Senthil Balaji's Bail Plea | Can Trial In PMLA Case Proceed Without Trial In Predicate Offence? Supreme Court Asks

The Supreme Court on Tuesday (August 6) while hearing former Tamil Nadu Minister Senthil Balaji's bail plea asked whether the trial under Prevention of Money Laundering Act, 2002 (PMLA) could proceed without the trial of the predicate offence.

The MLA and former Minister was arrested by the Enforcement Directorate (ED) in June last year in a cash-for-jobs money laundering case. He has challenged a Madras High Court order denying him bail in a money laundering case over the cash-for-jobs allegations.

A bench of Justice Abhay Oka and Justice Augustine George Masih heard the arguments of Solicitor General Tushar Mehta and Advocate Zoheb Hossain for ED on Tuesday. The court questioned the feasibility of commencing the trial in the money laundering case, considering that there are a thousand accused in the predicate offence(under the Prevention of Corruption Act) pending before the MP/MLA court.

“In the predicate offence there are a thousand accused. So possibility of trial commencing, that also you have to address. If there are no prospects at all of PMLA trial commencing, then the other issues would be irrelevant. Whether without trial of predicate offence can PMLA proceed? Unless the predicate offence is established how there can be conviction in PMLA”, Justice Oka asked.

Mehta responded that while the PMLA trial cannot conclude before the conclusion of the trial in predicate offence, both trials can run simultaneously. The Supreme Court is considering this issue in another case filed by “lottery king” Santiago Martin.

The predicate offence is registered against Balaji under section 420 (cheating) and other relevant sections of the IPC as well as sections 7 (public servant taking bribe), 12 (abetment) and 13 (misconduct of public servant) of Prevention of Corruption Act.

Hossain mentioned that the CSAC file found in a pen drive recovered from Balaji's residence contained details of job positions, their quantities, and the rates at which they were sold.

Hossain stated that ten files were relied upon in the prosecution complaint, including a file named TKT1.docx created by one Karthik, another accused in the predicate offence, which was found in a hard disk recovered from Balaji's residence. Hossain said that this file establishes a relationship between Balaji and his personal assistants Shanmugam and Karthikey who are alleged co-conspirators, a relationship Balaji has denied.

Hossain further elaborated that two letters from Balaji and M. Karthikey to the branch managers of Indian Bank and SBI requesting passbook issuance were found on Balaji's computer.

Hossain cited a file (AC1.xlsx) found on a pen drive recovered from Balaji's residence allegedly containing record of Rs. 14.2 Crores collected from the scam. “It is so organized, the manner in which this whole scam was being done. Vacancy notification would be sent to this gentleman, he would then make the recommendations, and rates were decided for each of the posts”, Hossain submitted.

Additionally, a file named "copy sent to corp" on the computer contained record of Rs. 14.2 Crores charged for job sale and Rs. 9.3 Crores balance to be collected in lieu of job sale, he said. Hossain relied on similar other sheets allegedly showing Rs. 40.33 Crores and Rs. 30.66 Crores received in lieu of job sale.

Responding to Balaji's claim that he was not part of the recruitment, Hossain emphasized that emails sent to Balaji from the official accounts regularly notified him of vacancies.

Senior Advocate Mukul Rohatgi for Balaji has earlier argued that the Crime Branch produced a Seagate hard disk before the court in the predicate offence, which was not mentioned in the search record. He asserted that an HP hard disk was recovered during the search, not a Seagate hard disk, thereby questioning the integrity of the evidence.

During the proceedings on Tuesday, Hossain explained that only the serial number of the hard disk is relevant for its identification, and the serial number in the seizure list matches with the serial number mentioned in deposit slip for depositing the seized material in the court. He pointed out that the authorized representative of Balaji had signed the deposit slip, indicating that there was no tampering of the seized evidence.

Solicitor General Tushar Mehta accused Balaji of winning over the victims, citing earlier litigation in which the Madras HC quashed one of the cases related to predicate offence against Balaji in light of settlement with the complainant.

The court kept the matter to continue on Monday at the end of the list.

Background

Balaji served as the Minister in the Tamil Nadu government's transport department from 2011 to 2016. He was accused of orchestrating a scheme with his personal assistants and brother to collect money in exchange for promising job opportunities in the department. Several complaints were filed against him by candidates who had paid money but failed to secure employment.

Based on these allegations, the ED registered an ECIR and arrested Balaji in June 2023. The Madras High Court denied him bail, but considering his incarceration of more than eight months, directed the Special Court to complete the trial within three months. Balaji then approached the Supreme Court, seeking bail.

Senior Advocate Mukul Rohatgi for Balaji argued that the Rs. 1.34 crores deposited in Balaji's bank account were from his MLA salary and agricultural income. He also claimed that the incriminating file mentioned in the prosecution complaint was not found in the seized hard disk and pen drive.

The ED has contended that the cash deposits were unrelated to Balaji's MLA salary or agricultural income. Hossain argued that Balaji's assertion that Rs. 68 lakhs of the Rs. 1.34 Crores was his MLA salary was incorrect, as MLA salaries are directly deposited via RTGS. He highlighted inconsistencies between Balaji's declared agricultural income and the actual deposits. Hossain also pointed out that the bank deposit challans involved large sums deposited without proper details such as PAN, address, or other identifying information.

Case no. – SLP(Crl) No. 3986/2024

Case Title – V. Senthil Balaji v. Deputy Director