In a significant ruling, the Allahabad High Court has denied bail to Shashi Bala alias Shashi Bala Singh, who is implicated in a high-profile money laundering case under the Prevention of Money Laundering Act, 2002 (PMLA). The case, involving massive financial scams perpetrated by the Shine City Group of Companies, is being closely monitored due to its wide-ranging implications on investors across several states in India.
Case Background
The bail application (Criminal Misc. Bail Application No. 6762 of 2024) was heard in Court No. 8, presided over by Justice Jaspreet Singh. The applicant, Shashi Bala, was represented by counsels Pradeep Kumar Rai, Prakarsh Pandey, and Praveen Kumar Shukla, while the Directorate of Enforcement was represented by counsel Rohit Tripathi.
Shashi Bala is accused in connection with the Enforcement Case Information Report (ECIR No. LKZO/05/2021) under Sections 3 and 4 of the PMLA. The case arises from multiple FIRs filed against the Shine City Group of Companies and its associates across the country. These FIRs, primarily lodged under various sections of the Indian Penal Code (IPC) by the Uttar Pradesh Police in Lucknow and Prayagraj, were eventually transferred to the Economic Offences Wing (EOW) at Lucknow.
The Shine City Group of Companies, managed by its director Rasheed Naseem, is alleged to have engaged in a series of fraudulent schemes, including fake real estate projects and unauthorized virtual currency transactions, to lure and cheat investors. The court noted that investors were promised high returns and offered post-dated cheques that were dishonoured upon maturity. Allegedly, the company also engaged in money laundering by moving illicit funds through various accounts and investments.
Legal Issues and Court’s Observations
One of the primary issues before the court was whether Shashi Bala, accused of being a close associate of Rasheed Naseem, the mastermind behind the fraudulent schemes, was entitled to bail. The court examined the allegations, which included her active role in creating a social media group named ‘Customer ka Haq,’ allegedly used to influence and illegally transfer possession of properties that had been provisionally attached by the Enforcement Directorate.
Justice Jaspreet Singh observed, “The applicant’s role in concealing the proceeds of crime and assisting in their dissipation cannot be overlooked. The evidence presented, including digital data and bank statements, indicates a pattern of behaviour that aligns with the illegal activities of the Shine City Group of Companies.”
The court further noted that significant amounts were deposited in Shashi Bala’s bank accounts, which she failed to satisfactorily explain. As a government school teacher, her only known source of income was her salary. The court remarked on the improbability of such large deposits coming from legitimate means, given her occupation and the evidence of transactions linked to the Shine City Group.
The counsel for the applicant argued that Shashi Bala was herself a victim of the fraudulent schemes, having invested money in the Shine City Group, which was not returned. However, the court rejected this defense, stating that “being a victim does not absolve one from being an active participant in the illegal activities of the offending company.”
Important Observations and Legal Precedents
Justice Jaspreet Singh referred to several precedents, including Rohit Tandon v. Directorate of Enforcement (2018) 11 SCC 46 and Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929, to underscore that economic offences involving money laundering are grave and pose a serious threat to the financial stability of the country. He emphasized that bail should not be granted lightly in such cases, especially when there are reasonable grounds to believe that the accused is guilty.
The court held that the applicant had not succeeded in overcoming the twin conditions for bail under Section 45 of the PMLA, which requires proving that the accused is not guilty of the offence and that they are unlikely to commit any offence while on bail. Justice Singh noted, “The presumption under Section 24 of the PMLA stands against the applicant, and it is for her to rebut it, which she has failed to do convincingly.”
The Court’s Decision
After hearing arguments from both sides and examining the evidence, the court concluded that there was sufficient material on record linking Shashi Bala to the fraudulent activities and money laundering operations of the Shine City Group of Companies. Therefore, the court denied her bail, stating, “The applicant’s involvement in the laundering of proceeds of crime, her active assistance in their concealment, and her proximity to the principal accused precludes the grant of bail at this stage.”
