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2025 (1) TMI 1447 - HC - Money LaunderingMaintainability of proceedings under the Prevention of Money Laundering Act 2002 (PMLA) in the absence of a scheduled offence - applicant s arrest and subsequent detention - lack of necessary sanction and procedural irregularities - Sufficiency of statements under Section 50 of the PMLA to establish a prima facie case of money laundering against the applicant - HELD THAT - The crux of the allegation against the applicant is that he was involved in running an extortion racket by way of Rs. 20 20 Rs. 40/- per quintal of custom milled rice out of the special incentive price of Rs. 120/- payable by the State of Chhattisgarh to the custom rice millers. Hence the offence under Section 383/384 of the IPC has been levelled against the applicant. Similarly the allegation of cheating under Section 420 IPC has been made against the applicant. Though it has been submitted by the counsel for the applicant that there is no direct or specific evidence against the applicant to suggest that he was involved in any of the offence as alleged in the subject ECIR or the prosecution complaint. From the investigation of the ED it has been revealed that the applicant was one of the key conspirator and main beneficiary of the POC extorted from the rice millers. It has also been revealed that the rice milers were forced for payment of the same under threat that their incentive bills would not be cleared from the MARKFED. As per Section 50(4) of the PML Act the statements recorded under Section 50 of the PMLA has evidentiary value as the proceedings under Section 50(2) and (3) are deemed to be a judicial proceeding within the meaning of Section 193 and 228 of the IPC 1860. The applicant is closely connected with POC as he had deputed some persons at certain place and the cash was not physically taken by him but it was initially demanded by the applicant and payment he conveyed it to the rice millers over phone. It has come in the statements of some of the rice millers who have personally handed over the extortion amount as demanded by the applicant - the application for bail of the Appellant should be seen at this stage while the Appellant is involved in the economic offence in general and for the offence punishable Under Section 4 of the PMLA in particular. In the present case it is not acceptable that the applicant was not involved in the offence of money laundering. In fact the applicant was assisting the co-accused Roshan Chandrakar in running an alleged extortion racket wherein an amount of Rs. 40/- (Rs. 20 20/-) per quintal was extorted from the custom milled rice out of the special incentive price of Rs. 120/- payable by the State Government to the custom rice millers Denial by the applicant itself is not sufficient to consider prima facie that there is no mens rea of the applicant in the said offences. Although the statements of the witnesses are required to be tested at the time of trial but for the purpose of consideration of bail application the statements of the witnesses are relevant for consideration of bail application of the applicant. It cannot be said that there is no involvement of the applicant in the offence in question. The Court after examining the entire documents found substantial material indicating a strong nexus between the applicant and the other accused persons in the commission of the crime. There were documents and evidences that reflected the involvement of the applicant and he is the key conspirator and beneficiary from the said scam. The investigation have revealed that the applicant was involved in the extortion of money from the rice millers which was allegedly used for constituting proceeds of crime. The applicant s medical record indicates manageable conditions and it has been found that there is no compelling medical reason for granting bail to the applicant. The Court has found substantial material indicating a strong nexus between the applicant and the crime thereby failing to satisfy the conditions of bail under Section 45 of the PMLA. The guilt of the accused in the offence of money laundering has been gathered and since the allegations against the applicant were extremely serious and taking into account the nature and gravity of the offence and from perusal of the record and in view of the fact that looking to the special and stringent provision under Section 45(1) of the PMLA for grant of bail in the considered opinion of this Court prima facie the money trail has been established by the prosecution and therefore it is not proper to order release of present applicant on regular bail for the reasons. Conclusion - Considering the role of the applicant in obtaining the money through illegal source which is the proceeds of crime and that there is sufficient evidence collected by the ED to prima facie show the involvement of the applicant in the alleged offences. It is an organized crime having various facets of its complexion therefore further considering the nature of offence and material collected during the investigation this Court is satisfied that there is prima facie evidence for believing that the applicant is involved in the offence therefore it is not required to release the applicant on bail. The prayer for bail made by the applicant under Section 483 of the Bhartiya Nagrik Suraksha Sanhita 2023 (BNSS) read with Section 45 of the PMLA 2002 for the offences under Section 3 4 of the PMLA 2002 deserves to be and is hereby rejected.
1. ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
2. ISSUE-WISE DETAILED ANALYSIS Existence of a Scheduled Offence The applicant contended that the proceedings under the PMLA are not maintainable without a scheduled offence. The court examined the legal framework under the PMLA, which requires a scheduled offence as a prerequisite for initiating proceedings. The applicant argued that the prosecution complaint filed by the ED was not maintainable as the predicate offences were not established. The court referred to precedents, including the judgment in Pavana Dibbur Vs. ED, emphasizing that a conspiracy to commit a scheduled offence is necessary for PMLA prosecution. The court found that the existence of a scheduled offence was sufficiently established through the FIR and prosecution complaint, which included offences under the IPC and Prevention of Corruption Act. Legality of Arrest and Detention The applicant challenged the legality of his arrest, arguing that it was conducted without necessary sanction and procedural compliance. The court considered the procedural requirements under the PMLA and related statutes, including the need for prior sanction under Section 197 Cr.P.C. The court found that the procedural requirements were met, and the applicant's arrest was lawful. The court also noted that the applicant's contention regarding the lack of sanction was not substantiated by evidence. Evidence and Prima Facie Case The court examined the evidence, including statements recorded under Section 50 of the PMLA, which are deemed judicial proceedings. The applicant argued that these statements were inadmissible and lacked evidentiary value. The court referred to precedents, including Prem Prakash Vs. ED, which held that statements of co-accused are weak evidence and require corroboration. The court found that the statements, along with other evidence, established a prima facie case of money laundering against the applicant. The court noted that the applicant's involvement in the extortion scheme was supported by substantial material, including witness statements and documentary evidence. Conditions for Bail under Section 45 of the PMLA The applicant sought bail under Section 45 of the PMLA, arguing that he satisfied the conditions for bail, including the triple test of flight risk, tampering with evidence, and influencing witnesses. The court considered the stringent conditions under Section 45, which require the court to be satisfied that the accused is not guilty and is unlikely to commit an offence while on bail. The court found that the applicant failed to satisfy these conditions, given the gravity of the offences and the evidence of his involvement in the extortion scheme. The court emphasized the seriousness of economic offences and the need for a different approach to bail in such cases, as highlighted in Y.S. Jagan Mohan Reddy Vs. CBI. Health Conditions and Right to Speedy Trial The applicant argued that his health conditions and the right to a speedy trial justified the grant of bail. The court acknowledged the applicant's health issues but found no compelling medical reason for bail, noting that the jail authorities could manage his conditions. The court also considered the right to a speedy trial, as emphasized in Javed Gulam Nabi Shaikh Vs. State of Maharashtra, but found that the trial was not unduly delayed. The court concluded that the applicant's continued detention was justified given the seriousness of the charges and the evidence against him. 3. SIGNIFICANT HOLDINGS The court held that the proceedings under the PMLA were maintainable, as the existence of a scheduled offence was established. The applicant's arrest and detention were found to be lawful, with procedural requirements duly met. The court concluded that the evidence, including statements under Section 50 of the PMLA, established a prima facie case of money laundering against the applicant. The court held that the applicant failed to satisfy the conditions for bail under Section 45 of the PMLA, given the gravity of the offences and his involvement in the extortion scheme. The court rejected the applicant's arguments regarding health conditions and the right to a speedy trial, finding no compelling reason to grant bail. The application for bail was dismissed, with the court emphasizing the seriousness of economic offences and the need for stringent measures under the PMLA to combat money laundering. The court underscored the importance of upholding the objectives of the PMLA and ensuring that the accused does not evade justice or tamper with the investigation.
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