Delhi High Court Grants Bail To CA In Money Laundering Case Against Shakti Bhog

Observing that no satisfactory explanation has been given by the ED for the lack of documents that could directly point to Bhuraria as the “mastermind”, Justice Jasmeet Singh said that the only substantial evidence against him are the statements made by the employees of Shakti Bhog under Section 50 of the Prevention of Money Laundering Act, 2002 (PMLA), which too have been retracted.

“These statements u/s 50 PMLA do not in my opinion, prima facie establish that the applicant was the mastermind of the whole operation,” the court said.

Justice Singh further said that the ED has recorded the statements made under Section 50 of PMLA, in a “cut copy paste job with even the punctation marks of commas, full stops not differing”.

Noting that the investigation in the case has not been yet completed and, therefore, no charges can be framed nor can the trial begin, the court said, “The period of incarceration as well as the delay in investigation ... justifies a prima facie release on bail. The only substantial evidence which is produced are the statements u/s 50 PMLA which too have been retracted.”

On the basis of a written complaint of State Bank of India (SBI)'s in 2020, the CBI had registered an FIR against Shakti Bhog and its Director/ Promoter, Kewal Krishan Kumar, under Section 120B read with Section 420/ 467/ 468/ 471 of the Indian Penal Code, 1860 (IPC) and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988.

Accusing Shakti Bhog of financial irregularity, the SBI in its complaint had alleged that it had siphoned of funds in relation to the credit facilities obtained from a consortium of banks led by SBI, causing a loss of Rs. 3269.42 crores. Based on the said FIR, the ED later registered a money laundering case against Shakti Bhog.

Raman Bhuraria, who was the internal auditor of Shakti Bhog for the financial year 2008-09 till 2013-14, and a statutory auditor for the financial year 2006-07, was arrested in 2021 in connection with the money laundering case. 

Opposing Bhuraria's bail application, the ED alleged that since he had audited the business and verified false accounting entries in the company's books of accounts, he played an active role in the commission of offence. In support of its allegation that Bhuraria was the mastermind of the whole operation, the ED relied on the emails and statements of the management and employees of Shakti Bhog.

In support of its bail plea, Bhuraria argued that he was not named as an accused or suspect in the FIR lodged by CBI. Further, it was brought to the court’s attention that in the Enforcement Case Information Report (ECIR) filed by the ED, the applicant was not named as an accused.

The court said the reliability of the retracted statements is questionable and cannot form the basis of the guilt of the Bhuraria of the offences as alleged. "Prima facie, I find it difficult to place the guilt of the offence under PMLA on the applicant, based on these statements. Further, the questions as to why the statements were retracted are questions of trial," it said.

The bench further said the Bhuraria has the 15-year association with SBFL, but despite the allegation that he was the mastermind of the whole operation, the ED has relied on five documents to show his complicity.

"For the reasons as noted, the documents do not show that the applicant is guilty of offences as alleged against him. In addition, there is not satisfactory explanation given by the ED for the lack of documents that directly point to the applicant as the 'mastermind'," it added.

The Court further remarked that out of a possible 7-year sentence, Bhuraria has already served more than 17 months of pre-trial detention, and to date the trial in the case has not begun.

“The ED has listed 109 witnesses till date and the Prosecution Complaints run into lakhs of pages in multiple trunks. Without a completion of investigation, no charges can be framed nor can trial cannot begin. In the light of this, the court cannot let the applicant undergo long period of detention. If this court allows the continuing pre-trial incarceration, the same will amount to deprivation of personal liberty as well as travesty of justice as the same is equivalent to punishment without trial,” the bench said.

The court said even though the allegations are serious, the chargesheet is yet to be filed.

"Assuming that the applicant was the mastermind, the respondent did not name him in the original FIR. The applicant had conducted audit of the company and had certified the fictitious accounting entries in the books of accounts of the company to inflate financials of SBFL, even then during his entire custody he has been interrogated only on one occasion on 13.11.2021,” it said.

Observing that the CBI may proceed with the investigation but not at the cost of continued incarceration of Bhuraria, the court said: “Having regard to the totality of the circumstances, in my opinion, the applicant should be released on bail.

The Court thus allowed the bail application and granted bail.

Counsel for the Applicant: Mr. Arshdeep Singh Khurana, Mr. Ayush Agarwal, Mr. Harsh Mittal, Advocates

Counsel for the Respondent: Mr. Zoheb Hossain, Mr. Vivek Gurnani, Advocates for ED

Case Title: Raman Bhuraria versus Directorate Of Enforcement

Citation: 2023 LiveLaw (Del) 135

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