Delhi HC grants bail to Lava MD Hari Om Rai in money laundering case

NEW DELHI: The Delhi high court on Wednesday granted bail to Hari Om Rai, co-founder and managing director of Lava International in a money laundering case involving smartphone maker Vivo.

Rai was arrested along with others by the Enforcement Directorate (ED) in October 2023 on charges of conspiring to fraudulently set up Vivo India and allegedly projecting that the firm was a subsidiary of a Hong Kong-based company when it was under the ultimate control of Vivo China.

Justice Manoj Kumar Ohri ordered Rai’s release on Wednesday, underlining that the court was prima facie satisfied that the “twin conditions” for grant of bail as enumerated in Section 45 of the Prevention of Money Laundering Act (PMLA), were met in the present case.

In a 25-page verdict, the court reiterated that section 45 of the Prevention of Money Laundering Act (PMLA) cannot be used as a tool for the applicant’s continued incarceration. Section 45 requires the court to be convinced that there are reasonable grounds to believe the accused is not guilty and is not likely to commit any offence while on bail.

The twin conditions often make it difficult for an accused in a money laundering case to be granted bail.

The high court underscored that this provision could not be allowed to become a shackle when it was evident that there was no likelihood for the trial to conclude in a reasonable time.

“In a situation such as the present case, where there are multiple accused persons, thousands of pages of evidence to assess, scores of witnesses to be examined and the trial is not expected to end anytime in the near future and the delay is not attributable to the accused, keeping the accused in custody by using Section 45 PMLA a tool for incarceration or as a shackle is not permissible,” the court said.

The bench added, “Liberty of an accused cannot be curtailed by Section 45 without taking all other germane considerations into account. It is also pertinent to bear in mind while dealing with the cases under the PMLA that, except in a few exceptional cases, the maximum sentence can be seven years. The accused in a money laundering case cannot be equated with those punishable with death, imprisonment for life, ten years or more like offences under the Narcotic Drugs and Psychotropic Substances Act, 1985, murder, cases of rape, dacoity, etc.”

In his plea, Rai stressed that he was innocent and that ED had not been able to produce any evidence indicating his complicity in any offence, or demonstrating that he ever received or dealt in any proceeds of crime. He also pointed out that the trial was likely to take a long time since the case was still at the stage of supply of documents and that the trial would take a long time since the prosecution had named 48 accused persons, cited 527 witnesses and filed documents in excess of 80,000 pages that would need to be analysed.

ED, which was represented by special counsel Zoheb Hossain, opposed the bail plea, contending that Rai was not only involved in the offence of money laundering but also in the destruction of evidence and setting up companies based on forged documents. Hossain also insisted that he tried to destroy records and misused the liberty granted to him when he was released on bail, after which he was directed to surrender on May 17.

Hossain also argued that Rai extended invitations to Chinese nationals including Zhang Jie and Zhengshen Ou and during their stay in India, they had committed the offence by using forged driving licence to open bank accounts and obtain director identification numbers from the central government.

Justice Ohri, however, underlined that the prosecution hadn’t produced any material proof to establish that the said two Chinese nationals came to India on Rai’s invitation.