Whether the appellants have been able to satisfy the twin conditions laid down in s. 45 of the Prevention of Money Laundering Act, 2002, that there are reasonable grounds for believing that the persons accused of the offence under the PMLA is not guilty of such offence; and that he is not likely to commit any offence while on bail.

* Author

[2024] 3 S.C.R. 778 : 2024 INSC 217

Satyendar Kumar Jain

v.

Directorate of Enforcement

(Criminal Appeal No. 1638 of 2024)

18 March 2024

[Bela M. Trivedi* and Pankaj Mithal, JJ.]

Issue for Consideration

Whether the appellants have been able to satisfy the twin conditions

laid down in s. 45 of the Prevention of Money Laundering Act, 2002,

that there are reasonable grounds for believing that the persons

accused of the offence under the PMLA is not guilty of such offence;

and that he is not likely to commit any offence while on bail.

Headnotes

Prevention of Money Laundering Act, 2002 – s. 45 – Offence

of money laundering – Conditions to be satified for grant of

bail – Appellant-Minister in the Govt. of NCT of Delhi was the

conceptualizer, initiator, fund provider and supervisor for the

entire operation of the accommodation entries against cash

totalling to around Rs. 4.81 crores received through entry

operators in the bank accounts of the four companies, by

paying cash and the said companies controlled and owned

by him and his family – Other two appellants assisted the

Minister by making false declarations under the IDS each of

them declaring alleged undisclosed income of Rs.8.26 crores

in order to protect the Minister – Prosecution complaint filed

by the Enforcement Directorate against the appellants for the

commission of the offence of Money laundering – Prosecution

complaint fixed for framing of charge against the appellants –

Bail applications – Denial of, by the High Court – Correctness:

Held: Though a company is a separate legal entity from its

shareholders and directors, the lifting of corporate veil is permissible

when such corporate structures have been used for committing

fraud or economic offences or have been used as a facade or a

sham for carrying out illegal activities – Declarations made by the

other two appellants under the IDS though were held to be void, the

observations and proceedings recorded in the said orders passed 

[2024] 3 S.C.R. 779

Satyendar Kumar Jain v. Directorate of Enforcement

by the Authorities and by the High Court cannot be brushed aside

merely because of the said declarations – Said proceedings clearly

substantiates the case of the ED as alleged in the prosecution

complaint – Appellants could not be permitted to take advantage of

their own wrongdoing of filing the false declarations to mislead the

Income Tax authorities, and now to submit that the said declarations

under the IDS were void – Having regard to the totality of the facts

and circumstances of the case, the appellants miserably failed to

satisfy that there are reasonable grounds for believing that they

are not guilty of the alleged offences – On the contrary, there is

sufficient material collected by the ED to show that they are prima

facie guilty of the alleged offences – Thus, it is not possible to hold

that appellants complied with the twin mandatory conditions laid

down in s. 45 – High Court also prima facie found the appellants

guilty of the alleged offences under the PMLA, and the judgment

does not suffer from any illegality or infirmity – Appellants were

released on bail for temporary period after their arrest and the

appellant-Minister was released on bail on medical ground which

continued till date – Appellant to surrender forthwith before the

Special Court. [Paras 28-33]

Prevention of Money Laundering Act, 2002 – ss. 3 and 2(1)

(u) – Offence of money laundering u/s. 3 – Words “proceeds

of Crime” in s. 2(1)(u) – Definition:

Held: Offence of money laundering captures every process and

activity in dealing with the proceeds of crime, directly or indirectly,

and is not limited to the happening of the final act of integration

of tainted property in the formal economy to constitute an act of

money laundering – Authority of the Authorised Officer under the

Act to prosecute any person for the offence of money laundering

gets triggered only if there exists proceeds of crime within the

meaning of s. 2(1)(u) and further it is involved in any process

or activity – Property must qualify the definition of “proceeds of

crime” u/s. 2(1)(u) – In all or whole of the crime property linked to

scheduled offence need not be regarded as proceeds of crime, but

all properties qualifying the definition of “proceeds of crime” u/s.

2(1)(u) will necessarily be the crime properties. [Para 21]

Case Law Cited

Vijay Madanlal Choudhary and Others v. Union of India

and Others [2022] 6 SCR 382 : (2022) SCC OnLine

SC 929; Karnail Singh v. State of Haryana and Another 

780 [2024] 3 S.C.R.

Digital Supreme Court Reports

(1995) Supp (3) SCC 376; Neelu Chopra and Another

v. Bharti [2009] 14 SCR 1074 : (2009) 10 SCC 184;

Myakala Dharmarajam & Ors. v. State of Telangana &

Anr. (2020) 2 SCC 743; Gautam Kundu v. Directorate

of Enforcement (Prevention of Money-Laundering Act),

Government of India [2015] 15 SCR 499 : (2015) 16

SCC 1; Rohit Tandon v. Directorate of Enforcement

[2017] 13 SCR 156 : (2018) 11 SCC 46 – referred to.

List of Acts

Prevention of Money Laundering Act, 2002; Prohibition of Benami

Property Transactions Act, 1988; Finance Act, 2016.

List of Keywords

Prevention of Money Laundering; Bail; Money laundering;

Accommodation entries; Undisclosed income; Company, separate

legal entity from its shareholders and directors; Lifting of corporate

veil; False declarations; Surrender; Proceeds of Crime; Property;

Beneficial owner.

Case Arising From

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.1638

of 2024

From the Judgment and Order dated 06.04.2023 of the High Court

of Delhi at New Delhi in BA No.3590 of 2022

With

Criminal Appeal Nos.1639 and 1640 of 2024

Appearances for Parties

Dr. Abhishek Manu Singhvi, N. Hari Haran, Mrs. Meenakshi Arora, Sr.

Advs., Vivek Jain, Abhinav Jain, Amit Bhandari, Rajat Jain, Sharian

Mukherji, Mueed Shah, Siddhant Sahay, Dr. Sushil Kumar Gupta,

Mrs. Sunita Gupta, Dr. Sushil Satrawala, Chandratanay Chaube,

Ankit Shah, Manan Verma, Advs. for the Appellant.

S.V. Raju, A.S.G., Mukesh Kumar Maroria, Zoheb Hussain, Rajat

Nair, Annam Venkatesh, Padmesh Mishra, Ms. Sairica S Raju,

Vinayak Sharma, Kshitiz Agarwal, Vivek Gurnani, Vivek Gaurav,

Kartik Sabharwal, Ms. Abhipriya, Advs. for the Respondent.

[2024] 3 S.C.R. 781

Satyendar Kumar Jain v. Directorate of Enforcement

Judgment / Order of the Supreme Court

Judgment

Bela M. Trivedi, J.

1. Leave granted.

2. All the three appeals arise out of the common impugned judgment

and order dated 06.04.2023 passed by the High Court of Delhi at

New Delhi, in the Bail Application Nos. 3590 of 2022, 3705 of 2022

and 3710 of 2022, whereby the High Court has rejected all the bail

applications of the appellants.

3. Earlier the Special Judge (PC Act) (CBI) -23 (MPs/MLAs cases) vide

the separate detailed orders dated 17.11.2022 had rejected the bail

applications of all the appellants – accused.

FACTUAL MATRIX

4. An FIR being case No.RC-AC-1-2017-A-0005 dated 24th August,

2017 came to be registered at the CBI AC-1, New Delhi against

Shri Satyendar Kumar Jain, Minister in the Government of National

Capital Territory of Delhi & Others, for the offences under Section

109 IPC and 13(2) read with Section 13(1)(e) of the PC Act, 1988

at the instance of the Dy. Superintendent of Police, CBI who had

conducted a Preliminary Enquiry, being PE AC-1-2017-A0003

dated 10.04.2017 registered at the said office of the CBI. After the

investigation, a Charge-sheet came to be filed by the CBI in respect

of the said FIR on 03.12.2018 in the Court of Special Judge, CBI,

Patiala House Courts, New Delhi against the six accused viz. Sh.

Satyendar Kumar Jain, Smt. Poonam Jain, Sh. Ajit Prasad Jain, Sh.

Sunil Kumar Jain, Sh. Vaibhav Jain and Sh. Ankush Jain.

