Delhi District Court
Directorate Of Enforcement vs Ashish Kakkar And Ors on 15 April, 2026
IN THE COURT OF MS. SHEFALI BARNALA TANDON,
ADDITIONAL SESSIONS JUDGE-06, NEW DELHI DISTRICT,
PATIALA HOUSE COURT, NEW DELHI
CC No. 1225/2024
Directorate of Enforcement Vs. Ashish Kakkar & Another
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
CNR No. DLND01-003899/2024
15.04.2026
Order on charge
Brief facts of the Case
1. The complaint is being filed under Section 44 (Offences Triable by
Special Court) read with Section 45 and Section 70 (Offences by Companies) of
the Prevention of Money Laundering Act, 2002 (hereinafter referred to as
'PMLA') for the commission of the offence of money laundering as defined in
Section 3 and punishable under Section 4 of the PMLA, 2002, against accused
Ashish Kakkar (vide initial complaint) and Puneet Maheshwari (vide
supplementary complaint). The present proceedings arise out of an ECIR
registered by the Directorate of Enforcement on the basis of multiple FIRs. The
gravamen of the allegations is that the accused persons, in connivance with
others, engaged in the activities amounting to laundering of proceeds of crime
through a network of shell entities, forged documentation, and alleged circular
trading involving cross border remittances.
Arguments on behalf of the ED
2. Ld. SPPs of ED Sh. Simon Benjamin and Sh. Manish Jain have stated at
the threshold as also mentioned in the written submissions filed by them, that the
ECIR of the present case is based on the following predicate offences:
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i) An FIR was registered by EOW, Delhi Police bearing FIR No. 0008/24) U/s
419, 420, 467, 468, 471, 476 and 120B of IPC, 1860 ( RUD-2), alleging that
accused persons namely Ashish Kakkar and Puneet Kumar in connivance
with other persons were engaged in large scale money laundering as well as
International Hawala/ unlawful money transfer to various parts of the world
by creating and operating a number of shell companies in India and abroad.
The said dummy companies have been in the name of his various
employees by using fabricated/ forged documents without any actual
business carried out, and only for import/ export in Special Economic Zones
and outward foreign remittances against these imports made by these
entities to circumvent the restrictions imposed under the provisions of
FEMA, 1999. They operated around 188 bank accounts with several Indian
banks in respect of 167 domestic firms/ companies and around 110 bank
accounts with various foreign banks in respect of 105 foreign
firms/companies. Out of the 105 foreign firms/companies, 46 are found
based in China, 30 in Singapore, 18 in Hong Kong, 07 in UAE, 02 in
Malaysia, 01 in Thailand and 01 in Mauritius. It is alleged that by adopting
aforementioned modus operandi, crores of rupees have been remitted out of
India as Foreign Outward Remittances in the guise of import of goods/
services without any actual business operations through bogus/ dummy
firms/ companies created/ incorporated by using fake/ forged documents.
Investigation conducted so far, prima facie, revealed that outward
remittances to the tune of US$ 18,00,00,000 (Eighteen Crores US Dollars)
approximately have been carried out by them in connivance with their
associates.
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ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
ii) FIR No. 630/2022 Cyber Crime, PS- Mahamandir, Jodhpur City East,
Rajasthan U/s 420, 406, 467, 468, 471 of IPC, 1860 and Sections 66, 66C &
66D of IT Act, 2008 (RUD-3): As per the content of the said FIR, some
unknown cybercrime fraudsters offered a guaranteed profit against
investment and lured one victim namely Shri Arvind Kalani who deposited
Rs.16,26,21,387/- through 101 transaction from his Axis Bank account
number 914010018368047, his OD Axis Bank Account 922030057073996
and his brother Shri Amit Kalani's Axis Bank account number
922030057069641 in the following bank accounts provided by the
fraudsters:
TABLE 01
LIST OF 08 COMPANIES
Name of the Account Holder Bank Name IFSC Code
SRK Trading Ltd. IDFC Bank Ltd. IDFB0080103
SRK Trading Ltd. ICICI bank Ltd. ICIC0000915
Adeke Rakesh Ltd. ICICI bank Ltd. ICIC0003222
Abdul Kedar HE Ltd. Yes Bank Ltd. YESB0000516
Soni Ltd. Axis Bank Ltd. UTIB0000097
Dhanraj Metal IDBI Bank Ltd. IBKL0001342
Mukesh Kumar Ltd. (Nile Traders) ICICI bank Ltd. ICIC0000539
M M Fruit & Veg Ltd. ICICI bank Ltd. ICIC0002484
iii) FIR No. 0048/2022 U/s 419 & 420 of IPC, 1860 and Section 66D IT
Act, 2000, PS Cyber Crime Gautam Budh Nagar, Uttar Pradesh ( RUD-4):
As per FIR, based on an advertisement received on Facebook for part time
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job, complainant registered on a link provided by the fraudsters and
applied for job for which she deposited total amounting to Rs.12,12,093/-
through online banking/ UPI but didn't get back anything.
iv) FIR No. 0070/2022 U/s 419 & 420 of IPC, 1860 PS Cyber Crime
Gurugram Haryana (RUD-5): As per FIR, complainant has filed a
complaint that through Telegram app he got introduced to a South Korean
girl (Anxi) who suggested him to make investment on www.upbitro.com, a
crypto Currency Exchange for good returns. He invested Rs.45,00,000/-
and when his amount reached to Rs. 1,30,00,000/-, he tried to withdraw the
same but it was restricted by the platform and asked to put Rs.25,00,000/-
more to withdraw the amount. This was alarming in nature and when he
checked the site carefully, he noticed that it's a copy of actual well-known
Korean crypto site www.upbit.com.
v) FIR No. 0036 dated 06.08.2022 U/s 420 of IPC, 1860 PS Cyber
Crime Rohtak, Haryana (RUD- 6): The complainant alleged to have
registered for online purchase on his WhatsApp and was defrauded of total
amount of Rs.6,88,231/-.
2.1 It is also alleged that various other complaints have also been registered all
over India in relation to Cyber Crimes alleging cheating the general public of
their hard-earned money and siphoning off the same out of India through the
companies controlled by accused Ashish Kakkar. The complaints are as below:
a) App-In Complaint No. 543/2022 at Cyber Crime Police Station,
Ahmedabad, Gujarat. Allegedly, the suspicious proceeds collected by the
Cybercrime fraudsters in the bank account number 016263400004312 of
M/s Ankur Enterprises were subsequently transferred to the bank account
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of M/ s Brightsuns Tradexim Pvt. Ltd., to the tune of Rs.1,72,49,999/
which is actually controlled and operated by Ashish Kakkar.
b) NCRP Complaint no. 984/2022 dated 18.02.2023 at Cyber Crime
Police Station, Rajkot, Gujarat. The suspicious proceeds collected by the
Cybercrime fraudsters were transferred and accumulated in the bank
accounts of the companies controlled and operated by Ashish Kakkar,
which are:
i) Axis Bank Account No. 922020041841784 maintained by M/s
Motownn Exim Pvt. Ltd.
ii) Axis Bank Account No. 922020021957935 maintained by M/s
Silvershine Warehouse.
iii) Axis Bank Account No. 922020033964710 maintained by M/s
Brightsuns Tradexim Pvt. Ltd.
iv) Axis Bank Account No. 922020033964969 maintained by M/s
Zlow Industries Pvt. Ltd.
c) Cyber Crime Cell Application no 2307B/2022 dated 22.12.2022
filed at Cyber Crime Cell, Mira Bhayandar, Vasai Virar Police
Commissionerate, Maharashtra- The suspicious proceeds collected by the
Cybercrime fraudsters were collected in the bank account number
920020041841784 maintained by M/s Motownn Exim Pvt. Ltd controlled
and operated by Ashish Kakkar.
2.2. Since the offences under Sections 419, 420, 467, 471, 476 and 120B of
IPC, 1860 are Scheduled Offences under Part 'A' of the Prevention of Money
Laundering Act, 2002 as defined under section 2 ( 1) (x) & (y) of PML Act, 2002
therefore, an Enforcement Case Information Report (ECIR) bearing No.
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ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
ECIR/STF/02/2024 dated 23.01.2024 (RUD-7) was recorded by Special Task
Force, headquarter office of the Directorate and investigation into the matter
under the provisions of Prevention of Money Laundering Act, 2002 was initiated.
2.3. The premises relating to Ashish Kakkar and his accomplices were
searched on 22/23.05.2023 by the Directorate of Enforcement under the
provisions of Foreign Exchange Management Act, 1999 (hereinafter referred to
as FEMA) and various documents and digital devices were seized. Further,
during investigation under FEMA, 1999, statements of various persons were
recorded under Section 37 of FEMA, 1999. It is alleged that during the course of
investigation, it was noticed that Ashish Kakkar with the aid and assistance of his
accomplices has indulged in numerous scheduled offences and hence the findings
of investigation was shared to the Economic Offence Wing of Delhi Police for
necessary action. The EOW, after conducting a preliminary enquiry, registered
an FIR and started its investigation vide FIR No. 0008 dated 23.02.2024
(RUD-2). The said FIR was also added in the ECIR/STF/02/2024 vide
addendum dated 01.03.2024 (RUD- 8).
2.4. The FIR No. 630 of 2022 (RUD-3) Jaipur Zonal Office of Enforcement
Directorate (JPZO) has initiated investigation under PMLA, 2002, vide
ECIR/JPZO/02/2023 dated 08.02.2023 (RUD- 9). However, since the said FIR
was a part of instant investigation being carried out under PMLA vide ECIR/STF
/02/2024 (RUD-7), the ECIR recorded by JPZO has been transferred vide letter
dated 01.04.2024 and merged with this instant ECIR/STF/02/2024 for
investigation (RUD-9).
2.5. It is alleged that during investigation it has surfaced that accused Ashish
Kakkar, also known as Pablo, along with his associates Punit Kumar, alias Puneet
Maheshwari or Monu Bhaiya, and John, in order to defraud the public through
intricate cybercrime methods and forgery, engaged in forging essential identity
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documents such as identity proofs, Aadhaar Card, PAN Cards, and signatures,
which played a crucial role in establishing a network of bank accounts of shell
companies and paper entities, both within India and internationally. Investigation
further revealed that the 23 entities and 26 entities are shell entities by the
accused persons respectively, wherein some of the entities are incorporated based
on forged documents. The accused No. 2 to 23 are the shell companies
beneficially owned and controlled by accused No. 1 Ashish Kakkar. The accused
No. 25 to 47 are the shell companies beneficially owned and controlled by
accused No. 24 Puneet Kumar. These shell companies and paper entities were
not having any legitimate businesses but rather served as complex channels for
accumulating, layering, and transferring proceeds obtained from various
cybercrimes. The illicit funds acquired through these criminal activities were
cleverly routed through circular import-export transactions to conceal their origin
and destination, facilitating their transfer out of India. The proceeds of crime
ultimately end up layered and accumulated in the bank accounts of
companies/firms controlled by Ashish Kakkar and his associates. These proceeds
are then fraudulently siphoned out of India as foreign outward remittances
against the import of goods and services.
2.6. During the course of the investigation under PMLA, searches were
conducted under section 17 of PMLA, 2002, at various premises under control of
accused persons and their associates. Incriminating documents, hard disks, digital
devices, mobile phones, gold, cash etc., were seized during these searches.
Statements of individuals associated with accused persons and working for him
were recorded under section 50 of PMLA, 2002. Analysis of the seized
documents and statements recorded revealed that accused persons have
incorporated several shell companies. They then opened bank accounts for these
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shell entities using forged KYC documents and forged AOF's to launder
proceeds of crime generated from various cyber frauds.
2.7. Various incriminating documents were seized from premises of accused
persons, alleged to establish their control over shell companies are as below:
i) Accused persons have utilized the common directors to incorporate the
majority of his shell companies. These companies share common
registered addresses. Upon examining the financial statements and banking
transactions of these shell companies, it becomes apparent that the banking
activities do not align with the financial records. Many of these companies
have failed to submit balance sheets and profit & loss statements to the
Registrar of Companies (RoC).
ii) Statements were recorded from various individuals, including dummy
Directors, employees who executed operations according to accused
person's instructions, and individuals involved in import/ export activities.
These statements revealed that the companies mentioned above were
incorporated, controlled, and operated by accused persons Ashish Kakkar
and Puneet Kumar.
iii) Various documents recovered during searches, such as blank
letterheads, digital rubber stamps of different companies, and import-
export related documents, were seized from accused person's premises.
Documents submitted to banks for outward foreign remittances against
imports were also seized from their premises. Additionally, digital copies
of blank letterheads and visiting cards of various companies bearing their
name were found during the searches, indicating direct control over these
companies.
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2.8. That the PMLA investigation findings indicate that approximately
Rs.16.22 Crores have been transferred from the bank accounts of Arvind Kalani
and Amit Kalani, as mentioned in FIR No. 0630/2022 dated 28.11.2022, to 08
bank accounts held by different individuals/ entities. Analysis of these bank
accounts reveals that the funds underwent layering through various accounts
belonging to multiple individuals, proprietorship firms, and companies before
being siphoned out of India as foreign outward remittances against the import of
goods which were heavily overvalued. After layering the funds, they were
ultimately consolidated into bank accounts opened using forged documents of
certain companies (with dummy directors but actually controlled by accused
persons), from where outward remittances were made against imports. Hence,
accused persons are involved in processes and activities connected to PoC
generated out of various cybercrimes to the tune of thousands of Crores in
various bank accounts of shell companies opened and operated by using forged
KYCs. In sum, accused persons knowingly engaged in concealing, possessing,
acquiring, using, and projecting proceeds of crime as untainted property.
2.9. That on the basis of material seized during the searches conducted under
Section 37 of FEMA 1999, at the premises of accused persons and their
associates; the statements recorded under FEMA which have been taken on
record under Section 50 of the PMLA, 2002 for further investigation under
PMLA; statements of various persons were recorded under Section 50 of PMLA,
2002 including statements of the accused persons and his associates, accused
Ashish Kakkar was arrested on 02.03.2024, under Section 19 of PMLA, 2002, on
the reasonable belief that he was involved in money laundering. Further during
investigation, Accused Punit Kumar was also arrested under section 19 of
PMLA, 2002, on 03.04.2024.
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2.10 To buttress their arguments, Ld. SPPs for the Complainant/ED have placed
reliance upon following judgments:
a. Hon'ble Supreme Court of India in case titled as Vijay Madanlal
Choudhary Vs. Union of India & Ors. reported in 2022 SCC OnLine SC
929, has held that :
"259. This speech, thus, set the tone for the years to come in our
fight against money-laundering. This law was enacted in 2002 yet
brought into force in 2005. Later, a speech was made by the then
Finance Minister, who had introduced the Prevention of Money
Laundering (Amendment) Bill, 2012 in the Rajya Sabha on
17.12.2012.
"SHRI P. CHIDAMBARAM: Mr. Deputy Chairman, Sir, I am
grateful to the hon. Members, especially ten hon. Members who
have spoken on this Bill and supported the Bill. Naturally, some
questions will arise; they have arisen. It is my duty to clarify those
matters. Sir, firstly, we must remember that money-laundering is a
very technically- defined offence. It is not the way we understand
'money-laundering' in a colloquial sense. It is a technically-defined
offence. It postulates that there must be a predicate offence and it is
dealing with the proceeds of a crime. That is the offence of money-
laundering. It is more than simply converting black- money into
white or white money into black. That is an offence under the
Income Tax Act. There must be a crime as defined in the Schedule.
As a result of that crime, there must be certain proceeds -- It could
be cash; it could be property. And anyone who directly or
indirectly indulges or assists or is involved in any process or
activity connected with the proceeds of crime and projects it as
untainted property is guilty of offence of money- laundering. So, it
is a very technical offence. The predicate offences are all listed in
the Schedule. Unless there is a predicate offence, there cannot be
an offence of money-laundering. Initially the thinking was unless a
person was convicted of the predicate offence, you cannot convict
him of money-laundering. But that thinking is evolved now. The
Financial Action Task Force has now come around to the view that
if the predicate offence has thrown up certain proceeds and you
dealt with those proceeds, you could be found guilty of offence of
money-laundering. What we are trying to do is to bring this law on
lines of laws that are commended by FATF and all countries have
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obliged to bring their laws on the same lines. I just want to point to
some of my friends that this Bill was passed in 2002. In 2002, we
felt that these provisions are sufficient. In the working of the law,
we found that the provisions have certain problems. We amended it
in 2005. We amended it in 2009. We still find that there are some
problems. The FATF has pointed out some problems. And, we are
amending it in 2012. It is not finding fault with anyone. All I am
trying to say is that this is an evolutionary process. Laws will
evolve in this way, and we are amending it again in 2012."
xxxxxx
269. From the bare language of Section 3 of the 2002 Act, it is
amply clear that the offence of money-laundering is an independent
offence regarding the process or activity connected with the
proceeds of crime which had been derived or obtained as a result of
criminal activity relating to or in relation to a scheduled offence.
The process or activity can be in any form -- be it one of
concealment, possession, acquisition, use of proceeds of crime as
much as projecting it as untainted property or claiming it to be so.
Thus, involvement in any one of such process or activity connected
with the proceeds of crime would constitute offence of money-
laundering. This offence otherwise has nothing to do with the
criminal activity relating to a scheduled offence -- except the
proceeds of crime derived or obtained as a result of that crime.
270. Needless to mention that such process or activity can be
indulged in only after the property is derived or obtained as a result
of criminal activity (a scheduled offence). It would be an offence
of money-laundering to indulge in or to assist or being party to
the process or activity connected with the proceeds of crime; and
such process or activity in a given fact situation may be a
continuing offence, irrespective of the date and time of commission
of the scheduled offence. In other words, the criminal activity may
have been committed before the same had been notified as
scheduled offence for the purpose of the 2002 Act, but if a person
has indulged in or continues to indulge directly or indirectly in
dealing with proceeds of crime, derived or obtained from such
criminal activity even after it has been notified as scheduled
offence, may be liable to be prosecuted for offence of money-
laundering under the 2002 Act -- for continuing to possess or
conceal the proceeds of crime (fully or in part) or retaining
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possession thereof or uses it in trenches until fully exhausted. The
offence of money-laundering is not dependent on or linked to the
date on which the scheduled offence or if we may say so the
predicate offence has been committed. The relevant date is the date
on which the person indulges in the process or activity connected
with such proceeds of crime. These ingredients are intrinsic in the
original provision (Section 3, as amended until 2013 and were in
force till 31.7.2019); and the same has been merely explained and
clarified by way of Explanation vide Finance (No.2) Act, 2019.
Thus understood, inclusion of Clause (ii) in Explanation inserted in
2019 is of no consequence as it does not alter or enlarge the scope
of Section 3 at all.
271. As mentioned earlier, the rudimentary understanding of
'money-laundering' is that there are three generally accepted stages
to money-laundering, they are:
(a) Placement: which is to move the funds from direct
association of the crime.
(b) Layering: which is disguising the trail to foil pursuit.
(c) Integration: which is making the money available to the
criminal from what seem to be legitimate sources."
b. Hon'ble Supreme Court of India in case titled as Pavana Dibbur Vs.
Directorate of Enforcement reported in 2023 SCC OnLine SC 1586 , has
held that :
"17.Coming back to Section 3 of the PMLA, on its plain reading,
an offence under Section 3 can be committed after a scheduled
offence is committed. For example, let us take the case of a person
who is unconnected with the offence, knowingly assists the
concealment of the proceeds of crime or knowingly assists the use
of proceeds of crime. In that case, he can be held guilty of
committing an offence under Section 3 of the PMLA, To give a
concrete example, the offences under Sections 384 to 389 of the
IPC relating to "extortion" are scheduled offences included in
Paragraph 1 of the Schedule to the PMLA, An accused may
commit a crime of extortion covered by Sections 384 to 389 of IPC
and extort money. Subsequently, a person unconnected with the
offence of extortion may assist the said accused in the concealment
of the proceeds of extortion. In such a case, the person who assists
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the accused in the scheduled offence for concealing I the proceeds
of the crime of extortion can be guilty of the offence of money
laundering. Therefore, it is not necessary scheduled offence that a
person against whom the offence under Section 3 of the PMLA is
alleged must have been shown as the accused in the What is held
in paragraph 270 of the decision of this Court in the case of Vijay
Madanlal Choudhary supports the above conclusion. The
conditions precedent for attracting the offerice under Section 3 of
the PMLA are that there must be a scheduled offence and that there
must be proceeds of crime in relation to the scheduled offence as
defined in clause (u) of subsection (1) of Section 3 of the PMLA."
c. Hon'ble Supreme Court of India in case titled as Y. Balaji Vs. Karthik
Desari & Anr. reported in 2023 SCC OnLine 645, has held that :
"96. Section 3 of the Act which defines the offence of money-
laundering reads as follows:
"3. Offence of money-laundering.--Whosoever directly or
indirectly attempts to indulge or knowingly assists or knowingly is
a party or is actually involved in any process or activity connected
with the proceeds of crime including its concealment, possession,
acquisition or use and projecting or claiming it as untainted
property shall be guilty of offence of money-laundering.
Explanation.--For the removal of doubts, it is hereby clarified that,
--(i) a person shall be guilty of offence of money- laundering if
such person is found to have directly or indirectly attempted to
indulge or knowingly assisted or knowingly is a party or is actually
involved in one or more of the following processes or activities
connected with proceeds of crime, namely:--
(a) concealment; or
(b) possession; or
(c) acquisition; or
(d) use; or
(e) projecting as untainted property; or
(f) claiming as untainted property, in any manner whatsoever;
(ii) the process or activity connected with proceeds of crime is a
continuing activity and continues till such time a person is directly
or indirectly enjoying the proceeds of crime by its concealment or
possession or acquisition or use or projecting it as untainted
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property or claiming it as untainted property in any manner
whatsoever."
97. If the main part of Section 3 is dissected with forensic
precision, it will be clear that Section 3 addresses itself to three
things (we may call them 3 'P's) namely, (i) person; (ii) process or
activity; and (iii) product. Insofar as persons covered by Section 3
are concerned, they are, (i) those who directly or indirectly attempt
to indulge; or (ii) those who knowingly assists; or (iii) those who
are knowingly a party; or (iv) those who are actually involved.
Insofar as process is concerned, the Section identifies six different
activities, namely (i) concealment; (ii) possession; (iii) acquisition;
(iv) use; (v) projecting; or (vi) claiming as untainted property, any
one of which is sufficient to constitute the offence. Insofar as
product is concerned, Section 3 identifies "proceeds of crime" or
the property representing the proceeds of crime as the product of
the process or activity.
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100. All the three FIRs alleged that the accused herein had
committed offences included in the Schedule by taking illegal
gratification for providing appointment to several persons in the
Public Transport Corporation. In one case it is alleged that a sum of
more than Rs.2 crores had been collected and in another case a sum
of Rs.95 lakhs had been collected. It is this bribe money that
constitutes the 'proceeds of crime' within the meaning of Section
2(1)(u). It is no rocket science to know that a public servant
receiving illegal gratification is in possession of proceeds of crime.
The argument that the mere generation of proceeds of crime is not
sufficient to constitute the offence of money-laundering, is actually
preposterous. As we could see from Section 3, there are six
processes or activities identified therein. They are, (i) concealment;
(ii) possession; (iii) acquisition; (iv) use; (v) projecting as untainted
property; and (vi) claiming as untainted property. If a person takes
a bribe, he acquires proceeds of crime. So, the activity of
"acquisition" takes place. Even if he does not retain it but "uses" it,
he will be guilty of the offence of money-laundering, since "use" is
one of the six activities mentioned in Section 3.
101. The FIRs for the predicate offences identify all the three
components of Section 3, namely, (i) persons; (ii) process; and (iii)
product. Persons accused in the FIRs are those who have indulged
in the process or activity. The illegal gratification that they have
taken, represents the proceeds of crime. The (i) acquisition of such
illegal gratification in the first instance; (ii) the possession of the
tainted money before putting it to use; and (iii) today projecting it
as untainted money, is the process or activity in which the accused
have indulged. The corruption money represents the proceeds of
crime."
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d. Hon'ble Supreme Court of India in case titled as Vijay Nair Vs.
Directorate of Enforcement reported in 2023 SCC OnLine Del 3769, has
held that :
"47. The bare reading of Section 3 of PMLA would make it clear
if a person is involved in any process or activity connected with the
proceeds of crime, including its concealment, possession,
acquisition or use and projecting or claiming it as an untainted
property shall be guilty of offence of money laundering. Therefore,
it is not necessary to attribute section 3 of the PMLA that the
alleged person must have acquired or in possession of the proceeds
of the crime. If a person has actually been involved in any process
or activity connected with the proceeds of crime, it would be
sufficient to prosecute him under Section 3 of PMLA. The
argument that the proceeds of crime have not been received or the
proceeds of crime has not been recovered and therefore section 3 of
the PMLA will not come into operation is totally fallacious and is
liable to be rejected. It is necessary to keep in mind that such
crimes are committed in a deep conspiracy and under the dark
cover. An act may not be an offence at all if it is done in relation to
any process or activity not connected with the proceeds of crime,
but if such an act is done in relation to any process or activity
connected with the proceeds of crime it will certainly be an offence
under Section 3 of PMLA. The scope and ingredients of offence of
money laundering under Section 3 of PMLA has been defined in
Vijay Madanlal Chaudhary (supra)."
e. Hon'ble High Court of Delhi in case titled as Anand Chauhan Vs.
Directorate of Enforcement reported in 2017 SCC OnLine Del 7790, has
held that :
"28. I cannot agree with the submission of the petitioner that for
the purpose of Section 3 and 4 of the PMLA, the person accused of
the commission of the offence under the PMLA should have
committed the scheduled offence and acquired the proceeds of
crime. The proceeds of crime may be acquired by another person
who commits one of the scheduled offences, and the person
charged with money laundering may have only, directly or
indirectly, assisted or knowingly become a party, or may be
actually involved in the process or activity of, inter alia,
concealing, possessing, acquiring or using and projecting or
claiming the said proceeds of crime as untainted property. The
purpose of scheduling the offences under the PMLA appears to be
to enlist the various crimes through which the proceeds of crime
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 15 of 117
ECIR No. - ECIR/STF/02/2024 dated 23.01.2024
may be generated. Thus, the submission of the petitioner that he
cannot be charged under the PMLA, does not appear to have any
merit."
f. Hon'ble Supreme Court of India in case titled as Anoop Bartaria Vs.
