169 Coal Consignments With Inflated Price Were Being Encashed Fraudulently: Madras HC Sets Aside Bail Granted To Company’s Director

The Madras High Court has observed that the records revealed that the Respondent had fraudulently encashed about 169 inflated-priced consignments through his company, resulting in money leaving the country.

The Court set aside the bail order of the Respondent (Director of the Company) passed by the Trial Court. The Directorate of Revenue Intelligence (DRI) suspected the Respondent and his company of inflating imported coal prices from foreign countries for thermal energy conversion and issued a show-cause notice under the Customs Act, 1962 (CA).

“However, in this case, records reveal that about 169 consignments with inflated price being encashed fraudulently by this petitioner through his Company and the money has gone out of the country. The provisional attachment of the property by efflux of time had lost its enforceability and therefore if the petitioner is enlarged on bail, apart from repeating similar crime by floating new Company, the danger of he fleeing from the hands of justice also cannot be ruled out”, Justice G Jayachandran observed.

Special Public Prosecutor N. Ramesh appeared for the Petitioner and Senior Advocate C. Manishankar appeared for the Respondents.

An investigation was launched by the DRI against a director from M/s.Coastal Energyen (P) Limited, the parent company of M/s.Mutiara Thermal Power Plant. The DRI suspected that the Respondent and his company were inflating the prices of imported coal from foreign countries for thermal energy conversion. It was believed that the Respondent and his company collected prices for high-quality coal from Indian buyers but purchased low-quality coal from foreign companies at lower prices. The DRI issued a show cause notice to the Respondent under the Customs Act, 1962 (CA). The Respondent's bail petition was denied by the Trial Court and this decision was upheld by the Supreme Court. A new bail petition was filed as the Enforcement Directorate (ED) had not yet filed the promised supplementary final report. The Trial Court granted bail with conditions due to the lack of progress in the trial. A Criminal Revision Petition was filed under section 482 of the Criminal Procedure Code (CrPC) to challenge the Trial Court's decision to grant bail to the accused/Respondent.

The Court stated that the CBI's delay in completing the investigation cannot be a reason to assume that the Respondent is innocent of the money laundering crime. The Court also emphasized that the closure of a similar investigation cannot be a factor to assume that the case will also result in a closure report. Ifs and buts cannot be enough to hold the Respondent as not guilty of the alleged offence.

“The delay in completing the investigation by the CBI, Delhi cannot be a ground to presume that accused is not guilty of money laundering offence. Closure of investigation in a similar case also cannot be a reason to presume that the present case will also end in closure report. Ifs and buts cannot be an adequate reason to hold this petitioner, not prima facie guilty of the alleged offence. No doubt personal liberty is a fundamental right of a person, yet, subject to reasonable restriction. Prolonged trial or incarceration pending trial is antithesis to fundamental right. However, the reasonable restriction and the interest of nation cannot be ignored while taking note of the fundamental right of individual”, the Court noted.

The Court noted that while personal liberty is a fundamental right, it is subject to reasonable restrictions. A prolonged trial or incarceration pending trial goes against fundamental rights. However, the Court emphasized that the nation's welfare and reasonable restrictions cannot be ignored while upholding individual fundamental rights.

Accordingly, the Court allowed the Petition and set aside the order of the Trial Court granting bail to the Respondent.

Cause Title: The Assistant Director v. Shri Ahmed A.R Buhari

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