Supreme Court Grants Bail To Former TN Minister Senthil Balaji In Money Laundering Case

A bench of Justice Abhay Oka and Justice Augustine George Masih had reserved its judgment and flagged delay in trial on August 12, 2024.

Justice Oka, while pronouncing the verdict today, said that stringent bail provisions and delay in trial cannot go together.

"We have referred to Najeeb and other judgements. What we have said is that stringent and higher threshold of bail and delay in prosecution cannot go together. And therefore we have slightly expanded the scope in Najeeb and bail granted but there are very onerous conditions put in the bail," Justice Oka said. Detailed copy of the judgment is awaited.

Considering the unlikelihood of early completion of trial and the long incarceration, the Court chose to grant him bail, despite finding that there is a prima facie case against him.

For a detailed report on the reasoning of the judgment - Requirement Of Expeditious Trial Must Be Read Into Special Statutes Imposing Stringent Bail Provisions : Supreme Court

Senthil Balaji, a former Tamil Nadu Minister and current MLA, is accused in a money laundering case stemming from allegations of his involvement in a cash-for-jobs scam during his tenure as the state's Transport Minister between 2011 and 2016. In June 2023, the Enforcement Directorate (ED) arrested him under the Prevention of Money Laundering Act, 2002 (PMLA), on charges linked to this scam. Balaji has challenged the denial of bail by the Madras High Court before the Supreme Court.

Allegations and Arrest

Balaji is accused of orchestrating a scheme with his personal assistants and brother to collect money from job seekers in exchange for promises of employment in the Tamil Nadu Transport Department. Numerous complaints were filed by candidates who paid substantial amounts but did not secure the promised jobs. Based on these allegations, the ED registered an Enforcement Case Information Report (ECIR) and proceeded with his arrest in June 2023.

Arguments in the Supreme Court

Balaji, through Senior Advocates Mukul Rohatgi and Sidharth Luthra, has contended that the deposits of Rs. 1.34 crore in his bank account between 2013 and 2021 were derived from his agricultural income and salary as an MLA. Rohatgi argued that the prosecution has overlooked these legitimate sources of income and wrongly attributed them to the alleged scam.

Balaji's defense further argued that the search and seizure operations by the investigating agencies were flawed. Specifically, Rohatgi pointed out discrepancies in the hard disk evidence, where a Seagate hard disk was mentioned in court proceedings, but an HP hard disk was actually recovered. He asserted that no incriminating files named "CSAC" allegedly detailing Rs. 67 crores in proceeds from the scam, was found in the seized pen drive and hard disk.

Rohatgi also highlighted that Balaji has been incarcerated for over 13 months and underwent a coronary bypass surgery while in custody. The defense argued that this, combined with the long delay in the trial's commencement, qualifies Balaji for bail under Section 45 of the PMLA, which allows for bail in exceptional circumstances like illness.

The ED, represented by Solicitor General Tushar Mehta and Advocate Zoheb Hossain, refuted Balaji's claims, asserting that the Rs. 1.34 crore in cash deposits had no connection to his MLA salary or agricultural income. They argued that MLA salary is deposited directly into bank account and Balaji's declared income in his election affidavits significantly differed from the amounts he now claims as agricultural income.

The ED contended that an incriminating "csac.xlsx" file, which details the amounts allegedly received in the scam, was found in the pen drive recovered from Balaji's residence. The ED also presented other documents and emails implicating Balaji, including files found on his computer showing the detailed management of the alleged scam.

The ED emphasized Balaji's continued influence, stating that the state of Tamil Nadu is helping the accused and ensuring that the trial in the predicate offence is not likely to conclude. The ED also contented that Balaji is compromising witnesses and victims in the predicate offence.

Madras High Court's Observations

The Madras High Court had earlier rejected Balaji's bail plea, citing a lack of merits. The court noted that the ED's investigation relied on documents already present in the predicate offence and found no grounds to suspect evidence tampering. The High Court also directed the Special Court to expedite the trial, considering Balaji's long incarceration.

Supreme Court Proceedings

During the hearings, the Supreme Court raised questions about the feasibility of proceeding with the PMLA trial without the completion of the trial in the predicate offence, which involves over two thousand accused. The court also focused on whether the incriminating file "CSAC" was indeed found in the seized pen drive, pressing the ED to substantiate its claims.

The Supreme Court also sought clarification from the ED on whether it intends to rely on all three predicate offences in the money laundering case against Senthil Balaji or exclude one of the cases that involves more than a thousand accused.

The Court observed that the ED must either rely on a complete trial of all three predicate offences against Senthil Balaji in the money laundering case against him or decide to let go of some cases as predicate offence. The Court observed that splitting the trial would not serve any purpose.

Case no. – SLP (Crl) No. 3986/2024

Case Title – V. Senthil Balaji v. The Deputy Director

Citation : 2024 LiveLaw (SC) 750

Click Here To Read/Download Judgment