Crime of Rs. 210.68 crore under PMLA Act: Patna HC allows Bail considering 12 Months of Custody without conclusion of trial [Read Order]

In a recent case, the Patna High Court allowed the bail for the offence of Rs. 210.68 crore under the Prevention of Money Laundering Act, 2002 (“PMLA Act”) as no prima facie offence is made and the twin conditions under Section 45 of the PMLA stands fully satisfied.. The petitioner has already undergone nearly 12 months of incarceration as an undertrial.

The petitioner, Punj Kumar Singh sought bail in connection with Special Trial (PMLA) arising out of offences under Section 3 and punishable under Section 4 of the Prevention of Money Laundering Act, 2002 (“PMLA Act”). The petitioner is named in the F.I.R. and is in custody since 19.09.2024.

The allegation, as per ECIR and addendum ECIRs against the accused persons, was allegedly engaging in illegal mining and selling sand withoutthe issuance of e-transit challans and causing revenue loss to the government. It was alleged in the ECIR that the suspects in pursuance of criminal conspiracy hatched and indulged in the activity related with the offence of money laundering as defined under Section 3 and punishable under Section 4 of the PMLA Act, where it is suspected that petitioner along with other co-accused persons generated and acquired proceeds of crime by commission of scheduled offences punishable under Sections 411, 420 and 120B of the Indian Penal Code, 1960.

It is alleged that an investigation in ECIR was initiated against six accused persons namely, Broadson, Mithilesh Kumar Singh, Baban Singh, Surender Kumar Jindal, Radha Charan Sah and Kanhaiya Prasad. Counsel appearing on behalf of the petitioner submitted that petitioner is an innocent person and has been falsely implicated with the present case merely because he was one of the previous Director of M/s. Broadson Commodities Pvt. Ltd. (“Broadson”), in whose favour settlement of sand ghats for district Bhojpur, Patna and Saran were issued initially for the period of 2015-19 and which was further extended time to time from 01.01.2020 to 31.10.2020, 01.11.2020 to 31.12.2020, 01.01.2021 to 31.03.2021 and finally from 01.04.2021 to 30.09.2021.

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It is pointed out that present ECIR was registered by the Assistant Director on the basis of predicate/scheduled offences under which total of 20 FIRs were registered against Broadson. It is submitted that petitioner was a Director of Broadson from September 2015 to April 2019 and is currently serving as Director in three other companies and also a Trustee of M/s. Bindhyavasini Mutual Benefit Trust. The complaint alleges that Broadson generated Proceeds of Crime amounting to approximately Rs. 210.68 crore under the PMLA Act, related to illegal sand mining and trading activities in Bihar, Jharkhand and West Bengal.

However, petitioner strongly denies any involvement in the alleged crime. It is submitted that generation of the alleged proceeds of crime occurred in 2020-2021, much before which he resigned from the directorship in 2019. Moreover, petitioner claims he had no personal financial interest in Broadson and was not part of any syndicate responsible for the illegal operations. The substantial FIRs against Broadson were registered only in 2021, which further establishes that the petitioner was not connected to the alleged misconduct.

It is further submitted that Broadson is facing multiple disputes with the Department of Mines and invoked the arbitration clause under the agreement and the New Sand Policy 2013. When the Collectors failed to appoint an arbitrator, Broadson approached the Patna High Court via Request Cases No. 33/2022, 39/2022, and 38/2022 for Patna, Bhojpur, and Saran respectively.

Consequently,Broadson (BSCPL) filed commercial suits in Patna and Saran courts regarding claims after that the State of Bihar, initiated certificate cases under the Bihar and Orissa Public Demand Recovery Act, 1914, against BSCPL to recover alleged costs of misappropriated sand and royalty for the remaining surrender period. It is further alleged in the ECIR/complaint that proceeds of crime amounting to Rs 83,52,45,069/- were generated through the sale of sand without issuing e-challans, causing loss to the government.

