9911796707
TMI Blog2024 (3) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... d Sections 13(2) read with 13(1)(d) of the PC Act, 1988. 3. The summary of the allegations contained in the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Earth Group and the remaining amount of USD 34.40 million (Rs. 204 Crores approx.) has been received by the sons of the Managing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IFFCO nor IPL was a public company, rather they have been private companies/entities since the year 2000. In this regard, the learned Senior Counsel referred to letters dated 21.08.2017 and 05.09.2018 of the CBI (annexed as Annexure P-13 to the 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 authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ior Counsel in respect of the indirect route is that in the said route the chain remains inconclusive and suffers from various material irregularities at each leg of this route / money trail, which are enumerated below: a. IFFCO and IPL have paid Uralkali for fertilizers at inflated prices to cover the commission amount which was subsequently received by the accused 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. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Rajeev Saxena - i. Mr Aggarwal submits that no proof of payment of money in the form of bank account statements has been placed on record by the ED to show any transaction between the entities of Rajeev Saxena and Rayon Trading. He submits that reliance in this regard has been placed by the respondent solely on plain paper (excel sheet) entries and the said document is not a contemporaneous 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the direct route is that even in the said route there are numerous breaks in the money trail, and such breaks at each step are enumerated below: a. the proceeds of crime from Rajeev Saxena came to the hands of Ratul Puri and his employee, Rajiv Agarwal i. The learned Senior Counsel for the petitioner submits that neither Ratul Puri nor his employee Rajeev Aggarwal have supported the case of the prosecution. Reliance 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jain of Dubai? Ans. 1 No. Q.2 Have you ever interacted with Pankaj Jain or Sanjay Jain in any matter? Ans. 2 No, I do not know these persons at all. I have never met them or interacted with them in any matter at all. Q. 3 Have you ever had any telephone conversations with these two persons? Ans. 3 No. Q. 4. Were you having phone numbers of these two persons? Ans. 4 No. I was not having phone numbers of these two persons. Q. 5 Have you ever interacted with Puneet Banthia 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 you ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction (of carrying cash) is of the year 2016, whereas, the ledgers recovered from Rajeev Saxena are only up till the year 2014. This according to Mr. Aggarwal shows that if any cash was carried by Puneet Banthia to the petitioner, the same has no connection with the transactions with Uralkali. BAIL ON THE GROUND OF PARITY 14. Mr Aggarwal, the learned Senior Counsel for the petitioner submits that the petitioner is also entitled to be enlarged on bail in view of the fact that all the accused persons named in the first complaint dated 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 Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submits that the present case is not a simplictor case of subsidy fraud but the accused persons have also committed the offence of cheating as a result of which both IFFCO and IPL have suffered wrongful loss, and wrongful gain has been derived by the accused persons. It is also the contention of Mr Hossain that the shareholders of the above companies have also been cheated and defrauded as the price at which fertilizers were imported was inflated. He also urged that had the present offence not been committed by the accused persons, the price of import of fertilizers 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibility of loss caused by the manipulative prices which included the commission paid to the sons of U.S. Awasthi and P.S. Gahlaut. He further submits that IFFCO and IPL are major players in the fertilizer industry and the price at which they imported the fertilizers affected the entire industry average. He refers to the OM to illustrate that for the month of April, the price at which fertilizer was imported by IFFCO was USD 69.60 and the industry average was USD 67.80, the industry price being lower was adopted for the said month. Had IFFCO paid its actual price after discounting the commission 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of money for fertilizers at inflated prices by IFFCO/IPL to Uralkali - i. According to Mr. Hossain the business dealings between IPL and Urakali are established from bank statements and financial transactions between the parties. The attention of the Court is invited to the debit note dated 09.05.2014 amounting to USD 1,000,000.00 raised by IPL on Uralkali as well as the declaration dated 05.09.2014 under Section 10(5) of the Foreign Exchange Management Act, 1999, whereby IPL has stated that it was expecting a sum of USD 1,000,000.00 from M/s Uralkali Trading (Gibraltar) Ltd on account of "REBATES". 