5. Since Section 13(2) read with Section 13(1)(e) of the PC Act in the

said FIR dated 24th August, 2017 were scheduled offences under the

Prevention of Money Laundering Act, 2002 (hereinafter referred to

as the “PMLA”) and since it was alleged inter alia that Sh. Satyendar

Jain with the help of his family members and other persons had

acquired disproportionate assets during the period from 14.02.2015

to 31.05.2017, while he was functioning as Minister of Govt. NCT of

Delhi, and had laundered tainted cash amounts through Kolkata based

shell companies, the Directorate of Enforcement had registered an

ECIR bearing No. ECIR/HQ/14/2017 dated 30th August, 2017 against 

782 [2024] 3 S.C.R.

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Satyendar Jain, Vaibhav Jain, Ankush Jain and others for investigation

into the commission of the offence of Money laundering as defined

under Section 3 and punishable under Section 4 of the PMLA. On

the completion of the said investigation, the Prosecution Complaint

came to be filed on 27.07.2022 by the Directorate of Enforcement

in the Court of District and Sessions Judge, Rouse Avenue District

Court, New Delhi, against the accused Sh. Satyendar Jain and

others with a prayer to take cognizance of the offences of money

laundering under Section 3 punishable under Section 4 of PMLA. The

said Prosecution Complaint being CC No.23/2022 is now pending

at the stage of framing of charge against the appellants – accused.

6. During the course of investigation, the appellant- Satyendar Kumar

Jain was arrested on 30th May, 2022 and the appellants-Vaibhav

Jain and Ankush Jain were arrested on 30th June, 2022. The gist of

the allegations made against the appellants-accused as mentioned

in the said Prosecution Complaint is as under: -

S.No. Name of the

Accused

Role in the case (in brief)

1. Satyendar

Kumar Jain

Based on the discussion and material herein

above, it is clear that Satyendar Kumar

Jain hatched the criminal conspiracy and

conceptualized the idea of accommodation

entries against cash. To get his idea

implemented, he recommended appointing his

old friend Sh. Jagdish Prasad Mohta, Chartered

Accountant as the auditor of Akinchan

Developers Pvt. Ltd., Paryas Infosolution

Pvt. Ltd., Indo Metalimpex Pvt. Ltd. and

Mangalayatan Projects Pvt. Ltd. He (Satyendar

Kumar Jain) first approached Sh. Jagdish

Prasad Mohta for taking accommodation

entries in lieu of cash in his aforesaid four

companies. Shri Mohta arranged a meeting

between Satyendar Kumar Jain and Rajendra

Bansal, Kolkata based accommodation entry

provider. In this meeting all the nitty gritties

of these entries was finalized like percentage

of commission, process of cash transfer,

documents to be maintained etc.

[2024] 3 S.C.R. 783

Satyendar Kumar Jain v. Directorate of Enforcement

In this way Satyendar Kumar Jain was the

conceptualizer, initiator, and supervisor for

the entire operation of these accommodation

entries. By taking the accommodation entries in

various companies, Satyendar Kumar Jain was

hiding behind the Corporate Veil. Investigation

into the transactions and facts prove that

Satyendar Kumar Jain initiated, managed

and controlled the companies in which these

accommodations entries were received.

Accordingly, the accommodation entries

totalling to Rs.4.81 Crore (Rs.4.75 crores

as entries + Rs.5.32 lakhs as commission)

were received during the period 2015-16 from

Kolkata based entry operators in the bank

accounts of the aforesaid companies and

cash totalling to Rs.4,65,99,635/- i.e. (sum of

Rs.4,60,83,500/- + Rs.5,16,135/- commission

paid to entry operators), for this purpose, was

paid to them. He also received accommodation

entry of Rs.15,00,000/- in his company J.J.

Ideal Estate Pvt. Ltd. during the year 2015-16

from Kolkata based entry operators by paying

cash amounts of Rs. 15,00,000 + commission

of Rs.16,800/-. By this criminal activity, he while

holding the public office of and functioning as

a Minister of Government of National Capital

Territory of Delhi, during the period 14.02.2015

to 31.05.2017, acquired assets to the tune of

Rs.4,81,16,435/- i.e. (sum of Rs.4,60,83,500/-

+ Rs.15,00,000/- received in J.J. Ideal Estate

Pvt. Ltd. + Rs.5,16,135/- & Rs.16,800/-

commission paid to entry operators) - , as

discussed in above paragraphs, in his name

and in the name of his family member/ friends,

with the help of his business associates, which

are disproportionate to his known sources

of income for which he has not satisfactorily

accounted for and laundered the proceeds of

crime through a complex web of companies

controlled by him. 

784 [2024] 3 S.C.R.

Digital Supreme Court Reports

Satyendar Kumar Jain has thus committed

the offence of money laundering as defined

under Section 3 of PMLA by actually

acquiring, possessing, concealing and

using the proceeds of crime to the tune

of Rs.4,81,16,435/- and projecting and

claiming the same as untainted in the mode

and manner as provided in the preceding

paragraphs in the present complaint.

2. Ankush Jain Ankush Jain has knowingly assisted Satyendar

Kumar Jain by making declaration under IDS,

2016 for declaring undisclosed income of

Rs.8.6 crore (including Rs.1,53,61,166/-

during check period) for the period from

2010-11 to 2015-16 in order to save and

shield Sh. Satyendar Kumar Jain. He also

prepared back dated documents with the

help of Vaibhav Jain, Sunil Kumar Jain and

Jagdish Prasad Mohta with regard to his

directorship in Akinchan Developers Pvt.

Ltd., Paryas Infosolution Pvt. Ltd. and Indo

Metalimpex Pvt. Ltd. by becoming directors

of aforesaid companies from back date for

showing his IDS declaration as genuine.

Ankush Jain has thus committed the offence

of money laundering as defined under Section

3 of PMLA by being actually involved in and

knowingly assisting Satyendar Kumar Jain in

projecting his proceeds of crime to the tune

of Rs.4,81,16,435/- as untainted in the mode

and manner as described in the preceding

paragraphs in the present complaint and is

therefore, liable for punishment under Section

4 of PMLA.

3. Vaibhav Jain Vaibhav Jain is involved in knowingly

assisting Satyendar Kumar Jain by making

declaration under IDS, 2016 for declaring

undisclosed income of Rs.8.6 crore (including

Rs.1,53,61,166/- during check period) for

the period from 2010-11 to 2015-16 in

order to save Sh. Satyendar Kumar Jain.

[2024] 3 S.C.R. 785

Satyendar Kumar Jain v. Directorate of Enforcement

He also prepared back dated documents with

the help of Sunil Kumar Jain, Ankush Jain and

Sh. Jagdish Prasad Mohta with regard to his

directorship in Akinchan Developers Pvt. Ltd.,

Indo Metalimpex Pvt. Ltd. and Mangalayatan

Projects Pvt. Ltd. by becoming directors of

aforesaid companies from back date for

showing his IDS declaration as genuine.

Vaibhav Jain has thus committed the offence

of money laundering as defined under Section

3 of PMLA by being actually involved in and

knowingly assisting Satyendar Kumar Jain in

projecting his proceeds of crime to the tune

of Rs.4,81,16,435/- as untainted in the mode

and manner as aforesaid in the complaint

and is therefore, liable for punishment under

Section 4 of PMLA.

SUBMISSIONS

7. The learned counsels for the parties made their respective

submissions at length. The learned senior advocate Mr. Abhishek

Manu Singhvi broadly made following submissions on behalf of the

appellant Satyendar Kumar Jain:

(i) The appellant was already granted bail in the predicate offence

registered by the CBI, and the arrest of the appellant was made

by the ED almost five years after the registration of the ECIR,

though the appellant was cooperating the ED by remaining

present in response to the summons issued under Section 50

of the PMLA. The appellant was in custody from 30.05.2022

to 26.05.2023 and since then has been granted interim bail on

the medical ground.

(ii) No shares of companies as alleged by the ED were acquired

by the appellant within the check period and even otherwise

the assets held by the company could not be attributed to its

shareholders.

(iii) Even if the accommodation entries amounting to Rs. 4.61 crores

are attributed to the appellant through his wife’s shareholdings,

it would come only to Rs. 59,32,122/- which is less than 1 crore, 

786 [2024] 3 S.C.R.

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and therefore the appellant is entitled to bail under the proviso

to Section 45 of the PMLA.

(iv) There is gross discrepancy in the amount of proceeds of

crime calculated by the ED and the amount mentioned

in the Chargesheet of the CBI in as much as the alleged

disproportionate amount is Rs.1,62,50,294/- as per the FIR

whereas as per the ED the amount is Rs. 4,81,16,435/-.

(v) The appellant had neither served as a Director nor had signed

any financial document during the check period, and the

appellant had already resigned from the directorship of the

allegedly involved Companies two years before the commission

of the alleged offence. It was Vaibhav Jain and Ankush Jain

and their family members who had a significant influence and

control over the said companies.

