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TMI Blog2024 (9) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... t Saiyyad Sulamani was taking the quantity of 19.56 MT coal from Toppa Colliery to Varanasi Mandi. It was pointed out that Varanasi is at the distance of 326 kms from the intercepted point and the Ramgarh is 11 Kms from the intercepted point. The second search was made on 16.01.2024 and allegations are made that 13 firms are non-operational / non-functional and further allegations are made that even the commission for getting the coal was at the subsidized rate. The search was conducted on 16.01.2024 and the petitioner was arrested on 07.50 PM on the same day. In Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ], the Hon ble Supreme Court has explained the proceeds of crime saying that the property must be derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence. It is further disclosed in the said judgment that the vehicle used in commission of scheduled offence may be attached as property in the concerned case (crime), it may still not be proceeds of crime within the meaning of Section 2 (1) (u) of the 2002 Act. Similarly, possession of unaccounted property acquired by legal means may be actionable for tax violatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he District of Ramgarh (Jharkhand) under Sections 420, 468, 469, 471, 120-B of the Indian Penal Code. He then submitted that the first summon was received by the petitioner in relation to the ECIR of 2023 for his appearance on 04.01.2024 at 10.30 A.M., but the said summon was received by him in the evening of 04.01.2024 through speed post and thereafter another summon was received on 09.03.2024 at 03.30 PM for his appearance on the same date before the Investigating Agency at 10.30 A.M., which has already expired. 4. Mr. Sinha, learned counsel has submitted the Investigating officer along with his team conducted a search and seizure operation at the residential premises of the Petitioner/ accused in Hazaribagh on 16.01.2024 and after conducting the search, the petitioner was arrested at 19:50 hours on 16.01.2024 under the allegation that he is involved and guilty of the offence of PML Act. He further submitted that pursuant to the investigation, the ED has filed a prosecution complaint dated 15.03.2024 under Section 45 of the PML Act, 2002, in ECIR Case No. 01 of 2024 in ECIR / RNZO / 34/2023 dated 12.12.2023 before the learned court against the petitioner and other two accused. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s /units on 03.03.2023. He submits that 2nd ECIR/RNZO/34/2023 dated 12.12.2023, seven persons were named, in which, it has been alleged that the coal on truck (JH 02AR 6640) was to be delivered to M/s Om Coke Industry, Ramgarh Jharkhand. Proprietor-Ishtiaq Ahmad. The Truck driver namely Saiyyad Sulamani-taking 19.56 MT Coal and that coal was taken from Toppa Colliery to Varanasi Mandi. The truck was intercepted at Hesargarha (100 mts. from Hesargarha Petrol Pump) which is approx. 4.5 Kms. from Toppa Colliery, however, Varanasi is at a distance of 326 Kms. from the intercepted point and Ramgarh is 11km away from intercepted point. He further submitted that the second search under Section 17 of the PML Act, was conducted in 2nd ECIR/RNZO/34/2023 dated 16.01.2024, in which, allegation against all 13 firms are made, which are non-operational/non-functional and despite the allocation of coal for captive consumption at a subsidized rate, it was sold in the open market to get maximum benefit and further allegation is made for giving commission for getting coal at a subsidized rate. He then submitted that the first summon in 2nd ECIR/RNZO/34/2023 was issued on 25.12.2023 for appearance on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of various documents, reports and the inspections being carried out by different agencies from time to time. Following are the Steps involved in the establishment/functioning of companies, which are as under:- i. Steps taken for compliance (PAN card, Aadhar, consent to establish. consent to operate, NOC from forest dept. Mining registration form, GST, Mining Registration, factory registration, Udyam portal, IT Return, Audit reports, monthly etc). ii. Documents submitted to JSMDC along with the application. iii. A committee under the supervision of the Mining chairman and JSMDC-verifies and approves yearly allotted quantity [Pg 12 of BA iv. Allotment quantity communicated through JSMDC to make security deposit. v. Fuel Supply Agreement (FSA) signed between JSMDC and purchaser entity. vi. After obtaining payment, a delivery order issued through authorized handling agent vii. Each colliery has handling agent authorized by the applicant who is responsible for loading of allotted coal in the trucks. viii. Quota dispatch plan issued by CCL/ BCCL containing details of trucks. 9. Learned counsel appearing for the petitioner has submitted that the prosecution has further failed to examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k of coal being transported for M/s Om Coke Industries only During the course of investigation, if the investigating agency has come across certain materials from where in its opinion a cognizable offence is made out, then in terms of the judgements passed in Prakash Industries Limited Anr. Versus Enforcement of Directorate (2023 SCC OnLine Del 336) the said materials are required to be forwarded to the scheduled offence agency and to be investigated in terms of the scheduled offence committed. The relevant extract of the aforesaid judgement is quoted as under- 91 Section 66 (2) thus fortifies the conclusion of the Court that ED does not stand conferred with any independent power to try offences that may be evidenced or may stand chronicled as offences under any other law What the Court seeks to highlight is that the jurisdiction and authority of the ED stands confined to considering whether an offence of money laundering stands evidenced. If in the course of its enquiry and investigation, it were to come to the conclusion that the material in ta possession evidences the commission of an offence created sonder any