Any Actions Taken Under Prevention Of Money Laundering Act Are Considered An Enquiry: Chhattisgarh HC Reiterates

The Chattisgarh High Court has reiterated that any actions taken under the Prevention of Money Laundering Act, 2002 (PMLA) are classified as an 'enquiry' comparable to a Judicial Proceeding.

The Court denied bail and noted that throughout such enquiry, testimonies from people, including the Accused, may be used in the bail process. If these statements contain evidence of money laundering as specified in Section 3 of the PMLA, the Court can assume guilt.

Justice Goutam Bhaduri observed, “From perusal of the aforesaid conclusion laid down by the Supreme Court in the matter of Vijay Madanlal Choudhary (supra), it is evident that action taken under the PMLA falls under the definition of ‘enquiry’. The enquiry is like a judicial proceeding (Section 50 of the PMLA) and further since the authorities are not police officers, the statement of person including accused recorded during the enquiry can be seen at the stage of grant of bail and presumption can also be made by the Court if the statement so recorded contains facts constituting the offence of money laundering as envisaged under Section 3 of the PMLA”.

Senior Advocates Puneet Bali, Prafull N. Bharat, Surendra Singh, Rajeev Shrivastava, and Fouzia Mirza appeared for the Applicants, and Advocate Saurabh Kumar Pande appeared for the Respondent.

A group, including Arunpati Tripathi, Anil Tuteja, and Saumya Chaurasia, conspired to take bribes through the sale of liquor with Anwar Dhebar and his associates, who helped collect the bribes. The Directorate of Enforcement (ED) found evidence of a planned conspiracy and that the Chhattisgarh State Marketing Corporation Limited (CSMCL) was being used to run a parallel Excise Department. The syndicate included senior bureaucrats, politicians, and Excise Department officials. Arunpati Tripathi was tasked with maximizing the bribe commission collected on liquor procured by CSMCL. The syndicate introduced the concept of FA-10A licenses to extort bribes, and foreign liquor was sold to Chhattisgarh Government warehouses, generating a commission of 10%. Vidhu Gupta admitted to giving a bribe of ₹ 90.00 lacs for a hologram and was supplied with a duplicate hologram in Chhattisgarh. The Applicants approached the Court seeking a grant of bail under Section 439 of the Criminal Procedure Code (CrPC). The Applicants were arrested in connection with a complaint filed by the ED under Section 44, read with Section 45, for the offence under Sections 3 and 4 of the PMLA.

The Court noted that if the Public Prosecutor opposes a bail application under Section 45 of the PMLA, bail can only be granted if the Court is satisfied that the applicant is not likely to commit any further offenses. There are reasonable grounds for believing their innocence. However, the Court noted that the Supreme Court, in the case of Vijay Madanlal Choudhary & Ors. v Union of India & Ors. [SLP (Cri.) No.4634 of 2014], such a proposition was lamented.

Furthermore, the Court observed that the authorities cannot act on money laundering unless it is registered with the police or pending inquiry before the competent forum. The presumption is that inter-connected transactions involving money laundering are presumed to form part of such transactions unless otherwise proved.

“There is a legal presumption envisaged under Section 23 of the PMLA, which speaks that where money laundering involves two or more inter-connected transactions and one or more such transactions is or are proved to be involved in money laundering, then for the purposes of adjudication or confiscation under Section 8 or for the trial of the money laundering offence, it shall unless otherwise proved to the satisfaction of the Adjudicating Authority, be presumed that the remaining transactions form part of such inter-connected transactions. However, there is a reverse burden of proof under Section 24 of the PMLA that in the case of a person charged with the offence of money-laundering under section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering”, the Bench noted.

The Court reiterated that the actions taken under the PMLA constitute an ‘enquiry’ similar to a judicial proceeding. During this enquiry, statements from individuals, including the accused, can be used during the bail process. If these statements contain evidence of money laundering as defined in Section 3 of the PMLA, the Court can make a presumption of guilt.

“Since it is undisputed fact that the complaint has already been filed, at this stage, on the basis of statements and material available on record, it is sufficient to draw, prima facie, presumption about the involvement of the applicants in money laundering and possession of the proceeds of crime”, the Court observed.

Accordingly, the Court dismissed the Application. 

Cause Title: Nitesh Purohit and 3 Ors v Directorate Of Enforcement

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