(vi) The appellant’s role in the companies has been delineated in the

MOU seized from Vaibhav Jain’s locker, which underscores the

business relations and shows that the appellant’s architectural

expertise was to be employed for the investment to be financed

by the families of Vaibhav Jain and Ankush Jain. Through the

quashing of the provisional attachment order by the Delhi High

Court, the allegation against the appellant being the beneficial

owner had stood refuted.

(vii) The alleged proceeds of crime through accommodation entries

were directed to the families of Vaibhav Jain and Ankush

Jain, and the fresh shares issued to the Kolkata based Shell

Companies were promptly transferred to Vaibhav Jain and

Ankush Jain during the check period. The appellant therefore

was not in possession of any proceeds of crime.

(viii) The appellant could not be held to be in constructive possession

of the property, if there was no dominion or control of the

appellant over the said property. As per the ED’s complaint

also the appellant was not in possession of the proceeds of

crime and therefore also the appellant could not be said to be

in constructive possession of the same.

(ix) There was no shred of evidence collected by the ED to show

that the appellant had provided cash to Kolkata companies

during the check period. It was Vaibhav Jain and Ankush Jain 

[2024] 3 S.C.R. 787

Satyendar Kumar Jain v. Directorate of Enforcement

who had explained on their Fragrance business as the legitimate

source of the cash during their recording of statements under

Section 50 of the PMLA.

(x) The Kolkata companies and the persons allegedly providing

accommodation entries were not made the accused by the ED.

(xi) The allegation of the ED in its complaint that the appellant had

committed a predicate offence of hatching a criminal conspiracy

and by committing criminal activity had acquired assets to the

tune of Rs. 4.81 crore in his name and in the name of his family

members while holding the public office, was not the allegation

made by the CBI in the FIR registered against the appellant

and others with regard to the disproportionate assets charged

under Section 13(1)(e) of the Prevention of Corruption Act.

(xii) The assumptions of proceeds of crime on the sole basis of

accommodation entries is completely contrary to the concept

of proceeds of crime as explained in the judgment of Vijay

Madanlal Choudhary and Others vs. Union of India and

Others1

. Such allegation could be a tax violation but could not

be considered as proceeds of crime.

(xiii) The Prosecution Complaint is silent as to when the scheduled

offence was committed and as to how and in what manner the

proceeds of crime was laundered within the meaning of Section

3 of the PMLA.

(xiv) As regards the Income Disclosure Scheme (IDS) declaration

made by Vaibhav Jain and Ankush Jain for about Rs.16 crores

for the period 2010-2016, it has been submitted that the said

IDS declarations were rejected by the PCIT vide the order dated

09.06.2017, on the ground of misrepresentation/suppression of

facts. The said order of PCIT was challenged by Vaibhav Jain

and Ankush Jain before the Delhi High Court, however the

High Court had also rejected that petition vide the order dated

01.08.2019. Neither the PCIT nor the High Court had given

any finding that the said amount of Rs. 16 crores belonged to

the appellant.

1 [2022] 6 SCR 382 : 2022 SCC OnLine SC 929

788 [2024] 3 S.C.R.

Digital Supreme Court Reports

(xv) The reliance placed by the ED on the appellant’s letter dated

27.06.2018 was misleading and incorrect, in as much as the

appellant vide the said letter had explicitly denied the appellant

being the beneficial owner. Since Vaibhav Jain and Ankush

Jain had already deposited the tax on the said income, the

appellant in the said letter had only requested the authorities

to adjust the said tax and not to make a demand again for the

same amount from the appellant, however from the said letter

it could not be assumed that the appellant had accepted the

additions made in the assessment order.

(xvi) As held in Vijay Madanlal Choudhary (supra), the courts ought

not to conduct mini trial and should consider only the broad

probability of the matter. The appellant is not a flight risk, there is

no risk of tampering of documents or witnesses. The jail violation

as alleged by the ED has not been accepted by the concerned

Jail visiting Judge and the Jail authorities. The appellant being

sick and infirm, having undergone a spine surgery, is entitled

to bail as per the proviso to Section 45 of PMLA.

8. The learned ASG Mr. SV Raju made the following submissions in

the appeal preferred by the appellant Shri Satyendar Kumar Jain:

(i) It was revealed during the course of investigation that the

appellant Satyendar Kumar Jain while posted and functioning

as the Minister in the Government of National Capital Territory

of Delhi, during the period from 2015 to 2017 had acquired

assets in the form of movable and immovable properties in

his name and in the name of his family members, which were

disproportionate to his known source of income.

(ii) During the check period, the accommodation entries against

cash of about 4.81 crores was received in the companies – M/s

Akinchan Developers Pvt. Ltd., M/s Paryas Infosolutions Pvt.

Ltd., M/s. Manglayatan Projects Pvt. Ltd., and M/s JJ Ideal

Estate Pvt. Ltd., beneficially owned/ controlled by the appellant

from Kolkata based entry operators through Shell Companies.

(iii) From the statements of Rajendra Bansal, Jivendra Mishra, both

residents of Kolkata, and from Shri J.P. Mohta, the Chartered

Accountant, it was revealed that Shri Rajendra Bansal had

arranged accommodation entries in the companies of the 

[2024] 3 S.C.R. 789

Satyendar Kumar Jain v. Directorate of Enforcement

appellant. Shri Vaibhav Jain in his statement under Section 50

had also stated that the cash was provided by the appellant

himself and had also explained about the modus operandi of

transferring the cash from Delhi to Kolkata through Hawala

operators and as to how in lieu of cash, accommodation entries

were layered and received from Kolkata based shell companies

into the companies owned by the appellant, and agricultural

lands were purchased from the said funds.

(iv) From the documents obtained from the Income Tax Department

it was revealed that the appellant had submitted the application

before the income tax authorities requesting that the income

tax paid by Vaibhav Jain and Ankush Jain under IDS, 2016

be adjusted against the demands raised in his individual

assessments by the IT authorities, which established that the

IDS declaration made by Vaibhav Jain and Ankush Jain were

made for the appellant and that the amount paid in IDS as well

as the tax paid thereon belonged to the appellant Satyendar

Kumar Jain.

(v) The Special Court having taken the cognizance of the PMLA

case vide the order dated 29.07.2022 and having held that there

was prima facie evidence incriminating about the involvement

of the appellant Satyendar Kumar Jain was sufficient to show

the existence of the scheduled offence and also the existence

of proceeds of crime.

(vi) The appellant Satyendar Kumar Jain was the main person

behind the bogus shell companies based in Kolkata, which

never did any real business. He had either incorporated them

or was having majority shareholdings alongwith his wife. The

accommodation entries of Rs. 16.50 crores (approx.) were

received in the said companies during the financial years 2010-

11, 2011-12 and 2015-16 with the modus operandi as revealed

from the statements of the Auditor/Chartered Accountant Shri

J.P. Mohta as well as the accommodation entry provider Shri

Rajendra Bansal and also from the statement of Vaibhav Jain.

(vii) Though the principle of company being a separate legal entity

from its shareholders is an established principle of Company

law, the lifting of corporate veil has been upheld in the cases

where the corporate structures have been used for committing 

790 [2024] 3 S.C.R.

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fraud, economic offences or have been used as a facade or a

sham for carrying out illegal activities.

(viii) The bogus nature of IDS declarations was substantiated by

the fact that the entire amount of Rs.16.50 Crores received

as accommodation entry was split between Vaibhav Jain and

Ankush Jain. The said declarations showed their modus operandi

to shield Satyendar Jain and his family members, and assume

the entire liability upon themselves to give it a colour of a tax

evasion simplicitor, rather than a criminal activity relating to

disproportionate assets. This modus operandi also showed

that the appellants themselves had disregarded the corporate

entities of these companies.

(ix) The disproportionate pecuniary resources earned by the

appellant by the commission of scheduled offence, were used

as accommodation entries for concealing and layering the

tainted origins of the money, and therefore would qualify to

be the proceeds of crime as defined under Section 2(1)(u) of

the PMLA.

(x) The two entry operators namely Rajendra Bansal and Jivendra

Mishra had expressed a fear that Shri Satyendar Kumar Jain

being an influential politician will create danger to them.

(xi) The mandatory twin conditions of Section 45 of PMLA having

not been satisfied, the appellant should not be released on bail.

