Delhi court says concept of locus standi alien to criminal law, sends Ambience mall owner Raj Singh Gehlot to 7 days ED custody

Concept of locus standi is alien to criminal law, said a Delhi court on Thursday while remanding Ambience mall owner Raj Singh Gehlot to the custody of the Enforcement Directorate (ED) till August 5 in connection with an alleged case of criminal conspiracy and diversion of funds..Gehlot was accused of allegedly criminally conspiring and siphoning off a loan sanctioned to M/s AHPL by a consortium of banks led by J&K Bank, Ansal Plaza, Delhi for construction of a hotel. He was alleged to have connived with bank officials, defalcated the money and siphoned it off through a complex web of shell companies and his associates. Gehlot is stated to be one of the directors of M/s AHPL..“Concept of locus standi is alien to criminal law. I concur with the special public prosecutor that the bank officials being involved and arraigned as co-accused with the present accused in predicate offence, for obvious reasons, would not come forward to lodge a complaint and thus no fault could be found with the ED for initiation of investigation in the instant matter,” judge Dharmendar Rana said.Senior counsel Vikas Pahwa and advocate Tanveer Ahmed Mir had contested the 14-day ED remand plea arguing that none of the banks came forward with a complaint as the banks were not aggrieved and the accused was sincere in his approach to repay the outstanding loan amount.“In my considered opinion, a sustained custodial interrogation of the accused is desirable owing to the very intricate nature of the offence of money laundering,” the court observed.According to special ED prosecutors Amit Mahajan and NK Matta, Gehlot criminally conspired with other accused persons to fraudulently siphon off the loan amount by diverting the funds for other purposes such as to settle the loan of other group companies and making fixed deposit as well as diversion of materials to other projects of the Ambience Group.They submitted that the siphoned off money as a result of the criminal conspiracy qualified as “proceeds of crime” and the accused was directly involved in the activity connected to proceeds of crime. The ED said that no complaint has been lodged by the bank concerned as the bank officials had themselves conspired with the accused.Pahwa had argued that Gehlot was never arrested by J&K police in the predicate offence, registered at the Anti-Corruption Bureau, Jammu and Kashmir on July 24, 2019. He argued that no offence of money laundering in the case was made out as not only the hotel had been constructed by the accused out of the loan amount in question but also he could explain each and every penny spent by him.The senior lawyer pointed out there were no "proceeds of crime” in the matter, hence, no offence of money laundering.Pahwa called the grounds of arrest absolutely flimsy and superfluous, submitting that the accused has been interrogated by the investigating agency concerned on multiple occasions and also had been thoroughly cooperative with the investigating agency. He blamed the investigating agency for maliciously and mischievously attempting to mislead the court by alleging that accused is evasive and non-cooperative.The court noted that statements recorded in the case by the investigating officer reflected that the payments were made by Gehlot for services never rendered and material never supplied."The material available on record not only suggests the siphoning off the funds, fraudulently obtained by the accused in connivance with the bank officials, but also alludes to its placement, layering and integration. The IO has brought to my notice a statement recorded u/s 50 of PMLA of a Bank Manager (J&K Bank) wherein it is evident that the amount was released to the accused in deviation of rules," the Court said..The court underscored that against the outstanding liability of Rs 289.28 crore, the bank officials attempted to settle the account with Gehlot for a paltry sum of Rs 128.94 crore that spoke “volumes about the malafide intent”.Therefore, it held, “The material available on record suggests that accused entered into a criminal conspiracy with other accused persons to fraudulently siphon off the loan amount by diverting the funds for the purposes other than for what it was released. The money so siphoned off by him, as a result of criminal conspiracy qualifies it as ‘proceeds of crime’.”.[Read Order]