2024 (10) TMI 446 - HC - Money Laundering

HC dismisses petitions challenging money laundering probe into Rs 2161 crore liquor cartel involving corruption and illicit operations

The HC dismissed petitions challenging money laundering investigations into a liquor cartel in Chhattisgarh involving proceeds of crime worth Rs. 2161 ... Money Laundering - scheduled offences - charging of illegal commission - Sale of unaccounted illicit country liquor wherein usage of hologram along with other methods was modus operandi - payment of annual commission by distilleries for operation of cartel, which make out a cognizable offence under Sections 7 and 112 of the PC Act and section 420, 467, 471 and 120B of the IPC - HELD THAT:- It is apparent that the allegations and scope of investigation in both the FIRs are different from each other. The State is conducting investigation regarding allegation of charging of illegal commission, sale of unaccounted illicit country liquor wherein usage of hologram alongwith other methods was a modus operandi and payment of annual commission by distillers for operation of cartel, which are not within the scope of investigation of the FIR registered by the State of Uttar Pradesh. The FIR registered by the State of Chhattisgarh, being No. 4/2024 on 17.01.2024 on the basis of the letter dated 11.07.2023 of the ED, is much more detailed one running in about 11 pages. It states that proceeds of crime is estimated to be Rs. 2161 Crores. Illegal commission has been charged from the liquor supplies for accounted sale of liquor in Chhattisgarh. Sale of off the record unaccounted illicit country liquor from the State run shops was done with the active involvement of Distillers, Hologram manufacturer, Bottle Maker, transporter, manpower management and District Excise Officials. Annual Commission paid by Distillers for allowing them to operate a cartel and divide the market share among themselves in the State of Chhattisgarh. The role of Anil Tuteja, Anwar Dhebar, Arunpati Tripath and other unnamed senior officers of Excise Department and local District Level Excise Officers have also been mentioned. The said offence has different facets including multiple sections of the PC Act, IPC and PMLA. The main responsibilities of Excise Departments are to regulate the supply of liquor, ensure quality liquor to users to prevent hooch tragedies and to earn revenue for the State. But the criminal syndicate led by Anwar Dhebar and Anil Tuteja has turned these objectives upside down - The CSMCL was established with the vision to provide genuine liquor, to stop sale of illegal Liquor, to provide liquor on MRP. It established its own stores to retail the liquor/ beer/wine/country liquor after procuring liquor from manufacturers directly. The investigation conducted has revealed that the transportation of liquor from distillers to shops and supply of duplicate holograms to distillers was looked after by Arvind Singh. Monthly targets were set by Anwar Dhebar who used to communicate to MD CSMCL either directly or through Arvind Singh. Then senior Excise officials used to coordinate with Distillers, Hologram Makers, Bottle Makers, Transporters and local Excise Officials to ensure that the entire system ran flawlessly and no one interferes in this illegal State-run racket. The target of kachcha liquor sale was flexible and, on an average, around 200 trucks carrying 800 cases of country liquor per month were supplied by the distillers to the syndicate during the financial year 2019- 20. The syndicate apart from collecting commission on sale of accounted liquor (Part-A) and sale of unaccounted kachcha illegal liquor (Part-B) also charged quid pro quo bribes from main distillers so that they can form a cartel and divide the entire market share among themselves - The ED investigation has established that in the Excise Department of State of Chhattisgarh massive unprecedented corruption was done between 2019 to 2023 in multiple ways. The total extent of extortion is coming to around Rs. 2161 Crore. The entire amount is nothing but the rightful amount which should have gone to the State Exchequer and should have been taxed and yielded revenue for Central and State governments. Thus, this is the proceeds of crime which ED is investigating and trying to establish money trail and trace the assets created out of these proceeds of crime. From perusal of the FIR and the ECIR in question, it cannot be said that no prima facie offence whatsoever is disclosed against the petitioners. Moreover, the material collected during the investigation goes to show that the nature of offences committed by the accused/ petitioners has caused huge financial loss to the State exchequer and the estimated proceeds of crime is of around Rs. 2161 Crores. In the FIR, there are 70 named persons including bureaucrats, politicians, businessman and other individuals and the present is a case of an organized crime which needs to be taken to the logical conclusion by the investigating agencies i.e. the State Police and the ED. None of the action of the respondent State/ACB EOW or the ED is found to be in contravention of any of the provisions of the PMLA or in violation of any order passed by the Supreme Court. Thus, no strong case is made out for interference by this Court at this stage - petition dismissed. Issues Involved:1. Legality of the FIR No. 4/2024 registered by the Anti Corruption Bureau (ACB), Raipur.2. Legality of the Enforcement Case Information Report (ECIR) No. RPZO/04/2024 registered by the Enforcement Directorate (ED).3. Allegations of mala fide and violation of Supreme Court orders by the ED and ACB.4. Whether the FIR and ECIR are based on the same transaction, constituting a second FIR.5. Validity of the arrest and remand of the petitioners under the Prevention of Money Laundering Act (PMLA).Detailed Analysis:1. Legality of the FIR No. 4/2024 by ACB, Raipur:The petitioners sought to quash FIR No. 4/2024, arguing it was registered in violation of Supreme Court orders and based on inadmissible evidence. The FIR was registered for offences under Sections 420, 467, 468, 471, 120-B IPC, and Sections 7 & 12 of the Prevention of Corruption Act, 1988. The State argued that the FIR was registered after independent verification of information provided by the ED, which revealed a prima facie cognizable offence. The Court found that the FIR was not in violation of Supreme Court orders and was based on credible information, thus dismissing the petitioners' claims.2. Legality of ECIR No. RPZO/04/2024 by ED:The petitioners challenged the ECIR, claiming it was a second investigation on the same transaction and thus illegal. The ED argued that the ECIR was based on a different predicate offence registered by the ACB, Raipur, and not on the previous ECIR/RPZO/11/2022. The Court held that the ECIR was valid as it was based on a new FIR with distinct allegations, and the Supreme Court had not barred the ED from recording a new ECIR.3. Allegations of Mala Fide and Violation of Supreme Court Orders:The petitioners alleged that the registration of the FIR and ECIR was in contempt of Supreme Court orders dated 18.07.2023, which directed the authorities to stay their hands. The Court found that the ED's communication to the State of Chhattisgarh was prior to the Supreme Court's order, and the FIR was registered after independent verification by the ACB. The Court dismissed the allegations of mala fide, stating that the actions of the ED and ACB were in compliance with legal provisions.4. Whether the FIR and ECIR Constitute a Second FIR:The petitioners argued that the FIR and ECIR were based on the same transaction as previous cases and thus constituted a second FIR, which is not permissible. The Court distinguished the allegations and scope of investigation in the FIR registered by the State of Chhattisgarh from the FIR registered in Uttar Pradesh, finding them to be different in nature and scope. The Court held that the FIR and ECIR were not a second FIR on the same transaction.5. Validity of Arrest and Remand under PMLA:The petitioners challenged the legality of their arrest and remand under the PMLA, arguing that the arrest was based on coerced statements and without proper grounds. The Court found that the arrest was conducted following due procedure under the PMLA, with sufficient material and grounds for the arrest. The Court upheld the remand orders, stating that the Magistrate had satisfied himself with the validity of the arrest and the need for further investigation.Conclusion:The Court dismissed all petitions, finding no illegality in the registration of the FIR or ECIR, no violation of Supreme Court orders, and no mala fide intent in the actions of the ED and ACB. The investigation was allowed to proceed, emphasizing the seriousness of the allegations and the need for a thorough inquiry. The interim orders, if any, were vacated.