Chhattisgarh HC refuses to Grant Bail under PMLA on failure to Fulfil Twin condition of S. 45 [Read Order]

The Chattisgarh High Court refused to grant bail under the Prevention of Money Laundering Act, 2002 (PMLA) on failure to fulfil the condition of section 45 of the act. It was found that the applicant has not prima facie reversed the burden of proof and dislodged the prosecution case which is mandatory requirement to get bail.

The bail application was filed by Nikhil Chandrakar under Section 483 of the Bhartiya Nagrik Suraksha Sanhita, 2023 for grant of regular bail to the applicant, who has been arrested on 20.06.2023 in connection with Crime No. ECIR dated 29.09.2022 registered at Police Station- Directorate of Enforcement, Zonal Office, Raipur (C.G.) for the offence punishable under Sections 3 & 4 of the Prevention of Money Laundering Act, 2002 (“the PMLA, 2002”).

On 12.07.2022, FIR No. 129/2022 was registered by Kadugodi Police Station,Whitefield, Bengaluru under Sections 186, 204, 353 & 120B of IPC against the applicant & other persons on the basis of complaint filed by Deputy Director of Income Tax, Foreign Assets Investigation Unit-I Bengaluru alleging that as part of conspiracy during course of search by Income Tax department on 30.06.20applicant had obstructed the officials from carrying their official duties and destroyed crucial incriminating documents and digital evidence about the alleged illegal extortion on Coal Transportation, payments collected by the applicant and his associates.

How to Audit Public Charitable Trusts under the Income Tax Act Click Here

Read More: Delhi HC Quashes ₹2,000 Cr Income Tax Notice against Maruti Suzuki, Declares It Time-Barred

It has also been alleged that pursuant to the Order issued by the State Government the dispatch rules of coal mines by authorities have been changed from an online process to introduction of manual verification. The said notification was issued under the signatures of one Sameer Vishnoi, IAS who was the Director, Geology & Mining as well as MD of CMDC.

The applicant is an employee of Suryakant Tiwari who is one of the active members of the coal syndicate. The applicant was actively involved in formation of the syndicate and arranged meetings with coal businessmen, coal transporters etc. He was also actively involved in collection of illegal cash from businessmen and distribution of illegal cash to different persons on the direction of Suryakant Tiwari. The applicant had played an active role as accountant, treasurer, coordinator, cash collector, cash distributor in the syndicate and was also as representative & personal assistant of Suryakant Tiwari. He used to coordinate with other employees of Suryakant Tiwari posted in different districts & businessmen for illegal cash collection. He used to co-ordinate with Chhattisgarh State Machineries for smooth functioning of the coal syndicate.

After receipt of illegal cash by members of the syndicate deployed in coal District, they used to share the collection data of illegal cash over WhatsApp as well as in physical form and illegal cash was collated with the applicant & his colleagues Roshan Kumar Singh & Rajnikant Tiwari at the house of Suryakant Tiwari i.e. 134, Anupam Nagar, Raipur. At the said address, Rajnikant Tiwari, the applicant and Roshan Kumar Singh used to maintain consolidated data of this illegal levy collection along with the cash collected. Thereafter, such illegal cash was used for making bribes to Saumya Chaurasia, other senior bureaucrats & politicians for incoming miscellaneous political expenses & election campaign purchasing immovable properties & coal washeries by Suryakant Tiwari & members of coal syndicate, miscellaneous expenses of Suryakant Tiwari and other syndicate members etc. by the applicant, Roshan Singh and Rajnikant.

Boost Your Business with SME IPO Funding Strategies - Enroll Now

Tiwari on the direction of Suryakant Tiwari. The applicant & Rajnikant Tiwari also used to transfer part of collected illegal cash to house of Rajnikant Tiwari and Laxmikant Tiwari in Mahasamund for safe keeping.

The applicant was also looking after layering & projection of illegal cash into acquisition of the properties by Suryakant Tiwari, Saumya Chaurasia etc. A part of proceeds of crime has also traveled to the applicant which was utilized by him for acquisition of properties. In this context, multiple cash entries are mentioned in his name in the seized diaries. He was also a member of various WhatsApp Groups with Suryakant Tiwari, Rajnikant Tiwari, Roshan Kumar Singh wherein multiple entries cash collection & distribution of proceeds of crime are shared for real time update. The applicant had played an important role in generation of proceed of crime.

Read More: Writ Jurisdiction Not Invokable Against SCN Issued u/s 74 of CGST Act at Preliminary Stage: Kerala HC

Counsel for the applicant submitted that the applicant is innocent and has been falsely implicated in the crime in question. He would further submit that the applicant is being continued without the existence of a live investigation into the scheduled offence i.e. Section 384 of the IPC. The prosecution under the PMLA, 2002 against the applicant suffers from an inherent defect i.e. the predicate offence forming the basis of initiation of prosecution does not survive.

The power to arrest was exercised without due compliance with the safeguards under Section 19 of the PMLA, 2002. On 20.06.2023, there was no reasonable grounds to conclude that the applicant was guilty of the offence of money laundering and there was no live scheduled offence on such date to even sustain a prosecution under the PMLA, 2002 on such date. He would further submitted that no grounds of arrest were supplied to the applicant and the applicant was not informed orally of the grounds on which he was being arrested, he was simply taken into custody and forced to sign some blank papers. He would further submit that the evidence and statements relied upon by the Enforcement Directorate to support charges under Sections 3 & 4 of the PMLA, 2002 are a product of coercion/duress and the same are contrary to the fundamental right against self-incrimination guaranteed under Article 20(3) of the Constitution of India.

Clear all Your Doubts on RCM, TCS, GTA, OIDAR, SEZ, ISD Etc... Click Here

Since statements have been recorded after significant coercion and in violation of basic human and fundamental rights of the applicant, the same cannot be relied on by the Enforcement Directorate to sustain any conviction under Sections 3 and 4 of the PMLA, 2002. The other statements relied upon by the Enforcement Directorate in support of allegations against the applicant cannot form the basis of any conviction as they are hit by the hearsay rule against evidence

The court found that several movable and immovable properties worth Rs. 221.19 crores approximately have been provisionally attached under Section 5 of the PMLA, 2002 vide Provisional Attachment orders dated 09.12.2022, 29.01.2023 & 08.05.2023 and the same were subsequently confirmed by the learned Adjudicating Authority (PMLA), vide orders dated 01.06.2023, 17.07.2023 & 09.10.2023. Thus, the applicant is unable to fulfill the twin condition of Section 45 of the PMLA, 2002.

The applicant has not placed any record before this Court to demonstrate that the trial is delayed on account of negligence or delay tactic adopted by the prosecution, as such, in absence of any record, it cannot be prima facie held that the trial is delayed by the prosecution to consider grant of bail to the accused on account of delayed trial.

Since the applicant is unable to fulfill twin conditions for grant of bail as per Section 45 of the PMLA, 2002 and also considering

the submission that the applicant has not prima facie reversed the burden of proof and dislodged the prosecution case which is mandatory requirement to get bail, the single bench of Justice Narendra Kumar Vyas refused to grant bail.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates