Money Laundering Case: SC Upholds Rejection of Bail to Rohit Tandon for Possession & Conversion of Demonetised Currency [Read Judgment]

While upholding the proceedings against Advocate Rohit Tandon, a three judge bench of the Supreme Court confirmed the Delhi High Courts’ order denying bail for possession and conversion of Demonetized Currency.

In the instant case, criminal investigation was initiated against the appellant for allegedly indulged in converting demonetized currency into new currency which was entrusted to bank/Govt officials with the help of Bank manager, Kotak Mahindra and a Chartered Accountant violating the guidelines issued by the Reserve Bank of India/Ministry of Finance. Since the accused persons have cheated the public at large and have caused monetary loss to the Govt. of India, offences u/s 420, 406, 409, 467, 468, 471, 188, 120B IPC were charged against them.

Subsequently, the Enforcement department initiated proceedings finding the same as a fit case for investigation under the Prevention of Money Laundering Act, 2002.

The appellant, while praying for bail before the subordinate courts and High Court, pleaded that the matter cannot be investigated by the Enforcement Directorate.

Both the Sessions Court and the High Court rejected the plea of the appellant.

The High Court found that the Act of 2002 does not prescribe that the Enforcement Directorate is debarred from conducting investigation in relation to the offences under Sections 3 & 4 of the Act of 2002 unless the Crime Branch concludes its investigation in relation to FIR No.205/2016 or was to file charge sheet for commission of scheduled offence. It further noted that the proceedings under the Act of 2002 are distinct from the proceedings relating to scheduled offence and both the investigations can continue independently.

Before the Top-Court, the appellant contended that there is no allegation in the charge sheet filed in the scheduled offence case or in the prosecution complaint that the unaccounted cash deposited by the appellant is as a result of criminal activity. Absent this basic ingredient, the property derived or obtained by the appellant would not become proceeds of crime for the purpose of PMLA.

However, the Bench comprising Chief Justice Dipak Misra, Justice A.M. Khanwilkar and Justice D.Y. Chandrachud rejected the above contentions and upheld the view taken by the High Court.

Relying on its past decisions, the Apex Court held that “The consistent view taken by this Court is that economic offences having deep rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. Further, when attempt is made to project the proceeds of crime as untainted money and also that the allegations may not ultimately be established, but having been made, the burden of proof that the monies were not the proceeds of crime and were not, therefore, tainted shifts on the accused persons under Section 24 of the Act of 2002.”

“The possession of demonetized currency in one sense, ostensibly, may appear to be only a facet of unaccounted money in reference to the provisions of the Income Tax Act or other taxation laws. However, the stated activity allegedly indulged into by the accused named in the commission of predicate offence is replete with mens rea. In that, the concealment, possession, acquisition or use of the property by projecting or claiming it as untainted property and converting the same by bank drafts, would certainly come within the sweep of criminal activity relating to a scheduled offence. That would come within the meaning of Section 3 and punishable under Section 4 of the Act, being a case of money laundering,” the bench said.

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