other enactment it would be obliged to furnish requisite information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prosecution has seized the documents and examined them for a period of 15 years and found 6 discrepancies in registers and vouchers as alleged in Para 7.5.2 of the Prosecution Complaint. The prosecution alleges that the entries in the registers were manipulated as the registration number of the vehicles used for transportation were of two-wheelers and response there, it has been stated in para-19 of the bail application that and a few of the relevant documents have also been brought on record through Additional Rejoinder Affidavit filed on behalf of the Petitioner. The said affidavit contains the details of the correct truck numbers along with the official government documents related to it, such as the sale challan issued by the JSMDC, document issued by the Department of Forest, Environment and Climate Change, GST Delivery Challan issued by the CCL, weighment slip issued by the CCL. Learned counsel for the petitioner submitted that the vehicle bearing registration no. JH02A-7322 was mistakenly written in the register, whereas, the correct vehicle number is another one and submitted that it is an human error in writing in register. Further, it has been pointed out that the vehicl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the summons issued under Section 50 of the Act of 2002 would not be enough to render him/her liable to be arrested under Section 19 of the Act. iii. M/s Bharathi Cement Corporation Private Limited vs Directorate of Enforcement (Criminal Revision Case No: 87 of 2021)- the Special Court trying the offence of money laundering while independently proceeding with the trial, may, however take a pause and await the ultimate pronouncement/decision of the Special Court trying the scheduled offence .. iv. Prakash Industries Limited Anr. vs ED (2033 SCC OnLine Del 336) ED does not stand conferred with any independent power to try offences obliged to furnish requisite information in respect thereof to the concerned agency for necessary action. In any case and independent of Section 66 (2) v. Hemant Soren Vs ED MANU/JH/0906/2024- 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 vi. Pushpendra Singh Vs. Director of Enforcement MANU/MP/2372/2024- Arrest is to be made, when custodial investigation regarding proceeds of crime is to be made or where there are chances that applicant, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ail Application No. 3494/2022 ) Hence, prima facie not much reliance can be placed on section 50 statements in view of inconsistency in the statements of Indrajit Zaveri, Amj Malik and Pranav Kumar .. xvi. Vijay Agarwal Through Parokar Vs Directorate of Enforcement (Delhi High Court Bail Application No. 1762/2022.) If the liberty of an individual is concerned, the Court cannot proceed merely on the basis of assumptions and presumptions. The evidentiary value of the statement recorded under Section 50 of PMLA has to be tested at the end of the trial and not at the stage of bail . xvii. DipakbhaiJagdish chandra Patel Vs. State of Gujarat Another (Supreme Court) (2019) 16 SCC 547 -Para 48-50-Statement of co accused not substantive evidence. Only can be used for assurance for conclusion of guilt based on other evidence. xviii. Sanjay Jain Vs Directorate of Enforcement (2022 SCC OnLine Del 325)- ... 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 then such contradictions and inconsistencies will be one of the factors that will ensure to the benefit of the ball applicant whilst ascertaining th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociated with the scheduled offence must have been derived or obtained by a person as a result of criminal activity relating to the concerned scheduled offence. This distinction must be borne in mind while reckoning any property referred to in the scheduled offence as proceeds of crime for the purpose of the 2002 Act. Dealing with proceeds of crime by way of any process or activity constitutes offence of money-laundering under Section 3 of the Act. 252. Be it noted that the definition clause includes any property derived or obtained indirectly as well. This would include property derived or obtained from the sale proceeds or in a given case in lieu of or in exchange of the property which had been directly derived or obtained as a result of criminal activity relating to a scheduled offence. In the context of Explanation added in 2019 to the definition of expression proceeds of crime , it would inevitably include other property which may not have been derived or obtained as a result of any criminal activity relatable to the scheduled offence. As noticed from the definition, it essentially refers to any property including abroad derived or obtained directly or indirectly. The Explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the 2002 Act, in particular Section 2 (1) (u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of definition clause proceeds of crime , as it obtains as of now. 18. Per contra Mr. Prashant Vidyarthi, learned CGC appearing for the Enforcement Directorate has opposed the prayer of the regular bail of the petitioner by way of drawing the attention of the court to the prosecution complaint and submitted that in para-7.3.3., it has come that the coal purchased by the petitioner through his other entities directly from CCL from financial year 2018-19 to financial year 2022-23 is disclosed in table Nos. 3 and 4. He further submitted that in para-7.4.4, it has been stated that from the agreement to sell, it was revealed that the coal supplied by the JSMDC at subsidized rates to the MSME units to be used as raw material only to manufacture the desired goods, not to be used otherwise, not be traded, not to be diverted for any use other than that of the end use, not be diverted in the open market and undertake to furnish periodical certificates certifying the end use of coal. 19. Learned counsel appearing for the ED h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Directorate. He further submitted that the petitioner has provided forged / manipulated manually maintained bills issued by the petrol pumps as the dates are in increasing order, however, the bill numbers are not in increasing order. 