9. So far as the appellants Ankush Jain and Vaibhav Jain are concerned,

the Learned Senior Advocate Ms. Menakshi Arora with Learned

Advocate Mr. Sushil Kumar Gupta made the following submissions: -

(i) The Scheduled offence in the present case i.e. the disproportionate

assets case under Section 13(1)(e) of the PC Act is a period

specific offence and gets accomplished only at the end of

the check period (14.02.2015 to 31.05.2017). As stated in

Vijay Madanlal Choudhary (supra), the proceeds of crime

is indicative of criminal activity related to a scheduled offence

already accomplished, and therefore the offence of money

laundering can be initiated only after the Scheduled Offence

is accomplished. However, in the instant case, the appellants

have been roped in for benami transactions from 2015-2016

which was well before the end of check period i.e 31.05.2017.

[2024] 3 S.C.R. 791

Satyendar Kumar Jain v. Directorate of Enforcement

(ii) The offence of money laundering against the appellants is

attributed to their act of filing IDS on 27.09.2016 much before

the end of check period i.e. 31.05.2017. Hence, the same cannot

be considered as an act of assisting someone in the offence of

money laundering as the proceeds of crime could have been

generated after the end of the check period and not before that.

(iii) The act of declaring IDS by the appellants in respect of

undisclosed income for the period from 2010-2011 to 2015-2016

cannot be considered as an act of assisting Satyendar Jain in

committing the offence of money laundering, in as much as the

possession of unaccounted property acquired by legal means

may be actionable for tax violation, but cannot be regarded

as the proceeds of crime unless the concerned tax legislation

prescribes such violations as an offence and such an offence

is included in the Schedule of the PML Act. In the instant case,

the total amount of 16 crores has not been considered as the

proceeds of crime as the ED is relying on the accommodation

entries received during the check period.

(iv) The IDS filed u/s 183 of the Finance Act, 2013 was declared

void u/s 193 of the said Act by the Income Tax authorities.

Hence, the said act of the appellants filing the IDS cannot

be construed as basis for levelling charges under Section 3

of PMLA. Reliance is placed on Karnail Singh vs. State of

Haryana and Another2 for understanding the meaning of “void.”

(v) It is not made clear by the ED as to the declaration of which IDS,

whether the one filed by Vaibhav Jain or that filed by Ankush

Jain has led to the assistance of Satyendar Jain for making out

the offence under PMLA. Since the allegations are vague, the

benefit of the same should go to the accused. In this regard,

reliance is placed on Neelu Chopra and Another vs. Bharti3

 and

Myakala Dharmarajam & Ors. Vs. State of Telangana & Anr.4

(vi) Since, the generation of proceeds of crime is not an offence

under Section 3 of PMLA and the said offence could be

2 (1995) Supp (3) SCC 376

3 [2009] 14 SCR 1074 : (2009) 10 SCC 184

4 (2020) 2 SCC 743

792 [2024] 3 S.C.R.

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committed only after the accomplishment of the Scheduled

Offence, the alleged act could not be said to be an offence

under Section 3 of PMLA. The act of the appellants assisting

Satyendar Jain for accumulating assets as alleged by the CBI,

cannot be said to be an offence under the PMLA.

(vii) The control of the entire records of the companies was with

the appellants, including the bank accounts. They were the

main decision- makers being the Directors, in respect of the

acts performed on behalf of the Companies, and Mr. Satyendar

Jain had nothing to do with the said Companies after 2013.

The prosecution has unnecessarily tried to link the appellants

with Satyendar Jain from the statements of witnesses recorded

under Section 50 of the PMLA.

(viii) The Scheduled Offence does not allege conspiracy. The day

Mr. Satyendar Jain decided to enter into politics, all the relations

with him whether in respect of the Companies or any business

transactions were severed, and since July 2013 he was neither

a Director nor a shareholder nor had any relation with the

Companies which were the Companies of the appellants.

(ix) The appellants are in custody since 30.06.2022 except for the

period when they were released on the interim bail (Vaibhav Jain

on 18.08.2023 to 27.12.2023 and Ankush Jain on 12.09.2023

to 27.12.2023).

(x) The appellants have not violated any conditions imposed by

the Court when on interim bail, and have also not tried to delay

the proceedings before the trial court in any manner.

10. The learned ASG Mr. S.V. Raju appearing on behalf of the respondentDirectorate of Enforcement made his submissions in the appeals

preferred by the appellants- Ankush Jain and Vaibhav Jain as under: -

(i) The appellants-Ankush Jain and Vaibhav Jain were actively

involved in the commission of the offence of money laundering

by assisting the accused-Satyendar Kumar Jain. The appellant

Ankush Jain was the Director of M/s. Mangalayatan Projects Pvt.

Ltd. during the check period. The said company is one of the

accused in the Prosecution Complaint filed on 27.07.2022. The

said company had received the proceeds of crime amounting

to Rs.1,90,00,000/- during the check period in the form of 

[2024] 3 S.C.R. 793

Satyendar Kumar Jain v. Directorate of Enforcement

accommodation entries from Kolkata based shell companies.

The said appellant-Ankush Jain transferred the land possessed

by M/s. Mangalayatan Projects Pvt. Ltd. in the name of his

mother Indu Jain to frustrate the proceeds of crime.

(ii) Similarly, the appellant-Vaibhav Jain was the Director of M/s.

Paryas Infosolution Pvt. Ltd. during the check period. The

said company is also one of the accused in the Prosecution

Complaint filed on 27.07.2022. The said company had received

proceeds of crime amounting to Rs.69,00,300/- during the

check period in the form of accommodation entries from the

Kolkata based shell companies. The said appellant-Vaibhav

Jain had transferred the land possessed by M/s. Mangalayatan

Projects Pvt. Ltd. in the name of his mother Sushila Jain and

wife-Swati Jain to frustrate the proceeds of crime. He also took

back the shares without consideration from shell companies

and thus both the appellants helped Satyendar Kumar Jain in

projecting the tainted money as untainted in the process of

money laundering.

(iii) Both the appellants had made declarations in their individual

capacity under the IDS, 2016 for declaring undisclosed income

of Rs.8.6 Crores during check period i.e. from 2010-11 to 2015-

16, in order to shield Satyendar Kumar Jain for concealing the

true nature of proceeds of crime.

(iv) Both the appellants prepared back dated documents with the

help of each other and with the help of Sunil Kumar Jain and

Jagdish Prasad Mohta for becoming directors in their respective

companies i.e. Mr. Ankush Jain in M/s. Akinchan Developers

Pvt. Ltd., and M/s. Indo Metalimpex Pvt. Ltd., and Mr. Vaibhav

Jain in M/s. Akinchan Developers Pvt. Ltd., M/s. Mangalayatan

Projects Pvt. Ltd. and M/s. Indo Metalimpex Pvt. Ltd. for showing

the IDS declarations as genuine.

(v) The income sought to be disclosed by the appellants under

the IDS declarations belonged to the appellant- Satyendar

Jain, and the said IDS declarations were rejected by the

Income Tax authorities under Section 193 of the Finance Act,

2016 on the ground of misrepresentation and suppression of

facts. The said order was upheld by the High Court and the

Supreme Court.

794 [2024] 3 S.C.R.

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(vi) The declarations of the appellants were held void under Section

193 of the Finance Act, 2016, which applied only for the purpose

of the said scheme, however, if the making of such declarations

was an offence under a separate Act, namely, PMLA, then such

an act would not be effaced merely because of Section 193.

(vii) The very fact that such declarations were made by the said

appellants, was the relevant fact for the purposes of the

alleged offence under the PMLA, as both the appellants are

being prosecuted in their individual capacities for allegedly

actively assisting the appellant- Satyendar Jain in concealing

the proceeds of crime and projecting the proceeds of crime

as untainted.

(viii) Section 13(1)(e) and Section 13(2) are both scheduled offences

under the PMLA, and Section 3 of PMLA ropes in any person

who may or may not have any role to play in the scheduled

offence but has directly or indirectly attempted to indulge or

knowingly assisted or knowingly is a party involved in any

process or activity connected with the proceeds of crime.

(ix) The money laundering need not commence only after the check

period, inasmuch as the offence under Section 13(1) (e) of the

PC Act contemplates that at any time the assets of the public

servant could be disproportionate to his income, which could

have been acquired by the public servant either at the beginning

or in the middle of the check period also.

