9911796707
TMI Blog2024 (3) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... inquiry by CBI in respect of IPL was closed stating that it has no jurisdiction over IPL since it is not a public authority. The said submission cannot be gone into at this stage as a co-ordinate Bench of this Court is stated to be seized of the specific issue with regard to the jurisdiction of the CBI to register the RC, in the writ petitions filed by the co-accused - Both offences under Section 120-B and Section 420 IPC find mention in Schedule-A of the PMLA, therefore, such offences by themselves can be a predicate offence to trigger the offence of money laundering under the PMLA. To what extent reliance could be placed on the statement under section 50 of PMLA at the stage of considering bail application - HELD THAT:- The principle that emerges from Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ] as regards the statement recorded under Section 50 of the Act is that such statements are recorded in a proceeding which is deemed to be a judicial proceeding within the meaning of Section 193 and Section 228 of the Indian Penal Code and is admissible in evidence. The said statements are to be meticulously appreciated only by the Trial Court during the course of the tria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duals/entities. Thus, there are two money trails which have been referred to hereinabove. To hold the petitioner guilty there has to be an unbroken money trail i.e., generation of proceeds of crime which eventually leads to the petitioner and in case there is a break in the trail, the said break shall enure to the benefit of the petitioner. Before proceeding to examine the two money trails/routes, it is required to be noticed that the first two steps viz., (i) payment of inflated prices inclusive of commission/bribe money by IFFCO/IPL to Uralkali Trading for the import of fertilizers from it, and (ii) payment of commission/bribe money by Uralkali to Rajeev Saxena, are common to both the trails/routes, therefore, apt would it be advert to the same at the outset - The two steps are Step 1: Inflation of prices and Step 2: Flow of proceeds of crime from Uralkali Trading to Rajiv Saxena. The lack of evidence at Step 1 , as well as, the conflicting stand of Rajeev Saxena in Step 2 , are circumstances, which cannot be ignored altogether at this stage. Direct route through Ratul Puri - HELD THAT:- It is the case of the respondent that thereafter the proceeds of crime were collected by one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no document to indicate that IFFCO / IPL are industry leaders. Assuming arguendo, that the said entities are market leaders and they could manipulate the average industry prices, but there is not an iota of evidence to demonstrate that the average industry price was actually manipulated by IFFCO and IPL. Further, in this regard the observations of this Court under the heading Step 1 may be referred to - On the other hand, it can be seen that after 01.04.2010, the Nutrient Based Subsidy Scheme [ NBS Scheme ] became applicable whereunder the cost of production/import price of the fertilizers has no relevance to the amount of subsidy which could be claimed by the importer. Therefore, there seems to be some merit in the contention of the learned Senior Counsel for the petitioner that post introduction of the NBS Scheme the case set up by the CBI and the Respondent itself appears to have become improbable. Examination of the predicate offence - HELD THAT:- As this Court has prima facie observed that there is no material showing imports at inflated prices by IFFCO/IPL and consequent payment of higher subsidy and there appears to be a break in the money trails, therefore, the eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FIR registered by the CBI are as follows: - a. Two complaints were forwarded to the CBI against the MD, Indian Farmers Fertilizer Cooperative Limited (hereinafter referred to as 'IFFCO') relating to subsidy fraud in IFFCO by opening Kisan International Trading, exchange of illegal commissions in import of raw materials and fertilizers, manipulation of sales data of fertilizers for claiming higher subsidy etc. b. During scrutiny and verification of the complaints by the CBI, specific inputs were received from reliable sources alleging serious irregularities committed by the MD, IFFCO and other board members of IFFCO as well as MD, Indian Potash Limited (hereinafter referred to as IPL ) and others resulting in huge losses to both the entities and undue pecuniary gain to them and their family members. c. It is alleged that the accused persons including the petitioner entered into a criminal conspiracy amongst themselves and during the period from 2007-2014 cheated and defrauded IFFCO, IPL, the general shareholders of these entities, as well as, the Government of India by fraudulently importing fertilizers and other materials at inflated prices and claimed higher subsidy there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aging Directors of IFFCO and IPL either in the accounts of the firms/companies owned by them or in cash. h. It also transpired that Rare Earth Group Commodities, DMCC (beneficially owned by Pankaj Jain) supplied a large quantity of Rock Phosphate to IFFCO during the period 2007-11 directly or through Kisan Trading FZE. It was further revealed that the company of Pankaj Jain namely, Ferttrade DMCC also supplied fertilizers to IFFCO from 2012 onwards. Trans Globe DMCC, a company of Pankaj Jain also supplied fertilizers to IFFCO. Rare Earth Commodities DMCC