S.50 PMLA Statement Given In ED Custody Inadmissible: Madhya Pradesh HC Gives Bail To Man Booked For Importing Poppy Seeds Worth Rs 140 Cr

While allowing a man's bail plea booked for money laundering under the Prevention of Money Laundering Act, the Indore bench of the Madhya Pradesh High Court has reiterated that statements of the accused recorded by the investigating agency under Section 50 PMLA while he was in custody shall be inadmissible against him.

In doing so it also observed that in the present case the opinion formed by the ED under Section 19 (power to arrest) of the PMLA with respect to the guilt of the applicant, is based upon the statement of the co-accused person which is "prima facie" inadmissible.

Referring to various Supreme Court judgments including Pankaj Bansal Vs. Union of India and Arvind Kejriwal v Directorate of Enforcement, Justice Prakash Chandra Gupta in its order said, “After considering the judgments referred above, it is apparent that in case of non-compliance of section 19 of the PMLA, the court shall examine the material and resources whereby the authorized officer has to give reason to belief the guilt of accused and the court has to give reason to belief of not guilty of offence i.e. reason to belief becomes a sine-qua-non. It is also clear that when an accused is in custody under PMLA irrespective of the case for which he is under custody, any statement under section 50 of PMLA to the same investigating agency is inadmissible against the maker. Furthermore, the arrest should be rational, fair and as per law and shall not be merely based upon guilt of accused established from inadmissible evidence. Additionally, forming of opinion of the designated officer of the guilt of accused in writing is must”.

It further referred to the Supreme Court's decision in V Senthil Balaji V State Represented by Deputy Director and Ors. which in paragraph 97.2, had been held that in any non-compliance of the mandate under section 19 of the PMLA, the same would enure to benefit of the person arrested.

As per the prosecution an FIR was registered against the applicant Asif Hanif Thara and co-accused persons who are allegedly the proprietors of 9 Benami Firms and accused of importing poppy seeds through benami entities, under Sections 417, 420 (cheating) and 120-B (criminal conspiracy) IPC. The ED alleged that applicant fraudulently obtained import authorization in the name of his Benami entities by cheating the Government authorities with an intent to acquire wrongful gain for himself by circumventing the existing guideline issued by Department of Revenue, Ministry of Finance and obtained maximum share of country quota by misleading the authority and concealing the fact from them and causing wrongful loss to government exchequer.

The ED argued that the applicant fraudulently imported poppy seeds of around Rs. 141.8 Crores which is "proceeds of crime" relating to the offence of money laundering. It has been alleged that the applicant used to import the poppy seeds from countries and sold it to domestic buyers within the country. The ED claimed that the applicant was involved in the offence of money laundering as per Section 3 PMLA.

The applicant's counsel contented that the ED did not comply with the provisions under Section 19 of PMLA wherein reasons were not recorded by the prosecution for the arrest of the applicant and reasons which are recorded are based on statement of co-accused persons which is not admissible in evidence. It was further contended that the applicant's statement taken in custody under Section 50 of PMLA were not proper and inadmissible. It was contended that no evidence and material was collected by the ED, reliance was placed only on the statement of co-accused persons, no information was collected from licensing authority which issued the license in favour of the applicant and alleged tainted property or money has not been specified by the ED.

Meanwhile the ED said that the mandatory conditions as mentioned under section 45 of the PMLA is to be satisfied before an accused is released on bail, unless court comes to satisfaction that there is no reasonable ground that the applicant/ accused is guilty and he is not likely to commit any offence, only then he may be released. It was submitted that sufficient evidence has been collected that shows that the applicant is involved in money laundering which is proceeds of the crime. However the ED's counsel said that applicant was neither called by ED nor his statement was recorded before arresting him and also that no further custodial interrogation of the applicant is required.

The court said that the applicant was not even summoned before arrest and his statements were not recorded by the investigating authorities. It said that no information was called by ED from the licensing authority to show that the applicant adopted fraudulent practices in obtaining import license. It further said that appeared that in this case provisions of section 19 of the PMLA has not been complied with.

The high court thereafter, without expressing any opinion on merits, granted bail to the applicant, on him furnishing personal bond of Rs.5,00,000 with two sureties in the like amount to the satisfaction of concerned trial Court, subject to certain conditions.

Case title: Asif Hanif Thara Versus Enforcement Directorate

Case No: MISC. CRIMINAL CASE No. 44309 of 2024

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