Raman Bhuraria v. Directorate of Enforcement

14. It is also submitted that the „triple test‟ for grant of bail laid down by various judgments are as under: i. Flight risk ii. Influencing any witness iii. Tampering with evidence.

15. The learned Sessions Court in its order dated 18.11.2021 has given all 3 findings in favour of the applicant which have not been challenged by the respondent.

16. The order dated 18.11.2021 records as under:-

17. The Special Judge (PC Act) rejected the bail application of the applicant on considerations of parameters of Section 45of the Prevention of Money Laundering Act, 2002 (hereinafter called as PMLA).

18. In the prosecution complaint, the allegations against the applicant are that the applicant had designed the entire plan of laundering of loan funds through dummy entities. By virtue of this mechanism on one hand the turnover and the stock of the company was inflated and on the other hand the loan funds were laundered. On analysis of the bank statement of shell corporations, it was revealed that funds received from SBFL were either withdrawn in cash or re-routed to further shell companies. It is submitted that all the entities mentioned in the prosecution complaint do not name the applicant. The applicant had nothing to do with these accommodation entries made by SBFL through various shell companies. Accommodation entries through shell companies:

19. Mr Devki Nandan Garg and Mr Ashok Kumar Goel have been cited as accommodation entry operators. Mr Devki Nandan Garg and Mr Ashok Kumar Goel have named the accused in their statements on various dates. Mr Khurana has taken me through a chart wherein detailed comparison of the statement of Mr. Devki Nandan Garg and Mr Ashok Kumar Goel and the same reads as under:

1 Devki Nandan Garg Statement dt. 05.07.2021, Statement dt. 21.09.2021 Statement dt. “On being asked I further state “On being asked about “On being asked that I know Mr. Kewal Krishan Kumar Managing Director of Shakti Bhog Food Ltd. since last 20 years.” Devki Nandan Garg statement dt. 05.07.2021, Q[4], Pg.[3] “I have seen and signed copies of fictitious bills and bilitties on your file. The said bills and billitties are the same which were arranged by my firm namely M/s Lachhu Ram Agarwal to Mr. Kewal Krishan Kumar in Shakti Bhog Food Ltd. through employee namely Sandeep Mishra, Abdul Hassan Ansari and others. I had arranged the same on request of Mr Kewal Krishan Kumar and remitted/ transferred the payments further in the account of firms stated by Mr Abdul Hassan Ansari@ Pathak or Mr Sandeep Mishra purpose of abovementioned bogus transactions, I want to state that SBFL used to divert funds availed as credit facilities to my dummy entities and these funds are further transferred into bank accounts of SBFL or into other dummy entities or into group companies of SBFL or withdrawn as cash as per directions received from Shri KK Kumar, Shri Siddharth Kumar, Shri Raman Bhuraria, Shri Tarun Kumar or Shri Sandeep Mishra.” 21.09.2021, about purpose of above-mentioned bogus transactions, I want to state that SBFL used to divert funds availed as credit facilities to my dummy entities and these funds are further transferred into bank accounts of SBFL or into other dummy entities or into group companies of SBFL or withdrawn as cash as per directions received from Shri KK Kumar, Shri Siddharth Kumar, Shri Raman Bhuraria, Shri Tarun Kumar or Shri Sandeep Mishra.” both employee of Shakti Bhog Food Ltd. At commission@ 0.5% to 2%.” Devki Nandan Garg Statement dt.08.07.2021 “Shakti Bhog Food Ltd through Mr tarun Kumar, Mr Abdul Hassan Ansari and Mr Sandeep Mishra provided the account numbers in which the further remittances / RTGS were made. If there was any mismatch or delay in remittances, I was also approached by Shakit Bhog Food Ltd in some cases and the matter was resolved accordingly. The said parties/firms had also obtained commission.50% to 1 % for arranging the said services to Shakti Bhog Food Ltd.” Devki Nandan Garg Statement “On being asked about commission charged by me for providing accommodation entries, I want to state that I used to charge commission ranging from.5% to 1.5% on fake invoice value provided to SBFL. On being asked about mode of receipt of this commission, I want to state that I used to deduct amount of commission from funds received from banks accounts of SBFL and remaining funds are transferred as per directions received from Shri KK Kumar, Shri Siddharth Kumar, Shri Raman Bhuraria, Shri Tarun Statement dt. 22.09.2021, “On being asked about commission charged by me for providing accommodation entries, I want to state that I used to charge commission ranging from.5% to 1.5% on fake invoice value provided to SBFL. On being asked about mode of receipt of this commission, I want to state that I used to deduct amount of commission from funds received from banks accounts of SBFL and remaining funds are transferred BAIL APPLN. 4330/2021 dt. 08.07.2021, “I further state that in some cases payment was also transferred directly by our firms as per requirement of Shakti Bhog Food Ltd. but such instances are not much in number. Mr Abdual Hassan Ansari, Mr Tarun Kumar and Mr Sandeep Mishra had all knowledge of these transaction and they were the main persons who dealt these transactions on directions of Mr Kewal Krishan Kumar.” Devki Nandan Garg Statement dt.10.07.2021 “Shakti Bhog Food Ltd. approached me through MD Sh. Kumar or Shri Sandeep Mishra.” “On being asked about end use of these funds of SBFL received in my dummy entities, I want to state that I used to transfer funds received from SBFL into other bank accounts of SBFL or into other dummy entities or into group companies of SBFL or withdraw cash. On being asked as to who used to direct me to transfer these funds, I want to state that directions to transfer funds were received as per directions received from Shri 22.09.2021 “On being asked about end use of these funds of SBFL received in my dummy entities, I want to state that I used to transfer funds received from SBFL into other bank accounts of SBFL or into other dummy entities or into group companies of SBFL Kewal Krishan Kumar and employee namely Mr. Sandeep Mishra, Mr. Abdul Hassan Ansari @ Pathak etc. for the said fictitious bills for discounting of bills and inland LC's purposes and accordingly arranged the same as per their requirements without actual movement of stock. The said persons had also stated detail of rate, quantity, types of grains, load, commission etc. for preparation of the said fake documents and accordingly I got prepare the said fake set of documents i.e bills, invoices, transport receipts etc. which were finally submitted by these personal banks for realisation of LC's and other purposes.” Devki Nandan Garg Statement dt.12.07.2021 from Shri KK Kumar, Shri Siddharth Kumar, Shri Raman Bhuraria, Shri Tarun Kumar or Shri Sandeep Mishra. I want to further state that I used to deduct commission from the amount received from SBFL before further transfer of funds.” Statement dt. “On being asked about cash withdrawn from bank accounts of my dummy entities and end use of this cash, I want to state that I used to withdraw cash also from bank accounts of my or withdraw cash. On being asked as to who used to direct me to transfer these funds, I want to state that directions to transfer funds were received from Shri Shri Raman Bhuraria, Shri Tarun Kumar or Shri Sandeep Mishra. I want to further state that I used to deduct commission from the amount received from SBFL before further transfer of funds.” Statement dt. 22.09.2021 “On being asked about cash withdrawn BAIL APPLN. 4330/2021 “These firms used to provide accommodation entries by charging commission. I was aware of this fact because whenever I used toad more layers to any transactions by using their firms and buying and selling fake purchase sale and transport bills/invoices for Shakti Bhog Food ltd. Business. I had to rotate some money through their accounts and purchased some bills from them to complete cycle. Even, monument of Shakti Bhog Food Ltd. Sh. Kewal Krishan Kumar and Mr Tarun had also asked to rotate the funds some more channel” Devki Nandan Garg Statement dt. 13.07.2021 “On being asked I further state that in some cases on request of Mr Kewal Krishan Kumar I dummy entities as per instructions received from Shri KK Kumar, Shri Siddharth Kumar, Shri Raman Bhuraria, Shri Tarun Kumar or Shri Sandeep Mishra.” from bank accounts of my dummy entities and end use of this cash, I want to state that I used to withdraw cash also from bank accounts of my dummy entities as per instructions received from Shri had also arranged funds in cash to Kewal Krishan Kumar towards the said RTGS and issued fictitious bills/bilities. I will also provide details of the said cash transactions. I had not business activity with Shakti Bhog Food Ltd.” Devki Nandan Garg Statement dt.24.07.2021 “It is further stated that I have prepared various fake transport invoices and bills raised by M/s Shri Shyam Road Lines on M/s Shakti Bhog Foods Limited. I have copies of few fake transport invoices prepared by me. These fake transport invoices are provided to Shri Abdul Hasan Ansari (Accountant of SBFL) for submission to banks by SBFL for the purpose of discounting of LC's by bank.”

