Ashraf Khadir @ Ashraf Mk V. Union Of India Enforcement Directorate Thru. Its Ass. Director

/7723/2022

AI Insights

The case revolves around the bail application of Ashraf Khadir @ Ashraf Mk, who was implicated in a money laundering case linked to the Popular Front of India (PFI) and its activities. The Enforcement Directorate (ED) accused him of being involved in laundering money through a residential project in Kerala, allegedly funded by foreign sources to support PFI activities. The applicant contested the charges, highlighting his non-involvement in the initial FIRs related to terrorism and his lack of criminal history. The court considered various precedents and the specifics of the case, including the fact that PFI was not banned at the time of the alleged offences and that similar accused had been granted bail.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 808452 (HC-LUCKNOW)
• Appeal Type: Others
• Pronouncement Date: 27-09-2023
• Assessment Year: misc
• Other Referred Cases: Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929
• Laws Referred To: Prevention of Money Laundering Act, 2002, Indian Penal Code, 1860, Unlawful Activities (Prevention) Act, Information Technology Act, 2002, Explosives Substances Act, Arms Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: KULDEEP SRIVASTAVA; SHIV SHUKLA
• Assessee Lawyers: PRANAV AGARWAL; AMARJEET RAKHRA
• Keywords: Bail application; Custodial interrogation; Hawala; Money laundering; Prevention of Money Laundering Act; Proceeds of Crime; Scheduled Offence; Underground Channels
• Section: 147; 148; 153A; 68; 13; 72; 20; 5; 14; 3; 18; 25; 4; 65; 21; 16; 76; 120-B; 120-B; 124A; 121-A; 295A

