TaxTMI 
TaxTMI 
2024 (3) TMI 598
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....2021 registered by the CBI under Sections 120B read with 420 IPC and 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 defrau....
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.... of the total illegal commission, an amount of USD 80.18 million (Rs. 481 Crores approx.) was channelized through Rare 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 ....
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...., 1988, to submit that although the RC was registered by the CBI under the provisions of the Prevention of Corruption Act, but at the relevant time i.e. at the time of import from 2007-2014, neither 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....
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....them. The relevant paragraph of the order dated 31.05.2021 reads as under: "7. Till further orders, no coercive steps shall be taken against the petitioners, however, they shall join investigation as and when called by SHO/IO." ANOMALIES IN THE CASE OF THE RESPONDENT IN THE INDIRECT ROUTE/COMMISSION THROUGH RAYON TRADING 11. The submission of the learned Senior 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....
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....respondent has failed to establish a link between the petitioner and Rajeev Saxena, in as much as there is no record to show any communication between them. Further, the prosecution complaints are based entirely on the unsubstantiated false statements and internal records of Rajeev Saxena (co-accused), thus, the veracity of the allegations against the petitioner is doubtful. c. Thereafter, the money was transferred to Rayon Trading 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 Ag....
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.... OF THE RESPONDENT IN THE DIRECT ROUTE 12. It may be noticed that the first two steps i.e. steps at sub paras (a) and (b) in para 11 above, insofar as payment from IFFCO/IPL to Uralkali and then from Uralkali to Rajeev Saxena, are concerned, the same are common in both the routes, therefore, the submissions apropos the said two steps in the indirect route are same in the direct route, therefore, they are not being repeated for the sake of brevity. 13. The submission of the learned senior counsel in respect of 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....
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....be recorded on 21.l 0.2022. I undertake to appear on 28.10.2022 at 1500 hours. The above statement of mine running into two pages has been tendered voluntarily on my own without any fear, pressure, force, coercion, threat or inducement and the same is true and correct to the best of my knowledge and belief. It has been typed on a computer at my request." ii. Mr Aggarwal contends that to a similar effect is the statement of Rajiv Aggarwal recorded under Section 50 of the PMLA on 14.10.2022, the relevant part of which reads as under: "Q. 1 Have you ever interacted with Rajiv Saxena in relation to payment of cash in India to Sanjay Jain brother of Pankaj 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 Ha....
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....ehalf cash transfers were being carried out. The relevant part of Shahnawaz's statement dated 18.10.2021 under Section 50 of the PMLA reads as under: Ans. 15 Give the normal day to day work handled by you while you were working for Mr. Rajiv Saxena. Ans.. .... On being asked I stated that the party on whose behalf these transfer were being carried out was not know to me..." v. It is fairly submitted by Mr Aggarwal, learned Senior Counsel that only one person namely, Puneet Banthia in his statements recorded on 24.09.2021 and 10.10.2022 has supported the case of the prosecution to the effect that he (Puneet Banthia) carried cash from Ratul Puri to the petitioner. He, however, adds that the statement of Puneet Banthia is contradictory to his earlier statement given to Income Tax Authorities in 2019. Further, no figure/amount has been disclosed by Puneet Banthia and that the said transaction (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 transactio....
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....0. This according to the learned Senior Counsel establishes that the petitioner is not likely to commit any further offence in case he is enlarged on bail and prays for the petitioner to be enlarged on bail. SUBMISSIONS ON BEHALF OF THE LEARNED SPECIAL COUNSEL FOR THE ED/RESPONDENT THE PRESENT CASE IS NOT A CASE ONLY UNDER THE PREVENTION OF CORRUPTION ACT BUT ALSO UNDER SECTIONS 420/120B IPC 21. Per Contra, Mr. Zoheb Hossain, learned Special Counsel appearing for the respondent at the outset submits that even if for the sake of argument it is assumed that IFFCO and IPL are private companies and the provisions of the Prevention of Corruption Act are not applicable to the office bearers of IFFCO and IPL, the RC has also been registered under Sections 120B r/w 420 IPC, which are also scheduled offences under the PMLA and bare reading of the RC manifests that the offence of cheating against the accused persons is made out. 22. Elaborating further, he 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 ....
