# ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE

- **Citation:** [2017] 13 S.C.R. 156
- **Court:** Supreme Court of India
- **Decided:** 2017
- **Case number:** Criminal Appeal Nos. 1878-1879 of2017
- **Bench:** Dipak Misra, A. M. Khanwilkar, D.Y. Chandrachud
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/rohit-tandon-v-the-enforcement-directorate-31791
- **Pages:** 33

## Headnote

Code of Criminal Procedure, 1973: s.439 -
Bail application
C filed under s.439 rlw s.45 of PML Act -
Allegation was that
appellant-ac¢used conspired with a bank manager and a CA to
earn huge pKofit by converting black money in the form of old
currency notes into new currency notes and made illegal earnings
- Prosecution under s.45 for commission of offence under ss.3 and
D
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4 of P ML Act as a sequel to FIR which was registered under ss.420,
406, 409, 46~. 471, 188 and 1208 !PC - Prayer for bail rejected
by Sessions judge and then by High Court - Second bail application
filed before High Court - Along with that, appellant filed an
application seeking direction for his interim release on assertion
that his mother was seriously ill and required immediate .medical
attention - The said interim release application was allowed noting;
that the appellant never evaded the investigation; the period of 7
months of incarceration; illness of his mother; and absence of
definite reasqns assigned by counsel to substantiate allegation that
appellant would tamper with evidence especially when charge sheet
in the main case had been submitted - However, regular second
bail application was dismissed as withdrawn - In the instant appeal,
challenge is to the rejection of first bail application filed before
High Court - Plea was that the reasons which weighed while
directing interim release would apply proprio vigore for considering
regular bail - Held: The observations made while allowing interim
G release would have no bearing on merits of the controversy - The
appellant has not succeeded in persuading about the inapplicability
of the threshold stipulation under s.45 of the Act - Prosecution
based its ca$e on the evidence of 26 witnesses - The same made out
a convincing case about involvement of appellant in commission of
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serious offence of money laundering - Thus, there were reasonable
grounds for believing that the appellant was guilty of such offence
156
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE
157
- Also appellant was reluctant in disclosing source from where such
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huge value of demonetized currency and new currency was acquired
by him - The volume of demonetized currency recovered from the
office and residential premises of appellant, including the bank
drafts in favour of fictitious persons and also new currency notes
for huge amount, leave no manner of doubt that it was the outcome
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of some activity connected with the proceeds of crime projecting
the property as untainted property - Np case made out for
interference with the order of High Court rejecting the prayer for
grant of regular bail to the appellant - Prevention of Money
Laundering Act, 2002 - ss.3 and 4.
Dismissing the appeals, the Court
c
HELD : 1. 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 D
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
E
meaning of Section 3 and punishable under Section 4 of the Act,
being a case of money-laundering. [Para 23] [183-E-F]
Manoranjana Sinh v. Central Bureau of Investigation
(2017) 5 SCC 218 ; Sanjay Chandra v. Central Bureau
of Investigation (2012) 1 SCC 40 : [2011 J 13 SCR 309
- distinguished.
Gautam Kundu
v. Directorate of Enforcement
(Prevention of Money-Laundering Act), Government of
India (2015) 16 SCC 1 ; Subrata Chattoraj v. Union of
India (2014) 8 SCC 768 : [2014] 6 SCR 783 ;
Y.S. Jagan Mohan Reddy v. CBI (2013) 7 SCC 450 ;
Union of India v. Hassan Ali Khan (2011) 10 SCC
235 : (2011] 11 SCR 778 ; Ranjitsing Brahmaj

## Text

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[2017] 13 S.C.R. 156
ROHIT TANDON
v.
THE ENFORCEMENT DIRECTORATE
(Criminal Appeal Nos. 1878-1879 of2017)
NOVEMBER 10,2017
[DIPAK MISRA, CJI, A. M. KHANWILKAR AND
D.Y. CHANDRACHUD, JJ.)