Judgement Text

"High Court of Judicature at Allahabad Sitting at Lucknow ********************** RESERVED Neutral Citation No. - 2023:AHC-LKO:62810 Judgment Reserved on 15.09.2023 Judgment Delivered on 27.09.2023 Court No. - 16 Case :- CRIMINAL MISC. BAIL APPLICATION No. - 7723 of 2022 Applicant :- Ashraf Khadir @ Ashraf Mk Opposite Party :- Union Of India Enforcement Directorate Thru. Its Ass. Director Counsel for Applicant :- Pranav Agarwal,Amarjeet Singh Rakhra Counsel for Opposite Party :- Kuldeep Srivastava,Shiv P. Shukla Hon’ble Subhash Vidyarthi J. 1. Heard Sri Amarjeet Singh Rakhra, learned counsel for the applicant and Sri Rohit Tripathi, learned counsel appearing on behalf of the respondent Union of India/Enforcement Directorate. 2. The instant application has been filed seeking release of the applicant Ashraf Khadir @ Ashraf Mk on bail in ECIR/02/HIU/2018, under Sections 3/4 of Prevention of Money Laundering Act, 2002, Police Station Directorate of Enforcement, APJ Abdul Kalam Road, New Delhi. 3. On 07.08.2013, the National Investigating Agency (hereinafter referred to as ‘the NIA’) had filed an FIR No. RC-05/2013/NIA/KOC in the Special Court for NIA Cases at Ernakulam against P. V. Abdul Azeez and 23 other persons, not including the applicant, stating that those persons were engaged in imparting weapon training and making bombs. 4. On 19.10.2013, the NIA submitted a charge-sheet against Abdul Azeez and 21 other persons stating that they were active members / leaders of PFI (Popular Front of India) and SDPI (Social Democratic Party of India) and under a conspiracy with each other, they attempted to promote feelings of enmity between different religions, used Page No.1 of 6 country made bombs and sword for the purpose training youngsters for terrorist activities, imparted training on making of country made bombs and in the use of sword and thus acted preparatory to the commission of terrorist acts endangering the unity and integrity of the nation. 5. The Directorate of Enforcement (hereinafter referred to as ‘the E.D.’) registered ECIR/02/HIU/2018 and undertook investigation. 6. On 07.10.2020 another FIR No. 199/2020 was registered in Police Station Mant, District Mathura under Sections 153A/295A/124A of the Indian Penal Code, 1860, Sections 14 and 18 of UAPA and 65/72/76 of the Information Technology Act, 2002, against 4 persons, not including the applicant. 7. FIR No.04/2021 dated 16.02.2021 (3rd Predicate Offence) has been registered under Sections 120-B and 121-A of the IPC, Sections 13, 16, 18 and 20 of UAPA Section 3, 4, and 5 of the Explosives Substances Act and Section 3 and 25 of the Arms Act against Anshad Badharudeen and Firoz Khan. 8. The Applicant is not named in the complaint dated 06.02.2018, which was filed against 5 persons namely K. A. Rauf Sherif, Atikur Rehman, Masood Ahmad, Siddique Kappan, Alam, all of whom have been enlarged on bail. The Applicant’s name surfaced for the first time in the Supplementary Complaint dated 06.05.2022 filed by the E.D., against Abdul Razak Peediyakkal, Ashraf Khadir @ Ashraf MK (the applicant), Munnar Villa Vista Pvt. Ltd. and Tamar India Spices Pvt. Ltd. 9. It is alleged in the Supplementary Complaint dated 06.05.2022 that the oversees members of PFI are developing a residential project - Munnar Villa Vista Project at Munnar, Kerala (MVVP) with a view to launder money collected from foreign countries as well as India and to generate funds for PFI activities. Both Abdul Razak Peediyakkal and the Applicant Ashraf Khadir @ Ashraf MK have been shown to be the Directors/Key Persons of MVVP. Both of them have been shown to be the members of PFI and shareholders of MVVP. It is the case of ED that on close scrutiny of statements recorded and documents relating to MVVP it became evident that there are several Page No.2 of 6 discrepancies in the project and the Applicant had played a key role in collection of funds abroad and remittance of the same to India, through channels which are not recognized. 10. E.D. has recorded statement of the applicant on 21.02.2022, 22.02.2022 and 23.02.2022, prior to his arrest on 12.04.2022. 11. In the affidavit filed in support of the application for bail, it has been stated that the applicant is innocent, he has falsely been implicated in the present case and the applicant has no criminal history. 12. All the accused persons mentioned in the Original Complaint of the ED and the only other natural person named along with the Applicant in the Supplementary Complaint, have been granted bail and the Applicant is languishing in jail since 12.04.2022. 13. There is only one scheduled offence mentioned in the supplementary complaint, i.e. FIR No. RC/05/2013/NIA/KOC dated 07.08.2013, in which the applicant is not an accused and that F.I.R. pre-dates the alleged generation of proceeds of crime against the Applicant. 14. In Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929, it has been held that to be ‘proceeds of crime’, the property must be derived or obtained, directly or indirectly, “as a result of” criminal activity relating to a scheduled offence. ED cannot resort to action against a person for money-laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed. The expression “derived or obtained” is indicative of criminal activity relating to a scheduled offence already accomplished. The offence under Section 3 is dependent on the wrongful and illegal gain of property as a result of criminal activity relating to a scheduled offence. 