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied this in detail in my above-mentioned statements. However, I once again submit that the copy of agreement submitted in my statement dated 24.12.2019 is just a draft agreement which was never signed and executed by any of the parties mentioned in the agreement. Further, there was no agreement handed over to me or my company by Rare Earth group. I once again confirm and state that no signed agreement was ever given to us. Upon being asked to explain about the ownership of Rare Earth Group, I once state that Rare Earth Group is beneficially owned, controlled and managed by A.D. Singh, Pankaj Jain and Sanjay Jain. The 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. Proceeds of crime from Rajeev Saxena to Rayon Trading i. Mr Hossain submits that the money so received in the entities of Rajeev Saxena was thereafter transferred to the account of Rayon General Trading and other entities controlled by Pankaj Jain (co-accused/brother of the petitioner). In support of his contention, he invites the attention of the Court to the statement of Rajeev Saxena dated 10.06.2021 recorded under Section 50 of the PMLA, wherein Rajeev Saxena furnished the consolidated statement showing transactions with Pankaj Jain, Sanjay Jain and A.D. Singh. The relevant part of the statement reads as under: "On being 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by him that payments amounting to Rs. 35,04,09,900/- have been made to the petitioner in the form of cash, RTGS transfers, FDRs etc. He further explained that M/s Atoll Vyapaar Private Limited and M/s Rasraj Marketing Private Limited are companies of the petitioner and he held 100% shares of both these companies and the directors of the said companies are dummy directors acting at the behest of the petitioner. iii. Mr Hossain submits that Sunil Kumar Gupta was maintaining an account titled JPS on his laptop which belonged to the petitioner and on being shown the printout of this account, Sunil Kumar Gupta explained various credit and debit entries 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner through an individual namely, Ratul Puri. Reliance in this regard is placed on the statement dated 11.06.2021 of Rajeev Saxena recorded under Section 50 of the PMLA to contend that on the said day, Rajeev Saxena was confronted with his statement dated 02/03.07.2019 tendered before the Income Tax Authorities and he admitted the same to be true and correct. In the said statement Rajeev Saxena had stated that payment to the tune of Rs. 43.89 Crores (USD 6.98 million) was made to the brother of the petitioner namely, Pankaj Jain. The attention of the Court was also drawn to Tables VII and VIII of the 1st Supplementary RC which shows the details of amount paid 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. Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in custody. He submits that the petitioner is not entitled to grant of bail on the ground of parity, in as much as, the other accused were granted bail disregarding the twin conditions as contained under Section 45 of the PMLA, based upon the judgment of Nikesh Tarachand Shah v. UOI (2018) 11 SCC 1, wherein Section 45(1) of the PMLA, insofar as it imposes twin conditions for release on bail, was declared to be unconstitutional, whereas the Supreme Court in Vijay Madanlal Chaudhary (supra) has now upheld the twin conditions under Section 45(1) of the PMLA. 38. He further submits that a co-accused namely, Amarendra Dhari Singh, has been granted bail on medical grounds vide order dated 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same as the weight of evidence and no substantial weight can be attached to the statement of co-accused namely, Rajeev Saxena as it is trite that the statements of co-accused are not a substantive piece of evidence. He places reliance on the decision of Hon'ble Supreme Court in Dipakbhai Patel v. State, (2019) 16 SCC 547. He further submits that the respondent cannot elevate the weight of the evidence merely because the same is recorded under Section 50 of the PMLA. 43. He submits that the statements of Rajeev Saxena are inherently unreliable, in as much, it is the own case of the respondent that Rajeev Saxena is guilty of "fudging" important documents and now the same is being sought to be relied upon 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material on record. 