Mere Exculpatory Statement To ED Not Ground To Believe That Accused Is Not Guilty Of Money Laundering: Delhi High Court

The Delhi High Court has observed that a mere exculpatory statement made to officials of Enforcement of Directorate (ED) cannot suffice to form a reasonable ground to believe that the accused is not guilty of the offence of money laundering.

Justice Asha Menon made the observation while denying bail to one Bimal Kumar Jain, who was booked by ED for indulging in money laundering, alleging that he along with other co-accused persons had incorporated and operated 450 Indian entities and 104 foreign entities for routing proceeds of crime and also enabled purchase of offices and properties with untainted funds.

ED had alleged that Jain's brother had placed funds in his companies and layering was done by routing the proceeds of crime into various companies that had dummy shareholders and Directors.

After Jain's brother was arrested on 1st September, 2020 under sec. 19 of the PMLA, the investigations traced proceeds of the crime to the tune of Rs.5,65,11,22,269 but the extent of money laundering was more than Rs. 96,000 crores. Jain was then named in the complaints filed while the investigation was proceeding.

Jain's counsel had argued that nothing new could be discovered against him and that the statements that were made by Jain to ED officials were completely exculpatory, as he had denied any knowledge of the activities of his brother or being involved in any routing of proceeds of crime.

The counsel thus argued that such exculpatory statements could not be used against Jain and that there was no ground to detain him in judicial custody.

Denying bail to Jain, the Court noted that the allegations against him were very serious in nature and that a huge amount of Rs. 96,000 crores was supposed to have been laundered.

"There has been multiple layering, calling for painstaking and detailed investigations. The applicant has fully participated in the money laundering by lending his companies accounts to his brother and making accommodating entries. A sum of Rs. 35 crores is directly traceable to the applicant," the Court said.

It added,

"A mere exculpatory statement to the respondent can never suffice to form a ground, leave alone a reasonable ground to believe that the applicant is not guilty of the offence. The investigations are continuing in respect of the scale of operations, but to say that because those investigations are continuing, an incomplete challan had been submitted and therefore, the applicant would technically be entitled to bail under Section 167(2) Cr.P.C., would be a somewhat convoluted argument."

Thus, considering the gravity of the offence, Jain's previous reluctance to co-operate with the investigating agencies, his act of providing fake addresses as also the fact that he absconded from law, were the factors which led to the Court concluding that the twin conditions under sec. 45 of the PMLA were not met in order to justify the grant of bail to him.

The Court also noted that it was not the first bail application filed on behalf of Jain and that he his prior bail application was also dismissed by High court vide judgment dated 30th July, 2021.

"The Bail Application is therefore rejected. There is no gainsaying that the observations made in this order are intended only for the purposes of disposal of the present Bail Application," the Court said.

Case Title: BIMAL KUMAR JAIN v. DIRECTORATE OF ENFORCEMENT

Citation: 2022 LiveLaw (Del) 865

Click Here To Read Order