15. The learned Counsel for the applicant has submitted that in Vijay Madanlal Chaudhary (Supra), the Hon’ble Supreme Court has further held that if an accused is acquitted of the scheduled offence or if the offence is quashed as against an accused, the proceedings under PMLA would also stand nullified whereas in the present case, the applicant has neither been accused in the scheduled offence, nor has Page No.3 of 6 any of his properties been attached by the E.D. and, therefore, proceedings under PMLA cannot continue against him. 16. The learned Counsel for the applicant has further submitted that PFI was banned only on 27.09.2022, and it had not been notified as an unlawful organization at the time of alleged commission of offences, while SDPI is not banned even today nor has ever been banned. SDPI is a registered political party, which also contested elections on 16 seats in the 2023 Karnataka Assembly Elections. 17. RIF was not a banned organization at the time the funds are alleged to have been transferred, i.e. between June 2018 and June 2020. RIF was banned along with PFI on 27.09.2022. At the time of the alleged transfers, RIF was an organization recognised by the United Nations Global Compact as a participant NGO and had even been granted tax exemptions under Sec. 12AA & 80G of the Income Tax Act by the State. 18. The learned Counsel for the applicant has further submitted that the total proceeds of crime alleged against the Applicant is 58,33,044.50/, transactional details for which have been provided by the ED itself. As the entire sum alleged to be proceeds of crime has been transferred through banking channels, the allegation that the funds were transferred through ‘hawala/underground channels’ is baseless. He has submitted that the mere fact that cash deposits were made in the Applicant’s bank account does not by itself render the same to be proceeds of crime, especially when it is the ED’s admitted case that the origin of the same cannot be verified. 19. There is no requirement for custodial interrogation of the Applicant as his statements have already been recorded by ED under Section 50 of the PMLA on 19.02.2022, 21.02.2022, and 24.02.2022. After the applicant’s arrest, his statements were recorded on 25.09.2022, 30.09.2022, 01.10.2022, and 02.10.2022. The Supplementary Complaint dated 18.11.2022 has already been filed before and investigation qua the Applicant is complete. 20. Co-accused K. A. Rauf Sherif has been granted bail by means of an order dated 12.02.2021 passed by the Special Judge, PMLA, Ernakulam. Alam alias Mohmmed Alam has been granted bail by Page No.4 of 6 means of an order dated 31.10.2022 passed by the Session Judge / Special Court PMLA, Lucknow. Siddique Kappan has been granted bail by means of an order dated 23.12.2022 passed by this Court in Criminal Miscellaneous Bail Application No. 13642 of 2022, Atikur Rahman has been granted bail by means of an order dated 25.05.2023 passed by this Court in Criminal Miscellaneous Bail Application No. 4343 of 2023. Masood has been granted bail by means of an order dated 30.05.2023 passed by this Court in Criminal Miscellaneous Bail Application No. 5331 of 2023. 21. Abdul Razak Peediyakkal has been granted bail by means of an order dated 25.08.2023 passed by the Hon’ble Supreme Court in S.L.P. (Crl.) No. 4627 of 2023. The Hon’ble Supreme Court has taken into consideration the fact that the material witnesses have already been examined, several co-accused persons have been granted bail and Abdul Razak Peediyakkal was languishing in jail since 10.03.2022. Abdul Razak Peediyakkal and the Applicant, both have been shown to be the Directors/Key Persons of MVVP and both of them have been shown to be the members of PFI and shareholders of MVVP. Therefore, the allegations against Abdul Razak Peediyakkal and the Applicant are similar in nature. 22. Keeping in view the facts that: - (i) The applicant is not named or arrayed as accused in any of the Scheduled offences; (ii) PFI was banned only on 27.09.2022, and it had not been notified as an unlawful organization at the time of alleged commission of offences; (iii) The total proceeds of crime alleged against the Applicant have been transferred through banking channel; (iv) There is no requirement for custodial interrogation of the Applicant as his statements have already been recorded by ED and investigation qua the Applicant is complete; (v) Six co-accused persons have already been granted bail and while granting bail to Abdul Razak Peediyakkal, the Hon’ble Supreme Court has taken into consideration the fact that the material witnesses have already been examined, and the case set up against the applicant is similar to the case set up against Abdul Razak Peediyakkal and (vi) The applicant has no previous criminal history and he is languishing in jail since Page No.5 of 6 12.04.2022, I am of the view that the aforesaid facts are sufficient for making out a case for enlargement of the applicant on bail. 23. Accordingly, the bail application is allowed. 24. Let the applicant-Ashraf Khadir @ Ashraf Mk be enlarged on bail in ECIR/02/HIU/2018, under Sections 3/4 of Prevention of Money Laundering Act, 2002, Police Station Directorate of Enforcement, APJ Abdul Kalam Road, New Delhi, on furnishing a personal bond and two sureties each in the like amount to the satisfaction of Court concerned, subject to following conditions:- (i) the applicant shall not tamper with the prosecution evidence; (ii) the applicant shall not pressurize the prosecution witnesses; (iii) the applicant shall appear on each and every date fixed by the trial court. (iv) the applicant shall surrender his passport, if any, before the trial and he will not go outside the territories of India without prior permission of the trial Court. (Subhash Vidyarthi, J.) Order Date :- 27.09.2023 Ram. Page No.6 of 6 Digitally signed by :- RAM SINGH High Court of Judicature at Allahabad, Lucknow Bench "