and Trans Globe DMCC also supplied fertilizers to IPL. 4. In a nutshell, as per the case of the respondent, the petitioner herein has received the proceeds of crime through two routes which are as follows: Direct Route/Ratul Puri Route Under this route, Rajeev Saxena would receive proceeds of crime from Uralkali, then he would pay cash to the petitioner through one Rajiv Aggarwal (an associate of Mr. Ratul Puri). One Punit Banthia used to pick up cash from Rajiv Aggarwal on behalf of the Petitioner. The Direct Route could be depicted by the following flow chart: IFFCO/IPL URALKALI TRADING RAJIV SAXENA RAJIV AGGARWAL/RATUL PURI PUNE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he paper book) wherein the CBI has already taken a categorical stand that CBI has no jurisdiction over Indian Potash Limited since it is not a public authority. The letter dated 21.08.2017 reads as under: No. 179/CO AC 1 2016 A 0009 O/o Supdt. of Police Central Bureau of Investigation Anti-Corruption I B-5 CBI Hqrs., 8th Floor CGO Complex, Lodhi Road New Delhi 110003 Tele-fax:-011-24360361 Dated: 21.8.2017 To Sh.Kulwant Rana, Under Secretary to the Govt. of India, Ministry of Chemicals Fertilizers, Department of Fertilizers, Shastri Bhawan, New Delhi. Sub: Irregularities in import of fertilizers regarding Sir, Kindly, refer your office letter F. No. 16/4/14-Vig (L.S) dated 12.07.2017 on caption mentioned above. In this regard, it is informed that the competent authority of CBI has closed this complaint because CBI has no jurisdiction over Indian Potash Limited which at present is not a public authority. For information please. Sd/- (Rajiv Ranjan) Supdt. of Police CBI/AC-I/New Delhi . 8. To the same effect is the letter dated 05.09.2018 written by the CBI to the Member of Parliament, which reads as under: No. 274/CO AC 1 2016 A 0009 O/o Supdt. of Police Central Bureau of Investigati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed persons i. It is the submission of the learned Senior Counsel that the respondent has failed to produce any evidence showing payment of inflated prices by IFFCO and IPL. For this purpose, the attention of the Court was drawn to Annexure P-10, the Office Memorandum dated 23.07.2012 issued by the Ministry of Chemicals and Fertilizers in response to a letter written by the Directorate of Enforcement dated 24.02.2012, to submit that the Ministry of Chemicals and Fertilizers has in unequivocal terms dismissed allegations of any wrongdoing on part of IFFCO. ii. He submits that the said memorandum states that up till the year 2010, the subsidy which an entity was entitled to claim was subject to the weighted average price of the entire industry or based on the price of import by an entity, whichever was lower. iii. He submits that after 01.04.2010 the subsidy which was payable on imports was directly linked to the percentage of the chemical component in the fertilizer and not the import price thereof. This makes the case of the prosecution doubtful as the subsidy payable was not dependent upon the price of the import or the industry average. b. Once the money for commission was receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neous record and has been prepared for investigating agencies. Further, the said document submitted by Rajeev Saxena is not a ledger maintained during the course of business and cannot pass the test of Section 34 of the Indian Evidence Act, 1872. d. Once the money was received by Rayon Trading, the same was transferred to Alankit Group/ Alok Aggarwal i. Mr. Aggarwal submits that the purpose of payment between Rayon Trading and Alankit Group/Alok Agarwal has not been established as the transactions between the two entities have been explained by Alok Agarwal as genuine in his statement dated 28.11.2022 under Section 50 of the PMLA. The relevant part of the said statement reads as under: Q.5 Please explain the transactions figuring in the Ledger account of Rayon General Trading LLC in the books of M/s Alankit Global Resources DMCC as submitted by Sh. Ankit Agarwal vide his statement dated 24.11.2022? Ans 5. These transactions pertain to the consultancy services provided by Alankit Global Resources DMCC to Rayon General Trading LLC. I do not remember the details thereof, however, I undertake to provide the same along with supporting documents by 30.11.2022. Premised on the above state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in this regard is placed on the statement of Ratul Puri recorded on 20.10.2022 under Section 50 of the PMLA, the relevant part of the statement reads as under: Q1. Was any cash delivered to you by Sh. Sanjay Jain through Sh. Rajeev Agarwal? Ans. 1. No, I do not who Sh. Sanjay Jain is. Q2. Did Sh. Rajeev Saxena give any corresponding credit entries to you or your companies abroad in lieu of cash delivered by you to Sh. Sanjay Jain though Sh. Rajeev Agarwal? Ans . 2. No. Q3. You are being shown statement dated 11.06.2021 of Sh. Rajeev Saxena running into 74 pages. Please go through it and comment as far as it pertains to you? Ans. 3. l have seen and read statement dated 11.06.2021 of Sh. Rajeev Saxena running into 74 pages. l have put my dated signatures on all the 74 pages as a token of having read the same. I state that I strongly deny the statement made by Sh. Rajiv Saxena. I have no such account with him which he has enumerated in excel spreadsheets. My company's business dealings were limited to sourcing of Solar panels. Q4. Please refer to Question number 15 of statement dated 03.07.2019 tendered before Income Tax Authorities and accepted vide his statement dated 11.06.