Sidhique Kappan v. Directorate of Enforcement

Adyasha SahooCase Summary

Bail application in a case involving money laundering allegations through fraudulent transactions

Sidhique Kappan v. Directorate of Enforcement
In the High Court of Allahabad
Crl. Misc. B.A. 13642/2022
Before Justice D.K. Singh
Decided on December 23, 2022

Relevancy of the Case: Bail application in a case involving money laundering allegations through fraudulent transactions

Statutes and Provisions Involved

  • The Prevention of Money Laundering Act, 2002 (Section 3, 4, 44, 45)
  • The Information Technology Act, 2000 (Section 65, 72, 76)
  • The Indian Penal Code, 1860 (Section 120B, 124, 153A, 295A)
  • The Unlawful Activities (Prevention) Act, 1967 (Section 17, 18)

Relevant Facts of the Case

  • The accused applicant, an accredited press reporter for, was travelling to Hathras to cover an incident.
  • The U.P. Police arrested him for offences under the Information Technology Act, 2000, the Indian Penal Code, 1860, and the Unlawful Activities (Prevention) Act, 1967. In the case above, the Supreme Court granted bail to the accused applicant on September 9, 202e.
  • However, before his release, the police filed a complaint under Sections 3, 4, 44 and 45 of the Prevention of Money Laundering Act (PMLA), 2002 and took cognisance taken on February 10, 2022.
  • The complaint accused the applicant and co-accused of participating in a conspiracy led by K.A. Rauf Sherif, PFI Secretary, to disturb communal harmony, incite riots, and fund anti-CAA protests.
  • The investigation revealed that Rauf Sherif and his associates fraudulently collected ₹1.36 crores from abroad through bogus transactions. This money qualifies as proceeds of crime linked to international trade. They utilised these funds for criminal activities, including offences under UAPA.
  • The accused-applicant played a role in the conspiracy by maintaining ties with PFI, staying in regular contact with its office bearers, and actively participating in the use of proceeds of crime. He also travelled to Hathras with the co-accused and transferred funds as per Rauf Sherif’s instructions.
  • The accused-applicant filed a bail application.

Prominent Arguments by the Advocates

The accused-applicant’s counsel:

  • He argued that the complaint lacks specific details on the accused-applicant’s involvement in handling the proceeds of crime. For example, there is an absence of specified amounts, except for the ₹5,000 transferred to Atikur Rahman’s account, leading to a mere bald allegation.
  • The counsel asserted that the accused-applicant’s association with PFI, even if assumed true, does not constitute an offence under Section 3 of the Prevention of Money Laundering Act (PMLA), 2002.
  • Additionally, the counsel argued that the twin conditions under Section 45 of the PMLA, 2002 are not applicable as the proceeds of crime dealt with by the accused-applicant amount to only Rs. 5,000, falling short of the ₹1 crore threshold required to trigger these conditions.

The respondent’s counsel:

  • He argued that the accused-applicant is a part of the gang led by K.A. Rauf Sherif. The total proceeds of crime exceeds ₹1 crore, as per the complaint.
  • He further contended that since they have utilised the entire amount for scheduled offences, the conditions under Section 45 of the PMLA are satisfied. Hence, the applicant is not eligible for the grant of bail.

Opinion of the Bench

  • Apart from ₹5,000, no other transactions were found in either the accused-applicant or the co-accused’s account. Even if a portion of the proceeds of the crime was transferred, it may not sufficiently establish the accused-applicant’s involvement in the larger sum received by K.A. Rauf Sherif.
  • Twin conditions under Section 45 are not fulfilled. The applicant deserves to be released on bail.

Final Decision

  • The bench granted the bail application.