Funds Collected To Commit A Scheduled Offence Cannot Be Termed As "Proceeds Of Crime" Under PMLA: Delhi HC Grants Bail To PFI Members

The Delhi High Court granted bail to the members of the Popular Front of India (PFI), a banned Islamic political organization, in a money laundering case.

The accused PFI members had filed Bail Applications before the Court seeking bail in a case relating to the offence under Sections 3 and 4 read with Section 70 of the Prevention of Money Laundering Act, 2002 (PMLA).

A Single Bench of Justice Jasmeet Singh observed, “In order to invoke the provisions of section 3 of PMLA, there must be proceeds of crime as discussed above and these proceeds must be a result of a criminal activity. The case set up by the ED that the funds which the petitioners were generating were used for committing a scheduled offence, hence proceeds of crime, is not the scheme of PMLA. The offence committed by the collection of funds may be an offence under any law including a scheduled offence but cannot be termed as a proceeds of crime to invoke section 3 of PMLA.”

Senior Advocate Shadan Farasat, Advocates Satyakam, and Adit S. Pujari appeared for the Petitioners while Special Counsel Zoheb Hossain appeared for the Respondent.

Factual Background -

All the Petitioners/accused persons were arrested in 2022. As per the Complaint filed by the Enforcement Directorate (ED), Parvez Ahmed was the President of Delhi State Unit of PFI for the term 2018-20 and it was alleged that he was actively involved in anti CAA-NRC protests held in Delhi. The anti-CAA protests in Delhi resulted in Delhi riots of February, 2020 in which he, along with other PFI members, was arrested. He admitted that in his capacity as the President of PFI Delhi, he followed up the collection of donations and he also revealed that receipts were issued to individual contributors who donated funds to PFI. Mohd Ilyas was the General Secretary of Delhi State Unit of PFI since November, 2018 and was alleged to have actively participated in the anti-CAA protests in Delhi which resulted in Delhi Riots.

In his statement recorded under Section 50 of PMLA, Ilyas stated that collection of funds was mainly done in the form of donations by Delhi units of PFI. Further, the cash which was collected was deposited by him in PFI’s Shaheen Bagh office with either the manager or accountant. It was further stated in the Complaint that Abdul Muqeet was the Office Secretary of Delhi State Unit of PFI since 2017. During the investigation, it was revealed that bogus donation slips were issued in the name of residents of Mullah Colony, Gharoli for PFI by him along with his associates. It was also revealed that donations made for a sum of Rs. 50-100 were incorrectly reflected as donations to the tune of Rs. 2000 – Rs. 4000. Further, it was alleged that he was actively involved in the collection of donations in his locality. During the investigation, it was revealed that more than Rs. 60 Crores were deposited in the bank accounts of PFI since 2009 and an amount of Rs. 32.03 Crores was deposited in cash.

The High Court in view of the facts and circumstances of the case, said, “In the present case, the role of the petitioners is that they collected funds and deposited the same to the accountant or PFI‟s account. Hence, in this scenario, prima facie, the dominion and control over the generation of alleged proceeds of crime is not of the petitioners herein.”

The Court noted that the twin conditions of Section 45 PMLA have been met and the Special Counsel for ED has been given an opportunity to oppose the bail applications. It added that the offence of money laundering is not made out against the Petitioners.

“… the Constitutional Courts are vested with powers to protect the fundamental rights of the accused guaranteed under Article 21 of Constitution of India. Further, these Courts have to be vigilant in protecting the said rights. Special statutes have stringent conditions for grant of bail but they should not become means to detain the accused without there being any possibility of concluding the trial, expeditiously”, it enunciated.

Furthermore, the Court elucidated that, merely charging an accused person under the provisions of the special statutes should not become a punishment in itself which violates Article 21 of the Constitution.

“… Article 21 prevails over the stringent conditions of section 45 of PMLA and in case the accused has been incarcerated for a reasonably long period of time without there being any reasonable chance of concluding trial, Article 21 will take primacy”, it added.

Accordingly, the High Court granted bail to the accused persons on furnishing a personal bond of Rs. 50,000/- each with one surety in the like amount to the satisfaction of the concerned Trial Court.

Cause Title- Parvez Ahmed v. Directorate of Enforcement (Neutral Citation: 2024:DHC:9389)

Appearance:

Petitioners: Senior Advocate Shadan Farasat, Advocates Adit S. Pujari, A. Nowfal, Shaurya Mittal, Mantika Vohra, Arif Hussain, Satyakam, Talha Abdul Rahman, Sudhanshuy Tewari, Arif Hussain, A. Nowfal, Harshit Anand, Aman Naqvi, and Niharika.

Respondent: Special Counsel Zoheb Hossain, Panel Counsel Vivek Gurnani, Advocates Kartik Sabhdarwal, Pranjal Tripathi, Kanishk Maurya, and Azeeq Mushtaque.

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