48. Before adverting to the rival contentions of the parties, it is imperative to bear in mind the threshold that the petitioner is required to meet under Section 45 of the PMLA before he is enlarged on bail. Reference may advantageously be had to the observations of the Supreme Court in Vijay Madanlal Choudhary (supra), the relevant paragraphs of which read as under:- "388. There is no challenge to the provision on the ground of legislative competence. The question, therefore, is : whether such classification of offenders involved in the offence of money-laundering is reasonable? Considering the concern expressed by the international community regarding the money-laundering activities world over and the transnational impact thereof, 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be required to record a finding as to the possibility of his committing a crime after grant of bail. However, such an offence in futuro must be an offence under the Act and not any other offence. Since it is difficult to predict the future conduct of an accused, the court must necessarily consider this aspect of the matter having regard to the antecedents of the accused, his propensities and the nature and manner in which he is alleged to have committed the offence. 45. It is, furthermore, trite that for the purpose of considering an application for grant of bail, although detailed reasons are not necessary to be assigned, the order granting bail must demonstrate application of mind at least in serious cases as to why the applicant has been granted or denied the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of evidence to find the guilt of the accused is the work of Trial Court. v. A finding is also required to be recorded as to the possibility of the bail applicant committing a crime after grant of bail. This aspect has to be considered having regard to the antecedents of the accused, his propensities and the nature and manner in which he is alleged to have committed the offence. 50. The rival contentions of the parties, therefore, will have to be appreciated bearing in mind the aforementioned principles. CBI'S JURISDICTION TO REGISTER THE RC 51. The first submission of the learned Senior Counsel for the petitioner is that since IFFCO and IPL are no longer government entities and it is not yet clear whether the co-accused namely, P.S. Gahlaut and U.S. Awasthi are "public servants", hence, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al v. Enforcement Directorate, 2023 SCC OnLine Del 1094] has held that weightage given to Section 50 statement is to be analysed at the final stage and not at the stage of grant of bail. Hence, prima facie not much reliance can be placed on Section 50 statements in view of inconsistency in the statements of Indrajit Zaveri, Anuj Malik and Pranav Kumar." (emphasis supplied) 55. In Manish Sisodia vs. Directorate of Enforcement: 2023 SCC OnLine Del 3770 this Court held 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. The Court did not look into the contradictions in the testimony of the witnesses observing that the Court cannot appreciate the evidence meticulously but at the same time observed that the Court 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 rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hasis supplied) 56. The principle that emerges from Vijay Madanlal Choudhary (supra), as well as the above decisions 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 trial and there cannot be a mini-trial at the stage of bail. However, when the statements recorded under Section 50 of PMLA are part of the material collected during investigation, such statements can certainly be looked into at the stage of considering bail application albeit for the limited purpose of ascertaining whether there are broad probabilities, 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 inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that such confession by the maker as against the co-accused himself should be treated as a piece of corroborative evidence.[Bishnu Prasad Sinha v. State of Assam : 2007(11) SCC 467] 60. It is trite that the court cannot start with the confession of the co-accused to arrive at a finding of guilt but rather after considering all other evidence placed on record and arriving at the guilt of the accused, can the court look at the statement of the co-accused to receive assurance to the conclusion of guilt. 61. In Surinder Kumar Khanna vs. DRI: [(2018) 8 SCC 271] the Hon'ble Supreme Court tracing the law as regards the general application of a confession of a co-accused as against other accused under Section 30 of the Evidence Act, laid down that the Court cannot start with the confession of a co-accused person; it must begin with other evidence adduced 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 reitera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent existence of proceeds of crime, as aforesaid, the authorities under the 2002 Act cannot step in or initiate any prosecution." (emphasis supplied) COMMON STEPS IN THE MONEY TRAILS/ROUTES 64. 