Delhi High Court Denies Bail To Alleged International Hawala Dealers Bimal Jain And Naresh Jain

The Bench of Justice Yogesh Khanna denied them bail taking into account the serious allegations levelled against them and the investigation carried out against them by the Directorate Of Enforcement

Allegations against the petitioners

On July 1, 2017, an enquiry under FEMA, 2019 was commenced by the Directorate Of Enforcement and searches were carried out at various places against accused Naresh Jain and others.

The investigation conducted by the Directorate of Enforcement revealed that Naresh Jain along with his brother Bimal Jain and other accomplices hatched a criminal conspiracy to cause loss to the exchequer and banks by indulging in illegal foreign exchange transactions on the basis of forged/ fabricated documents.

For the furtherance of the conspiracy, documents like identity proof, birth and education certificate, voter ID, PAN Card and signatures were forged/fabricated to incorporate entities, operating bank accounts, facilitating bogus/over-invoiced/ under invoiced import and export transactions and rotation of the funds through a web of shell companies to cause undue benefit to the parties involved and loss to the exchequer and banks.

Naresh Jain also facilitated parking of funds abroad by Indian nationals through his international Hawala transaction structure created in India and in various other jurisdictions.

Naresh Jain conducted an international Hawala operation and domestic operation of providing accommodation entries to co-conspirators i.e. the beneficiaries in lieu of his commission.

Allegedly Naresh Jain incorporated and operated 450 Indian entities and 104 foreign entities and he and his accomplices including the Bimal Jain rotated funds approximately to the tune of Rs.96,000 Crores for providing accommodation entries of approximately Rs.18,679 Crores to 973 beneficiaries.

Proceedings against them

On September 13, 2018, the Enforcement Directorate registered an FIR with the EOW Cell for Scheduled Offences under the Prevention of the Money Laundering Act, 2002 i.e. Sections 419/420/467/468/471/476/120B IPC against the accused persons.

On September 1, 2020, Naresh Jain was arrested under Section 19 PMLA and searches were conducted by the Enforcement Directorate on October 23, 2020 under PMLA at the residential premises of the petitioner Bimal Jain also.

Finally, on November 30, 2020, Bimal Jain was also arrested pursuant in the execution of the NBW (Non-Bailable Warrant) by the Special Judge, PMLA while taking cognizance of prosecution complaint filed by the Enforcement Directorate.

Petitioner Bimal Jain then moved an application for bail but it was rejected on the ground that he did not cooperate with the Investigating Officer; furnished fake addresses; and also on the gravity of the offence.

Court's observations

It was vehemently argued that the arrest of Bimal Jain was made without compliance of Section 19 of the PMLA and Rules, hence his custody was wholly illegal and he needs to be granted bail.

As per Section 19(1) PMLA, the Investigating Officer must have the material in his possession, and he has reasons to believe (the reasons for such belief to be recorded in writing); that such person is guilty of an offence under the Act; and after the arrest of such person under subsection (1), he has to forward the copy of the order along with the material in his possession to the adjudicating authority in a sealed envelope.

However, the Court noted that since the arrest of accused Bimal Jain was in execution of the NBWs therefore, the provision under Section 19 of the PMLA could not be adhered to.

"The very fact the complaint was filed by the Enforcement Directorate arraying petitioner Bimal Jain as accused No.2, prima facie show there were reasons to believe the person was guilty of offence punishable under Section PMLA as the complaint is filed only against a person who is presumed to be guilty"

The Court also noted that Special Judge, PMLA took cognizance of the complaint filed by the Enforcement Directorate as he reasonably believed petitioner Bimal Jain, being guilty of the offence of money laundering and thus there was no occasion to comply with the requirement of Section 19 of the PMLA.

Consequently, noting the serious allegations against the petitioners, the Court dismissed their bail pleas.

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