The Delhi High Court clarified that properties seized by the investigating agency could not be automatically deemed as proceeds of crime. It was further highlighted that the property must have a direct link to the criminal activity associated with the scheduled offence.
Additionally, even if the property was acquired in exchange for assets obtained through criminal activity, it still falls within the purview of proceeds of crime.
Brief Facts:
The Directorate of Enforcement alleged that Naresh Jain, his brother Bimal Jain, and other collaborators engaged in a criminal conspiracy to defraud the exchequer and banks through illicit foreign exchange transactions. The basis of their actions involved the use of forged or fabricated documents. Significantly, a search conducted at Naresh Jain's secret office in Delhi revealed the seizure of 14 digital keys for operating foreign bank accounts, along with other incriminating documents and data.
The Enforcement Directorate alleged that Naresh Jain and his accomplices operated approximately 337 accounts in foreign banks located in Dubai, Hong Kong, and Singapore, involving 104 shell firms or companies.
It has been determined that Naresh Jain and his associates, including the present petitioner, engaged in the rotation of funds amounting to approximately Rs. 96,000 Crores. These funds were used to provide accommodation entries of around Rs. 18,679 Crores to 973 beneficiaries.
Observations of the Court:
It was clarified that not all properties seized or confiscated by the investigating agency automatically qualify as proceeds of crime under general law.
The Court noted that any property derived or obtained directly or indirectly as a result of criminal activity related to the scheduled offence is deemed as proceeds of crime. The Court further expounded that the property must have a connection to the criminal activity associated with the scheduled offence.
Even if the property is acquired in exchange for property obtained through criminal activity, it still falls within the definition of proceeds of crime. The High Court considered the accused's mens rea, and in this particular case, the petitioner was accused of acquiring undervalued shares, obtaining loans from shell companies, and participating in money laundering.
The decision of the Court:
The Delhi High Court allowed the petition and granted bail to the Petitioner, starting the unique circumstances of the case.
Case Title: Vijay Agrawal Through Parokar v Directorate of Enforcement
Case No.: Bail Application 1762 of 2022
Coram: Hon'ble Mr. Justice Dinesh Kumar Sharma
Advocates for Petitioner: Advs. Mr.Sidharth Aggarwal, Mr.Arjun Dewan, Mr.Shahryar Khan and Ms.Arshiya Ghosh
Advocates for Respondents: Advs. Mr.Zoheb Hossain, Mr.Vivek Gurnani and Mr.Baibav
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