Directorate of Enforcement reported in 2023 SCC OnLine 477, has held
that:
"27. Having regard to the definition contained in Section 3, it
would be a folly to hold that the knowledge of the accused that he
was dealing with the proceeds of crime, would be a condition
precedent or sine qua non required to be shown by the prosecution
for lodging the complaint under the said Act. As the definition
itself suggests whosoever directly or indirectly attempts to indulge
or knowingly assists or knowingly is a party or is actually involved
in any process or activity connected with the proceeds of crime
including its concealment, possession, acquisition or use and
projecting or claiming it as untainted property shall be guilty of
offence of money- laundering. Hence, apart from having
knowledge, if a person who directly or indirectly attempts to
indulge or is actually involved in the process or activity connected
with the proceeds of crime, is also guilty of the offence of money
laundering. In the instant case, the direct involvement of the
petitioners in the activities connected with the proceeds of crime
has been alleged, along with the material narrated in the complaint
which would require a trial to be conducted by the competent
court."
g. Hon'ble Supreme Court of India in case titled as UOI through
the Assistant Director Vs. Kanhaiya Prasad reported in 2025 SCC
OnLine SC 36, has held that :
"18. Though it was sought to be submitted by learned senior
Advocate Mr. Ranjit Kumar for the respondent that the appellant
had relied upon the statements of the respondent recorded
under Section 50 of the Act which were inadmissible in evidence,
the said submission cannot be accepted in view of the position of
law settled by this Court in Vijay Madanlal (supra) in which it has
been held inter alia that the person summoned under Section 50 (2)
is bound to attend in person or through authorized agents before the
authority and to state truth upon any subject concerning which he is
being examined or is expected to make statements and to produce
the documents as may be required by virtue of sub-section (3)
of Section 50. It has been further observed that Article 20(3) of the
Constitution would not come into play in respect of the process of
recording statement pursuant to such summon issued under sub-
section (2) of Section 50. The phrase used in Article 20(3) is “to be
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 16 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
a witness” and not to “appear as a witness”. It follows that the
protection afforded to an accused insofar as it is related to the
phrase “to be a witness” is in respect of testimonial compulsion in
the court room, and it may also extend to compelled testimony
previously obtained from him. It is available therefore to a person
against whom a formal accusation relating to the commission of an
offence has been levelled, which in the normal course may result in
a prosecution.
h. Hon’ble Supreme Court of India in case titled as Tarun Kumar Vs.
Directorate of Enforcement reported in 2023 SCC OnLine SC 1486, has
held that:
“14. The first and foremost contention raised by learned Senior
Counsel Mr. Luthra would be that the appellant was not named in
the FIR nor in first three prosecution/ supplementary complaints
and has been implicated only on the basis of the statements of
witnesses recorded pursuant to the summons issued under Section
50 of the PML Act, without there being any material in support
thereof.
15. In our opinion, there is hardly any merit in the said submission
of Mr. Luthra. In Rohit Tandon Vs. Directorate of Enforcement;
(2018) 11 SCC 46 , a three Judge Bench has categorically observed
that the statements of witnesses/ accused are admissible in
evidence in view of Section 50 of the said Act and such statements
may make out a formidable case about the involvement of the
accused in the commission of a serious offence of money
laundering. Further, as held in Vijay Mandanlal (supra), the offence
of money laundering under Section 3 of the Act is an independent
offence regarding the process or activity connected with the
proceeds of crime which had been derived or obtained as a result of
criminal activity relating to or in relation to a scheduled offence.
The offence of money laundering is not dependent or linked to the
date on which the scheduled offence or predicate offence has been
committed. The relevant date is the date on which the person
indulges in the process or activity connected with the proceeds of
crime. Thus, the involvement of the person in any of the criminal
activities like concealment, possession, acquisition, use of proceeds
of crime as much as projecting it as untainted property or claiming
it to be so, would constitute the offence of money laundering
under Section 3 of the Act.
16. So far as facts of the present case are concerned, as
transpiring from the supplementary complaint filed against the
appellant, apart from the statements of witnesses recorded
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 17 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
under Section 50 of the said Act, there has been sufficient material
collected in the form of documents which prima facie show as to
how the appellant was knowingly a party and actually involved in
the process and in the activities connected with the proceeds of
crime, and how he was projecting/ claiming such proceeds of crime
as untainted and how he was the beneficiary of the proceeds of
crime acquired through the criminal activities relating to the
scheduled offences.
xxxxxxxx
22. Lastly, it may be noted that as held in catena of decisions,
the economic offences constitute a class apart and need to be
visited with a different approach in the matter of bail. The
economic offences having deep-rooted conspiracies and involving
huge loss of public funds need to be viewed seriously and
considered as grave offences affecting the economy of the country
as a whole and thereby posing serious threat to the financial health
of the country. Undoubtedly, economic offences have serious
repercussions on the development of the country as a whole. To
cite a few judgments in this regard are Y. S. Jagan Mohan Reddy
Vs. Central Bureau of Investigation, (2013) 7 SCC 439;
Nimmagadda Prasad Vs. Central Bureau of Investigation, (2013) 7
SCC 466; Gautam Jundu Vs. Directgorate of Enforcement (Supra),
State of Bihar & Anr. Vs. Amit Kumar alias Bachcha Rai, (2017)
13 SCC 751. This court taking a serious note with regard to the
economic offences had observed as back as in 1987 in case of State
of Gujrat Vs. Mohanlal Jitamalji Porwal and Another, (1987) 2
SCC 364 as under:-
“5… The entire community is aggrieved if the economic
offenders who ruin the economy of the State are not
brought to books. A murder may be committed in the heat
of moment upon passions being aroused. An economic
offence is committed with cool calculation and deliberate
design with an eye on personal profit regardless of the
consequence to the community. A disregard for the interest
of the community can be manifested only at the cost of
forfeiting the trust and faith of the community in the system
to administer justice in an even-handed manner without fear
of criticism from the quarters which view white collar
crimes with a permissive eye unmindful of the damage done
to the National Economy and National Interest…”
23. With the advancement of technology and Artificial
Intelligence, the economic offences like money laundering have
become a real threat to the functioning of the financial system of
the country and have become a great challenge for the investigating
agencies to detect and comprehend the intricate nature of
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ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
transactions, as also the role of the persons involved therein. Lot of
minute exercise is expected to be undertaken by the Investigating
Agency to see that no innocent person is wrongly booked and that
no culprit escapes from the clutches of the law. When the detention
of the accused is continued by the Court, the courts are also
expected to conclude the trials within a reasonable time, further
ensuring the right of speedy trial guaranteed by Article 21 of the
Constitution.”
i. Hon’ble High Court of Delhi in Bail Application No. 3464/2024 titled as
Aditya Krishna Vs. Directorate of Enforcement, has held that :
“37. It is a settled position of law that statements recorded under
Section 50 of the PMLA hold evidentiary value and are admissible
in legal proceedings. The Hon‟ble Supreme Court, while
emphasizing the legal sanctity of such statements, has time and
again observed that they constitute valid material upon which
reliance can be placed to sustain allegations under the PMLA. In a
recent judgment, the Hon‟ble Supreme Court in Abhishek
Banerjee v. Enforcement Directorate, (2024) 9 SCC 22 has made
such observations which are as under:
“21. …Section 160 which falls under Ch. XII empowers the
police officer making an investigation under the said
chapter to require any person to attend within the limits of
his own or adjoining station who, from the information
given or otherwise appears to be acquainted with the facts
and circumstances of the case, whereas, the process
envisaged by Section 50 PMLA is in the nature of an
inquiry against the proceeds of crime and is not
“investigation” in strict sense of the term for initiating
prosecution; and the authorities referred to in Section 48
PMLA are not the police officers as held in Vijay Madanlal
[Vijay Madanlal Choudhary v. Union of India, (2023) 12
SCC 1] .
22. It has been specifically laid down in the said decision
that the statements recorded by the authorities under
Section 50 PMLA are not hit by Article 20(3) or Article 21
of the Constitution, rather such statements recorded by the
authority in the course of inquiry are deemed to be the
judicial proceedings in terms of Section 50(4), and are
admissible in evidence, whereas the statements made by
any person to a police officer in the course of an
investigation under Ch. XII of the Code could not be used
for any purpose, except for the purpose stated in the proviso
to Section 162 of the Code. In view of such glaring
inconsistencies between Section 50 PMLA and SectionsDirectorate of Enforcement Vs. Ashish Kakkar & Another Page 19 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
160/161CrPC, the provisions of Section 50 PMLA would
prevail in terms of Section 71 read with Section 65 thereof.”
38. The Hon‟ble Supreme Court in the aforementioned
judgment underscored that such statements, being recorded in the
course of an inquiry rather than an investigation, are not subject to
the restrictions under Article 20(3) and Article 21 of the
Constitution. Instead, they are deemed to be judicial proceedings
under Section 50(4) of the PMLA and, therefore, admissible as
evidence in proceedings under the PMLA.
Xxxxxx
75. From the bare perusal of Section 24 of the PMLA, it is
evident that once a person is charged with the offence of money
laundering under Section 3, the law presumes that the proceeds of
crime are involved in money laundering unless the contrary is
proven by the accused.
xxxxxx
77. By virtue of Section 24 of the PMLA, the respondent is not
required to conclusively establish the applicant’s guilt at the pre-
trial stage, rather, the applicant must demonstrate that the proceeds
of crime attributed to him are not linked to money laundering. In
the absence of any rebuttal by the applicant, the presumption
under Section 24 of the PMLA stands in favor of the respondent,
thereby justifying his continued detention.
xxxxx
79. In light of the principles enunciated by the Hon‟ble
Supreme Court in Vijay Madanlal Choudhary (Supra) and
reiterated in Prem Prakash (Supra), this Court must determine
whether the foundational facts necessary to invoke the presumption
under Section 24 of the PMLA have been established by the
respondent. The Hon‟ble Supreme Court has categorically held
that the prosecution must satisfy three essential ingredients. First,
the commission of a scheduled offence must be established.
Second, the property in question must be shown to have been
derived or obtained, directly or indirectly, as a result of such
criminal activity and third, the accused must be linked, directly or
indirectly, to any process or activity connected with the proceeds of
crime.
xxxxxxx
81. Applying the legal presumption under Section 24(a) of the
PMLA, once the respondent has demonstrated these foundational
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 20 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
facts, the onus shifts to the applicant to rebut the presumption that
the proceeds of crime were not involved in money laundering. The
applicant, however, has failed to provide any credible evidence to
rebut this presumption. Mere denial of involvement or assertion of
being an investor in the firm without day-to-day operational control
is insufficient to discharge the burden imposed by the Statute.”
j. Hon’ble Supreme Court of India in case titled as Satish Jaggi Vs.
State of Chhattisgarh reported in (2007) 11 SCC 195, has held that :
“Normally in the offence of non-bailable also, bail can be granted
if the facts and circumstances so demand. We have already
observed that in granting bail in non-bailable offence, the primary
consideration is the gravity and the nature of the offence. A reading
of the order of the learned Chief Justice shows that the nature and
the gravity of the offence and its impact on the democratic fabric of
the society was not at all considered. We are more concerned with
the observations and findings recorded by the learned Chief Justice
on the credibility and the evidential value of the witnesses at the
stage of granting bail. By making such observations and findings,
the learned Chief Justice has virtually acquitted the accused of all
the criminal charges levelled against him even before the trial. The
trial is in progress and if such findings are allowed to stand it
would seriously prejudice the prosecution case. At the stage of
granting of bail, the Court can only go into the question of the
prima facie case established for granting bail. It cannot go into the
question of credibility and reliability of the witnesses put up by the
prosecution. The question of credibility and reliability of
prosecution witnesses can only be tested during the trial.”
k. Hon’ble Supreme Court of India in Crl. (SLP) No. 6185 of
2023 titled as Pradeep Nirankarnath Sharma Vs. Directorate of
Enforcement, has held that :
“29. Furthermore, it is settled law that the determination of the
amount involved in a money laundering offence is not to be viewed
in isolation but in the context of the overall financial trail and
associated transactions. The totality of the evidence must be
assessed, which is a matter of trial; but even on a prima facie
assessment, it is clear that the proceeds of crime in the present case
are significantly higher than the statutory threshold. The appellant
has failed to substantiate his claim with any material thatDirectorate of Enforcement Vs. Ashish Kakkar & Another Page 21 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
contradicts the respondent’s submissions in this regard. Therefore,
this ground also does not aid the appellant in any manner.
30. The PMLA was enacted with the primary objective of
preventing money laundering and confiscating the proceeds of
crime, thereby ensuring that such illicit funds do not undermine the
financial system. Money laundering has far-reaching consequences,
not only in terms of individual acts of corruption but also in
causing significant loss to the public exchequer. The laundering of
proceeds of crime results in a significant loss to the economy,
disrupts lawful financial transactions, and erodes public trust in the
system. The alleged offences in the present case have a direct
bearing on the economy, as illicit financial transactions deprive the
state of legitimate revenue, distort market integrity, and contribute
to economic instability. Such acts, when committed by persons in
positions of power, erode public confidence in governance and lead
to systemic vulnerabilities within financial institutions.
31. The illegal diversion and layering of funds have a cascading
effect, leading to revenue losses for the state and depriving
legitimate sectors of investment and financial resources. It is
settled law that in cases involving serious economic offences,
judicial intervention at a preliminary stage must be exercised with
caution, and proceedings should not be quashed in the absence of
compelling legal grounds. The respondent has rightly argued that in
cases involving allegations of such magnitude, a trial is imperative
to establish the full extent of wrongdoing and to ensure
accountability.
32. The PMLA was enacted to combat the menace of money
laundering and to curb the use of proceeds of crime in the formal
economy. Given the evolving complexity of financial crimes,
courts must adopt a strict approach in matters concerning economic
offences to ensure that perpetrators do not exploit procedural
loopholes to evade justice.
33. The present case involves grave and serious allegations of
financial misconduct, misuse of position, and involvement in
transactions constituting money laundering. The appellant seeks an
end to the proceedings at a preliminary stage, effectively
preventing the full adjudication of facts and evidence before the
competent forum. However, as established in multiple judicial
pronouncements, cases involving economic offences necessitate aDirectorate of Enforcement Vs. Ashish Kakkar & Another Page 22 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
thorough trial to unearth the complete chain of events, financial
transactions, and culpability of the accused.
34. The material submitted by the respondent, coupled with the
broad legislative framework of the PMLA, indicates the necessity
of allowing the trial to proceed and not discharging the appellant at
the nascent stage of charge framing. The argument that the
proceedings are unwarranted is devoid of substance in light of the
statutory objectives, the continuing nature of the offence, and the
significant financial implications arising from the alleged acts.
Discharging the appellant at this stage would be premature and
contrary to the principles governing the prosecution in money
laundering cases.
35. Given the severe and grave nature of the allegations against
the appellant, it is imperative that he must undergo thorough
judicial scrutiny during trial. A proper trial is necessary to unearth
the full extent of the offence, to evaluate the evidence produced by
the appellant, to analyze the complete chain of final transactions,
and find out the veracity of the severe allegations and the amount
of proceeds of crime. The legal framework under the PMLA serves
as a crucial mechanism to ensure that individuals involved in
laundering proceeds of crime are brought to justice and that
economic offences do not go unpunished.
36. In light of the above discussion, it is evident that the
appellant has failed to establish any legally sustainable ground
warranting interference by this Court at a pre-trial stage. The
submissions made in support of the appeal are neither legally
untenable nor in the best interest of justice. The offence alleged
against the appellant is clearly a continuing offence under the
PMLA, and the quantum of proceeds of crime involved far exceeds
the statutory threshold and requires proper investigation and
judicial scrutiny. The findings of the Courts below are well
reasoned and do not call for interference.
l. Hon’ble Supreme Court of India in case titled as Soma Chakravarty
vs. State reported in (2007) 5 SCC 403, has held that :
“12. It may be mentioned that the settled legal position, as
mentioned in the above decisions, is that if on the basis of material
on record the Court could form an opinion that the accused might
have committed offence it can frame the charge, though for
conviction the conclusion is required to be proved beyondDirectorate of Enforcement Vs. Ashish Kakkar & Another Page 23 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
reasonable doubt that the accused has committed the offence. At
the time of framing of the charges the probative value of the
material on record cannot be gone into, and the material brought on
record by the prosecution has to be accepted as true at that stage.
Before framing a charge the court must apply its judicial mind on
the material placed on record and must be satisfied that the
commitment of offence by the accused was possible. Whether, in
fact, the accused committed the offence, can only be decided in the
trial.”
m. Hon’ble Supreme Court of India in case titled as State of Rajasthan
Vs. Ashok Kumar Kashyap reported in (2021) 11 SCC 191, has held that :
“13. Having considered the reasoning given by the High Court
and the grounds which are weighed with the High Court while
discharging the accused, we are of the opinion that the High Court
has exceeded in its jurisdiction in exercise of the revisional
jurisdiction and has acted beyond the scope of Section 227/339
Cr.P.C. While discharging the accused, the High Court has gone
into the merits of the case and has considered whether on the basis
of the material on record, the accused is likely to be convicted or
not. For the aforesaid, the High Court has considered in detail the
transcript of the conversation between the complainant and the
accused which exercise at this stage to consider the discharge
application and/or framing of the charge is not permissible at all.
14. As rightly observed and held by the learned Special Judge
at the stage of framing of the charge, it has to be seen whether or
not a prima facie case is made out and the defence of the accused is
not to be considered. After considering the material on record
including the transcript of the conversation between the
complainant and the accused, the learned Special Judge having
found that there is a prima facie case of the alleged offence
under Section 7 of the PC Act, framed the charge against the
accused for the said offence. The High Court materially erred in
negating the exercise of considering the transcript in detail and in
considering whether on the basis of the material on record the
accused is likely to be convicted for the offence under Section 7 of
the PC Act or not.
15. As observed hereinabove, the High Court was required to
consider whether a prima facie case has been made out or not and
whether the accused is required to be further tried or not. At the
stage of framing of the charge and/or considering the discharge
application, the mini trial is not permissible. At this stage, it is to be
noted that even as per Section 7 of the PC Act, even an attempt
constitutes an offence. Therefore, the High Court has erred and/orDirectorate of Enforcement Vs. Ashish Kakkar & Another Page 24 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
exceeded in virtually holding a mini trial at the stage of discharge
application.
16. We are not further entering into the merits of the case
and/or merits of the transcript as the same is required to be
considered at the time of trial. Defence on merits is not to be
considered at the stage of framing of the charge and/or at the stage
of discharge application.”
n. Hon’ble Supreme Court of India in case titled as State of Gujrat Vs.
Dilipsinh Kishorsinh Rao reported in 2023 INSC 894, has held that :
“11. This Court in State of T.N. Vs. N. Suresh Rajan (2014) 11
SCC 709 adverting to the earlier propositions of law laid down on
this subject has held:
“29. We have bestowed our consideration to the rival
submissions and the submissions made by Mr. Ranjit
Kumar commend us. True it is that at the time of
consideration of the applications for discharge, the court
cannot act as a mouthpiece of the prosecution or act as a
post office and may sift evidence in order to find out
whether or not the allegations made are groundless so as to
pass an order of discharge. It is trite that at the stage of
consideration of an application for discharge, the court has
to proceed with an assumption that the materials brought
on record by the prosecution are true and evaluate the said
materials and documents with a view to find out whether
the facts emerging therefrom taken at their face value
disclose the existence of all the ingredients constituting the
alleged offence. At this stage, probative value of the
materials has to be gone into and the court is not expected
to go deep into the matter and hold that the materials would
not warrant a conviction. In our opinion, what needs to be
considered is whether there is a ground for presuming that
the offence has been committed and not whether a ground
for convicting the accused has been made out. To put it
differently, if the court thinks that the accused might have
committed the offence on the basis of the materials on
record on its probative value, it can frame the charge;
though for conviction, the court has to come to the
conclusion that the accused has committed the offence. The
law does not permit a mini trial at this stage.”
12. The defence of the accused is not to be looked into at the
stage when the accused seeks to be discharged. The expression “the
record of the case” used in Section 227 Cr.P.C. is to be understood
as the documents and articles, if any, produced by the prosecution.
The Code does not give any right to the accused to produce any
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 25 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
document at the stage of framing of the charge. The submission of
the accused is to be confined to the material produced by the
investigating agency.
13. The primary consideration at the stage of framing of charge
is the test of existence of a prima-facie case, and at this stage, the
probative value of materials on record need not be gone into. This
Court by referring to its earlier decisions in the State of
Maharasthra Vs. Som Nath Thapa (1996) 4 SCC 659 and the State
of MP Vs. Mohan Lal Soni (2000) 6 SCC 338 has held the nature
of evaluation to be made by the court at the stage of framing of
the charge is to test the existence of prima-facie case. It is also held
at the stage of framing of charge, the court has to form a
presumptive opinion to the existence of factual ingredients
constituting the offence alleged and it is not expected to go deep
into probative value of the material on record and to check whether
the material on record would certainly lead to conviction at the
conclusion of trial.
o. Hon’ble Supreme Court of India in case titled as State by Karnataka
Lokayukta Police Vs. M.R. Hiremath reported in (2019) 7 SCC 515, has
held that :
“The High Court ought to have been cognizant of the fact that the
trial court was dealing with an application for discharge under the
provisions of Section 239 of the CrPC. The parameters which
govern the exercise of this jurisdiction have found expression in
several decisions of this Court. It is a settled principle of law that at
the stage of considering an application for discharge the court must
proceed on the assumption that the material which has been
brought on the record by the prosecution is true and evaluate the
material in order to determine whether the facts emerging from the
material, taken on its face value, disclose the existence of the
ingredients necessary to constitute the offence.
p. Hon’ble Supreme Court of India in case titled as Palwinder Singh
Vs. Balwinder Singh reported in (2008) 14 SCC 504, has held that :
“Having heard learned counsel for the parties, we are of the
opinion that the High Court committed a serious error in passing
the impugned judgment insofar as it entered into the realm of
appreciation of evidence at the stage of the framing of the charges
itself. The jurisdiction of the learned Sessions Judge while
exercising power under Section 227 of the Code of Criminal
Procedure is limited. Charges can be framed also on the basis of
strong suspicion. Marshalling and appreciation of evidence is notDirectorate of Enforcement Vs. Ashish Kakkar & Another Page 26 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
in the domain of the Court at that point of time. This aspect of the
matter has been considered by this Court in State of Orissa Vs.
Debendra Nath Padhi -(2005(1) SCC 568, wherein it was held as
under:
“23. As a result of the aforesaid discussion, in our view,
clearly the law is that at the time of framing charge or
taking cognizance the accused has no right to produce any
material. Satish Mehras Case holding that the trial Court
has powers to consider even materials which the accused
may produce at the stage of Section 227 of the Code has not
been correctly decided.”
q. Hon’ble Supreme Court of India in case titled as Ram Narian Popli
Vs. CBI reported in (2003) 3 SCC 641, has held that :
“343. No doubt in the case of conspiracy there cannot be any
direct evidence. The ingredients of offence are that there should be
an agreement between persons who are alleged to conspire and the
said agreement should be for doing an illegal act or for doing
illegal means an act which itself may not be illegal. Therefore, the
essence of criminal conspiracy is an agreement to do an illegal act
and such an agreement can be proved either by direct evidence or
by circumstantial evidence or by both, and it is a matter of common
experience that direct evidence to prove conspiracy is rarely
available. Therefore, the circumstances proved before, during and
after the occurrence have to be considered to decide about the
complicity of the accused.”
r. Hon’ble Supreme Court of India in case titled as Y. S. Jagan Mohan
Reddy Vs. Directorate of Enforcement reported in (2013) 7 SCC 439, has
held that :
“34. Economic offences constitute a class apart and need to be
visited with a different approach in the matter of bail. The
economic offence having deep rooted conspiracies and involving
huge loss of public funds needs to be viewed seriously and
considered as grave offences affecting the economy of the country
as a whole and thereby posing serious threat to the financial health
of the country.”
s. Similar view as above, has been reiterated by Hon’ble Supreme
Court of India in case titled as Nimmagadda Prasad Vs. Central Bureau of
Investigation reported in (2013) 7 SCC 466 and Hon’ble High Court of
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 27 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
Delhi in Bail Application No. 544/2025 titled as Arvind Dham Vs.
Directorate of Enforcement while referring to case Nimmagadda Prasad
(Supra).
t. Hon’ble High Court of Madras in case titled as Directorate of
Enforcement Vs, Ashok Anand reported in (2024) SCC OnLine Mad 8528,
has held that :
“22. Holistic reading of the provisions of PMLA would indicate
that schedule offence is prerequisite condition for initiation of
proceedings under PMLA. Once proceedings are initiated under
PMLA by recording ECIR, thereafter the investigation and offence
of money laundering traced out by the Enforcement Directorate
become independent and to be dealt with under the provisions of
PMLA and the application of Cr.P.C is undoubtedly limited in view
of Section 65 and 71 of PMLA.
23. ECIR cannot be equated with FIR. The schedule offence is
quintessential for initiation of proceedings and recording of ECIR
but both the offences cannot be placed on the same footing. PMLA
proceedings are distinct and the said Act is a complete code in
itself. Whereas scheduled offences are tried under other penal laws.
When two documents are difference and distinct in their own
nature, a combined reading and implication cannot be adduced to
them.
24. ECIR is born from FIR, but once the ECIR is born, the
umbilical cord that connects the ECIR with FIR looses its
relevance and the ECIR becomes an independent document in
itself. Consequently, a new life in the form of ECIR emerges,
which has breath on its own without the support of FIR. So, the
FIR and ECIR become two different documents and both tend to
take shape on its own, independent of each other.
