CA gets bail under PMLA from Delhi High Court in Chinese Company Money Laundering Case

A Delhi court on Monday granted bail to chartered accountant Nitin Garg, one of four main suspects in the Rs.20,000 crore money laundering case involving Chinese smartphone maker Vivo.

The Enforcement Directorate denied Garg’s bail, calling him the “main mastermind” and claiming that he was the “first limb” in forming a network of 19 firms that played an important role in the money laundering operation.

Additional Sessions Judge Kiran Gupta granted the accused bail, ruling that Garg had no role in the 19 firms’ activities or operations after their incorporation in 2014.

The accused’s lawyers, Aman Sharma, Samarth K Luthra, and Ankit Bhatia, maintained that Garg was not a beneficiary of the alleged gains in the case and was simply extending his professional services by incorporating the 19 businesses for which he was paid Rs.19 lakh.

The ED, on the other hand, said that Garg “knowingly incorporated” Vivo India’s distributor firms, aiding in the syphoning off funds from India to China. Garg had contact with the Chinese government before 2014, according to the agency. They also claimed that if granted bail, the defendants could flee India.

The agency claimed that several owners in a firm called GPICPL (Grand Prospect International Communication Pvt. Ltd.), which was allegedly formed to carry out fraudulent activities, using fake documents and fake addresses.

Garg’s senior counsel, Sidharth Agarwal, stated that the accused never forged the documents.

“The forgery, if any, was after the incorporation of these companies, and none of the documents used for obtaining the forged documents were signed/attested by the applicant,” concluded ASJ Gupta. She concluded that Garg was unlikely to commit any offence while on bail.

In October, the ED arrested four people in connection with the case, including a Chinese national and the managing director of Lava International mobile firm. Along with Garg, another CA was detained.

According to the chargesheet, various businesses controlled by Vivo China used fake identification documents to obtain unjust benefits for themselves “to the detriment of Indian laws and the country’s economic sovereignty.”

The chargesheet also alleges that Vivo China wrongfully “established a complex centrally controlled structure all over the country under the corporate veil of Vivo India and concealed the true nature of their ownership and control.”

Vivo China exploited the complicated company structure to collect proceeds of crime totalling Rs.20,241 crore.