Code of Criminal Procedure, 1973: s.439 -
Bail application
C filed under s.439 rlw s.45 of PML Act -
Allegation was that
appellant-ac¢used conspired with a bank manager and a CA to
earn huge pKofit by converting black money in the form of old
currency notes into new currency notes and made illegal earnings
- Prosecution under s.45 for commission of offence under ss.3 and
D
E
F
4 of P ML Act as a sequel to FIR which was registered under ss.420,
406, 409, 46~. 471, 188 and 1208 !PC - Prayer for bail rejected
by Sessions judge and then by High Court - Second bail application
filed before High Court - Along with that, appellant filed an
application seeking direction for his interim release on assertion
that his mother was seriously ill and required immediate .medical
attention - The said interim release application was allowed noting;
that the appellant never evaded the investigation; the period of 7
months of incarceration; illness of his mother; and absence of
definite reasqns assigned by counsel to substantiate allegation that
appellant would tamper with evidence especially when charge sheet
in the main case had been submitted - However, regular second
bail application was dismissed as withdrawn - In the instant appeal,
challenge is to the rejection of first bail application filed before
High Court - Plea was that the reasons which weighed while
directing interim release would apply proprio vigore for considering
regular bail - Held: The observations made while allowing interim
G release would have no bearing on merits of the controversy - The
appellant has not succeeded in persuading about the inapplicability
of the threshold stipulation under s.45 of the Act - Prosecution
based its ca$e on the evidence of 26 witnesses - The same made out
a convincing case about involvement of appellant in commission of
H
serious offence of money laundering - Thus, there were reasonable
grounds for believing that the appellant was guilty of such offence
156
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE
157
- Also appellant was reluctant in disclosing source from where such
A
huge value of demonetized currency and new currency was acquired
by him - The volume of demonetized currency recovered from the
office and residential premises of appellant, including the bank
drafts in favour of fictitious persons and also new currency notes
for huge amount, leave no manner of doubt that it was the outcome
B
of some activity connected with the proceeds of crime projecting
the property as untainted property - Np case made out for
interference with the order of High Court rejecting the prayer for
grant of regular bail to the appellant - Prevention of Money
Laundering Act, 2002 - ss.3 and 4.
Dismissing the appeals, the Court
c
HELD : 1. 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 D
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
E
meaning of Section 3 and punishable under Section 4 of the Act,
being a case of money-laundering. [Para 23] [183-E-F]
Manoranjana Sinh v. Central Bureau of Investigation
(2017) 5 SCC 218 ; Sanjay Chandra v. Central Bureau
of Investigation (2012) 1 SCC 40 : [2011 J 13 SCR 309
- distinguished.
Gautam Kundu
v. Directorate of Enforcement
(Prevention of Money-Laundering Act), Government of
India (2015) 16 SCC 1 ; Subrata Chattoraj v. Union of
India (2014) 8 SCC 768 : [2014] 6 SCR 783 ;
Y.S. Jagan Mohan Reddy v. CBI (2013) 7 SCC 450 ;
Union of India v. Hassan Ali Khan (2011) 10 SCC
235 : (2011] 11 SCR 778 ; Ranjitsing Brahmajeetsing
Sharma v. State of Maharashtra and Anr. (2005) 5 SCC
294 : [2005] 3 SCR 345 ; State of Maharashtra v.
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SUPREME COURT REPORTS
[2017] 13 S.C.R.
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Vishwaniath Maranna Shettv (2012) 10 SCC 561 :
[2012] 9 SCR 873 - referred to.
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Gorav Kmhuria v. Union of India (2016) SCC Online
P & H 3428 - referred to.
2. The appellant has not succeeded in persuading about
the inapplicability of the threshold stipulation under Section 45
of the Act. The appellant is reluctant in disclosing the source
from where such huge value of demonetized currency and also
new currency has been acquired by him. The prosecution is relying
on statements of 26 witnesses/accused already recorded, out of
which 7 were considered by the High Court. These statements
are admissiblie in evidence, in view of Section 50 of the Act of
2002. The S'1mc makes out a formidable case about the
involvement of the appellant in commission of a serious offence
of money-laundering. It is, therefore, not possible to record
satisfaction that there are reasonable grounds for believing that
the appellant is not guilty of such offence. Further, the Courts
below have justly adverted to the antecedents of the appellant
for considering the prayer for bail and concluded that it is not
possible to hpld that the appellant is not likely to commit any
offence ascribable to the Act of 2002 while on bail. Since the
threshold stipulation predicated in Section 45 has not been
overcome, the question of considering the efficacy of other points
urged by the appellant to persuade the Court to favour the
appellant with the relief ofregular bail will be of no avail. In other
words, the fact that the investigation in the predicate offence or
that the investigation qua the appellant in the complaint is
completed; and that the proceeds of crime is already in possession
of the investigating agency and provisional attachment order in
relation thereto passed on 13'" February, 2017 has been
confirmed; or that charge-sheet against the appellant without his
arrest; that the appellant has been lodged in judicial custody since
2"' January, 2017 and has not been interrogated or examined by
the Enforcei;nent Directorate thereafter; all these will be of no
consequence. [Para 27] [185-G-H; 186-A-E]
3. The fact that no limit for deposit was specified, would
not extricate the appellant from explaining the source from where
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE
159
such huge amount has been acquired, possessed or used by him.
A
No explanation was offered by the appellant to dispel the legal
presumption of the property being proceeds of crime. Similarly,
the fact that the appellant has made declaration in the Income
Tax Returns and paid tax as per law does not extricate the
appellant from disclosing the source of its receipt. There is no
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provision in the taxation laws which grants immunity to the
appellant from prosecution for an offence of money-laundering.
In other words, the property derived or obtained by the appellant
was the result of criminal activity relating to a scheduled offence.