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....contained in the RC registered by the CBI does not make out the scheduled offence, the failure of the petitioner to array the CBI as a party before this Court leaves this Court unequipped to consider the validity of the RC or the material collected by the CBI during its investigation. OFFICE MEMORANDUM OF THE DEPARTMENT OF FERTILIZERS DOES NOT ABSOLVE THE PETITIONER OF HIS GUILT 26. He invites the attention of the Court to the OM dated 23.07.2012, on page no. 483 of the bail application, to contend that the said office memorandum has itself used the words "even if that could happen" and "If the allegation of import of inputs at higher price is true for one company, it will be true for all", which means that the office memorandum does not rule out that prices could not have been manipulated, under any circumstance. 27. He submits that at best, the office memorandum discounts the possibility of IFFCO having benefited due to the manipulation of import prices, but it nowhere negates the possibility 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....
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....ave been recorded under Section 50 of the PMLA, thus, the same are admissible in evidence. The credibility and reliability of the statements of Rajeev Saxena cannot be considered by this Court at this stage as the same will be evaluated by the learned Trial Court at the time of Trial. For this purpose reliance was placed on the judgment of the Supreme Court in Satish Jaggi v. State of Chattisgarh, (2007) 11 SCC 195, the relevant paragraph of which reads as under:- "At the stage of granting of bail, the Court can only go into the question of the prima facie case established for granting bail. It cannot go into the question of credibility and reliability of the witnesses put up by the prosecution. The question of credibility and reliability of prosecution witnesses can only be tested during the trial." UNBROKEN MONEY TRAIL (THROUGH RAYON TRADING/INDIRECT ROUTE) 32. Mr Hossain submits that the money trail i.e. flow of proceeds of crime is unbroken and his submissions in this regard are as under: a. Payment 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....
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....mpanies i.e. Midas Metal International LLC and Pacific international FZC were receiving funds from Uralkali General Trading, Gibraltar ; Gulf Marine DMCC, Dubai on behalf of Sh. Pankaj Jain, Sanjay Jain and A.D. Singh. The said payments were received as commission for which invoices were raised on the instructions of all these three viz Sh. Pankaj Jain, Sanjay Jain and A.D. Singh. Further, I also state that there is no agreement from these entities with Midas Metal International LLC and Pacific international FZC for the said work. Upon being asked about the structure and ownership of Midas Metal International LLC and Pacific international FZC, I once again state that it is already mentioned in my above-mentioned statements. Ques No. 3 Please refer to your statement dated 24.12.2019 recorded u/s 37 of FEMA, 1999 wherein you have submitted a copy of the agreement between 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. 1 have already clarified this in detail in my above-mentioned statements. However, I once again submit that the copy of agreem....
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....ved has to be paid to Amol Awasthi, Anupam Awasthi, Vivek Gahlot, A.D. Singh and Pankaj Jain/Sanjay Jain. Accordingly, it was decided that this commission will be received in my entities acting as paymaster for them and will be paid according to their directions. My role was to provide them entities for receiving payments as paymaster and making payments out of these funds as per their directions. Since Pankaj Jain who is brother of Sanjay Jain, is Dubai based used to pass on instructions on behalf of A.D. Singh and Sanjay Jain in case of any modification. Further, I want to state that Sh. Sushil Kumar Pachisia use to interact on behalf of Pankaj Jain with my office on regular basis. He is the key person managing the affairs of the Rare Earth Group. A.D. Singh and Sanjay Jain used to visit my office regularly to have an update of the affairs pertaining to transaction from Uralkali and Gulf Marine. On being further asked to explain the role and function of 'Paymaster', 1 state that the role of Paymaster is to receive and disburse payment on the instructions of the client against service charges." c. Proceeds of crime from Rajeev Saxena to Rayon Trading i. M....