(x) From the statements of bank accounts of the four companies

and various other Kolkata based shell companies controlled

by Kolkata based entry operators revealed that the amount

totalling to Rs. 4,60,83,500/- was received in M/s. Akinchan

Developers Pvt. Ltd., M/s. Mangalayatan Projects Pvt. Ltd.

and M/s. Paryas Infosolution Pvt. Ltd. from Kolkata based shell

companies during the period 01.04.2015 to 31.03.2016 (during

the check period) despite no business activities were carried

out by the said companies and the shares were purchased at

a very high premium.

(xi) The investigation revealed that the cash acquired by Satyendar

Jain was given to the Kolkata entry operators for the purpose

of accommodation entries contemporaneously during the check 

[2024] 3 S.C.R. 795

Satyendar Kumar Jain v. Directorate of Enforcement

period as and when they were acquired and thereafter the same

were concealed and projected as untainted and sought to be

laundered in the form of share application money. The said

amount was also used for repayment of loan and purchase of

agricultural lands by the said companies.

(xii) Though the CBI in their chargesheet dated 03.12.2018 filed

in FIR No. RC-AC-I-2017-A 0005 (dated 24.08.2017) had

quantified the proceeds of crime to be Rs.1,47,60,497.67, in view

of the investigation conducted under PMLA it was established

that all the companies were beneficially owned and controlled

by Satyendar Jain, and the amount of Rs.4,81,16,435/- received

during the check period was the proceeds of crime in the hands

of Satyendar Jain. The said conclusion along with the facts

underlying the same, have also been conveyed to the CBI

under Section 66(2) of PMLA vide the letter dated 31.03.2022.

(xiii) Though the accommodation entries per se may not be the

proceeds of crime in a given case, since in the instant case,

it has been specifically alleged that the shares in the three

companies during the check period which were held by the

bogus share companies, were purchased by the Kolkata based

bogus companies as entries in lieu of cash, the source of which

cash was the public servant, namely, Saytendar Jain, he was the

beneficial owner of the shares which was a vehicle to introduce

the unaccounted cash or disproportionate pecuniary resources

which squarely fell within the meaning of proceeds of crime as

defined under Section 2(1)(u) of the PMLA.

11. During the course of arguments, the Court had sought clarification from

the learned ASG Mr. Raju with regard to the role of the appellantsAnkush Jain and Vaibhav Jain, as also the quantum of proceeds of

crime with which they were allegedly involved, specifically in respect

of the figures mentioned in the Prosecution Complaint against them.

Pursuant to the same, the Deputy Director, Directorate of Enforcement

has filed his affidavit clarifying the role of the appellants – Ankush

Jain and Vaibhav Jain and further stating inter alia that the figure

of Rs.1,53,61,166/- was inadvertently mentioned at page no.-248,

as it was the amount attributed by the CBI in its Chargesheet to

Satyendar Jain, Ankush Jain and Vaibhav Jain individually for the

purpose of receiving total accommodation entries in lieu of cash of 

796 [2024] 3 S.C.R.

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Rs.4.61 Crores, however respondent’s investigation has revealed

that the entire Rs.4.81 Crores (Rs.4.61 Crores plus commission plus

Rs.15 lakhs in J.J. Ideal Estates Pvt. Ltd.) was entirely the property

of Satyendar Jain received in his companies as accommodation

entries in lieu of cash and this entire sum was sought to be declared

by the appellants Ankush Jain and Vaibhav Jain in the IDS as their

own income.

12. In the light of the said clarification, the Learned Senior Advocate

Ms. Arora had further submitted that the so-called inadvertent error

was not pointed out before the trial court and the High Court and

it was only during the course of arguments before this Court, the

said clarification/rectification was sought to be made, which is not

permissible. According to her, ED attains jurisdiction to investigate

only after the proceeds of crime is generated and when the same

is subjected to any process or activity as mentioned in Section 3 of

PMLA. Therefore, ED could not have increased the proceeds of crime

beyond what was taken as disproportionate assets by the CBI i.e.

1,47,60,497/-. She further submitted that as per the FIR, the figure

mentioned was Rs. 1,53,61,166/-, during the arguments and as per

the written submissions the figure mentioned was Rs. 4,81,16,435/-,

and the figure mentioned as per the affidavit is Rs.4,65,99,635/- which

does not find mention in the complaint. Thus, the allegations made

against the appellants being vague in nature, the benefit should go

to the appellants.

ANALYSIS

13. We are well conscious of the fact that the chargesheet has already

been filed in the predicate offence on 03.12.2018 for the offences

under the Prevention of Corruption Act allegedly committed by the

present appellants alongwith others, and the cognizance thereof

has already been taken by the concerned Court. The Prosecution

Complaint has also been filed by the respondent – ED against the

present appellants alongwith others for the commission of the offence

of Money laundering as defined under Section 3 read with Section

70 punishable under Section 4 of PMLA 2002. We have also been

apprised that the Special Court has fixed the Prosecution Complaint

for framing of charge against the appellants alongwith others. Under

the circumstances any observation made by us may influence the

process of trial. We, therefore would refrain ourselves from dealing 

[2024] 3 S.C.R. 797

Satyendar Kumar Jain v. Directorate of Enforcement

with the elaborate submissions made by the learned counsels for the

parties on the merits of the case, we would rather confine ourselves

to deal with the bare minimum facts necessary for the purpose of

deciding whether the appellants have been able to satisfy the twin

conditions laid down in Section 45 of the PMLA, that is (i) there are

reasonable grounds for believing that the persons accused of the

offence under the PMLA is not guilty of such offence; and (ii) that

he is not likely to commit any offence while on bail.

14. In Gautam Kundu vs. Directorate of Enforcement (Prevention of

Money-Laundering Act), Government of India5

, while holding that

the conditions specified under Section 45 of PMLA are mandatory,

it was observed as under: -

“30. The conditions specified under Section 45 of PMLA are

mandatory and need to be complied with, which is further

strengthened by the provisions of Section 65 and also

Section 71 of PMLA. Section 65 requires that the provisions

of CrPC shall apply insofar as they are not inconsistent

with the provisions of this Act and Section 71 provides

that the provisions of PMLA shall have overriding effect

notwithstanding anything inconsistent therewith contained

in any other law for the time being in force. PMLA has an

overriding effect and the provisions of CrPC would apply

only if they are not inconsistent with the provisions of this

Act. Therefore, the conditions enumerated in Section 45

of PMLA will have to be complied with even in respect

of an application for bail made under Section 439 CrPC.

That coupled with the provisions of Section 24 provides

that unless the contrary is proved, the authority or the

Court shall presume that proceeds of crime are involved

in money-laundering and the burden to prove that the

proceeds of crime are not involved, lies on the appellant.”

15. In Vijay Madanlal Choudhary (supra), a three-judge bench while

upholding the validity of Section 45 had observed as under: -

“387. Having said thus, we must now address the challenge

to the twin conditions as applicable post amendment of

5 [2015] 15 SCR 499 : (2015) 16 SCC 1

798 [2024] 3 S.C.R.

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2018. That challenge will have to be tested on its own

merits and not in reference to the reasons weighed with this

Court in declaring the provision, (as it existed at the relevant

time), applicable only to offences punishable for a term of

imprisonment of more than three years under Part A of the

Schedule to the 2002 Act. Now, the provision (Section 45)

including twin conditions would apply to the offence(s) under

the 2002 Act itself. The provision post 2018 amendment, is

in the nature of no bail in relation to the offence of moneylaundering unless the twin conditions are fulfilled. The

twin conditions are that there are reasonable grounds for

believing that the accused is not guilty of offence of moneylaundering and that he is not likely to commit any offence

while on bail. Considering the purposes and objects of the

legislation in the form of 2002 Act and the background in

which it had been enacted owing to the commitment made

to the international bodies and on their recommendations, it

is plainly clear that it is a special legislation to deal with the

subject of money-laundering activities having transnational

impact on the financial systems including sovereignty and

integrity of the countries. This is not an ordinary offence.

To deal with such serious offence, stringent measures

are provided in the 2002 Act for prevention of moneylaundering and combating menace of money-laundering,

including for attachment and confiscation of proceeds of

crime and to prosecute persons involved in the process or

activity connected with the proceeds of crime. In view of the

gravity of the fallout of money-laundering activities having

transnational impact, a special procedural law for prevention

and regulation, including to prosecute the person involved,

has been enacted, grouping the offenders involved in the

process or activity connected with the proceeds of crime

as a separate class from ordinary criminals. The offence

of money-laundering has been regarded as an aggravated

form of crime “world over”. It is, therefore, a separate class

of offence requiring effective and stringent measures to

combat the menace of money-laundering.