25. “Proceeds of Crime” is the focal point for an ECIR,
whereas scheduled offence is dealt with under the FIR. Further
reliance may be relevant with reference to the judgment in the case
of Vijay Madanlal Choudhary vs. Union of India and Others
reported in 2022 SCC Online SC 929 and Rajinder Singh Chada
vs. Union of India. Both these judgments have noted the distinction
between FIR and ECIR. More so, ECIR is treated as an internal
document.”
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Arguments on behalf of accused Ashish Kakkar
3. Per contra, Ld. Counsel Sh. Ashish Batra for accused argued that in the
instant case, proceedings under PMLA, 2002 were initiated basically on five
FIRs taken as Scheduled offence, however none of the FIR makes out a case of
money laundering. The prosecution initiated against the accused is baseless,
unsubstantiated and devoid of merits. For an offence of money laundering, the
basic foundational ingredients are:
(i) Commission of the Scheduled offence,
(ii) Generation of the proceeds of crime from the commission of the
Scheduled Offence, and
(iii) Laundering of the said proceeds of crime.
3.1. The Complainant/ED has to prima facie prove all the aforesaid three basic
ingredients to proceed with the matter in order to raise presumptions against the
accused and frame charges against him accordingly.
3.2 The FIR on which the present case is primarily based is of EOW, wherein
the ED had been the complainant itself. The allegation therein is that the bank
accounts of the shell companies allegedly under operation and control by/of the
accused, were opened on the basis of forged documents of its dummy Directors.
The said bank accounts were alleged to be used as mode of transfer of funds
from one account to another, however no material has been adduced to prove
even prima facie by the ED for generation of ‘proceeds of crime’ from the
alleged Scheduled Offence of forging the documents for opening the bank
accounts. The onus was on the Complainant/ED to show that the amount of
Rs.6,000 Crores in the said bank accounts was derived from commission of the
scheduled offence. Till date, the scheduled offence has only been opening of
bank accounts by way of forged documents and there is no scheduled offence
registered for the transactions carried out in the said bank accounts. In absence
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of any such material brought on record, the said amount of money in the bank
accounts cannot be termed as ‘Proceeds of Crime’ by any stretch of imagination.
The Complainant/ED in their own arguments have referred the amount in those
bank accounts as unaccounted money, however it cannot be stated to be
‘Proceeds of Crime’, hence does not attract the provisions of the Act of Money
Laundering. Even in the entire complaint, the ED has failed to adduce any
evidence/material to support their own allegations that the amount in the said
bank accounts was generated from online gaming. Moreso, the penal provisions
of Public Gambling Act, 1867 have not been invoked. Surprisingly, the
allegation of conversion of INR into foreign currency is a violation under FEMA
and it is not a scheduled offence under PMLA. Further, sending the money
through SEZ by over-valuing the imported product and not receiving remittance
for export product is offence under Custom’s Act, 1962, but in the present case
the same has not been invoked as a Scheduled Offence.
3.3 With regard to the FIR registered at Jodhpur, Rajasthan, reliance is placed
upon the chargesheet of the said case filed by the Complainant/ED as RUD-3 and
it is argued that the accused is admittedly not an accused in the said scheduled
offence. Contrary to the case of the Complainant/ED herein as per flow chart at
Page 163 of the Prosecution Complaint, the State of Rajasthan stated on an
affidavit filed before Hon’ble Supreme Court of India during hearing of
anticipatory bail application of an alleged accused in the scheduled offence in
SLP No. (Crl.) 14503 of 2023 in FIR No. 630/2022 PS Cyber Crime , that Rs
11.03 Crores out of the ‘Proceeds of Crime’ amounting to Rs.16.26 Crores, were
frozen at the hands of the Bank accountholder itself and were released to the
complainant thereafter. For the remaining amount, the police have stated that the
flow of funds ends at M/s Sagar Empire Jewels and RHC Global Exports, from
which the remaining amount of Rs 5.23 Crores was sent to Hong Kong based
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companies being Fu Lee Hong Coy Ltd. Mars India & Comm Services Ltd. and
not credited to accounts of Astoria Exim Private Ltd. and Motown Exim Private
Ltd., alleged to be companies belonging to the accused. The copy of the said
affidavit is filed along with the written synopsis filed.
3.4 With respect to the FIRs by Cyber Crime, Gautam Budh Nagar; Cyber
Crime, Gurugram and Cyber Crime, Rohtak, it is argued that the accused is
admittedly not an accused in any of these FIRs. As per the case of the ED itself,
funds were transferred to various Bank accounts before being credited in the
Bank accounts allegedly controlled by the accused herein. However, no
investigation has been carried out from the Bank accountholders in-between.
Without any proper investigation and completing the entire chain of the
transactions, it cannot be alleged that the Bank accounts allegedly under control
of the accused were having ‘proceeds of crime’ generated from the said FIRs.
3.5 Hence, in absence of the aforesaid foundational ingredients being
satisfied on record, the offence of money laundering cannot be said to have
occurred in the instant case. Pertinently, there is no presumption that ‘ proceeds
of crime’ have been generated by the commission of the Scheduled offence. As
held by the Hon’ble Apex Court, the Complainant/ED has to first satisfy the
three foundational facts on record, which they failed to do in the present case.
Arguments on behalf of accused Puneet Kumar
4. Ld. Counsel for accused Sh. Debopriyo Moulik has argued that the
accused was not arraigned initially and has been arraigned only in the
supplementary complaint. Only alleged Scheduled offence against him is the FIR
bearing no 48/2022 of Cyber Crime registered at Gautam Budh Nagar, UP,
wherein it has been alleged against him that he was involved in Dabba Trading
and online betting, however they can be an offence under FEMA but are not
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Scheduled Offences under PMLA. Even Dabba Trading can, at best, be violative
of the Securities Contracts (Regulation) Act, 1956, and online betting can, at
best, be violative of the Public Gambling Act, 1867, which are also not a
scheduled offence under the PMLA. The offence under Custom’s Act has not
been invoked.
4.1 Even nothing on record has been shown to prove involvement of the
accused in the betting gaming. The statement recorded of the accused and relied
by Complainant/ED was recording during his custody and has been retracted
during bail proceedings, hence it cannot be relied upon now. It is further argued
that that accused was carrying out normal business transactions which is also
reflected in the Table 31 relied by the Complainant/ED.
4.2 As per the Table No. 32 relied by the Complainant/ED itself, the accused
Puneet has only been linked with M/s Triosam. However, there is break in the
link of the alleged money trail since the accused is link with M/s Triosam, which
is at Stage 3 layering company, as per para 14.6 of the supplementary
prosecution complaint. There are other breakages in the money trail as per Table
30 and 32 also. From the record itself it is evident that there are multiple breaks
in the money trail and there is no direct and exclusive link between the money
from one account to another specially between Prerna Yadav’s bank account and
the money that was transferred to Triosam’s bank account. Therefore, in absence
of any nexus between the transfers, there is no basis to assume that the funds
received by Triosam are the ‘proceeds of crime’ or were connected in any
manner with the Scheduled Offence.
4.3 It has also been argued that during search no electronic device, bag or
cash has been recovered from the premises of accused Puneet. Lastly, it is
submitted that for considering any money as the ‘proceeds of crime’, the property
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must be derived or obtained, directly or indirectly, as a result of the criminal
activity relating to a Scheduled Offence.
4.4 An application for discharge has also been filed by the accused wherein
the grounds for discharge have been reiterated more or less on the basis of oral
arguments tendered above. Reply to said application has also been filed by
Complainant/ED.
4.5 In order to buttress his arguments Ld. Counsel has placed reliance upon
following judgments:
a. Hon’ble Supreme Court of India in case titled as Dipakbhai
Jagdishchandra Patel v. State of Gujarat reported in (2019) 16 SCC 547,
has held that :
“23. At the stage of framing the charge in accordance with the
principles which have been laid down by this Court, what the Court
is expected to do is, it does not act as a mere post office. The Court
must indeed sift the material before it. The material to be sifted
would be the material which is produced and relied upon by the
prosecution. The sifting is not to be meticulous in the sense that the
Court dons the mantle of the Trial Judge hearing arguments after
the entire evidence has been adduced after a full-fledged trial and
the question is not whether the prosecution has made out the case
for the conviction of the accused. All that is required is, the Court
must be satisfied that with the materials available, a case is made
out for the accused to stand trial. A strong suspicion suffices.
However, a strong suspicion must be founded on some material.
The material must be such as can be translated into evidence at the
stage of trial. The strong suspicion cannot be the pure subjective
satisfaction based on the moral notions of the Judge that here is a
case where it is possible that accused has committed the offence.
Strong suspicion must be the suspicion which is premised on some
material which commends itself to the court as sufficient to
entertain the prima facie view that the accused has committed the
offence
24. Undoubtedly, this Court has in Suresh Budharmal Kalani
Alias Pappu Kalani (supra), taken the view that confession by a co-
accused containing incriminating matter against a person would not
by itself suffice to frame charge against it. We may incidentally
note that the Court has relied upon the judgment of this Court in
Kashmira Singh v. State of Madhya Pradesh. We notice theDirectorate of Enforcement Vs. Ashish Kakkar & Another Page 33 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
observations, which have been relied upon, were made in the
context of an appeal which arose from the conviction of the
appellant therein after a trial. The same view has been followed
undoubtedly in other cases where the question arose in the context
of a conviction and an appeal therefrom. However, in Suresh
Budharmal Kalani Alias Pappu Kalani (supra), the Court has
proceeded to take the view that only on the basis of statement of
the co-accused, no case is made out, even for framing a charge”
b. Hon’ble Supreme Court of India in case titled as Karan Tnalwar Vs.
State of Tamil Nadu reported in 2024 INSC 1012, has held that :
“5. Before dealing with the rival contentions, it is only
appropriate to refer to the scope of exercise of power under Section
227, Cr.P.C. This Court in P. Vijayan v. State of Kerala & Anr. :
(2010) 2 SCC 39, made an in-depth consideration regarding the
scope of power under Section 227, Cr.P.C. and held thus: –
“10. Before considering the merits of the claim of both the
parties, it is useful to refer to Section 227 of the Code of
Criminal Procedure, 1973, which reads as under:
“227. Discharge. — If, upon consideration of the record of
the case and the documents submitted therewith, and after
hearing the submissions of the accused and the prosecution
in this behalf, the Judge considers that there is not sufficient
ground for proceeding against the accused, he shall
discharge the accused and record his reasons for so doing.”
If two views are possible and one of them gives rise to
suspicion only, as distinguished from grave suspicion, the
trial Judge will be empowered to discharge the accused and
at this stage he is not to see whether the trial will end in
conviction or acquittal. Further, the words “not sufficient
ground for proceeding against the accused” clearly show
that the Judge is not a mere post office to frame the charge
at the behest of the prosecution, but has to exercise his
judicial mind to the facts of the case in order to determine
whether a case for trial has been made out by the
prosecution. In assessing this fact, it is not necessary for the
court to enter into the pros and cons of the matter or into a
weighing and balancing of evidence and probabilities which
is really the function of the court, after the trial starts.
11. At the stage of Section 227, the Judge has merely to sift
the evidence in order to find out whether or not there is
sufficient ground for proceeding against the accused. In
other words, the sufficiency of ground would take within its
fold the nature of the evidence recorded by the police or the
documents produced before the court which ex facie
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disclose that there are suspicious circumstances against the
accused so as to frame a charge against him.”
6. While considering the scope of Section 227, Cr.P.C. in Sajjan
Kumar v. Central Bureau of Investigation: (2010) 9 SCC 368, this
Court laid down certain guiding principles for discharge as under: –
“21. On consideration of the authorities about the scope of
Sections 227 and 228 of the Code, the following principles
emerge:
(i) The Judge while considering the question of
framing the charges under Section 227 CrPC has the
undoubted power to sift and weigh the evidence for
the limited purpose of finding out whether or not a
prima facie case against the accused has been made
out. The test to determine prima facie case would
depend upon the facts of each case.
(ii) Where the materials placed before the court
disclose grave suspicion against the accused which
has not been properly explained, the court will be
fully justified in framing a charge and proceeding
with the trial.
(iii) The court cannot act merely as a post office or a
mouthpiece of the prosecution but has to consider
the broad probabilities of the case, the total effect of
the evidence and the documents produced before the
court, any basic infirmities, etc. However, at this
stage, there cannot be a roving enquiry into the pros
and cons of the matter and weigh the evidence as if
he was conducting a trial.
(iv) If on the basis of the material on record, the
court could form an opinion that the accused might
have committed offence, it can frame the charge,
though for conviction the conclusion is required to
be proved beyond reasonable doubt that the accused
has committed the offence.
(v) At the time of framing of the charges, the
probative value of the material on record cannot be
gone into but before framing a charge the court must
apply its judicial mind on the material placed on
record and must be satisfied that the commission of
offence by the accused was possible.
(vi) At the stage of Sections 227 and 228, the court
is required to evaluate the material and documents
on record with a view to find out if the facts
emerging therefrom taken at their face value
disclose the existence of all the ingredients
constituting the alleged offence. For this limited
purpose, sift the evidence as it cannot be expectedDirectorate of Enforcement Vs. Ashish Kakkar & Another Page 35 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
even at that initial stage to accept all that the
prosecution states as gospel truth even if it is
opposed to common sense or the broad probabilities
of the case.
(vii) If two views are possible and one of them gives
rise to suspicion only, as distinguished from grave
suspicion, the trial Judge will be empowered to
discharge the accused and at this stage, he is not to
see whether the trial will end in conviction or
acquittal.”
7. The position of law enunciated in the said decisions would
reveal that while calling upon to exercise the power under Section
227, Cr.P.C., the judge concerned has to consider only the record of
the case and the documents produced along with the same. If on
such consideration the court forms an opinion that there is no
sufficient ground to proceed against the accused concerned, he
shall be discharged after recording the reasons therefor. It is also
evident from the precedence on the aforesaid question that while
exercising the said power, the Court could sift the materials
produced along with the final report only for the purpose of
considering the question whether there is ground to proceed
against the accused concerned.
xxxxxx
10. As is evident from the said Section, the alleged offence is
consumption of narcotic drug or psychotropic substance other than
those specified in or under clause (a) of Section 27, NDPS Act, and
therefore, the question is whether any material is available to
charge the appellant thereunder. The contention of the appellant is
that he has been arraigned as accused No.13 based on the
confession statement of co-accused viz., accused No.1. Certainly,
in the absence of any other material on record to connect the
appellant with the crime, the confession statement of the co-
accused by itself cannot be the reason for his implication in the
crime. This view has been fortified by the law laid down in Suresh
Budharmal Kalani v. State of Maharashtra: (1998) 7 SCC 337,
wherein it was stated that a co-accused’s confession containing
incriminating matter against a person would not by itself suffice to
frame charge against him. The materials on record would reveal
that the investigating agency had not subjected him to medical
examination and instead, going by complaint Witness No.23, he
smelt the accused. The less said the better and we do not think it
necessary to comment upon adoption of such a course. We need
only to say that even if he tendered such evidence, it would not
help the prosecution in anyway. There is absolutely no case that
any recovery of contraband was recovered from the appellant. As
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regards the confession statement of the appellant in view of
Section 25 of the Indian Evidence Act, 1872 there can be no doubt
with respect to the fact that it is inadmissible in evidence. In this
context it is worthy to refer to the decision of this Court in Ram
Singh v. Central Bureau of Narcotics: (2011) 11 SCC 347. In the
said decision, this Court held that Section 25 of the Indian
Evidence Act would make confessional statement of accused
before police inadmissible in evidence and it could not be brought
on record by prosecution to obtain conviction. Shortly stated,
except the confessional statement of co-accused No.1 there is
absolutely no material available on record against the appellant.
11. When this be the position, the question is whether the two
Courts were justified in holding that there is prima facie case
against the appellant to proceed against him. In this contextual
situation, it is relevant to refer to the decision of this Court in
Dipakbhai Jagadishchandra Patel v. State of Gujarat and Anr:
(2019) 16 SCC 547 Paragraphs 23 and 24 of the said decision are
relevant for the purpose of this case and they read thus: –
“23. At the stage of framing the charge in accordance with
the principles which have been laid down by this Court,
what the court is expected to do is, it does not act as a mere
post office. The court must indeed sift the material before
it. The material to be sifted would be the material which is
produced and relied upon by the prosecution. The sifting is
not to be meticulous in the sense that the court dons the
mantle of the trial Judge hearing arguments after the entire
evidence has been adduced after a full-fledged trial and the
question is not whether the prosecution has made out the
case for the conviction of the accused. All that is required
is, the court must be satisfied that with the materials
available, a case is made out for the accused to stand trial.
A strong suspicion suffices. However, a strong suspicion
must be founded on some material. The material must be
such as can be translated into evidence at the stage of trial.
The strong suspicion cannot be the pure subjective
satisfaction based on the moral notions of the Judge that
here is a case where it is possible that the accused has
committed the offence. Strong suspicion must be the
suspicion which is premised on some material which
commends itself to the court as sufficient to entertain the
prima facie view that the accused has committed the
offence.
24. Undoubtedly, this Court has in Suresh Budharmal
Kalani [Suresh Budharmal Kalani v. State of Maharashtra,
(1998) 7 SCC 337], taken the view that confession by a co-
accused containing incriminating matter against a person
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would not by itself suffice to frame charge against it. We
may incidentally note that the Court has relied upon the
judgment of this Court in Kashmira Singh v. State of M.P.
[Kashmira Singh v. State of M.P., (1952) 1 SCC 275]. We
notice that the observations, which have been relied upon,
were made in the context of an appeal which arose from the
conviction of the appellant therein after a trial. The same
view has been followed undoubtedly in other cases where
the question arose in the context of a conviction and an
appeal therefrom. However, in Suresh Budharmal Kalani
[Suresh Budharmal Kalani v. State of Maharashtra, (1998)
7 SCC 337], the Court has proceeded to take the view that
only on the basis of the statement of the coaccused, no case
is made out, even for framing a charge.”
12. As noted hereinbefore, the sole material available against the
appellant is the confession statement of the co-accused viz.,
accused No.1, which undoubtedly cannot translate into admissible
evidence at the stage of trial and against the appellant. When that
be the position, how can it be said that a prima facie case is made
out to make the appellant to stand the trial. There can be no doubt
with respect to the position that standing the trial is an ordeal and,
therefore, in a case where there is no material at all which could be
translated into evidence at the trial stage it would be a miscarriage
of justice to make the person concerned to stand the trial.
c. Hon’ble Supreme Court of India in case titled as Tuhin Kumar Biswas @
Bumba Vs. The State of West Bengal reported in 2025 SCC Online SC 2604, has
held that :
“14. Having heard the learned counsel for the parties, this Court is
of the view that before proceeding with the matter, it is essential to
outline the legal principles to be kept in mind by the Court while
deciding an application seeking discharge.
15. This Court has recently in Ram Prakash Chadha v. State of UP
(2024) 10 SCC 651, cited with approval earlier decisions of this
Court in Stree Atyachar Virodhi Parishad v. Dilip Nathumal
Chordia, (1989) 1 SCC 715; P. Vijayan v. State of Kerala, (2010) 2
SCC 398; and Union of India v. Prafulla Kumar Samal, (1979) 3
SCC 4, as under:-
“21. In the decision in Stree Atyachar Virodhi Parishad v.
Dilip Nathumal Chordia [Stree Atyachar Virodhi Parishad v.
Dilip Nathumal Chordia, (1989) 1 SCC 715 : 1989 SCC
(Cri) 285], this Court held that the word “ground” in
Section 227CrPC, did not mean a ground for conviction, but
a ground for putting the accused on trial.
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22. In P. Vijayan v. State of Kerala [P. Vijayan v. State of
Kerala, (2010) 2 SCC 398 : (2010) 1 SCC (Cri) 1488], after
extracting Section 227CrPC, this Court in paras 10 and 11
held thus: (SCC pp. 401-402)
“10. … If two views are possible and one of them
gives rise to suspicion only, as distinguished from
grave suspicion, the trial Judge will be empowered
to discharge the accused and at this stage he is not to
see whether the trial will end in conviction or
acquittal. Further, the words “not sufficient ground
for proceeding against the accused” clearly show
that the Judge is not a mere post office to frame the
charge at the behest of the prosecution, but has to
exercise his judicial mind to the facts of the case in
order to determine whether a case for trial has been
made out by the prosecution. In assessing this fact,
it is not necessary for the court to enter into the pros
and cons of the matter or into a weighing and
balancing of evidence and probabilities which is
really the function of the court, after the trial starts.
11. At the stage of Section 227, the Judge has
merely to sift the evidence in order to find out
whether or not there is sufficient ground for
proceeding against the accused. In other words, the
sufficiency of ground would take within its fold the
nature of the evidence recorded by the police or the
documents produced before the court which ex facie
disclose that there are suspicious circumstances
against the accused so as to frame a charge against
him.”
23. In para 13 in P. Vijayan case [P. Vijayan v. State of Kerala,
(2010) 2 SCC 398 : (2010) 1 SCC (Cri) 1488], this Court took note
of the principles enunciated earlier by this Court in Union of India
v. Prafulla Kumar Samal [Union of India v. Prafulla Kumar Samal,
(1979) 3 SCC 4 : 1979 SCC (Cri) 609] which reads thus: (Prafulla
Kumar Samal case [Union of India v. Prafulla Kumar Samal, (1979)
3 SCC 4 : 1979 SCC (Cri) 609] , SCC p. 9, para 10)
“10. … (1) That the Judge while considering the question of
framing the charges under Section 227 of the Code has the
undoubted power to sift and weigh the evidence for the
limited purpose of finding out whether or not a prima facie
case against the accused has been made out.
(2) Where the materials placed before the Court disclose
grave suspicion against the accused which has not been
properly explained the Court will be fully justified in
framing a charge and proceeding with the trial.
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(3) The test to determine a prima facie case would naturally
depend upon the facts of each case and it is difficult to lay
down a rule of universal application. By and large however
if two views are equally possible and the Judge is satisfied
that the evidence produced before him while giving rise to
some suspicion but not grave suspicion against the accused,
he will be fully within his right to discharge the accused.
(4) That in exercising his jurisdiction under Section 227 of
the Code the Judge which under the present Code is a senior
and experienced court cannot act merely as a post office or a
mouthpiece of the prosecution, but has to consider the broad
probabilities of the case, the total effect of the evidence and
the documents produced before the Court, any basic
infirmities appearing in the case and so on. This however
does not mean that the Judge should make a roving enquiry
into the pros and cons of the matter and weigh the evidence
as if he was conducting a trial.”
16. In M.E. Shivalingamurthy vs. Central Bureau of Investigation
Bengaluru, (2020) 2 SCC 768, this Court has held as under:-
“17.This is an area covered by a large body of case law. We refer to
a recent judgment which has referred to the earlier decisions viz. P.
Vijayan v. State of Kerala and discern the following principles:
17.1. If two views are possible and one of them gives rise to
suspicion only as distinguished from grave suspicion, the trial
Judge would be empowered to discharge the accused.
17.2. The trial Judge is not a mere post office to frame the charge at
the instance of the prosecution.
17.3. The Judge has merely to sift the evidence in order to find out
whether or not there is sufficient ground for proceeding. Evidence
would consist of the statements recorded by the police or the
documents produced before the Court.
17.4. If the evidence, which the Prosecutor proposes to adduce to
prove the guilt of the accused, even if fully accepted before it is
challenged in cross-examination or rebutted by the defence
evidence, if any, “cannot show that the accused committed offence,
then, there will be no sufficient ground for proceeding with the
trial”.
17.5. It is open to the accused to explain away the materials giving
rise to the grave suspicion.
17.6. The court has to consider the broad probabilities, the total
effect of the evidence and the documents produced before the court,
any basic infirmities appearing in the case and so on. This,
however, would not entitle the court to make a roving inquiry into
the pros and cons.
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17.7. At the time of framing of the charges, the probative value of
the material on record cannot be gone into, and the material brought
on record by the prosecution, has to be accepted as true.
17.8. There must exist some materials for entertaining the strong
suspicion which can form the basis for drawing up a charge and
refusing to discharge the accused.
18. The defence of the accused is not to be looked into at the stage
when the accused seeks to be discharged under Section 227 CrPC
(see State of J&K v. Sudershan Chakkar). The expression, “the
record of the case”, used in Section 227 CrPC, is to be understood
as the documents and the articles, if any, produced by the
prosecution. The Code does not give any right to the accused to
produce any document at the stage of framing of the charge. At the
stage of framing of the charge, the submission of the accused is to
be confined to the material produced by the police (see State of
Orissa v. Debendra Nath Padhi).”
17. Consequently, at the stage of discharge, a strong suspicion
suffices. However, a strong suspicion must be found on some
material which can be translated into evidence at the stage of trial.
18. Keeping in view the aforesaid principles of law, this Court will
have to assess as to whether there are sufficient grounds for
proceeding against the Appellant-accused for the offences alleged
in the FIR.”
d. Hon’ble High Court of Kerala in case titled as Dennis Sagaya Jude
Vs. Directorate of Enforcement Government of India and Another reported
in 2024 SCC OnLine Kar 6421, has observed that :
“12. Section 3 of the Act deals with money laundering, and it states
that whosoever directly or indirectly attempts to indulge or know-
ingly assist or knowingly is a party or is actually involved in any
process or activity connected with the proceeds of crime, including
its concealment, possession, acquisition, or use and projecting or
claiming it as untainted property shall be guilty of the offence of
money laundering.
13. Explanation : For removal of doubts, it is hereby clarified that-
i) a person shall be guilty of offence of money laundering if such
person is found to have directly or indirectly attempted to in-
dulged on knowingly assisted or knowingly is a party or is actu-
ally involved in one or more of the following processes or activi-
ties connected with proceeds of crime, namely,-
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a) concealment : or
b) possession : or
c) acquisition; or
d) use; or
e) projecting as untainted property; or
f) claiming as untainted property in any manner whatso-
ever;
ii) the process or activity connected with proceeds of crime is a
continuing activity and continues till such time a person is di-
rectly or indirectly enjoying the proceeds of crime by its con-
cealment or possession of acquisition or use or projecting it as
untainted property or claiming it as untainted property in any
manner whatsoever.
