Citing ‘Lackadaisical Attitude’ Of West Bengal CID, High Court Upholds Transfer Of Money Laundering Probe Against Co-op Society To CBI, ED

The Calcutta High Court has recently upheld the order of a single-judge which transferred to the CBI, an ongoing probe into allegations of money laundering by the functionaries Alipurduar Mohila Samabay Rindan Samity Limited, a cooperative society.

Petitioners, who were members of the society had approached the Court alleging that they had deposited money into the society, which was subsequently swindled as part of a “deep-rooted financial scam.”

A single-judge had earlier ordered the State’s CID which had been investigating the matter, to transfer the same to the CBI & ED (Eastern Zone), due to lack of progress in the investigation, and had subsequently dismissed a ‘frivolous’ recall application taken out by the CID by imposing costs of Rs 5 lakhs upon the CID.

In dismissing the appeal arising out of the single-bench’s orders, while setting aside the payment of costs, and expunging “aspersions” cast on the CID by the single-judge, a division-bench of Justice Sabyasachi Bhattacharya and Justice Uday Kumar held:

On merits, no fault could be found with the order dated September 15, 2023 inasmuch as the recall application of the CID was rejected. The CID, being an Investigating Agency, cannot have any interest either way. In fact, neutrality demands that once a direction is given for transfer of the investigation, the erstwhile Investigating Agency should hand over the papers immediately to the Agencies lastly appointed. Although the reasoning of the order dated September 15, 2023 could be mellowed down, the conclusion reached by the learned Single Judge in the said order was perfectly justified.

State argued that the single judge had no jurisdiction to pass the impugned orders and that the plea was in the form of a PIL, which was not under the jurisdiction of the single-judge.

It was argued that the petitioners had bypassed the Magistrate and directly approached the writ court, without making any submissions about the CID’s inability to carry out the investigation.

Counsel submitted that as was well settled, Central agencies could only be summoned in exceptional cases, and that such a high-bar had not been satisfied in the present case, since the CID had already filed its charge sheet in the matter and was carrying on its investigation.

Petitioner’s counsel argued that the CID instead of independently investigating the issue, had been attempting to stall the investigation.

It was submitted that ever since the investigation was handed over to the CID in 2020, they had not taken any substantial steps, and in fact only filed a charge sheet during pendency of the writ petition in order to frustrate its purpose.

Petitioners argued that in the present case of money-laundering, the CID had even failed to send the accounts of the Society to a financial auditor and that in such situations there could be no fetter on the HC or SC to transfer investigations.

Decision of the Court

In dealing with the rival contentions, the Bench concluded that the single-judge indeed had jurisdiction to hear the matter, since the writ petitioners were those who were personally aggrieved by actions of the society and suffered due to their money being laundered.

It was further observed that in spite of being given the case in 2020, the CID had only filed the charge sheet in August 2023 apparently hurriedly, not only during pendency of the writ petition but about two months after the direction to file a report was passed.

Court held that as laid down by the Apex Court, apart from the rarest cases, order for transference of investigation could be passed when the State police lacked credibility and transfer would be required to ensure a fair investigation and retain the confidence of the public.

It was found: Nothing in the report indicates that the CID undertook any independent investigation into the matter. It merely fidgeted around the materials handed over to it by the police. The reasons cited in the report for the delay in the investigation are flimsy. It is surprising that the CID woke up from its slumber and sought for sanction to proceed against the two government officials about one year after filing of the writ petition. In fact, there is no clear allegation against the two government officials. There is sufficient reason to apprehend that the investigation undertaken by the CID does not inspire confidence in the public mind.

In further elaborating on the magnitude of the financial embezzlement being alleged, the Court observed that of almost Rs 50 crore had been allegedly swindled from mostly women who came from marginalised sections of society

The said sections of society form the bulk of the Indian polity and are equally, if not more, entitled to Constitutional safeguards than are the creamy layers of society, it was held.

Accordingly, the appeals were dismissed and the order of the single-judge was upheld while setting aside the direction for payment of costs and expunging the “aspersions” cast on the CID, while directing for the CBI and ED to proceed before the Trial Court as the investigative agencies in charge of the issue.

Citation: 2023 LiveLaw (Cal) 288

Case: The State of West Bengal and others Vs. Kalpana Das Sarkar and others

Case No: MAT 168 of 2023

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