TaxTMI 
TaxTMI 
2025 (8) TMI 1349
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...., 468 and 471 of IPC, and under Section 39(3) of the Bihar Mineral, (Concession, Prevention of Illegal Mining, Transportation and Storage) Rule, 2019. It was alleged inter alia that M/s Broad Son Commodities Private Ltd and its Directors were engaged in illegal mining and selling of sand without using the departmental pre-paid transportation E-challan, issued by the Mining Authority Bihar, and thus had caused revenue loss of Rs. 161,15,61,164/- to the Government Exchequer. Since the said FIRs contained Scheduled offences as defined under Section 2(1)(y) of the PMLA, an ECIR bearing No. ECIR/PTZO/14/2023 dated 15.03.2023, addendum ECIR No. ECIR/PTZO/14/2023 dated 08.11.2023 and dated 04.05.2024 came to be registered, and the investigation for the offences of Money Laundering was initiated. 3. During the course of investigation and pursuant to the information made available, search operations were carried out under Section 17 of PMLA at the various locations and premises related with the said Company and its Directors, including four premises of Radha Charan Sah (father of the petitioner). During the course of inquiry, the statements of the petitioner-Kanhaiya Prasad, being son of....
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....ing proceeds of crime, allegedly generated by his father from the profits of sand mining undertaken by M/s Broadson Commodities Pvt. Ltd., purportedly as part of a syndicate. It is significant to note that petitioner's father has already been granted bail by a coordinate Bench of this Hon'ble Court, vide order dated 03.07.2024 passed in Cr.Misc. No. 15740 of 2024 (Radha Charan Sah v. Union of India), which was subsequently affirmed by the Hon'ble Supreme Court, vide order dated 21.04.2025 in Criminal Appeal No. 2067 of 2025 {arising out of SLP (Crl.) No. 5952 of 2025, Union of India v. Radha Charan Sah}. Even assuming, without admitting, that any alleged wrongful gain accrued to M/s Broadson Commodities Pvt. Ltd., resulting in loss to the government exchequer, the liability, if any, would attach only to the said company as a distinct legal entity, and at most, to its directors, not to the petitioner, who has neither any proven role nor nexus therein. There exists no material on record to demonstrate the presence of any syndicate, much less to establish that the petitioner was a member thereof. As settled in criminal jurisprudence, criminal liability cannot be imposed me....
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....f Sudama Kumar, employee of Ashok Kumar (one Director of the company), recorded before the Income Tax Department. Both Sudama Kumar, in his deposition before the ED, and Ashok Kumar, in his statement dated 18.03.2023 before the Income Tax Authority have categorically stated that the petitioner had no connection with the said funds. Indeed, even the prosecution Complaint acknowledges that the sum was utilized by co-accused Radha Charan Sah and Ashok Kumar, not this petitioner. This itself demolishes the allegation against this petitioner. 11. Further, on the allegation regarding petitioner's father holding shares in M/s Broadson Commodities Pvt. Ltd., as part of an alleged "syndicate,", learned senior counsel humbly submits that this assertion is wholly unsubstantiated. It rests merely on statements under Section 50 of the PMLA, including from co-accused persons, without any corroborative material. In support of this submission, he relies upon a judgment of Hon'ble Supreme Court in the case of Prem Prakash v. Enforcement Directorate, reported in (2024) 9 SCC 787. The account statements of Broadson Commodities clearly reveal that there were no financial dealings whatsoever wit....
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.... either quashed or concluded by final form. As it is laid down at para no. 253 in Vijay Madanlal Choudhary vs. Union of India through E.D. reported in 2022 SCC OnLine 929, existence of a subsisting predicate offence is sine qua non for the very foundation of proceeds of crime. In the present case, the absence of any live predicate offence and the temporal disconnect of the FIRs with the Petitioner's investments render the entire proceedings legally untenable. While considering applications for grant of bail, the Court is required to form only a prima facie view and is not expected to meticulously weigh the evidence for the purpose of drawing inferences under the twin conditions stipulated in Section 45 of the PMLA. 15. He further submits that even, while dealing with bail under a special legislation such as the PMLA, governed by Section 45, the Hon'ble Supreme Court has unequivocally held that the rigors of the statute must be harmonized with the constitutional guarantees enshrined under Article 21. It has been consistently observed by the Supreme Court that while adjudicating bail, even under the PMLA, the Court is duty-bound to give due consideration to the fundamental....