2. Ashok Kumar Goel Statement dt.20.08.2021, Q[2], Pg.[2] “On being asked about my acquaintance with SBFL, I want to state that I used to work as commission agent in trading of food grains in Lawrence Road Industrial Area, Delhi. Shri KK Kumar was member of Dal Mill Association, Lawrence Road and he used to meet my maternal uncle Late Shri Radhey Shyam Gupta frequently. I was introduced to him by my uncle and thereafter I developed personal acquaintance with him. In 2014, he called me over phone and insisted me to provide accommodation entries to Shakti Bhog Foods Limited (SBFL) & its Group Companies. He told me that he required shell/dummy companies to rotate funds from bank accounts of SBFL to inflate business of SBFL. He offered me commission also for arranging accommodation entries. He requested me to provide fake purchase bills raised on SBFL and told me to give these fake bills to Shri Abdul Hasan Ansari (Accountant of SBFL) or Shri Tarun (Nephew of Shri KK Kumar). He further told me coordinate with Shri AH Ansari & Shri Tarun Kumar for any issues related to these accommodation entries.” Ashok Kumar Goel Statement dt. 20.08.2021 “On being asked about procedure to transfer/rotation of funds from dummy entities to SBFL or group companies, I want to state that Shri AH Ansari used to provide me fake bills to transfer funds from my dummy entities to SBFL or group concerns and Shri Tarun Kumar used to communicate as to how much amount is required to be transferred in which account of SBFL or sister concerns. He used to provide me details of bank accounts of SBFL and its sister concerns to transfer funds on strength of fake bills without actual movement of goods.”

20. The Ld. Counsel for the applicant states that on bare perusal of the disclosure statements clearly demonstrate that they are pure cut, copy, paste job where even coma, inverted comas, exclamations are identical. Mr Khurana, also states that Mr Devki Nandan Garg has subsequently retracted from his statement. The statement of Mr Devki Nandan Garg reads as under:

21. This statement has been taken on record by the Special Judge (PC Act), CBI-12, RADC, New Delhi in its order dated 15.12.2021. “There is also an application moved on behalf of accused Devki Nandan for retraction from his statements which were recorded U/s 50 of PMLA during the course of ongoing investigation. Copy of this application has been supplied to the Ld. Spl. PP for the ED. However, since no arguments are to be addressed on this application, same is taken on record and accordingly disposed off.”

22. The promoter Director, Mr Kewal Kumar has also retracted from his statement naming the applicant which reads as under: “To The Court of Sh. Ajay Gulati Ld. Special Judge, Rouse Avenue District Courts New Delhi Subject: Statement of Retraction Respected Sir, …….. Sir, the E.D. officials paid no heed and were pressurizing me to admit that I had resorted to creating diversions and they were repeatedly saying that I had siphoned off money, whereas I have siphoned off nothing. I told them constantly that all my assets are property documented and they can easily find out the source of funds but they were not interested in this activity at all. I also candidly told them that I have no other assets. Whilst seeking to produce me on 13.07.2021, same intimidatory tactics were applied and I was told not to disclose anything to Hon‟ble Court, failing which my family members would be arrested as well. Under coercive tactics employed by E.D. officials, I was also told to state that in my activities of inflating the accounts there was a hand of my internal auditor Raman Bhuraria as well. LTI Kewal Krishan Kumar Tihar Jail No.7, Delhi”

23. Mr Ashok Kumar Goel also retracted from his statement on 10.04.2022 which has been taken on record by the Special Judge (PC Act) on 22.04.2022.

24. The submission of Mr Khurana is that a bare perusal of statements of the two accused mentioned above clearly shows that they were pure cut, copy, paste job as they are identical in their content, description, detailing as well as accusations and hence no reliance can be placed upon them. He further states that assuming the said statements to be true, they both have been retracted:

25. Lastly and most importantly it is submitted that besides the two statements of Ashok Kumar Goel and Devki Nandan Garg there is nothing else that links the applicant with the allegations made by the ED.

