Conduct of ED deplorable, took cavalier approach in investigation: Delhi Court grants bail in money laundering case

A Delhi Court recently pulled up the Enforcement Directorate (ED) for a “casual and cavalier” approach in its investigation in a Prevention of Money Laundering Act (PMLA) case, observing that the accused’s arrest had “preceded” the grounds of his arrest [ED v. Jatinder Pal Singh]..Additional Sessions Judge Dharmender Rana noted the same while acting on the bail plea of Jatinder Pal Singh, accused of money laundering..The ED alleged that the accused had purchased cloth worth ₹6.60 crore from a company named M/s Astonishing Private Limited and sold it to M/s Shree Shyam Dhani Trading Company for ₹12.23 crore.It was further alleged that both companies were bogus and untraceable, and made illegal earnings arising out of criminal activities related to scheduled offences. Singh was thus arrested on December 31, 2021..After hearing both the ED and the defence counsel, the Court stated,“This Court is constrained to bring on record its anguish regarding the casual and cavalier approach in which the investigation is being conducted. Unfortunately, even the supervisory officers have miserably failed to guide the investigating officer in the instant matter to ensure fair and impartial investigation.”.“It appears that the officers involved in the investigation of the instant matter have even attempted to hoodwink their own Special Director while procuring the permission for arrest under Section 19 of PMLA by not disclosing the facts in its entirety or at least in the correct perspective before the worthy Special Director,” the bail order further stated..Thus, the Court found it appropriate to bring the matter to the notice of “higher echelons of ED,” directing for its order to be brought to the notice of the Special Director, with a request to personally monitor the ongoing investigation to ensure a free and fair investigation..From the record, the Court observed that the activities attributed to Singh were “merely layering” activities and that he appeared to be a “mere cog in the wheel”. In its opinion, the focus of the investigation ought to be the "source of money" used to purchase the fabric, to find out if its origin was tainted or not.“However, unfortunately, instead of focusing upon the source of money, accused Jatinder Pal Singh is the focus of investigation in the instant matter,” it noted..According to the Senior Counsel arguing on Singh’s behalf, the ED gave a much higher estimate of the proceeds of crime in the present case while seeking the accused’s remand even as this amount “gradually diminished” during the arguments on bail.Therefore, the lawyer submitted that the case was a “mischievously sinister design to implicate an innocent citizen in a false and fabricated case and deprive him of his liberty.”.The ED’s Special Prosecutor argued that economic offences were a class apart and required to be approached differently at the time of deciding bail. It was submitted that the mandatory twin conditions for grant of bail under Section 45 of the PMLA, having been revived by way of the Finance Act, would apply and bail could only be granted only if there were reasonable grounds that the accused was not guilty.Singh’s arrest and search and seizure at his premises were stated to be done according to the provisions of the PMLA..Judge Rana, however, stated,“Before proceeding to deal with the issue on merits, in pains, I must admit at the very outset that the conduct of ED in the instant matter is highly disappointing, if not deplorable as suggested by the defence. In its zeal to ensure the sustained detention of the applicant/accused, ED seems to have thrown out the baby with the water.”.From the facts on record, it was noted that the ED arrested Singh on December 31, 2021, and the permission to arrest him was granted on the previous day.The Court observed that the ED had consistently held that M/s Shree Shyam Dhani Trading Company was not traceable, but on January 12, 2022, it had examined its proprietor Sanjay Kumar who reportedly revealed that “some commission was generated”..“Therefore, the fact of generation of commission came into the notice of ED only on 12.01.2022 and not before whereas the permission to arrest in the instant matter was accorded on 30.12.2021 itself. A fact which came into the notice of ED on 12.01.2022 only could obviously not have been a reason to grant permission to sanction the arrest of accused. Therefore, it is apparent that either the source of money till date remains undetected or the contention now adopted by ED regarding the proceeds of crime is merely an after thought and the arrest of the accused was absolutely unjustified on 31.12.2021,” the Court went on to state..In either case, the Court was of the view that deserved bail.“ED made a conscious choice to arrest the accused without doing proper preliminary enquiry. Having made a conscious choice to place the cart before the horse and apprehend the accused upon the basis of half baked facts , ED cannot cry hoarse now that the investigation is at a nascent stage,” the order highlighted..On the twin conditions raised by the ED counsel, the Court emphasised that in ED v. Dr VC Mohan, the Supreme Court remanded the matter to the High Court concerned to reconsider the anticipatory bail granted to the accused and consider the mandate of Section 45 of the PMLA.“It has neither decided nor observed that the twin conditions prescribed under Section 45 of PMLA stands revived,” the Court noted..Singh was accordingly granted bail on a bond of ₹2 lakh with two sureties, and saddled with various conditions..Senior Advocate Sudhir Nandrajog and Advocates HS Bhullar and Shikhar Sharma represented Singh. Special Counsel Zoheb Hussain and Special Prosecutor NK Matta appeared for the ED..[Read Order]