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....3,699.70, AED 73,106.40, AED 513,565.12 and AED 219,869.70 on 07.06.2014, 17.06.2014, 19.06.2014 and 09.07.2014, respectively. e. Proceeds of crime from Alankit Global to the petitioner - i. To substantiate the last leg of the money trail in the indirect route, Mr Hossain invites the attention of the Court to the statement of one individual namely, Sunil Kumar Gupta, who was an employee of Alok & Company LLP (a CA firm belonging to Alok Kumar Agarwal). He submits that Sunil Kumar Gupta was responsible for maintaining the record of all cash as well as non-cash transactions for Alok Kumar Agarwal and Ankit Agarwal and the same was also recorded in his statement under Section 50 of the PMLA. He further submits that the cash transactions were recorded on a laptop in an Excel sheet as well as in a tally document and the said statements were checked and reconciled by Alok Kumar Agarwal and Ankit Agarwal. It was also explained by Sunil Kumar Gupta that his laptop had been seized by Income Tax Authorities on 18.10.2019. ii. Mr Hossain submits that Sunil Kumar Gupta took a printout of the said Excel sheet and explained on the basis of diaries/excel sheets/ledgers ....
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..... According to Mr Hossain, the above trail is established from the fact that the petitioner admitted to having known Sunil Kumar Gupta from Alok & Co. Further, many other persons including Rakesh Kumar Jain, Mukesh Chandra Aggarwal and Mahesh Uphadhyaya etc. have testified to this fact. 34. Mr. Hossain, thus, submits that the funds which were transferred by entities controlled by Pankaj Jain from Dubai, using the vehicle provided by Alankit Group entities under the control of Alok Kumar Agarwal, to the petitioner/Sanjay Jain are also part of the proceeds of crime, which had been transferred by Rare Earth Group entities, and which have been projected as consultancy income by Alok Kumar Agarwal in the entities under his control. UNBROKEN MONEY TRAIL (THROUGH RATUL PURI/DIRECT ROUTE) 35. Mr. Hossain submits that the flow of money from IFFCO/IPL to Rajeev Saxena through Uralkali is common to both routes, therefore, he made submissions on the subsequent legs of the direct route, which are as under: a. Flow of Proceeds of Crime from Rajeev Saxena to Ratul Puri or his employee Rajeev Aggarwal i. Mr. Hossain submits that once the proceeds of crime were in the han....
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....V. Vijay Sai Reddy (2013) 7 SCC 452, the relevant paragraph of which reads as under: "30. As pointed out by the learned Senior Counsel for CBI in para 25 of the impugned judgment [V. Vijay Sai Reddy v. CBI, Criminal Petition No. 4387 of 2012, decided on 13-6-2012 (AP)], the High Court did not agree with the observation of the Special Judge that the investigation has reached to a conclusion. In fact, the High Court has concluded that the above finding is incorrect. In para 26 also, the High Court appreciated and accepted the stand of CBI that it has been making investigation with regard to other distinct offences that are alleged in the FIR. Interestingly, the High Court has also not accepted the another reasoning of the Special Court for granting bail, namely, that the main accused, A-1 and other beneficiaries have not been arrested by the investigating agency. In other words, the High Court has rightly concluded that the circumstance of not arresting the other accused itself cannot be a ground to grant bail..... (Emphasis Supplied) PETITIONER IS NOT ENTITLED TO GRANT OF BAIL ON THE GROUND OF PARITY 37. Mr. Hossain submits that it is the case of the petition....
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....an Krishnan learned Senior Counsel made submissions for the petitioner. He submits that considerable reliance has been placed by the respondent on the statements which have been recorded under Section 50 of the PMLA and it has been contended that this Court should not examine the correctness of the statements and must take them at face value. For this purpose, reliance has been placed by the respondent on the decision of this Court in Satyender Jain (supra). He, on the other hand, contends that the statements recorded under Section 50 of the PMLA cannot be seen at this stage at all and can only be seen at the stage of trial and this view has been endorsed by this Court in C.P. Khandelwal v. Directorate of Enforcement 2023 SCC OnLine Del 1094, Para 34, Preeti Chandra v. Directorate of Enforcement 2023 SCC OnLine Del 3622, Para 71 and Vijay Aggarwal v. Directorate of Enforcement 2023 DHC 3811, Para 35. Thus, he submits that the decision of this Court in Satender Jain (supra) is an exception and ought not to be followed by this Court. 42. Without prejudice to the above, he submits that even if this Court were to examine the statements recorded under Section 50 of the PMLA, the same....
