A special court on Friday disallowed the Enforcement Directorate to take custody of Pune-based businessman Hasan Ali Khan, citing lack of “reasonable grounds for believing that the accused is guilty under the PMLA [the Prevention of Money Laundering Act].”
“No case is made out for the custody of the accused,” Justice M.L. Tahaliyani said, reprimanding the Enforcement Directorate for not providing sufficient evidence. “The Enforcement Directorate has not been able to place any sufficient material that any scheduled offence was committed by the accused.”
Hasan Ali was released on bail, on a surety of Rs.80,000.
Enforcement Directorate counsel said they were planning to move a higher court to challenge the verdict.
The Enforcement Directorate had earlier submitted that Hasan Ali's offence had cross-border implications. Denying the contention, the court said: “The investigators should establish the offence committed in India and the proceeds transferred outside India.”
Justice Tahaliyani granted Hasan Ali bail, mainly on the grounds that the agency could not prove any scheduled offence against him. The Enforcement Directorate did not submit enough evidence to prove that the property he gained was a result of the scheduled offence.
Unless there was prima facie evidence that a scheduled offence was committed by the accused, the Enforcement Directorate would not be able to prove that property transferred by him was tainted money which was being projected as untainted.
Turning the heat on the Enforcement Directorate, the judge said that under the PMLA, the agency should prove that the property gained by the accused was directly or indirectly achieved through a scheduled offence. The Enforcement Directorate had failed to do that.
The Enforcement Directorate cited the cases of passport forgery against Hasan Ali as the scheduled offence. It said the passport was used for travelling abroad where Hasan Ali indulged in illegal transactions.
“This is stretching too much to fit in the case of the PMLA,” Justice Tahaliyani said, referring to the linking of passport-related offences to money laundering. “The Enforcement Directorate was supposed to place some material to show that the property was derived directly or indirectly from the scheduled offence.”
Bank accounts
The Enforcement Directorate submitted photocopies of three accounts allegedly held by Hasan Ali and his wife in UBS Bank. The documents indicated that on July 30, 2001, two accounts were opened in the name of Hasan Ali and one in the name of his wife. The judge said the two accounts held by Hasan Ali were never made operational and were not funded. He said $61,031 was deposited in his wife's account and withdrawn immediately. “It appears that the bank was not satisfied with the credentials of the accountholders, and the accounts were never made operational.”
He also questioned the authenticity of the documents that the Enforcement Directorate relied on. “It is difficult to say the documents on which the Enforcement Directorate relied are genuine documents. They may have been created for some other purposes also,” he said, asking the Enforcement Directorate why it did not take steps after 2007 to further enquire into the documents.
He said the Enforcement Directorate relied heavily on more than 400 documents given by a source. “The investigation is based on them,” he said. He asked the agency that when UBS Bank denied the transaction of large sums on the account, how did it rely on the documents provided by the source. “The investigating officers relied on documents which indicate the transfer of more than $300 million allegedly held by the accused. But the communication from UBS Bank stated that there was no such transaction on the account, and it was immediately closed. These documents appear contradictory.”
He accepted the defence counsel's contention that the transfer of $7 lakh from Sarasin Bank to the account of S.K. Financial Services in Barclays Bank was done on the instructions of some H.A. Kahn, and not Hasan Ali Khan, as claimed by the agency. “Apart from that, even if it is admitted for the sake of argument that the $7 lakh was transferred by the accused, it can't be said that the proceeds of crime have been transferred,” Justice Tahaliyani said.