It is argued that the investigating agency and the complaint cannot rely on the evidence recovered by the Income Tax Department. These loose evidence are claimed to be irrelevant and insufficient to conclude the alleged generation of proceeds of crime, and reliance on them is contrary to the Indian Evidence Act, 1872 and Criminal Procedure Code, 1973.

It is submitted that figure qua proceeds of crime of Rs 83.52 crores was included through a separate addendum based on FIR dated 07.02.2024, which itself was solely based on the loose sheets recovered by the Income Tax Department. On bare perusal of the FIR forming the basis of the ECIR No. ECIR/PTZO/14/2023 dated 15.03.2023 reveals that the allegation contradict the provisions of the 2019 Rules and the Indian Evidence Act, making any investigation or charge-sheet legally unsustainable.

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It is submitted that the offence of money laundering can only proceed if a predicate offence exists. If, based on objective assessment, the alleged predicate offence prima-facie appears weak or non-existent. It is further submitted that the ECIRs in question are based on several FIRs, of which, only two FIR i.e. FIR No. 109/17 dated 05.04.2017 and FIR No. 523/17 dated 31.07.2017, predate the construction of the petitioner's properties.

The absence of any live predicate offence and the temporal disconnect of the FIRs with the Petitioner's investments render the entire proceedings legally untenable. While considering applications for grant of bail, the Court is required to form only a prima facie view and is not expected to meticulously weigh the evidence for the purpose of drawing inferences under the twin conditions stipulated in Section 45 of the PMLA.

It is also submitted investigation against the petitioner is complete and a prosecution complaint dated 10.11.2023 pursuant to the completion of investigation has been filed, therefore custodial interrogation of the petitioner is not required. It is pointed out that petitioner has consistently demonstrated good conduct.

While concluding the argument it is submitted that the petitioner has been arrested for alleged money laundering based solely on the assumption that the recovered property constitutes "proceeds of crime," without any cogent, tangible, or admissible evidence indicating involvement in a scheduled offence or its proceeds.

The respondents had no reason to believe in the commission of a scheduled offence or any wrongful gain derived therefrom, and the arrest is legally unsustainable in absence of materials linking the petitioner to such offence. It is submitted that a weak predicate offence leads to acquittal under the PMLA based on broad probabilities.

It is also stated that the trial of the scheduled offence is at its initial stage and would directly affect the outcome of the money laundering case, continued custody serves no useful purpose, especially when conclusion of trial does not appear in the near future. Despite these facts, the petitioner’s bail application was rejected by the Sessions Judge, without due consideration of these circumstances.

It is submitted by counsel for petitioner that in the facts and circumstances of the present case, the petitioner is entitled to be released on regular bail, as no prima facie offence is made out against him and the twin conditions under Section 45 of the PMLA stands fully satisfied. The investigation qua petitioner is complete; the prosecution complaint has already been filed, and other coaccused have been granted bail.

With respect to the predicate FIRs, the trial has not even commenced. The prosecution has cited as many as 149 witnesses and relied upon voluminous records exceeding 13,283 pages, concluding trial in the near future impossible. The petitioner has already undergone nearly 12 months of incarceration as an undertrial and in view of these circumstances, coupled with the settled principles of law.

On the other hand, Mr. Tuhin Shankar,counsel appearing on behalf of the opposite party / E.D. vehemently opposed the bail petition and submitted that registration of FIR in the predicate offence is merely a condition precedent for commencement of investigation under PMLA, however it is not necessary that every person, who is arrayed as an accused in an offence of money laundering, should also be an accused in the predicate offence.

Altogether 149 witnesses, 221 exhibits running into 13,283 pages to be examined during the trial, which is yet to start giving a clear cut projection that trial is not likely to conclude in near future, coupled with the fact as petitioner remains in custody since 19.09.2024 i.e., about one year against maximum sentence of 7 years.

Considering the situation, the bench of Justice Chandra Shekhar Jha directed to release petitioner on bail in connection with Special Trial (PMLA) on furnishing bail bond of Rs.10,000/- (Rupees Ten Thousand) with two sureties of the like amount each to the satisfaction of Sessions Judge cum Special Judge (PMLA).

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