14. The explanation to Section 3 clarifies the scope and nature of
the offence of money laundering, which is as follows:
• It is a continuing offence;
• The involvement in money laundering can be direct or indirect;
• The accused must have knowledge that the property involved rep-
resents the proceeds of the crime and it is not sufficient for the
property to be connected to a scheduled offence and the person
must be aware of its illicit origin.
xxxxxxx
23. However, in the complaint furnished before the Special
Judge, which is the basis for prosecuting the petitioner – accused
no. 17, the ED has alleged that the petitioner has indirectly in-
dulged and is actually involved in the process connected with the
proceeds of crime viz. acquisition and use of the proceeds of crime
and is thus guilty of the offence of money laundering
24. It is pertinent to record that the prosecution has —
a) Neither adduced any prima facie evidence to indicate that
the petitioner-accused no. 17 had knowledge of the fact that the
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funds transferred into his account had been derived from criminal
activity related to the alleged scheduled offences of sections 120-B
(criminal conspiracy), 420 (cheating and dishonestly inducing de-
livery of property) and 471 (using as genuine a forged document or
electronic record) of IPC, 1860;
b) Nor adduced any prima facie evidence to indicate that the
petitioner -accused no. 17 knowingly assisted the prime accused,
the accused no. 5, in the concealment or transfer of the illicit pro-
ceeds so as to project them as untainted money.
25. Furthermore, it is to be borne that the petitioner herein is ar-
rayed as accused no. 17 in the complaint as made by the Asst. Di-
rector, Directorate of Enforcement, and that on perusal of the con-
tents of the complaint (including the above extracted flowchart,
which attributes to the prime accused no. 5 his alleged role in the
commission of the scheduled offence) and the statement of the pe-
titioner, it may be reasonably concluded that the petitioner herein is
not involved in the alleged commission of the scheduled offence,
and more important, is distant to the alleged commission of the of-
fence of money laundering. Furthermore, on the reading of the
complaint, it may be noted that it does not bring forth any bare al-
legation, much less a specific allegation against the petitioner
herein that he had knowingly assisted the accused no. 5 in the con-
cealment or utilisation of the illicit proceeds so as to project them
as untainted property.
26. The Hon’ble Supreme Court in the case of Sh. Satish
Mehra v. Delhi Administration, AIR 1996 SC 375 construed the
provisions of Section 226 of Cr. P.C., which obliges the prosecu-
tion to describe the charge brought against the accused and to state
by what evidence the guilt of the accused would be proved and
Section 228 of Cr. P.C. which provides for framing of the charge
upon grave suspicion of commission of offence, and opined that if
a “Judge is fairly certain that there is no prospect of the case ending
in conviction the valuable time of the Court should not be wasted
for holding a trial only for the purpose of formally completing the
procedure to the pronounce the conclusion on a future date.” It fur-
ther held that if a “Judge is almost certain that the trial would be an
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exercise in futility or a sheer waste of time it is advisable to trun-
cate” the proceedings the stage of discharge under Sec-
tion 227 of Cr. P.C.
27. In the case of Avinash J Mahale v. State of M.H., (2006) 4
AIR Bom R 181 (Bom) : 2006 Cri LJ 3123, the High Court of
Bombay referred to the ratio laid down by the Apex Court in the
case of State of M.P. v. S.B. Johari, (2000) 2 SCC 57 : AIR 2000
SC 665 and held that a charge can be quashed where the evidence
adduced by the prosecution fails to prove that the accused commit-
ted the alleged offence.
28. It has been held by the coordinate bench of this Court in the
case of Vipul Prakash Patil v. The State of Karnataka (Crl P. No.
104152/2022 KHC-D) where the petitioner sought to quash the FIR
and complaint against the offence punishable under Sec-
tion 420 of IPC and Section 9 of the Karnataka Protection of Inter-
est of Deposits in Financial Establishment Act, 2004 that,
“In order to proceed against a person with criminal action,
the complaint or the prosecuting agency must make out a
prima facie material whereby some nexus could be estab-
lished to the alleged crime with a person. If such material is
not available, (the) very registration of the case against such
persons would definitely amount to the abuse of the process
of law affecting (the) right of a citizen enshrined in Arti-
cle 21 of the Constitution of India.”
It further observed that,
“No person shall be allowed to undergo (the) ordeal of a
criminal investigation unless there is some material which
would connect the said person with the alleged crime.”
29. The petitioner is required to rebut the presumption under
Section 24 of the Act, 2002, only if there is sufficient evidence or
any specific allegation to establish that the petitioner knowingly as-
sisted in concealing the proceeds of the crime or facilitated the use
of such proceeds to project illicit proceeds as untainted property.
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30. In the case at hand, the petitioner’s conduct exhibits neither
indirect attempt to indulge, nor active involvement in any process
connected with the proceeds of crime as to launder their illicit ori-
gin into untainted property. It is apposite to add, at the risk of repe-
tition, that no prima facie evidence has been adduced by the prose-
cution indicating proof of having knowingly assisted on part of the
petitioner herein or having knowingly been a party, in relation to
the commission of the offence of money laundering.
e. Hon’ble High Court of Delhi in case titled as Sanjay Pandey Vs. Di-
rectorate of Enforcement reported in 2022 SCC OnLine Del 4279, has held
that :
“55. The entire prosecution is silent on the identity of the victim
who has suffered a wrongful loss. There is nobody named in the
prosecution complaint who has been deceived or cheated. Nobody
has been named to whom a wrongful loss has been caused and as to
what is the wrongful loss. Except for a bald averment that various
customers have been cheated, the complaint is totally silent on the
name of the customers, the way and manner that they have been
cheated.
56. It is alleged that the „customers‟ were cheated as they
shared „information‟ only under an assumption that the same
would not be recorded. However, the ED has failed to show the na-
ture of such information which was shared or misused, or intended
to be misused, to cause any wrongful loss or wrongful gain. More-
over, no “customers” have filed any complaint or been made wit-
nesses in the Complaint.
xxxxxxx
63. Hence, prima facie, for the reasons stated above, ingredients
of section 120B read with Section 409 and 420 IPC have not been
made out in the present case.”
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f. Hon’ble High Court of Kerala in case titled as Thomas Daniel Vs.
Enforcement Directorate reported in 2023 SCC OnLine Ker 8214, has held
that :
“26. To attract section 420 IPC, dishonesty or fraudulent intention
from the beginning is essential. There is no presumption under the
PML Act that an accused is guilty. Of course, section 24 of the
PML Act provides for the burden of proof and directs that the court
shall presume that the proceeds of crime are involved in money
laundering. The PML Act has not created a presumption of guilt of
the predicate offences on the accused. Section 24 of the PML Act,
refers to the burden of proof and states that the court shall presume
that the proceeds of crime are involved in money laundering. In Vi-
jay Madanlal Choudhary‘s case, (paragraph 346) it was explained
that the burden on the accused under section 24 of the PML Act is
an evidentiary burden and can be discharged at the time of evi-
dence as it is only a rule of evidence. The Court also explained that
the legal presumption is about the involvement of proceeds of
crime in money laundering, which becomes relevant only after es-
tablishing three basic or foundational facts. The foundational facts
are: (i) The criminal activity relating to a scheduled offence has
been committed, (ii) the property in question has been derived or
obtained directly or indirectly, by any person as a result of that
criminal activity, and (iii) the person concerned is directly or indi-
rectly involved in any process or activity connected with the said
property being proceeds of crime. Therefore, section 24 of PML
Act cannot be utilized to presume the guilt of the accused for the
predicate offences alleged.”
g. Hon’ble High Court of Bombay in case titled as Sadanand
Gangaram Kadam Vs. Enforcement Directorate reported in 2023 SCC
OnLine Bom 2613, has held that:
15. Coming back to Section 3 of the PMLA, on its plain reading,
an offence under Section 3 can be committed after a scheduled of-
fence is committed. For example, let us take the case of a person
who is unconnected with the scheduled offence, knowingly assists
the concealment of the proceeds of crime or knowingly assists the
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use of proceeds of crime. In that case, he can be held guilty of
committing an offence under Section 3 of the PMLA. To give a
concrete example, the offences under Sections 384 to 389 of the
IPC relating to “extortion” are scheduled offences included in Para-
graph 1 of the Schedule to the PMLA. An accused may commit a
crime of extortion covered by Sections 384 to 389 of IPC and ex-
tort money. Subsequently, a person unconnected with the offence
of extortion may assist the said accused in the concealment of the
proceeds of extortion. In such a case, the person who assists the ac-
cused in the scheduled offence for concealing the proceeds of the
crime of extortion can be guilty of the offence of money launder-
ing. Therefore, it is not necessary that a person against whom the
offence under Section 3 of the PMLA is alleged must have been
shown as the accused in the scheduled offence. What is held in
paragraph 270 of the decision of this Court in the case of Vijay
Madanlal Choudhary’ supports the above conclusion. The condi-
tions precedent for attracting the offence under Section 3 of the
PMLA are that there must be a scheduled offence and that there
must be proceeds of crime in relation to the scheduled offence as
defined in clause (u) of sub-section (1) of Section 3 of the PMLA.”
h. Hon’ble Supreme Court of India in case titled as Suresh Budharmal
Kalani Vs. State of Maharashtra reported in (1998) 7 SCC 547, has held
that :
“7. So far as the confession of Jayawant Suryarao is concerned, the same (if
voluntary and true) can undoubtedly be brought on record under Section 30 of
the Evidence Act to use it also against Kalani but then the question is what
would be its evidentiary value against the latter. The question was succinctly
answered by this Court in Kashmira Singh Vs. State of Madhya Pradesh (1952
SCR 526) with the following words :
“The proper way to approach a case of this kind is first, to marshal the
evidence against the accused excluding the confession altogether from
consideration and see whether, if it is believed, a conviction could safely
be based on it. If it is capable of belief independently of the confession,
then of course it is not necessary to call the confession in aid. But cases
may arise where the judge is not prepared to act on the other evidence as
it sands even though if believed, it would be sufficient to sustain a
conviction. In aid the confession and use it to lend assurance to the otherDirectorate of Enforcement Vs. Ashish Kakkar & Another Page 47 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
evidence and thus fortify himself in believing what without the aid of the
confession he would not be prepared to accept.”
The view so expressed has been consistently followed by this Court. Judged in
the light of the above principle the confession of Suryarao cannot called in aid
to frame charges against Kalani in absence of any other evidence to do so.”
i. Hon’ble High Court of Delhi in case titled as Anil Kumar Aggarwal
Vs. Enforcement Directorate reported in 2025 SCC OnLine Del 2216, has
held that:
“36. The Applicants also emphasise that the prosecution case
hinges almost entirely on the statements of Mr. Tajinder Pal Singh,
an approver and self-confessed participant in the alleged
conspiracy. It is submitted that his testimony, being that of an
accomplice, is inherently tainted and incapable of forming the sole
basis for denial of bail without independent corroboration. On a
prima facie view of the material placed before this Court, there
appears to be some merit in the submission. The law in this regard
is well-settled. In Haricharan Kurmi v. State of Bihar: 1964 SCC
OnLine SC 28, the Supreme Court held that while the confession
of a co-accused under Section 30 of the Evidence Act may be taken
into consideration, it is not substantive evidence and cannot be the
foundation of conviction in the absence of other evidence. The
Court observed that such confessions are “evidence of a very weak
type” and must only serve to lend “assurance” to otherwise
satisfactory evidence. The judgment reiterates the principle that a
confession cannot substitute the primary burden of proof and must
be corroborated with material evidence.
37. Further, reliance is also placed in Somasundaram Vs. State:
(2020) 7 SCC 722, relevant portion of which reads as follows:
“Accomplice evidence
71. Section 133 of the Evidence Act declares that an
accomplice is a competent witness and further that a
conviction based on the uncorroborated testimony of an
accomplice is not illegal only on account of it being so.
Section 133 reads as follows:
“133. Accomplice.- An accomplice shall be a
competent witness against an accused person; and a
conviction is not illegal merely because it proceeds
upon the uncorroborated testimony of an
accomplice.”
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72. It is apposite to notice Section 114 of the Evidence Act,
Illustration
(b), the court may presume:
“(b) that an accomplice is unworthy of credit, unless he is
corroborated in material particulars.”
73. Thus, there appears to be a contradiction between these
provisions. The matter is no longer res Integra. We may
notice the following statement of the law contained in an
early judgment of this Court in Sarwan Singh v. State of
Punjab (AIR pp. 640-41, para 7) “7…. It is hardly necessary
to deal at length with the true legal position in this matter.
An accomplice is undoubtedly a competent witness under
the Evidence Act. There can be, however, no doubt that the
very fact that he has participated in the commission of the
offence introduces a serious stain in his evidence and courts
are naturally reluctant to act on such tainted evidence unless
it is corroborated in material particulars by other
independent evidence.
It would not be right to expect that such independent
corroboration should cover the whole of the prosecution
story or even all the material particulars. If such a view is
adopted it would render the evidence of the accomplice
wholly superfluous. On the other hand, it would not be safe
to act upon such evidence merely because it is corroborated
in minor particulars or incidental details because, in such a
case, corroboration does not afford the necessary assurance
that the main story disclosed by the approver can be
reasonably and safely accepted as true.
But it must never be forgotten that before the court reaches
the stage of considering the question of corroboration and
its adequacy or otherwise, the first initial and essential
question to consider is whether even as an accomplice the
approver is a reliable witness. If the answer to this question
is against the approver then there is an end of the matter,
and no question as to whether his evidence is corroborated
or not falls to be considered.
In other words, the appreciation of an approver’s evidence
has to satisfy a double Find test. His evidence must show
that he is a reliable witness and that is a test which is
common to all witnesses. If this test is satisfied the second
test which still remains to be applied is that the approver’s
evidence must receive sufficient corroboration. This test is
special to the cases of weak or tainted evidence like that of
the approver.”
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74. We may profitably also refer to the views expressed
in Haroon Haji Abdulla v. State of Maharashtra. 835-36,
para 8) “8… The law as to accomplice evidence is well
settled. The Evidence Act in Section 133 provides that an
accomplice is a competent witness against an accused
person and that a conviction is not illegal merely because it
proceeds upon the uncorroborated testimony of an
accomplice. The effect of this provision is that the court
trying an accused may legally convict him on the single
evidence, of an accomplice. To this there is a rider in
Illustration (b) to Section 114 of the Act which provides
that the court may presume that an accomplice is unworthy
of credit unless he is corroborated in material particulars.
This cautionary provision incorporates a rule of prudence
because an accomplice, who betrays his associates, is not a
fair witness and it is possible that he may, to please the
prosecution, weave false details into those which are true
and his whole story appearing true, there may be no means
at hand to sever the false from that which is true. It is for
this reason that courts, before they act on accomplice
evidence, Insist on corroboration in material respects as to
the offence itself and also implicating in some satisfactory
way, however small, each accused named by the
accomplice. In this way the commission of the offence is
confirmed by some competent evidence other than the
single or unconfirmed testimony of the accomplice and the
Inclusion by the accomplice of an innocent person is
defeated. This rule of caution or prudence has become so
ingrained in the consideration of accomplice evidence as to
have almost the standing of a rule of law.”
75. The dichotomy between the mandate of Section 133 and
Illustration (D) to Section 114 of the Evidence Act has been
explained as follows in Sheshanna Bhumanna Yadav v
State of Maharashtra (SCC pp. 125-26, para 12) “12. The
law with regard to appreciation of approver’s evidence is
based on the effect of Sections 133 and 114, Illustration (0)
of the Evidence Act, namely, that that an accomplice is
competent to depose but as a rule of caution it will be
unsafe to convict upon his testimony alone. The warning of
the danger of convicting on uncorroborated evidence is
therefore given when the evidence is that of an accomplice.
The primary meaning of accomplice is any party to the
crime charged and someone who aids and abets the
commission of crime. The nature of corroboration is that it
is confirmatory evidence and it may consist of the evidence
of second witness or of circumstances like the conduct of
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the person against whom it is required. Corroboration must
connect or tend to connect the accused with the crime.
When it is said that the corroborative evidence must
implicate the accused in material particulars it means that it
is not enough that a piece of evidence tends to confirm the
truth of a part of the testimony to be corroborated. That
evidence must confirm that part of the testimony which
suggests that the crime was committed by the accused. If a
witness says that the accused and he stole the sheep and he
put the skins in a certain place, the discovery of the sad and
would not corroborate the evidence of the witness as against
the accused. But if the skins were found in the accused’s
house, this would corroborate because it would tend to
confirm the statement that the accused had some hand in the
theft.”
76. We may finally advert to a recent pronouncement of this
Court In K. Hashim v. State of T.: (SCC 250-51, paras 38-
42) ”
38. First, it is not necessary that there should be independent
confirmation of every material circumstance in the sense that the
independent evidence in the case, apart from the testimony of the
complainant or the accomplice, should in itself be sufficient to
sustain conviction. As Lord Reading says:
“Indeed, if it were required that the accomplice should be
confirmed in every detail of the crime, his evidence would
not be essential to the case; it would be merely confirmatory
of other and Independent testimony. (Baskerville case, KB
p. 664 : All ER p. 42 B-C)
39. All that is required is that there must be some additional
evidence rendering it probable that the story of the accomplice (or
complainant) is true and that it is reasonably safe to act upon it.
40. Secondly, the independent evidence must not only make it safe
to believe that the crime was committed but must in some way
reasonably connect or tend to connect the accused with it by
confirming in some material particular the testimony of the
accomplice or complainant that the accused committed the crime.
This does not mean that the corroboration as to identification must
extend to all the circumstances necessary to identify the accused
with the offence. Again, all that is necessary is that there should be
independent evidence which will make it reasonably safe to believe
the witness’s story that the accused was the one, or among those,
who committed the offence. The reason for this part of the rule is
that:
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“A man who has been guilty of a crime himself will always
be able to relate the facts of the case, and if the
confirmation be only on the truth of that history, without
identifying the persons, that is really no corroboration at
all… It would not at all tend to show that the party accused
participated in it.’i. Similarly held in case titled as Raman Bhuraia Vs. Enforcement
Directorate reported in (2023) 4 HCC (Del) 197 by Hon’ble High Court of
Delhi.
Relevant Provisions of the PMLA, 2002:
5. Before divulging into merits of the present matter, it is pertinent to go
through the relevant provisions of Law involved herein:
i) The term “Beneficial Owner” has been defined in Section 2(1) (fa) of
the PML Act, 2002 as “Beneficial Owner” means an individual who
ultimately owns or controls a client of a reporting entity or the person on
whose behalf a transaction is being conducted and includes a person who
exercises ultimate effective control over a juridical person.
ii) “Proceeds of Crime” defined under Section 2 (1)(u) of the PMLA as
under: “PoC” means any property derived or obtained directly or
indirectly, by any person as a result of criminal activity relating to
schedule offence or the value of any such property or where such property
is taken or held outside the country, then the property equivalent in value
held within the country.
iii) Property defined under section 2(l)(v) of the PMLA as under:
”property” means any property or assets of every description, whether
corporeal or incorporeal, movable or immovable, tangible or intangible
and includes deeds and instruments evidencing title to, or interest in, such
property or assets, wherever located;
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Explanation: For the removal of doubts, it is hereby clarified that the
term “property” includes property of any kind used in the commission of
an offence under this Act or any of the scheduled offences.
iv) Value is defined Section 2(l)(zb) of the PMLA as under: “value” means
the fair market value of any property on the date of the acquisition by any
person, or if such date cannot be determined, the date on which such
property is possessed by such person.
v) Offence of Money Laundering is defined under Section 3 of the PML
Act, 2002 as under:
Section 3 Offence of money-laundering – Whosoever directly or
indirectly attempts to indulge or knowingly assists or knowingly is a
party or is actually involved in any process or activity connected with
the PoC including its concealment, possession, acquisition or use and
projecting or claiming it as untainted property shall be guilty of offence
of money laundering.
vi) Punishment for money laundering under section 4 of the PMLA
provides as under:
Section 4: Punishment for money-laundering. Whoever commits the
offence of money-laundering shall be punishable with rigorous
imprisonment for a term which shall not be less than three years but
which may extend to seven years and shall also be liable to fine:
Provided that where the PoC involved in money-laundering relates to
any offence specified under paragraph 2 of Part A of the Schedule, the
provisions of this section shall have effect as if for the words “which
may extend to seven years”, the words “which may extend to ten
years” had been substituted.
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vii) Section 22 of the PMLA, 2002 provides as under:
Section 22: Presumption as to records or property in certain cases
(1) Where any records or property are or is found in the possession or
control of any person in the course of a survey or a search, for where
any record or property is produced by any person or has been resumed
or seized from the custody or control of any person or has been frozen
under this Act or under any other law for the time being in force,] it
shall be presumed that-
(i) such records or property belong or belongs to such person;
(ii) the contents of such records are true; and
(iii) the signature and every other part of such records which
purport to be in the handwriting of any particular person or
which may reasonably be assumed to have been signed by, or
to be in the handwriting of, any particular person, are in that
person’s handwriting, and in the case of a record, stamped,
executed or attested, that it was executed or attested by the
person by whom it purports to have been so stamped,
executed or attested.
(2) Where any records have been received from any place outside
India, duly authenticated by such authority or person and in such
manner as may be prescribed, in the course of proceedings under this
Act, the Special Court, the Appellate Tribunal or the Adjudicating
Authority, as the case may be, shall-
(a) presume, that the signature and every other part of such
record, which purports to be in the handwriting of any
particular person or which the court may reasonably assume to
have been signed by, or to be in the handwriting of, anyDirectorate of Enforcement Vs. Ashish Kakkar & Another Page 54 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
particular person, is in that person’s handwriting; and n the
case of a record executed or attested, that it was executed or
attested by the person by whom it purports to have been so
executed or attested;
(b) admit the document in evidence, notwithstanding that it is
not duly stamped, if such document is otherwise admissible in
evidence.
viii) Section 23 of the PMLA, 2002 provides as under:
Section 23: Presumption in inter-connected transactions
Where money-laundering involves two or more inter-connected
transactions and one or more such transactions is or are proved to be
involved in money-laundering, then for the purposes of adjudication
or confiscation under section 8 or for the trial of the money-
laundering offence, it shall unless otherwise proved the satisfaction
of the Adjudicating Authority or the Special Court], be presumed
that the remaining transactions form part of such inter-connected
transactions.
ix) Section 24 of the PMLA, 2002 provides as under:
Section 24: In any proceeding relating to PoC under this Act-
(a) in the case of a person charged with the offence of money-
laundering under section 3, the Authority or Court shall, unless the
contrary is proved, presume that such PoC are involved in money-
laundering; and
(b) in the case of any other person the Authority or Court, may
presume that such PoC are involved in money-laundering.
x) Section 50 of the PMLA, 2002 provides as under: –
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Section 50: Powers of authorities regarding summons, production of
documents and to give evidence, etc.
(1) The Director shall, for the purposes of section 13, have the
same powers as are vested in a civil court under the Code of Civil
Procedure, 1908 (5 of 1908) while trying a suit in respect of the
following matters, namely:–
(a) discovery and inspection;
(b) enforcing the attendance of any person, including any
officer of a 1[reporting entity] and examining him on oath;
(c) compelling the production of records;
(d) receiving evidence on affidavits;
(e) issuing commissions for examination of witnesses and
documents; and
(f) any other matter which may be prescribed.
(2) The Director, Additional Director, Joint Director, Deputy
Director or Assistant Director shall have power to summon any
person whose attendance he considers necessary whether to give
evidence or to produce any records during the course of any
investigation or proceeding under this Act.
(3) All the persons so summoned shall be bound to attend in
person or through authorized agents, as such officer may direct, and
shall be bound to state the truth upon any subject respecting which
they are examined or make statements, and produce such documents
as may be required.
(4) Every proceeding under sub-sections (2) and (3) shall be deemed
to be a judicial proceeding within the meaning of section 193 and
section 228 of the Indian Penal Code (45 of 1860).
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 56 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
(5) Subject to any rules made in this behalf by the Central
Government, any officer referred to in sub-section (2) may impound
and retain in his custody for such period, as he thinks fit, any records
produced before him in any proceedings under this Act:
PROVIDED that an Assistant Director or a Deputy Director shall
not-
(a) impound any records without recording his reasons for so doing;
or
(b) retain in his custody any such records for a period exceeding
three months, without obtaining the previous approval of the Joint
Director.
xi) Code of Criminal Procedure, 1973 to apply –
The provisions of the Code of Criminal Procedure, 1973 (2 of 1974)
shall apply, insofar as they are not inconsistent with the provisions of
this Act, to arrest, search and seizure, attachment, confiscation,
investigation, prosecution and all the proceedings under this Act.
xii) Section 70 of the PMLA provides as under:
(1) Where a person committing a contravention of any of the
provisions of this Act or of any rule, direction or order made
thereunder is a company, every person who, at the time the
contravention was committed, was in charge of and was responsible
to the company, for the conduct of the business of the company as
well as the company, shall be deemed to be guilty of the
contravention and shall be liable to be proceeded against and
punished accordingly:
Provided that nothing contained in this sub-section shall render any
such person liable to punishment if he proves that the contraventionDirectorate of Enforcement Vs. Ashish Kakkar & Another Page 57 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
took place without his knowledge or that he exercised all due
diligence to prevent such contravention.
(2) Notwithstanding anything contained in sub-section (1), where a
contravention of any of the provisions of this Act or of any rule,
direction or order made thereunder has been committed by a company
and it is proved that the contravention has taken place with the
consent or connivance of, or is attributable to any neglect on the part
of any director, manager, secretary or other officer of any company,
such director, manager, secretary or other officer shall also be deemed
to be guilty of the contravention and shall be liable to be proceeded
against and punished accordingly.
Explanation [1]-For the purposes of this section- (i) “company”
means anybody corporate and includes a firm or other association of
individuals; and
(ii) “director’; in relation to a firm, means a partner in the firm.”
