No Assertion In ED Complaint That Scheduled Offences Generated Proceeds Of Crime : Supreme Court Grants Bail In PMLA Case

The Supreme Court recently granted bail in a case under the Prevention of Money Laundering Act (PMLA) after noting that the prosecution complaint did not have any assertion that the scheduled offence generated proceeds of crime directly or indirectly..

“Prima facie, there must be factual assertions in the complaints to show that the offences which are named as scheduled offences on the basis of which complaints are filed, directly or indirectly, generated proceeds of crime”, the Court held.

The Court granted bail to Bhagwan Bhagat and Sunil Yadav, accused in a money laundering case linked to illegal sand mining in Jharkhand's Sahibganj district.

A bench of Justice Abhay Oka and Justice Augustine George Masih observed that the prosecution complaints do not indicate that the appellants are guilty of money-laundering under the Prevention of Money Laundering Act, 2002 (PMLA).

Bhagat is an accused in two successive complaints by the ED. The Court noted that four out of the five FIRs mentioned in the first complaint were also incorporated in the second complaint.

However, the Court found that there was no connection pleaded between these FIRs and the alleged proceeds of crime. The Court observed that in the first complaint, there was a reference to several offences registered at different locations. However, the Court added –

“However, we find that there is no prima facie material to show that the offences pleaded, directly or indirectly, generated proceeds of crime in the form of money or illegally mined minerals. There are, no doubt, allegations of large scale illegal mining against the accused, but that is not sufficient.”

The Court also noted that the first offence mentioned in both complaints was under Section 120B of the IPC, which alone is not a predicate offence under the PMLA schedule. There was no other scheduled offence mentioned in the FIRs that could substantiate the charge of money laundering.

“prima facie, we are satisfied that there are reasonable grounds for believing that the complaints do not indicate that the appellants are guilty of offence of money-laundering. We may also note here that nothing is pleaded to show that the appellants are involved in any other offence of money-laundering under the PMLA. Allegation of tampering with the evidence have not been made. Both the appellants have undergone incarceration for a period of about 01 year approximately. Therefore, a case is made out for enlarging the appellants on bail”, the Court stated.

The Supreme Court directed that Bhagwan Bhagat be produced before the Special Court under the PMLA within a maximum period of one week. It directed the Special PMLA Court to grant bail to Bhagat on appropriate terms and conditions.

The Court made it clear that the observations in the order are limited to the appellants and were solely for the purpose of considering the bail application.

Background

The prosecution's case is based on an FIR filed by Sambhu Nandan Kumar at Barharwa Police Station, Sahibganj, Jharkhand, on June 22, 2020. The FIR alleges that Pankaj Mishra, prime accused and close aide of then Chief Minister Hemant Soren, and others threatened the complainant to deter him from participating in a tender for Barharwa Toll and subsequently attacked him when he refused to comply.

Following this, charge sheet was filed on November 30, 2020, in Rajmahal, Sahibganj. The Enforcement Directorate (ED) then initiated an investigation under the PMLA, merging several FIRs related to the matter. The investigation allegedly revealed extensive illegal mining activities in Sahibganj and adjoining areas, involving Pankaj Mishra, who allegedly collected levies from trucks carrying stone chips and controlled various mining operations. It is further, alleged that total cash amounting to Rs. 5,34,44,400 was recovered from accomplices as well as close associates of the prime accused Pankaj Mishra.

A supplementary prosecution complaint alleged that proceeds of crime generated from illegal mining were transferred to Pankaj Mishra by his associates, including the petitioner Bhagwan Bhagat, who are accused of laundering this money to appear legitimate.

Bhagwan Bhagat was arrested on July 7, 2023, and his initial bail application was dismissed on October 9, 2023, by the Special Judge, PMLA, Ranchi. Thereafter, the Jharkhand High Court denied him bail the holding that the allegations against him, including his close association with Pankaj Mishra and the significant cash recoveries, warranted the denial of bail. The HC found that Bhagat's case did not merit bail on grounds of parity, given the severity of his alleged involvement in the illegal mining operations and money laundering activities.

Case no. – SLP (Crl.) No. 6905/2024

Case Title – Bhagwan Bhagat v. Directorate of Enforcement and Anr.

Citation : 2024 LiveLaw (SC) 576