Supreme Court Reserves Verdict On AAP Leader Satyendar Jain's Bail Plea In Money Laundering Case

During today's hearing, the law officer also cautioned the court against setting aside concurrent findings of the trial court and the high court which have previously denied Jain's request for bail. In this connection, Raju pointed to the circumspection with which the Supreme Court has ordinarily interfered with concurrent findings. In response to this, Justice Trivedi pointed out, "Concurrent final findings, not tentative findings."

"Even findings on facts," ASG Raju insisted. Before concluding his arguments, he once again repeated that the premium of the shares of the Jain-linked company had been inflated, while the buyback rates were low to provide a cover for the money-laundering exercise. The allegation levelled against the AAP leader is that he effectively controlled these companies, shares of which were purchased by certain Kolkata-based entities after routing them through shell companies, using black money provided by Jain's associates. These shares were later bought back by co-accused Ankush and Vaibhav Jain. According to the ED's chargesheet, which originates out of a disproportionate assets case being investigated by the Central Bureau of Investigation (CBI), this is the manner in which money was laundered, with Satyendar Jain being the mastermind behind the alleged scheme. 

Senior Advocate Abhishek Manu Singhvi, however, vehemently denied these allegations on behalf of Jain. At the outset of his rejoinder, he urged the court to look at all the evidence and the circumstances in a holistic manner. "One straw doesn't break a camel's back. It's the cumulative effect. Your Lordships need to take a holistic view of the case."

While questioning the necessity and proportionality of the arrest, Singhvi urged the court to remember the small proportion of shares held by Satyendar Jain and his decision to resign from his post as a director of the two of the companies at the centre of the controversy. The senior counsel argued -

"The ED's entire basis has been shareholding. Later they added directorship. But they have applied the test of control because they know that they can't make a case on the basis of shareholding. On the other hand, it is easy to argue control. Shareholding, directorship, land, possession of money...they cannot make out these cases. These are objective facts, unlike 'control'. The families of Ankush and Vaibhav Jain are major shareholders. They exercised control. It's a peculiar case because there are people who owned up and said that the money and shares belonged to them. But ignoring this, the ED says actual control was exercised by Satyendar Jain. That's why they are saying 'mastermind', 'architect', 'control'. These are amorphous terms which if at all, can only be proved in trial. The man certainly cannot be held in jail on the basis of this."

"Moreover, he has already been incarcerated for a year and continues to be in jail despite getting bail in the predicate offence. It also must be remembered that the ECIR was lodged in 2017, and he was arrested only after five years," Singhvi added. In the same vein, Senior Advocate N Hariharan also questioned why the 'threat perception' that Jain would intimidate witnesses and try to influence trial, which has been cited by the ED as one of the reasons to oppose Jain's bail plea, did not exist in these five years.

Echoing the submissions made during his opening arguments, Singhvi once again insisted that where the predicate offence was over Rs 1.47 crores, a money laundering case relating to an amount exceeding this cannot be made out. When Justice Trivedi expressed her doubts about this rationale, Singhvi asserted, "Then change the predicate offence to a non-disproportionate assets case, or the check period will have to change. If you have chosen to stick with a DA case for a given check period, then this is not permissible."

"Is it your submission that the ED has to restrict itself to the CBI case? The PMLA is independent," Justice Trivedi asked.

"It is not independent of the anchor offence. It's a DA case, not a bribe or any other case. In a DA case, you fix the amount, etc. The goalpost cannot vary...How do you then do expenditure minus income...Then it's not a DA case. This is actually an income tax case which they are trying to convert into a DA case," Singhvi argued. He also questioned the statements relied on by the Enforcement Directorate, arguing that some were obtained by posing leading questions to the witnesses. Others, he said, were cyclostyled and copy-pasted, indicating that the witnesses had been tutored by the agency. Taking the court through the statement by the prosecution's star witness and Jain's chartered accountant, JP Mohta, Singhvi finally argued that there were no credible links tying Jain to the allegations of money laundering. 

At the end, while urging the court to allow Jain's bail application, Singhvi also said -

"The Enforcement Directorate has alleged that Satyendar Jain hatched a conspiracy in 2010. Then he should get a Nobel prize for astrology or some special prize because in 2010, he knew that in future a party would be formed, he would enter politics, win an election, become a minister, and then amass disproportionate assets. He wishes he were that omniscient, then he would not be suffering like this. This agency is supposed to be independent and objective. Sounds like Kafka's books...Opposite of what they are."

