Gujarat High Court Upholds Trial Court's Decision To Not Discharge Ex-IAS Officer Pradeep Sharma In Money Laundering Case, Orders Expeditious Trial

The Gujarat High Court recently refused to interfere with the order of trial court rejecting former IAS Officer Pradeep Sharma's application for discharge in a case under Prevention of Money Laundering Act (PMLA).

The single judge bench of Justice Samir J. Dave observed:

“While rejecting the discharge application of the applicant, learned trial court has specifically observed that on the basis of prima facie investigation made by ED, it appears that the applicant is prima facie involved in Hawala i.e., illegal transfer of money from nation to foreign countries. Prima facie there is sufficient material, which warrants this court to arrive at prima facie inferences that applicant is involved in such serious case wherein discretion is not required to be exercised.”

Sharma was arrested on July 31, 2016, by the Directorate of Enforcement (ED). Subsequently, after the investigation, the ED filed complaint before the Sessions Judge and Designated Judge (PMLA), Ahmedabad on September 27, 2016 for the offence under Section 3 (Offence of money-laundering) and Section 4 (Punishment for money laundering) of the Prevention of the Money Laundering Act, 2002 (PMLA).

The ED investigation started on the basis of two cases:

1. I-CR.No.03/2010 registered with Rajkot Zone, CID Crime for offences under section 7 (Public servant taking gratification other than legal remuneration in respect of an official act); Section 11 (Public servant obtaining valuable thing, without consideration from person concerned in proceeding or business transacted by such public servant); Sections 13(1)(B) and 13(2) (Criminal misconduct by a public servant) of Prevention of Corruption Act, 1988.
2. I-CR.No.09/2010 registered with Rajkot Zone, CID Crime for offences under Section 217 (Public servant disobeying direction of law with intent to save person from punishment or property from forfeiture); Section 409 (Criminal breach of trust by public, servant. or by banker, merchant or agent); Section 465 (Punishment for forgery); Section 467 (Forgery of valuable security, will, etc.); Section 468 (Forgery for purpose of cheating); Section 471 (Using as genuine a forged document or electronic record); Section 476 (Counterfeiting device or mark used for authenticating documents other than those described in section 467, or possessing counterfeit marked material); 120(B) (Punishment of criminal conspiracy) of IPC, 1860.

In both the cases, charge-sheet was filed against Sharma but the court has not framed charges against him till date.

In the case- I-CR.No.09/2010, Sharma was granted regular bail by the Supreme Court vide order dated December 13, 2011. In  the case-I-CR.No.03/2010, Sharma was granted anticipatory bail by the High Court vide order dated February 2, 2022.

The former bureaucrat in 2017 filed an application for discharge under Section 227 of CrPC before Sessions Judge and Designated Judge (PMLA), District Court, Ahmedabad (Rural) which was rejected vide impugned order dated January 8, 2018.

Challenging the trial court decision, the counsel appearing for Sharma argued that ED has relied upon two scheduled offence and since one of the offence is committed prior to PMLA Act coming into the force, therefore the aforesaid offence cannot be considered.

It was further argued that there is no evidence of money laundering act or proceeds of crime with regard to the second offence, therefore offence under Sections 3 and 4 of the PMLA Act is not made out.

The counsel further argued that with regard to the case- I-CR.No.09/2010, although the prosecution had alleged that the petitioner was responsible for causing loss to the public exchequer and revenue to the tune of Rs. 1,04,61,622 and loss of Stamp duty to the tune of Rs.15,69,240, there is no evidence to show that the petitioner has received any amount from any source which would attract the provisions of PMLA.

Additional Solicitor General of India, Devang Vyas contended that PMLA, being special statute, the presumption is that the accused has prima facie committed an offence and onus is on the accused to discharge the said burden during the trial, and therefore, at this stage, when full-fledged trial is yet to begin, the accused cannot be discharged.

Vyas further submitted that there is prima facie case against the applicant and there are reasons to believe that Sharma is prima facie guilty of the offence charged against him.

The court noted that before the trial court, Sharma failed to discharge his burden under Section 24 (Burden of proof) of PMLA.

“The trial court observed that there is serious allegations against the applicant so far as Hawala chapter is concerned wherein the Hawala entries via Dubai (UAE), crores of rupees have been credited in the accounts of wife of the applicant as well as his children in USA and the wife of the applicant was made partner in a firm to the extent of 30 percent by investment of only Rs. 1 lakh and getting crores of rupees from India as well as UAE,” it said.

The bench also noted that while rejecting the discharge application, the trial court made observation that there is strong prima facie case against the applicant and there appears materials sufficient for the purpose of trial.

The court dismissed Sharma’s revision petition and upheld the impugned order of the trial court. However, the court directed the trial court to conclude trial within a period of six months preferably on day to day basis.

The court further rejected the request of counsel appearing for Sharma to extend the interim relief granted earlier.

Case Title: Pradeep Nirankarnath Sharma v. Directorate of Enforcement & Anr.

Case Citation: 2023 Livelaw (Guj) 59

Coram: Justice Samir J. Dave

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