'Exercised De Facto Control Of Companies Receiving Laundered Money': Enforcement Directorate Opposes AAP Leader Satyendar Jain's Bail Plea In Supreme Court

Additional Solicitor-General SV Raju, appearing for the ED, told the bench of Thursday, January 11, that Jain exercised effective control even after giving up his position as a director in the companies –

“Unaccounted cash of over four crores were received in these companies, through entries. This is not disputed. Satyendar Jain, however, has maintained that he had nothing to do with this amount or the companies. That's the crux of his case. His not being a director has no significance. He was de facto in control of these companies through his family members…Co-accused Vaibhav and Ankush Jain were only dummies. The entire amount that was received by these companies can be attributed to Satyendar Jain.”

Jain was arrested by the central agency in May 2022 on charges of money laundering. He, along with others, were accused of laundering money through three companies during 2010-12 and 2015-16. A bench of Justices Bela M Trivedi and Pankaj Mithal was hearing his special leave petition against an April 2023 Delhi High Court order denying him bail. The AAP leader is currently out on interim bail, which was granted to him by the top court in May last year.

During today's hearing, the law officer claimed that in a bid to launder money, certain amounts were routed through shell companies by Kolkata-based entry operators, which eventually returned the money to the companies linked to Jain in the form of investments.

“But these investments were bogus. The shares were inflated. The companies were not doing any business…The price of these shares were inflated so that more money can come and less shares can go. After this money came in, the shares were brought back again by these companies.”

“How would this help Satyendar Jain?” Justice Mithal asked the additional solicitor-general.

ASG Raju reasoned, “This helped him because he did not have white…he needed the white money…”

Justice Trivedi pressed on, “But he was not the director…”

The law officer explained, “In this case, it was a small-knit family company.”

He also contended that Jain had masterminded the entire money-laundering exercise, in consultation with his chartered accountant.

Justice Trivedi asked, “Is the chartered accountant also one of the accused?”

“No,” ASG Raju replied, “He is our star witness.”

In the course of the hearing, the additional solicitor general notably took the court through several photographs allegedly depicting, among other things, Satyendar Jain tutoring Vaibhav and Ankush Jain while in jail. Last year, a video of the AAP leader receiving a massage from who officials reportedly claimed was a fellow prisoner went viral, triggering a massive mud-slinging row between AAP and the Bharatiya Janata Party.

“If you're saying he's getting special treatment, why keep him inside?” Justice Mithal asked ASG Raju, on a lighter note.

Raju replied, “Either he is getting special treatment while in jail. Outside jail, he's in the hospital. Whenever the bail matter comes up, he's falling down. I've pointed out the number of times he has suffered a fall just before the bail matter. It's a strange coincidence. They say lightning never strikes in the same place twice…”

Jain's lawyer, however, promptly objected to these remarks, calling them 'unfair'. The injuries suffered by Jain during his post-operative recovery period had been verified, he asserted.

The hearing will continue on Wednesday, January 17.

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.

Earlier this 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