Economic Offenders Have Huge Proceeds Of Crime, May Use It To Affect Probe, Win Over Witnesses: Allahabad HC Denies Anticipatory Bail To Accused

The Allahabad High Court has recently rejected an anticipatory bail application filed by the erstwhile sleeping Director of M/s Surgicoin Medequip Pvt. Ltd who was accused in the National Rural Health Mission Scheme Scam.

The Bench of Justice Chandra Dhari Singh, while rejecting the application filed under Section 438 CrPC noted that a criminal of economic offences has a larger amount of proceed of crime, which he may use and affect the investigation and win over witnesses.

"In socio-economic offences proceed of crimes are larger and further, offenders are economically sound, therefore, in releasing them on bail/anticipatory bail probability of abscondance not within country but beyond country is more probable. Usually socio-economic offenders abscond to some other country and after that it becomes difficult to bring them back and complete the criminal proceeding against them. Further, their monetary sound condition particularly proceed of crime obtained not by honest working but by deceiving others causes more prone situation for influencing witnesses and other evidences. Furthermore, status and position of offender provides opportunity to influence investigation and prosecution."

"More the accused is economically sound and more the amount involved in a criminal case; it causes more the chance of affecting the requirements of criminal justice, more the accused is unfit for bail, thereby, more the chance of refusal to grant bail", the Court added.

The Court further observed that crimes nowadays were committed by influential persons belonging to upper class in an organized manner after well planning by use of modern gadgets in course of performance of their official, professional, business activities in which they have expertise.

"Criminal acts committed by professionals, businessmen and public servants, it is very difficult to identify whether sober and civilised activity was committed or criminal act was committed. Such criminals have no criminal self image, further by societal members there is no labelling which affect seriously pursuits to cope with crime and criminality. Economic offenders are only concerned with their personal gain even at the cost of irreparable and serious loss to society which provided socialization and made him a human being, provided status and position, provided respect and reputation, provided stature and means."

These observations were made by the High Court while hearing an application filed under Section 438 CrPC seeking anticipatory bail apprehending arrest in a case registered under Section 3/4 of Prevention of Money Laundering Act, 2002 by the Enforcement Agency E.D., Lucknow. 

Background:

The High Court vide order dated November 15, 2011 had directed the Central Bureau of Investigation to conduct a Preliminary Enquiry in the matter of execution and implementation of National Rural Health Mission (for short 'NRHM') and utilization of funds at various levels during such implementation in the entire State of Uttar Pradesh and to register regular cases in respect of the persons against whom prima facie cognizable offence were made out in accordance with law. 

Pursuant to this order, five separate preliminary enquiries were registered in different branches of CBI. On January 2, 2012, a first information report was registered by CBI under Sections 120-B r/w Sections 420, 409 of IPC and Section 13(2) r/w Section 13(1)(d) of the Prevention of Corruption Act against several persons.

Furthermore, Directorate of Enforcement lodged Enforcement Case Information Report dated April 14, 2012 against all the persons named in FIR. Thereafter, the Directorate of Enforcement passed an order of Provisional Attachment dated April 5, 2017 and provisionally attached two of the properties.

The Directorate of Enforcement preferred an Original Complaint on May 11, 2017 under Section 5(5) PMLA before Adjudicating Authority, PMLA, New Delhi seeking confirmation of the Provisional Attachment Order which was confirmed on September 13, 2017. Then the Directorate of Enforcement filed a Complaint under Section 45 of PMLA against M/S Surgicoin Mediquip Pvt. Ltd., Naresh Grover, the present applicant and Abhay Kumar Bajpai.

Submissions Before Court:

Advocate Priyam Kumar Singh submitted that accusations against the applicant were made with ulterior motives and offence under Section 3 of PMLA could not be made out against the applicant as none of the essentials under the provision were fulfilled.

He added that the properties in question were acquired by the applicant in the year 2002 and 2001 and the alleged year of commission of the crime was 2010-11.

The properties in question were never owned by the applicant nor the sale consideration of the properties was paid by the applicant. Hence, no question of proceeds of crime arose, he further stated.

Assistant Solicitor General S.B. Pandey, on the other hand, argued that in terms of the twin conditions prescribed in Section 45 of PMLA, the Court could grant anticipatory bail to the applicant only after recording satisfaction that there were reasonable grounds for believing that the applicant was not guilty of the alleged offence and that while on bail he was not likely to commit any offence. 

He further relied on the voluminous oral and documentary evidence collected during the course of investigation which revealed that Naresh Grover, Director of M/s Surgicoin Medequip Pvt. Ltd. in connivance with his son, the present applicant had been constantly trying to manipulate the records to conceal the "Proceeds of Crime" and had also clandestinely sold off half of the factory property after knowledge of initiation of present proceedings under the PMLA.

"The written directions given by Naresh Grover to his son Pankaj Grover, which were recovered during the search clearly establish that the said persons in possession or use of the property acquired out of/in lieu of "Proceeds of Crime" in the instant case were prone to encash/sell the same at the earliest opportunity to frustrate the proceedings under this Act and thus, the properties identified in their hands in lieu of "Proceeds of Crime" were attached...",  he told the Court.

Pander further informed the Bench that the investigation had revealed that out of the said "Proceeds of Crime" a sum of nearly Rs.10 Crore was paid by way of bribe/commission to various officials and ministers and their associates leaving a balance of about Rs.11 Crore in the hands of M/s Surgicoin Medequip Pvt. Ltd. 

Findings of the Court:

With regard to the importance and relevance of custodial interrogation of the accused in a case of the present nature, reliance was placed on the Supreme Court's observations in P. Chidambaram v. Directorate of Enforcement.

The Court further noted that in respect of offences as enumerated under Section 438(4) of CrPC and also in respect of offences under a special statute, the jurisdiction under Section 438 of CrPC has been specifically ousted, and even if the offences were non-bailable, a person could not invoke the jurisdiction under Section 438 of CrPC seeking pre-arrest bail.

Relying on letters written by Naresh Grover, who was in judicial custody at that time, to his son Pankaj Grover, it was found that the applicant was directed to manipulate the accounts and records to defeat the allegation of supply of material under NRHM Scheme at astronomical rates of profit as well as of short supply of the said material.

"In the statements recorded under Section 50 of PMLA, 2002 both Pankaj Grover as well as Mr. Rajendra Kaul have admitted that the profit margin on procurement/manufacture of certain items ranged up to 200%. Moreover, the fact that Naresh Grover had directed Pankaj Grover in writing not to submit the original invoices and the ledgers of the sundry creditors and debtors to the ED as well as to manipulate the records of the genuine creditors with other fictitious entries establishes that he was wilfully and knowingly trying to frustrate the proceedings under the Act and was also attempting to deflect the process of investigation", observed the Court.

In light of these observations, the Court found no merit in the application seeking anticipatory bail and rejected to grant the same.

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