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thia or Puneet in India for payment of cash in India? Ans. 5 No. Q. 6 Have you ever interacted with Puneet Banthia or Puneet in India for any other matter? Ans . No. Q. 7 Have you ever had telephonic conversation with Puneet Banthia or Puneet? Ans . No. Q. 8 Were you having phone numbers of Puneet Banthia or Puneet? Ans. 8 It was there in my telephone diary but I never interacted with him. Q. 9 Who gave you his phone number? Ans. 9 I do not remember. Q. 10 In what connection were you having his phone number? Ans. 10 I do not remember. Q. 11 How do you know him? Ans . I do not know him. Q. 12 If you do not know him why were you having the phone number of a complete stranger in your telephone diary? Ans. 12 I do not remember in what context anybody has given his number to me. But as per my memory, I have never met him or interacted with him in any manner. I request that my further statement may be recorded on 18.10.2022. I undertake to present myself at 1530 hours on 18.10.2022 to continue my further statement. The above statement of mine running into two pages has been tendered voluntarily on my own without any fear, pressure, force, coercion, threat or inducement and the same is tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 30.07.2021 and summoned by the Ld. Special Judge have already been enlarged on bail. The details of the said accused are as follows: S.No. Name of Co-accused Date and details of the bail order 01. Amarendra Dhari Singh Released on regular bail vide order dated 05.08.2021 passed by this Court in BAIL APPLN No. 2293/2021 02. Alok Kumar Aggarwal Released on regular bail vide order dated 16.08.2021 passed by this Court. 03. Ankit Aggarwal Granted Anticipatory bail vide order dated 26.10.2021 passed by this Court in BAIL APPLN No. 3619/2021 04. Chandra Shekhar Jha Released on regular bail vide order dated 21.09.2021 passed by the Trial Court. THE PETITIONER IS NOT LIKELY TO COMMIT ANY OFFENCE IN CASE HE IS ENLARGED ON BAIL 15. Mr Aggarwal submits that the petitioner had joined the investigation as and when directed by the Investigating Officer/Enforcement Directorate as well as other investigating agencies, who are investigating the same allegations against the petitioner. 16. He submits that the petitioner in the present case had joined the investigation on at least 10 occasions up to 06.10.2022 when the petitioner was arrested. Prior to his arrest, the petitioner had cooperated with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s would have been substantially lower than the actual price at which fertilizers were imported. 23. In sum and substance, it is the contention of Mr Hossain that the present case is not a case of only subsidy fraud but has three different layers viz., (i) cheating at the level of the IFFCO/IPL (ii) cheating at the level of their respective shareholders and (iii) cheating at the level of the government by claiming higher subsidy. VALIDITY OF THE PROCEEDINGS BY THE CBI CAN NOT BE QUESTIONED AT THE STAGE OF BAIL 24. Mr. Hossain also submits that the scheme of the PMLA makes it obligatory for the Court to assume that the scheduled offence exists and no doubt can be raised against the existence of the scheduled offence. It is also the contention of the learned counsel that the argument of the petitioner that the scheduled offence is under a cloud cannot be sustained in a bail application, all the more when the CBI, who had registered the scheduled offence, is not a party before this Court. Reliance in this regard was placed on the judgment of a co-ordinate bench of this Court in Satender Kumar Jain vs. Directorate of Enforcement, BAIL APPLN 3590/2022 , the relevant paragraph of which re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission which is inbuilt into the import price say, USD 63, it would have resulted in a reduction of subsidy payable not only to IFFCO but also to various other importers. 28. To substantiate his submission that IFFCO and IPL are the major players in the fertilizer industry, he contends that during the year 2013-2014, the above two entities were paid Rs 5661.70 Crore of subsidy on imported P K fertilizers out of a total of Rs. 13926.86 Crore paid to 33 entities which is roughly 40% of the total subsidy payouts. Similarly, for the year 2014-2015, it was Rs. 4003 Crore out of Rs. 8667.30 Crore being 46% of the total subsidy paid, which shows that the manipulation of prices by these two entities alone caused loss to the exchequer to a great extent. CREDIBILITY OF MR. RAJEEV SAXENA CAN NOT BE QUESTIONED BY THE PETITIONER 29. Mr. Hossain submits that considerable emphasis has been laid that Rajeev Saxena who has stated as regards the complicity of the petitioner is not a credible witness. At the outset, Mr Hossain clarified that the revocation application seeking cancellation of approvership of Rajeev Saxena has not been filed in the present case but it has been filed in a separate ECIR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . b. Flow of Proceeds of crime from Uralkali to Rajeev Saxena/Entities controlled by Rajeev Saxena i. Mr. Hossain contends that once money was paid to Uralkali by IFFCO/IPL, the commission amount was thereafter paid to Mr. Rajeev Saxena through companies which were owned by him. For this purpose, the attention of the Court was drawn to the bank statements of Mr. Rajeev Saxena, which were produced by him under Section 50(2) of the PMLA. Referring to the said bank statements, it is contended that on various occasions, Uralkali Trading (Gibraltar) Ltd. had