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....nsideration the bail application of the petitioner. In this regard, reliance can be placed on paragraph nos. 13, 14, 15, 21, 22, 23, 27, 30, 32 and 34 of Prem Prakash v. Enforcement Directorate, reported in (2024) 9 SCC 787. 19. He further submits that investigation against the petitioner is complete and prosecution complaint dated 10.11.2023 pursuant to the completion of investigation has been filed therefore, custodial interrogation of the petitioner is not required. In this regard, reference can be made to Para 39, 40, 46 of Sanjay Chandra Vs. Central Bureau of Investigation reported in (2012) 1 SCC 40 and Para 86, 89 of the case of Satendra Kumar Antil Vs. Central Bureau of Investigation reported in (2022) 10 SCC 51. 20. He further submits that petitioner has consistently demonstrated good conduct. He scrupulously complied with all bail conditions earlier imposed, surrendered before the Learned Special Judge on 19.02.2025 in adherence to the Hon'ble Supreme Court's order, and has neither tampered with evidence nor influenced witnesses. He thus satisfies the "triple test/tripod test" for bail, viz. (i) not being a flight risk, (ii) not tampering w....
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....: "15. Coming back to Section 3 of the PMLA, on its plain reading, an offence under Section 3 can be committed after a scheduled offence is committed. For example, let us take the case of a person who is unconnected with the scheduled offence, knowingly assists the concealment of the proceeds of crime or knowingly assists the use of proceeds of crime. In that case, he can be held guilty of committing an offence under Section 3 of the PMLA. To give a concrete example, the offences under Sections 384 to 389 of the IPC relating to "extortion" are scheduled offences included in paragraph - 1 of the Schedule to the PMLA. An accused may commit a crime of extortion covered by Sections 384 to 389 of IPC and extort money. Subsequently, a persons unconnected was the offence of extortion may assist the said accused in the concealment of the proceeds of extortion In such a case, the person who assists the accused in the scheduled offence for concealing the proceeds of the crime of extortion can be guilty of the offence of money laundering. Therefore, it is not necessary that a person against whom the offence under Section 3 of the PMLA is alleged must have been shown as the accused in....
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....le. In the present case, the proceedings in the predicate offence are merely stayed and such a stay cannot be extended to the proceedings under the PMLA" 26. It has been further argued by the learned counsel for E.D. that the investigations against petitioner have revealed that the petitioner concealed proceeds of crime by way of carrying out constructions in his family owned trust's property, carrying out renovation in the resort owned by a company where he and his brothers are Directors and by investing it through third parties in LLP where he and his brother are partners, therefore, he is in possession of proceeds of crime. Thus, he is found to be directly involved in concealing the proceeds of crime generated from the activities related with the scheduled offence and is guilty of the offence of the money laundering. 27. It is further contended that petitioner's father Radha Charan Sah has acquired Mastiff Grand Manali Resort, Manali valued at Rs. 20.92 Crore (total value of resort) in the name of firm called Intercontinental Resort Pvt. Ltd where his sons viz. Kanhaiya Prasod, Satendra Kumar and Basuki Nath Prasad are the share-holders. For the acquisition of the said....
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.... has been further argued that summonses were issued to the accused-petitioner to appear before E.D. on 11.09.2023, however he failed to appear on the said date. He was again issued summon to appear on 12.09.2023. Again he failed to appear on the given date. The act of not answering the call of summons clearly shows that the petitioner has not cooperated with the investigation and thereby attempted to frustrate the proceedings of investigation under the PMLA, 2002 and on the basis of material available on record and investigations, the role of the petitioner in the offence of money laundering was gathered and accordingly, petitioner was arrested at Enforcement Directorate Patra Zonal Office, Bihar on 18.09.2023. On production of accused-petitioner before the Court, vide order dated 22.09.2023, the custody of petitioner was handed over to the Enforcement Directorate. 29. Learned counsel for E.D. has further urged that petitioner has utilized Rs. 11,90,00,000/- in cash to carry out renovation work in resort purchased by him in Manali. Kanhaiya Prasad (petitioner), in his statement, stated that the said resort was purchased by him in partnership with his brothers by purchasing all t....
