No bail to petitioner-directors who were arrested for money laundering: HC

Case Details: N. Umashankar v. Assistant Director, Directorate of Enforcement - [2022] 138 taxmann.com 509 (Madras)

Judiciary and Counsel Details

• • M. Duraiswamy & J. Sathya Narayana Prasad, JJ.
  • R. Jayaprakash for the Petitioner.
  • Rajinish Pathiyil, Special Public Prosecutor for the Respondent.

Facts of the Case

In the instant case, petitioners were the Directors of the company, ‘D’ who were the persons responsible for the affairs of the company. The Company ‘D’ collected money from public under various investment schemes with a promise to pay attractive returns but failed to pay same and, thus, caused pecuniary loss to tune of Rs. 1137 crores to investors.

The SEBI directed the Company and its Directors to wind up the investment schemes and refund the money due to the investors. However, the Directors failed to refund the money to the investors.

Based on the reference from the SEBI and the complaints received from the investors, the Economic Offences Wing registered a case for the offences under sections 406, 420, and 120B of IPC read with section 5 of the Tamil Nadu Protection of Interests of Depositors (in financial establishments) Act, 1997. Economic.

Respondent issued an order of arrest under section 19(1). The Petitioners were arrested by the respondent for the alleged offence under section 3 and punishable under section 4. The Petitioners filed applications seeking bail.

High Court Held

The High Court held that before the instant court the respondent submitted that the petitioners never co-operated with the investigation and therefore, the petitioners should not be enlarged on bail. It was also brought to the notice that even after the registration of the criminal complaint against the petitioners, they have indirectly started new Companies by using other names.

Therefore, the High court held that it could not believe that the petitioner was not guilty of the alleged offences, and in such circumstances, it cannot be held that the petitioners were not likely to commit offence while on bail and if the petitioners were enlarged on bail, there was every likelihood that the petitioners may flee the jurisdiction of instant Court to avoid the process of law. Accordingly, bail applications were to be rejected.

List of Cases Referred to

• • Nikesh Tarachand Shah v. Union of India [2017] 87 taxmann.com 257/[2018] 145 SCL 96 (SC) (para 5.2)
  • Prakash Gurbaxani v. Directorate of Enforcement 2021 SCC Online P&H 1567 (para 5.2)
  • Amarendra Dhari Singh v. Directorate of Enforcement [2021] 129 taxmann.com 162 (Delhi) (para 5.2)
  • Union of India v. Yogesh Narayanrao Deshmukh 2021 SCC Online Bom. 2905 (para 5.2)
  • Cheviti Venkanna Yadav v. State of Telangana [2017] 1 SCC 283 (para 6.2)
  • P. Chidambaram v. Directorate of Enforcement [2019] 109 taxmann.com 57/156 SCL 104 (SC) (para 6.2)
  • Satendra Kumar Antil v. CBI [SLP (Crl.) No. 5191 of 2021] (para 6.2)
  • Mohammad Arif v. Directorate of Enforcement [BLAPL No. 2607 of 2020, dated 13-7-2020] (para 6.2)
  • Arun Mukherjee v. Enforcement Directorate [Manu/WB/1498/2018] (para 6.2), Bimal Kumar Jain v. Directorate of Enforcement [Manu/DE/1458/2021] (para 6.2)
  • Directorate of Enforcement v. Upendra Rai [SLP (Crl.) No. 2598 of 2020] (para 14)
  • Dr. Shivinder Mohan Singh v. Directorate of Enforcement 2020 SCC Online Del. 766 (para 14)
  • Directorate of Enforcement v. Shivinder Mohan Singh [SLP (Crl.) No. 3474 of 2020, dated 31-7-2020] (para 14).