Proceeds Of Crime not Magical Term to be Established merely because ED recited in Complaint in PMLA Case: Addln Sessions Court, Delhi [Read Order]

In a significant ruling the Additional Sessions Court, Delhi, observed that the proceeds of crime not magical term to be established merely because the Enforcement Directorate (ED) recited in complaint in the Prevention of Money Laundering Act, 2002 (PMLA) case.

The application was filed on behalf of applicant/accused Mohan Madaan seeking regular bail under Section 439 of CrPC read with Section 45 of The Prevention of Money Laundering Act. The applicant is an accused in Enforcement Case Information Report (ECIR) No.23/STF/2021 registered under Sections 3 and 4 of the Prevention of Money Laundering Act by the Enforcement Directorate.

In so far as the role of the applicant is concerned, it has been alleged that the stamps of Singapore based entities namely (i) G.S.Impex PTE Ltd. Singapore; and (ii) Pinnacle Trading (SG) PTE Ltd. Singapore were seized during search proceedings at the premises of Deepak Kaushik (brother-in-law of Ashish Verma) and import/export data of M/s Krishna Overseas, proprietorship firm of the applicant was analyzed, which revealed that goods worth Rs.2.14 crore were exported by Krishna Overseas to Pinnacle Trading (SG) PTE Ltd.

It is the case of Enforcement Directorate that the companies controlled by the applicant carried out export of sub-standard goods and claimed fake duty drawback and IGST refund. It has been alleged that the company M/s Krishna Overseas was controlled by the applicant and it was involved in export to shell entities and it also availed fraudulent IGST refund.

The Court of Additional Sessions Judge, Sudhanshu Kaushik observed that “It is a settled proposition that the existence of proceeds of crime is sacrosanct for the offence of money laundering. The term ‘proceeds of crime’ is not a magical term which can be taken to be established merely because the prosecution has recited the term in its complaint. There ought to be some evidence on record to demonstrate that the money has either been derived or obtained from a criminal activity in respect of which a predicate offence stands registered.”

“The identification and existence of proceeds of crime have come under cloud. It may also be noted that a period of more than two years has lapsed and the charge-sheet has not been filed in the predicate offence. Record shows that major component of the evidence of the Enforcement Directorate is in the form of statements recorded under Section 50 of the PMLA. The applicant has pointed out discrepancies in the statement of one of the key material witnesses” the Court noted.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates