'Confinement Inevitable': Madras HC Denies Bail To NRI Company Director Accused Of Money Laundering, Supplying Inferior Quality Coal To PSUs

Madras High Court has refused to grant bail to Ahmed A.R Buhari, director and promoter of M/s Coastal Energen Private Limited (CEPL), accused of the offence under Section 3 of the Prevention of Money Laundering Act, 2002.Justice G. Jayachandran observed that the petitioner is alleged to have supplied Indonesian imported coal of inferior quality to Public Sector Undertakings (PSUs), routing the supply through his shell company in Dubai, and siphoning the overinflated and over-invoiced money to his offshore entities in UAE, British Virgin Islands (BVI) and Mauritius. According to the respondent ED, the money so laundered is brought back to India as an equity investment in Coastal Energy Private Limited owned by him.The court also noted the prosecution's submission that the accused has not been cooperating with the investigation. In fact, he is withholding relevant information for the continuance of the investigation. The court, therefore, noted in its order dismissing the bail:"In view of this Court, this petitioner who is a Non-Resident Indian widely connected with other parts of the World and not inclined to cooperate with the investigation in its true sense is not entitled for bail. The ramification of the alleged crime runs to several hundred crores. Several persons in and outside India are connected in the crime. The documents connected with the Shell Companies floated by him in other countries are to be collected...His appearance before the Investigating Officer for investigation as and when it was convenient for him does not indicate that his presence can be secured, if he once decide to leave the Country for ever."On the petitioner's Senior Counsel P. Chidambaram's submission that the arrest was unnecessary, the court opined that Section 45(1) of PMLA after amendment ought to be applied when 'a bail petition is considered in case of offences involving "Proceeds of Crime" above Rs.1 crore'. Section 45(1) of the Act imposes an additional condition for the grant of bail apart from the condition contained in the Code of Criminal Procedure. The court also noted that the principle of 'bail being the rule and jail being the exception' is not entirely applicable in special legislations like PMLA, NDPS Act etc. where 'Jail becomes the rule and bail becomes the exception' based on the gravity of offences committed."...Whether such classification is reasonable or not is the question primarily now subject matter pending before of the Apex Court. Till verdict is pronounced, as the Division Bench of this Court has observed in N.Umashankar & others -vs- The Assistant Director, Directorate ofEnforcement, Government of India, Chennai(2022)...., the constitutional validity of Section 45(1) of PMLA, 2002 found in the statute has to be held valid", the court clarified.The court acknowledged the Additional Solicitor General's submission that the petitioner deliberately evaded the queries made by the investigating agency to furnish bank account statements of the offshore Companies involved in this transaction, original invoices raised by the Indonesian Coal Miners to his Dubai based entities, Books of Accounts of his foreign entities located in Mauritius and the British Virgin Islands (BVI).These documents, being crucial to determine if money has been laundered in the manner as prima facie indicated by the investigation, must be handed over to the agency, the court noted.Arguments RaisedThe petitioner argued that for arrest under PMLA, arrest under PMLA, the authorised officer must prima facie satisfy himself that the accused is guilty of the offence under PMLA. For granting bail, the court should reach a conclusion that the accused is not guilty of the said offence under PMLA. The crux of the argument was that predicate offence is not made out and no final report has been filed so far, therefore, prima facie satisfaction guilt does not arise. The petitioner also added that the constitutional validity of Section 45 of PMLA is currently under challenge in the Supreme Court and the rigours of the same shouldn't be applied for grant of bail. The triple test in Section 437 Cr. P.C should only be applied, they argued.Refuting the petitioner's submission that there must be a conclusion of proceedings initiated under the 'predicate offence' to act upon the petitioner, ASG submitted that initiation of proceedings under the schedule offence is more than enough and even the outcome of proceedings is immaterial. He added that there is no bar to simultaneously initiating action under PMLA, 2002 and sustaining it independent of the orders passed in respect of the schedule offence.Before the court, the ASG argued that the petitioner's co-operation was 'partial and selective'. After outrightly refusing to provide the documents related to offshore accounts and shell companies, the petitioner resorted to his right to maintain silence, ASG added. However, such right is subject to 'adverse inference' and Section 63 of the Act...

'Confinement Inevitable': Madras HC Denies Bail To NRI Company Director Accused Of Money Laundering, Supplying Inferior Quality Coal To PSUs

Sebin James

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'Confinement Inevitable': Madras HC Denies Bail To NRI Company Director Accused Of Money Laundering, Supplying Inferior Quality Coal To PSUs

Sebin James

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