26. The next allegation is that fictitious stock damage report was got prepared at the applicant‟s instance and he attended the meeting as a special invitee where decision for disposal for damage stock was taken. It is stated by the applicant that the stock damage report dated 01.02.2016 is prepared by HUMS & Associates. Vide Board Resolution, HUMS & Associates were appointed as Internal Auditors and therefore when the report of 01.02.2016 was prepared, the applicant was not an Internal Auditor of SBFL. The only way by which the applicant is connected with this report is one unsigned minutes of meeting dated 10.02.2016 wherein the applicant was a special invitee. Assuming unsigned minutes can be relied upon, there is nothing to show that the applicant was involved in any way in making false report dated 01.02.2016.

27. The next allegation is that applicant is the person who was making false stock report and submitting to banks and obtaining loans (which on the basis of true stock reports, the company would not have obtained). The applicant submits that there is not a single stock statement has been signed by the applicant. The only document signed by the applicant is a stock receivable audit report as on 31.12.2014. The stock audit report is neither by the applicant nor signed by him but in fact is of an independently appointed stock Auditor. In the entire stock audit report, there is only one document signed by the applicant. There is nothing else which has been signed by the applicant. Submissions by the ED: Mr. Zoheb Hossain, Ld. standing counsel for the ED states as under:

28. The respondent submits that that the applicant was an internal auditor of SBFL and was actively involved in creation and projection of the inflated financials which involved dummy entities. The respondents have stated that from the perusal of the bank account No.010100063801 of Indraprastha Sehkari Bank Ltd., it would be clear that the said bank account was opened on 01.06.2011. The transactions in this bank account were made only on 20.12.2011, but, SBFL falsely reflected cheque payments through this bank account w.e.f. 03.04.2011 i.e., several months prior to opening and actual operation of the account. Prior to December 20, 2011, all transactions through this account were purely fictional entries. Additionally, this account reflects most of the transactions of SBFL with dummy entities to inflate its financials and which ultimately led to the commission of the offence of money laundering.. Since the applicant had audited the business and verified the false accounting entries in the company's books of accounts, the applicant thus played an active role in the commission of the offence.

29. The respondent submits that the applicant had two main firms namely (i)Raman Bhuraria & Associates, which was a CA firm engaged by SBFL for internal audit and by group companies as statutory auditor, and

(ii) Bhuraria Consultants Pvt Ltd. In addition to receiving cash in the amount of Rs. 6.14 Crore, the applicant, his firm, and company also received proceeds of crime (PoC) worth Rs. 8.47 Crore, which are PoC obtained by aiding SBFL and its directors in commission of offence.

30. Additionally, the applicant was involved in the projection of a fictitious and false stock position as well as other SBFL financial data to consortium banks. He managed bank officials' visits for stock verification. Email correspondence from the applicant, dated 20.10.2011, which was discovered during the investigation, showed that he was involved in stock and related bank verification/audit matters. In this email, the Applicant has stated: “As discussed with Mr. Tarun yesterday is not stock audit. It is just quarterly visit of bank to be conducted by outside agency, assigned to a CA firm on panel. Not Full Stock Audit. Nothing to vary (worry) and to be complied till November."

31. The respondent submits that this email clearly shows the involvement of applicant in stocks of SBFL. This email when was confronted with employee of SBFL in his statement recorded u/s 50 of PMLA, 2002, stated that SBFL did not have the stock that it had claimed to have to lender banks. Furthermore, he claimed that SBFL was involved in paper transactions that were carried out on applicant's advise and that the applicant was fully aware that SBFL's stocks were inflated and that the company did not actually own the stocks it had claimed to have to lender banks. In another email exchanged between applicant and Abdul Hasan Ansari, list of Godowns of Rice and Wheat mentioning details of owner and address of Godowns of SBFL were exchanged

32. The applicant was also involved in preparing inflated financial documents of SBFL for enhancing loan from consortium banks.