The argument of the appellant that there is no allegation in the
charge-sheet filed in the scheduled offence case or in the C
prosecution complaint that the unaccounted cash deposited by
the appellant is the result of criminal activity, will not come to the
aid of the appellant. That will have to be negatived in light of the
materials already on record. The possession of such huge quantum
of demonetized currency and new currency in the form of D
Rs.2000/- notes, without disclosing the source from where it is
received and the purpose for which it is received, the appellant
has failed to dispel the legal presumption that he was involved in
money-laundering and the property was proceeds of crime. There
is no reason to interfere with the well considered opinion of the
Sessions Court and the High Court rejecting the prayer for grant
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of regular bail to the appellant. [Paras 28, 29] [187-B-G]
Case Law Reference
(2015) 16 sec 1
referred to
Para 16
F
[2014] 6 SCR 783
referred to
Para 17
(2013) 1 sec 450
referred to
Para 17
[2011) 11 SCR 778
referred to
Para 17
[2005) 3 SCR 345
referred to
Para 19
G
[2012] 9 SCR 873
referred to
Para 19
(2017) 5 sec 218
distinguished
Para 20
[2011) 13 SCR 309
distinguished
Para 20
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SUPREME COURT REPORTS
[2017] 13 S.C.R.
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CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
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Nos. 1878-1879 of2017.
From the Ju(lgment and Order dated 05.05.2017 of the High Court
of Delhi at New Delhi in Bail Application No. 119/2017 and Cr!. M. B.
No. 121/2017.
Mukul Roh~tgi, Subramonium Prasad, Sr. Advs, Jayant Mohan,
Arunabh Chowdhury, Anupam Lal Das, Manu Sharma, Sarvesh Singh
Baghel, Vaibhav Tomar, Abhir Datt, Ms. Shruti Chaudhry, Karma Dorjee,
Anirudh Singh, Ac;lvs for the Appellant.
Tushar Mehta, ASG, Ms. Binu Tamta, Prateek Jalan, B. Krishna
Prasad, Advs for the Respondent.
The Judgment of the Court was delivered by
A. M. KHANWILKAR, J. !. By these appeals the order of
the High Court of Delhi at New Delhi dated 5th May, 2017, rejecting the
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Bail Application No.119 of2017 and Criminal M.B. No.121 of2017 has
been assailed. The appellant was arrested on 28th December, 2016 in
connection with EC!R/l 8/DZ-Il/2016/ AD(RV) registered under Sections
3 & 4 of the Prevention of Money-Laundering Act, 2002 (hereinafter
referred to as "the Act of 2002"). The said ECIR was registered on
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26'" December, 2016 as a sequel to FIR No.205/2016 dated 25th
December, 2016 In relation to the offences punishable under Sections
420, 406, 409, 468, 471, 188 and 120B of the Indian Penal Code, 1860
("!PC" for short). The said FIR was registered by the Crime Branch of
Delhi Police, New Delhi. The ECIR, however, has been registered at
the instance of A~sistant Director (PMLA), Directorate of Enforcement,
empowered to investigate the offences punishable under the Act of2002.
2. The appellant first approached the Additional Sessions Judge02, South East Sake! Court, New Delhi for releasing him on bail by way
of an application under Section 439 of the Code of Criminal Procedure,
1973 read with Section 45 of the Act of2002. The said bail application
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came to be rejected vide judgment dated 7th January, 2017 by the said
Court. The appellant thereafter approached the High Court of Delhi at
New Delhi by wa:y of Bail Application No.119 of2017 and an interlocutory
application filed therein, being Criminal M.B. No.121 of2017. The High
Court independently considered the merits of the arguments but eventually
rejected the praytr for bail vide impugned judgment dated 5" May, 2017.
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ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE
161
[A.M. KHANWILKAR, J.]
3. The ECIR has been registered against Ashish Kumar, Raj
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Kumar Goel and other unknown persons for offences punishable under
Sections 3/4 of the Act of 2002 on the basis of information/material, as
evident from the predicate offence registered by P. S. Crime Branch,
Delhi against the named accused and unknown accused for offences
punishable under Sections 420,406,409, 467,468, 471, 188and120B of B
!PC, being FIR No.205/2016 dated 25ili December, 2016. The relevant
facts noted in the ECIR read thus:
"A. It is reported that during the course of investigation of
Case FIR No.242116 uls 420, 467,468,471, 120-B IPC, PS
C.R. Park, Delhi, it is revealed that Accused Raj Kumar Goel
along with associates are engaged into earning profits by
routing money into various accounts by using forged
documents and thereby receiving commission from the
prospective clients who either need money by cheque or in
..
cash. In order to obtain large profits, accused Raj Kumar
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Goel and few of his associates have opened many Bank D
Accounts in Kotak Mahindra and ICICI Bank at Naya Bazar,
Chandni ·Chowk, Delhi.