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. STEP 1: INFLATION OF PRICES 65. The specific case of the respondent is that the accused persons entered into a criminal conspiracy and thereby cheated and defrauded IFFCO / IPL, the shareholders of these entities, as well as, the Government of India 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-à-vis other importers has been pointed out to establish that the price at wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statements were made by Rajeev Saxena to different agencies:- a. Statement dated 02.07.2019 recorded by the Income Tax Authorities - In this statement, Rajeev Saxena stated that agreements were executed between his company and Uralkali, but he did not provide copies of such agreements. The relevant part of the said statement reads as under: "Q.9 Was there any agreement/contract signed by Midas Metal International LLC/Pacific International FZC and Uralkali? Ans: Yes. I am providing you the same. The same have been made part of Annexure I (Page 71 to 77) seized from the premise. As can be seen on perusal of the Pages 71 to 77 of Annexure A-1, there was an agreement signed on between Uralkali and Pacific International FZC w.e.f. 28.01.2014 for 1 year. There are other agreements between Midas Metals International LLC and Uralkali which are present at Page Nos. 85-90 of Annexure A-1. These agreements 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween Uralkali Trading (Gibraltar) Limited and your company M/s Midas Metals International LLC and also refer to answer to question no 2 above. Please explain the same. Ans No.3. I have already clarified this in detail in my above mentioned statements. However, I once again submit that the copy of agreement submitted in may statement dated 24.12.2019 is just a draft agreement which was never signed and executed by any of the parties mentioned in the agreement. Further, there was no agreement handed over to me or my company by Rare Earth group. I once again confirm and state that no signed agreement was ever given to us. Upon being asked to explain about the ownership of Rare Earth group, I once state that Rare Earth Group is beneficially owned, controlled and managed by A.D. Singh, Pankaj Jain and Sanjay Jain. The detail of entities in Rare Earth Group is already submitted in my above mentioned statements recorded u/s 37 of FEMA, 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 neg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted to dealing with Puneet Banthia for the purpose of handing over cash to him to transport the same to the petitioner. 77. Thus, it is only Puneet Banthia who has supported the case of the prosecution in his statement dated 10.10.2022 recorded under Section 50 of PMLA to the effect that he was asked by the petitioner to pick up some cash from the office of Moser bear and have it delivered at the office of Sh. Sanjay Jain in Defence Colony. He has also stated that he carried cash in the year 2016, whereas the transactions in Rajeev Saxena's ledgers connected with Uralkali are up to the year 2014. In this backdrop, the contention of the learned Senior Counsel for the petitioner that even if the statement of Puneet Banthia is taken on face value, the cash carried by him has no connection with the import by IPL / IFFCO from Uralkali, cannot be said to be wholly without substance. INDIRECT ROUTE THROUGH ALANKIT GROUP 78. It is the case of 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 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 012 issued by the Department of Fertilizers, Ministry of Chemicals & Fertilizers, states that the methodology for payment of subsidy as against import of Rock Phosphate was designed in such a manner that IFFCO had no freedom to manipulate prices and even if that could happen, it was restricted to the industry average being lower than that of IFFCO. Likewise, in the case of Sulphur, it is stated that there is no reason for any importer to import at higher prices, as its prices would be subject to the weighted average prices of the entire industry. 83. The relevant extract of the aforesaid office memorandum reads as under:- "As can be seen from the methodology mentioned above, in case of rock phosphate, the price recognized is not only based on the price of IFFCO but is subject to the weighted average price of the entire industry. IFFCO's concession was based on either the industry average (when it was lower than IFFCO) or its own price, which was lower 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerned with commercial transactions of IFFCO. xxxx xxxx xxxx xxxx Subsidy for fertilizers is disbursed on the basis of sale of fertilizers after receipt in the districts. The payment is subject to verification of statutory auditor of the company, railway receipts, sale invoice etc. This is further subject to certificate of the State Governments. As such, merely declaring a fertilizer as sold does not trigger eligibly for payment of subsidy. Further, the alleged motive attributed to IFFCO for sale of fertilizers imported in Aug-September 2009 is feat of decease in subsidy in subsequent months say Oct.