made payments in foreign currency to Pacific International FZC and Midas Metals International LLC and it is not in dispute that the said two companies belong to Mr. Rajeev Saxena. ii. In respect of the above financial transactions, Mr. Hossain draws the attention of the Court to the statement dated 05.06.2021 of Mr. Rajeev Saxena recorded under Section 50 of the PMLA, to contend that the above-named companies of Rajeev Saxena received funds from Uralkali General Trading, Gibraltar; Gulf Maine DMCC, Dubai on behalf of the petitioner (Sanjay Jain), Pankaj Jain and A.D. Singh and that these payments were actually received as commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... detail of entities in Rare Earth Group is already submitted in my above-mentioned statements recorded u/s 37 of FEMA, 1999. Ques No. 4 . As stated in your above-mentioned statements you have received funds for Rare Earth group from Uralkali and Gulf Marine in your entities. Please explain the payments made out of these funds. Ans No. 4 . The details regarding payments received and made have already been submitted along with the documents in my above-mentioned statements. However, I once again state that payments were received from Uralkali and Gulf Marine and made to Amol Awasthi, Anupam Awasthi, Vivek Gahlot, A.D. Singh and Pankaj Jain/Sanjay Jain or entities under their control or ownership. Instructions for these payments were given by A.D. Singh, Sanjay Jain and Pankaj Jain. Since, these payments were although received in Midas Metal International LLC and Pacific international FZC but were belonging to A.D. Singh, Sanjay Jain and Pankaj Jain. Ques No. 5 . Who used to give instructions regarding receiving of funds from Uralkali and Gulf Marine and Payments from these funds. Ans No 5 . As I have already stated in my above-mentioned statements, I re-state that all three i.e. A.D. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng asked I am submitting consolidated statement of transaction of Pankaj Jain, Sanjay Jain and AD Singh running into pages 1 to 11 under my dated initials as prepared by my accountant Sh. Shahnawaz Khan. Further I am submitting a statement consisting 71 entries (7 pages) with corresponding bank account statements of transactions of Pankaj Jain, Sanjay Jain and AD Singh under my dated initials. ii. Referring to the memorandum of account submitted by Rajeev Saxena, Mr Hossain submits that the said memorandum of account clearly shows the flow of proceeds of crime from Rajeev Saxena to Rayon Group and other entities. The relevant part of the memorandum of account (Excel sheets) is annexed at pages 63 and 64 of the compilation handed over by Mr Hossain. iii. He further submits that the statement of Rajeev Saxena was corroborated by three (03) e-mails which have been sent by Ajeit Saxena to Shahnawaz Khan dated 18.05.2014, 11.06.2014 and 14.08.2013, wherein Ajeit Saxena can be seen following up on behalf of co-accused Pankaj Jain for due payments to Rayon General Trading. d. Thereafter, the money/proceeds of crime were transferred by Rayon General Trading to M/s Alankit Global Resources ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contained therein, as under: a. for instance, on 22.05.2014, the account of the petitioner was credited with Rs. 1,17,32,000 in respect of the transfer of USD 2 lacs to one of many parties related to Alok Kumar Agarwal. For this credit entry, Alok Agarwal charged his commission @ 3% and paid cash in multiple tranches to various parties linked to Sanjay Jain. It was submitted that that this modus operandi is consistent with the statement of Sushil Kumar Pachisia before income tax authorities wherein he explained about generation of cash in Dubai which was sent to Sanjay Jain in India through non-banking channels. In this case, cash generated in Dubai was paid to any of the contacts of Alok Kumar Agarwal/Ankit Agarwal in Dubai in foreign currency (USD/AED) and Alok Kumar Agarwal/Ankit Agarwal would make payment in equivalent Indian currency in India to the petitioner/AD Singh. Alok Kumar Agarwal/Ankit Agarwal would charge a commission from Sanjay Jain/AD Singh for the said transactions. The cash would be paid in India from the cash amount received from the contacts to whom payment was made in foreign currency in Dubai. b. Another instance which has been pointed out is that on 21.07.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid by Rajeev Saxena to Sanjay Jain in India through RatuI Puri against illicit commission received from Uralkali Trading Gibraltar against MoP (Muriate of Potassium) imported in India by IFFCO/IPL. He submits that Rajeev Saxena further stated that these payments have been made through Ratul Puri, son of Deepak Puri, owner of the Moser Baer group of companies. He also states that these payments have been made by Rajiv Agarwal, an employee of Ratul Puri mostly through one Punit Banthia who works for Sanjay Jain. b. Proceeds of Crime from Ratul Puri/Rajiv Agarwal to Puneet Banthia (Employee of the Petitioner) i. For this purpose, Mr Hossain referred to the statement of Punit Banthia recorded under Section 50 of the Act to contend that Punit Banthia had admitted having picked up cash from the Moser Baer office of Ratul Puri and having delivered the same to the office of Sanjay Jain. ii. He contends that the statement of Puneet Banthia has been corroborated independently by the statement of Sh. Rajiv Agarwal recorded on 10.10.2022 under Section 50 of the PMLA wherein he admitted the presence of Punit Banthia s phone number in his phone which was saved as DUBAI PUNEET RAJIV . NON-ARREST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 05.08.2021 in BAIL APPLN. 