33. The facts regarding involvement and role of the applicant in the offence of money laundering have been divulged by the following people in their statements u/s 50 of the PMLA:

1. Awadh Narayan Garg, employee of Raman Bhuraria & Associates 10.09.2021

2. Dinesh Mohan, Accounts clerk in Raman Bhuraria & Associates 30.09.2021

3. Mukesh Kumar Uniyal, employee of Raman Bhuraria & Associates 30.09.2021

4. Smt. Neha Gupta, Partner at Raman Bhuraria & Associates 01.10.2021

5. Sh. Piyush Ranjan, Partner at Raman Bhuraria & Associates 13.09.2021

6. Sh. Prashant Gupta, classmate of Raman Bhuraria and director of Bhuraria Consultants 21.09.2021

7. Sh. Shiv Kumar, employee of Raman Bhuraria & Associates 30.09.2021

8. Smt. Usha Bhuraria, wife and coaccused 01.10.2021

34. The respondent states that since statements are u/s 50 PMLA, the aforesaid statements, by virtue of section 50, are admissible in evidence as also held by the Hon'ble Supreme Court and sufficient to reject bail as held in Rohit Tandon vs. Directorate of Enforcement (2018) 11 SCC 46. Further, the challenge to the said provision i.e., Section 50 of the PMLA has been dismissed by the Hon‟ble Supreme Court upholding the validity of the said provision in its latest decision in the case of Vijay Madanlal Chaudhary & Ors. vs. Union of India & Ors. 2022 SCC OnLine SC 929.

35. The respondent also submits that the averment of the applicant accused that there is no material apart from statements in the present case is incorrect. There is also other material recovered against the applicant. This material placed on record is sufficient to persuade this Hon‟ble Court that no satisfaction, as required u/s 45 of the PMLA, can be reached i. The statement of Sh. Abdul Hasan Ansari is corroborated by the email correspondence dated 02.12.2015 between applicant and Abdul Hasan Ansari (with copy to CMD and Siddharth Kumar) by which applicant had demanded documents of the group companies. ii. Evidences show that applicant was directly involved in arranging fake bills from entry operators like Devki Nandan Garg. While analysing the seized material, an email had been recovered from email correspondence between applicant and Abdul Hasan Ansari which contains the details of payments made by SBFL to the dummy entries operated by Devki Nandan Garg. iii. SBFL booked some fake transactions in its books of accounts. From a perusal of the bank account no. 010100063801 of Indraprastha Sehkari Bank Ltd., it has been observed that the said bank account was made only on 20.12.2011. But, SBFL falsely reflected cheque payments through this bank account w.e.f. 03.04.2011 i.e., several months prior to opening and actual operation of the account. All the transactions made through this account before 20.12.2011 were nothing but fictitious entries. iv. Audit report dated 31.12.2014 signed by RG Sharma, Stock Auditor, which states that 100% accounting supervision/feedback is provided by internal auditor. Investigation revealed that applicant was responsible for managing and control of affairs of SBFL. v. A table showing details of closing stock as on 31.12.2014 was received from the lender bank i.e., State Bank of India and the said document reflects the inflated and fictitious stock position which was submitted to the lender bank for availing loan facility. This document was signed by applicant.

36. The reliance placed by the accused applicant on the fact that Devki Nandan Garg, Entry Operator, has retracted his statement, is liable to be rejected as it is submitted that the statements of Devki Nandan Garg were recorded on 05.07.2021, 08.07.2021, 10.07.2021, 12.07.2021, 13.07.202 24.07.2021, 23.08.2021, 18.09.2021, 20.09.2021, 21.09.2021, 22.09.2021, 23.09.2021, 24.09.2021, 25.09.2021, 26.09.2021, 27.09.2021, 28.09.2021 & 29.09.2021 and Devki Nandan Garg filed an application for retraction on 15.12.2021. The respondent contends that Devki Nandan Garg was arrested by the ED on 21.09.2021, produced before the Ld. Special Court, PMLA on 21.09.2021 when the Ld. Court remanded him to ED custody. Remand was then further extended till 24.09.2021 and thereafter Devki Nandan Garg was remanded to judicial custody on 29.09.2021. Judicial custody was extended from time to time on 26.10.2021, 09.11.2021, 23.11.2021 and despite all these opportunities, no allegation of any coercion was raised by Devki Nandan Garg and this itself strikes at the credibility of the retraction application This court in Dayawanti v. Commissioner of Income Tax, 2016 SCC OnLine Del 5772 has held as under:

37. With regards to the statements being identical and hence tutored is incorrect and liable to be dismissed. As submitted during the course of arguments that statements or the said persons were again recorded by the ED in their own handwriting and all of them have stated in their subsequent statements that the previous statements were given voluntarily.

