2024 (9) TMI 1029 - HC - Money Laundering

Seeking grant of Regular Bail - money laundering - proceeds of crime - Non-Compliance and Misuse of Subsidized Coal - offences u/s 3/4 of the Prevention of Money Laundering Act, 2002 - HELD THAT - The court has gone through the materials available on record and finds that admittedly there are various FIRs against Ram Binod Sinha in the year 2010-11, in which for the scheduled offence so far as the second ECIR is concerned, the FIR No. 10 of 2019 dated 20.01.2019. In the first ECIR, the petitioner was called upon and he has appeared on 18.05.2012 and on 09.03.2023 to 05.07.2023 i.e. eight times and the first search in light of Section 17 of the PML Act in the first ECIR was made on 03.03.2023. Second ECIR was registered on 12.12.2023, in which, 7 persons are named. The coal on truck bearing number JH-02-AR-6640 was to be delivered to M/s Om Coke Industry, Ramgarh, Jharkhand, however, the said truck was intercepted at Hesargarha on the allegation that Saiyyad Sulamani was taking the quantity of 19.56 MT coal from Toppa Colliery to Varanasi Mandi. It was pointed out that Varanasi is at the distance of 326 kms from the intercepted point and the Ramgarh is 11 Kms from the intercepted point. The second search was made on 16.01.2024 and allegations are made that 13 firms are non-operational / non-functional and further allegations are made that even the commission for getting the coal was at the subsidized rate. The search was conducted on 16.01.2024 and the petitioner was arrested on 07.50 PM on the same day. In Vijay Madanlal Choudhary 2022 (7) TMI 1316 - SUPREME COURT , the Hon ble Supreme Court has explained the proceeds of crime saying that the property must be derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence. It is further disclosed in the said judgment that the vehicle used in commission of scheduled offence may be attached as property in the concerned case (crime), it may still not be proceeds of crime within the meaning of Section 2 (1) (u) of the 2002 Act. Similarly, possession of unaccounted property acquired by legal means may be actionable for tax violation and yet, will not be regarded as proceeds of crime unless the concerned tax legislation prescribes such violation as an offence and such offence is included in the Schedule of the 2002 Act. In view of this judgment, the property associated with the schedule offence must be derived or obtained by a person, as a result of criminal activity, relating to a scheduled offence. In para-8.2 of the prosecution complaint, it is clearly stated that the petitioner after investing Rs. 29,50,36,622.79/-, wherein the words Paid and Purchase have been used, thus, prima facie it appears that that amount cannot be said to be the subject matter of amount used for the proceeds of crime. The petitioner is directed to be released on regular bail, on furnishing bail bond of Rs.50,000/- with two sureties of the like amount each to the satisfaction of learned Special Judge, PMLA, Ranchi, in connection with ECIR Case No. 01 of 2024. Bail application allowed.

Summary

Issues Involved:
1. Regular Bail Application under Sections 3/4 of the Prevention of Money Laundering Act, 2002 (PMLA).
2. Allegations of Non-Compliance and Misuse of Subsidized Coal.
3. Validity and Authenticity of Business Operations and Documentation.
4. Calculation and Definition of "Proceeds of Crime".
5. Legal Precedents and Judgments Referenced.

Detailed Analysis:

1. Regular Bail Application under Sections 3/4 of the Prevention of Money Laundering Act, 2002 (PMLA):
The petitioner sought regular bail in connection with ECIR Case No. 01 of 2024, registered for alleged offences under Sections 3/4 of the PMLA. The petitioner was arrested on 16.01.2024 under the allegation of involvement and guilt in the offence of money laundering. The Enforcement Directorate (ED) filed a prosecution complaint on 15.03.2024 under Section 45 of the PMLA in ECIR Case No. 01 of 2024.

2. Allegations of Non-Compliance and Misuse of Subsidized Coal:
The predicate offence forming the basis of the present ECIR was the FIR bearing No. 10 of 2019 dated 20.01.2019, where it was alleged that coal meant for M/s OM Coke Industries was being transported to Varanasi Mandi instead. The petitioner was accused of running 13 bogus firms/entities since 2009, receiving subsidized coal, and selling it in the open market contrary to the terms and conditions of the agreement, generating Proceeds of Crime to the tune of Rs. 71 Cr.

3. Validity and Authenticity of Business Operations and Documentation:
The petitioner argued that the businesses were established and operated in compliance with applicable laws, regulations, and guidelines. Various documents such as sale challans, tax invoices, forest challans, transport challans, weighment slips, and e-way bills were submitted to support the legitimacy of the business operations. The petitioner maintained that errors in vehicle registration numbers in the registers were human errors and not indicative of fraudulent activities.

4. Calculation and Definition of "Proceeds of Crime":
The prosecution alleged that the total proceeds of crime amounted to Rs. 71,32,28,759.17, which included Rs. 29,50,36,622.79 paid for coal purchase and Rs. 41,81,92,136.38 obtained from selling the coal in the open market. The court noted that the amount paid for coal purchase could not be termed as proceeds of crime under Section 2(1)(u) of the PMLA. The correct calculation of proceeds of crime should exclude the investment amount, resulting in a reduced figure.

5. Legal Precedents and Judgments Referenced:
The petitioner relied on several judgments to argue for bail, including:
- Anil Tuteja and Ors. vs. The Director, Directorate of Enforcement and Ors.: Burden of proof lies on the applicants only after framing of the charge.
- Pankaj Bansal vs. Union of India & Ors.: Non-cooperation in response to summons does not render a person liable for arrest.
- Prakash Industries Limited & Anr. vs. ED: ED must share information with the concerned agency if another law is contravened.
- Vijay Madanlal Choudhary & Ors. vs. Union of India & Ors.: Proceeds of crime must be derived or obtained as a result of criminal activity relating to a scheduled offence.

The court, considering these precedents, granted bail to the petitioner with conditions, emphasizing the need for a judicious exercise of discretion in bail matters, especially in socio-economic offences.

Conclusion:
The High Court granted bail to the petitioner, recognizing that the amount paid for coal purchase could not be considered proceeds of crime. The court imposed conditions on the bail, including surrendering the passport, not tampering with evidence, and appearing before the trial court on scheduled dates. The judgment highlighted the importance of adhering to legal precedents and the correct interpretation of "proceeds of crime" under the PMLA.