2293/2021 and the same cannot be a ground to claim parity. To buttress his submission, reliance was placed on the judgment of the Chhattisgarh High Court in Sunny v. State of Chattisgarh 2017 SCC OnLine Chh 900 , the relevant paragraph of which reads as under:- 6. The bail order of Mohan Lalwani and the documents filed along with these bail application would show that Mohan Lalwani being aged about 60 years and because of ailment and further he was shown to be physically disabled as per Annexure A-12, was enlarged on bail. Therefore, the present applicants cannot claim parity of order on basis of medical documents submitted. Neither the degree of ailment or age is at par with the other co-accused. . 39. Similarly, the Gauhati High Court in Laishram Noren Singh vs. Lalsawmillen Kungte 2007 SCC OnLine Gau 109, has held as under:- 9. As the co-accused was granted bail on medical ground, his case cannot be compared with the case of the present petitioner s son i.e., accused as that case is not standing on the same footing. Mere granting of bail to the co-accused does not ipso facto create any right to the accused for bail. If an accused wants to get the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the respondent. The statements of Rajeev Saxena have not been corroborated by any independent material/documents. 44. Mr. Krishnan contends that the predicate offence being weak in nature is a relevant consideration, which shall enure to the benefit of the petitioner. Elaborating further, he submits that where the accused has demonstrated that the predicate offence is weak in nature or that no scheduled offence exists, it has to be taken that the accused has ipso facto shown that he shall be acquitted in the proceedings initiated under the PMLA. This approach according to the learned Senior Counsel has been adopted by this Court in Sanjay Pandey v. Directorate of Enforcement 2022 SCC OnLine Del 325, Para 73-81 and Chitra Ramkrishna v. Directorate of Enforcement Bail App 2919/2022, Para 46, 49-51. 45. Mr Krishnan also repelled the contention on behalf of the respondent/ED that non-arrest of co-accused is not a ground for grant of bail. He submits that the judgment of the Supreme Court in Vijay Sai Reddy (supra) as relied upon by the respondent, lays down that non-arrest of co-accused by itself cannot be a ground for bail, but the same is a relevant factor which has to be taken i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coupled with the fact that the presumption that the Parliament understands and reacts to the needs of its own people as per the exigency and experience gained in the implementation of the law, the same must stand the test of fairness, reasonableness and having nexus with the purposes and objects sought to be achieved by the 2002 Act. Notably, there are several other legislations where such twin conditions have been provided for. Such twin conditions in the concerned provisions have been tested from time to time and have stood the challenge of the constitutional validity thereof. The successive decisions of this Court dealing with analogous provision have stated that the Court at the stage of considering the application for grant of bail, is expected to consider the question from the angle as to whether the accused was possessed of the requisite mens rea. The Court is not required to record a positive finding that the accused had not committed an offence under the Act. The Court ought to maintain a delicate balance between a judgment of acquittal and conviction and an order granting bail much before commencement of trial. The duty of the Court at this stage is not to weigh the evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... privilege of bail. 46. The duty of the court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. However, while dealing with a special statute like MCOCA having regard to the provisions contained in sub-section (4) of Section 21 of the Act, the court may have to probe into the matter deeper so as to enable it to arrive at a finding that the materials collected against the accused during the investigation may not justify a judgment of conviction. The findings recorded by the court while granting or refusing bail undoubtedly would be tentative in nature, which may not have any bearing on the merit of the case and the trial court would, thus, be free to decide the case on the basis of evidence adduced at the trial, without in any manner being prejudiced thereby (emphasis supplied) 401. We are in agreement with the observation made by the Court in Ranjitsing Brahmajeet sing Sharma. The Court while dealing with the application for grant of bail need not delve deep into the merits of the case and only a view of the Court based on available material on record is required. The Court will not weigh the evidence to find the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , no offence under the provisions of the Prevention of Corruption Act is made out. It was further elaborated that even an inquiry by CBI in respect of IPL was closed stating that it has no jurisdiction over IPL since it is not a public authority. The said submission cannot be gone into at this stage as a co-ordinate Bench of this Court is stated to be seized of the specific issue with regard to the jurisdiction of the CBI to register the RC, in the writ petitions filed by the co-accused. However, suffice it to note that the predicate offence has also been registered under Sections 420 and 120B of the Indian