Muhammed Shafeeque Payeth V. Directorate Of Enforcement Thru. Assistant Director

/4713/2023

AI Insights

The case revolves around the bail application of Muhammed Shafeeque Payeth, who was accused under the Prevention of Money Laundering Act, 2002, in connection with the Enforcement Directorate's investigation into the fund-raising activities of the Popular Front of India (PFI). The ED alleged that Payeth was involved in transferring proceeds of crime from abroad under the guise of legitimate transactions. However, the defense argued that Payeth was not named in any of the scheduled offences and that the funds were transferred through banking channels, not through hawala or underground channels as alleged by the ED. The court's decision to grant bail was influenced by the lack of direct accusations against Payeth in the scheduled offences, the fact that similar co-accused had been granted bail, and the completion of the investigation against him.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 798193 (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
• Assessee Lawyers: MOHAMMAD BEG; HARSH VARDHAN KEDIYA; PURNENDU CHAKRAVARTY; SHASHANK SHUKLA; SHEERAN ALAVI
• Keywords: Bail application; Custodial interrogation; ED; Money laundering; NIA; Proceeds of Crime; Scheduled offences; Fund Raising Activities; PFI
• Section: 153A; 13; 72; 20; 5; 14; 3; 18; 25; 4; 65; 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:62813 Judgment Reserved on 12.09.2023 Judgment Delivered on 27.09.2023 Court No. - 16 Case :- CRIMINAL MISC. BAIL APPLICATION No. - 4713 of 2023 Applicant :- Muhammed Shafeeque Payeth Opposite Party :- Directorate Of Enforcement Thru. Assistant Director Counsel for Applicant :- Mohammad Hamza Beg,Harsh Vardhan Kediya,Harsh Vardhan Kedia,Purnendu Chakravarty,Shashank Shekhar Shukla,Sheeran Mohiuddin Alavi Counsel for Opposite Party :- Kuldeep Srivastava Hon’ble Subhash Vidyarthi J. 1. Heard Sri Purnendu Chakravarty and Sri Harsh Vardhan Kediya, the learned counsel for the applicant, Sri Kuldeep Srivastava, the learned counsel for the respondent and the respondent-Directorate of Enforcement and perused the records. 2. The instant application has been filed seeking release of the applicant Muhammed Shafeeque Payeth on bail in Sessions Case No.2459 of 2022: Enforcement Directorate Vs. Mohammed Shafeeque Payeth, ECIR/02/HIU/2018, under Sections 3/4 of Prevention of Money Laundering Act, 2002, Police Station Directorate of Enforcement, Headquarters, Investigation Unit, 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 the those persons were engaged in imparting weapon training and making illegal bombs. 4. On 19.10.2013, the NIA submitted a charge-sheet against Abdul Azeez and 21 other persons stating they were active members / leaders of PFI and SDPI and under a conspiracy with each other, they attempted to promote feelings of enmity between different religions, Page No.1 of 6 used 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. The 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 E.D. claims that the applicant was involved in the fund raising activities of PFI and approx. Rs. 42.74 lakhs are transferred from abroad in the guise of payments related to international trade of goods to the bank accounts of K. A. Rauf Sherif, National General Secretary of Campus Front of India (CFI) the Student’s Wing of PFI. He collected funds abroad and transferred Rs. 15,59,133 to his Indian bank accounts and then to Rehab India Foundation projecting them as legitimate funds in the guise of donations. 9. The E.D. alleges that the applicant placed, integrated and transferred proceeds of crime raised & collected abroad by depositing the same in his bank account in Doha and thereafter he transferred the proceeds of crime to his NRE/NRO bank accounts in South Indian Bank in India and from there to the bank accounts of Rehab India Foundation (RIF) and K. A. Rauf Sherif. It is alleged that the applicant had deposited 3,70,400 Qatar Riyal in Doha bank account in cash and he used the disguise of donations and payments related to international trade of goods for sending the said proceeds of crime to the Indian bank accounts for projecting the said money to be untainted. Page No.2 of 6 10. The PFI and its associated organizations have also been banned by the Government of India vide notification dated 27.09.2022. 11. Sri Purnendu Chakravarty and Sri Harsh Vardhan Kedia the learned Counsel for the applicant have submitted that the applicant is not named or arrayed as an accused in any of the Scheduled offences which have been enumerated in the supplementary complaint dated 18.11.2022 and, therefore, the proceedings under PMLA cannot survive against the applicant. 12. In the scheduled offences mentioned in the Supplementary Complaint dated 18.11.2022, there is only one offence 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. 13. In the affidavit filed in support of the application for bail, it has been mentioned that the applicant is innocent, he has falsely been implicated in the present case and he has no criminal history. 14. All the accused persons mentioned in the Original Complaint of the ED and the other natural persons named along with the Applicant in the Supplementary Complaint, have been granted bail and the Applicant is languishing in jail since 22.09.2022. 15. 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. 16. 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 Page No.3 of 6 property as a result of criminal activity relating to a scheduled offence. 17. 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 any of his properties been attached by the E.D. and, therefore, proceedings under PMLA cannot continue against him. 18. 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. 19. The 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. 20. 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. 21. There is no requirement for custodial interrogation of the Applicant as his statements have already been recorded by ED under Section 50 of Page No.4 of 6 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. 22. 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 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. 23. 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. 24. 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 (vi) The applicant has no Page No.5 of 6 previous criminal history and he is languishing in jail since 22.09.2022, I am of the view that the aforesaid facts are sufficient for making out a case for enlargement of the applicant on bail. 25. Accordingly, the bail application is allowed. 26. Let the applicant-Muhammed Shafeeque Payeth be released on bail in Sessions Case No.2459 of 2022: Enforcement Directorate Vs. Mohammed Shafeeque Payeth, ECIR/02/HIU/2018, under Sections 3/4 of Prevention of Money Laundering Act, 2002, Police Station Directorate of Enforcement, Headquarters, Investigation Unit, 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 "