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..... State 2018 SCC OnLine Del 8688. 46. In respect of the two money trails, Mr. Krishnan submits that the respondent has relied upon Section 50 statements of an admittedly tainted witness (Rajeev Saxena); a witness whose statement is at the highest hearsay (Sunil Kumar Gupta) and a witness who repeatedly records contradictory statements (Puneet Banthia), whereas, there are several statements under Section 50 of the PMLA which completely exonerate the petitioner and would ultimately lead to the acquittal of the petitioner. According to Mr. Krishnan, the gist of the statements of such witnesses can be summarized as under: 1. Rakesh Kumar Jain • Accused no. 8 in the 1st supplementary complaint Each of the individuals has denied participating in any cash transaction. 2. Sanjeev Jain • Accused no. 9 in the 1^st supplementary complaint 3. Rahul Mittal • Accused no. 10 in the 1st supplementary complaint 4. Manish Jain • Accused no. 14 in the 1st supplementary complaint 5. Rajiv Agarwal • Accused no. 12 in the 1st supplementary complaint The witness has denied knowing the petitioner or del....
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....er grant of bail." xxxx xxxx xxxx xxxx 400. It is important to note that the twin conditions provided under Section 45 of the 2002 Act, though restrict the right of the accused to grant of bail, but it cannot be said that the conditions provided under Section 45 impose absolute restraint on the grant of bail. The discretion vests in the Court which is not arbitrary or irrational but judicial, guided by the principles of law as provided under Section 45 of the 2002 Act. While dealing with a similar provision prescribing twin conditions in MCOCA, this Court in Ranjitsing Brahmajeetsing Sharma, held as under: "44. The wording of Section 21(4), in our opinion, does not lead to the conclusion that the court must arrive at a positive finding that the applicant for bail has not committed an offence under the Act. If such a construction is placed, the court intending to grant bail must arrive at a finding that the applicant has not committed such an offence. In such an event, it will be impossible for the prosecution to obtain a judgment of conviction of the applicant. Such cannot be the intention of the legislature. Section 21(4) of MCOCA, therefore, must be construed....
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....rial collected during investigation and the said view will not be taken into consideration by the Trial Court in recording its finding of the guilt or acquittal during trial which is based on the evidence adduced during the trial. As explained by this Court in Nimmagadda Prasad, the words used in Section 45 of the 2002 Act are "reasonable grounds for believing" which means the Court has to see only if there is a genuine case against the accused and the prosecution is not required to prove the charge beyond reasonable doubt." 49. It thus, emerges that at the stage of considering a bail application under the PMLA, the Court has to bear in mind the following aspects: i. Whether the accused possessed the requisite mens rea. ii. The words used in Section 45 of the 2002 Act are "reasonable grounds for believing" which means the Court has to see only if there is a genuine case against the accused and the prosecution is not required to prove the charge beyond reasonable doubt. iii. A positive finding that the accused had not committed an offence under the Act is not required to be recorded. A delicate balance between a judgment of acquittal/conviction and an o....
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....stage of considering a bail application, therefore, apt would it be to examine the said question before proceeding further. 53. A Coordinate Bench of this Court in Chandra Prakash Khandelwal vs. Directorate of Enforcement: 2023 SCC OnLine Del 1094 held that the question of weightage to be given to the statements under Section 50 of PMLA will be tested at the end of the trial and not at the stage of bail. The relevant paragraph of the said judgment read as under: "34. ........What weigh the statements under Section 50 of PMLA would carry at the end of trial cannot be tested at the stage of bail, more importantly when the intermediary companies were never made an accused in the present ECIR. The ultimate effect of their non-inclusion would be seen at the conclusion of trial..." (emphasis supplied) 54. In Preeti Chandra vs. Enforcement Directorate: 2023 SCC OnLine Del 3622 yet another Coordinate Bench of this Court held that the statements recorded under Section 50 can only be analyzed once the parties enter the witness box. However, the Court noted the inconsistency in the statements under Section 50 of the PMLA and observed that prima facie not much reliance ....