400. It is important to note that the twin conditions provided

under Section 45 of the 2002 Act, though restrict the right 

[2024] 3 S.C.R. 799

Satyendar Kumar Jain v. Directorate of Enforcement

of the accused to grant of bail, but it cannot be said that

the conditions provided under Section 45 impose absolute

restraint on the grant of bail. The discretion vests in the

Court which is not arbitrary or irrational but judicial, guided

by the principles of law as provided under Section 45 of

the 2002 Act.

404. As aforementioned, similar twin conditions have

been provided in several other special legislations validity

whereof has been upheld by this Court being reasonable

and having nexus with the purposes and objects sought

to be achieved by the concerned special legislations.

Besides the special legislation, even the provisions in the

general law, such as 1973 Code stipulate compliance of

preconditions before releasing the accused on bail. The

grant of bail, even though regarded as an important right

of the accused, is not a mechanical order to be passed

by the Courts. The prayer for grant of bail even in respect

of general offences, have to be considered on the basis

of objective discernible judicial parameters as delineated

by this Court from time to time, on case-to-case basis.

406. It was urged that the scheduled offence in a given

case may be a non-cognizable offence and yet rigors

of Section 45 of the 2002 Act would result in denial of

bail even to such accused. This argument is founded on

clear misunderstanding of the scheme of the 2002 Act.

As we have repeatedly mentioned in the earlier part of

this judgment that the offence of money-laundering is

one wherein a person, directly or indirectly, attempts to

indulge or knowingly assists or knowingly is a party or

is actually involved in any process or activity connected

with the proceeds of crime. The fact that the proceeds of

crime have been generated as a result of criminal activity

relating to a scheduled offence, which incidentally happens

to be a non-cognizable offence, would make no difference.

The person is not prosecuted for the scheduled offence

by invoking provisions of the 2002 Act, but only when he

has derived or obtained property as a result of criminal

activity relating to or in relation to a scheduled offence and

then indulges in process or activity connected with such 

800 [2024] 3 S.C.R.

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proceeds of crime. Suffice it to observe that the argument

under consideration is completely misplaced and needs

to be rejected.”

16. In the light of the aforestated position of law propounded by the

three Judge Bench, we have prima facie examined the case alleged

against the appellants and the prima facie defense put forth by the

appellants, to satisfy ourselves whether there are reasonable grounds

for believing that the appellants are not guilty of the alleged offences

under the Act and that they are not likely to commit any offence while

on bail. Though it was urged on behalf of the respondent – ED that

the appellant Satyendar Kumar Jain is a very influential political

leader and is likely to influence the witnesses if released on bail, we

would rather objectively decide the appeals on merits.

17. The case in nutshell put forth by the respondent – ED is that the appellant

Satyendar Kumar Jain had conceptualized the idea of accommodation

entries against cash and at this instance, his close associate Shri

Jagdish Prasad Mohta had arranged a meeting between Satyendar

Kumar Jain and Rajendra Bansal, a Kolkata based accommodation

entry provider in July/ August, 2010. In the said meeting the modalities

of carrying out accommodation entries, percentage of commission,

process of cash transfer and documents to be maintained etc. were

finalized. Thus, according to the ED, Satyendar Kumar Jain was the

conceptualizer, initiator and supervisor for the entire operation of the

accommodation entries. It has been alleged that the accommodation

entries totalling to Rs.4.81 crores were received during the period

2015-16 from Kolkata based entry operators in the bank accounts of

the four companies – Paryas Infosolution Pvt. Ltd., Indo Metalimpex

Pvt. Ltd., Mangalayatan Projects Pvt. Ltd. and Akinchan Developers

Pvt. Ltd., which companies were owned/controlled by him and his

family members, and the cash totalling Rs.4,65,99,635/- approximately

was paid to the said entry operators. It has been also alleged that

the appellant Satyendar Kumar Jain received accommodation entries

of Rs.15 lakhs in his company J.J. Ideal Estate Pvt. Ltd. during the

year 2015-16 from the said Kolkata based entry operators by paying

cash amounts of Rs.15 lakhs and commission of Rs.16,800/-. Thus,

it has been alleged that Satyendar Kumar Jain committed offence of

money laundering under Section 3 of PMLA by actually acquiring,

possessing, concealing and using the process of bank to tune of

Rs.4,81,16,435/- and projecting and claiming the same as untainted.

[2024] 3 S.C.R. 801

Satyendar Kumar Jain v. Directorate of Enforcement

18. The ED has also alleged against the appellants Ankush Jain and

Vaibhav Jain inter alia that they had assisted Satyendar Kumar

Jain in the commission of the alleged offence by making separate

independent declarations under IDS 2016 for declaring undisclosed

income of Rs.8.26 crores for period from 2010-11 to 2015-16 in order

to protect Satyendar Kumar Jain. As per the case of ED, the appellants

Ankush Jain and Vaibhav Jain had prepared ante dated documents

with the help of Sunil Kumar Jain and Jagdish Prasad Mohta with

regard to the Directorship in Akinchan Developers Pvt. Ltd. Paryas

Infosolution Pvt. Ltd., Indo Metalimpex Pvt. Ltd., and Mangalayatan

Projects Pvt. Ltd. by becoming the Directors of the said companies

from the back date for showing their IDS declarations as genuine.

Thus, the said appellants have also committed the offence of money

laundering as defined under Section 3 of PMLA by being actually

involved in and knowingly assisting Satyendar Kumar Jain in projecting

his proceeds of crime to the tune of Rs.4,81,16,435/- as untainted in

the mode and manner stated in the Prosecution Complaint.

19. It was vehemently argued by the Learned Senior Advocate Mr.

Singhvi, for the appellant Satyendar Jain that there was gross

discrepancy in the amount of proceeds of crime calculated by the

ED in the Prosecution Complaint and in the amount with regard to

disproportionate assets mentioned by the CBI in the chargesheet filed

in the predicate offence. According to him, the amount with regard to

disproportionate assets mentioned by the CBI is Rs. 1,47,60,497/-

whereas as per the ED the proceeds of crime is Rs.4,81,16,435/-.

Even if the accommodation entries amounting to about Rs.4.6 crores

are attributed to the appellant-Satyendar Kumar Jain through his

wife’s share holdings, it would come to only Rs.59,32,122/- which

is less than one crore. He has further submitted that the appellantSatyendar Kumar Jain neither served as a Director nor had signed

any financial document during the check period and that he had

already resigned from the Directorship of the companies two years

before the commission of the alleged offence. According to him, it

was the appellants- Vaibhav Jain and Ankush Jain, and their family

members who had the significant influence over the control of the

companies involved in the case.

20. In order to appreciate the submissions of Mr. Singhvi, let us have a

cursory glance over the definitions of the words “beneficial owner”

as contained in Section 2(1)(fa), “Money laundering” as defined in 

802 [2024] 3 S.C.R.

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Section 2(1)(p), “Proceeds of Crime” in section 2(1)(u) and “Property”

in Section 2(1)(v), and the offence under Section 3 of the PMLA.

The said definitions read as under:

“Section 2 (1) (fa)

(fa) “beneficial owner” means an individual who ultimately

owns or controls a client of a reporting entity or the person

on whose behalf a transaction is being conducted and

includes a person who exercises ultimate effective control

over a juridical person;

Section 2 (1) (p)

(p) “money-laundering” has the meaning assigned to it

in section 3;

Section 2 (1)(u)

(u) “proceeds of crime” means any property derived or

obtained, directly or indirectly, by any person as a result

of criminal activity relating to a scheduled offence or the

value of any such property or where such property is taken

or held outside the country, then the property equivalent

in value held within the country or abroad;

Explanation. --For the removal of doubts, it is hereby

clarified that “proceeds of crime” include property not only

derived or obtained from the scheduled offence but also

any property which may directly or indirectly be derived

or obtained as a result of any criminal activity relatable to

the scheduled offence;

Section 2 (1)(v)

(v) “property” means any property or assets of every

description, whether corporeal or incorporeal, movable

or immovable, tangible or intangible and includes deeds

and instruments evidencing title to, or interest in, such

property or assets, wherever located;

Explanation. --For the removal of doubts, it is hereby

clarified that the term property includes property of any

kind used in the commission of an offence under this Act

or any of the scheduled offences;

[2024] 3 S.C.R. 803

Satyendar Kumar Jain v. Directorate of Enforcement

Section 3

Whosoever directly or indirectly attempts to indulge or

knowingly assists or knowingly is a party or is actually

involved in any process or activity connected with the

proceeds of crime including its concealment, possession,

acquisition or use and projecting or claiming it as untainted

property shall be guilty of offence of money-laundering.