21. Learned counsel for the ED has submitted that the generation of proceeds of crime was made out, as the coal being purchased from JSMDC by entities of the petitioner is being sold in the open market. During the course of the investigation, e-auction price was called for from CCL and BCCL and the difference of the average price of coal purchased by entities of the petitioner from JSMDC and the average price of the same coal sold in e-auction at the same time are being treated as proceeds of crime in the present case. He submitted that in the investigation, it was found that the actual price at which the coal was sold in the open market is around 20% more than the price at which the coal was procured from the CCL and the BCCL through e-auction. 22. By way of inviting para-8.2 of the prosecution complaint, he submitted that in view of the above fact the total amount paid by the 13 small and medium enterprises of petitioner for purchase of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and further allegations are made that even the commission for getting the coal was at the subsidized rate. The search was conducted on 16.01.2024 and the petitioner was arrested on 07.50 PM on the same day. 26. In the bail application, it has been disclosed that the companies were opened after meeting all the requirements, which are as under:- i. Steps taken for compliance (PAN card, Aadhar, consent to establish. consent to operate, NOC from forest dept. Mining registration form, GST, Mining Registration, factory registration, Udyam portal, IT Return, Audit reports, monthly etc). ii. Documents submitted to JSMDC along with the application. iii. A committee under the supervision of the Mining chairman and JSMDC-verifies and approves yearly allotted quantity [Pg 12 of BA] iv. Allotment quantity communicated through JSMDC to make security deposit. v. Fuel Supply Agreement (FSA) signed between JSMDC and purchaser entity. vi. After obtaining payment, a delivery order issued through authorized handling agent vii. Each colliery has handling agent authorized by the applicant who is responsible for loading of allotted coal in the trucks. viii. Quota dispatch plan issued by CCL/ BCCL contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nicled as offences under any other law. What the Court seeks to highlight is that the jurisdiction and authority of the ED stands confined to considering whether an offence of money laundering stands evidenced. If in the course of its enquiry and investigation, it were to come to the conclusion that the material in its possession evidences the commission of an offence created under any other enactment, it would be obliged to furnish requisite information in respect thereof to the concerned agency for necessary action. In any case and independent of Section 66 (2), the Court finds itself unable to recognize ED as being statutorily empowered to either try or examine whether an offence under any other statue stands committed nor can it and more importantly pass a PAO on a mere assumption that an offence Independently created under any other statute is established to have been committed. 29. In para-8.2 of the prosecution complaint, it has been alleged as under:- 8.2. In view of the above facts, the total amount paid by the 13 small and medium enterprises of Ezhar Ansari for purchase of the said coal from JSMDE from October 2018 to March 2023 is calculated to be Rs. 29,50,36,622.79/- a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esting Rs. 29,50,36,622.79/- and if the words Paid and Purchase for that coal is there, Rs. 29,50,36,622.79/- cannot be termed as proceeds of crime under Section 2 (1) (u) of the PML Act and the amount of Rs. 29,50,36,622.79/- is minuses from Rs. 41,81,92,136.38/-, then it comes to Rs. 11 cores and odd, where in the said paragraph, the investment is also said to be the proceeds of crime and that is how the figure has come to Rs. 71,32,28,759.17. 32. It was pointed out that in the register, the vehicle number was wrongly mentioned as JH-02-T-7366, wherein the correct number is JH-02-T-7336, however, in the e-way bill and tax invoice, the truck number is mentioned as JH-02-T-7336. Further vehicle number was wrongly mentioned as JH-02-AR-6603, wherein the correct number is JH-02-AQ-6603, however, in the e- way bill and tax invoice, the truck number is mentioned as JH-02- AQ-6603. Further vehicle number was wrongly mentioned as JH- 01-AX-5533, wherein the correct number is JH-01-AX-5133, however, in the e-way bill and tax invoice, the truck number is mentioned as JH-01-AX-5133, which, prima facie suggests that the same are the human errors. 33. In para-251 of the judgment of Vijay Mada ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act on the society; and (v) likelihood of his tampering. No doubt, this list is not exhaustive. There are no hard-and-fast rules regarding grant or refusal of bail, each case has to be considered on its own merits. The matter always calls for judicious exercise of discretion by the Court. 38. Recently, the principles governing grant of bail were considered by the Supreme Court in P. Chidambaram v. Central of Investigation reported as (2020) 13 SCC 337. Relevant extract from the decision is reproduced hereunder:- 21. The jurisdiction to grant bail has to be exercised on the basis of the well- settled principles having regard to the facts and circumstances of each case. The following factors are to be taken into consideration while considering an application for bail: (i) the nature of accusation and the severity of the punishment in the case of conviction and the nature of the materials relied upon by the prosecution; (ii) reasonable apprehension of tampering with the witnesses or apprehension of threat to the complainant or the witnesses; (iii) reasonable possibility of securing the presence of the accused at the time of trial or the likelihood of his abscondence; (iv) character, b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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