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.... to go into the meticulous examinations of the witnesses as being argued by the learned defence counsels or to take into account the statements recorded under Section 50 of the PMLA by the ED. It is correct that the case of ED is based on the statements under Section 50 of the PMLA cannot be taken as gospel truth but at the same, the court has to take into account the probabilities and the legislative intent behind enacting Section 50 of the PMLA. The statements under Section 50 of the PMLA are not akin to Section 161CrPC. The bare perusal of Section 50 makes it clear that these are deemed to be judicial proceedings. There are consequences for making a false statement or not complying to the summons under Section 50 of the PMLA as provided under Section 63 of the PMLA. 58. This Court at this stage cannot go into the probative value of the witnesses nor can it meticulously examine those facts. The involvement of the third parties in the formulating and drafting of the policy certainly points at mens rea. The jurisdiction of bail is a discretionary jurisdiction. But this discretion has to be exercised on the settled principles in a judicial manner. The court has to bring in ....
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....pose mentioned therein but a confession made by an accused in his statement under Section 50 of the PMLA is not a judicial confession [Judicial confessions are those which are made before Magistrate or Court in course of judicial proceedings [AIR 2022 SC 5273: (2022) 15 SCALE 425 : Ramanand @ Nandlal Bharti v. State of Uttar Pradesh] nor there is any provision in the PMLA like Section 15 of Terrorist and Disruptive Activities Act, 1987 or Section 18 of Maharashtra Control of Organised Crime, 1999 which specifically makes confession of a co-accused admissible against the other accused under certain eventualities. Therefore, Section 30 of the Evidence Act has to be invoked for consideration of a confession of an accused against a co-accused, abettor or conspirator charged and tried in the same case along with the accused. Section 30 of the Evidence Act reads as under: "Section 30. Consideration of proved confession affecting person making it and others jointly under trial for same offence. When more persons than one are being tried jointly for the same offence, and a confession made by one of such persons affecting himself and some other of such persons is proved, t....
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....the PMLA. It is the case of the respondent/ED that the petitioner has received proceeds of crime through two routes which before reaching the petitioner passed through the hands of various individuals/entities. Thus, there are two money trails which have been referred to hereinabove. To hold the petitioner guilty there has to be an unbroken money trail i.e., generation of proceeds of crime which eventually leads to the petitioner and in case there is a break in the trail, the said break shall enure to the benefit of the petitioner. This view finds support from the observation made in Vijay Madanlal Choudhary (supra) which read as under:- "253. Tersely put, it is only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. The authorities under the 2002 Act cannot resort to action against any person for money-laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the compet....
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....e not in dispute. The said documents do not remotely indicate that the prices at which the said entity imported fertilizer from Uralkali were inflated to cover the bribe money. Likewise, no document, whatsoever, has been pointed out to establish inflation of prices by IFFCO. Thus, at 'Step 1' itself, evidence is lacking to prove the foundational fact that prices were inflated to cover the bribe money. STEP 2: FLOW OF PROCEEDS OF CRIME FROM URALKALI TRADING TO RAJEEV SAXENA 67. The case set up by the prosecution is that two entities namely, Midas Metal International LLC and Pacific International FZC, which were controlled by Rajeev Saxena were receiving funds from Uralkali on behalf of the petitioner and other co-accused without there being any agreement between the said two entities and Uralkali. 68. The receipt of payments from Uralkali into the bank accounts of aforesaid two entities of Rajeev Saxena is sought to be proved by: (i) Bank Statements produced by Rajeev Saxena. (ii) Statement of Rajeev Saxena recorded on 05.06.2021 under Section 50 of the PMLA. (iii) Report from MLAT confirming that 35 million USD was transferred to entities control....
