Chinese Visa Scam: Delhi High Court Reserves Order In Karti Chidambaram's Anticipatory Bail Plea In Money Laundering Case

The Delhi High Court on Wednesday reserved order on the anticipatory bail plea moved by Congress MP Karti P Chidambaram in a money laundering case registered by Enforcement Directorate (ED) in connection with alleged Chinese vivas scam.

Justice Poonam A. Bamba reserved the order after hearing Senior Advocate Kapil Sibal appearing for Karti Chidambaram whereas ASG SV Raju appeared for ED.

About the Controversy

Karti Chidambaram had approached the High Court after he was denied anticipatory bail by city's Rouse Avenue Court on June 3.

The Trial Court had rejected his plea along with two others after observing that the offence alleged was of a very serious nature. The Court had also vacated the interim protection from arrest granted during the pendency of proceedings.

The Enforcement Directorate had registered the money laundering case against Karti Chidambaram, S. Bhaskararaman and Vikas Makharia in the alleged scam concerning the issuance of visas to 263 Chinese nationals in the year 2011 when P Chidambaram, his father, was the home minister.

The ED had registered the case under various provisions of the Prevention of Money Laundering Act (PMLA) taking cognisance of an FIR registered by the CBI.

The scheduled offences case of CBI was registered in respect to the allegations of payment of a bribe of Rs.50 lakhs by M/s. Talwandi Sabo Power Limited, a subsidiary company of the Vedanta Group, which was given a contract by the Punjab State Electricity Board (PSEB) for establishment of a 1980 MW thermal power plant at District Mansa, Punjab and M/s TSPL was in the process of establishing the said power plant with the help of a Chinese Company named M/s Shandong Electric Power Construction Corp (M/s SEPCO).

It was alleged that M/s TSPL was in need of some more Project Visas for Chinese experts from M/s SEPCO as it was running behind its schedule for establishment of the said project and due to this, it was likely to have huge financial repercussions in terms of penalty and interest on bank loans etc.

Project Visas were introduced in October, 2010 as a new type of visa for power and steel sectors only and detailed guidelines governing the issuance of such visas are also stated to have been issued with approval of Sh. P. Chidambaram, the then Union Home Minister, Government of India and it was also alleged that in the said guidelines, there was no provision of re-use of the Project Visas and any deviation from the said guidelines was permitted only in rare and exceptional circumstances with approval of the Union Home Secretary and Union Home Minister.

It had been alleged by the CBI that the accused Vikas Makharia on behalf of M/s TSPL had approached the accused S. Bhaskararaman, who was a close associate of the accused Karti P. Chidambaram, and sought his help in the matter of re-use of Project Visas for his company.

It was also alleged that on directions of the accused S. Bhaskararaman, the accused Vikas Makharia had even sent a copy of the request letter through email to him and the accused S. Bhaskararaman had further forwarded the same to accused Karti P. Chidambaram and after some discussions conducted thereafter with the then Union Home Minister, accused S. Bhaskararaman had demanded an illegal gratification of Rs.50 lakhs for ensuring approval for the above said request and this demand for payment of illegal gratification was accepted by the accused Vikas Makharia.

It was alleged in the CBI case that sufficient documentary evidence existed in the form of e-mails exchanged between the accused Vikas Makharia and accused S. Bhaskararaman on one side and also the accused S. Bhaskararaman and Karti P. Chidambaram on the other to substantiate the allegations of grant of approval for re-use of Project Visas on payment of a bribe of Rs.50 lakhs.

Thus, it was alleged that the above approval of Union Home Secretary and Union Home Minister for the above said proposal was granted in furtherance of a criminal conspiracy hatched between all the above accused persons and some other unknown private persons and public servants and investigation to unearth the above criminal conspiracy and to identify the participants thereof is in progress.

Arguments in Court

During the course of hearing today, Sibal argued that while the allegation in the FIR was that cheque was converted into cash and given to Bhaskararaman, there was nothing on record to show the same in any of the documents.

"What happened to that cash is not reflected anywhere," Sibal added.

Sibal argued that there was no allegation that any money was paid to Karti Chidambaram or that Bhaskararaman had paid the whole amount of Rs. 50 lakhs to him. He also submitted that there was no overt act attributed to Karti including the fact that there was no allegation that he used or influenced any public servant.

"There is no allegation that the petitioner singly or with anyone else met any public servant or induced the public servant. How he is attracted under sec. 8 and 9 of Prevention of Corruption Act is anybody's guess. There is no allegation of conspiracy showing as to how sec. 120B of IPC can be attracted but I'll argue that matter before the CBI (Court)," Sibal said.

Highlighting various errors in the order passed by the Trial Court denying anticipatory bail to Karti, Sibal further argued that if the agency had not investigated anything in the matter yet, then why should Karti be prosecuted in any manner.

"If the investigation is yet to begin, then there is no justification for ED to arrest the petitioner. They can arrest only after there is is prima facie evidence collected," he argued.

Accordingly, Sibal submitted that the conclusion of the Special CBI Judge was ex facie wrong.

On the allegation that the approval of Union Home Secretary and Union Home Minister for re-use of Project Visas was granted in furtherance of a criminal conspiracy, Sibal submitted that while the prosecution has named the then Home Minister, it had not named the then Home Secretary.

"That's their case. It is to be approved by the Home Secretary. That name they will not reveal because the then Home Secretary is a cabinet minister," he added.

Sibal submitted that the reasoning of the Trial Court is based on pure speculation. He also argued that in the CBI case, Karti has already been given protection in view of Trial Court's order directing agency to give a 3 days notice in the event of his arrest.

"In this case, as far as PMLA is concerned, there can be no proceeds of crime. If the money has yet not reached me, how can I launder it? It's nobody's case that it has reached me. How does sec. 3 of PMLA apply? First they have to show that money has reached Bhaskararaman in cash. They haven't taken any statement of Home Secretary who granted approval. They don't know who was the public servant, who influenced it, what is the conspiracy?," Sibal argued.

He concluded by arguing that Karti was not a flight risk and that in the other matters, he had been granted permission to travel and has even cooperated with the agency by going thrice after the CBI called him.

On the other hand, ASG SV Raju questioned the maintainability of the anticipatory bail plea and argued that the same was filed prematurely.

He argued that the provision of anticipatory bail confers concurrent powers and not appellate powers on the Court and that Sibal was arguing as if it was an appeal challenging the Trial Court order.

"Today, the trial court judgment is not under challenge. He could gave filed a petition under sec. 482 or 226. There is no such challenge in the prayer. The trial court judgment isn't challenged. The argument that the Trial court was wrong is immaterial. He has to make out a case of anticipatory bail independently or irrespective of the reasoning of trial court. Reasoning of trial court is immaterial in case of concurrent jurisdiction," Raju argued.

Furthermore, Raju argued that the requisite essentials provided under sec. 438 of CrPC for grant of anticipatory bail is missing in the present matter and that the same is not applicable in the facts of the case. He argued that there was no reason for Karti to believe that he is likely to be arrested and that there was no apprehension of arrest.

"He has argued the matter as if the stage of investigation is concluded. We have not even started investigation. It is like a case where suppose there is a dead body, somebody says a dead body is lying there, the police has to investigate and find out whether it is a murder or homicide or suicide or who is involved. I'm not saying that a person cannot move anticipatory bail application is there is no FIR. Even if there is no FIR, anticipatory bail is applicable provided there are genuine reasons to believe," Raju argued.

He added "If he has a genuine apprehension of arrest, he can move anticipatory bail application. He cannot move anticipatory bail application on figment of imagination which does not show any apprehension which is essential requirement for sec. 438 CrPC."

Raju further submitted that unlike IPC offences, different apprehension is required for PMLA offences because of sec. 19 of the Act and that severe restrictions or conditions are there on the power of arrest which can be exercised while arresting a person in a PMLA offence.

Furthermore, he added that the investigation is at a very nascent stage and that if anticipatory bail is granted, it will lead to a situation where protection is granted to accused only because the agency couldn't collect relevant material due to paucity of time.

Title: Karti Chidambaram v. ED