Statement Given By Accused In Custody To ED U/S. 50 PMLA Inadmissible: Madhya Pradesh HC Grants Bail In ₹140Cr Poppy Import Case

The Madhya Pradesh High Court while granting bail to an accused in a ₹140 crore poppy import case reiterated that any statement under Section 50 PMLA given to ED by the accused in custody is inadmissible in court against the maker.

The Court was considering a Bail Application filed under Section 439 of Cr.P.C. (now section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023) read with Section 45 of PMLA for grant of bail to the applicant, in connection with a case registered for commission of offence punishable under Sections 3/4 of the Prevention of Money Laundering Act, 2002.

The single-judge bench of Justice Prakash Chandra Gupta observed, ".....in case of non-compliance of section 19 of the PMLA, the court shall examine the material and resources whereby the authorized officer has to give reason to belief the guilt of accused and the court has to give reason to belief of not guilty of offence i.e. reason to belief becomes a sine-qua-non. It is also clear 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 Petitioner was represented by Senior Advocate Sidhharth Agrawal while the Respondent by Deputy Solicitor General Himanshu Joshi.

It was alleged in the FIR that during period between 2014 to 2023, the applicant fraudulently obtained import authorization in the name of his Benami entities by cheating the Government authorities with an intent to acquire wrongful gain for himself by circumventing the existing guideline issued by Department of Revenue, Ministry of Finance and obtained maximum share of country quota by misleading the authority and concealing the fact from them and causing wrongful loss to government exchequer. Consequently, an FIR was registered under Sections 417, 420 and 120 B of the IPC for scheduled offences under the Prevention of Money Laundering Act, 2002.

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 9 Benami firms situated around the same place.

Senior Counsel for the Applicant submitted that mandatory provision of the PMLA is not followed by the ED and that there is non-compliance of Section-19 of the PMLA. He averred that reasons were not recorded by the prosecution for the arrest of the applicant and reasons which are recorded are based on statement of co-accused persons which is not admissible in evidence. It was further submitted that Section 50 of the PMLA was also not complied with and no evidence and material was collected by the ED. It was further submitted that twin condition under Section 45 will be attracted only when mandatory provision under Sections 19 and 50 of the PMLA has been complied with.

On other hand learned counsel appearing for the ED submitted 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. It was submitted that sufficient evidence has been collected that shows that the applicant is involved in money laundering which is proceeds of the crime.

The Court discussed the Supreme Court verdicts as cited by the Senior Counsel for the Applicant and observed that in case of non-compliance of Section-19 of the PMLA, the court shall examine the material and resources whereby the authorized officer has to give reason to belief the guilt of accused and the court has to give reason to belief of not guilty of offence i.e. reason to belief becomes a sine-qua-non.

"It is also clear 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. Furthermore, the arrest should be rational, fair and as per law and shall not be merely based upon guilt of accused established from inadmissible evidence. Additionally, forming of opinion of the designated officer of the guilt of accused in writing is must," the court observed.

"In the instant case 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. Opinion formed by the ED u/s 19 of the PMLA with respect to the guilt of the applicant, is based upon the statement of the co-accused person which is prima facie inadmissible. Therefore, it appears that in this case provisions of section 19 of the PMLA has not been complied with," the Court concluded.

The application was accordingly allowed.

Cause Title: Mr. Asif Hanif Thara vs. Enforcement Directorate (2024:MPHC-IND:32694)

Appearances:

Applicant- Senior Advocate Sidhharth Agrawal, Advocate Shri Manu Maheshwari, Advocate Smriti Sinha, Advocate Radhika Subhash, Advocate Arshiya Ghose and Advocate Ritesh Kumar Sharma

Respondent- Deputy Solicitor General Himanshu Joshi, Asst. Directorate for Enforcement Department Dilip Singh Shaktawat

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