Analysis of material on record
6. The succinct factual matrix, as emerging from the record, reveals that
the present proceedings emanate from multiple FIRs, pursuant to which the
Directorate of Enforcement (ED) initiated investigation against the accused
persons following registration of present ECIR. The said FIRs are delineated as
under:
ï‚· (i) FIR No. 0008/24 by EOW U/s 419, 420, 467, 468, 471, 476 and 120B
of IPC, 1860 (RUD-2)
7. The Complainant/ED has alleged that accused persons namely Ashish
Kakkar and Puneet Kumar were engaged in large scale money laundering as well
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 58 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
as International Hawala/unlawful money transfer to various parts of the world by
creating and operating a number of shell companies in India and abroad as well,
in the name of his various employees by using their fabricated/forged documents
without any actual business being carried out, and only for import/export in
Special Economic Zones and outward foreign remittances against these imports
made by these entities to circumvent the restrictions imposed under the
provisions of FEMA, 1999.
7.1 That the investigation alleged to have revealed that accused No. 2 to
23 are shell entities incorporated by Ashish Kakkar/accused No. 1, wherein
forged KYC documents and forged Account Opening Form (AOF) have been
used for opening the bank accounts and these entities were used to siphon out
PoC by making outward remittance against circular trading (i.e. import of goods
and re-export thereof). The following are the said entities:
8. Arroz Impex Pvt. Ltd
9. Astoriaa Exim Pvt. Ltd
10. Brightsuns Tradexim Pvt. Ltd
11. Camger Traders Pvt. Ltd
12. Chetaki Tradexim Pvt. Ltd
13. Crezora Tradexim Pvt. Ltd
14. Electronio Industries Pvt. Ltd
15. Empon Industries Pvt. Ltd
16. Fosteron Tradexim Pvt. Ltd
17. Lyncage Logistics and Warehouse
Services Pvt. Ltd
18. Mixpier Clotex Pvt. Ltd
19. Motownn Exim Pvt. Ltd
20. Omesa Exim Pvt. Ltd
21. Righttime Impex Pvt. Ltd
Tikmet Exim Pvt. Ltd
22. Trineq Business Solutions Pvt. Ltd
23. Trioasm India Pvt. Ltd
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 59 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
24. Wintrix Impex Pvt. Ltd
25. Woop Industries Pvt. Ltd
26. Avanzado Impex Private Limited
27. Absolute Tradexim Private Limited
28. M/s R. K. Traders
29. Macallan Impex Private Limited
7.2 That the investigation under PMLA, 2002 has further alleged to have
revealed that imports in the above-mentioned companies have been made by
Ashish Kakkar from foreign entities located at various locations and are under
the control of Ashish Kakkar or his associates. The list of such foreign entities is
as below:
TABLE-4
List of foreign entities controlled by Ashish Kakkar and his associatesS. No. Name of the entity Country Remarks
Registered at 1 Raffles Place, #44-01A,
One Raffles Place, Singapore 048616 and
HRA IT Products and Services
1 Singapore presently struck off. Ashish Kakkar is the
Pte. Ltd.
shareholder of the company ASH Stock
Pte. Ltd. (RUD-113)
2 Express Luck Pte Limited Singapore Same as above
3 ASH Stock Pte Ltd Singapore Same as above
4 BBKH Trade Pte. Ltd. Singapore Same as above
ARN Electricals Stock Pte. Registered at 20 Cecil Street, #05-03, Plus,
5 Singapore
Ltd. Singapore 049705 and presently struck off
Registered at 8 Ubi Road 2, #08-10,
6 Telexcell Singapore Pte. Ltd. Singapore
Zervex, Singapore 408538
Registered at 8 Ubi Road 2, #08-10,
7 The Brindavan Stones Pte. Ltd. Singapore
Zervex, Singapore 408538
Registered at 6 Marina Boulevard, #16-18,
8 Idea Giant Pte Ltd Singapore
The Sail @ Marina Bay, Singapore 018985
Registered at 7500A Beach Road, #04-
9 ASL Honour Pte Ltd. Singapore
327, The Plaza, Singapore 199591
Registered at 5th Floor, The Core
Nexus Global Financial
10 Mauritius Building, No 62 ICT Avenue, Cybercity,
Services Limited
Ebene Mauritius
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 60 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
S. No. Name of the entity Country Remarks
Beijing,
11 Power Electronics Trade Ltd –
China
Hong
12 Comet International Ltd –
Kong
Hong
13 Huge Force Ltd. –
Kong
Hong
14 Lumisoq HK Limited –
Kong
Hong
15 Mobitronics International –
Kong
Hong
16 Seven Stars International –
Kong
Hong
17 Limco Trade Limited –
Kong
18 Power Electronics SDN BHD Malaysia –
Hydro Power Traders SDH.
19 – –
BHD
Alam Alkhayal Wholesales
20 UAE –
Trading LLC
7.3 That the investigation under PMLA, 2002 is stated to have established that
above mentioned shell companies as listed above are shell companies
beneficially owned by Ashish Kakkar [in terms of Section 2(fa) of PMLA, 2002]
and are not involved in any real business as:
ï‚· Common dummy directors have been used for incorporation of
companies and photos of unrelated persons have been used for
opening of bank accounts by way of forgery.
ï‚· Common addresses used for incorporation of shell companies.
ï‚· Financial Statements of Shell companies are non-commensurate with
transactions in bank accounts
ï‚· Statements of various persons recorded u/ s 50 of PMLA, 2002 have
revealed that these are mere shell companies of Ashish Kakkar.
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 61 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
ï‚· Documents recovered from the premises belonging to Ashish Kakkar
which make it clear that he was controlling the shell companies.
TABLE-4A
Details of common Dummy Directors in the Companies controlled by Ashish Kakkar
S. Saim Tarun Rahul Ramesh Arvind
Company
No. James Borah Mittal Bhardwaj Kumar
1 Arroz Impex Pvt. Ltd ✓ ✓
2 Astoriaa Exim Pvt. Ltd ✓ ✓
3 Brightsuns Tradexim Pvt. Ltd ✓ ✓
4 Camger Traders Pvt. Ltd ✓ ✓
5 Chetaki Tradexim Pvt. Ltd ✓ ✓
6 Crezora Tradexim Pvt. Ltd ✓ ✓
7 Empon Industries Pvt. Ltd ✓ ✓
8 Fosteron Tradexim Pvt. Ltd ✓ ✓
Lyncage Logistics and
9 ✓ ✓
Warehouse Services Pvt. Ltd
10 Motown Exim Pvt. Ltd ✓ ✓
11 Omesa Exim Pvt. Ltd ✓ ✓
12 Righttime Impex Pvt. Ltd ✓ ✓
13 Trioasm India Pvt. Ltd ✓ ✓
14 Wintrix Impex Pvt. Ltd ✓ ✓
Avanzado Impex Private
15 ✓ ✓
Limited
Absolute Tradexim Private
16 ✓ ✓
Limited
17 M/s R. K. Traders ✓
Macallan Impex Private
18 ✓ ✓
Limited7.4 The following addresses belonging to Ashish Kakkar (as also revealed by
various persons including Ashish Kakkar during their statement recorded u/ s 50
of the PMLA 2002 mentioned in the table below) have been used for
incorporation of these 23 Shell companies beneficially controlled by Ashish
Kakkar:
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 62 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
TABLE 06
Shell Companies incorporated with common registered address
Persons who have disclosed u/s 50
S.
Name of entity Registered address of PMLA, 2002 that the premises
No
belongs to Ashish Kakkar
• Manjeet Singh statement dated
05.03.2024 (RUD-27)
25/32, 1st Floor, Office No 3,
Omesa Exim Pvt. • Harikishan Jain statement dated
1 East Patel Nagar, New Delhi –
Ltd 15/16.02.2024 (RUD-28)
110008
• Rohit Kumar Jha statement dated
20/21.03.2024 (RUD-29)
• Harikishan Jain statement dated
15/16.02.2024 (RUD-28)
25/32, 1st Floor, Office No 3,
Wintrix Impex Pvt. • Rohit Kumar Jha statement dated
2 East Patel Nagar, New Delhi -
Ltd 20/21.03.2024 (RUD-29)
110008
• Ashish Kakkar statement dated
06.03.2024 (RUD-30)
25/32, 1st Floor, Office No 3,
• Ashish Kakkar statement dated
3 M/s R. K. Traders East Patel Nagar, New Delhi –
06.03.2024 (RUD-30)
110008
25/32, 1st Floor, Office No 3,
Astoriaa Exim Pvt. • Manjeet Singh statement dated
4 East Patel Nagar, New Delhi –
Ltd 05.03.2024 (RUD-27)
110008
9/2, Office No 303, 3rd Floor,
Brightsuns East Patel Nagar, New Delhi - • Harikishan Jain statement dated
5
Tradexim Pvt. Ltd 110008 15/16.02.2024 (RUD-28)
• Arvind Kumar statement dated
9/2, Office No 303, 3rd Floor,
Motownn Exim 20.03.2024 (RUD-31)
6 East Patel Nagar, New Delhi -
Pvt. Ltd • Ashish Kakkar statement dated
110008
06.03.2024 (RUD-30)
9/2, Office No 303, 3rd Floor,
Arroz Impex Pvt. • Ashish Kakkar statement dated
7 East Patel Nagar, New Delhi -
Ltd 06.03.2024 (RUD-30)
110008
9/2, Office No 303, 3rd Floor,
Crezora Tradexim
8 East Patel Nagar, New Delhi - --
Pvt. Ltd
110008
9 Fosteron Tradexim Flat No. 501/26, Pragati Tower, • Manjeet Singh statement dated
Pvt. Ltd. Rajendra Place, Patel Nagar, 05.03.2024 (RUD-27)
Delhi – 110008. • Harikishan Jain statement dated
15/16.02.2024 (RUD-28)
• Rohit Kumar Jha statement dated
20/21.03.2024 (RUD-29)
• Ashish Kakkar statement datedDirectorate of Enforcement Vs. Ashish Kakkar & Another Page 63 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
Persons who have disclosed u/s 50
S.
Name of entity Registered address of PMLA, 2002 that the premises
No
belongs to Ashish Kakkar
06.03.2024 (RUD-30)
Flat no 501/26, Pragati Tower,
Macallan Impex • Ashish Kakkar statement dated
10 Rajendra Place, Patel Nagar,
Private Limited 06.03.2024 (RUD-30)
Delhi – 110008
• Manjeet Singh statement dated
05.03.2024 (RUD-27)
• Harikishan Jain statement dated
Flat No-1205/2, Padma Tower,
Avanzado Impex 15/16.02.2024 (RUD-28)
11 Rajendra Place, New Delhi –
Private Limited • Rohit Kumar Jha statement dated
110008
20/21.03.2024 (RUD-29)
• Ashish Kakkar statement dated
06.03.2024 (RUD-30)
Absolute Tradexim Flat No-1205/2, Padma Tower, • Ashish Kakkar statement dated
12 Private Limited Rajendra Place, New Delhi – 06.03.2024 (RUD-30)
110008
Camger Traders Office no 805, 8th Floor, • Manjeet Singh statement dated
13
Pvt. Ltd Pragati Tower, Rajendra Place 05.03.2024 (RUD-27)
Righttime Impex Office no 805, 8th Floor,
14 —
Pvt. Ltd Pragati Tower, Rajendra Place
• Harikishan Jain statement dated
15/16.02.2024 (RUD-28)
• Rohit Kumar Jha statement dated
15 Chetaki Tradexim New Delhi - 110018 20/21.03.2024 (RUD-29)
Pvt. Ltd
• Ashish Kakkar statement dated
06.03.2024 (RUD-30)
16 Empon Industries
New Delhi - 110018 --
Pvt. Ltd
17 Trioasm India Pvt.
New Delhi - 110018 --
Ltd
• Manjeet Singh statement dated
44, First Floor, Left Side, Veer
18 Electronio 05.03.2024 (RUD-27)
Savarkar Block, Shakarpur,
Industries Pvt. Ltd • Rohit Kumar Jha statement dated
Delhi - 110092
20/21.03.2024 (RUD-29)
• Manjeet Singh statement dated
05.03.2024 (RUD-27)
Unit No TF-10, Pearls Omaxe,
19 Mixpier Clotex • Harikishan Jain statement dated
Netaji Subhash Place,
Pvt. Ltd 15/16.02.2024 (RUD-28)
Pitampura, Delhi - 110034
• Rohit Kumar Jha statement dated
20/21.03.2024 (RUD-29)
20 Trineq Business Shop No 120, Aaya Nagar • Manjeet Singh statement dated
Solutions Pvt. Ltd Market, Delhi - 110047 05.03.2024 (RUD-27)
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 64 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
Persons who have disclosed u/s 50
S.
Name of entity Registered address of PMLA, 2002 that the premises
No
belongs to Ashish Kakkar
• Harikishan Jain statement dated
15/16.02.2024 (RUD-28)
• Manjeet Singh statement dated
2nd Floor on Right/North side of
21 Tikmet Exim Pvt. 05.03.2024 (RUD-27)
Property bearing no 1-C, Arjun
Ltd • Harikishan Jain statement dated
Nagar, Delhi – 110029
15/16.02.2024 (RUD-28)
2nd Floor on Right/North side of
22 Woop Industries • Rohit Kumar Jha statement dated
Property bearing no 1-C, Arjun
Pvt. Ltd 20/21.03.2024 (RUD-29)
Nagar, Delhi – 110029
• Manjeet Singh statement dated
05.03.2024 (RUD-27)
• Harikishan Jain statement dated
Lyncage Logistics IL & FS, 6th Floor, N/Q Bandra
23 15/16.02.2024 (RUD-28)
and Warehouse Kurla Complex, Bandra East,
• Rohit Kumar Jha statement dated
Services Pvt. Ltd Mumbai, Maharashtra – 400051
20/21.03.2024 (RUD-29)
• Ashish Kakkar statement dated
06.03.2024 (RUD-30)
7.5 As per the case of the Complainant/ED, upon analysis of financial
statements and banking transactions of the above-mentioned 23 shell companies,
it is found that banking transactions are not commensurate with the financial
statements. In the majority of companies, no balance sheet and profit & loss
statement have been filed with RoC by these companies. The details are given in
Table No.7. Hence, it is evident that as per financial statements filed with
Registrar of Companies (RoC), no business transactions were carried out
whereas, as per the bank accounts huge financial transactions have been shown
to be done in the name of these companies. This shows that these entities are
only paper entities and no actual business activities have been done in these
companies except paper transactions for the purpose of layering of proceeds of
crime and siphoning off out of India.
7.6 That during the course of investigation under PMLA, 2002, statements
of various persons including dummy Directors, employees of Ashish Kakkar who
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 65 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
have handled various work as per instructions of Ashish Kakkar, persons who
have handled import/ export consignments, Ashish Kakkar (himself) etc. were
recorded under Section 50 of PMLA. During recording of the statements, it has
been revealed that the above-mentioned companies were incorporated, controlled
and operated by Ashish Kakkar. The details of the statements are in Table-8.
Even the statements recorded under Section 50 of PMLA, 2002, it is revealed
that Ashish Kakkar was also controlling foreign entities used in the trade-based
money laundering. The details thereof are in Table-9.
7.7 That during investigation, multiple searches were conducted under the
provisions of FEMA and PMLA, wherein documents related to various shell
companies controlled by Ashish Kakkar were recovered from various premises
belonging to Ashish Kakkar, which are as under:
i. Blank letterheads of various shell companies (both domestic and
overseas entities),
ii. Digital rubber stamps of various companies (both domestic and
overseas entities) and
iii. Import-export related documents such as copies of bills of entry,
bills of lading, shipping bills, import-export invoices, etc.7.8 The above-mentioned documents were alleged to be found and seized
during the course of search under Panchnama dated 22/23.05.2023 (RUD-37)
under Section 37 of FEMA from Flat No-1205, Padma Tower Rajendra Place
New Delhi, Delhi- 110008 which is the premises belonging to Ashish Kakkar.
That the recovery of these documents, rubber stamps, letter heads of the shell
companies from the premises of Ashish Kakkar clearly establishes that these
shell companies are under the control of Ashish Kakkar and used by Ashish
Kakkar in circular import/ export activities for sole purpose of sending outward
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 66 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
foreign remittances of proceeds of crime for the purpose of money laundering.
Import- Export documents, outward remittance documents submitted to Banks,
blank letters heads & digital rubber stamps, visiting cards of various companies
controlled by Ashish Kakkar, etc. (collectively RUD-38) were retrieved from the
data extracted from WD make HDD bearing SL No. WX11A29D4UH4 under
Panchnama dated 28.08.2023 (RUD-39) drawn at Cyber Forensic Lab from the
hard disk seized under Panchnama dated 22/23.05.2023 under Section 37 of
FEMA.
7.9 During the course of investigation, statements of Ashish Kakkar were
recorded on 15.02.2024 under Section 17 of PMLA, 2002, 03.03.2024
(RUD-41), 04.03.2024 (RUD-42), 06.03.2024 (RUD-30), 07.03.2024 (RUD-36),
09.03.2024 (RUD-43), 10.03.2024 (RUD-44) and 12.03.2024 (RUD-45) under
Section 50 of PMLA, 2002, wherein he stated that the premises i.e. Flat
No-1205/2 Padma Tower Rajendra Place New Delhi, Delhi- 110008 from where
the incriminating documents/electronic devices were seized belongs to him. The
following companies were used and controlled by him:
Companies used for Import:
1) Lyncage Logistics and Warehouse Private Limited
2) Chetaki Tradexim Private Limited
3) Silvershine Warehouse Private Limited
4) Empon Industries Private Limited
5) Taglo Tradex Private Limited
6) Woop Industries Private Limited
7) Astoriaa Exim Private Limited
8) Motownn Exim Private Limited
9) Zlow Industries Private Limited
10) Camger Traders Private Limited
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ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
11) Crezora Tradexim Private Limited
12) Fosteron Tradexim Private Limited
13) Mixpier Clotex Private Limited
14) Omesa Exim Private Limited
15) Righttime Impex Private Limited
16) Trineq Business Solution Private Limited
17) Trioasm India Private Limited
18) Wintrix Impex Private Limited
19) Zomlim Trade India Private Limited
20) Lovik Tradex Private Limited
Companies used for Export
1) Retab Industries Private Limited
2) Omlar Industries Private Limited
3) Crestos Tradexim Private Limited
4) Jaikom Industries Private Limited
5) Skybird Traders (Proprietorship)
6) Ujjwal Trading Company
Entities used for making banking transactions:
1) AP Warehousing & Trading LLP
2) Arroz Impex Private Limited
3) Astoriaa Exim Private Limited
4) Avanzado Impex Private Limited
5) Brain Maalish Consortium Private Limited
6) Butlow Exim Private Limited
7) Camger Traders Private Limited
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 68 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
8) Celot & Comert Private Limited
9) Chetaki Tradexim Private Limited
10) Clakum Marketing Private Limited
11) Commodities Trading
12) Curfin Betelis Private Limited
13) Determination Infotech India Private Limited
14) Digidatics Services Private Limited
15) Empon Industries Private Limited
16) Feeker Traders Private Limited
17) Frizo Overseas (Partnership Firm)
18) Greensea Multi Trade Private Limited
19) Jabril Tradexim Private Limited
20) Lyncage Logistics and Warehouse Services Private Limited
21) Mahima Sales Corporation
22) Omesa Exim Private Limited
23) Paanpuff Perfumery Private Limited
24) R K Enterprises (Prop. Rohit Kumar)
25) R K Traders (Prop. Govind Goyal)
26) Righttime Impex Private Limited
27) Silvershine Warehouse Private Limited
28) Skihigh Online Services Private Limited
29) Skybird Traders (prop. Manoj Rathore)
30) TBO Online Travelling Private Limited
31) Trioasm India Private Limited
32) Ujjwal Trading Company
33) Ujwal trading company (Prop. Tarun Borah)
34) Zlow Industries Private Limited
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 69 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
7.10 That the following overseas entities were used by him for import and
export and sending outward foreign remittances:
TABLE 11
List of Overseas Entities used for Import/Export by Ashish KakkarS. No. Name of the Entity Country
1 Alam Alkhayal Wholesales Trading LLC UAE
2 ARN Electricals Stock Pte. Ltd. Singapore
3 ASH Stock Pte Ltd Singapore
4 ASL Honour Pte Ltd Singapore
5 BBKH Trade Pte. Ltd. Singapore
6 Comet International Ltd Hong Kong
7 Electronics Power SDN BHD Malaysia
8 Express Luck Pte Limited Hong Kong
9 HRA IT Products & Servicer Pte Ltd Singapore
10 Huge Force Ltd. Hong Kong
11 Hydro Power Traders SDH. BHD Malaysia
12 Idea Giant Pte Ltd Singapore
13 Lumisoq HK Limited Hong Kong
14 Mobitronics International Hong Kong
15 Nexus Global Financial Services Ltd. Mauritius
16 Power Electronics Trade Ltd Beijing, China
17 Seven Stars International Hong Kong
18 Telexcell Singapore Pte. Ltd. Singapore
19 The Brindavan Stones Pte. Ltd. Singapore7.11 During investigation under PMLA, 2002, it has also been revealed that
Ashish Kakkar has used SBI Bank Account No. 40136786750 (RUD-104) of
M/s. Lyncage Logistics & Warehouse Services Private Limited, a shell entity
controlled by Ashish Kakkar, for collection/ layering/ concealment of PoC. The
transaction details are as under:
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 70 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
TABLE 14
Transactions between Shell Companies and Companies incorporated under
Directorship of Ashish Kakkar and his family membersSum amount Sum of amount
Name of the entities
credited in INR debited in INR
Empon Industries Pvt. Ltd. 4,03,07,639 40,89,47,146
Lyncage Logistics and Warehouse
18,29,610 18,12,95,427
Services Pvt. Ltd.
Trioasm India Pvt Ltd 3,06,71,477 8,14,50,000 Camger Traders Pvt Ltd 6,52,023 6,82,95,000 Laurus Trade Exim Private Limited 44,00,000 0 Right Time Impex Pvt Ltd 3,17,000 0 Zlow Industries Private Limited 2,58,000 0 Nimrit Agro Private Limited 51,00,000 30,00,000 TOTAL 8,35,35,749 74,29,87,573 7.12 It is alleged that in view of Table Nos. 17 to 19, it is noticed that by using
forged KYC documents, Ashish Kakkar got opened bank accounts in J&K Bank,
Axis Bank and ICICI Bank. The tables are reproduced hereinbelow:
TABLE 17
List of Bank Accounts opened and operated by use of Forged KYCsKYC of the
Date of Photograph of the
Name of Bank and account person used for
opening of person pasted on
number opening of bank
account KYC
accounts
J & K Bank account no.
Jitendra and
0055010980000013 30-03-2022 Dev Rajul Gupta
Abhishek Malla
(RUD-62)
ICICI Bank account no. Jitendra and
24-01-2022 Dev Rajul Gupta
022405004355 (RUD-63) Abhishek Malla
Axis Bank account no.
Jitendra and Jitendra @ jitu /
921020045667064 02-02-2022
Abhishek Malla Rajul Gupta
(RUD-64)
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 71 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
TABLE 18
Details of Credit Transactions in Bank Accounts
Name of
Account No Period Amount
Bank
0055010980000013 2022 5,50,28,48,315
J & K Bank
(RUD-62) 2023 83,47,75,327
022405004355 (RUD-63) ICICI Bank 2022 25,01,000
921020045667064 (RUD-64) Axis Bank 02-02-2022 604,44,52,711
Total 12,38,45,77,353TABLE 19
List of Bank Accounts opened and operated by use of forged KYCs
Date of KYC of the person Photograph of the
Name of Bank and
opening of used in opening Bank person pasted on
Account Number
account account the said KYC
J & K Bank account no. Rahul Mittal Hemant Birje
032301010007010 14-10-2022
(RUD-53) Ramesh Bhardwaj Manjeet Singh
ICICI Bank account no. Harikishan Jain
Rahul Mittal
081605012640 23.03.2023 @ Aakash Jain
(RUD-51) Ramesh Bhardwaj Jitendra @ Jitu
Axis Bank account no. Harikishan Jain
Rahul Mittal
92202020065882022 12.12.2022 @ Aakash Jain
(RUD-52) Ramesh Bhardwaj Jitendra @ Jitu7.13 The said bank accounts were then used for acquiring wrongful gain for
Omesa Exim Private Limited and ultimately for Ashish Kakkar, as beneficial
owner of Omesa Exim Private Limited. Thus, Ashish Kakkar has acquired PoC
to the tune of approximately Rs. 388 Crores in the aforesaid bank account from
2022-2023.
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 72 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
7.14 It is also alleged that Ashish Kakkar created various shell companies /
firms in the name of employees / hired persons. He created forged Aadhaar Card,
PAN and by submitting these documents accused has opened Bank accounts of
these shell companies in various banks. The said bank accounts were used for
collection, accumulation, layering and siphoning off the proceeds of crime. The
above documents fall within the definition of ‘valuable securities’ as defined in
section 30 of the Indian Penal Code, 1860. Since the aforementioned bank
accounts were opened based on the forged documents, the entire amount credited
in the said bank account is nothing but proceeds of crime to the tune of
approximately Rs.37,49,47,18,073/- Crores.
7.15 Hence, it is alleged that accused Ashish Kakkar is knowingly involved in
the process and activities such as concealment, possession, acquisitions, use and
projecting as untainted property of proceeds of crime, generated out of the
scheduled offences by accumulation, layering and siphoning off the same out of
India in the guise of foreign outward remittances against import of goods through
the bank accounts controlled by him to the tune of thousands of Crores.
7.16. With regard to accused Puneet Kumar, it is the case of the
Complainant/ED that the information under Section 66 (2) of PMLA, 2002 was
shared with EOW, Delhi Police vidc Letter dated 17.05.2024 (RUD-98),
regarding involvement of Punit Kumar in forgery, cheating, cybercrime, online
betting, Dabba Trading and other illegal activities. The information contained
details of forgery committed by Punit Kumar in respect of incorporation of
companies and opening of bank accounts on the basis of forged documents and
his involvement in various cybercrimes including Dabba Trading and online
betting fraud. In response to the information shared under Section 66(2) of
PMLA,2002, EOW, Delhi Police has informed vide letter No. 538/R/ACP/SEC-
VI/EOW dated 30.05.2024 (RUD-99) that the information shared has been taken
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 73 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
on record in the investigation of case vide FIR No. 08/2024 dated 23.02.2024,
under Sections 419,420,467,468,471,476, 120-B of IPC, 1860.
