'No Scheduled Offence In Complaint Or Chargesheet' : Supreme Court Grants Bail To Two Accused In Money Laundering Case

The Supreme Court on Friday (October 4) granted bail to two accused, Laxmikant Tiwari and Shiv Shankar Naag, in a money laundering case connected with the Chhattisgarh coal levy scam case.

A bench of Justice Abhay Oka and Justice Augustine George Masih granted bail on the grounds of prolonged incarceration and the absence of a scheduled offence at the time of filing of the Enforcement Directorate's (ED) complaint under the Prevention of Money Laundering Act, 2002 (PMLA).

“Thus, when the complaint under Section 44 of the PMLA Act was filed, the scheduled offence was not in existence. Even in the charge-sheet filed in the FIR which is stated to be a scheduled offence in the complaint, there was no allegation of commission of any scheduled offence. As late as on 19th July, 2024, now the charge-sheet has been filed in the State of Chhattisgah for the offence punishable under Section 384 of the IPC. Considering the long period of incarceration and considering the peculiar fact of these appeals, continuation of custody of the appellants will be violation of their right under Article 21 of the Constitution of India”, the Court observed.

The Court noted that the facts of both cases are similar, as they arise from the same Enforcement Case Information Report (ECIR) and the same complaint under Section 44 of the PMLA. Laxmikant Tiwari has been in custody for nearly two years, while Shiv Shankar Naag had been incarcerated for one year and nine months, the Court noted.

An FIR was initially registered on July 12, 2022, at Kadugodi Police Station in Bengaluru, under Sections 186, 204, 353, and 120-B of the IPC.

The Court noted that out of these, only Section 120-B was considered a scheduled offence under PMLA. However, it pointed out that in light of the Supreme Court's decision in Pavana Dibbur v. Directorate of Enforcement, Section 120-B could not be treated as a scheduled offence as a conspiracy to commit a scheduled offence was not alleged.

The Court noted that section 384 (extortion) of the IPC was added to the FIR later, and an ECIR was recorded based on this FIR.

However, on June 8, 2023, a charge-sheet was filed, wherein it was noted that the offence under Section 384 had been committed in Chhattisgarh. Further, Section 120-B was dropped from the charge-sheet for want of evidence. Thus, as of the date of filing the charge-sheet, no scheduled offence existed, the Court noted.

A second FIR was registered in Chhattisgarh on January 17, 2024, alleging an offence under Section 384 of the IPC. A charge-sheet for this FIR was filed in Chhattisgarh on July 19, 2024.

The Supreme Court noted that as of the filing of the ED's complaint under Section 44 of the PMLA in 2022, there was no scheduled offence in existence. Given the prolonged incarceration of both appellants, the Court held that their continued detention would violate their right to personal liberty under Article 21 of the Constitution.

The Supreme Court, therefore, granted bail to both Laxmikant Tiwari and Shiv Shankar Naag. It directed that they be produced before the Special Court, which would enlarge them on bail on appropriate terms and conditions after hearing the ED's counsel. The Court clarified that its observations were limited to the consideration of bail and would not affect the merits of the complaint.

Background

Laxmikant Tiwari was arrested on October 13, 2022, following the registration of an ECIR by the ED on September 29, 2022. The investigation stemmed from a raid by the Income Tax Department on June 30, 2022, at a hotel in Bengaluru, involving one Suryakant Tiwari. The raid allegedly uncovered evidence of illegal coal levies orchestrated by Suryakant Tiwari. The ED alleged that Laxmikant Tiwari handled proceeds of crime amounting to Rs. 26 crores, which were used to purchase immovable properties. He was also accused of storing illegal cash and assisting in money laundering activities.

The Chhattisgarh High Court had earlier denied bail to Laxmikant Tiwari, citing the seriousness of the offence and the risk of tampering with evidence.

Shiv Shankar Naag, a Deputy Director in the Mining Department, was arrested on January 25, 2023, also implicated in a scheme involving the illegal collection of levies on coal transportation led by Suryakant Tiwari. The ED alleged that Naag verified coal delivery orders in exchange for bribes, thereby facilitating the extortion racket. The Chhattisgarh High Court had also denied bail to Naag, citing his involvement in laundering the proceeds of crime and the potential for influencing witnesses.

Recently, the Court granted interim bail to Saumya Chaurasia, former Deputy Secretary to ex-Chhattisgarh Chief Minister Bhupesh Baghel, who is also accused in a money laundering case relating to coal scam.

Case no. – Crl.A. No. 4142/2024 Diary No. 30327/2024

Case Title – Laxmikant Tiwari v. Directorate of Enforcement

Citation : 2024 LiveLaw (SC) 787