38. The reliance placed by the applicant on decisions to state that bail should be granted in the present case as trial is likely to take time are not applicable. As it is submitted that the Hon‟ble Supreme Court has taken a view that mere long incarceration in jail would not be per se illegal and has further held that in case the accused has committed the offence, he is bound to stay behind bars. Such detention in jail even as an undertrial prisoner, there being a provision for bail, through restricted, is not violative of Article 21 of the Constitution. Even the three Judge Bench of the Hon'ble Supreme Court in Vijay Madanlal (supra), while upholding the mandatory twin conditions for grant of bail u/s 45 of the PMLA, has held that the right of bail arises at the stage of Section 436A Cr.P.C.

39. The respondent finally submits that the economic offences in itself are considered to be gravest offence against the society at large and hence are required to be treated differently in the matter of bail. It is submitted that the hon‟ble courts have successively held that the entire Community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book as such offences affects the very fabric of democratic governance and probity in public life. Analysis

40. I have heard the learned counsels for the parties.

41. At this juncture, it is imperative to have an overview of the PMLA, post the Vijay Madan lal(supra) case. The three Judge Bench decision of the Hon‟ble Supreme Court in its recent decision in the case of Vijay Madanlal Chaudhary (supra) and connected matters, has upheld the mandatory twin conditions u/s 45 of the PMLA.

42. The PMLA is a special statute. If a person is charged under the PMLA, he has to overcome the twin conditions of Section 45(1)(ii) of PMLA. Section 45 (1)(ii) reads as under: “(ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail: Provided that a person who is under the age of sixteen years or is a woman or is sick or infirm, may be released on bail, if the special court so directs: Provided further that the Special Court shall not take cognizance of any offence punishable under section 4 except upon a complaint in writing made by—

(i) the Director; or

(ii) any officer of the Central Government or State Government authorised in writing in this behalf by the Central Government by a general or a special order made in this behalf by that Government.”

43. The twin conditions, are independent of each other and require the Court to weigh each one of them and adjudicate on the potential guilt of the offender based on the material relied upon by the accused and the opposition made to the same by the prosecution.

44. Hence the Hon'ble Court is not required to render a finding of guilt or acquittal at this stage, nor is it required to conduct a mini trial or meticulously examine the evidence but rather is to examine whether the applicant has made out reasonable grounds for believing that he is not guilty. In Union of India vs. Rattan Mallik (2009) 2 SCC 624, while dealing with section 37 of the NDPS, which similar to the section 45 PMLA, the Hon‟ble Supreme Court observed;

45. After Vijay Madanlal (supra) case, it is clear that this court is not to go into the conclusive guilt or innocence of the accused but base its finding on a prima facie test.

I. Prima Facie no reasonable grounds for believing that the applicant is guilty

46. The applicant is not named in the FIR. The applicant is also not named as an accused in the ECIR registered by the ED, as the same is simply a replica of the FIR registered by the CBI.

47. The role assigned to the applicant is mentioned in the arrest memo dated 13.08.2021. The arrest memo alleged as under:

48. Hence the role assigned to the Applicant is that since he was an Internal Auditor of SBFL and statutory auditor of several sister concerns of SBFL, it was through his aid and assistance that Shakti Bhog Foods Limited, borrowed, layered and siphoned off the loan funds using the platform of about 24 known group companies and several shell entities. It is also alleged that he was directly involved in paper sale purchase transactions of SBFL without conducting any actual business transactions which resulted in inflation of their financials. It was on the strength of these audited but falsely inflated financials that SBFL was able to obtain loans from banks. The borrowed funds were then channelized through the bank accounts of several Shakti Bhog group entities which had actually provided a platform for changing the colour of the borrowed funds from liabilities to assets and then, for siphoning off the same by creating a web of complex transactions leading to commission of the offence of money laundering. The applicant was auditor of several group companies during the period when offence took place. For this purpose, he received the commission in form of fees and hence is involved in the offence of money laundering.

49. The timeline of the applicant with SBFL is reproduced hereinbelow:

50. As is clear from the above, the applicant was not the statutory auditor at the time of the commission of offence i.e., the period between 2013 and

2017.

51. The ED has alleged that the applicant was the mastermind of the whole operation and to prove the same the ED has produced evidence in form of some emails and statements of management and employees of SBFL given u/s 50 of the PMLA.