-Nov. 2009. Thios motive is not supported by the subsidy rate announced by the Government. In fact, rates of subsidy for DAP in the month of August and September 2009 were lower than the months of Oct and Nov. 2009 as follows: Months Rates of subsidy (Rs. per MT) August 2009 8499 September 2009 9244 October 2009 9765 November 2009 9724 Accordingly, the allegation appears to be without rational data analysis. If MD, IFFCO has sold DAP as alleged in the month of August and September 2009 instead of in the months of October and November, 2009, IFFCO must have incurre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Special Counsel appearing on behalf of the respondent / ED is that since IFFCO and IPL were industry leaders, they could manipulate the average industry prices. Prima facie this submission appears to be without substance. There 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. 86. 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 87. Wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Act, but only when he has derived or obtained property as a result of criminal activity relating to or in relation to a scheduled offence and then indulges in process or activity connected with such proceeds of crime. Suffice it to observe that the argument under consideration is completely misplaced and needs to be rejected." 78. Since none of the ingredients of the scheduled offences viz., Section 72 IT Act, Section 120B r/w 409 and 420 IPC, Section 13(2) read with 13(1)(d) PC Act are made out, there is no occasion to allege acquisition or retention of 'proceeds of crime', which under Section 2(u) of PMLA is defined to mean proceeds arising out of 'scheduled offences." 90. Similarly, the attention of this Court was drawn to the decision of this Court in Chitra Ramkrishna vs. Assistant Director. Enforcement Directorate, in BAIL APPLN. 2919/2022 decided on 09.02.2023, where after examining the predicate offence, the Court held that since "no scheduled offences against the Applicant are established, the provisions of PMLA cannot be attracted to the present case." 91. It has been held by the Hon'ble Supreme Court in Vijay Madanlal Choudhary (Supra) that initiation and continuat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has been filed by the SFIO without feeling the need of any custody of the 53 out of 55 accused persons. The main accused even as per the SFIO has not been arrested, being protected by the order passed by this Court in Writ Petition (Criminal) No. 1242 of 2022. The said writ petition was filed by accused namely 'Vinod Kumar Dandona' and others including the main accused 'Shantanu Prakash' seeking quashing of the order dated 17.08.2018 passed by the MCA under Section 212(1)(c) of the Companies Act, which led to the start of investigation into the affairs of ESL. 46. The coordinate bench of this court, considering the facts of the case, by its order dated 26.05.2022, had directed SFIO not to take any coercive steps against the petitioners therein, which includes the main accused 'Shantanu Prakash'. 47. From the perusal of the complaint, it is apparent that even in relation to the charges which are alleged against the present applicant, there are various other accused persons who have been named as co-accused. The role assigned to them at this stage is no different than the Applicant. However, surprisingly the SFIO did not feel any need or ground to arrest those co-accused perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d disks etc., were either seized or duplicated. However, no incriminating material in the form of WhatsApp, Email, or CDRs has been recovered from him to support the claim of the respondent/ED. 100. It is also an undisputed fact that searches have been conducted by three agencies, i.e., Income Tax, Central Bureau of Investigation and Enforcement Directorate at different stages at the petitioner's house and at this office and since the present case is documentary in nature, all material documents are already in possession of the investigating agencies and no further recovery is to be made from the petitioner. 101. It was also not disputed by the learned Special Counsel for the respondent/ED that between 14.06.2016 (the date of receipt of the complaint by the CBI) and registration of the subject ECIR on 20.05.2021, the petitioner travelled overseas approximately 26 times. Thus, the petitioner is not a flight risk and is not likely to flee from the administration of justice. 102. Further, the petitioner does not have a criminal record and no criminal case is pending against him except the predicate offence, ED's present complaint and Income Tax proceedings for the same allegations. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