Penal Code, apart from the provisions of the Prevention of Corruption Act. Both offences under Section 120-B and Section 420 IPC find mention in Schedule-A of the PMLA, therefore, such offences by themselves can be a predicate offence to trigger the offence of money laundering under the PMLA. TO WHAT EXTENT RELIANCE COULD BE PLACED ON THE STATEMENT UNDER SECTION 50 OF THE PMLA AT THE STAGE OF CONSIDERING BAIL APPLICATION 52. As considerable reliance has been placed by the respondent on the statements of the witnesses recorded under Section 50 of the PMLA and both sides have argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt cannot take the statements under Section 50 of the PMLA as gospel truth and only broad probabilities have to be seen. Accordingly, the Court did not make any comment on such contradictions observing that the trial is yet to take place. The relevant part of the decision reads thus: 55. This Court is fully conscious of the fact that personal liberty is a sacrosanct right and pre-trial detention cannot be taken as a punitive measure. However, the court has to strike a balance between the interest of an individual and the interest of the society at large. This Court is also conscious of the fact that though the statements recorded under Section 50 of the PMLA are admissible in evidence but their evidentiary value has to be weighed at the time of trial xxxx xxxx xxxx xxxx 57. Learned Senior Counsels have invited the attention of this Court towards the contradictions in the testimony of the witnesses. However, this Court is fully conscious of the fact that at the stage of bail, the court cannot appreciate the evidence meticulously. This Court at this stage, would restrain itself to make any comment further on this as the trial is yet to take place. The option before this Court is ei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies, or reasons to believe, that the bail applicant is not guilty. Meaning thereby, the statements under Section 50 of the PMLA have to be taken at their face value, but in case any such statement is patently self-contradictory or two separate statements of the same witness are inconsistent with each other on material aspects, then such contradictions and inconsistencies will be one of the factors that will enure to the benefit of the bail applicant whilst ascertaining the broad probabilities, though undoubtedly the probative value of the statement(s) of the witnesses and their credibility or reliability, will be analyzed by the trial court only at the stage of trial for arriving at a conclusive finding apropos the guilt of the applicant. WHETHER THE CONFESSIONAL STATEMENT OF CO-ACCUSED UNDER SECTION 50 PMLA CAN BE USED AGAINST OTHER ACCUSED 57. Another question that assumes importance in the backdrop of the factual matrix of this case is whether the confessional statement of co-accused recorded under Section 50 of the PMLA can be used against another accused. 58. The proceedings under Section 50 of the PMLA may be judicial proceedings for the limited purpose mentioned therein but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced by the prosecution and after it has formed its opinion with regard to the quality and effect of the said evidence, then it is permissible to turn to the confession in order to receive assurance to the conclusion of guilt which the judicial mind is about to reach on the said other evidence. This proposition of law has been further reiterated by the Hon ble Supreme Court in Deepak Bhai Patel vs. State: (2019) 16 SCC 547. 62. Thus, the confessional statement of a co-accused under Section 50 of the PMLA is not a substantive piece of evidence and can be used only for the purpose of corroboration in support of other evidence to lend assurance to the Court in arriving at a conclusion of guilt. MONEY TRAIL SHOULD REMAIN UNBROKEN TO HOLD THE PETITIONER GUILTY 63. For an offence of money laundering, there should be generation of proceeds of crime from the scheduled offence and the person sought to be prosecuted should be directly or indirectly involved in any process or activity connected with the said proceeds of crime. Thus, the existence of proceeds of crime is essential for initiation of prosecution under the PMLA. It is the case of the respondent/ED that the petitioner has receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a by fraudulently importing fertilizers and other materials at inflated prices and simultaneously claimed higher subsidy thereby causing loss to the public exchequer, but intriguingly no evidence in the form of a comparative price data vis- -vis other importers has been pointed out to establish that the price at which IFFCO / IPL imported the fertilizer was inflated so as to cover the bribe/commission money for the accused persons. This comparative data of the relevant period could have indicated that not only the prices at which the IFFCO / IPL imported the fertilizer were inflated but the resultant subsidy was claimed on the inflated prices. Further, no witness from Uralkali has been examined or cited to prove the allegation of import at inflated prices. 