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....e instructions were given to us by Pankaj Jain, Sanjay Jain or A.D. Singh during the course of meeting held at our office. I never had any contact with any representative or employee of Uralkali General Trading." c. Statement dated 24.12.2019 recorded by the respondent under FEMA - In this statement, Rajeev Saxena stated that agreements were entered into, however, he did not remember the same when his statement was previously recorded by the respondent under FEMA. The relevant part of the said statement reads as under: "Q1. As you have stated earlier in your statement dated 09.09.2019 that you have not entered into any agreement with Uralkali Trading (Gibraltar) Limited through your companies M/s Midas Metal International LLC and M/s Pacific International FZC, but today you have submitted a copy of consultancy agreements made between M/s Uralkali Trading (Gibraltar) Ltd. and your company/s Pacific International FZC, and another copy of consultancy agreements made between Ms. Uralkali Trading (Gibraltar) Ltd. and your company M/s Midas Metals International LLC.. Please clarify it. Ans. I did not remember about these agreements and later may staff found the....
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.... said report was not placed on record by the respondent, possibly for the reason that the same is confidential in terms of the treaty executed between the Government of India and the requested party, therefore, no reliance can be placed on the same. 72. The lack of evidence at 'Step 1', as well as, the conflicting stand of Rajeev Saxena in 'Step 2', are circumstances, which cannot be ignored altogether at this stage. DIRECT ROUTE THROUGH RATUL PURI 73. Now coming to the rival contentions of the parties in respect of payment of proceeds of crime to the petitioner herein through the direct route, it may be noticed that it is the specific case of the respondent that USD 6.98 million was paid in cash to the petitioner in India. However, it has been categorically admitted by Rajeev Saxena in his statement dated 02/03.07.2019 that he himself was not coordinating the cash, therefore, he is not a direct witness to the alleged payment of cash to the petitioner. 74. Another witness i.e., Shahnawaz, an employee of Rajeev Saxena, who allegedly made payments in cash, has stated in his statement dated 18.10.2021 that he was not aware of the parties on whose behalf transfers were bein....
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....eev Saxena to the respondent is not a document or regularly kept accounts in the course of business according to a set of rules or system in terms of Section 34 of the Evidence Act but it is simply a paper created by the staff of Rajeev Saxena for the investigating agencies. It is thus, not a contemporaneous document and the entries contained therein are prima facie not admissible. 80. It is the case of the respondent that thereafter the proceeds of crime from Rayon Trading have come to Alankit Group. At this stage, suffice it to note that Alok Aggarwal in his statement dated 28.11.2022 under Section 50 has made it clear that the money received from Rayon Trading is for genuine purposes/transaction. Therefore, Alok Kumar Aggarwal has not supported the case of the prosecution. Further, Alok Kumar Aggarwal is a co-accused in the present matter, therefore, as already noted above, his statement can only be used for the purpose of corroboration and is not a substantive piece of evidence. 81. It is further case of the respondent that the proceeds of crime from Alankit Group to Sanjay Jain/petitioner have come through cash/bank transfer and for this purpose, the respondent has relie....
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....e same is further subject to published price. Price of Rock and Sulphur The following is the details of price of rock phosphate and sulpher for IFFCO and weighted average industry price adopted for finalizing concession e.g. 2007/2008: Rock phosphate (Cfr per MT US $) Month IFFCO Industry Avg. Lower price adopted April 69.60 67.80 67.80 May 69.60 64.33 64.33 June 71.84 74.27 71.84 July 71.84 67.93 67.93 August 71.85 66.55 66.55 Sept 75.40 79.20 75.40 Oct 77.00 77.02 77.00 Nov 78.77 83.07 78.77 Dec 85.20 87.85 85.20 Jan 92.90 102.21 92.90 Feb 108.48 97.32 97.32 March 122.66 111.82 111.82 SULPHUR (cfr Per MT US $) Month Published Price Industry Avg. Lower price adopted IFFCO price April 92.00 No import 77.61 (being the latest import price of Feb. 2007) No import May-07 112.88 76.84 76.84 No import Jun-07 137.80 87.25 89.62 82.57 Jul-07 152.50 107.76 107.76 82.57 Aug-07 178.50 156.59 156.59 156.32 Sept.07 22....