After hearing these submissions, the bench reserved its verdict on Satyendar Jain's bail plea. However, it is yet to hear the petitions filed by co-accused Ankush and Vaibhav Jain, which have been posted for hearing on Wednesday, January 24. 

What happened so far in the case?

Jain, a former Cabinet Minister of the Delhi Government, was arrested by the Enforcement Directorate in a money laundering case on May 30, 2022. He remained in custody until a vacation bench of the Supreme Court comprising Justices JK Maheshwari and PS Narasimha granted him interim bail on health grounds on May 26 last year.

In August, the court extended Jain's interim bail for the second time after Singhvi stated that he was undergoing rehabilitation following a complex spinal operation. Despite opposition from ASG SV Raju, who advocated for an independent examination by AIIMS and a cancellation of interim bail, the bench agreed to defer Jain's surrender. Since then, the case has witnessed a number of adjournments. But during one such hearing that subsequently got adjourned, the additional solicitor-general flagged alleged delay tactics being used by Jain to push back the trial court hearing. In response, the apex court directed him to 'diligently' participate in the ongoing proceedings before the trial court. "It is made clear pendency of proceedings before this court or any reason shall not be used as an excuse or ruse to defer proceedings before trial court, but would diligently take part in proceedings before the trial court and permit the case to progress," the bench ordered.

The law officer's allegation, however, was met with opposition from the petitioner's lawyer during a subsequent hearing. Among other things, Senior Advocate AM Singhvi also questioned the necessity of Jain's arrest, pointing to the need to show a “demonstrable, obvious, and palpable reason for making an arrest”. Since his arrest in May 2022, Jain has spent almost an entire year in jail before finally being released on interim medical bail to undergo a spinal operation, the senior counsel told the court. Responding to the ED's claim that Jain was the beneficiary and controller of the 'irregular' transactions under its scanner, Singhvi pointed out he was neither a director of any of the three companies that allegedly received laundered money after being routed through Kolkata-based shell companies in the form of investments, nor had he financially benefitted from the amounts that were suspected to have been transferred from the three companies to co-accused Vaibhav and Ankush Jain.

Last week, addressing the court on the merits of the main bail petition, Singhvi stressed that no predicate offence could be established against him and questioned the application of the Prevention of Money Laundering Act. Among other things, he also insisted that Jain's role was that of a qualified architect, not an investor or money handler, and highlighted the former minister's full cooperation during the investigation.

Background

In 2017, the Central Bureau of Investigation accused Jain and others of laundering money to the tune of Rs 11.78 crore during 2010-2012 and Rs 4.63 crores during 2015-16, when he had become a minister in the Delhi government. It was alleged that the money laundering exercise was carried out through three companies – Paryas Infosolution, Akinchan Developers, and Mangalayatan Projects.

Jain allegedly had given money to some Kolkata-based entry operators of different shell companies for accommodation entries, through his associates. The entry operators had then allegedly re-routed the money in the form of investment through shares in Jain-linked companies after 'layering them through shell companies'.

The case lodged by the Directorate of Enforcement is based on the CBI complaint and alleges that Jain signed conveyance deeds for the purchase of agricultural lands by Prayas Infosolutions in 2011 and 2012. The central agency has further alleged that the land was later transferred to family members of Jain's associates who denied knowledge about the transfers.

Last year, the ED year attached properties worth Rs. 4.81 crores belonging to five companies and others in the money laundering case against Jain and others. These assets reportedly were in the name of Akinchan Developers, Indo Metal Impex, Paryas Infosolutions, Mangalayatan Projects, and J.J. Ideal Estate etc. The Aam Aadmi Party leader was taken in custody in connection with the money laundering case on May 30, 2022.

In November of last year, the bail application of the former cabinet minister was dismissed by a trial court, which said that it had prima facie come on record that Jain was 'actually involved' in concealing the proceeds of crime by giving cash to the Kolkata-based entry operators and thereafter, bringing the cash into three companies against the sale of shares to show that income of these three companies was untainted.

Subsequently, his bail was denied by the Delhi High Court as well in April, on the ground that he was an influential person and had the potential of tampering with evidence. As such, the twin conditions under the Prevention of Money Laundering Act, 2002 were held to not be satisfied. Justice Dinesh Kumar Sharma also denied bail to co-accused Vaibhav Jain and Ankush Jain.

In May, a vacation bench headed by Justice JK Maheshwari granted interim bail to the Aam Aadmi Party leader on medical grounds, which was extended by the court in July.

Case Title

Satyendar Kumar Jain v. Directorate of Enforcement | Special Leave Petition (Criminal) No. 6561 of 2023