B. On 08.11.2016, the Government if India announced
demonetization of one thousand- (I 000) and five hundred
(500) rupee notes. On this accused Raj Kumar Goel conspired
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with the bank manager of Kotak Mahindra Bank, Cannaught
Place, namely Ashish Kumar rlo A-701, Bestech Park, Sector
61, Gurugram, Haryana and one Chartered Accountant, name
unknown, having mobile number 97 II 329619 to earn huge
profit by converting black money in the form of old currency
notes into new currency notes. In this conspiracy, the said F
CA acted as a mediator and arranged prospective clients who
intended to convert their black money into legitimate money.
For the same, alleged CA offered 2% commission to the other
accused persons on all such transactions.
C. The accused were having bank accounts in the Naya Bazar
branch of Kotak Mahindra Bank but the CA and Bank
. Manager Ashish asked accused Raj Kumar to deposit old
. . currency notes in Cannaught Place branch of Kotak
· Mahindra Bank. It is also revealed that the accused opened
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[2017] 13 S.C.R.
bank accounts in the name of Quality Trading Company, Swati
Trading Company, Shree Ganesh Enterprises. R.K.
International, Mahalxmi Jndustires. Virgo International and
Sapna International on the basis of forged/false documents
and deposited approx. Rs.25 Crore after the demonetization.
As per the preliminary investigation of the said case it is
transpired that accused Raj Kumar Goel, Bank Manager
Ashish, CA along with their associates are involved in a deep
roted conspiracy and were indulged in converting old
currency which were entrusted to bank/Govt officials and
were supposed to be delivered to general public/guidelines
issued by the Reserve Bank of India/Ministry of Finance and
hand thus cheated the public at large. The accused persons
have also caused monetary loss to the Govt. of India and
thereby Committed offences u/s 420, 406, 409. 467, 468, 471,
188, 120-B !PC."
It is then noted that the offences under Sections 420, 468, 4 71 and
l 20B of !PC are scheduled offences under the Act of 2002 and that
from the available facts, a reasonable inference is drawn that the named
accused and unl!:nown accused have made illegal earnings arising out of
the said criminal conspiracy which might have undergone the process of
laundering and thereby an offence under Section 3 of the Act of 2002
was made out. It is noted that prima facie case for commission of
offence under Section 3 punishable under Section 4 of the Act of2002
was made out and accordingly the case is being registered and taken up
for investigation under the Act of 2002 and rules framed thereunder.
4. The learned Sessions Judge while considering the bail application
adverted to the velevant materials including the CDR analysis of Mobile
number of Ashish Kumar, Branch Manager, Kotak Mahindra Bank, K.G.
Marg Branch, Kamal Jain, CA of Ro hit Tandon (hereinafter referred to
as "appellant"), Dinesh Bhola, Raj Kumar Goel; the statements of Kamal
Jain, Dinesh Bhola andAshish Kumar, recorded under Section 50 of the
Act of 2002; and analysis of bank statements of stated companies. All
these reveal that Ashish Kumar conspired with other persons to get
deposited Rs.38.53 Crore in cash of demonetized currency into bank
accounts of companies and got demand drafts issued in fictitious names
with intention of getting them cancelled and thereby converting the
demonetized currency into monetized currency on commission basis.
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE
163
[A.M. KHANWILKAR, J.]
Further, the investigation also revealed that the entire cash was collected A
on the instructions of the appellant herein, by Ashish Kumar, Raj Kumar
Goel and others through Dinesh Bhola, an employee of the appellant.
According to the prosecution, all the associates of the appellant acted on
instructions of the appellant for getting issued the demand drafts against
cash deposit with the help of Ashish Kumar, Branch Manager of Kotak
Mahindra Bank and others, to the tune of Rs.34.93 Crore from Kotak
Mahindra Bank, K.G. Marg Branch. It was also noted that the demand
drafts ofRs.3.60 Crore were issued in fictitious names on the instructions
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of Bank Manager Ashish Kumar in lieu of commission received by him
in old cash currency. The demand drafts amounting to Rs.38 Crore were
issued in favour ofDinesh Kumar and Sunil Kumar which were recovered
from the custody of Kamal Jain who had kept the same on the instructions
of the appellant. Out of the said amount, the demand drafts of other
banks, apart from Kotak Mahindra Bank Limited, were also recovered.
The prosecution suspected that there could be other dubious transactions
made by the appellant in other banks and that Ashish Kumar, Bank
Manager and others were acting on the instructions of the appellant for
executing the crime.