7.17 The investigation allegedly uncovered that Punit Kumar was engaged in
cybercrimes, including dabba trading and online betting frauds. Dabba trading is
an illegal form of trading where Punit Kumar facilitated illegal trading in stocks,
commodities, futures, and other financial products through informal networks,
bypassing official channels like brokers or stock exchanges. Punit Kumar used
software and applications to run his dabba trading activities, allowing individuals
to bet on financial products without involving standard brokers or exchanges.
These brokers, who were his employees, maintained their own records, creating a
parallel market. The investigation also revealed Punit Kumar’s association with
online betting apps, notably www.taj777.com, which he developed, managed,
and used to provide an online gambling and betting platform, generating
proceeds of crime.
7.18 That allegedly Punit Kumar used various deceptive techniques, such as
rate manipulation, technical glitches, account restrictions, use of multiple IDs,
deceptive profit offers, and delayed settlements, to cheat individuals.
7.19 During investigation under PMLA, search and seizure operations under
Section 17 of PMLA, 2002 were conducted at various premises, wherein various
electronic devices containing records/data having incriminating nature,
incriminating documents, gold, cash etc. were found and seized. Details of the
searches conducted are as under: –
TABLE-3 (Of Supplementary Complaint)
LIST OF PREMISES SEARCHED UNDER PMLA, 2002S.
Name of entity/person Address Date of search
No.
15/16.02.2023
1 Ashish Kakkar 706, Ansal Bhawan, KG Marg, Delhi
(RUD-10 of FPC)
15.02.2023
2 Ashish Kakkar W-119, 3rd Floor, GK-2, New Delhi
(RUD-11 of FPC)Directorate of Enforcement Vs. Ashish Kakkar & Another Page 74 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
S.
Name of entity/person Address Date of search
No.
Punit Kumar alias Punit J-73, 7th Floor, DLF Capital Greens, Shivaji 15.02.2023
3
Maheshwari Marg, Karampura, Delhi-110015 (RUD-12 of FPC)
Shiv Dagar alias Shiv 15.02.2023
4 H-36D, Saket, Delhi
Dargar (RUD-13 of FPC)
C-49, Anand Niketan, Chanakyapuri, New 15.02.2023
5 Keshav Sood
Delhi-110021 (RUD-14 of FPC)
Shaila Projects Private 6/79, 2nd Floor, Old Rajinder Nagar, New 15.02.2023
6
Limited Delhi-110060 (RUD-15 of FPC)
Hari Kishan Jain alias D-681, 682 JJ Colony, Tigri, South 15.02.2023
7
Akash Jain Delhi-110062 (RUD-16 of FPC)
B9, Sai apartment, Sector-13 Rohini, New 15.02.2023
8 Prateek Mittal
Delhi-110085 (RUD-17 of FPC)
C-28, Sahibkunj, New Palam Vihar, Gurugram, 15.02.2023
9 Zeeshan Mirza
Haryana-122017 (RUD-18 of FPC)
B-II/210, 2nd Floor, Phase-I, Punjabi Saudagar 15.02.2023
10 Imran Mirza
Society, Mayur Vihar, Delhi-110091 (RUD-19 of FPC)
Euro Star Container Line Euro Star Office: F-26, 1st Floor, Star City 15.02.2023
11
Private Limited Mall, Mayur Vihar-I Extn, Delhi-110091 (RUD-20 of FPC)
1/22, Block-1, Single Story, Tilak Nagar, 15.02.2023
12 Prateek Anand
Rajouri Garden, Delhi (RUD-21 of FPC)
607, 6th Floor, Surya Kiran Building, Kasturba 15.02.2023
13 Ashish Kakkar
Gandhi Marg, C.P., New Delhi (RUD-22 of FPC)
Office No. 7 & 18, KASEZ Association 15.02.2023
14 Kiran Ujalsingh Kouchar
Building, Gandhidham, Kutch, Gujarat (RUD-23 of FPC)
Lobby and Cafeteria area of ground floor of
02.03.2023
15 Ashish Kakkar Holiday Inn, Gurugram, Sector-90, Gurugram,
(RUD-24 of FPC)
Haryana-122505
25.04.2024
16 Punit Kumar 6/12, West Patel Nagar, New Delhi
(RUD-3)
Locker No. 30, Indian Bank, MCF-04, Chawla
03.05.2024
17 Punit Kumar Colony, Ballabhgarh, Faridabad,
(RUD-4)
Haryana-121004
7.20 During searches conducted at the following premises, gold bars, gold
jewellery, cash etc. were alleged to be recovered and seized as under:
TABLE 04 (Supplementary)
Value of seizure
Sl. as per Govt.
Premises Details Date of seizure Details of seizure
No approved valuer
(in INR)
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 75 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
i) 08 gold bars weighing 8000
Gms.
ii) 44 ginni weighing 352 gm
iii) 1 chain weighing 33.950
gm
iv) 2 rings weighing 18 gm
v) 1 ring diamond weighing
12.030 gm
Residence of Punit vi) 1 ginni weighing 8 gm
Kumar situated at Flat vii) 2 gold kade weighing
Panchnama dated
No. 073, Tower J-73, 7th 43.150 gm
1 15.02.2024 5,62,92,594/-
Floor, DLF Capital viii) 1 ring weighing 10.610
(RUD-12 of FPC)
Greens, Moti Nagar, New gm
Delhi ix) 2 ginni weighing 16 gm
x) 4 gold coins 24K weighing
31.660 gm
xi) 6 gold bangles weighing
100 gm
xii) 1 gold set with kada
weighing 98 gm
xiii) 2 rings weighing 9.900
gm
xiv) 4 ring diamonds weighing
30.460 gm
xv) 1 ring diamond weighing
6.208 gm
xvi) 2 pair tops diamonds
weighing 13 gm
i) 5 Gold Bars of ARGOR
HERAEUS SA, Switzerland
make of 1 KG weight each
ii) 3 Gold Bars of
VALCAMBI SUISSE make of
Locker No. 30, Indian 1 KG weight each
Bank, MCF-04, Chawla iii) 2 Gold Bars of BRIGHT
Colony, Ballabhgarh, GOLD make of 1 KG weight
Panchnama dated
Faridabad, each
2 03.05.2024 14,04,00,000/-
Haryana-121004 (Locker iv) 2 Gold Bars marked (A) of
(RUD-4)
maintained in the name of 1 KG weight each
Smt. Lata Rani, mother of v) 1 Gold Bar of RAND
Punit Kumar) REFINERY make of 1 KG
weight
vi) 1 Gold Bar of NADIR
METAL RAFINERI make of
1 KG weight
vii) 1 Gold Bar of Agnis Gold
make of 1 KG weight
viii) 1 Gold Bar of TASHA
make of 1 KG weight
ix) 1 Gold Bar of M. D.
Overseas Private Limited
make of 1 KG weight
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 76 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
x) 1 Gold Bar of MMTC
PAMP make of 1 KG weight
xi) 1 Gold Bar of 1 KG weight
xii) 3 Gold Bars of MMTC
PAMP make of 100 GM
weight each
xiii) 1 Gold Bar of CREDIT
SUISSE make of 100 GM
weight
xiv) 1 Gold Bar of
VALCAMBI SUISSE make of
100 GM weight
i) Mercedes E-220D,
Registration No. HP12L5511,
Color – Selenite Grey, Chassis
No. WDD2131046L013932,
Engine No. 65492080200006
ii) Audi Q7, Registration No.
UP16DK4959, Color –
Residence of Ashish
Barrique Brown M, Chassis
Kakkar situated at W-119, 15.02.2024 Value yet to be
3 No.
3rd Floor, GK-2, New (RUD-11 of FPC) ascertained
WAUZAHN4M8NY0005456,
Delhi
Engine No. DCB552708
iii) Kia Carnival, Registration
No. UP16DP7299, Color –
Glacier White Pearl, Chassis
No.
MBZMBC81AMPN013596,
Engine No. D4HBND000938
Ashish Kakkar (Lobby
and Cafeteria area of
ground floor of Holiday 02.03.2024
4 Rs. 15,00,000/- cash 15,00,000
Inn, Gurugram, (RUD-24 of FPC)
Sector-90, Gurugram,
Haryana-122505)
Residence of Ashish
Kakkar situated at
M-25/3, GK-II, New
5 22.05.2023 Rs. 13,50,000/- cash 13,50,000/-
Delhi
28282.968 Kgs. of Gold and
Gold Jewellery and Rs.
TOTAL 19,95,42,594/-
28,50,000/- cash + three cars
(value yet to be ascertained)
7.21 The details of companies incorporated allegedly under the directorship of
employees/hired persons by Punit Kumar is as under –
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 77 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
TABLE 07
Company Designation Date of Appointment Date of Cessation
Marvelox Universal Private Limited Director 30-Nov-22 –
Finatech M Industries Private Limited Director 30-Nov-22 –
Dreamzen Softserve Industries Private Limited Director 30-Nov-22 –
Electronio Industries Private Limited Director 13-Jul-22 13-Dec-22
Gimaxery Md Softserve Private Limited Director 08-Dec-22 09-Dec-22
Alscat Universal Private Limited Director 24-Jun-22 07-Jul-22
JHALAN RAM (DIN: 09646610)
Company Designation Date of Appointment Date of Cessation
Marvelox Universal Private Limited Director 30-Nov-22 –
Gritfix Softserve Private Limited Director 23-Jun-22 –
Electronio Industries Private Limited Director 13-Jul-22 25-Jul-22
Detrosoftec Industries Private Limited Director 30-Nov-22 09-Dec-22
Alscat Universal Private Limited Director 24-Jun-22 07-Jul-22
ABHISHEK MAVI (DIN: 09207170)
Company Designation Date of Appointment Date of Cessation
Lyncage Logistics and Warehouse Services Additional
31-Dec-21 18-May-22
Private Limited Director
Triosam India Private Limited Director 14-Jan-22 18-May-22
SRIRAM DIGAL (DIN: 09812758)
Company Designation Date of Appointment Date of Cessation
Octradix M Industries Private Limited Director 25-02-2023 –
Broxfix Mu Softserve Private Limited Director 10-12-2022 –
Utsab Pradhan (DIN: 09353612)
Company Designation Date of Appointment Date of Cessation
Septragianx Industries Private Limited Director 26-09-2022 –
Alsceat Universal Private Limited Director – 26-08-2022
Additional
Onpoint Planning Private Limited – 14-01-2022
Director
Additional
Camger Traders Private Limited – 25-05-2022
Director
Arjit Singh (DIN: 09814607)
Company Designation Date of Appointment Date of Cessation
Allwaster Mu Universal Private Limited Director 26-12-2022 03-04-2023
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 78 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
Blonchesoftec Industries Private Limited Director 10-12-2022 04-04-2023
Gimaxery Md Softserve Private Limited Director 09-12-2022 04-04-2023
Octradix Mu Industries Private Limited Director 31-12-2022 22-03-2023
Arroz Impex Private Limited Director 07-12-2022 08-12-2022
Crezora Tradexim Private Limited Director 07-12-2022 08-12-2022
Saim James (DIN: 08646065)
Company Designation Date of Appointment Date of Cessation
Additional
Zlow Industries Private Limited 08-03-2021 –
Director
Additional
Trioasm India Private Limited 18-05-2022 –
Director
Additional
Chetaki Tradexim Private Limited 24-11-2022 –
Director
Lyncage Logistics And Warehouse Services Additional
18-05-2022 -
Private Limited Director
Additional
Empon Industries Private Limited 28-01-2020 -
Director
Witcos Traders Private Limited Director 13-01-2020 16-10-2021
Additional
Paanpuff Perfumery Private Limited 20-01-2020 16-10-2021
Director
Additional
Veca Tradex Private Limited 11-05-2020 16-10-2021
Director
Additional
Silvershine Warehouse Private Limited 22-03-2022 27-09-2022
Director
Additional
Feeker Traders Private Limited 01-05-2020 16-10-2021
Director
Yeltuc Traders Private Limited Director 01-07-2020 16-10-2021
Snoora Trade Private Limited Director 24-12-2019 16-10-2021
Nomzor Traders Private Limited Director 26-06-2020 16-10-2021
Lyncage Logistics And Warehouse Services Additional
08-03-2021 31-12-2021
Private Limited Director
Additional
Camger Traders Private Limited 18-07-2020 30-12-2021
Director
SREQ Industries Private Limited Director 29-06-2020 16-10-2021
Additional
Iditi Exim Private Limited 07-12-2020 16-10-2021
Director
Additional
Righttime Impex Private Limited 15-02-2022 11-04-2022
Director
7.22 As mentioned in the Table-5, allegedly majority of the shell entities have
been incorporated with a common registered address:
TABLE- 8
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 79 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
SHELL COMPANIES OPENED WITH COMMON ADDRESSESS No Name of entity Date of Incorporation Registered address
Blonchesoftec Industries 16-2664 SF Beadon Pura Gali No. 2-3, Karol
1 21-11-2022
Private Limited Bagh, Delhi DL
Broxifx Mu Softserve Private
2 10-12-2022 Karol Bagh, Delhi DL
Limited
Detrosoftec Industries Private
3 30-11-2022 Central Delhi 110005
Limited
Septragianx Industries Private
4 26-09-2022 Central Delhi 110005
Limited
Geekfix Softserve Private 44, F-F, Left Side Veer Savarkar Block, Shakarpur,
5 23-05-2017
Limited East Delhi, Delhi, India, 110092
Electronio Industries Private
6 13-07-2022 Delhi, India
Limited
Octradix MU Industries
7 18-10-2022 Delhi, India
Private Limited
3rd Floor, Office No. 308 15A-1, Prestige
8 KDM Associates 16-03-2021 Chamber, Karol Bagh, Delhi, Central Delhi, Delhi,
110005
9 Mahima Sales Corporation 07-07-2021 Delhi, Central Delhi, Delhi, 110005
Megha Commercial
10 16-12-2020 Delhi, Central Delhi, Delhi, 110005
Enterprise
11 Ujwal Trading Company 09-12-2020 Delhi, Central Delhi, Delhi, 1100057.23 It has been putforth by the Complainant/ED that upon analysis of
financial statements and banking transactions of the above-mentioned shell
companies, it is found that banking transactions are not commensurate with the
financial statements. In the majority of companies, no balance sheet and profit &
loss statement have been filed with RoC by these companies. The details are
given in Table 09 of the supplementary complaint.
7.24 In view of the above, it is alleged that as per financial statements filed
with Registrar of Companies (RoC), no business transactions were carried out
whereas as per the bank account statements huge financial transactions have been
shown to be done in the name of these companies. It is shown that these entities
are only paper entities and no actual business activities have been done in these
companies except paper transactions for the purpose of layering of proceeds of
crime and siphoning off out of India.
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 80 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
7.25 During the course of investigation under PMLA, 2002, statements of
various persons including dummy directors, employees/hired persons of Punit
Kumar who have undertaken various tasks as per instructions of Punit Kumar,
were recorded under Section 50 of PMLA, 2002. During recording of the
statements, it has been revealed that the above-mentioned 26 companies were
incorporated, controlled and operated by Punit Kumar.
8. Whereas, the defence has argued in nutshell the bank accounts of the shell
companies allegedly under operation and control by/of the accused, were
allegedly opened on the basis of forged however, no material has been adduced
on record to prove even prima facie by the Complainant/ED for generation of
‘proceeds of crime’ from the alleged Scheduled Offence in the bank accounts.
The onus was on the Complainant/ED to show that the amount in the said bank
accounts was derived from commission of the scheduled offence. No scheduled
offence has been registered for the transactions carried out in the said bank
accounts, hence the money in the bank accounts cannot be termed as ‘ proceeds of
crime’. With regard to the allegation of fraud by online gaming, the penal
provisions of Public Gambling Act, 1867 have not been invoked. The allegation
of conversion of INR into foreign currency is a violation under FEMA, which is
not a scheduled offence under PMLA. The allegation of sending the money
through SEZ by over-valuing the imported product and not receiving remittance
for export product is offence under the Custom’s Act, 1962, which is not invoked
as a Scheduled Offence.
8.1 Ld. Counsel for accused Puneet has additionally argued in brief that
only alleged Scheduled offence against him is the FIR bearing No. 48/2022 of
Cyber Crime registered at Gautam Budh Nagar, UP, wherein it has been alleged
against him that he was involved in Dabba Trading and online betting, however
they can be an offence under FEMA but are not Scheduled Offences under
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 81 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
PMLA. Even Dabba Trading can, at best, be violative of the Securities Contracts
(Regulation) Act, 1956, and online betting can, at best, be violative of the Public
Gambling Act, 1867, which are also not a scheduled offence under the PMLA.
The offence under Custom’s Act has not been invoked.
8.2 Even nothing on record has been shown to prove involvement of the
accused in the betting gaming. The statement recorded of the accused and relied
by Complainant/ED was recording during his custody and has been retracted
during bail proceedings, hence it cannot be relied upon now. It is further argued
that the accused was carrying out normal business transactions which is also
reflected in the Table 31 relied by the Complainant/ED.
8.3 That as per the Table No. 32 relied by the Complainant/ED itself, the
accused Puneet has only been linked with M/s Triosam. However, there is break
in the link of the alleged money trail since the accused is in link with
M/sTriosam, which is at Stage 3 layering company, as per para 14.6 of the
supplementary prosecution complaint. There are other breakages in the money
trail as per Table 30 and 32 also. From the record itself it is evident that there are
multiple breaks in the money trail and there is no direct and exclusive link
between the money from one account to another specially between Prerna
Yadav’s bank account and the money that was transferred to Triosam’s bank
account. Therefore, in absence of any nexus between the transfers, there is no
basis to assume that the funds received by Triosam are the ‘ proceeds of crime’ or
were connected in any manner with the Scheduled Offence.
8.4 It has also been argued that during search no electronic device, bag or
cash has been recovered from the premises of accused Puneet. Lastly, it is
submitted that for considering any money as the ‘proceeds of crime’, the property
must be derived or obtained, directly or indirectly, as a result of the criminal
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 82 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
activity relating to a Scheduled Offence. Even, the provisions of Securities
Contract (Regulation) Act, 1956 have been filed on record.
Court observation
9. At the outset, it is apposite to note the authoritative pronouncement of the
Hon’ble Supreme Court of India in Vijay Madan Lal Chaudhary (Supra),
wherein it was held:
“97. Be that as it may, we may now proceed to decipher the purport of
Section 24 of the 2002 Act. In the first place, it must be noticed that the legal
presumption in either case is about the involvement of proceeds of crime in
money-laundering. This fact becomes relevant, only if, the prosecution or the
authorities have succeeded in establishing at least three basic or foundational
facts. First, that the criminal activity relating to a scheduled offence has been
committed. Second, that the property in question has been derived or
obtained, directly or indirectly, by any person as a result of that criminal
activity. Third, the person concerned is, directly or indirectly, involved in
any process or activity connected with the said property being proceeds of
crime. On establishing the fact that there existed proceeds of crime and the
person concerned was involved in any process or activity connected
therewith, itself, constitutes offence of money-laundering. The nature of
process or activity has now been elaborated in the form of Explanation
inserted vide Finance (No. 2) Act, 2019. On establishing these foundational
facts in terms of Section 24 of the 2002 Act, a legal presumption would arise
that such proceeds of crime are involved in money-laundering. The fact that
the person concerned had no causal connection with such proceeds of crime
and he is able to disprove the fact about his involvement in any process or
activity connected therewith, by producing evidence in that regard, the legal
presumption would stand rebutted.”
9.1 Therefore as per above said preposition laid down by Hon’ble
Supreme Court of India, Complainant/ED has to establish three foundational
basic facts:
i) The criminal activity relating to a schedule offence has been
committed,
i) That the property in question has been derived or obtained directly or
indirectly, by any person as a result of that criminal activity, andDirectorate of Enforcement Vs. Ashish Kakkar & Another Page 83 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
ii) The person concerned is directly involved in any process or activity
connected with the said property being proceeds of crime9.2 In case titled as Bhagwan Bhagat Vs. Directorate of Enforcement
SLP (Criminal) 6905/2024 dated 12.08.2024 it was held by Hon’ble Apex court
that “Prima Facie, there must be factual assertions in the complaints to show that
the offenses which are named as scheduled offenses on the basis of which
complaints are filed, directly or indirectly, generated proceeds of crime”.
9.3 In the present FIR, there exists sufficient material on record to prima facie
demonstrate that the aforesaid bank accounts of the companies were opened on
the strength of forged and fabricated documents. It is further borne out from the
statements recorded under Section 50 of the Prevention of Money Laundering
Act, 2002, of various employees associated with accused namely Gaurav
Pradhan, Saim James, Tarun Bohra, Hari Kishan Jain, Jitender, Manjeet Singh,
among others that the said entities/companies were, in fact, under the control and
dominion of the accused.
9.4 However, it is noteworthy that while placing on record the detailed
account particulars in paragraphs 10.1 to 10.11 of the main complaint, the
Enforcement Directorate has, in the concluding portion of each such entry,
asserted that since the concerned bank accounts were opened on the basis of
forged documentation, the entirety of the funds lying therein constitutes
“Proceeds of Crime”.
9.5 The ‘Proceeds of Crime’ have been defined elaborately by the
Hon’ble Apex Court in Vijay Madan Lal Chaudhary (Supra) and it is defined
that:
“31. The “proceeds of crime” being the core of the ingredients constituting
the offence of money-laundering, that expression needs to be construed
strictly. In that, all properties recovered or attached by the investigating
agency in connection with the criminal activity relating to a scheduled
offence under the general law cannot be regarded as proceeds of crime.
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 84 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
There may be cases where the property involved in the commission of
scheduled offence attached by the investigating agency dealing with that
offence, cannot be wholly or partly regarded as proceeds of crime within the
meaning of Section 2(1)(u) of the 2002 Act — so long as the whole or some
portion of the property has been derived or obtained by any person “as a
result of” criminal activity relating to the stated scheduled offence. To be
proceeds of crime, therefore, the property must be derived or obtained,
directly or indirectly, “as a result of” criminal activity relating to a scheduled
offence. To put it differently, the vehicle used in commission of scheduled
offence may be attached as property in the concerned case (crime), it may
still not be proceeds of crime within the meaning of Section 2(1)(u) of the
2002 Act. Similarly, possession of unaccounted property acquired by legal
means may be actionable for tax violation and yet, will not be regarded as
proceeds of crime unless the concerned tax legislation prescribes such
violation as an offence and such offence is included in the Schedule of the
2002 Act. For being regarded as proceeds of crime, the property associated
with the scheduled offence must have been derived or obtained by a person
“as a result of” criminal activity relating to the concerned scheduled offence.
This distinction must be borne in mind while reckoning any property referred
to in the scheduled offence as proceeds of crime for the purpose of the 2002
Act. Dealing with proceeds of crime by way of any process or activity
constitutes offence of money-laundering under Section 3 of the Act.”
9.6 In view of the above said definition, there is no doubt that opening of bank
account on fabricated document is a Scheduled Offence under PMLA Act but the
unaccounted money deposited in the said bank account itself cannot become
“Proceeds of Crime” unless it is explained that the amount in the above said
entities were earned by the accused persons and linkage of the amount earned to
the criminal activity directly or indirectly. Only mentioning that as the account
was opened on the basis of forged document, therefore, the entire amount
credited in the bank account is nothing but Proceeds of Crime is not sufficient.
Complainant/ED in the complaint from para 10.1 to 10.11 has explained the role
of these companies and there is no investigation qua the said fact as to how the
amount was generated in the said companies by accused persons. It seems that
the Complainant/ED is only alleging on the basis of presumption that the amount
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 85 of 117
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credited in the said shell companies is Proceeds of Crime but failed to explain the
mode of the amount being generated in such shell companies by the accused
persons.
9.7 In part 11 (of main complaint), Complainant/ED is alleging about
siphoning off of proceeds of crime out of India but firstly Complainant/ED has to
establish that the amount credited in the account of shell companies is the
‘Proceeds of Crime’ and it is paramount for the Complainant/ED to establish 03
foundational facts i.e. firstly criminal activity w.r.t. scheduled offence, secondly
property in question derived or obtained directly or indirectly as a result of
criminal activity and thirdly the person is directly or indirectly involved in any
process or activity connected with the said property being proceeds of crime.
However, the Directorate of Enforcement has failed to explain the mode and
manner of the amount being received in the account of such shell companies as
derived or obtained by accused persons, therefore, the second foundational fact
as per judgment of Vijay Madanlal (supra) is missing from investigation of the
ED w.r.t. FIR No. 8/2024 PS EOW.
9.8 Such a sweeping inference, bereft of any demonstrable linkage between
the funds and a specific scheduled offence, falls short of the statutory mandate.
The Hon’ble Supreme Court in Vijay Madanlal Choudhary (Supra) has clarified
that “Proceeds of Crime” must be strictly construed to mean property derived or
obtained, directly or indirectly, as a result of criminal activity relating to a
scheduled offence. The mere association of property with a crime or its use in the
commission thereof, does not ipso facto render it “Proceeds of Crime”.
9.9 Applying the aforesaid principles, it becomes evident that while the act of
opening bank accounts using forged documents may itself constitute a Scheduled
Offence, the funds deposited therein cannot automatically be classified as
“Proceeds of Crime” in the absence of a clear and cogent explanation as to their
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origin and nexus with the alleged criminal activity. The complaint, as it
presently stands, does not elucidate the source of the funds credited in these
accounts, nor does it establish how such funds were derived as a consequence of
any scheduled offence.
9.10 The assertions in Part 11 of the complaint regarding the siphoning of funds
abroad, though serious in nature, presuppose the existence of proceeds of crime.
However, the foundational requirement of establishing that the funds in question
indeed constitute “Proceeds of Crime” remains unfulfilled. In the absence of such
foundational facts, the presumption under Section 24 of the PMLA cannot be
invoked.
9.11 Consequently, it prima facie appears that the Directorate of Enforcement
has failed to satisfy the second essential limb as laid down in Vijay Madanlal
Choudhary (Supra), namely, that the property in question was derived or
obtained as a result of criminal activity. At this stage, the prosecution case rests
on conjecture and presumption rather than substantive evidentiary linkage.
