Trust funds misappropriation case: PMLA court refuses to discharge Bhavna Gawali’s aide

MUMBAI: A special court designated under the Prevention of Money Laundering Act (PMLA) has rejected the discharge plea of Saeed Khan Shergul Khan, an aide of Shiv Sena MLA Bhavana Gawali, who was arrested in connection with a money laundering case. Khan is accused of misappropriating funds amounting to ₹18.18 crore from a trust headed by Gawali.

The Enforcement Directorate’s (ED) money laundering case stems from an FIR registered at the Risod police station in Washim district, following a complaint by Bhavana Gawali, the chairperson of the trust. She alleged the misappropriation of ₹18.18 crore from the trust.

In his discharge plea, Khan claimed that there was no predicate offence against him, and thus the allegations involving proceeds of crime did not hold. Khan argued that he was not associated with the organisation during the period of the predicate offence, which spanned from 2008 to June 2019. The plea also highlighted that neither the Registrar of Companies nor any other authorities had lodged complaints of document forgery against Khan. It further contended that since Khan was not an office-bearer at the time, he could not have withdrawn or siphoned off funds.

Khan’s advocate alleged that the trust was converted into a company at Gawali’s behest, with Khan becoming the company’s chairman in 2020. The defence argued that Ashok Gandole, who chaired the trust from 2003 to 2019, was responsible for siphoning off funds. They maintained that there was no evidence to establish the proceeds of crime as an untainted amount.

Relying on a high court judgement which affirmed that the ED can investigate scheduled penal offences against individuals who have laundered money, regardless of whether they are named as accused in the primary offence, the court observed that the ED had not erred in naming Khan as an accused in the case.

The defence asserted that Khan assumed control of the trust in January 2020, after its conversion into a company. However, the court noted that “it does not mean that a person who is not an office-bearer cannot control the management of the trust.” Referring to statements from employees, the court observed that there was incriminating material against the accused.

The special public prosecutor submitted that the ED’s investigation revealed Khan’s involvement in dealing with proceeds of crime and their generation, projection, and layering. According to the prosecution, Khan submitted forged documents to facilitate the conversion of the trust into a company, withdrew cash from the trust, and diverted it into his personal account.

In an order dated 13 January, the court noted that several witnesses testified that cash was withdrawn from the trust at Khan’s and Gawali’s behest. It also scrutinised a loan of ₹3.58 crore taken by Khan from Master Plan Finance Ltd., allegedly by fraudulently pledging the property of Zahid Khan. Questioning the transfer of ₹20 lakh from the trust’s account to Khan’s account in December 2019, the court remarked, “Why this amount was transferred to the account of the applicant/accused is unanswered.”

The court concluded, “In this matter, the criminal activities involve cheating, forgery, and the misappropriation of funds from the trust’s accounts and related institutions. The withdrawn cash was projected as untainted funds by purchasing property and presenting it as a loan transaction.” Finding prima facie evidence to demonstrate the generation of proceeds of crime, the sessions court dismissed Khan’s discharge plea.