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 crores. The court found prima facie offences under PC Act sections 7 and 112, IPC sections 420, 467, 471 and 120B involving illegal commission charging, sale of unaccounted illicit country liquor using duplicate holograms, and annual commission payments by distilleries for cartel operations. The investigation revealed systematic corruption in the Excise Department from 2019-2023, with 70 named accused including bureaucrats, politicians and businessmen. The court held the investigation was lawful and necessary to trace proceeds of crime.

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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.

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