The Delhi High Court has granted the bail to the former Lava MD in money laundering case on a personal bond of Rs. 1 lakh.
The bench of Justice Manoj Kumar Ohri has observed that the applicant has been in custody since 10.10.2023 and the trial is at the stage of documents under Section 207 Cr.P.C. and charges are yet to be framed. Out of the 7 accused persons who were arrested, arrest of 3 persons was declared illegal by the Trial Court vide order dated 30.12.2023 and the other three, as noted above, have already been released on bail.
Table of Contents – Former Lava MD
Background
The petitioner/applicant seeks regular bail in the proceedings emanating out of ECIR. The ECIR was registered on the basis of the FIR No. 0807/2021 dated 05.12.2021 registered under Sections 417/120B/420 IPC.
It has been alleged in the prosecution complaint that Vivo Mobile Communication Co. Ltd, China along with others conspired to fraudulently set up Vivo group of companies in India without revealing their true beneficial ownership and carried out mis-declarations before government bodies. It is alleged that Vivo Mobile India Private Limited and its State Distribution Companies (SDCs) concealed their Chinese ownership. While it was projected that Vivo India is a subsidiary of a Hong Kong based company viz. Multi Accord Limited, however investigation has established that it was under the ultimate control of Vivo China.
It is also alleged that Vivo India had remitted funds outside India to the tune of Rs 70,837 Crores out of the total funds i.e. Rs. 71,625 Crores accumulated by them from sale of goods in the period from January 2015 to March 2021. Thus, Vivo China, through Vivo India has created an elaborate network of companies under a corporate veil.
All the SDCs are controlled by Vivo India which in turn is controlled by Vivo China. By creating the said meshed and Pan-India structure, Vivo India has acquired Proceeds of Crime to the tune of Rs. 2,02,41,17,72,292.89. The proceeds so acquired were then siphoned off by Vivo India to Overseas trading companies many of which are in control of Vivo China.
The applicant is the Managing Director of M/s Lava International Ltd., engaged in the business of manufacture and sale of mobile phones under the brand „Lava‟and a competitor of Vivo. He has been arrayed as accused No. 20 in the prosecution complaint. It has been alleged that the applicant had invited Chinese Nationals from Vivo China in 2013-2014 with the intent of enabling them to set up a web of companies in India by concealing true ownership.
He is also alleged to have provided them logistical and ground support and helped them get a foothold in India by circumventing FDI norms. He is also alleged to have transferred around Rs. 3.17 Crores in total, including Rs 2.62 Crores from Lava and Rs 55 lacs from his personal account to one Labquest Engineering Pvt. Ltd. to help Vivo China set up a number of companies without disclosing that it is the controller of those entities.
Court’s Findings
Since the offence pertains to money laundering, apart from the usual considerations, it would have to be seen whether the twin conditions stipulated in Section 45 of the PMLA are met. A plain reading of Section 45 of the PMLA shows that the public prosecutor must be given an opportunity to oppose the application and the Court should have reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail. The twin conditions though restricts the right of accused to be released on bail but do not impose absolute restraint and the discretion vests in the Court.
Bail is the rule and jail is the exception. This principle is nothing but a crystallisation of the constitutional mandate enshrined in Article 21, which says that that no person shall be deprived of his life or personal liberty except according to the procedure established by law. Liberty is the usual course of action and deprivation of it a detour.
The deprivation of liberty must only by procedure established by law, which should be fair and reasonable. Right of the accused to speedy trial is an important aspect which the Court must keep in contemplation when deciding a bail application as the same are higher sacrosanct constitutional rights, which ought to take precedence.
Section 45 of the PMLA while imposing additional conditions to be met for granting bail, does not create an absolute prohibition on the grant of bail. When there is no possibility of trial being concluded in a reasonable time and the accused is incarcerated for a long time, depending on the nature of allegations, the conditions under Section 45 of the PMLA would have to give way to the constitutional mandate of Article 21.
What is a reasonable period for completion of trial would have to be seen in light of the minimum and maximum sentences provided for the offence, whether there are any stringent conditions which have been provided, etc. It would also have to be seen whether the delay in trial is attributable to the accused.
The court noted that where there are multiple accused persons, thousands of pages of evidence to assess, scores of witnesses to be examined and the trial is not expected to end anytime in the near future and the delay is not attributable to the accused, keeping the accused in custody by using Section 45 PMLA a tool for incarceration or as a shackle is not permissible. Liberty of an accused cannot be curtailed by Section 45 without taking all other germane considerations into account.
Conclusion
The court granted the bail to the applicant subject to various conditions.
Firstly, the applicant shall not leave Delhi/NCR without prior permission of the concerned Court and surrender his passport, if any, if not already done.
Secondly, the applicant shall provide his mobile number to the Investigating Officer on which he will remain available during the pendency of the trial.
Thirdly, in case of change of residential address or contact details, the applicant shall promptly inform the same to the concerned Investigating Officer as well as to the concerned Court.
Fourthly, the applicant shall not directly/indirectly try to get in touch with the prosecution witnesses or tamper with the evidence.
Lastly, the applicant shall regularly appear before the concerned Court during the pendency of the proceedings.
Case Details
Case Title: Hari Om Rai versus ED
Case No.: BAIL APPLN. 3548/2024 and CRL.M.(BAIL) 1644/2024
Date: 20.11.2024
Counsel For Petitioner: Vikas Pahwa
Counsel For Respondent: Zoheb Hossain