5. The Sessions Court rejected the argument of the appellant that
the investigation of the offence registered against the appellant and others
under Section 3/4 of the Act of2002 being a sequel to the FIR registered
by the Crime Branch of Delhi Police, it cannot be investigated by the
Enforcement Directorate. For, the Enforcement Directorate was not
concerned with the outcome of the investigation of the predicate offence
registered by the Delhi Police. It thus opined that the matter on hand
must be examined only in reference to the registration of ECIR by the
Enforcement Directorate. The fact that the investigation in FIR registered
by the Crime Branch of Delhi Police, bearing FIR No.205/2016, had not
commenced will also be of no avail to the appellant. The Sessions Court
also found that as per Section 19 of the Act of 2002, the only condition to
be satisfied for arrest of a person is the reasonable belief of the authority
gathered on the basis of material in its possession. Further, in the present
case, the accused was arrested by the competent authority on the basis
of material in his possession giving rise to a reasonable belief about the
complicity of the accused in the commission of offence punishable under
the Act of 2002. As such the arrest of the appellant under the Act of
2002 cannot be termed as illegal. After having dealt with those
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contentions, the Sessions Court took note of the material pressed into
service by the prosecution and analysed the same in the following words:
"21. Pursuant to registration of FIR No.20512016 under
section 420, 406, 409, 468, 471, 188, 120-B IPC by Crime
Branch, the matter was taken up by ED and ECIR No.18116
was opened for investigation. Transaction statements of
accounts in Kotak Mahindra Bank in FIR No. 205116 in respect
of companles i.e. Delhi Training Company. Kwality Tading
Company, Mahalaxmi Industries. R.K. International, Sapna
Trading Company, Shree Ganesh Enterprises. Swastik
Trading Company arid Virgo International were sought and
scrutinized. Huge cash deposits in the said accounts were
ident!fied during November, 2016, post demonetization
announcement it was found that demand drafts were issued
in fictitious names like Dinesh Kumar. Sunil Kumar. Abhilasha
Dubey. Madan Kumar. Madan Saini, Satya Narain Dagdi and
Seema Bai.
22. Statement of Ashish Kumar, accused named in FIR
No.105116, Branch Manager, Kotak Mahindra Bank, K.G.
Marg branch was recorded under section 50 of PMLA which
revealed that Kamal Jain, CA of accused Rohit Tandon
contacted h,im to get the demonetized currency on behalf of
accused/applicant, converted into monetized currency on
commissio~ basis. The commission of Ashish Kumar was
decided @ 35%, who in turn contacted one Yogesh Mittal
and Rajesh K11mar Goel. accused in FIR No.205116 to carry
out the criminal design of getting the demonetized cash
converted into monetized 7 valuable form. Demonetized
currency was deposited in different accounts of companies
pertaining to Raj Kumar Goel besides others through Raj
Kumar Goel with the help of Ashish Kumar in different bank
accounts of Kotak Mahindra Bank and DDs were issued in
fictitious names. The illegal conversion of demonetized
currency, getting the same deposited and issuance of demand
drafts is corroborated through CDR analysis of relevant
persons for the relevant period. Dinesh Bhola and Kamal
Jain, in their statements recorded under section 5 0 of P MLA
have also confirmed and reiterated the facts as stated by
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE
165
[A.M. KHANWILKAR, J.]
Ashish Kumar, the Branch Manager. The statements of persons
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recorded under section 50 of PMLA, which has evidentiary
value under section 50(4) of PMLA, have confirmed that the
old demonetized currency pertains to accused Rohit Tandon
and the conspiracy was executed on his instructions.
23. Lastly, ii was submitted by learned senior counsel for
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accused that accused folly cooperated with the investigating
agency and there was no need to arrest him in this case. He
further submitted that the actions of Accused persons as
mentioned in the FIR attract implications and as such the
correct authority to investigate into the same is the Income
Tax Department and not the ED. Per contra, learned Special
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Prosecutor for ED submitted that accused only cooperated
in the investigation in ECIR No.14116 and not in ECIR No.
18116. He further submitted that as sufficient material
surfaced on record against the present accused and he did
not cooperate in the investigation in the present case, therefore,
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accused Rohit Tandon was arrested in this case. He submitted
that he does not dispute the jurisdiction of Income Tax
Department so far as other aspects of the matter are
concerned.
24. As per section 45 of PMLA, while considering grant of E
bail to accused, the court has to satisfy that:-
i. There are reasonable grounds for believing that accused
is not guilty of such offence and that
ii. He is not likely to commit any offence, while on bail.
25. In the present case, accused has failed to satisjy this court
that he is not guilty of alleged offence punishable under
section 3 of PMLA. He has not been able to discharge the
burden as contemplated under section 24 of the Act.
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26. Accused is alleged to have been found involved in a white
collar crime. The alleged offence was committed by accused G
in conspiracy with other co-accused persons in a well planned
and thoughtfal manner. It has been observed in a catena of
decisions by Hon' ble Superior Courts that economic offences
constitute a class apart and need to be visited with a different
approach in the matter of bail. The economic offence having
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deep rooted conspiracies and involving huge loss of' public.
fimdi needs to be viewed seriously and c:onsidered as grave
o.flences affecting the economy of the co1111t1:v as a whole
and thereby posing serious threat to the financial health of
the coun/ly. "
(emphasis supplied)
6. Having fonned that opinion and noticing that the investigation
was at the initial and crucial stage and that the source offunds of proceeds
of crime was yet to be ascertained till then and that the recovery of
balance proceeds of crime was in the process, the question of enlarging
the appellant on bail does not arise, more so, when there was every
possibility that he 1111ay tamper with the evidence and influence the material
prosecution witnesses. Accordingly, the bail application was rejected by
the Sessions Court vide judgment and order dated 7ili January, 2017.