52. The categorical allegations against the applicant are as follows:

E. ED‟s allegation regarding Proceeds of Crime: Applicant received Rs. 14.61 Crores (Rs. 6.14 Crs. Cash Deposits + Rs 8.47 Crs. in Banks Accounts). Admittedly, the applicant conducted statutory audit for the year FY 2006-07 and internal auditor for 2007-8 to 2013-14 and being the professional auditor, the applicant was entitled to charge a professional fee. Hence, the amount in the bank accounts is legitimate professional fee received by Applicant from SBFL and group companies for his audit related work & other consultancy. All the Professional fees received by the Applicant has duly been disclosed, audited and all applicable taxes were paid. The respondent‟s case is not that the Applicant did not render professional services to SBFL & group concerns. Prima facie this is a plausible explanation. This is especially so, since during investigation, no cash or undisclosed assets recovered from Applicant and his family. Moreover, immovable properties, bank accounts, bank lockers and other assets of Applicant and his family stand seized, frozen or attached by the ED. Hence, the alienation of alleged Proceeds of Crime is not possible. As regard the cash deposits, the applicant has stated that the same is result of cash withdraws and less expenditure over a substantial over period of time. The explanation for the cash deposits given by the applicant i.e., the excess cash withdrawal was redeposited in the account is plausible and gains even more significance in view of the fact that they have withstood the scrutiny of income tax department.

53. In this view of the matter, the aforesaid documents do not support the contention of the ED that the applicant is guilty. Heavy reliance has been placed on section 50 of PMLA statements made by the employees of the SBFL. The only relevant document remaining that prima facie may establish the guilt are the statements u/s 50 of the PMLA.The investigation of the ED is hinged on the statements made u/s 50 of the employees of the SBFL.

54. In Vijay Madanlal (supra), the Hon‟ble Supreme Court has observed as follows:

55. The Supreme Court, thus, clarified that the statements made u/s 50 are admissible evidence. However, these statements are now retracted as follows:  Shri Kewal Krishna Kumar dated 28.08.2021 [Founder and Managing Director of SBFL].  Shri Devki Nandan Garg Retraction dated 14.12.2021  Shri Ashok Kumar Goel Retraction dated 10.04.2022  Shri Tarun Kumar has also filed Retraction dated 14.07.2022 (Key Managerial Personnel and also Nephew of Promoter – Kewal Krishan Kumar). (Arrested on 22.06.2022)  Shri Sidharth Kumar has also filed Retraction dated 06.08.2022 (Key Managerial Personnel and also Son of Promoter – Kewal Krishan Kumar). (Arrested on 22.06.2022).

56. Hence, the question which I am confronted with is not whether these retracted statements are admissible but whether these retracted statements are reliable? At this stage, I have to see the reliability of these retracted statements in the facts and circumstances of this case.

57. The reliability of the retracted statements has been discussed by the division bench of this court Central Excise v. Vishnu & Co. Pvt. Ltd., 2015 SCC OnLine Del 13824:

58. In the present case as well, the question is not regarding the admissibility but the reliability. The statements had concretely named the applicant. However, in their subsequent retraction the reliability of the statements themselves become doubtful. Statements of Employees of SBFL, Accommodation Entry Operators (Devki Nandan Garg & Ashok Kumar Goel) are a cut copy paste job with even the punctation marks of commas, full stops not differing.

59. Prima facie in view of the retraction, the reliability of these statements is questionable. The retracted statements cannot form the basis of the guilt of the applicant 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.

60. The ED has placed reliance on Rohit Tandon v. Directorate of Enforcement, (2018) 11 SCC 46 and submitted that Economic Offences are to be treated on a different footing since economic offences have deeprooted conspiracies and involve huge loss of public funds which need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.

61. The observation of the Supreme Court is binding on this court. However, in Rohit Tandon (supra), the facts were different. For one, the primary reason for dismissal of bail was availability of documentary evidence against the Applicant therein and recovery of huge amount of unaccounted cash for which no explanation could be provided as noted by the Hon‟ble Supreme Court. Moreover, in Rohit Tandon was subsequently granted bail 5 months thereafter by this Hon‟ble Court in “Raj Kumar Goel v. Directorate of Enforcement, 2018 SCC OnLine Del 8873, reported as

