TaxTMI 
TaxTMI 
2024 (6) TMI 470
X X X X Extracts X X X X
X X X X Extracts X X X X
....icant was the real consignee. A search was carried out at the godown of M/s. Pooja Pigments, a firm of the applicant, and 72.15 MT of similar betel nuts were seized. 2.2 On 21 May 2020, DRI issued a show cause notice to various entities, including the applicant. In the meanwhile, a Criminal Public Interest Litigation No. 5 of 2016 was filed before the Nagpur Bench of this Court and by an order dated 25 February 2021, a Division Bench of this Court directed CBI to register the offences into the allegations of smuggling of illegally imported betel nuts. 2.3 Pursuant to the aforesaid directions, CBI/ACB, Nagpur, registered FIR on 5 March 2021 for the offences punishable under Sections 420, 467, 468, 471, 120B of the Indian Penal Code and Section 13 (2) read with Section 13 (1) (d) of the Prevention of Corruption Act, 1988, alleging, inter alia, that unscrupulous traders in connivance with various public servants were indulging in smuggling of substandard betel nuts / areca nuts of Indonesian origin by claiming falsely the same to be originating from the SAPTA-SAARC Preferential Trading Agreement based Member Countries by using fake certificates of origin, bogus and undervalued bills....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the process or activity connected with proceeds of crime to the tune of Rs. 11.70 Crores. 2.6 The applicant made an endeavour to use part of the proceeds of crime to obtain the documents relating to the investigation through the contractual staff of ED. The applicant is, thus, involved in generation, acquisition, layering, use and concealment of the proceeds of crime. 2.7 The applicant came to be arrested on 26 June 2023 by invoking the powers under Section 19 of the PMLA. The learned Special Judge, PMLA was persuaded to reject the application by an order dated 3 February 2024. 3. I have heard Mr. Vikram Chaudhari, learned Senior Advocate for the Applicant, and Mr. Ashish Chavan, learned Special PP for the Respondent No. 1 - ED at some length. With the assistance of the learned Counsel for the parties, I have perused the material on record. 4. Mr. Chaudhari, learned Senior Advocate, advanced a multi-pronged submission. Firstly, the threshold prescribed for arrest under Section 19 of the PMLA was not met. There was no justification for the arrest of the applicant. On the own showing of the ED, the applicant had appeared before the Investigating agency on 7 occasions. The applic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons and habitual offender was not at all arrested by the Respondents. The learned Special Judge released accused No. 2 by invoking the provisions contained in Section 88 of the Code of Criminal Procedure, 1973. Resultantly, the accused No. 2 who allegedly defrauded the Government to the tune of Rs. 113 Crores, who did not appear before the IO despite several notices and who is allegedly a habitual offender, is at liberty and the applicant, who had procured and sold the betel nuts in the normal course of business is detained. Having regard to the role attributed to the accused No. 2 and the applicant, the latter also deserves to be enlarged on bail, urged Mr. Chaudhari. 10. Mr. Chaudhari submitted that the foolishness on the part of the applicant in offering bribe to one of the contractual employees in the office of the ED to obtain copies of his statement, even if taken at its face, may not be construed against the applicant if he is otherwise entitled to be released on bail. 11. Mr. Chavan, learned Special PP, countered the submissions on behalf of the applicant. It was strenuously submitted that the material on record makes out a very strong prima facie case against the applica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the applicant caved in. What exacerbates the situation, according to Mr. Chavan, was an attempt to influence the investigation by offering bribe to the contractual employee. In the circumstances, the second condition that the applicant will not indulge in identical offences, if released on bail, cannot be said to have been fulfilled. Such conduct of the applicant singularly disentitles the applicant from any discretionary relief, submitted Mr. Chavan. 16. The aforesaid submissions now fall for consideration. To begin with, it is necessary to note, in view of the interdict contained in Section 45 (1) of the PMLA, no person accused of an offence can be released on bail unless the Court is satisfied that there are reasonable ground for believing that such person is not guilty of such offence and that he is not likely to commit any offence while on bail. Satisfaction of the twin conditions is the statutory requirement. Sub-section (2) of Section 45 further clarifies that the limitation on granting bail under sub-section (1) is in addition to the limitation under the Code or any other law for the time being in force for granting of bail. Are there grounds which would entitle the applic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d by Deputy Director and Ors. (supra), the applicant ought to have assailed the order of remand in an appropriate proceedings. In the said case, the Supreme Court enunciated the position as under : "30. In a case where the mandate of Section 167 of the CrPC, 1973 and Section 19 of the PMLA, 2002 are totally ignored by a cryptic order, a writ of Habeas Corpus may be entertained, provided a challenge is specifically made. However, an order passed by a Magistrate giving reasons for a remand can only be tested in the manner provided under the statute and not by