66. The documents viz., (i) debit notes and (ii) inward remittance payment advices etc. on which reliance has been placed by the respondent / ED only establishes and reaffirms the position that IPL and Uralkali were having a business relationship with one another, which position is otherwise not in dispute. The said documents do not remotely indicate that the prices at which the said entity imported fertilizer from Uralkali were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents are for the provisions of consultancy service. However, no services were actually provided to Uralkali and the invoices were raised only for the transfer of funds to Midas on the instructions of Pankaj Jain and Sanjay Jain. b. Statement dated 09.09.2019 recorded by the respondent under FEMA In this statement, Rajeev Saxena stated that no agreements were executed between him and Uralkali. The relevant part of the said statement reads as under: Q-3. Please explain whether there was any agreement between any of your group companies and Uralkali General Trading in Gibraltar? And what was the accounting treatment of these receipts in your books. Ans. To the best of my knowledge there was no agreement between our group company and Uralkali General Trading in Gibraltar. Commissions were received against invoices raised by us. These invoices were raised on the instructions of either Pankaj Jain, Sanjay Jain or A.D. Singh. These instructions were given to us by Pankaj Jain, Sanjay Jain or A.D. Singh during the course of meeting held at our office. I never had any contact with any representative or employee of Uralkali General Trading. c. Statement dated 24.12.2019 recorded by the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EMA, 1999. Undoubtedly, the ultimate call with regard to the probative value of the aforesaid statements of Rajeev Saxena and his credibility will be taken by the trial court at the stage of trial, but the inconsistency in his various statements cannot be negated altogether while considering the present bail application and the same will be a relevant circumstance while assessing the broad probabilities. 70. In so far as, the statement of Rajeev Saxena recorded under Section 50 of PMLA is concerned, suffice it to observe that he is a co-accused in the RC, as well as, in the present ECIR, therefore, his statement is not a substantive piece of evidence and can at best be used for corroboration. 71. In regard to the reports received from the MLAT confirming that 35 million USD were transferred to the entities controlled by Rajeev Saxena, it may be observed that the said report was not placed on record by the respondent, possibly for the reason that the same is confidential in terms of the treaty executed between the Government of India and the requested party, therefore, no reliance can be placed on the same. 72. The lack of evidence at Step 1 , as well as, the conflicting stand of Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the prosecution that the proceeds of crime after being in the hands of Rajeev Saxena have flowed to Rayon Trading, however, the ED has not placed on record a single bank statement to show the flow of money from Rajeev Saxena s entities to Rayon Trading. The only document relied upon by the ED is the plain paper entry/excel sheet, the genesis of which has been explained by Rajeev Saxena in his statement dated 05.06.2021, wherein it has been clarified that the said document has been created by his staff to answer the questions by the ED. The relevant part of the statement dated 05.06.2021 reads as under: Page 121 to 131 is a working paper created by my staff to give the details to Enforcement Directorate during the FEMA investigation as stated in my answer no. 1. 79. The paper/Excel sheet which has been handed over by Rajeev Saxena to the respondent is not a document or regularly kept accounts in the course of business according to a set of rules or system in terms of Section 34 of the Evidence Act but it is simply a paper created by the staff of Rajeev Saxena for the investigating agencies. It is thus, not a contemporaneous document and the entries contained therein are prima facie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer than the industry average. As such, the methodology was designed in such a manner that IFFCO could not have freedom to manipulate prices, and even if that could happen, it was restricted to the industry average being lower than that of IFFCO. In case of sulphur, the price recognized for the concession was decide on the basis of either the published price in the Fertilizer Market Bulletin (FMB) (upto 31.03.2007) or on the basis of lower of published price of weighted average import price of the entire industry. As such, there is no reason for any importer to import at higher price, as its price would be subject to weighted average import price of the entire industry. If the allegation of import of inputs at higher price is true for one company, it will be true for all. But then, the same is further subject to published price. Price of Rock and Sulphur The following is the details of price of rock phosphate and sulpher for IFFCO and weighted average industry price adopted for finalizing concession e.g. 2007/2008: Rock phosphate (Cfr per MT US $) Month IFFCO Industry Avg. Lower price adopted April 69.60 67.80 67.80 May 69.60 64.33 64.33 June 71.84 74.27 71.84 July 71.84 67.93 67.9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstead of in the months of October and November, 2009, IFFCO must have incurred loss. Possibly, the contacts which have supplied the information to MD, IFFCO that subsidy would be lower in subsequent months appear to be unreaslisable. Copy of the notification of rates is placed at Flag 'B' fore reference. xxxx xxxx xxxx xxxx 4. Concession Scheme w.e.f. 1st April, 2010: With effect from the 1st April, 2010 the concession scheme applicable for the decontrolled P K Fertilizers has been discounted and replaced by the Nutrient Based Subsidy (NBS) Scheme (NBS), wherein instead of announcing the rates of concession month