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.... found and seized. Whereas huge documentary and digital records containing the data related with illegal sand mining and sale of sand were found and seized. In view of the facts mentioned above, it is clear that the claim of the petitioner having undisclosed income from inflation of bills is merely an afterthought and without any basis, hence it is fit to be rejected. The unexplained income in the hands of the petitioner and associated entities is nothing but proceeds of crime. 31. Further, Mr. Tuhin Shankar, learned counsel has also submitted that Shri Ashok Kumar one of the Directors of M/s Broadson Commodities Pvt. Ltd., has allegedly disclosed unexplained income before Income Tax Department, but subsequently, he retracted the same before Income Tax Department. It clearly shows that accused person changed his stand as per his convenience and tried to escape from the clutches of law. 32. Learned counsel for E.D. further argued that the sum of Rs. 5.36 crores in cash was utilized in the construction of the school by Radha Charan Sah and Ashok Kumar, not the petitioner, it is submitted that this Directorate has leveled up the same allegation against the petitioner in the pros....
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....ration of proceeds of crime by illegal sale of sand is from 2017 till 2021. During this period, Broadson Commodities Pvt. Ltd. & its syndicate members have generated proceeds of crime to the tune of Rs. 210.68 crore. From the documents seized from the premises and FIRs it is revealed that total proceeds of crime generated by Radha Charan Sah is 20% of 88% share of 210,68,92,651 Rs. 37,08,13,107/- during the period 2017-2021. Hence the averment made by the petitioner that only 02 FIRs were registered prior to the construction and renovation of the property is irrelevant as the period of generation of proceeds of crime is 2017-2021. In this regard, he has placed reliance upon a judgment of Hon'ble High Court of Delhi in the case of Rajinder Singh Chadha vs Union of India. 35. Lastly, learned counsel for E.D. humbly submitted that even though, there is no absolute restraint on grant of bail when the person is tried for offence of money laundering, however, the grant of bail is subject to fulfilment of conditions prescribed under the law, in other words, person should be granted bail only if the twin conditions stipulated under Section 45 of PMLA are fulfilled. 36. From the p....
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....eeds of crime. 40. Heard the submissions, so advanced by Mr. Mrigank Mauli, learned senior counsel appearing on behalf of petitioner and Mr. Tuhin Shankar, learned counsel for opposite party/E.D. and perused the materials available on record. 41. It is settled law that at the stage of consideration of application for bail of an accused under the PMLA, the Court has to see the materials available against the petitioner from the charge-sheet to form an opinion that there exists reasonable grounds for believing that the accusation against such a person is prima facie true. At this stage, the Court is not supposed to weigh the evidence meticulously, but to arrive at a finding based on broad probabilities. If a charge-sheet is already filed, the Court has to examine the material forming a part of charge-sheet for deciding the issue. 42. The Hon'ble Supreme Court in the case of Vijay Madanlal Choudhary (supra), while reiterating and agreeing with the holding in Ranjitsing Brahmajeetsing Sharma vs. State of Maharashtra held that the Court while dealing with the application for grant of bail in PMLA need not delve deep into the merits of the case and only a view of the court based....
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....and surmises and there is no reasonable ground to come to this conclusion that the money, which was invested by the petitioner in the alleged ventures, was of the crime proceeds. 47. There is no documentary evidence establishing any direct or indirect nexus between the petitioner and his father in the mining business. The prosecution's claim regarding the existence of such a "syndicate" is based solely on the statements of co-accused persons recorded under Section 50 of the PMLA, which remain uncorroborated by any independent material evidence. Mere inference, based solely on the uncorroborated statements of co-accused, is insufficient to establish culpability. In the present case, there exists no material to suggests any nexus between the petitioner and his father and the generation of proceeds of crime, nor is there any evidence indicating his involvement in the acquisition, concealment, layering, or laundering of such proceeds. On the contrary, the funds invested by the petitioner in his properties had already been voluntarily disclosed to the Income Tax Department through a detailed reply dated 24.05.2023. The Income Tax authorities duly acknowledged and accepted these f....
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.... been laid down that the rigours of such provisions will melt down where there is no likelihood of trial being completed in a reasonable time and the period of incarceration already undergone has exceeded a substantial part of the prescribed sentence. 51. In Vijay Madanlal Choudhary's (supra), the Supreme Court categorically held that while Section 45 PMLA restricts the right of the accused to grant of ball, it could not be said that the conditions provided under Section 45 impose absolute restraint on the grant of bail. Para 302 is extracted hereinbelow:- "302. 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." 52. These observations are significant and if read in the context of the recent pronouncement of this Court dated 09-08-2024 in the case of Manish Sisodia v. Enforcement Directorate, r....