invoking Article 226 of the Constitution of India. There is a difference between a detention becoming illegal for not following the statutory mandate and wrong or inadequate reasons provided in a judicial order. While in the former case a writ of Habeas Corpus may be entertained, in the latter the only remedy available is to seek a relief statutorily given. In other words, a challenge to an order of remand on merit has to be made in tune with the statute, while non-compliance of a provision may entitle a party to invoke the extraordinary jurisdiction. In an arrest under Section 19 of the PMLA, 2002 a writ would lie only when a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....othing to do with the criminal activity relating to a scheduled offence - except the proceeds of crime derived or obtained as a result of that crime." (emphasis supplied) 21. A profitable reference can also be made to a recent decision in the case of Pavana Dibbur vs. Directorate of Enforcement AIR 2024 SC 117., wherein after following the decision in the case of Vijay Chaudhary (supra) the Supreme Court repelled the contention raised on behalf of the appellant therein that appellant cannot be prosecuted under PMLA as he was not shown as an accused in the scheduled offence. The Supreme Court observed, inter alia, as under: "15 The conditions precedent for attracting the offence under Section 3 of the PMLA are that there must be a scheduled offence and that there must be proceeds of crime in relation to the scheduled offence as defined in clause (u) of sub-section (1) of Section 3 of the PMLA. 16. In a given case, if the prosecution for the scheduled offence ends in the acquittal of all the accused or discharge of all the accused or the proceedings of the scheduled offence are quashed in its entirety, the scheduled offence will not exist, and therefore, no one can be prosecut....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tation in paragraph 10.8 of the prosecution complaint. It reads as under : 25. At this stage itself, it may be necessary to note the alleged placing and layering of the proceeds of crime, generated out of the sale of smuggled betel nuts. It is alleged that the applicant had transferred in tranches a sum of Rs. 1.71 Crores to the account of M/s. Kheboto Traders, Nagpur and a sum of Rs. 1.31 Crores to M/s. K.S. Enterprises, Nagaland held by Kuhoje K. Achumi (A3) and, therefrom, the said amount came to be credited to the account of F.M. Food. Likewise, the applicant had credited a sum of Rs. 6.22 Crores to the account of F.M. Food, aggregating to Rs. 11.70 Crores. 26. Mr. Chaudhari submitted that in the pictorial representation, referred to above, the applicant had no role upto the 3rd circle. The applicant comes in the frame in the fourth circle. It was urged that the applicant is allegedly one of the traders in Nagpur, Delhi and Varanasi. Referring to the money trail (paragraph 10.1.4), Mr. Chaudhari would submit that the entire amount was transferred by the applicant through banking channel. That reflects the bona fide transaction in the trade. 27. In opposition to this, Mr. Cha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....equently withdrawn in cash by Abdul Hannan Ali. Abdul Hannan Ali had not maintained any proper documentation with regard to purchases as admitted by his firm in the letter submitted to Customs, that they were conducting business in an unorganized manner. In his letter submitted to the Customs, it is further admitted that the payments are being made in cash to the persons from whom betel nuts were purchased. Wasim Bawla had purchased the smuggled betel nuts from Abdul Hannan Ali by claiming the same as of Indian origin. From the sale of the said betel nuts, he had generated proceeds of crime which were used for obtaining the documents related to the investigation in unauthorized manner. Thus, the accused persons have committed an offence of Money Laundering as defined under section 3 of PMLA, 2002 and they are liable to be prosecuted and punished u/s 4 of PMLA, 2002." (emphasis supplied) 30. It would be contextually relevant to note, in paragraph 11.2, it is alleged, Abdul Hanan Ali (A2) has directly indulged in the process of activities connected with the proceeds of crime to the tune of Rs. 113.40 Crores. It needs no emphasis that Abdul Hannan Ali (A2) was allegedly the princip....
X X X X Extracts X X X X
X X X X Extracts X X X X
....offender, against whom there are more grave allegations, has not been arrested and the person who allegedly received a portion of the smuggled betel nuts has been deprived of his personal liberty. Deprivation of personal liberty cannot be a matter of chance (from the point of view of the accused) or choice (from the point of view of the investigator.). The principle of parity, in a situation of the present nature, must weigh with the Court. It is true, Abdul Hannan Ali (A2) was not released on bail and, at that stage, the question of fulfillment of twin conditions prescribed under Section 45 of the PMLA was not required to be delved into. Yet the resultant position that obtains can not be lost sight of. The person who allegedly smuggled the betel nuts and supplied the same to various traders is under no restraint and the applicant, who is allegedly one of the traders who received the allegedly smuggled betel nuts, is behind the bars. The decision to arrest or not to arrest is undoubtedly within the domain of the investigating agency. However, the role attributed to Abdul Hannan Ali (A2), extracted above, stares in the face. Therefore, in my considered view, the applicant deserves t....