9.12 It is also pertinent to note that while foreign remittances may attract
regulatory scrutiny under the provisions of the Foreign Exchange Management
Act, 1999, the same, in isolation, does not constitute an offence under the
Prevention of Money Laundering Act, 2002, unless it is demonstrably linked to
proceeds of crime arising from a scheduled offence.
9.13 At this stage, it is apposite to refer to definition of Schedule Offence. Said
definition is extracted herein below for ready reference:
“Section 2 (1) (y) stipulates that: Schedule offence means – (i) the
offences specified under part A of the schedule or (ii) the offences
specified under part B of the Schedule if the total value involved in
such offences is Rs.1 Crore or more or (iii) the offences specified
under part C of the schedule. Section 2 (1) (x) defines schedule as
to mean the schedule to this act.”
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9.14 According to the said definition, offence of particular statue contained in
said schedule appended to PMLA are said to be Scheduled Offence. This
definition seems to be complete in itself and does not leave scope for inclusion of
any offence on the principle of being an identical offence. The language used by
Legislature in its wisdom to define offence of schedule offence is very
categorical. In the case titled as Vijay Madan Lal (Supra) while defining the
terms of PMLA, Hon’ble Supreme Court of India has held that strict
interpretation of the terms used in PMLA should be made. This observation had
come in respect of the term proceeds of crime and taking a cue from said
decision of Hon’ble Supreme Court of India, it is held that all the terms used in
PMLA needs to be construed accordingly i.e. a strict interpretation is to be given
to the terms used in PMLA.
9.15 This Court is enlightened by decision of Hon’ble Supreme Court of India
in case titled as Pavana Dibbur (Supra) , wherein inter-alia, it has been held that:
“18. Now, we come to the third argument made by the learned
senior counsel appearing for the appellant based on the
interpretation of the Schedule. It must be noted here that in the case
of Vijay Madanlal Choudhary, even the validity of the Schedule
was under challenge. A perusal of the said decision shows that this
Court was not called upon to interpret any entry in the Schedule
and, in particular, entry of Section 120B in the Schedule. The
challenge to the Schedule is dealt with in paragraphs 453, 454 and
455 of the said decision. The contention before this Court was that
even minor offences have been included in the Schedule, and even
compoundable offences form part of the Schedule. It was submitted
that the offences which do not have cross border implications have
been included in the Schedule. In paragraphs 454 and 455 of the
said decision, this Court held thus:
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“454. This Schedule has been amended by Act 21 of 2009,
Act 2 of 2013, Act 22 of 2015, Act 13 of 2018 and Act 16 of
2018, thereby inserting new offences to be regarded as
scheduled offence. The challenge is not on the basis of
legislative competence in respect of enactment of Schedule
and the amendments thereto from time to time. However, it
had been urged before us that there is no consistency in the
approach as it includes even minor offences as scheduled
offence for the purposes of offence of money laundering,
more so even offences which have no transborder
implications and are compoundable between the parties.
The classification or grouping of offences for treating the
same as relevant for constituting offence of money
laundering is a matter of legislative policy. The Parliament
in its wisdom has regarded the property derived or obtained
as a result of specified criminal activity, being an offence
under the concerned legislation mentioned in the Schedule.
The fact that some of the offences may be non-cognizable
offences under the concerned legislation or regarded as
minor and compoundable offences, yet, the Parliament in its
wisdom having perceived the cumulative effect of the
process or activity concerning the proceeds of crime
generated from such criminal activities as being likely to
pose threat to the economic stability, sovereignty and
integrity of the country and thus, grouped them together for
reckoning it as an offence of money laundering, is a matter
of legislative policy. It is not open to the Court to have a
second guess at such a policy.
455. Needless to underscore that the 2002 Act is intended to
initiate action in respect of money laundering activity which
necessarily is associated with the property derived or
obtained by any person, directly or indirectly, as a result of
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specified criminal activity. The prosecution under this Act is
not in relation to the criminal activity per se but limited to
property derived or obtained from specified criminal
activity. Resultantly, the inclusion of criminal activity
which has been regarded as non-cognizable, compoundable
or minor offence under the concerned legislation, should
have no bearing to answer the matter in issue. In that, the
offence of money laundering is an independent offence and
the persons involved in the commission of such offence are
grouped together as offenders under this Act.
There is no reason to make distinction between them insofar as the
offence of money laundering is concerned. In our opinion,
therefore, there is no merit in the argument under consideration.” In
this case, we are not called upon to decide the validity of the
Schedule or any part thereof. The question is whether the offence
under Section 120B of IPC, included in Paragraph 1 of the
Schedule, can be treated as a scheduled offence even if the criminal
conspiracy alleged is to commit an offence which is not a part of
the Schedule. This issue did not arise for consideration in the case
of Vijay Madanlal Choudhary.
Now, we turn to the Schedule to the PMLA. We find that many
offences, which may generate proceeds of crime, have not been
included in the Schedule. We are referring to only a few of such
offences only by way of illustration:
a. Section 263A of IPC, which deals with the offence of
making or possessing fictitious stamps is not a part of the
Schedule;
b. Though offences punishable under Sections 392 to 402
regarding robbery and dacoity have been included in part A
of the Schedule, the offence punishable under Section 379
of committing theft and the offence punishable underDirectorate of Enforcement Vs. Ashish Kakkar & Another Page 90 of 117
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Section 380 of theft in a dwelling house are not made a part
of parts A and B of the Schedule. The theft of both
categories can be of a very large amount running into
crores. The said two offences become scheduled offences
by virtue of clause (3) of part C of the Schedule only if the
offences have cross border implications;
c. The offence punishable under Section 403 of dishonest
misappropriation of property does not form part of the
Schedule. The said offence becomes a scheduled offence by
virtue of clause (3) of part C of the Schedule only if the
offence has crossborder implications;
d. The offence under Section 405 of criminal breach of
trust, which is punishable under Section 406, is not a part of
the Schedule The said offence becomes a scheduled offence
by virtue of clause (3) of part C of the Schedule only if the
offence has crossborder implications;
e. Though the offence under Section 417 of cheating has
been made a scheduled offence, the more stringent crime of
forgery for the purposes of cheating under Section 468 is
not a part of the Schedule, and
f. Though the offences under Sections 489A to 489C
regarding forging or counterfeiting currency notes are part
of the Schedule, the offence under Section 489D of making
or possessing instruments or materials for forging or
counterfeiting currency notes is not a part of the Schedule.
21. Now, coming to Part B of the Schedule, it includes only one
offence under Section 132 of the Customs Act, 1962. The offence
under Section 132 of the Customs Act of making a false declaration,
etc., becomes a scheduled offence in view of subclause (ii) of
Clause (y) of subsection (1) of Section 2 of the PMLA only if the
total value involved in the offence is Rs.1 crore or more. Part C ofDirectorate of Enforcement Vs. Ashish Kakkar & Another Page 91 of 117
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the Schedule provides that any offence specified in Part A having
cross border implications becomes a part of Part C. More
importantly, all the offences against the property under Chapter
XVII of IPC having cross border implications become scheduled
offences. As pointed out earlier, the offences punishable under
Sections 379 (theft), 380 (theft in dwelling house), 403 (dishonest
misappropriation of property) and 405 (criminal breach of trust) are
part of Chapter XVII. Though the said offences are not included in
Part A, they become scheduled offences by virtue of Part C only if
they have crossborder implications. Thus, it can be said that many
offences capable of generating proceeds of crime do not form a part
of the schedule.
22. The learned Additional Solicitor General argued that as Section
120B of IPC is included in Part A to the Schedule, even if the
allegation is of making a criminal conspiracy to commit an offence
which is not a part of the Schedule, the offence becomes a
scheduled offence. As stated earlier, many offences under Chapter
XVII of IPC are not included in Parts A and B. They become
scheduled offences only if the same have cross border implications.
Thus, the offences of dishonest misappropriation of property or
criminal breach of trust or theft can become a scheduled offence,
provided they have cross border implications. If the argument of the
learned Additional Solicitor General is accepted, if there is a
conspiracy to commit offences under Section 403 or Section 405,
though the same have no cross border implications, the offence
under Section 120B of conspiracy to commit offences under
Sections 403 and 405 will become a scheduled offence. Thus, if any
offence is not included in Parts A, B and C of the Schedule but if
the conspiracy to commit the offence is alleged, the same will
become a scheduled offence. A crime punishable under Section 132
of the Customs Act is made a scheduled offence under Part B,
provided the value involved in the offence is Rupees One Crore or
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more. But if Section 120B of IPC is applied, one who commits such
an offence having a value of even Rs.1 lac can be brought within
the purview of the PMLA. By that logic, a conspiracy to commit
any offence under any penal law which is capable of generating
proceeds, can be converted into a scheduled offence by applying
Section 120B of the IPC, though the offence is not a part of the
Schedule. This cannot be the intention of the legislature.
23. The penal statutes are required to be strictly construed. It is true
that the penal laws must be construed according to the legislative
intent as expressed in the enactment. In Chapter 1 of GP Singh’s
Principles of Statutory Interpretation (15th Edition), it is observed
that:
“The intention of the Legislature, thus, assimilates two
aspects: In one aspect it carries the concept of “meaning”,
i.e. what the words mean and in another aspect, it conveys
the concept of “purpose and object” or the “reason and
spirit” pervading through the statute. The process of
construction, therefore, combines both literal and purposive
approaches. In other words the legislative intention, i.e., the
true or legal meaning of an enactment is derived by
considering the meaning of the words used in the enactment
in the light of any discernible purpose or object which
comprehends the mischief and its remedy to which the
enactment is directed.” In the words of A Driedger,
Construction of Statute, 2nd Edn, 1983: The words of an Act
are to be read in their entire context and in their grammatical
and ordinary sense harmoniously with the Scheme of the
Act, the object of the Act, and the intent of the Parliament.
This formulation later received the approval of the Supreme
Court and was called the “cardinal principle of
construction”.” In both Constitutional and statutoryDirectorate of Enforcement Vs. Ashish Kakkar & Another Page 93 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
interpretation, the court is supposed to exercise discretion in
determining the proper relationship between the subjective
and objective purposes of the law and help the law achieve
its purpose.” (Emphasis added).
24. While giving effect to the legislature’s intention, if two
reasonable interpretations can be given to a particular provision of a
penal statute, the Court should generally adopt the interpretation
that avoids the imposition of penal consequences. In other words, a
more lenient interpretation of the two needs to be adopted.
25. The legislative intent which can be gathered from the definition
of the scheduled offence under clause (y) of sub Section (1) of
Section 2 of the PMLA is that every crime which may generate
proceeds of crime need not be a scheduled offence. Therefore, only
certain specific offences have been included in the Schedule. Thus,
if the submissions of the learned Additional Solicitor General are
accepted, the Schedule will become meaningless or redundant. The
reason is that even if an offence registered is not a scheduled
offence, the provisions of the PMLA and, in particular, Section 3
will be invoked by simply applying Section 120B. If we look at
Section 120B, only because there is a conspiracy to commit an
offence, the same does not become an aggravated offence. The
object is to punish those involved in conspiracy to commit a crime,
though they may not have committed any overt act that constitutes
the offence. Conspiracy is an agreement between the accused to
commit an offence. If we look at the punishments provided under
Section 120B, it becomes evident that it is not an aggravated
offence. It only incorporates the principle of vicarious liability. If no
specific punishment is provided in the Statute for conspiracy to
commit a particular offence, Section 120B treats a conspirator of
the main accused as an abettor for the purposes of imposing the
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punishment. The interpretation suggested by the ED will defeat the
legislative object of making only a few selected offences as
scheduled offences. If we accept such an interpretation, the statute
may attract the vice of unconstitutionality for being manifestly
arbitrary. It cannot be the legislature’s intention to make every
offence not included in the Schedule a scheduled offence by
applying Section 120B. Therefore, in our view, the offence under
Section 120B of IPC included in Part A of the Schedule will
become a scheduled offence only if the criminal conspiracy is to
commit any offence already included in Parts A, B or C of the
Schedule. In other words, an offence punishable under Section
120B of IPC will become a scheduled offence only if the conspiracy
alleged is of committing an offence which is otherwise a scheduled
offence.”
9.16. Against the said decision, a review petition was also filed in Hon’ble
Supreme Court of India but the said review petition was dismissed by Hon’ble
Supreme Court of India which implies that above said principle laid down by
Hon’ble Apex Court has been reaffirmed by it. The necessary corollary of above
noted settled principle of law in respect of schedule offence of PMLA is that any
offence or statue which is not mentioned in the schedule to PMLA cannot be
included in the schedule in any manner. In part A of schedule to PMLA, first
entry is in respect of Indian Penal Code. Not only name of statue is mentioned
but Act number and year of implementation of the said statute is also mentioned.
Reference to such exact details is an indicator of fact that legislature intends to
make clear that schedule included in said statute alone and nothing else. There is
no provision in entire PMLA which enable investigating agency or court to
include any other statue in the schedule on the ground that though, said statue is
not part of schedule to PMLA but replica of that offence in another statute is
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included in the schedule of PMLA. The above decision of Hon’ble Supreme
Court of India clearly hold that such interpretation cannot be lent to the term
schedule offence defined in section 2 (1) (y) of PMLA.
9.17 Reverting to the present matter, it has been putforth by the
Complainant/ED that accused persons have used modus of Circular trading
(Import-Export) in order to siphon off the funds to foreign countries and to
disguise the origins of illicit funds thereby laundering the proceeds of crime.
Accused persons established various shell companies in India and abroad. They
also obtained GST Registrations/ IECs and Letter of Permission (LoP) of SEZ
etc. by using KYCs of dummy directors/ persons. They further opened bank
accounts of these shell companies by using these forged KYCs and these
companies have not carried out any legitimate business and exist primarily to
facilitate money laundering.
9.18 Accused persons have intentionally used the SEZ entities for circular
Import-Export for siphoning off the proceeds of crime as foreign outward
remittances. Since SEZ area is subject to different economic regulations than
other regions within the same country and Special economic zones are typically
created in order to facilitate rapid economic growth by leveraging tax incentives
to attract foreign investment and spark technological advancement. SEZs have
been set up basically for giving leverage for boosting the economy of the country
but they mis-used the leverage given to the SEZ Entities and devised the modus
of circular import-export activities.
9.19 The accused persons have been re-exporting the same imported goods
from the SEZ without processing the goods to the overseas entities shell owned/
controlled by him without getting any remittances against the exports. They have
undertaken circular Import-Export with a sole intent to remit the “Proceeds of
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Crime” out of India, thus no inward foreign remittances have been noticed in the
bank account of the entities who have exported the goods out of India.
9.20 As per the settled law, Foreign Remittance can be offence under FEMA
1999, but it is not an offence under PMLA 2002. It is also pertinent to note that
while foreign remittances may attract regulatory scrutiny under the provisions of
the Foreign Exchange Management Act, 1999, the same, in isolation, does not
constitute an offence under the Prevention of Money Laundering Act, 2002,
unless it is demonstrably linked to proceeds of crime arising from a scheduled
offence.
9.21 With regard to dabba trading and online betting, it is not in dispute
that dabba trading, though illegal and violative of regulatory laws such as
the Securities Contracts (Regulation) Act, 1956 and the SEBI Act, 1992, does not
find mention in the Schedule to PMLA. The prosecution has failed to
demonstrate that the alleged acts constitute any offence specifically enumerated
in the Schedule.
9.22 With respect to Online gaming, the alleged illegality stems from gambling-
related laws such as the Public Gambling Act, 1867. However, offences under
gambling laws are not included in the Schedule of PMLA. As rightly pointed out
by the defence, the provisions under Custom’s Act have not been invoked in the
present matter.
9.23 The Hon’ble Supreme Court in Vijay Madanlal Choudhary (supra) has
categorically held:
“The offence under PMLA is dependent on the existence of a
scheduled offence, and if the predicate offence fails or is not
established, the offence of money laundering cannot survive.”
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ï‚· (ii) FIR No. 630/2022 Cyber Crime, PS- Mahamandir, Jodhpur City East,
Rajasthan (RUD-3)
10. The Complainant/ED has brought on record with respect to the money trail
of the ‘Proceeds of Crime’ that during the course of investigation, proceeds
generated through various cybercrimes have been traced and money trail has
been prepared which clearly shows that proceeds of crime generated from crime
committed as detailed in FIRs and cyber complaints have been routed through
companies of Ashish Kakkar and ultimately siphoned off. Investigation under
PMLA has revealed that funds to the tune of Rs 16.22 Crores approx. have been
transferred from the bank accounts of Arvind Kalani and Amit Kalani (victims of
cyberfraud) as mentioned in FIR No. 0630/2022 dated 28.11.2022 (RUD-3) to
08 bank accounts of different individuals/ entities as mentioned in Table 01
above. Statement dated 06.03.2024 (RUD-71) of Shri Arvind Kalani was
recorded under section 50 of PMLA, 2002, wherein he, inter-alia, explained the
modus of cheating done by cybercrime fraudsters. Analysis of these banks
accounts have revealed that the funds were layered through various bank
accounts pertaining to several individuals/ proprietorship firms and companies
and finally the funds were siphoned off out of India as foreign outward
remittance against import of goods. It is pertinent to mention that in order to
camouflage the real nature of transactions between the group of accounts, various
cross-transactions were done and after layering the funds, same were finally
accumulated to the bank accounts opened based on the forged documents of
certain companies (having dummy directors but actually controlled by Ashish
Kakkar) from where outward remittances were done against imports.
STAGE-I LAYERING
TABLE-52
Details of Bank Accounts for Acquiring of POC in FIR No. 630/2022
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 98 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
Name of the Account Holder Bank Name IFSC Code
YSM Enterprises IDFC Bank Ltd. IDFB0080103
SRK Trading Ltd. ICICI Bank Ltd. ICIC0000915
Adeke Rakesh Ltd. ICICI Bank Ltd. ICIC0003222
Abdul Kedar H E Ltd. Yes Bank Ltd. YESB0000516
Soni Ltd. Axis Bank Ltd. UTIB0000097
Dhanraj Metal IDBI Bank Ltd. IBKL0001342
Mukesh Kumar Ltd. (Nile Traders) ICICI Bank ICIC0000539
M M Fruit & Veg Ltd. ICICI Bank ICIC0002484
10.1 On analysis of these 08 bank accounts it has been alleged that they have
revealed that the funds received from Arvind Kalani and Amit Kalani were
further transferred to various other bank accounts pertaining to several
individuals/ proprietorship firms and companies. The entities and accounts where
funds were transferred from the bank accounts of Arvind Kalani and Amit Kalani
have been categorized as Stage-1 entities/ accounts for the purpose of
demonstration of the fund trail. These entities are:
TABLE 53
Transfer of Funds from Arvind Kalani and Amit Kalani to 08 Companies
Name Counter Bank Sum of
Party No Account CP Account No
of Party Party Name Debit
M.M. Fruits
Amit 922030057069641 248405500165 ICICI
— & Vegeta- 21,03,914
Kalani (RUD-72) (RUD-75) Bank
bles
79SRK
Arvind 914010018368047 091505005808 ICICI
— Trading Pvt. 4,58,254
Kalani (RUD-73) (RUD-76) Bank
Ltd.
Abdul
Arvind 914010018368047 051685800001762 YES
-- Kader H E 10,00,000
Kalani (RUD-73) (RUD-77) Bank
Ltd
Arvind 914010018368047 Adeke 322205500398 ICICI
-- 94,82,288
Kalani (RUD-73) Rakesh (RUD-78) Bank
Arvind 914010018368047 -- Deepak 922020038936406 AXIS 1,98,54,195
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 99 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
Name Counter Bank Sum of
Party No Account CP Account No
of Party Party Name Debit
Kalani (RUD-73) Soni (RUD-79) Bank
Arvind 914010018368047 Dhanraj 1342102000032346 IDBI
— 47,00,000
Kalani (RUD-73) Metal (RUD-80) Bank
M.M. Fruits
Arvind 914010018368047 248405500165 ICICI
— & Vegeta- 7,67,43,651
Kalani (RUD-73) (RUD-81) Bank
bles
Arvind 914010018368047 053905500700 ICICI
— Nile Traders 2,90,51,660
Kalani (RUD-73) (RUD-82) Bank
Arvind 914010018368047 YSM Enter- 10104049558 IDFC
— 11,50,721
Kalani (RUD-73) prises (RUD-83) Bank
Abdul
Arvind 922030057073996 051685800001762 YES
— Kader H E 41,00,000
Kalani (RUD-74) (RUD-77) Bank
Ltd
Arvind 922030057073996 Adeke 322205500398 ICICI
— 1,06,73,440
Kalani (RUD-74) Rakesh (RUD-78) Bank
M.M. Fruits
Arvind 922030057073996 248405500165 ICICI
— & Vegeta- 30,00,000
Kalani (RUD-74) (RUD-75) Bank
bles
16,23,18,12310.2 As evident from the table above, a sum of Rs. 16,23,18,123 /- has been
credited in 08 bank accounts as mentioned above from Arvind Kalani and Amit
Kalani and sum of Rs.15,65,00,116/- have been debited to following 14
individuals/entity of 2nd Stage transaction for the purpose of layering.
STAGE-2 LAYERING
TABLE 56
SUMMARY OF STAGE-2 TRANSACTIONS IN FIR 630/2022
Name of the Counterparty
Counterparty Name Counterparty Account Sum of Credit Sum of Debit
entity Bank
Adarsh Trans-
Century Enterprises 057763300002360 YES BANK – 1,79,10,000
port
M.M. Fruits & Veg-
248405500165 ICICI BANK 1,28,10,000 -
etables
Nile Traders 053905500700 ICICI BANK 50,00,000 -
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 100 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
Name of the Counterparty
Counterparty Name Counterparty Account Sum of Credit Sum of Debit
entity Bank
Deepak Soni 9220200389936406 AXIS BANK 53,73,229.85 –
M.M. Fruits & Veg-
248405500165 ICICI BANK 39,80,620 -
etables
Amanulla Nakeshatra Traders 46963300003301 YES BANK - 1,25,00,000
Ravula Rajendra
092205008244 AXIS BANK - 30,30,000
Prasad
Shriram Enterprises 046963300003108 YES BANK - 2,95,00,000
Ashok
Century Enterprises 057763300002360 YES BANK - 1,60,00,000
Rasalkar
AXIS
Deepak Soni 922020038936406 11,008.85 -
BANK
M.M. Fruits & ICICI
248405500165 53,81,646 -
Vegetables BANK
Century ICICI
Nile Traders 053905500700 55,00,000 -
Enterprises BANK
Farzana Century Enterprises 057763300002360 YES BANK - 93,00,000
M.M. Fruits & ICICI
248405500165 2,39,96,648 -
Vegetables BANK
Nakshatra Traders 046963300003301 YES BANK - 65,00,000
ICICI
Nile Traders 053905500700 80,00,000 -
BANK
R R Enterprises 004863300005292 YES BANK - 1,38,70,000
ICICI
Adarsh Transport 177105000977 - 8,20,000
BANK
Century Enterprises 057763300002360 YES BANK - 45,00,000
Kedar
M.M. Fruits & ICICI
Chandershekar 248405500165 1,40,00,000 -
Vegetables BANK
Sinasangli
Nakshatra Traders 046963300003301 YES BANK - 1,43,00,000
ICICI
Nile Traders 053905500700 30,00,000 -
BANK
R R Enterprises 004863300005292 YES BANK - 19,30,000
ICICI
Adele Rajesh 322205500398 40,50,200 -
BANK
AXIS
Deepak Soni 922020038936406 1,57,30,730 -
BANK
Dhanraj Metal 1342102000032346 IDBI BANK 10,62,000 -
Nakshatra Traders 46963300003301 YES BANK - 2,81,00,000
Nakshatra ICICI
Nile Traders 053905500700 60,00,000 -
Traders BANK
Narella M.M. Fruits & ICICI
248405500165 10,00,000 -
Shivaappa Vegetables BANK
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 101 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
Name of the Counterparty
Counterparty Name Counterparty Account Sum of Credit Sum of Debit
entity Bank
Krishna
ICICI
Nile Traders 053905500700 10,91,000 –
BANK
AXIS
Deepak Soni 922020038936406 31,014.75 -
BANK
Ravula
Muhammed Shafi ICICI
Rajendra 265405000219 - 2,70,000
Arakkal BANK
Prasad
Nakshatra Traders 46963300003301 YES BANK - 85,00,000
ICICI
Nile Traders 053905500700 6,00,000 -
BANK
Century Enterprises 057763300002360 YES BANK - 19,00,000
M.M. Fruits & ICICI
Rekha Sonde 248405500165 18,03,000 -
Vegetables BANK
Nakshatra Traders 46963300003301 YES BANK - 19,00,000
Abdul Kader H B
0516858000011762 YES BANK 20,05,000 -
Ltd
ICICI
Adele Rakesh 322205500398 1,16,29,100 -
BANK
Muhammed Shafi ICICI
S Barani 265405000219 - 20,00,000
Arakkal BANK
Nakshatra Traders 46963300003301 YES BANK - 3,85,50,000
Shriram Enterprises 046963300003108 YES BANK - 60,00,000
Shriram ICICI
Adele Rakesh 322205500398 20,00,000 -
Enterprises BANK
Motown Exim Pvt. AXIS
9220200041841784 - 1,60,99,999
Ltd. BANK
Silvershine AXIS
922020021957935 - 2,05,68,000
Warehouse Pvt. Ltd. BANK
Century Enterprises 057763300002360 YES BANK - 4,80,00,000
Subashin AXIS
Deepak Soni 922020038936406 22,11,900 -
Gnanasvelu BANK
M.M. Fruits & ICICI
248405500165 1,87,73,018 -
Vegetables BANK
Nakshatra Traders 046963300003301 YES BANK - 35,00,000
ICICI
Nile Traders 053905500700 4,60,000 -
BANK
Grand Total 15,65,00,116 30,05,47,999
10.3 Further, hereinafter third stage of layering is explained by the table.
STAGE 3 LAYERING
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 102 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
TABLE 58
SUMMARY OF STAGE-3 TRANSACTIONS IN FIR 630/2022
Counterpar
Name of the Counterparty Sum of
Counterparty Party ty Bank Sum of Credit
Party Account Debit
Name
Adarsh Kedar Chandershekhar
136105500139 ICICI Bank 8,20,000
Transport Sinais ingbal
Adarsh Transport 177105000977 ICICI Bank 1,79,10,000
Ashok Rasalkar 139205006001 ICICI Bank 1,60,00,000
Brightsuns Tradexim Pvt. 92202003396471
AXIS Bank 70,00,000
Ltd. 0
Farzana 603505016265 ICICI Bank 93,00,000
Kedar Chandershekhar
136105500139 ICICI Bank 45,50,000
Sinais ingbal
Century
Enterprises Motown Exim Pvt. Ltd 92202004184178 AXIS Bank 31,00,000
4
Rekha Sonde 101605001793 ICICI Bank 19,00,000
Silvershine Warehouse 92202002195793
AXIS Bank 3,11,00,000
Pvt. Ltd. 5
Subashini Gnanavelu 108205003534 ICICI Bank 4,80,00,000
92202003396496
Zlow Industries Pvt. Ltd. AXIS Bank 52,00,000
9
Astoria Exim Private 05501010000796
Motown J&K Bank 1,44,30,500
Limited 3
Exim Pvt.