Explanation. --For the removal of doubts, it is hereby

clarified that, --

(i) a person shall be guilty of offence of money-laundering if

such person is found to have directly or indirectly attempted

to indulge or knowingly assisted or knowingly is a party or is

actually involved in one or more of the following processes

or activities connected with proceeds of crime, namely: --

(a) concealment; or

(b) possession; or

(c) acquisition; or

(d) use; or

(e) projecting as untainted property; or

(f) claiming as untainted property,

in any manner whatsoever;

(ii) the process or activity connected with proceeds of

crime is a continuing activity and continues till such time

a person is directly or indirectly enjoying the proceeds of

crime by its concealment or possession or acquisition or

use or projecting it as untainted property or claiming it as

untainted property in any manner whatsoever.”

21. The offence of money laundering as contemplated in Section 3

of the PMLA has been elaborately dealt with by the three Judge

Bench in Vijay Madanlal Choudhary (supra), in which it has been

observed that Section 3 has a wider reach. The offence as defined

captures every process and activity in dealing with the proceeds of

crime, directly or indirectly, and is not limited to the happening of

the final act of integration of tainted property in the formal economy 

804 [2024] 3 S.C.R.

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to constitute an act of money laundering. Of course, the authority

of the Authorised Officer under the Act to prosecute any person for

the offence of money laundering gets triggered only if there exists

proceeds of crime within the meaning of Section 2(1)(u) of the Act

and further it is involved in any process or activity. Not even in case

of existence of undisclosed income and irrespective of its volume,

the definition of “Proceeds of Crime” under Section 2(1)(u) will get

attracted, unless the property has been derived or obtained as a result

of criminal activity relating to a scheduled offence. The property must

qualify the definition of “Proceeds of Crime” under Section 2(1)(u) of

the Act. As observed, in all or whole of the crime property linked to

scheduled offence need not be regarded as proceeds of crime, but

all properties qualifying the definition of “Proceeds of Crime” under

Section 2(1)(u) will necessarily be the crime properties.

22. So far as the facts of the present case are concerned, the respondent

ED has placed heavy reliance on the statements of witnesses

recorded and the documents produced by them under Section 50

of the said Act, to prima facie show the involvement of all the three

appellants in the alleged offence of money laundering under Section

3 thereof. In Rohit Tandon vs. Directorate of Enforcement6

, a three

Judge Bench has held that the statements of witnesses recorded

by Prosecution – ED are admissible in evidence in view of Section

50. Such statements may make out a formidable case about the

involvement of the accused in the commission of the offence of

money laundering.

23. Again, the three Judge Bench in Vijay Madanlal Choudhary (supra)

while examining the validity of the provisions contained in Section

50 held as under: -

431. In the context of the 2002 Act, it must be remembered

that the summon is issued by the Authority under Section 50

in connection with the inquiry regarding proceeds of crime

which may have been attached and pending adjudication

before the Adjudicating Authority. In respect of such action,

the designated officials have been empowered to summon

any person for collection of information and evidence to

be presented before the Adjudicating Authority. It is not

6 [2017] 13 SCR 156 : (2018) 11 SCC 46

[2024] 3 S.C.R. 805

Satyendar Kumar Jain v. Directorate of Enforcement

necessarily for initiating a prosecution against the noticee

as such. The power entrusted to the designated officials

under this Act, though couched as investigation in real

sense, is to undertake inquiry to ascertain relevant facts to

facilitate initiation of or pursuing with an action regarding

proceeds of crime, if the situation so warrants and for

being presented before the Adjudicating Authority. It is

a different matter that the information and evidence so

collated during the inquiry made, may disclose commission

of offence of money-laundering and the involvement of the

person, who has been summoned for making disclosures

pursuant to the summons issued by the Authority. At this

stage, there would be no formal document indicative of

likelihood of involvement of such person as an accused of

offence of money-laundering. If the statement made by him

reveals the offence of money-laundering or the existence

of proceeds of crime, that becomes actionable under the

Act itself. To put it differently, at the stage of recording of

statement for the purpose of inquiring into the relevant facts

in connection with the property being proceeds of crime

is, in that sense, not an investigation for prosecution as

such; and in any case, there would be no formal accusation

against the noticee. Such summons can be issued even

to witnesses in the inquiry so conducted by the authorised

officials. However, after further inquiry on the basis of other

material and evidence, the involvement of such person

(noticee) is revealed, the authorised officials can certainly

proceed against him for his acts of commission or omission.

In such a situation, at the stage of issue of summons, the

person cannot claim protection under Article 20(3) of the

Constitution. However, if his/her statement is recorded

after a formal arrest by the ED official, the consequences

of Article 20(3) or Section 25 of the Evidence Act may

come into play to urge that the same being in the nature

of confession, shall not be proved against him. Further,

it would not preclude the prosecution from proceeding

against such a person including for consequences under

Section 63 of the 2002 Act on the basis of other tangible

material to indicate the falsity of his claim. That would be

a matter of rule of evidence.

806 [2024] 3 S.C.R.

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24. In the instant case, it has been found during the course of

investigation from the statements of witnesses recorded under

Section 50 that the appellant Satyendar Jain and his family

directly or indirectly were owning/controlling the companies - M/s.

Akinchan Developers Pvt. Ltd., M/s. Paryas Infosolution Pvt. Ltd.,

M/s. Indo Metalimpex Pvt. Ltd. and M/s. Mangalayatan Projects

Pvt. Ltd. He was the conceptualizer, initiator and supervisor of the

accommodation entries totalling to Rs.4.81 Crores approximately,

which were received from the Kolkata based entry operators in

the Bank accounts of the said four companies. Shri J.P. Mohta

in his statement had stated inter alia that Mr. Satyendar Jain had

informed him in June/July, 2010 that he wanted to get investment/

accommodation entries in his companies against cash payment

and therefore he introduced Mr. Jain with his friend Mr. Rajendra

Bansal who was in the business of providing accommodation

entries against cash. Mr. Rajendra Bansal in his statement under

Section 50 had stated in detail as to how his companies provided

accommodation entries to the four companies owned/controlled by

Satyendar Jain from 2010-11 to 2015-16 against cash. Mr. Rajender

Bansal had also stated that the cash was being received from

Satyendar Kumar Jain/Jagdish Prasad Mohta at Kolkata through

Hawala operators, and he used to pass on the address of Hawala

operators to the other entry operators namely Jivendra Mishra and

Abhishek Chokhani for collecting cash after taking token from them.

He used to arrange entries for the companies of Satyendar Kumar

Jain as per the details provided by Jagdish Prasad Mohta through

his companies and other entry operators. He (Mr. Bansal) used to

issue cheque/RTGS to subscribe the shares of the four companies

of Satyendar Kumar Jain receiving the amounts in cash. He had

further stated that the accommodation entries were reflected in

the books of accounts of his companies as investments in shares.

He used to give signed share applications along with signed blank

transfer deeds to Jagdish Prasad Mohta. He had further stated that

he had received cash through Hawala operators of Kolkata 40-50

times during 2010-2016 totaling to approximately 17 crores on the

instructions of Satyendar Jain/Jagdish Prasad Mohta and he had

provided accommodation entries for Satyendar Jain’s Companies

of about 17 crores, for which he had earned commission of Rs

12,40,000/- for providing/arranging such accommodation entries

to the companies of Satyendar Jain.

[2024] 3 S.C.R. 807

Satyendar Kumar Jain v. Directorate of Enforcement

25. Mr. Pankul Agarwal had stated in his statement that though he was

appointed as a Director in M/s. J.J. Ideal Estate Pvt. Ltd., he did

nothing except signing of the documents and that the said company

was controlled by Satyendar Kumar Jain and Poonam Jain, and

that he was never informed about any business activity of the said

company by them. The appellant-Vaibhav Jain himself in his statement

recorded on 27.02.2018, had stated that the cash amount of Rs.16.50

crores (approx.) was paid by him, Sunil Kumar Jain, Ankush Jain

and Satyendar Kumar Jain for taking accommodation entries in M/s.

Akinchan Developers Pvt. Ltd., Paryas Infosolution Pvt. Ltd., Indo

Metalimpex Pvt. Ltd. and Mangalayatan Projects Pvt. Ltd. through

Kolkata based entry operators, and that the entire idea was mooted by

Satyendar Kumar Jain to use it for purchasing agricultural lands and

to develop the township. The said witnesses had clearly stated that

Satyendar Kumar Jain was the conceptualizer, initiator, fund provider

and supervisor for the entire operation to procure the accommodation,

share capital/premium entries. Though, the shareholding patterns of

the said four companies are quite intricate, they do show that Mr.