“25. Thus the major change which is required to be considered by this Court as per the decision of Supreme Court in Kalyan Chandra Sarkar (supra) referred to by Additional Solicitor General in the present case is the non-applicability of the twin conditions under Section 45 of PMLA which was the major reason for rejection of the earlier bail application of Rohit Tandon. Second major consideration is that the offence punishable under Section 4 PMLA provides for maximum sentence of imprisonment for seven years with a minimum sentence for imprisonment of three years. Petitioners have been in custody for a period of now more than one year four months and despite directions of the Hon'ble Supreme Court vide order dated 10th November, 2017 that day-to-day trial should continue, till date arguments on charge have not begun. As noted above in the predicate offence, that is, FIR No. 205/2016 the Crime Branch did not even think it fit to arrest the petitioners and filed a charge-sheet without arrest. The evidence in the present case is primarily documentary in nature and statements of accused which are admissible in evidence have already been recorded under Section 50 of PMLA. Further corroborative evidence in the form of CCTV footage and call detail records is also documentary in nature. Moreover as per the requirement of Section 44 of PMLA trials in FIR No. 205/2016 for the scheduled offence as well as Section 4 PMLA in ECIR No. 18/DLZOII/2016 are required to be held together. Hence the trial is likely to take some time. Thus, this Court deems it fit to grant bail to the petitioners.”

62. In the present case, there is no relevant document to support the allegations. Admittedly the applicant 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 5 documents to show the applicant‟s 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.”

63. In addition, the observation of the IO also assumes importance in determining whether the applicant is prima facie not guilty. The IO in the column No.12 of the FIR, noted that the account the SBFL was declared NPA on account of commercial reason and, more importantly, there were no apparent mala fides in the monitoring of the account though there are some omissions/ instances of negligence. This observation is indicative of the fact that initial investigation in the role of the applicant had not led to a conclusive finding against the applicant.

II. Delay in filing chargesheet; Investigating still continuing:

64. In the present case, out of a possible 7-year sentence, the applicant in case has already served more than 17 months of pre-trial detention (as of 23.01.2023). It is also important to state that the applicant has been interrogated only once on 13.11.2021 in entire judicial custody of more than 1 year.

65. I was also apprised of the fact that even now the trial in this case has not begun. During the arguments, the ED had sought leave of the Ld. Trial Court to file the following documents in the 4th Prosecution: i. additional documents, ii. additional list of witnesses, iii. further Complaints

66. In my opinion, there can be no arguments on framing charges or initiation of a trial because the investigation is still ongoing. 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.

67. In Vijay Madanlal (supra) as well the Hon‟ble supreme Court, also upheld the sentiment of unjustified detention. The Hon‟ble SC observed that:

68. In the present case, although the applicant, has not undergone half of the period, the offence with which the applicant is charged with is punishable with imprisonment upto 7 years but not with life or death. There are no criminal antecedents reported against the applicant. Out of this sentence, the applicant has already undergone 17 months of incarceration

69. Even though the allegations are serious but 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.

70. The period of incarceration as well as the delay in investigation along with any reliable material which directly involved the Applicant 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.

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

72. With regards to the apprehension on the part of the prosecution of tampering with the evidence and threatening the witnesses can be taken care of by imposing stringent conditions. The CBI may proceed with the investigation but not at the cost of continued incarceration of the applicant.

73. The standing counsel for the ED has been given the opportunity to oppose the bail. Hence the twin conditions as enumerated u/s 45 of PMLA have been met.

74. Having regard to the totality of the circumstances, in my opinion, the applicant should be released on bail. The application is, therefore, allowed in terms of the following conditions: (a) The applicant shall furnish a personal bond in the sum of Rs. 50,000/- (Rupees fifty Thousand Only) each with 01 surety in the like amount, to the satisfaction of the trial Court; (b) The applicant shall not leave the country and if the applicant has a passport, he shall surrender the same to the trial Court;

(c) The applicant shall furnish to the IO/SHO concerned his cellphone number on which the applicant may be contacted at any time and shall ensure that the number is kept active and switched-on at all times;

(d) The applicant shall drop a Google pin location from his mobile phone to the IO concerned which shall be kept operational throughout his bail; (e) The applicant shall not indulge in any act or omission that is unlawful, illegal or that would prejudice the proceedings in pending cases, if any; (f) The applicant shall join investigation as and when directed by the IO and will appear in court as and when required;

75. Nothing stated hereinabove shall tantamount to an expression of opinion on the merits of the case.

76. The application along with pending application(s), if any, are disposed of accordingly.