7. Aggrieved, the appellant approached the High Court of Delhi
by way of bail application under Section 439 of the Cr.P.C. read with
Section 45 of the Act of2002. The High Court independently analysed
all the contentions raised by the appellant and after adverting to the
relevant materials, rejected the application for grant ofbail preferred by
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
of2002 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. Further, the proceedings under the Act of2002 are
distinct from the proceedings relating to scheduled offence and both the
investigations can continue independently. The High Court then noted
that Section 44 of the Act of2002 is an enabling provision, to have a joint
trial in such a situation to avoid conflicting and multiple opinions of the
Courts. But proceeded to hold that the said possibility would arise only
when the charge-sheet is filed after completion of investigation in relation
to FIR No.205/2016 and the case is committed to the concerned Court.
The High Court held that Section 44 of the Act of2002 does not envisage
a joint investigation but is a provision stipulating that the trial of offence
under Section 3/4 of the Act of2002 and any scheduled offence connected
to the offence under that section may be tried only by the Special Court
constituted for the area in which the offence has been committed. While
considering the merits of the allegations against the appellant, in particular,
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE
167
[A.M. KHANWILKAR, J.]
the materials on record, the High Court analysed the same in the following
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words:
"14. Jn FIR No.20512016 allegations are that Raj Kumar
Goel; Ashish Kumar, Bank Manager, Kotak Mahindra Bank,
K. GMarg Branch and others conspired for illegal conversion
of demonetized currency notes into monetized currency by
way of depositing cash in various accounts of the firms and
subsequently getting Demand Drafts issued in fictitious
names. It is further alleged in the said FIR that accused therein
opened bank accounts in the name of 'Group of Companies'
in Kotak Mahindra Bank. In ECJR No.18, transactions
statements of accounts were collected pertaining to these
'Group of Companies' from Kotak Mahindra Bank and it
emerged that from 15.11.2016 to 19.11.2016, there was huge
cash deposit to the tune of '31.75 crores by Raj Kumar Goel
and his associates. It was also found that the Demand Drafts
amounting to '38 crores were issued in fictitious names during
that period. It cannot be said at this stage that offences
referred in FIR No.20512016 and the ECIR No.18 have. no
nexus.
15. Prosecution rmder Section 45 of PMLA for commission
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of offence under Section 3 punishable under Section 4 of E
PMLA has already been initiated by ED in the Special Court.
By an order dated 25.02.2017, learned Addi. Sessions Judge
I Special Court (P MLA) has taken cognizance against Roh it
Tandon (present petitioner), Ashish Kumar and Raj Kumar
Goel. Dinesh Bhola and Kamal Jain have also been summoned
to face trial under Section 4 of P MLA. Raj Kumar Goel and
Ashish Kumar continue to be in custody in the said
proceedings.
16. On perusal of the complaint lodged under Section 45
PMLA, it reveals that serious and grave allegations have been
leveled against the petitioner and others. The a/legations are
categorical and specific; definite role has been assigned to
each accused. It is alleged that during the period from
15.11.2016 to 19.11.2016, huge cash to the tune of '31.75
crores was deposited in eight bank accounts in Kotak
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[2017] 13 S.C.R.
Mahindra Bank in the accounts of the 'Group of Companies'.
It gives details of Demand Drafts issued during 15.11.2016
to 19.11.2016 from eight bank accounts in the name of Sunil
Kumar, Dinesh Kumar, Abhilasha Dubey, Madan Kumar.
Madan Saini, Satya Narain Dagdi and Seema Bai on various
dates. Most of the Demand Drafts issued have since been
recovered. Its detail finds mention in Table No.2 given in the
complaint.
17. During arguments, specific query was raised and the
learned Senior Counsel for the petitioner was asked as to, to
whom the money deposited in the various accounts belonged
Learned Senior Counsel for the petitioner was fair enough to
admit tllat the whole money belonged to the petitioner. When
enquired as to from which 'source', huge chsh was procured,
there was no clear response to it. Again, learned Senior
Counsel for the petitioner was asked as to how the cash
belongillg to the petitioner happened to be deposited in various
accounts of the 'Group of Companies' which were not owned
by the petitioner and what was its purpose. It was further
enquired as to why the Demand Drafts were got issued in the
names of the persons referred above and what was its specific
purpose; Learned Senior Counsel for the petitioner avoided
to answer these queries stating that the defence of the petitioner
could not be disclosed at this juncture to impact his case during
trial. Apparently, no plausible explanation has been offered
as to what forced the petitioner to deposit the old currency to
the tune of '31. 75 crores in eight accounts of the different
'Group of Companies' in Kotak Mahindra Bank during the
short period from 15.11.2016 to 19.11.2016. There was no
explanation as to why the Demand Drafts for the said amount
were got issued in the name of sham people whose identity
was not known. The purpose of all this exercise seemingly
was to deposit the cash (old currency) first, get the Demand
Drafts issued in fictitious names and obtain monetized
currency by cancelling them subsequently. The petitioner also
did not place on record any document whatsoever to show as
to from which legal source, the cash was procured to deposit
in the bank accounts of strangers. I find no substance in the
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE
169
[A.M. KHANWILKAR, J.]
