ASJ Dharmender Rana granted bail to the Applicant – Luo Sang @ Charlie Peng who is allegedly involved in a 1000 crores hawala / money laundering case registered by the Directorate of Enforcement. 

Appearing for ED, Adv. Mohammad Faraz primarily opposed the bail of Luo Sang @ Charlie Peng on the ground of bar u/s 45 PMLA and grave economic offence. It was submitted that in terms of Sec. 24 PMLA the burden lies on the accused to prove that he is not involved in the offence of money laundering.

Appearing for the applicant, Sr. Advocate Vikas Pahwa, assisted by Sumer Singh Boparai & Shadman Ahmed Siddiqui vehemently refuted the aforesaid contentions of ED, arguing that – 

(1) The ED has failed to ascertain the source of funds and whether it qualifies as “proceeds of crime” in terms of Sec. 2(1)(u) PMLA,2002 

(2) The bar of S.45 PMLA has been struck down and the 2018 amendment does not revive the twin conditions reliance was placed on Sai Chandrashekhar vs. Directorate of Enforcement 2021 SCC Online 1081; 

(3) With respect to burden of proof on the accused u/s 24 of PMLA, Mr. Vikas Pahwa, Senior Advocate relying on Anil Tuteja v. The Director, Directorate of Enforcement M. Cr.C. (A) NO. 469 of 2020 (Chhattisgarh High Court) argued that the burden lies on the accused only after framing of charges. It was further argued that even though Sec.24 shifts the burden on the accused yet the foundational facts are to established by investigating agency. In the present case ED is yet to ascertain whether the said funds are “proceeds of crime” in terms of S. 2(1)(u). 

Accepting the contentions raised on behalf of the Accused, the court granted bail and observed that the investigation conducted so far by the ED does not reveal the source of proceeds of crime. Further, the bar of S.45 is no longer applicable and only usual considerations for grant of bail u/s 439 Cr.P.C. are relevant. The court further observed that presumption u/s 24 PMLA comes to play only after framing of charges.

Relevant excerpts from the Order dated 23.07.2021 is as under:

I concur with the Ld. Senior Advocate that ‘proceeds of crime’ is a sine qua non for the commission of offence of Money Laundering. During the course of arguments, it is fairly conceded by the Ld. SPP that the source of money involved in the instant case is still under investigation. He also fairly conceded that as of now, there is no material available with ED to establish that the money involved in the present case came from any tainted source. However, he forcefully argued that a huge sum of money is involved in the present case. He placed strong reliance upon the judgment of Hon’ble Apex Court in the matter of Union of India v. Hassan Ali Khan & Anr (2011) 10 SC 235 which in my opinion is misplaced as in that case, there was categorical allegation that the money involved was proceeds of crime and a link , although nebulous, between the sums of money involved and the arm deal was emanating out of the material available on record. 

Senior Advocate Vikas Pahwa with Sumer Singh Boparai, Shadman Ahmed Siddiqui, Lavkesh Bhambhani, Syed Arham Masud, Abhishek Pati and Kartik Sabharwal Advocates appeared for the Applicant