2022 (6) TMI 1502 - HC - Indian Laws

Regular bail denied in money laundering case involving Rs. 32.25 crore export duty drawback fraud scheme

Sajjan Kumar Versus Directorate Of Enforcement

Delhi HC dismissed regular bail application in money laundering case involving export duty drawback fraud. Applicant allegedly procured goods ... Seeking grant of regular bail - Money Laundering - predicate offences - procured goods from various places within India to export the same in the name of different firms/companies by inflating the value by several times - disbursal of duty drawback on the overvalued exports subsequently leading to extra duty drawbacks - HELD THAT:- In the matter of regular bail under Section 439 of the Cr.P.C., a Court must consider aspects, including but not limited to, the larger interest of the State or public, whether the accused is a flight risk, whether there is likelihood of his tampering with evidence, whether there is likelihood of his influencing witnesses, etc. Apart from these, another factor relevant would be the gravity of the alleged offence and/or nature of the allegations levelled, which may serve as an additional test that can be applied while keeping in view the severity of the punishment that the offence entails. It is equally well-settled that economic offences constitute a class apart and need to be visited with a different approach, given their severity and magnitude. Albeit these offences are likely to adversely impact the economic fabric of the Country. But each case must be adjudged on the basis of the peculiar facts and circumstances, while striking a balance between the right to personal liberty of the applicant and the interest of the society in general. In Dr. V.C. Mohan [2022 (1) TMI 511 - SUPREME COURT] on a challenge made by the Directorate of Enforcement to the grant of anticipatory bail to the respondent, the Hon’ble Supreme Court set aside the impugned order and remanded the matter back for re-consideration. In the instant case, the offence is squarely made out against the applicant as DRI has already filed a complaint and cognizance has already been taken by the concerned Court. As per the allegations, the applicant is unique modus operandi to procure the goods from various places within India to export the same in the name of different firms/companies by inflating the value by several times. Two sets of invoices bearing the same serial number and dates were prepared. The invoices of inflated value were produced before Indian custom authorities and actual values were sent to consignee therefore on the basis of inflated values, extra duty drawbacks were claimed by accused other than what was admissible, and in this manner, Rs. 32.25 crores were fraudulently availed by applicant/accused. The applicant is alleged the main accused in the instant FIR. The DRI has already filed a complaint against the applicant and cognizance has been taken by the concerned Court and there is no challenge to the cognizance and, therefore, there is no force in the argument of the applicant that no schedule offence is made out. This Court finds no reasonable ground for believing that the applicant is not guilty of the alleged offence. From a prima facie view of the material placed on record and in light of the gravity of alleged offence, it cannot be said that the applicant is not likely to commit any such offence while on bail. Accordingly, the bail application is dismissed. Issues Involved:1. Applicability of Section 45 of the PMLA.2. Allegations of fraudulent export and availing undue duty drawbacks.3. Legality of arrest and detention.4. Definition and applicability of 'proceeds of crime'.5. Consideration of bail under Section 439 of Cr.P.C.Issue-wise Detailed Analysis:1. Applicability of Section 45 of the PMLA:The court examined the applicability of Section 45 of the PMLA, which imposes twin conditions for bail: (i) the Public Prosecutor must be given an opportunity to oppose the bail application, and (ii) the court must be satisfied that there are reasonable grounds for believing that the accused is not guilty of the offense and is not likely to commit any offense while on bail. The court noted that the Supreme Court in Nikesh Tarachand Shah had declared these conditions unconstitutional, but the Finance Act, 2018, amended Section 45 to reintroduce these conditions. The court observed that the constitutional validity of this amendment is under consideration by the Supreme Court.2. Allegations of Fraudulent Export and Availing Undue Duty Drawbacks:The applicant was accused of inflating the value of exported goods to fraudulently claim undue duty drawbacks amounting to Rs. 32.25 crores. The allegations included procuring goods within India, preparing two sets of invoices with inflated values, and converting the proceeds from bank accounts to cash through various modes. The court noted that the Directorate of Revenue Intelligence (DRI) had already filed a complaint, and cognizance had been taken by the concerned court.3. Legality of Arrest and Detention:The applicant argued that his arrest was arbitrary and a counterblast to his complaint against ED officials. The court, however, noted that the authorized officer, based on the material in possession, had reasons to believe that the applicant was guilty of an offense under PMLA and arrested him accordingly. The court emphasized that the seriousness and magnitude of the offense justified the arrest and continued detention.4. Definition and Applicability of 'Proceeds of Crime':The applicant contended that the duty drawback on export goods, determined by customs officers, could not be considered 'proceeds of crime.' The court rejected this argument, stating that the fraudulent availing of undue duty drawbacks constituted proceeds of crime under PMLA. The court relied on statements and documentary evidence to substantiate the allegations.5. Consideration of Bail under Section 439 of Cr.P.C.:The court considered various factors for granting bail, including the severity of the offense, the applicant's potential flight risk, and the likelihood of tampering with evidence or influencing witnesses. The court emphasized that economic offenses require a different approach due to their severity and potential impact on the country's economic fabric. The court concluded that there were no reasonable grounds for believing that the applicant was not guilty of the alleged offense or that he would not commit any such offense while on bail.Conclusion:The court dismissed the bail application, finding no reasonable ground for believing that the applicant was not guilty of the alleged offense. The court emphasized the gravity of the offense and the material placed on record, indicating that the applicant was likely to commit such offenses while on bail. The court also clarified that the observations made would not affect the trial proceedings.