petitioner's plea that petitioner's only liability was to pay A
income tax on the unaccounted money I income. In my
considered view. mere payment of tax on the unaccounted
money fi·om any 'source · whatever would not convert it into
'legal· money. Needless to say, huge deposit was a sinister
attempt I strategy by the petitioner and others to convert the
'old currency· into new one to frustrate the Demonetization
Policy primarily meant to unearth black money.
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18. Allegations against the petitioner are not without
substance. The prosecution has recorded statements of the
petitioner on various dates and that of Dinesh Bhola. Ashish
Kumar (Branch Manager. Kotak Mahindra Bank). Raj Kumar
Goel, Kamal Jain (petitioner :s Chartered Accountant), Vimal
Negi. Jivan Singh and Vanm Tandon under Section 50 PMLA
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on various dates. There statements have evidentiary value
under Section 50 PMLA. Prima facie, the version given by
them is in consonance with the prosecution case. The
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prosecution has further relied ll[JOn Call Data Records, CCTV
footage, Account Trend Analysis. "
(emphasis supplied)
8. The High Court opined that keeping in mind the rigors of Section
45 of the Act of 2002 for the release of the accused charged under Part
A of the Schedule, on bail, coupled with the antecedents of the appellant
of being involved in other similar crime registered as FIR No.19712016.
for offence under Section 420, 409, 188, 120B of IPC dated 14'h
December, 2016 by Crime Branch and ECIR No.14/DZ/JI/2016
registered on l61h December, 2016 by Enforcement Directorate for
offences under Sections 3/4 of the Act of 2002. Further, during a raid
conductedjoin!
1 ~· hy the Crime Branch and Income Tax Department on
JOili December .. 2016 at around 10.00 P.M. at the office premises of the
appellant, currency of Rs.13.62 Crore was recovered including new
currency in the denomination ofRs.2000/- amounting to Rs.2.62 Crore.
In addition, the appellant had surrenc~red Rs.128 Crore during the raid
conducted by the Income Tax Department on 6/8 October, 2016 in his
office and residential premises. No reliable and credible documents
were forthcoming from the appellant about the source from where he
had obtained such a huge quantity of cash. The possibility of the same
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being proceeds of crime cannot be ruled out. Hence, it noted that the
question of granting bail did not arise, taking into consideration the serious
allegations against the appellant and other facts including severity of the
punishment prescribed by law. Accordingly, the bail application of the
appellant came lo be rejected. As a consequence, the pending application
which was considered along with the bail application was also disposed
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of by the impugned judgment and order dated 5th May, 2017 passed by
the High Court.,
9. We have heard Mr. Mukul Rohatgi, learned senior counsel
appearing for the appellant and Mr. Tushar Mehta, learned Additional
Solicitor General for the Union of India. They have also filed written
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submissions.
10. Before we analyse the rival submissions, for the completion
of record, we must mention that after the impugned judgment, the Crime
Branch filed th~ charge-sheet before the appropriate Court in relation to
FIR No.205/2016 on 24'h June, 2017. Similarly, the Enforcement
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Directorate has filed supplementary complaint CC No. 700/2017 in relation
to ECIR 18/2016, which refers to further material gathered during the
investigation, indicating the complicity of the concerned accused in the
crime for offence punishable under Section 3 of the Act of 2002. A
comprehensive supplementary complaint has been filed before the District
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and Sessions Judge, Saket, New Delhi (Designated Court under the
Prevention of Money-Laundering Act, 2002) on 2"" August, 2017.
11. Before this supplementary complaint was filed, the appellant
preferred second bail application in the present case before the High
Court of Delhi at New Delhi, being Bail Application No.136112017. This
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application was filed on 12"' July, 2017. Along with the said bail application
the appellant filed an application being Criminal M.A. No.1293 of2017
for directing his interim release in connection with ECIRIDZ/W2016 on
the assertion !hat his mother was seriously ill and required immediate
medical attention because of the injuries suffered by her on 2o•h June,
2017. The said interim release application was allowed on 1 O'" August,
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2017. Notably, the appellant was advised to withdraw the regular (second)
Bail Application No.1361/2017. The learned Single Judge of the High
Court by order dated !Olh August, 2017 acceded to the prayer so made
by the appellant. The order passed by the learned Single Judge of the
High Court reads thus:
H
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE
171
[A.M. KHANWILKAR, J.]
"BAIL APPLN. 136112017
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The petitioner has prayed for bail in connection with ECIR/
18/DZil/2016/AD registered under Section 3 & 4 of
Prevention .of Money Laundering Act, 2002.
