Custodial Interrogation Is Crucial To Uncover Entire Chain Of Transactions & Reveal Full Extent Of Their Involvement In Economic Offence Case: Delhi HC

While ruling that custodial interrogation is crucial to uncover the entire chain of transactions and reveal the full extent of their involvement in an economic offense case, the Delhi High Court has withdrawn anticipatory bail for two individuals in Rs. 14.08 crore GST fraud case.

A Single Judge Bench of Justice Amit Sharma observed that “It is pertinent to note that as per investigation, the mobile number with which said M/s Madhu Enterprises was registered with the GST Department belonged to the aforesaid Sanjay Kumar, who is stated to be a security guard of the applicants. The investigation from the GST Department has also revealed that the aforesaid M/s Madhu Enterprises made business transactions worth crores of rupees with three entities of which the present applicants were director and despite that said fact, the applicants have been evading from giving details of the said transaction”.

Senior Advocate Rakesh Kumar Khanna appeared for the Petitioner, whereas APP Aman Usman appeared for the Respondent.

As per the brief facts, the present case involved a complaint made by one Rajiv Jain, who discovered that a GST number had been fraudulently generated in the name of ‘M/s Madhu Enterprises’ using his PAN number. The complaint further alleged that transactions worth Rs. 14.80 Crores had been fraudulently conducted using this GST number from July 2019 to November 2019. During the investigation, it was revealed that the firm's address for GST registration did not match the actual premises, and the landlord confirmed that no one had rented the premises for such a business. Mobile numbers and email IDs used for the fraudulent GST registration were traced to an individual named Surjeet Singh Gusain, who during interrogation, disclosed that he had been working as a security guard for the accused/applicant's family-owned firms. It was found that bank accounts were opened in the names of employees without their knowledge. The investigation uncovered multiple bank accounts and transactions that pointed to fraudulent activities involving the applicant and his father.

After considering the submission, the Bench observed that the investigation conducted by the GST Department had revealed that M/s Madhu Enterprises had engaged in business transactions worth crores of rupees with three entities, and the present applicants were directors of these entities.

Despite this significant fact, the Bench found that the applicants had avoided providing details about these transactions, and that the responses provided by the applicants during the investigation were conspicuously evasive.

Additionally, the Bench considered the decision in State Rep. by the C.B.I. v. Anil Sharma [(1997) 7 SCC 187], where the Supreme Court had observed that custodial interrogation was qualitatively more effective in eliciting information compared to questioning a suspect protected by a favorable order under Section 438 of the Code of Criminal Procedure, 1973.

Accordingly, the High Court concluded that custodial interrogation of the applicants was necessary to unearth the complete chain of transactions associated with M/s Madhu Enterprises, orchestrated by the applicants and entities under their control.

As a result, the High Court withdrew the interim protection that had previously been granted to the applicants.

Cause Title: Shashi Kant Gupta and Ors. v. State Through Incharge Economic Office Wing Section [Neutral Citation: 2023: DHC: 7716]

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