The Madhya Pradesh High Court while granting the bail to the accused under Prevention of Money Laundering Act, 2002 (PMLA) held that opinion formed by Enforcement Directorate (ED) under Section 19 of the PMLA merely based on the co-accused’s statement is inadmissible.
The bench of Justice Prakash Chandra Gupta has observed that before the arrest of the applicant, he was neither summoned, nor his statement was recorded by the investigating authorities. As alleged, the applicant carried out his import business under valid license. No information was called by ED from the licensing authority to show that the applicant adopted fraudulent practices in obtaining import license.
During PMLA investigation it was revealed that the applicant is involved in importing poppy seeds from China and Turkey by misrepresenting/ hiding the facts and circumventing the stipulated guidelines issued by competent authority in the name of aforesaid 9 Benami firms situated around the same place.
He has been obtaining import authorisation from Central Bureau of Narcotics, Gwalior in a fraudulent manner in a different proprietorship and firms set up in the name of his family members and employees/ co-accused persons but beneficiary owned and controlled by him in gross violation of the licensing provision for import of the poppy seeds as stipulated by the Department of Revenue, Ministry of Finance and Government of India.
It was also revealed that the applicant is the master mind behind the entire scheme of obtaining import licence of poppy seeds. He played an active role in getting various proprietorship firms in the name of his family members and employees/ co-accused persons with malafide intention to receive maximum share in the import of poppy seeds which is capped at a specific quantity per country.
He managed and controlled the operation of aforesaid 9 proprietorship firms including their bank accounts. The applicant fraudulently imported poppy seeds worth Rs. 141.8 Crores which is nothing but proceeds of crime involved in the offence of money laundering.
The applicant used to import the poppy seeds from distinct countries and sell it to the domestic buyers within the country. Therefore, it is clear that the applicant is directly indulged into the activities connected with the proceeds of crime in terms of section 3 of the PMLA.
The applicant contended that mandatory provision of PMLA is not followed by the ED. It is submitted that there is non-compliance with section 19 of the PMLA. Reasons were not recorded by the prosecution for the arrest of the applicant and reasons which are recorded are based on statements of co-accused persons which are not admissible in evidence. Section 50 of the PMLA was also not complied with. No evidence and material was collected by the ED.
The applicant contended that twin conditions mentioned under section 45 will not apply. The applicant has carried out his business upon a valid licence and it has not been alleged by the ED that any evasion of tax is carried out by the applicant. It is also submitted that when the applicant was in judicial custody, the ED had recorded statements of applicant on 27.10.2024 and 28.10.2024 which is not admissible in evidence.
The department contended that the mandatory conditions as mentioned under section 45 of the PMLA is to be satisfied before an accused is released on bail, unless court comes to satisfaction that there is no reasonable ground that the applicant/ accused is guilty and he is not likely to commit any offence, only then he may be released. Sufficient evidence has been collected that shows that the applicant is involved in money laundering which is proceeds of the crime. Therefore, the applicant is not entitled for bail.
The court held that when an accused is in custody under PMLA irrespective of the case for which he is under custody, any statement under section 50 of PMLA to the same investigating agency is inadmissible against the maker.
The court stated that the arrest should be rational, fair and as per law and shall not be merely based upon guilt of accused established from inadmissible evidence.
The court directed that the applicant must be released on bail upon his furnishing personal bond in the sum of Rs.5,00,000 with two sureties in the like amount to the satisfaction of the concerned trial Court for his appearance before the trial Court on all such dates as may be fixed in this behalf by the trial Court during pendency of the trial.
Case Details
Case Title: Mr. Asif Hanif Thara Versus Enforcement Directorate
Case No.: MISC. CRIMINAL CASE No. 44309 of 2024
Date: 19.11.2024
Counsel For Applicant: Sidhharth Agrawal, learned Senior Advocate with Shri Manu Maheshwari, Ms. Smriti Sinha, Ms. Radhika Subhash, Ms. Arshiya Ghose and Shri Ritesh Kumar Sharma
Counsel For Respondent: Himanshu Joshi, learned Deputy Solicitor General and Shri Dilip Singh Shaktawat, Asst. Directorate