Simultaneously an application has been filed seeking interim
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bail on the ground of illness of the mother ~f the petitioner
who has recently suffered a fracture in the neck.
Mr. Mukul Rohatgi, learned Sr. Advocate seeks permission
to withdraw the regular bail application on the observation of
the bench that the earlier bail application was rejected only c
on 5th of May, 2017. However he presses the interim bail
application.
Accordingly the regular bail application is dismissed as
withdrawn.
Crl.M.A.No.129312017 (application for interim bail)
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It has been submitted on behalf of the petitioner that he is the
only son of his mother who has suffered a fall and has got a
fracture in her neck. The sister of the petitioner is stationed
abroad. The petitioner has a son who is of young age. The
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petitioner has also drawn the attention of this Court to the
medical report which indicates that a plaster has been put on
the fracture but she has been suffering from acute pain.
It has been further submitted that the charge sheet in the main
case has been submitted and that the petitioner has remained
in jail for more than seven months by now.
Opposing the aforesaid prayer for grant of interim bail. Mr.
Mahajan, learned Sr. Standing Counsel submits that this is a
case of serious fiscal impropriety of great magnitude and there
is a possibility of the petitioner tampering with evidence if he
comes out from the jail even for a short period. No definite
reasons, however, have been assigned by Mr.Mahajan, for
such ii presumption that the petitioner would tamper with the
evidence specially when charge sheet in the main case has
already been submitted.
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Mr.Rohtr:igi. learned senior counsel has drawn the attention
of this Court to the fact that whenever the petitioner was
summoned to answer to the Queries, he had visited the office
of the ED and in the past, had never tried to evade the process
of investigation.
Taking into account the aforesaid facts. special~v the period
of incarceration of the petitioner. submission of the charge
sheet in the main case and the illness of the mother of the
petitioner. this Court is inclined to grant interim bail to the
petitioner for a period of 3 weeks.
Let the petitioner be released on interim bail for the period of
3 weeks, to be counted from the date of his release, on his
furnishing a bond in the sum of Rs. 25,0001- with two sureties
of the like amount to the satisfaction of special court.
However it is made clear that the petitioner shall not tamper
with the evidence or commit any act which would be
prejudicial to the prosecution side. Should anything of that
kind be reported. this Court would consider the desirability
of withdrawing/cancelling the interim bail.
The petitioner shall not. unnecessary, seek extension of the
interim bail granted to him. It is also specified that the
petitioner shall not leave the country under any circumstances
whatsoever. Should the petitioner intend to go out of the
territorial confines of NCR of Delhi, permission would be
required to be taken from the Special Court. The petitioner
shall also deposit his passport before the Special court while
furnishing his bonds.
Application is disposed of accordingly.
Dasti."
(emphasis supplied)
12. It is relevant to note that the aforementioned order for interim
release of the appellant was confirmed by this Court on 12"' August,
2017.
ROHIT TANDON v. THE ENFORCEMENT DIRECTORATE
173
[A.M. KHANWlLKAR, J.]
13. The appellant was thereafter advised to file the present appeals
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to assail the judgment and order dated 5ili May, 2017 passed by the High
Court of Delhi at New Delhi in Bail Application No.119 of 2017 and
Criminal M.B. No.121 of2017. The special leave petitions were filed on
l 8lli August, 2017. During the pendency of these special leave petitions,
the appellant was advised to also file a writ petition under Article 32 of B
the Constitution of India to challenge the validity of the provisions of the
Act of2002. The same was filed on 23"' August, 2017, being Writ Petition
(Civil) No.121 of2017. The reliefs claimed in the said writ petition read
thus:
"PRAER
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(i) Issue a writ of mandamus or any other appropriate writ,
order or direction declaring that the conditions/limitations
contained in Section 45(1) of Prevention of Money
Laundering Act. 2002 (Act 15 of 2003) to the extent that it
imposes rigors/restrictions in the grant of bail in any offence
punishable upto 7 years under the provisions of Prevention
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of Money Laundering Act. 2002 (Act 15 of 2003) as
unreasonable, arbitrary and unconstitutional being violative
of the fundamental rights of the Petitioner guaranteed and
''''''"prot~i:i/d .;mder Articles 14 and 21 of the Constitution of
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" "1iidia:· ·. . , .
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.;\'·.'i -,,; r. ·,•1:.
,1 \;,\\().i),Jn-.the plterna/ive to prayer (i) above. issue a writ of
'·"'"'· m,and_q111us 1:1r .. a!ly. qt her appropriate writ. order or direction
, :,;;.\ li,eP4irig cjpwn:the;~·cope and ambit of Section 45(!) of the
,,,.,""[!.r.eyeri/iow,of Money Laundering Act. 2002 (Act 15 of 2003).
11., ;,,,s.o.(hqt<!_he rigqrs.in grant ofbai/ are not applicable in the
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case of the Petitioner, where the alleged scheduled offences
in (C No.