Satyendar Kumar Jain through his family was controlling the said

companies directly or indirectly and that Mr. Satyendar Kumar Jain

was the “beneficial owner” within the definition of Section 2(1) (fa)

of PMLA.

26. At this juncture, it is extremely pertinent to note that the appellantsVaibhav Jain and Ankush Jain had sought to avail of the Income

Declaration Scheme, 2016 (IDS) by filing separate declarations under

Section 183 of the Finance Act, 2016 in Form-I on 27.09.2016, in

which both of the said appellants had individually declared an income

of Rs.8,26,91,750/- as investments in shares of various companies

in the assessment years 2011-12, 2012-13 and 2016-17. The

Principal Commissioner, Income Tax (IV), New Delhi vide the order

dated 09.06.2017 passed under Section 183 of the Finance Act,

2016 held that the said declaration of income of Rs.8,26,91,750/- by

each of the appellants- Vaibhav Jain and Ankush Jain was made

“by suppression and misrepresentation of facts”, and therefore they

were “void”. It is further pertinent to note that the said order of PCIT

was based on the report submitted by the ACIT, Special Range (IV)

dated 07.06.2017 with regard to the assessment proceedings in case

of M/s. Akinchan Developers Pvt. Ltd., M/s. Indo Metalimpex Pvt.

Ltd., M/s. Paryas Infosolution Pvt. Ltd. ,and Mr. Satyendar Kumar 

808 [2024] 3 S.C.R.

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Jain. It was noted in the said report inter alia that the said companies

had taken accommodation entries in the form of share capital from

Kolkata based shell companies. On the basis of the said report,

the notices under Section 148 of the Income Tax Act for the year

2011-12 an 2012-13 were issued to Mr. Satyendar Kumar Jain. The

information regarding accommodation entries was also received by

the Initiating officer for further examination and necessary action

under the Prohibition of Benami Property Transactions Act, 1988

(for short “the PBPT Act). The Initiating officer had issued provisional

attachment orders under Section 24(4) of the PBPT Act on 24.05.2017

holding that Mr. Satyendar Kumar Jain was the beneficial owner of

the bogus share capital introduced in the companies. The said order

of PCIT dated 09.06.2017 passed under Section 183 of the FA, 2016

was challenged before the High Court of Delhi at New Delhi by the

appellants-Ankush Jain and Vaibhav Jain by filing Writ Petition (C)

Nos. 6541 of 2017 and 6543 of 2017 which came to be dismissed

by the High Court vide the order dated 21.08.2019. The High Court

in the said judgment had elaborately dealt with all these issues and

while dismissing the said writ petitions held as under:

“30. There are eight companies whose shares were

purchased by the two petitioners, whose names have

been included in the list. Admittedly, in respect of the

shares in ADPL, proceedings under section 24(4) of the

Prohibition of Benami Property Transaction Act, 1988 have

been initiated. The petitioners have themselves enclosed

a copy of the order dated May 24, 2017 passed in respect

of the “Benamidar”, i.e., ADPL, which inter-alia notes that

the cash that was routed through accommodation entries

in the garb of share capital/premium in fact belonged to

Mr. Satyender Kumar Jain and that it was at his direction

that the entire transaction was orchestrated. It was noted

that neither of these two petitioners was either a director

or shareholder in the said company. It was noted that the

declarants had not provided the name of the “Benamidar”

through whom the investment had been routed and that

these facts were all completely within the knowledge of

the two petitioners. These conclusions of the Principal

Commissioner of Income-tax have not been convincingly

countered by either of the petitioners. In the circumstances, 

[2024] 3 S.C.R. 809

Satyendar Kumar Jain v. Directorate of Enforcement

the Principal Commissioner of Income-tax was right in

concluding that neither of the petitioners had made a full

and true disclosure of all material facts.”

27. The said order of the High Court was challenged by the appellantsAnkush Jain and Vaibhav Jain before the Supreme Court by filing

Special Leave Petitions being SLP(C)Nos. 27522 of 2019 and 27610

of 2019, however they came to be dismissed vide the order dated

29.11.2019.

28. From the above stated facts there remains no shadow of doubt

that the appellant- Satyendar Kumar Jain had conceptualized idea

of accommodation entries against cash and was responsible for

the accommodation entries totalling to Rs. 4.81 crores (approx.)

received through the Kolkata based entry operators in the bank

accounts of the four companies i.e. M/s. Akinchan Developers Pvt.

Ltd., M/s. Paryas Infosolution Pvt. Ltd., M/s. Indo Metalimpex Pvt.

Ltd. and M/s. Mangalayatan Projects Pvt. Ltd., by paying cash and

the said companies were controlled and owned by him and his family.

Though it is true that a company is a separate legal entity from its

shareholders and directors, the lifting of corporate veil is permissible

when such corporate structures have been used for committing fraud

or economic offences or have been used as a facade or a sham for

carrying out illegal activities.

29. It has also been found that the appellants - Ankush Jain and Vaibhav

Jain had assisted the appellant-Satyendar Kumar Jain by making

false declarations under the IDS each of them declaring alleged

undisclosed income of Rs.8.26 crores in order to protect Satyendar

Kumar Jain. Though it was sought to be submitted by the learned

counsel for the appellants that the said declarations under IDS having

been held to be “void” in terms of Section 193 of FA, 2016 by the

income tax authorities, the same could not be looked into in the

present proceedings, the said submission cannot be accepted. The

declarations made by the appellants-Ankush Jain and Vaibhav Jain

under IDS have not been accepted by the Income Tax authorities on

the ground that they had misrepresented the fact that the investments

in the said companies belonged to the said appellants, which in fact

belonged to Mr. Satyendar Kumar Jain. The appellants could not

be permitted to take advantage of their own wrongdoing of filing

the false declarations to mislead the Income Tax authorities, and 

810 [2024] 3 S.C.R.

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now to submit in the present proceedings under PMLA that the said

declarations under the IDS were void. The declarations made by them

under the IDS though were held to be void, the observations and

proceedings recorded in the said orders passed by the Authorities

and by the High Court cannot be brushed aside merely because the

said declarations were deemed to be void under Section 193 of the

Finance Act, 2016. The said proceedings clearly substantiates the

case of the respondent ED as alleged in the Prosecution Complaint

under the PMLA.

30. Having regard to the totality of the facts and circumstances of the

case, we are of the opinion that the appellants have miserably failed

to satisfy us that there are reasonable grounds for believing that

they are not guilty of the alleged offences. On the contrary, there is

sufficient material collected by the respondent-ED to show that they

are prima facie guilty of the alleged offences.

31. Though Ms. Arora had faintly sought to submit that the so-called

inadvertent mistake committed by the ED with regard to the figures

mentioned in the Prosecution Complaint in respect of the role of the

appellants Ankush Jain and Vaibhav Jain should not be permitted

to be corrected, which otherwise show that the allegations against

the appellants were vague in nature, we are not impressed by the

said submission. We are satisfied from the explanation put forth in

the affidavit filed on behalf of the respondent-ED that it was only

an inadvertent mistake in mentioning the figure Rs.1,53,61,166/- in

the bracketed portion, which figure was shown by the CBI in its

chargesheet. The said inadvertent mistake has no significance in

the case alleged against the appellants in the proceedings under

the PMLA.

32. From the totality of facts and circumstances of the case, it is not

possible to hold that appellants had complied with the twin mandatory

conditions laid down in Section 45 of PMLA. The High Court also

in the impugned judgment after discussing the material on record

had prima facie found the appellants guilty of the alleged offences

under the PMLA, which judgment does not suffer from any illegality

or infirmity.

33. The appellants were released on bail for temporary period after their

arrest and the appellant-Satyendar Kumar Jain was released on

bail on medical ground on 30.05.2022, which has continued till this 

[2024] 3 S.C.R. 811

Satyendar Kumar Jain v. Directorate of Enforcement

day. He shall now surrender forthwith before the Special Court. It is

needless to say that right to speedy trial and access to justice is a

valuable right enshrined in the Constitution of India, and provisions of

Section 436A of the Cr.P.C. would apply with full force to the cases

of money laundering falling under Section 3 of the PMLA, subject

to the Provisos and the Explanation contained therein.

34. In that view of the matter, all the appeals are dismissed.

Headnotes prepared by: Nidhi Jain Result of the case:

Appeals dismissed.