Ltd. 04696330000310
Shriram Enterprises YES Bank 1,60,99,999
8
Muhamed Ravula Rajendra Prasad 92205008244 ICICI Bank 2,70,000
Shafi Arakkal S Barani 027505009915 ICICI Bank 20,00,000
Amanulla 778805500051 ICICI Bank 1,25,00,000
Farzana 603505016265 ICICI Bank 65,00,000
Kedar Chandershekhar
136105500139 ICICI Bank 1,43,00,000
Sinais ingbal
92202004184178
Motown Exim Pvt. Ltd. AXIS Bank 1,87,80,000
4
Muhamed Shafi Arakkal 265405000219 ICICI Bank 2,81,00,000
Nakshatra
Traders Ravula Rajendra Prasad 92205008244 ICICI Bank 85,00,000
S Barani 027505009915 ICICI Bank 3,35,50,000
Silvershine Warehouse 92202002195793
AXIS Bank 66,32,000
Pvt. Ltd. 5
Subashini Gnanavelu 108205003534 ICICI Bank 35,00,000
92202003396496
Zlow Industries Pvt. Ltd. AXIS Bank 2,78,00,000
9
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 103 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
Rekha Sonde 101605001793 ICICI Bank 19,00,000
Brightsuns Tradexim Pvt. 92202003396471
AXIS Bank 28,00,000
Ltd. 0
Farzana 603505016265 ICICI Bank 1,38,70,000
Kedar Chandershekhar
136105500139 ICICI Bank 19,30,000
Sinais ingbal
RR
Enterprises 92202004184178
Motown Exim Pvt. Ltd. AXIS Bank 24,00,000
4
Silvershine Warehouse 92202002195793
AXIS bank 1,24,00,000
Pvt. Ltd 5
92202003396496
Zlow Industries Pvt. Ltd AXIS bank 55,28,000
9
Ravula
Rajendra Amanulla 778805500051 ICICI bank 30,30,000
Prasad
Amanulla 778805500051 ICICI bank 2,95,00,000
92202004184178
Motown Exim Pvt. Ltd AXIS bank 24,16,092
4
Shriram
Enterprises S Barani 027505009915 ICICI bank 60,00,000
Silvershine Warehouse 92202002195793
AXIS bank 26,96,303
Pvt. Ltd 5
Astoria Exim Private 05501010000796
Silvershine J&K bank 3,82,84,206
Limited 3
Warehouse
Pvt. Ltd 04696330000310
Shriram Enterprises YES bank 2,05,68,000
8
18,05,67,10
Grand Total 30,05,47,999
3
10.4 As evident from the table above, a sum of Rs. 30,05,47,999 /- has been
credited in the bank accounts as mentioned above from 3rd Stage entities and sum
of Rs.18,05,67,103/- has been debited to following 05 individuals/entity of 4th
Stage transaction for the purpose of layering.
STAGE 4 LAYERING
TABLE 60
SUMMARY OF STAGE-4 TRANSACTIONS IN FIR NO. 630/2022
Name of the Counterparty Counterp Sum of
Counterparty Name Sum of Debit
Party Account arty Bank Credit
Astoriaa Exim Motown Exim Pvt. AXIS
922020041841784 1,44,30,500
Private Limited Ltd. BANK
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 104 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
SUMMARY OF STAGE-4 TRANSACTIONS IN FIR NO. 630/2022
Silvershine Warehouse AXIS
922020021957935 3,62,84,208
Pvt. Ltd. BANK
J&K
Astoria Exim Pvt. Ltd. 055010100007963 29,41,90,600
Bank
YES
Brightsuns Century Enterprises 057763300002360 70,00,000
BANK
Tradexim Pvt.
Motown Exim Pvt. J&K
Ltd. 055010970000006 1,87,00,000
Ltd. Bank
YES
R R Enterprises 4863300005292 28,00,000
BANK
J&K
Astoria Exim Pvt. Ltd. 055010100007963 46,17,52,156
Bank
YES
Century Enterprises 057763300002360 31,00,000
BANK
Motown Exim Pvt. J&K
055010970000006 6,70,85,000
Motown Exim Ltd. (RUD-103) Bank
Pvt. Ltd. YES
Nakshatra Traders 46963300003301 1,87,80,000
BANK
YES
R R Enterprises 4863300005292 24,00,000
BANK
YES
Shriram Enterprises 046963300003108 24,16,091.59
BANK
J&K
Astoria Exim Pvt. Ltd. 055010100007963 22,12,27,349
Bank
YES
Century Enterprises 057763300002360 3,11,00,000
BANK
Silvershine
YES
Warehouse Pvt. Nakshatra Traders 46963300003301 66,32,000
BANK
Ltd.
YES
R R Enterprises 4863300005292 1,24,00,000
BANK
YES
Shriram Enterprises 046963300003108 26,96,303.35
BANK
J&K
Astoria Exim Pvt. Ltd. 055010100007963 23,81,49,883
Bank
Zlow Industries YES
Century Enterprises 057763300002360 52,00,000
Pvt. Ltd. BANK
Motown Exim Pvt. J&K
055010970000006 5,27,50,000
Ltd. Bank
YES
Nakshatra Traders 46963300003301
BANK
YES
R R Enterprises 4863300005292
BANK
Grand Total 1,35,38,54,988 18,05,67,102
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 105 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
10.5 It is alleged that the funds credited in the bank accounts of Century
Enterprises and Nakshatra Traders were further transferred into Stage 4 bank
accounts pertaining to 4 companies namely, Brightsuns Tradexim Private
Limited, Zlow Industries Private Limited, Motownn Exim Private Limited,
Silvershine Warehouse Private Limited which were having dummy Directors but
were actually controlled by Ashish Kakkar. That total debit amount in the
relevant period in these companies is much higher i.e. Rs.1,35,38,54,988/- than
the credit of Rs.18,05,67,102/- in their accounts (credited from the 3 rd layer of
shell companies as found during investigation while trailing the proceeds of
crime generated from defrauding Arvind Kalani and Amit Kalani). This is due to
the fact that these accounts are used to accumulate the proceeds of crime from
various victims of cybercrimes. The same has been shown in Table 61.
10.6 Allegedly, the funds accumulated in the above mentioned 04 bank accounts
are ultimately transferred to the bank account of M/ s Astoriaa Exim Private
Limited and M/ s Motownn Exim Private Limited (having dummy directors but
actually controlled by Ashish Kakkar) from where it is remitted out of India in
lieu of payments for imports by Ashish Kakkar. Details of entities and its bank
accounts from which funds have been siphoned off are given in Table 62.
10.7 Thus, it is alleged that the amount of Rs. 157.69 Crores is nothing but
proceed of crime generated from various cyber frauds going all over the country
including the proceeds generated from the crime registered vide FIR No. 630 of
2022 at PS- Mahamandir, Jodhpur, Rajasthan (RUD- 3).
11. Whereas, the defence has putforth that as per flow chart at pg. 163 of
the Prosecution Complaint, the case of ED has been that the funds were
ultimately credited in the bank accounts of the company controlled by the
accused persons at the fourth level but the State of Rajasthan stated on an
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 106 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
affidavit filed before Hon’ble Supreme Court of India in anticipatory bail
application of an alleged accused in the scheduled offence in SLP No. (Crl.)
14503 of 2023 in FIR No. 630/2022 PS Cyber Crime, that Rs 11.03 Crores out
of the ‘proceeds of crime’ amounting to Rs 16.26 Crores, were frozen at the
hands of the Bank account holder itself and were released to the complainant
thereafter. For the remaining amount, the police have stated that the flow of
funds ends at M/s Sagar Empire Jewels and RHC Global Exports, from which the
remaining amount of Rs 5.23 Crores was sent to Hong Kong based companies
being Fu Lee Hong Coy Ltd. Mars India & Comm Services Ltd. and not credited
to accounts of Astoria Exim Private Ltd. and Motown Exim Private Ltd., alleged
to be companies belonging to the accused. The copy of the said affidavit has been
filed on record.
Court’s Observations
12. The factual narration discloses that the complainant, Mr. Arvind Kalani, fell
victim to a sophisticated cyber fraud perpetrated under the guise of a lucrative
investment-cum-multi-level marketing scheme, promising assured and exorbitant
returns. Acting upon such inducement, the complainant is stated to have
transferred an aggregate sum of ₹16,26,21,387/- through as many as 101
transactions, routed from his own bank account maintained with Axis Bank as
well as from the account of his brother, Mr. Amit Kalani.
12.1 As per the case set up by the Enforcement Directorate, a substantial portion
of the said amount, approximating ₹16.22 crores, was further disseminated into
eight distinct bank accounts held in the names of various individuals/entities, as
detailed in Table 52 of the main complaint, namely: (i) YSM Enterprises, (ii)
SRK Trading Ltd., (iii) Adele Rakesh Ltd., (iv) Abdul Kedar HE Ltd., (v) Soni
Ltd., (vi) Dhanraj Metal, (vii) Mukesh Kumar Ltd. (Nile Traders), and (viii) M M
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 107 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
Fruit & Veg Ltd. It is, however, emphatically asserted that none of the aforesaid
entities are either owned or controlled or in any manner connected with the
present accused.
12.2 The prosecution further alleges that, through multiple stages of layering,
the funds were ultimately consolidated to the tune of ₹18,05,07,102/- and routed
into five corporate entities, as enumerated in Table 60 of the main chargesheet,
namely: (i) Brightsuns Tradexim Pvt. Ltd., (ii) Motownn Exim Pvt. Ltd., (iii)
Silvershine Warehouse Pvt. Ltd., (iv) Slow Industries Pvt. Ltd., and (v) Astoriaa
Exim Private Limited. It is further alleged that from Astoriaa Exim Private
Limited and Motownn Exim Pvt. Ltd., certain amounts were transferred outside
India, particularly to jurisdictions such as Hong Kong and Dubai, as reflected in
the flow chart at page 165 of the main complaint.
12.3 Significantly, reliance has been placed upon an affidavit filed by the State
of Rajasthan before the Hon’ble Supreme Court in connection with the bail
proceedings of one Sanjay Kumar Ghanshyambhai Moradiya in SLP (Crl.) No.
11930/2023. The said affidavit, which has been placed on record by the accused
Ashish along with the written synopsis qua arguments on point of charge, has not
been controverted by the Enforcement Directorate either during course of
arguments herein or in the earlier proceedings of this matter and, hence it has
reached finality. A perusal thereof reveals that an amount of approximately
₹11.03 crores has already been resituated to the complainant pursuant to Court
orders, while a further sum of about ₹5 crores remains to be recovered. The
affidavit further records that certain high-turnover entities, namely Sagar
Empires and RHC Global, were the ultimate beneficiaries of the fraud proceeds,
from whose account’s funds were remitted to Hong Kong.
12.4 It is of considerable import that neither Sagar Empires nor RHC Global are
alleged to be owned or controlled by the present accused, and yet, as per the
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 108 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
investigation conducted by the Rajasthan Police, these entities constitute the
conduits through which the funds were transmitted abroad. In stark contrast, the
Enforcement Directorate, in its investigation, attributes the outward remittance of
the very same proceeds of crime to entirely different entities, namely Astoriaa
Exim Private Limited and Motownn Exim Pvt. Ltd.
12.5 This glaring inconsistency between the findings of two governmental
investigating agencies, both acting within the domain of the same predicate
offence, casts a serious shadow of doubt on the prosecution narrative. Moreover,
it is noteworthy that no independent or specific investigation appears to have
been conducted by the Enforcement Directorate with respect to the entities Sagar
Empires and RHC Global, despite their explicit mention in the affidavit filed by
the State of Rajasthan before the Hon’ble Supreme Court.
ï‚· (iii) FIR No. 0048/2022 U/s 419 & 420 of IPC, 1860 and Section 66D IT
Act, 2000, PS Cyber Crime Gautam Budh Nagar, Uttar Pradesh (RUD-4)
13. Insofar as FIR No. 48/2022 registered at Police Station Cyber Crime,
Gautam Budh Nagar is concerned, the prosecution case, in essence, is that the
complainant, Ms. Prerna Yadav, was induced into a fraudulent scheme upon
encountering an online advertisement on Facebook offering a part-time
employment opportunity. Acting upon the representations so made, she registered
herself through a link provided by the alleged fraudsters and initially deposited a
sum of ₹100. Upon completion of the first assigned task, she received a sum of
₹132, thereby gaining confidence in the purported scheme. Subsequently, she
was persuaded to deposit ₹500, upon which she received ₹1,430 after completion
of further tasks.
13.1 Thereafter, the fraudsters, masquerading as “trading officers” on Telegram,
induced her to invest further sums, including an amount of ₹1,000, which,
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 109 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
however, could not be withdrawn. Under continued inducement and
misrepresentation, the complainant was compelled to deposit additional sums
from time to time, culminating in a total loss of ₹12,12,093/-.
13.2 As per the investigation conducted by the Enforcement Directorate, the
statement of Ms. Prerna Yadav was recorded under Section 50 of the Prevention
of Money Laundering Act, 2002. The financial trail, as delineated in Table 30 of
the first supplementary complaint, reveals that out of the aforesaid amount, a sum
of ₹3,35,000/- and ₹2,77,893/- was transferred from the account of Ms. Prerna
Yadav to an entity styled as “Capric” (Proprietor: Laxmanan Soundarajan), along
with certain smaller transfers to other entities.
13.3 It is further alleged that from the said entity Capric, a sum of ₹46,80,000/-
was transferred to Mark Enterprises, as reflected in Table 31 of the first
supplementary complaint. Thereafter, from Mark Enterprises, an aggregate
amount of ₹8,97,15,348/- is stated to have been transferred to the following five
entities, as detailed in Table 32 of the said complaint:
(a) Silvershine Warehouse Private Limited,
(b) Brightsuns Tradexim Private Limited,
(c) Trioasm India Private Limited,
(d) AR Enterprises, and
(e) Motownn Exim Private Limited.
14. Per contra, it has been agitated by the defence that as alleged the funds
were transferred to various Bank accounts before being credited in the Bank
accounts allegedly controlled by the accused herein. However, no investigation
has been carried out from the Bank account holders in-between. Without any
proper investigation and completing the entire chain of the transactions, it cannot
be alleged that the Bank accounts allegedly under control of the accused were
having ‘proceeds of crime’ generated from the said FIRs.
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 110 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
Court’s observation
15 A critical scrutiny of the investigation reveals a conspicuous and material
lacuna. Despite the admitted position that the complainant was defrauded of
approximately ₹12.12 lakh and that a substantial portion thereof was routed to
Capric, no meaningful investigation appears to have been undertaken by the
Enforcement Directorate either with respect to the said entity Capric or the
downstream entities to which the funds were subsequently transferred, for
reasons best known to the investigating agency.
15.1 Further, while it is alleged that an amount of ₹46.80 lakh was transferred
from Capric to Mark Enterprises, and thereafter a sum of ₹8.97 crore was
transferred from Mark Enterprises to the aforesaid five entities allegedly
associated with the accused/applicant, the investigation is conspicuously silent as
to the underlying purpose or commercial rationale for such transfers. No inquiry
appears to have been conducted to ascertain the nature, source, or legitimacy of
these transactions.
15.2 More importantly, there is a complete absence of any effort on the part of
the Enforcement Directorate to verify whether the amounts so transferred from
Capric to Mark Enterprises, or from Mark Enterprises to the said five entities, in
any manner include or are traceable to the funds allegedly defrauded from Ms.
Prerna Yadav. In the absence of such foundational verification, the mere
existence of subsequent high-value transactions cannot, ipso facto, lead to an
inference that the proceeds of crime pertaining to Ms. Prerna Yadav were
ultimately routed to the accounts of the said five entities.
15.3 In these circumstances, it cannot, at this stage, be conclusively or even
prima facie inferred that the amount allegedly defrauded from Ms. Prerna Yadav
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 111 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
has been laundered through or has reached the entities purportedly owned or
controlled by the accused/applicant.
ï‚· Other Cyber Crime FIRs ie FIR No. 0070/2022 U/s 419 & 420 of IPC,
1860 PS Cyber Crime Gurugram Haryana (RUD-5) & FIR No. 0036 dated
06.08.2022 U/s 420 of IPC, 1860 PS Cyber Crime Rohtak, Haryana
(RUD- 6)
16. It has been the case of the Complainant/ED that the bank accounts used in
layering of Proceeds of Crime are Mule Accounts which refers to an account
used by criminals to facilitate illicit activities such as money laundering or fraud.
These mule accounts are opened and operated for a small period and gets closed
as soon as the purpose of opening the account is achieved. Investigation has
revealed that multiple Mule accounts (which have been operational for only a
small period of time) were used to siphon off the PoC as per detail given in Table
64, of the main complaint.
16.1 That the bank accounts alleged to be used for layering of proceeds of crime
and its siphoning off were used as accumulation accounts, where proceeds of
crime generated from various cyber-frauds by defrauding several victims were
accumulated in a short span of time and then siphoned off.
16.2 The details of alleged total Proceeds of crime in which Ashish Kakkar has
been found to be involved is given in Table 65. Thus, Ashish Kakkar alleged to
be knowingly involved in processes and activities connected with proceeds of
crime amounting to ₹64,91,82,68,150/- including its generation, concealment,
possession, acquisition, and projection as tainted property.
Court’s Observation
17. The Directorate of Enforcement has filed its written explanation in earlier
proceedings before Ld. Predecessor of the Court contending, inter alia, that in
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 112 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
relation to FIR No. 70/2022, the only material procured during the course of
investigation is the correspondence addressed by the Gurugram Police to Axis
Bank, pursuant to which Account No. 922020041841784 standing in the name of
M/s Motownn Exim Private Limited–allegedly a shell entity under the control
of the accused–was frozen on 09.05.2023. It is submitted that beyond the said
act of freezing, no further investigative steps have been undertaken by the
Enforcement Directorate. Consequently, there is a conspicuous absence of any
inquiry or material elucidating the role of the accused or tracing the flow of funds
from the predicate offence, i.e. FIR No. 70/2022, into the accounts of M/s
Motownn Exim Private Limited.
18. Similarly, with respect to FIR No. 36/2022 registered at Police Station
Cyber Crime, Rohtak, Haryana, it has been averred that the only document
obtained by the Enforcement Directorate pertains to the freezing of Account No.
921020045667064 maintained in the name of M/s Trioasm India Private Limited,
a purported shell company allegedly controlled by accused Ashish Kakkar and
Punit Kakkar. It is further submitted that save and except the procurement of the
aforesaid freezing order, no substantive investigation has been carried out by the
Enforcement Directorate in connection with the said FIR. Even, there exists no
sufficient material on record demonstrating either the involvement of the accused
persons or the manner in which the proceeds of crime arising out of FIR No.
36/2022 were channelized into the accounts of M/s Trioasm India Private
Limited.
19. The Complainant/ED has failed to investigate key intermediary entities
forming part of the alleged money trail. The absence of any inquiry into such
entities breaks the chain of causation and renders the alleged linkage between the
defrauded amount and the accused’s entities speculative. No material has been
Directorate of Enforcement Vs. Ashish Kakkar & Another Page 113 of 117
ECIR No. – ECIR/STF/02/2024 dated 23.01.2024
placed to show that the funds received by the alleged entities of the accused
include the amount defrauded from the complainant
20. Consequently, it appears prima facie that the Directorate of Enforcement has
failed to satisfy the second essential limb as laid down in Vijay Madanlal
Choudhary (supra), namely, that the property in question was derived or obtained
as a result of criminal activity. The prosecution case rests on conjecture and
presumption rather than substantive evidentiary linkage.
ï‚· With respect to the complaints: (a) App-In Complaint No. 543/2022 at
Cyber Crime Police Station, Ahmedabad, Gujarat, (b) NCRP Complaint
no. 984/2022 dated 18.02.2023 at Cyber Crime Police Station, Rajkot,
Gujarat, (c) Cyber Crime Cell Application no 2307B/2022 dated
22.12.2022 filed at Cyber Crime Cell, Mira Bhayandar, Vasai Virar Police
Commissionerate, Maharashtra
21. The ED has allegedly connected accused Ashish with the aforesaid cyber-
crime frauds alleging only on the basis that certain documents ( RUD-43
including following documents) were recovered from the mobile phone of Shri
Ashish Kakkar:
a. Screenshot of complaint No. 31111220080693 dated 28/11/2022,
related to online financial fraud recovered from the mobile of Shri Ashish
Kakkar (at PS-Anjar, Kachh East, Gandhidham, Gujarat).
b. Screenshot of complaint No. 31111220079820 dated 25/11/2022, related
to online financial fraud recovered from the mobile of Shri Ashish
Kakkar (at PS-Anjar, Kachh East, Gandhidham, Gujarat)
c. Copy of correspondence No. 3054-5A dated 01.12.22, between PS-Cyber
Crime, Rohtak, Haryana and Axis Bank for debit freeze the bank account
No. 921020045667064 (Trioasm Tradexim Pvt. Ltd. controlled by Shri
Ashish Kakkar) in connection with FIR No. 36 dated 06.08.2022
registered under sections 420 & 467 of IPC.
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d. Screenshot of correspondence dated 25.11.22 between Cyber CID Police
Gujarat and Axis Bank for marking lien from Bank Account No.
922020033964969 of M/ s Zlow Industries Pvt. Ltd. controlled by Shri
Ashish Kakkar in case of online UPI fraud.
Court’s Observations
22. It is now trite, in view of the authoritative pronouncement of the Hon’ble
Supreme Court in Vijay Madanlal Choudhary (supra) that the offence of money
laundering under Section 3 of PMLA is not a standalone offence, but is
inextricably dependent upon the existence of a scheduled (predicate) offence.
The said offence is parasitic in nature, deriving its very sustenance from the
proceeds generated through criminal activity relatable to a scheduled offence.
Absent such foundational fact, the edifice of money laundering is rendered
wholly illusory.
23. The position is further fortified by the principles echoed in Pankaj Bansal v.
Union of India reported in (2023) SCC OnLine SC 1244, wherein the Hon’ble
Supreme Court has underscored the necessity of strict adherence to procedural
safeguards while exercising the extraordinary powers vested in the Enforcement
Directorate.
24. In the present case, the absence of any material demonstrating the existence
of a scheduled offence, much less its formal registration, strikes at the very root
of the case of the Enforcement Directorate.
Applicability of Section 24 PMLA, 2002
25. The prosecution has sought to rely upon the statutory presumption under
Section 24 of the PMLA. However, it is trite that the presumption under Section
24 is not absolute and arises only upon the prosecution first discharging its initial
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burden of establishing the foundational facts, particularly the existence of
“proceeds of crime.”
26. As clarified in Vijay Madanlal (supra), unless it is prima facie shown that the
property in question has been derived or obtained as a result of criminal activity
relating to a scheduled offence, the burden cannot be shifted upon the accused.
27. In the present case, as discussed hereinafter, the prosecution has failed to
establish even the foundational requirement of derivation of property from
criminal activity. Consequently, the presumption under Section 24 does not get
triggered.
Conclusion
28. At the stage of charge, the Court is required to assess whether the material
placed on record discloses grave suspicion against the accused warranting
framing of charge. However, it is equally well-settled that where the material
fails to disclose the essential ingredients of the alleged offence, the accused is
entitled to discharge.
29. In the light of this background reliance is placed upon the law laid down by
Hon’ble Supreme Court of India in the case titled as Union of India Vs Prafulla
Kumar Samal reported in (1979) 3 SCC 4 that in case two views are possible, at
this stage of framing of charge, the view favouring the accused should be
adopted/taken.
30. From the cumulative assessment of the material on record, this Court finds:
ï‚· The prosecution has failed to establish the existence of “proceeds of
crime” attributable to the accused;
ï‚· The essential nexus between the alleged funds and any scheduled
offence is absent;
ï‚· The money trail is incomplete and suffers from significant investigative
gaps;
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ï‚· Material inconsistencies between different investigations further erode
the prosecution’s case;
ï‚· The statutory presumption under Section 24 PMLA is not attracted in
the absence of foundational facts.
31. Hence, as a squeal to above discussion, the material produced by ED in the
form of relied upon documents is not sufficient to show prima facie case or
create grave suspicion u/s 3 /4 of PMLA against any of the accused persons in
the present matter. The Court is of the considered opinion that no grave suspicion
arises against the accused warranting framing of charge under the PMLA.
Continuation of proceedings in the absence of foundational facts would amount
to abuse of the process of law and would subject the accused persons to
unwarranted prosecution. Therefore, all the accused persons namely Ashish
Kakkar and the respective companies (i.e. accused No. 1 to 23) and Puneet
Kumar and the respective companies (ie. Accused No. 24 to 47) are hereby
discharged under Sections 3 and 4 of the Prevention of Money Laundering Act,
2002.
32. Bail bonds, if any, stand cancelled. Sureties are discharged. Endorsements, if
any, be also cancelled and documents if any, retained on record be returned as per
rules.
33. File be consigned to Record Room.
Pronounced in the open
Court on 15.04.2026 (Shefali Barnala Tandon)
Additional Sessions Judge -06,
NDD, PHC, Delhi
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