wise for each importer/manufacturer, the rates subsidy for each nutrient (N.P.K. and S) on per kg basis fixed for the whole year is announced and this subsidy is applicable to all the importer/manufacturers covered under subsidy scheme of the Department of Fertilizers. The subsidy is fixed after taking into consideration all factors including prices of fertilizers in the International Market, MRP, inventory levels and exchange rate. Under the NBS Policy there is no relevance of cost of production/import price of P K fertilizers. The MRP is allowed to be fixed by i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... probable. EXAMINATION OF THE PREDICATE OFFENCE 87. With considerable emphasis both the parties have argued on the aspect whether this Court can examine the predicate offence to satisfy itself that based upon the material which has been collected during investigation, are there reasonable chances of the petitioner being ultimately convicted of the predicate offence. 88. The learned Special Counsel for the respondent / ED has drawn the attention of the Court to the decision in Satender Kumar Jain (supra) to contend that this Court cannot go into the question of validity of institution of the predicate offence. 89. On the other hand, it has been argued on behalf of the petitioner that a weak predicate offence is a consideration which will enure to the benefit of the petitioner. To buttress this contention, reliance has been placed on the decision of a coordinate Bench of this Court in Sanjay Pandey vs. Enforcement Directorate, 2022 SCC OnLine Del 325, the relevant paragraphs of which read as under:- 58. The offence under section 120-B IPC (which is also a PMLA scheduled offence) is also not made out in so far as the criminal intent i.e., agreement to do an illegal act as defined under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that initiation and continuation of the offence of money laundering depends on the existence of the predicate offence. As a corollary of this proposition, as well as, from the above decisions of this Court it follows that on the basis of an objective assessment of the material on record if it prima facie appears that predicate offence is weak and will not hold good under the law i.e. the accused may not be ultimately convicted of the said offence, it will be a reason to believe that he is not guilty of an offence under PMLA. In other words, it will be a factor in favour of the accused in the scheme of broad probabilities. 92. As this Court has prima facie observed that there is no material showing imports at inflated prices by IFFCO/IPL and consequent payment of higher subsidy and there appears to be a break in the money trails, therefore, the evidence to prove conspiracy or wrongful loss to IFFCO/IPL, its shareholder and to the Public Exchequer and the resultant wrongful gain to the petitioner, is lacking. Thus, at this stage based upon the material produced before the Court, it can be said that prima facie the predicate offence appears to be weak in nature and the petitioner is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -accused persons and proceeded to file the complaint praying the learned Special Court to take cognizance of the offences. 95. Similarly in Ramesh Manglani vs. ED, 2023 SCC OnLine Del 3234 , this Court has held as under:- 56. Insofar as the ED not having arrested similarly placed co-accused persons; and not even having arraigned some other persons evidently connected with the offending transactions as accused in the prosecution complaint, though these aspects would not be dispositive of a bail plea one way or the other, they are also not wholly irrelevant and the doctrine of parity is not immaterial. As held by this court in Ashish Mittal (supra) considering the nature of the offence, where the gravamen of the offence is that several persons acting in concert have siphoned-off and laundered monies, it is manifestly arbitrary for the ED to have made selective arrests and arraignments. It has also been brought to the notice of this court that Sanjay Godhwani, who may be viewed as one of the main accused in this case, has been granted bail by the learned trial court vide order dated 09.05.2023 in Bail Application No. 688/2023 on merits as well as on medical grounds . This circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, in view of the above discussion and on the basis of the material available on record, this Court is satisfied that there are reasonable grounds for believing that the petitioner is not guilty of the offence and that he is not likely to commit any offence while on bail. 104. Thus, the petitioner has made out a case for grant of regular bail. Accordingly, the petitioner is enlarged on bail subject to his furnishing a Personal Bond in the sum of Rs. 2,00,000/- and two Sureties of the like amount of which one should be of family member of the petitioner subject to the satisfaction of the learned Special Judge/learned Trial Court/CMM/Duty Magistrate, further subject to the following conditions:- a) Petitioner shall not leave the country during the bail period without prior permission of this Court. b) Petitioner shall appear before the Court as and when the matter is taken up for hearing. c) Petitioner shall provide a mobile number to the IO concerned which shall be kept in working condition at all times and he shall not change the mobile number without prior intimation to the Investigating Officer concerned. d) Petitioner shall join the investigation as and when directed and sha ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