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....xxx xxxx xxxx 4. Concession Scheme w.e.f. 1st April, 2010: With effect from the 1st April, 2010 the concession scheme applicable for the decontrolled P&K Fertilizers has been discounted and replaced by the Nutrient Based Subsidy (NBS) Scheme (NBS), wherein instead of announcing the rates of concession month wise for each importer/manufacturer, the rates subsidy for each nutrient (N.P.K. and S) on per kg basis fixed for the whole year is announced and this subsidy is applicable to all the importer/manufacturers covered under subsidy scheme of the Department of Fertilizers. The subsidy is fixed after taking into consideration all factors including prices of fertilizers in the International Market, MRP, inventory levels and exchange rate. Under the NBS Policy there is no relevance of cost of production/import price of P&K fertilizers. The MRP is allowed to be fixed by importers/manufacturers. Para 3 (Last para): Methodology for calculation/computation of the amount of concessions for P&K Fertilizers from time to time during the years 2007-08, 2008-09, 2009-10, 2010-11 and the year 2011-12. It may be seen from above that in most of the cases, imports....
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....during investigation, are there reasonable chances of the petitioner being ultimately convicted of the predicate offence. 88. The learned Special Counsel for the respondent / ED has drawn the attention of the Court to the decision in Satender Kumar Jain (supra) to contend that this Court cannot go into the question of validity of institution of the predicate offence. 89. On the other hand, it has been argued on behalf of the petitioner that a weak predicate offence is a consideration which will enure to the benefit of the petitioner. To buttress this contention, reliance has been placed on the decision of a coordinate Bench of this Court in Sanjay Pandey vs. Enforcement Directorate, 2022 SCC OnLine Del 325, the relevant paragraphs of which read as under:- "58. The offence under section 120-B IPC (which is also a PMLA scheduled offence) is also not made out in so far as the criminal intent i.e., agreement to do an illegal act as defined under sec. 120-A IPC is not established. NSE has been involved in call-recording since 1997 through other vendors such as M/s. Comtel, prior to ISEC being brought into the picture to analyse recorded calls. Since call recording was bei....
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....ve decisions of this Court it follows that on the basis of an objective assessment of the material on record if it prima facie appears that predicate offence is weak and will not hold good under the law i.e. the accused may not be ultimately convicted of the said offence, it will be a reason to believe that he is not guilty of an offence under PMLA. In other words, it will be a factor in favour of the accused in the scheme of broad probabilities. 92. As this Court has prima facie observed that there is no material showing imports at inflated prices by IFFCO/IPL and consequent payment of higher subsidy and there appears to be a break in the money trails, therefore, the evidence to prove conspiracy or wrongful loss to IFFCO/IPL, its shareholder and to the Public Exchequer and the resultant wrongful gain to the petitioner, is lacking. Thus, at this stage based upon the material produced before the Court, it can be said that prima facie the predicate offence appears to be weak in nature and the petitioner is entitled to the benefit of the same. BAIL ON THE GROUND OF PARITY 93. Undisputedly, apart from the present petitioner, no other accused involved in the present offence und....
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....larly in Ramesh Manglani vs. ED, 2023 SCC OnLine Del 3234, this Court has held as under:- "56. Insofar as the ED not having arrested similarly placed co-accused persons; and not even having arraigned some other persons evidently connected with the offending transactions as accused in the prosecution complaint, though these aspects would not be dispositive of a bail plea one way or the other, they are also not wholly irrelevant and the 'doctrine of parity' is not immaterial. As held by this court in Ashish Mittal (supra) considering the nature of the offence, where the gravamen of the offence is that several persons acting in concert have siphoned-off and 'laundered' monies, it is manifestly arbitrary for the ED to have made selective arrests and arraignments. It has also been brought to the notice of this court that Sanjay Godhwani, who may be viewed as one of the main accused in this case, has been granted bail by the learned trial court vide order dated 09.05.2023 in Bail Application No. 688/2023 "... on merits as well as on medical grounds...". This circumstance must also weigh in favour of the petitioner being granted bail, considering that his role in the allegedly of....