
exercised by the Constitutional Courts on the grounds of
violation of Part III of the Constitution of India
notwithstanding the statutory provisions. The Constitutional
Courts can always exercise its jurisdiction under Article 32
or Article 226, as the case may be. The Constitutional
Courts have to bear in mind while dealing with the cases
under the PMLA that, except in a few exceptional cases, the
maximum sentence can be of seven years. The
Constitutional Courts cannot allow provisions like Section
45(1)(ii) to become instruments in the hands of the ED to
continue incarceration for a long time when there is no
possibility of a trial of the scheduled offence and the PMLA
offence concluding within a reasonable time. If the
Constitutional Courts do not exercise their jurisdiction in
such cases, the rights of the undertrials under Article 21 of
the Constitution of India will be defeated. In a given case, if
an undue delay in the disposal of the trial of scheduled
offences or disposal of trial under the PMLA can be
substantially attributed to the accused, the Constitutional
Courts can always decline to exercise jurisdiction to issue
prerogative writs. An exception will also be in a case where,
considering the antecedents of the accused, there is every
possibility of the accused becoming a real threat to society
if enlarged on bail. The jurisdiction to issue prerogative
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writs is always discretionary.”
51. Further, the Hon‟ble Supreme Court in Prem Prakash
(supra)observed as under:-
“13. Independently and as has been emphatically reiterated
in Manish Sisodia [Manish Sisodia v. Enforcement
Directorate, (2024) 12 SCC 660 : 2024 SCC OnLine SC
1920] relying on Ramkripal Meena v. Enforcement
Directorate [Ramkripal Meena v. Enforcement Directorate,
(2024) 12 SCC 684 : 2024 SCC OnLine SC 2276]
and Javed Gulam Nabi Shaikh v. State of
Maharashtra [Javed Gulam Nabi Shaikh v. State of
Maharashtra, (2024) 9 SCC 813] , where the accused has
already been in custody for a considerable number of
months and there being no likelihood of conclusion of trial
within a short span, the rigours of Section 45 PMLA can be
suitably relaxed to afford conditional liberty.
Further, Manish Sisodia [Manish Sisodia v. Enforcement
Directorate, (2024) 12 SCC 660 : 2024 SCC OnLine SC
1920] reiterated the holding in Javed Gulam Nabi
Sheikh [Javed Gulam Nabi Shaikh v. State of Maharashtra,
(2024) 9 SCC 813] , that keeping persons behind the bars
for unlimited periods of time in the hope of speedy
completion of trial would deprive the fundamental right of
persons under Article 21 of the Constitution of India and
that prolonged incarceration before being pronounced
guilty ought not to be permitted to become the punishment
without trial.”
52. The common thread in all the above judgments is that the
Constitutional Courts are vested with powers to protect the
fundamental rights of the accused guaranteed under Article 21 of
Constitution of India. Further, these Courts have to be vigilant in
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protecting the said rights. Special statutes have stringent conditions for
grant of bail but they should not become means to detain the accused
without there being any possibility of concluding the trial,
expeditiously. Merely charging an accused person under the
provisions of these special statutes should not become a punishment in
itself which violates Article 21. A perusal of the aforesaid judgment
also shows that Article 21 prevails over the stringent conditions of
section 45 of PMLA and in case the accused has been incarcerated for
a reasonably long period of time without there being any reasonable
chance of concluding trial, Article 21 will take primacy.
53. In the present case, it is stated that the matter is at the stage of 207/208
proceedings for supply of documents and thereafter charges are yet to
be framed. As per the Complaint and Supplementary Complaints filed
by the ED, it is stated by the learned counsels for the petitioners that
there are total 185 prosecution witnesses which are proposed to be
examined and the trial is to be conducted jointly with all co-accused
persons, there are 456 relied upon documents and digital evidence
running into lakhs of pages. The same factual position is not disputed
by the learned counsel for the ED.
54. In addition on the merits as noted above and from the judgments cited,
it is evident that there is no hard and fast formula as to what is the
minimum period which is to be considered as substantial period
undergone but keeping in view the timelines of the Hon‟ble Supreme
Court and the trial will take considerable time to conclude, the
petitioners i.e. Parvez Ahmed, Mohd Ilyas and Abdul Muqeet are
directed to be released on bail subject to the following terms and
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conditions:-
a) The petitioners shall furnish a personal bond in the sum of
Rs 50,000 (Rupees fifty thousand only) each with 1 surety
in the like amount, to the satisfaction of the concerned trial
court;
b) The petitioners shall not leave the country without the
permission of the concerned court and if the petitioners
have a passport, they shall surrender the same to the
concerned trial court;
c) The petitioners shall furnish to the IO concerned their cell
phone numbers on which the petitioners may be contacted
at any time and shall ensure that the number is kept active
and switched on at all times;
d) The petitioners will furnish their permanent address to the
concerned IO and in case they changes their address, they
will inform the IO concerned;
e) The petitioners shall not indulge in any act or omission
that is unlawful, illegal or that would prejudice the
proceedings in pending cases, if any;
f) The petitioners shall join investigation as and when
directed by the concerned IO and will appear in Court as
and when required;
g) The petitioners shall not communicate with, or come into
contact with any of the prosecution witnesses, or tamper
with the evidence of the case.
55. All the observations made herein above are only for the purpose of
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deciding these bail applications and will have no effect on the merits
of the case pending.
56. The petitions along with pending applications, if any, are disposed of.
JASMEET SINGH, J
(DECEMBER 04, 2024)/MSQ
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